The auto industry slow down must not provoke reactive posturing but spur a firm policy roadmap and a legal mandate in consultation with the industry to bring more certainty in the ambitious zero emissions target and the market
What a flip flop on electric vehicles when the official jingle otherwise is stoking aspiration for quick, disruptive and transformative targets by 2030. Since 2017, we have heard several ministers and the Niti Ayog expressing ambitions of 100 per cent electrification of vehicles by 2030.
In June this year, the Niti Ayog proposed halting sale of three wheelers with internal combustion engines and also two-wheelers with engine capacity up to 150cc after 2023. Of course, this aggressive positioning could not be sustained in the face of industry slow down and protest from auto makers and as a sympathetic gesture, the government has now assured that it will go slow on electric mobility and give some breathers to the industry.
The worry is elsewhere. These inconsistent policy sound bytes do not convince either the clean air and low carbon mobility champions or the auto makers. There is no clarity on the roadmap, legal mandate, intermediate milestones at the central and state level, timeline for goal posts, leveraging of diverse policy levers for market uptake, effective programme design and implementation plan for charging infrastructure.
This demands policy mandate for a well-grounded implementation strategy to bring more certainty in the roadmap and the market. Without this, saying either ‘go slow’ or ‘speed up’ have no meaning.
No doubt the policy conversation and action on electric vehicles have evolved in India. The Faster Adoption and Manufacturing of (Hybrid and) Electric vehicles (FAME) scheme Phase has entered the second phase, with some learning from the first phase. FAME’s Phase 2 launched in March this year is now more deliberately linked with the performance criteria including type and range of batteries, vehicle segment-wise strategy, incentive for manufacturers and consumers and is also expected to cover deployment of charging stations.
It is also very encouraging that central assistance has catalysed electric bus programmes in several cities and there is an explicit policy linkage between electric mobility and public transport strategy. Even private initiatives are evolving in which Uber, Ola, Lithium among others have initiated pilots and programmes on electric vehicle-based shared mobility. State governments have started to design incentive programme and state level initiatives. Clean air plans are asking for electric vehicle programme.
The budget has also cut the Goods and Services Tax to five per cent. Even though the directives and guidelines for electric vehicle charging facilities have been framed by the Union Ministry of Power n 2018, this still needs aggressive planning and compliance.
But there is no well-rounded electric vehicle policy yet when the devil is in the scale and design. It is not even clear as to what the mandate is. Pathways at the central and state level will have to be spelt out right away to build the supply chain and stoke the demand.
At this moment, there is no strategy to legislate the mandate of 100 per cent transition to electric mobility or achieve vehicle segment wise electrification including buses, taxis, aggregators, and delivery vehicles within a stated timeline. The electric vehicle policy will also have to identify a range of other policy levers — both fiscal and non-fiscal measures, as well as public procurement systems, at the central and state levels with appropriate compliance systems.
Just recall, when the natural gas vehicle programme had to be implemented in Delhi, the entire eco-system including the number of natural gas vehicles, network of refuelling outlets, emissions and safety standards for natural gas vehicles, pricing of natural gas, incentive programmes for the consumers, and suggested timeline for transition were defined, designed and mandated. There is no other way.
Taking a leaf from others
This is the time to learn from the global practices to chart a roadmap here. Globally — as the recent review by the International Council on Clean Transportation shows — governments are working with a combination of regulatory policies, incentives, infrastructure investment, and consumer campaigns to drive this change.
This shows that the top 25 metropolitan markets share 44 per cent of the global electric vehicle market. They have implemented mandates for electric vehicle, procurement requirement in public fleets, preferential registration, licensing policies for electric vehicles, and zero-emission zones linked to promoting zero emissions vehicles. There is no other way. Let us understand the system design.
Need legally binding mandate: The strongest mandate has emerged in California. Since adoption in 1990, California’s Zero Emission Vehicle (ZEV) mandate program has continuously evolved, and it is now an independent regulation under the Advanced Clean Cars (ACC) package of regulations.
