Paraguay - Technical Assistance for Regulating the Import of New and Used Vehicles to Paraguay

Rationale

Paraguay presents a significant opportunity to reduce greenhouse gas (GHG) and short-lived climate pollutant (SLCP) emissions, particularly from its growing road transport sector. With a population nearing 7.5 million—65 percent of whom reside in urban areas—the country’s transportation-related air pollution poses increasing risks to public health, contributing to premature deaths and rising healthcare costs.

While Paraguay’s national energy matrix is primarily based on hydropower, fossil fuels remain the dominant energy source for transport. The country’s vehicle fleet includes nearly 3 million units, with approximately 70 percent composed of imported used vehicles, many over ten years old. This presents a major challenge: although Paraguay now benefits from fuel quality with low sulfur content (10–15 ppm)—making it technically possible to support cleaner vehicles compliant with Euro 6 or equivalent standards—it lacks a regulatory framework to enforce emissions standards for either new or used vehicles.

The absence of emissions regulations, coupled with the continued importation of aging vehicles, increases the risk of rising GHG and SLCP emissions, particularly black carbon. Addressing these regulatory gaps offers Paraguay a pathway to fulfill its climate commitments while improving air quality and public health outcomes.

Objectives

• To establish an intersectoral working group and build national capacity for reducing short-lived climate pollutants (SLCPs) from the transport sector through workshops, technical coordination, and knowledge products.

• To develop a national database of Paraguay’s vehicle fleet, including new and used vehicles, and assess current SLCP emissions and energy efficiency based on vehicle operation patterns.

• To analyze SLCP reduction scenarios and develop a validated national roadmap for the gradual adoption of Euro VI-equivalent emission standards for imported vehicles.

• To conduct a cost-benefit analysis of implementing Euro VI emission standards for imported new and used vehicles in Paraguay.

• To evaluate and update Paraguay’s regulatory framework governing vehicle emissions, and to propose a mechanism for monitoring compliance with newly proposed standards.

Activities

To achieve these objectives, the project will:

• Establish an intersectoral working group of relevant government entities to coordinate efforts on reducing SLCP emissions from the transport sector and develop a project work plan.

• Produce knowledge products to build national capacity on SLCP mitigation in transport, including the development of technical materials focused on clean fuels and vehicles.

• Organize a series of in-person or virtual workshops and stakeholder meetings to raise awareness and promote technical understanding of cleaner vehicle standards and fuel alternatives.

• Identify public and private institutions that hold relevant vehicle fleet data, and compile this information to develop a national vehicle fleet database, including operation patterns, fuel efficiency, and emissions data.

• Calculate the SLCP emissions profile of Paraguay’s national vehicle fleet, using the compiled database and technical coordination support.

• Propose and validate SLCP reduction scenarios for Paraguay’s vehicle fleet, including adoption of Euro VI-equivalent standards for both new and used vehicle imports.

• Conduct a cost-benefit analysis to evaluate the economic and environmental impacts of transitioning to Euro VI emissions standards for imported vehicles.

• Develop and validate a national roadmap for the phased adoption of Euro VI vehicle emissions standards and concurrent fuel improvements.

• Analyze gaps in the current regulatory framework related to vehicle emissions and SLCP reduction in the transport sector.

Project Reference: [23-038-PY-23-001t] Technical Assistance for Regulating the Import of New and Used Vehicles 
to Paraguay