[Kurukshetra February 2023 Summary] Decarbonisation of Transport Sector – Explained, pointwise

Introduction

The most critical and pressing issue in front of the world and coming generations is to contain the global temperature rise within 1.5^oCelsius. Greenhouse gases (GHGs) are the reason for this temperature rise. Therefore, all the mechanisms and sustainable alternatives must be implemented to mitigate the climate risk. Climate change is having profound impacts on India. This includes adverse impacts on agriculture, water resources, forest and biodiversity, health, coastal management, and an increase in temperature. Heat waves have become more common and severe with many cities reporting temperatures above 48^oCelsius. The decline in agricultural productivity is the significant impact of climate change on India. Recognising the impact, India is championing climate action to achieve the nationally determined climate goals, mainstream sustainability, and reduce the carbon footprint. In this context, decarbonisation of transport sector is vital to achieve the climate goals.

Current Status of Transportation in India

The average carbon footprint of a person in India is 0.56 tonnes per year, compared to the global average of four tonnes per person per year. India’s transport demand is expected to increase by 2.7 times in over 30 years. Bus transport in India accounts for 38% of passenger km, though its share in overall registered vehicles in India is just around 3.5%. Two- wheelers account for 76-80% of the total registered automotive in India. Last-mile connectivity is still a big issue and mainly depends on three- wheelers and sub-seven-meter buses.

Sale of electric two-wheelers has jumped from 4,073 units in June 2021 to 42,260 in July 2022. The prices of electric buses is falling rapidly. In a recent tender by the Convergence Energy Services Limited (under Ministry of Power), the price discovered for EV buses has come to be 27% and 25% below diesel and CNG buses respectively (without subsidy).

India is the biggest manufacturer and market for two wheelers globally. The same status is expected to be carried over to EV segment. The EV segment is led by start-ups at present, but large traditional manufacturers are also scaling-up their EV segments.

Lifetime emissions from EVs are 19-34% lower than (Internal Combustion Engines) ICE vehicles.

Source: Kurukshetra February 2023

Initiatives for Decarbonisation of Transport Sector

Shift to Zero Tailpipe Emissions Mode: The National Electric Mobility Mission Plan (NEMMP) 2020 is a National Mission document providing the vision and the roadmap for the faster adoption of electric vehicles and their manufacturing in the country. As part of the NEMMP 2020, Department of Heavy Industry formulated the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) Scheme in the year 2015. Its aim is to promote manufacturing of electric and hybrid vehicle technology and to ensure sustainable growth of the same.

The 1^st Phase of FAME India Scheme was implemented through four focus areas namely: (a) Demand Creation, (b) Technology Platform, (c) Pilot Project and (d) Charging Infrastructure. Market creation through demand incentives was aimed at incentivizing all vehicle segments i.e. 2-Wheelers, 3-Wheelers Auto, Passenger 4-Wheeler vehicles, Light Commercial Vehicles and Buses.

The 2^nd Phase (FAME II) is a 3-year subsidy programme. It aims at supporting the electrification of public and shared transportation. Since the launch of the the remodelled FAME Il in June 2021, the sales have increased rapidly e.g., sale of two-wheelers have jumped from 4,073 to 42,260 between June 2021-June 2022.

The Government has nearly doubled the FAME 2 subsidy outlay at INR 5,172 crore in the Union Budget 2023-24. This is 78% more than the INR 2,900 crore that it had earmarked in the Budget for FY2022-23.

EV Value Chain: The Government is trying to establish India as a leading producer across the full electric vehicle (EV) value chain. India has a chance also to become the global hub of manufacturing for the entire EV Value chain (except raw material mining). Therefore, billion-dollar incentive programs such as the Advanced Chemistry Cell Program with an outlay of US$ 2.5 billion over five years were rolled out and have received an overwhelming response from the industry.

Similarly, to promote manufacturing of EV auto components, PLI for Advanced Auto Components (US$ 3.5 billion) has been launched. This will pave the way for a smooth transition of existing auto parts manufacturing in India and produce global champions.

EV Policies: States have also provided several fiscal and non-fiscal supports, in addition to the incentives provided by the Union Government. More than 22 states have declared their EV policies. Several states have also rolled out the incentives for battery manufacturing.

Indian Railways have launched their EV policy. They not only want to phase out all ICE vehicles used by Indian railways in offices etc., but also to put the charging stations at all electrified railway station parking spaces. This will significantly boost the charging infrastructure availability and help railways achieve their net zero carbon emission by 2030.

