São Paulo’s $248M Green Transit Push: World Bank and IDB Fund Major E-Bus Shift

In a major boost to sustainable urban mobility, the World Bank has approved a US$248.3 million financing package to support São Paulo's ambitious initiative to electrify and modernize its public transport system. The program, carried out in partnership with the city government, is one of the largest green transit investments in Latin America, aiming to significantly cut emissions and improve mobility for millions of residents.

The initiative, co-financed by the Inter-American Development Bank (IDB) with an equal US$248.3 million loan, forms a critical part of São Paulo’s broader strategy to address urban congestion, climate change, and social inequality. In total, the dual investment of nearly US$500 million is expected to mobilize an additional US$125 million in private sector capital, bolstering its transformative potential.

A Greener, More Inclusive Future for São Paulo

Home to over 12 million people, São Paulo is Latin America’s most populous city and one of the region’s economic powerhouses. Yet, it grapples with severe mobility challenges — including chronic traffic congestion, air pollution, and significant inequality in access to reliable public transport. More than half of São Paulo’s greenhouse gas (GHG) emissions stem from motorized transport, primarily diesel-powered buses and private vehicles.

This new project seeks to address those concerns head-on by promoting cleaner, more efficient, and inclusive urban mobility. At the heart of the effort is the electrification of bus corridors, with a goal to transition the city’s entire bus fleet — the largest in Latin America — to zero emissions by 2038.

Tangible Benefits for Millions

According to estimates, approximately 114,000 daily users of public transport and 2.92 million residents along the planned electrified corridors will directly benefit from the project. Electric buses promise a quieter, cleaner, and more accessible transit experience, particularly improving the quality of life in densely populated, low-income neighborhoods where pollution and limited mobility options are most severe.

The shift to electric buses is also expected to stimulate local industry, with job creation and technological innovation in Brazil’s e-bus manufacturing sector. This is not only a step toward climate resilience but also an economic opportunity for domestic industries and workers.

Cleaner Air, Healthier Lives

São Paulo’s public transport system is currently responsible for 47% of the city’s local pollutant emissions. Air pollution levels in the city have surpassed World Health Organization (WHO) recommended thresholds for over two decades, sometimes reaching four times the limit. A recent study shows that achieving WHO air quality standards could prevent more than 5,000 premature deaths annually and yield savings of up to US$15.1 billion per year in health care and lost productivity.

By replacing polluting diesel buses with electric alternatives, the initiative is set to significantly improve air quality — particularly benefiting children, the elderly, and those living in environmentally burdened communities. The project is therefore as much about health and equity as it is about climate and transport.

Strengthening Transport Governance and Inclusivity

Beyond electrification, the financing package will support digital and institutional modernization of São Paulo’s public transport management. This includes deploying smart technologies to improve route integration, reduce travel time, and boost operational efficiency.

Importantly, the program will also advance sustainable and inclusive mobility initiatives. These include expanding the city’s cycling infrastructure, promoting active transport, encouraging public transit ridership, and launching a gender equity program aimed at enhancing women’s participation in the transport sector — both as users and professionals.

Alignment with National and Global Climate Goals

This initiative aligns with Brazil’s Country Partnership Framework (CPF) with the World Bank and supports São Paulo’s Climate Change Law, which sets a binding target of a fully zero-emission bus fleet by 2038. It is the largest fleet decarbonization project of its kind in Latin America and stands as a model for other cities in the Global South facing similar urban mobility and climate challenges.

Johannes Zutt, World Bank Country Director for Brazil, emphasized the project’s transformative scope:

“Sustainable urban transport is at the heart of resilient cities and inclusive growth. By supporting São Paulo’s transition to a zero-emission bus fleet and promoting stronger mobility management, we are not only reducing emissions but also improving quality of life, creating economic opportunities, and establishing a model for Latin America.”

São Paulo’s urban transport overhaul represents a historic turning point in its development path. With strong financial backing from the World Bank, the IDB, and private investors, the city is laying the foundation for a cleaner, healthier, and more inclusive future. If successfully implemented, the program could serve as a blueprint for green mobility in other major metropolitan regions worldwide.