Rwanda Electric Motors: Carbon credit monetisation

• Main Authors: ZHOU, Helen Yangfang, APPASAMY, Lakshmi
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2024
• Subjects: Climate Change; Environmental Sustainability; Personal Light Electric Vehicles; Electric Vehicles; Electric Vehicle Industry; Green Business; Environmental Sciences; Transportation
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/508; https://cmp-shop.smu.edu.sg/products/rwanda-electric-motors-carbon-credit-monetisation-copy?variant=42309601394730
• Institution: Singapore Management University

As a primary means of transport, motorcycle taxis were a significant contributor to Rwanda’s air pollution. Lee Wee Chia and his friends set up Rwanda Electric Motors Limited (REM Limited) to market electric motorcycles (e-motos) to reduce pollution. In addition to environmental sustainability, REM’s twin-battery-powered e-motos and strategic location of swap stations effectively addressed riders’ range anxiety typically associated with electric vehicles. Moreover, the upfront cost of the e-motos and the rental cost of batteries were also competitive. This ensured cost-savings and convenience for riders. The Rwandan government had sworn to reduce greenhouse gas emissions as part of its efforts to mitigate the impact of climate change. It announced plans to phase out internal combustion engine (ICE) motorcycle taxis to address climate change. So, REM Limited also offered retrofitting services to convert ICE motorcycles to e-motos. REM’s potential to expand beyond Rwanda was promising. However, batteries were expensive, and Chia needed funds to expand the business. To make the proposal attractive to sustainability investors, Chia had to calculate the carbon credits REM Limited could generate by selling e-motos and converting ICE motorcycles to e-motos. Also, Chia had to demonstrate the additionality of emissions reduction and explore avenues to monetise the carbon credits in the carbon market. This case can be used at the undergraduate or MBA level and executive education to teach students how to quantify and monetise carbon credits accrued by a business. It can help initiate discussions on challenges and limitations in carbon trading. Topics covered include carbon credit calculation using life-cycle analysis and carbon credit monetisation, risks and opportunities in carbon trading, the importance of additionality in emission reduction projects, and the management of end-of-life batteries.