Source: Kurukshetra February 2023

Promoting Environmentally Friendly Technology: India is focusing on catalyzing, growing and fuelling the entrepreneurs in the country to create businesses with clean technologies such as hydrogen, electric mobility, batteries, etc. Green technologies are driving sustainable development in India. Such technologies maximise energy efficiency and preserve the environment while saving money.

Shoonya – Zero Pollution Mobility: It is a consumer and corporate-facing campaign hosted by NITI Aayog. The campaign aims to accelerate the transition of vehicles used for ride-hailing and deliveries into electric vehicles (EVs) by creating awareness and demand for zero-pollution rides and deliveries in Indian cities. The ecosystem it has created by bringing together a dedicated group of industry stakeholders, corporate partners, and consumers is being utilized to build awareness around EVs.

Challenges to Decarbonisation of Transport Sector

First, The initial purchase price of electric two-wheelers with fixed batteries is still greater than that of internal combustion engine vehicles. On a total cost of ownership basis, EVs are cheaper. However, high initial costs act as a deterrent to adoption.

Second, the 2-Wheeler EV segment is being driven by start-ups and new entrants. Established players in 2-wheeler segment seem to be reluctant to join the EV bandwagon. This can limit the scale-up and expansion of the segment.

Third, despite policy initiatives, there is severe shortage of charging infrastructure. Lack of charging infrastructure has limited adoption of EVs. The setting-up of charging infrastructure is not lucrative and appealing proposition as of now due to low market penetration of EVs. Hence, there seems to be catch-22 situation.

Fourth, Despite Government push, the adoption of public transport has been low.

Source: Kurukshetra February 2023

Fifth, the manufacturers have not yet focused on the commercial vehicle EV segment, which has a large share in the transport sector and remains a large emitter.

Way Forward for Decarbonisation of Transport Sector

First, to meet the needs of EVs, primarily four-wheelers, cargo three-wheelers, Light commercial vehicles (LCVs), and buses, there is a need to develop fast charging technology.

Second, Government-led firms like BHEL/BEL can work together to build a local supply chain for charger manufacturing. Further technical assistance can be obtained from research institutions such as lISc and labs such as CPRI/CSIR/ARCI.

Third, Opportunity charging and hybrid battery storage concepts (with fixed and switch battery) should be investigated for intercity transportation.

Fourth, Rural battery swap stations can alter the landscape of EV adoption and battery storage. It has the potential to increase electricity availability and quality in remote places. For example, in rural locations, the battery switch station might be powered by localised solar power (small setups). These switch stations can function as micro power grids, supplying extra power to the grid while also powering nearby villages/houses, in addition to functioning as EV exchanges. Suitable models should be developed to scale-up such swap stations.

Fifth, there is a need for developing a mission plan for Advanced Chemistry Cell (i.e. battery) recycling. This is especially significant since more than 95% of the original essential minerals in these ACC batteries may be recovered and reused in cell production. Many countries have already made the use of recycled materials in new ACC cells mandatory. India should adopt a similar approach.

Sixth, German commercial vehicle manufacturers have committed to launching light-duty and heavy-duty electric vehicles as well as developing a dedicated charging network in Germany. All large manufacturers (Traton Group, Daimler, and Volvo) are cooperating with each other and investing in zero-emission commercial vehicle charging infrastructure to mitigate risks and boost asset utilisation. A similar strategy can be adopted by Indian manufacturers.

Seventh, the electric bicycles need to be promoted. Although the prices of electric bikes are currently high, leasing companies, fleet operators, aggregators, financers, etc., can make it a viable option. e-Commerce and hyper-local delivery start-ups can utilise e-bikes to reduce their carbon footprint.

Eighth, Since EV is an evolving space, capacity building at all levels, along with upskilling and reskilling, is very important. It all starts with the government officials at the municipal level who interact for things like charging infra, incentives, etc. The sensitisation of the latest guidelines, rules, incentives, etc. should be well communicated through regular training.

Ninth, the decarbonisation of transport sector and transition to EVs will require creation of future ready workforce. NITI Aayog is working with IITs to nudge them to start EV-specific courses. More than 15 IITs have already started the courses at the PG level. This has to trickle down to diplomas and other technical and non-technical institutes.

Conclusion

The Government has laid an ambitious outline and policies to direct the country towards a cleaner, greener, and more connected world. The industry is also reciprocating the same, but the speed needs to pick up on all sides, including manufacturing and consumer acceptance. Decarbonisation of Transport sector is vital to achieve the Net Zero target. It would require close cooperation among all stakeholders; Government, Business and the citizens.

Syllabus: GS III, Conservation.

Source: Kurukshetra February 2023, Economic Times, PIB