With limited EV options, Uber embraces carbon offsets in Latin America

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MEXICO CITY, Nov 17 (Businesshala) – Uber (UBER.N) has set out to go carbon neutral by 2040, but the ride hailing company has chosen a path that’s fraught with challenges in parts of Latin America.

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Since February, the US group has offered an “Uber Planet” option to customers in Mexico. For an additional 0.37 Mexican pesos per kilometer, they can contribute to the purchase of carbon credits for deforestation projects and a wind farm in Oaxaca to offset the emissions caused by their rides.

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are carbon offset controversial, 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 continue 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). Uber’s report said the offsets “effectively pay for making it someone else’s responsibility” and have “vulnerabilities,” including verification challenges.

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In parts of Latin America, however, the company told Businesshala that a transition to zero-emissions EVs for drivers was “impractical” in the near term, given the nascent EV markets there.

So in Mexico, Colombia, Ecuador and Costa Rica it is using the Uber Planet Offset scheme, along with efforts to encourage drivers to switch to EVs, it said.

The decision underscores the difficulties facing transportation companies as they attempt to reduce their carbon footprint in emerging markets with relatively few sustainable options.

According to data analytics firm JD Power, electric and hybrid vehicles account for just 6.4% of Mexico’s car market, compared to 15% worldwide. By 2030, the market share in Mexico is expected to reach 12%, far behind the 50.5% estimated 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 non-profit registry.

Certification confirms that projects will not exist without the sale of carbon credits, assuring that they are in fact creating an offset.

But the Oaxaca IV wind farm project, a Mexican plan backed by Uber, could go ahead without credit, according to Gilles Dufrasne, a policy officer at the nonprofit industry monitor Carbon Market Watch.

Certification documents for the project from 2011, reviewed by Businesshala, showed that the carbon credits would provide about a 1% increase in its internal rate.

In documents filed with the UNFCCC, the farm’s developers stated that carbon credits were important to secure financing.

But Dufrasne said the modest gains raised questions about whether they were needed.

“The whole point of selling carbon credits is to have some way of measuring additional (emissions) reductions that wouldn’t have happened without the sale of credits,” he said. “But if they were going to build the project anyway, what you’re paying right now isn’t going to make a difference.”

Danny Cullenward, an offset specialist at CarbonPlan, a non-profit research group that also reviewed the project documents, also questioned whether credit sales were necessary to secure financing, given that the wind farm had The government had made a deal to buy it. Production at guaranteed price.

“It’s not some business venture that’s risky and needs a little boost to keep up,” Clanward said. “This is an infrastructure project with commercial mature technology that had a fixed price contract with the Mexican government.”

A spokesman for Spain’s Acciona (ANA.MC), the parent company of Oaxaca IV, said the project was investigated under the UNFCCC’s Clean Development Mechanism (CDM).

“The fact that the United Nations has included the Oaxaca IV project under the CDM mechanism is a testament to the wind farm’s contribution to the UN’s Sustainable Development Goals,” the spokesman 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 from Uber’s local website. Of the 8,668 credits purchased from Honduras-based carbon credit broker Anaconda Carbon between February and August, about 1,400 were from the project.

Uber sent Anaconda questions about the project.

Anaconda President Christian Giles told Businesshala the wind farm had been properly validated and that revenue from carbon credits was key to it.

“That argument was audited not only by a third independent party, but also by the United Nations itself,” he said, citing 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 such as Beat Tesla, which has an all-electric fleet of Teslas (TSLA.o). Meanwhile, China’s Didi Global (DIDI.N) says it has 1,600 hybrid or electric vehicles in Mexico.

Uber says it is determined to cut emissions.

David said, “Every market where Uber is available is taking bold steps to develop locally relevant strategies that run in parallel with our commitments. At this time, we are introducing Uber Planet, an urgent take on this challenge. Understanding the need to take action,” David said. Uber spokesperson Minguez 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 such as an additional 10,000 pesos per 160 trips.

He predicted that more than 600 of its drivers in Mexico would be able to convert to an electric or hybrid vehicle in 2022. Uber has about 200,000 drivers and delivery partners in the country.

The high price of electric vehicles puts them out of reach for most Mexicans, whose average daily wage is less than $21, while the country lacks tax incentives and charging infrastructure to encourage drivers to make the switch.

“We’re going to move on that, but it’s going to take more than twice as long for that to happen in all other parts of the world,” predicted Gerardo Gomez, JD Power’s director and country manager in Mexico.

($1 = 20.5090 Mexican Pesos)

Reporting by Cassandra Garrison Editing by Christian Plumb and Mark Potter

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