Is less pollution worth the costs?

Face of the future?: Electric buses, like this 12m three-door electric single-decker bus made by Volvo and Singapore’s SC Auto Industries, are cleaner but costlier than diesel buses. — The Straits Times/ANN

The city-state is accelerating its drive towards a cleaner public bus fleet. The Land Transport Authority (LTA) has just called a tender for 400 electric buses to be delivered from late 2024.

This is part of a plan to replace half of Singapore’s fleet of close to 6,000 largely diesel public buses with those running on electricity by 2030.

This is indeed good news for bus commuters, who bear the brunt of kerbside pollution as they wait at bus stops across the island day in, day out.

According to a study funded by the National Research Foundation, bus commuters are exposed to three and a half times more fine particulate matter than anywhere else.

On the road, these pollutants are produced mostly by automotive engines, especially large diesel-powered ones such as those used in buses.

Some of the particles are so small that they can be lodged deep in the lungs and even be absorbed into the bloodstream. They have detrimental effects on health, causing ailments from asthma in children to serious lung and heart diseases in older people.

Those with pre-existing cardiovascular or respiratory conditions – both among the leading causes of death here – face even higher risks.

According to LTA’s initial trial, electric buses produce half the emissions of diesel buses.

This is after taking into account emissions generated by power stations, which are sited far from population centres. That means the reduction in emissions is more significant where it matters most – at bus stops.

Hence, the authority’s goal of switching half the bus fleet here to electric models – and quite possibly more by 2040 – can potentially improve the health of residents here.

It will be good for the environment too, as electric vehicles have a smaller carbon footprint over their lifespan. With global efforts to tackle climate change, this will have a positive outcome, as transport accounts for some 15% of Singapore’s – and indeed, the world’s – carbon emissions.

Going electric saves on operating costs

But going electric will have cost implications.

The LTA has found that electric buses – numbering around 160 by the end of February – halves fuel cost. This is because electricity rates are substantially lower than diesel prices, and because electric motors are more efficient than diesel engines.

Since fuel and energy costs are traditionally the biggest expenses incurred by public transport companies next to manpower cost, an electric fleet will translate to impactful cost savings for them.

For instance, SBS Transit, the biggest bus operator here, incurred S$259.3mil in fuel and electricity costs for its financial year ended Dec 31, 2022.

Assuming diesel accounted for around 60% of that or S$155mil, a complete conversion to electric buses would halve this cost to S$77.5mil.

This would flow straight to its bottom line to boost its net earnings to S$145.5mil, up from its reported S$68mil. Its profit margin would more than double to almost 10%.

But acquiring the new buses is expensive

This of course does not take into account the acquisition cost of electric buses, which is some 40% higher than equivalent diesel buses. The single-decker buses in our public fleet typically cost around S$450,000 (RM1.4mil) each. So an electric one would cost S$630,000 (RM2mil), or S$180,000 (RM595,696) more.

To convert SBS Transit’s entire fleet of more than 3,500 buses would entail S$630mil (RM2bil) more in capital expenditure (assuming all single-deckers).

As public buses here have a lifespan of 17 years, the S$630mil (RM2bil) would mean around S$37mil (RM122mil) more in depreciation charges per year.

An electric bus’ lithium battery will most likely have to be replaced at least once during the vehicle’s 17-year lifespan.

Each battery is estimated to be 30 to 40% the cost of the bus. Assuming S$220,000 (RM728,072) per battery, a fleet of 3,500 buses would incur S$770mil (RM2.5bil) in replacement cost.

Actual accounting norms aside, this sum could simplistically be translated to an annual cost of S$45.3mil (RM150mil) if amortised over 17 years.

Together with the additional acquisition cost, this would add up to S$82.3mil (RM272mil) a year – which could potentially be borne by taxpayers.

Under Singapore’s bus contracting model, the LTA buys and owns buses, while operators are paid a fixed contracted sum to run, fuel and maintain the buses.

The LTA will collect fare revenue, which up to now has been falling short of the contract sums awarded to operators.

Thus, public buses currently soak up around S$1bil (RM3.3bil) a year in government subsidies. This will rise if Singapore’s bus contracting model’s contracts do not take into account the cost differences of buying and maintaining electric buses.

Smaller in capacity and more complex to maintain

Still, that is not the full picture, as there is another cost factor to consider. One is the lower passenger capacity of electric buses. Because of their sizeable batteries, each single-decker electric bus can accommodate 28 sitting and 52 standing passengers, down from 35 sitting and 56 standing on a regular diesel bus.

Will the LTA end up having to buy more buses, then? Quite likely.

Then, there is repair and maintenance. Electric vehicles are deemed to have much lower maintenance cost compared with their combustion-engined counterparts. They have far fewer components, requiring no regular engine oil or transmission fluid changes.

Electric motors have an inherent longevity and are relatively maintenance-free. They will require far less work than engines and transmissions, which are subject to higher wear, and need to be overhauled far more regularly than electric drivetrains.

But electric vehicles have more sophisticated electronic components, requiring technicians with a higher certification, and thus cost more to hire. Repairs, meanwhile, can be drastically costlier if batteries are damaged.

In March, Reuters reported that motor insurers in Europe and the United States were writing off EVs with battery damage because batteries were difficult to repair. And because the replacement cost is too high, insurers end up writing off the whole car.

SBS Transit incurred S$206.6mil in repair and maintenance in 2022, with half of that assumed to be for buses. How will this cost item change with an electric fleet? This is a big unknown, but it may be fair to assume the higher costs associated with repairs will be offset by lower regular maintenance expenses.

How much of an offset? Only time will tell, as they say.

Many unknowns

There is also the question of whether electric buses are able to last 17 years.

Diesel vehicles have proven to be robust workhorses if maintained well.

But less is known about their electric counterparts. Shenzhen in China, for one, has a fleet of about 17,000 electric buses which will run for eight years before they are scrapped.

Other unknowns include the cost of electricity with higher demand, and the cost of upgrading the power supply infrastructure to cater to that higher demand.

Rising fuel cost was one reason compressed natural gas (CNG) buses did not take off after SBS Transit’s initial fleet of 12.

Mandatory safety inspections following a fatal fire involving a CNG bus owned by a private transport company added to costs.

Inadequate refuelling infrastructure did not help.

At the end of the day, electric buses may be a boon to operators because they are cheaper to run, but they will cost more over a lifetime – largely because of their heftier sticker prices and, in the case of Singapore, the need for battery replacement.

But on a wider scale, electric buses will lead to improvements in the health of the population, which will mean lower healthcare costs and fewer man-hours lost to sick leave in the future. And as a global citizen, Singapore also needs to do its bit to save the earth.

Holistically, the drive to electrify our public buses – and indeed, all vehicles here – is thus a worthwhile goal, costly as it may be in the near term. — The Straits Times/ANN

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