Pushing the envelope vis-a-vis electric mobility will have to be a priority for governments to achieve climate mitigation goals. The Glasgow COP26 declaration on speeding up the transition to 100 per cent zero-emission cars and vans was categoric. The agreed timeline for this globally was 2040. In leading markets, the deadline was 2035. This calls for acceleration in phasing out internal combustion engine (ICE) vehicles in the coming years.
At the Glasgow meet, countries, financial institutions and companies joined the Zero-Emission Vehicles (ZEV) declaration. So did India. In fact, Prime Minister Narendra Modi announced a net-zero pledge by 2070 on day one itself. As the fourth-largest auto market, India committed to a new target for phasing out fossil fuel vehicles. The Indian motor industry also revealed fresh plans to make two-thirds of new vehicles electric by 2030.
But will it be able to deliver? The challenge is considerable. Says Anjal Prakash, research director at the Bharti Institute of Public Policy, Indian School of Business, Hyderabad: “In India, the transport sector contributes around 13 per cent to carbon dioxide emissions. EVs with zero tailpipe emissions are seen as an alternative to fossil fuel-based vehicles... India must have the right policies for infrastructure development to encourage zero-emission vehicles on the road.”
One of the challenges in promoting EVs is the requirement for charging infrastructure. In the absence of a single, all-encompassing policy for infrastructure creation, we need to independently evaluate various state policies to create an ecosystem for EVs to operate without hurdles, says Prakash.
According to him, the states and the Centre must unitedly draft a comprehensive plan. The carbon dioxide reduction targets must be decentralised to give states room to cut emission in a phased manner. Strong monitoring and evaluation are a must.
The wait is over
The industrialised global North, largely responsible for climate change, had agreed to mobilise $100 billion per year by 2020 towards mitigation efforts. However, it failed to meet this goal. The expert view is that we should no longer wait for it.
India must quickly adopt ZEVs. Its oil import bill in 2019-20 was a whopping $102 billion. According to a Petroleum Ministry study, nearly 65 per cent of the total diesel and 98 per cent of total petrol consumption is by the automotive sector. Additionally, the transport sector contributes to 23 per cent of the greenhouse gas emissions, and roughly 2.3 million deaths are linked to air pollution.
India has set a target of transitioning to EVs by 2030. The breakdown for this is two- and three-wheelers (80 per cent), private cars (30 per cent), commercial cars (70 per cent) and buses (40 per cent). Though the government has introduced various policy interventions and launched the e-AMRIT portal to raise awareness, there is still a long way to go.
EV adoption faces both supply and demand challenges. Low mineral reserves, high capital requirement, naïve technology and demand uncertainty are preventing domestic investments. The overwhelming dependence on imports for major components is leading to unviable manufacturing costs.
On the demand side, the high initial cost of EVs and lack of awareness are inhibiting adoption, in addition to range anxiety and limited charging infrastructure.
Says Rohan Rao, Partner, KPMG India: “Existing policy measures are a step in the right direction. However, continued support will be critical for faster transition to EVs. There is a need to formulate policy and encourage discoms and oil marketing companies to invest in developing charging infra and facilitate global alliances for sharing technology and resources.”
The subsidy effect
Aniruddha Bhattacharjee, senior researcher at communication network Climate Trends, shares Rao’s views and adds that subsidies must be maintained or even enhanced at the Central and State levels. According to him, electric two-wheelers are selling well because they are affordable in many states with the subsidies. Similarly, electric four-wheelers can be popularised, but their higher prices (versus ICEs) deter customers. Hence, they need further subsidies.
As for manufacturers, tax breaks would help. Several State governments including Maharashtra, Tamil Nadu and Telangana offer tax holidays to set up EV-only manufacturing units. This could be extended to those making both EVs and ICEs as an incentive for a faster switch.
The transition to electric mobility and zero-emission vehicles is a reality whose time has come.