INDIA’S Quest to Decarbonize Transport

News: India has recently committed to achieving net-zero emissions by 2070 and public transport is one of the largest emitters.

This article discusses the Opex model of Ahmedabad and the challenges that exist while modernizing urban transport.

How did Ahmedabad modernize its transport system?

Ahmedabad introduced an operational expenditure (opex) model in 2007. The municipality purchased bus services for an annual fee from private contractors and linked it to per kilometer run per bus per day. It improved frequency and reduced fares.

Also, in 2019, Ahmedabad Janmarg Ltd, started an experiment to make it the first Indian city that will electrify its entire bus fleet.

Why opex model is beneficial?

Offering public transit with electric buses under the opex model is cheaper than owning a fleet that uses internal combustion engines. Gujarat is now replicating this model in Surat and Rajkot by offering viability gap funding to its municipalities.

What is the issue with other cities?

Other city corporations have not modernized due to inadequate policy, lack of innovative vehicle models and deficiencies in financing.

Also, the rate of private ownership is low and over 90% of Indians rely on state-run vehicles, private vehicles, and shared mobility like scooters, taxi cabs, and rickshaws, to commute.

Why public transit needs to be modernized?

First, the transport sector is the third-biggest emitter of greenhouse gases in India and has tripled its carbon emissions over the three decades.

Second, India’s urban population is expected to double by 2050. Hence, public transport has to improve its efficiency to reduce its emissions.

Third, India has also pledged to cut total carbon emission by 1 billion tonnes and reduce the carbon intensity by less than 45% by 2030 at the COP26 summit. Hence, it needs to promote electric vehicles (EV) quickly.

Four, current EV penetration is less than 1% and the government’s EV 30@30 campaign aims to achieve the target of 30% electric vehicle auto sales by 2030. Hence, the focus should be on expanding existing capacity.

What are the existing challenges?

One, only about half of Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) subsidies were used in three years. In April 2019, FAME II was launched, but only 215,000 vehicles have been approved under both schemes so far.

Two, the current policy is designed to primarily benefit two-wheeler sales and the public transport segment (three-wheelers and buses).

Three, the FAME subsidy is similar to opex model and only applies under a gross cost contract basis. But most municipal-run transport services are unfamiliar with it. Also, there is a delay for states in issuing tenders for e-buses.

Furthermore, due to the lack of standardized concession agreements, the private sectors are reluctant to sign as counterparties. For instance, Delhi had issued a tender for 1,000 buses, which was later canceled.

Four, another major challenge is demand aggregation. Bus companies want to be promised at least 70,000 km per year. But in congested cities, it’s hard to offer such long routes. The maximum that’s possible is 160-170 km a day, but in that case, the bid prices go up and municipalities can’t afford it.

Five, India’s EV policy is scattered across different programs with no set annual targets. It allows the stock of new combustion engine vehicles to grow till 2029. Hence, Automakers aren’t motivated to set up new production lines.

For instance, Clean Energy Ministerial 30@30 initiative lacks concrete sales targets. Also, FAME II ends in 2024 and after that, there is no clear roadmap.

Six, tenders move slowly due to the lack of manufacturing capacity and that is why charging depots aren’t set up fast enough.

What is the way forward?

First, State and city transport should replace ageing bus fleets with buses that run on clean energy.

Second, the Niti Aayog has recommended creating escrow accounts to prioritize payment of services from fares collected to the private contractor to make tenders pick up faster.

Three, the easy way out is low-carbon shared mobility. For instance, Delhi’s battery-powered rickshaws are offering last-mile mobility. Another example is BluSmart Mobility, which started in 2019 and has about 40,000 unique users on a monthly basis today. There is no surge pricing with a zero-cancellation policy.

Source: This post is based on the article “INSIDE INDIA’S QUEST TO DECARBONIZE TRANSPORT” published in Live Mint on 3^rd Feb 2022.