Frame transit and public sector fleet procurement rules: Since 2008, the rule in California asks operators of large urban bus fleets to have minimum ZEV quotas in new bus purchases made. In December 2018, the California Air Resources Board introduced Innovative Clean Transit regulation which states that starting from 2023, 25 per cent of new bus purchases by large transit agencies shall be zero emission. This will increase to 50 per cent by 2026, and 100 per cent by 2029. This may be extended to public and commercial fleets, including rental cars, large employers, delivery vehicles, and ride-hailing fleets.
Similarly, the State Council of China has provided guidance that at least 30 per cent of new procurement should be zero emission for all categories of vehicles in public service in ZEV promoting cities since 2014. This has now become a mandated purchase of electric public service vehicles at the city level. In fact, the southern Guangdong province has mandated that at least 80 per cent of bus fleets be zero emission by 2020.
The European Union (EU) has also created zero emission vehicle targets for public procurement for its member states — this can be as high as 38.5 per cent for light-duty vehicles, 45 per cent (2025) to 65 per cent (2030) for buses, and 10 per cent (2025) to 15 per cent (2030) for trucks.
Link implementation of low emissions zones and parking strategy with incentives for electric vehicles: Low-emission zones carved out in cities grant preferential access to electric vehicles. Many cities are now in the process of tightening the emissions criteria for low emissions zones to achieve large-scale electrification. Several governments are creating preferential systems and charging systems under parking policy.
Link permit conditions of taxis with zero-emission requirements: In London, the permit conditions are being changed from January 1, 2023, onwards so that all new private-hire vehicle license issuances can only be for zero emissions vehicles. Uber and others are supporting London’s directive with their own electrification targets.
The New York City Council is capping ride hiring cabs but have exempted battery electric vehicles from this cap for the time being. Starting in mid-2018, Shenzhen is issuing road transport permits to ride-hailing taxis and light commercial vehicles that are powered by electricity.
Limit the sale of conventional vehicles through registration restrictions to promote electric vehicles: In China, Beijing, Shanghai, Shenzhen, and Guangzhou have adopted this strategy. While the cap and auction based on a fixed quota of maximum number of vehicle registrations is allowed, they exempt electric vehicles and treat them preferentially. This has increased sales. Beijing and 185 Chinese cities have also banned motorcycles in the city to clean up the air.
Leverage fuel consumption policies to achieve target for zero-emission vehicles: California and several other states in the United States, China, and the Canadian province of Quebec have adopted credit-based mandate programs that require passenger car manufacturers to sell more electric vehicles to meet their fuel economy target and corporate average CO2 standards.
In the EU, until 2025, the standards will incentivise electric vehicles through a super credit mechanism to earn more credit from sale of electric vehicles and for corporate average compliance values. After that, they will follow the sales benchmark mechanism.
Avoid flip flop; Need certainty
What India needs is not reactionary and opportunistic sound bytes or only aggressive posturing but a firm policy roadmap and a legal mandate that can be worked out with the industry to meet the ambitious zero emissions target. While industry slow down is cyclical and transient, recent reports also indicate that India will become the third largest car market in the world, according to a report by Goldman Sachs.
But India's unique opportunity is also its public transport strategy to get the win-win co-benefits of clean air, reduced health exposure, lower climate impacts and improved energy security. Electric mobility is a long-term commitment and requires all the microcosm of the ecosystem to work in tandem.
At a time when the auto industry is gearing up for advanced IC technology to meet Bharat Stage VI and prepare for the ambitious electric mobility target, India needs more certainty in the roadmap in terms of firm legal backing for zero emissions mandate, timetable for intermediate milestones, timeline for phased manufacturing and fleet transformation, more stringent fuel economy regulations, state level action on charging infrastructure, fiscal and non-fiscal incentives in cities, and a compliance mechanism.
Time-bound, 100 per cent electrification nation-wide is possible only when central and state level action and ambition are harmonised and aligned. For instance, the Delhi government seeks to have a fourth of the vehicles registered annually — public and private — to be electric by 2024.
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