DECARBONIZING TRANSPORT SECTOR- CAMPAIGN TO ACTIONS

The week of 19th February appeared to be an interesting week for India, when, the Union Transport Minister and Minister of Power urged to use electric vehicles while launching ‘Go Electric campaign’ in New Delhi.

Globally, transport is the second largest energy end-use sector, emitting approximately 8 billion tons of carbon dioxide (CO2)[1], resulting from rapid economic growth. It accounts for around twenty-nine percent of total final energy consumption and heavily dependent on fossil fuels (96% of the sector’s energy use coming from petroleum products), which is a key challenge in decarbonizing the transport sector. 

Efficiency in the transportation sector is a matter of concern. With the advancement of technological solutions, one can replace conventional internal combustion vehicles with lower-emitting options or opt for electrification, however, the ecosystem to enable such a transition is grossly missing in most countries. Hence, achieving ‘efficiency’ with an optimum cost would need enabling infrastructure, which could facilitate the mass deployment of such solutions. However, technological breakthroughs are yet to happen in the aviation and marine shipping sector. Decarbonizing these segments would require innovation, ranging from alternative fuels to electrification. 

Another critical challenge in achieving the ambition of decarbonizing the transportation sector is ‘accelerating consumers' preference and adoption’ of new technologies. There are over 1.3 billion personal cars on roads around the world[2]. Therefore, transitioning from the ‘carbon-intensive’ to ‘zero-emissions’ vehicle would need a long-term transformation plan.

Along with technological enablers and behavioural change of consumers, the transportation sector would also need a paradigm shift in developing market instruments, backward and forward linkage of the transportation value chain and policy enables. For instance, developing countries would need a supportive infrastructure for promoting the adoption of ‘low-emission’ transportation. This is particularly pertinent in the case of creating demand and supply chains such as strengthening the segments of charging or fueling infrastructure (both private and public). 

Policy interventions for promoting electric-power transport based on renewables need to be prioritized. Decarbonizing the transportation sector with renewables would need mass adoption of fuel production from renewable sources as well as strengthening the power sector for the availability of electricity for transportation. This would also require large scale deployment of vehicles that can use renewable sources of energy along with the development of energy and fuel distribution infrastructure.

For achieving the decarbonization of the transportation sector, we need holistic long-term policies[3], with the flexibility to adapt to changing market conditions. To this end, a combination of policy measures[4] is needed focusing on direct support (deployment), integration, and enabling environment.

 Direct policy support should able to introduce pro-decarbonization policy instruments such as tax incentives, incentivizing consumers to buy EVs, subsidies, tradable certificates (Perform-achieve and Trade). It would also be crucial to introduce codes, standards, binding targets, electric vehicle rating system as well as setting up a national/sub-national target for ‘zero-emission vehicle’ deployment. Innovative direct policy support could be in the form of introducing a scrappage programme through which consumers could trade off old ICE vehicles for financial compensation with a new EV. 

Enabling policies are essential to promote the effective development of ‘efficient and zero-emission’ transportation markets. These include policies that issue clear signals to stakeholders (e.g., environmental policies, licensing, and regulations), investment-friendly policies for e-vehicle manufacturers, power utilities providing power to charging stations, facilitate access to affordable financing at multiple levels, introduce industrial/manufacturing policies. One fine example is ‘bulk procurement’. Like in energy-efficient appliances such as LED bulbs etc., governments can introduce mass procurement policies for building markets and stimulating demand for zero-emission vehicles.

Integrating policies is pivotal. It brings a ‘system approach’ with integrated policies across sectors, taking advantage of synergies with renewables, energy efficiency & supporting infrastructure. As such, policies are needed to ensure the development of the infrastructure needed (e.g., grid extensions, charging stations for electric vehicles), and to enhance system flexibility[5]. For instance, the government could provide financial and non-financial policy support for installing EV charging infrastructure. 

References:

[1] CSIS Briefs (2020)-Climate Solutions Series: Decarbonizing Global Transport

[2] “International Energy Outlook 2019,” Energy Information Administration, (PowerPoint presentation, U.S. Department of Energy, September 24, 2019), https://www.eia.gov/ outlooks/ieo/.

[3] IRENA (2017), REthinking Energy 2017: Accelerating the global energy transformation. International Renewable Energy Agency, Abu Dhabi.

[4] IRENA, IEA and REN21 (2018), ‘Renewable Energy Policies in a Time of Transition’. IRENA, OECD/IEA and REN21.

[5] IRENA (2018), Power System Flexibility for the Energy Transition, Part 1: Overview for policy makers, International Renewable Energy Agency, Abu Dhabi.