Focus: With limited EV options, Uber embraces carbon offsets in Latin America
17/11/2021 12:00
By Cassandra Garrison
MEXICO CITY, Nov 17 (Reuters) - Uber UBER.N has set out to
be carbon neutral by 2040, but the ride hailing company has
picked a route in parts of Latin America that is fraught with
challenges.
Since February, the U.S. group has offered customers in
Mexico an "Uber Planet" option. For an additional 0.37 Mexican
pesos per kilometer, they can contribute towards the purchase of
carbon credits for reforestation projects and a wind farm in
Oaxaca to offset the emissions caused by their rides.
Carbon offsets are controversial https://twitter.com/GretaThunberg/status/1455904676227002375.
When countries and companies find it difficult or expensive to
cut greenhouse gas emissions, they sometimes use offsets to meet
climate goals. These allow buyers to keep polluting while paying
someone else to take climate friendly action.
Uber's own climate report last year said the company avoided
buying offsets as a primary strategy, instead emphasizing
subsidies for its drivers to switch to electric vehicles (EVs).
Offsets "effectively pay to make it someone else's
responsibility" and have "weaknesses," including verification
challenges, Uber's report said.
In parts of Latin America, however, the company told Reuters
a transition for drivers to zero emission EVs was "impractical"
in the near term, given nascent EV markets there.
So in Mexico, Colombia, Ecuador and Costa Rica it is using
the Uber Planet offset scheme, alongside efforts to encourage
drivers to switch to EVs, it said.
The decision underscores the difficulties transport
companies face as they try to reduce their carbon footprints in
emerging markets with relatively few sustainable alternatives.
According to data analytics firm J.D. Power, electric and
hybrid vehicles comprise just 6.4% of Mexico's car market,
compared with 15% worldwide. By 2030, the market share is seen
hitting 12% in Mexico, far behind the 50.5% predicted globally.
MAKING A DIFFERENCE?
Uber Planet buys credits in projects that have been
certified by organizations such as the United Nations Framework
Convention on Climate Change (UNFCCC) and the Climate Action
Reserve (CAR), a not-for-profit registry.
Certification is supposed to confirm projects would not
otherwise exist without the sale of carbon credits, giving
assurance they are genuinely creating offsets.
But one Mexican scheme supported by Uber, the Oaxaca IV wind
farm project, may have gone ahead without the credits, according
to Gilles Dufrasne, a policy officer at not-for-profit industry
monitor Carbon Market Watch.
The certification documents for the project from 2011,
reviewed by Reuters, showed carbon credits would provide about a
1% increase in its internal rate of return.
The farm's developers said in the documents, filed to the
UNFCCC, that carbon credits were vital to secure financing.
But Dufrasne said the modest benefit raised questions
whether they were needed.
"The whole point of selling carbon credits is to have some
way of measuring extra (emissions) reductions which would not
have happened without the sale of the credits," he said. "But if
they were going to build the project anyway, then what you're
paying now is just not making any difference."
Danny Cullenward, an offset specialist at CarbonPlan, a
not-for-profit research group who reviewed the project documents
too, also questioned whether the sale of credits was necessary
to secure financing, noting the wind farm had a deal for the
government to buy its output at a guaranteed price.
"This isn't some business venture that's kind of risky and
needs a little boost to stay afloat," said Cullenward. "It's an
infrastructure project with commercial mature technology that
had a fixed price contract with the Mexican government."
A spokesperson for Spain's Acciona ANA.MC , the parent
company of Oaxaca IV, said the project was vetted under the
UNFCCC's Clean Development Mechanism (CDM).
"The very fact that the U.N. included the Oaxaca IV project
under the CDM mechanism is in itself proof of the contribution
of the wind farm to the U.N.'s sustainable development goals,"
the spokesperson said.
The UNFCCC did not respond to requests for comment.
The wind project accounts for about 16% of Uber Planet's
carbon credit purchases in Mexico, according to data on Uber's
local website. Of the 8,668 credits it bought from
Honduras-based carbon credit broker Anaconda Carbon between
February and August, almost 1,400 were from the project.
Uber referred questions about the project to Anaconda.
Anaconda President Christian Giles told Reuters the wind
farm was properly validated and revenue from carbon credits was
vital to it.
"That argument was audited, not only by a third independent
party, but also by the U.N. itself," he said, referring to the
UNFCCC.
'DOUBLE THE TIME'
Companies are under pressure from activists, investors,
politicians and even each other to cut emissions.
In Mexico City, Uber faces new competitors like Beat Tesla,
with an all-electric fleet of Teslas TSLA.O . China's Didi
Global DIDI.N , meanwhile, says it has 1,600 hybrid or electric
vehicles in Mexico.
Uber says it is determined to cut emissions.
"Every market where Uber is available will be taking bold
steps to develop locally relevant strategies that move in
parallel with our commitments. At this moment, we are presenting
Uber Planet, understanding the urgency needed to crack down on
this challenge immediately," said David Mínguez, an Uber
spokesperson in Mexico.
He said the company would take steps "within the coming
months" to encourage more drivers to switch to electric or
hybrid cars, including promotional prices for the vehicles and
incentives like an extra 10,000 pesos per 160 trips.
He predicted more than 600 of its drivers in Mexico would be
able to change to an electric or hybrid vehicle in 2022. Uber
has around 200,000 drivers and delivery partners in the country.
The high price of EVs puts them out of reach for most
Mexicans, whose average daily salary is less than $21, while the
country lacks the tax incentives and charging infrastructure to
encourage drivers to switch.
"We are going to move to that but it's going to take more
than double the time it will happen for all other parts of the
world," predicted Gerardo Gomez, director and country manager
for J.D. Power in Mexico.
($1 = 20.5090 Mexican pesos)
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
REFILE-Toyota says large parts of world not ready for
zero-emission cars urn:newsml:reuters.com:*:nL1N2S20X4
Huge global disparities in electric car ownership - study
urn:newsml:reuters.com:*:nL1N2ME0VM
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Cassandra Garrison
Editing by Christian Plumb and Mark Potter)
((Cassandra.Garrison@thomsonreuters.com; +52 55 6200 7873;))