Road transport key in India’s clean energy shift

A recent report by the International Energy Agency (IEA) highlights the critical role of road transport in India's ambitious clean energy transition. As India's economy continues to surge and its population grows, the expansion of road transport has the potential to drive socio-economic development. However, the country has been grappling with significant environmental challenges, including escalating CO2 emissions and air pollutants from road transport.
Currently, road transport accounts for 12% of India’s energy-related CO2 emissions, contributing to alarming levels of urban air pollution. With the demand for private mobility and goods transportation on the rise, the IEA’s Stated Policy Scenario (STEPS) predicts a potential doubling of energy use and CO2 emissions from road transport by 2050.

In response to these challenges, India has adopted an electrification strategy as a cornerstone of its efforts to decarbonize the transport sector. The nation is already the world’s fourth-largest car manufacturer, positioning electric vehicles (EVs) as a catalyst for both economic growth and environmental sustainability. Notably, two flagship national programs—the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme and the Production-Linked Incentive (PLI) schemes—are providing purchase incentives and manufacturing support for EVs.

The report projects that EV sales could reach nearly 35% of total vehicle sales by 2030, a crucial step towards achieving the goal of 50% by 2070. The actual CO2 emissions reduction potential of EVs hinges on India’s progress in decarbonizing its power sector, which remains coal-dependent. Presently, the emissions avoided by EVs are balanced by emissions produced during power generation. However, by 2050, India’s EV fleet could potentially avoid a significant amount of CO2, ranging from 110 to 380 million tonnes, depending on the pace of power sector decarbonization.

Two- and three-wheelers have emerged as the frontrunners for electrification, with more than 50% of three-wheelers and 4% of two-wheelers being electric vehicles in recent years. The analysis of total cost of ownership (TCO) indicates that electric three-wheelers offer a 70% cost advantage over their gasoline-powered counterparts over their lifetime. While upfront costs remain a challenge, government policies, including subsidies and favorable taxation, are narrowing the price gap between electric and conventional vehicles.

As part of its push for cleaner transport, India is also considering additional policy measures such as low-emission zones, stringent fuel economy standards, and zero-emission vehicle (ZEV) requirements to accelerate the adoption of EVs.

The report underscores that while road transport has posed environmental challenges, it can also serve as a linchpin for India’s transition to clean energy. With strategic policies in place, electrification of the transport sector has the potential to significantly curb emissions, improve air quality, and drive sustainable growth for the country.

Source: Transitioning India’s Road Transport Sector | The IEA

A bar chart comparing the purchase price components of a two-wheeler with an internal combustion engine and an electric vehicle in India for the years 2022 and 2030. Categories include sales price, taxes, FAME subsidy reduction, and tax reductions.

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