03/12/2020 - Environment

KEY POINTS

·      The sudden drop in air pollution levels in metropolitan cities due to the lockdown was one of the few positive impacts of the early days of the pandemic.

·      As per EY analysis (Mobility Consumer Index Report, 2020)*, monthly per capita emissions of carbon dioxide (CO2) fell globally across all three travel segments work travel, social and household travel, and leisure and entertainment.

·      High upfront capital cost is the major obstacle impeding the adoption of EVs and their growth in India. The most critical component of battery pack leads decides the cost of an EV, considering that the cost of this component is about 40% of the total vehicle cost.

·      Future advances in technology and greater economies of scale will, in all probability, make batteries more affordable. In the meantime, corporates who want to procure EV fleets may find leasing as a more attractive option than purchasing these vehicles.

·      In addition, third-party players have started to develop battery-as-a-service business models focused on bringing more moderately-priced battery replacement solutions to the public.

·      Moreover, the market also holds opportunities to repurpose and recycle EV batteries. A typical EV battery, after being removed, retains the power capacity of 50-70%. This has the potential to be repurposed for tasks such as power backup, renewable-energy storage and grid stabilisation. Upon completion of a battery’s second life, the final stage is recycling.

·      In terms of EV charging stations, although there are many infrastructure operators in India, a standard business model is yet to be established. More than operations and maintenance, installation services can serve as the primary revenue driver in this market.

·      Many state utilities are offering special tariffs/plans for retailing electricity for EV charging, while operators of charging networks typically provide charging station hardware, cloud-based software services, technical support and other electric vehicle supply equipment (EVSE) management services, such as payment processing.

Amidst the devastating Covid-19 pandemic, a rare positive has been - the significant decrease in air pollution levels due to reduced industrial and human activities during lockdowns. 

The reduction in road transport and the correlated decrease in air pollution have highlighted that gas-powered vehicles are key drivers of air pollution. This also presents an opportunity to boost electric mobility in India. 

>>> Ways to boost electric mobility in India :

- Boost charging facility : Power distribution companies may be directed to invest in the charging infrastructure.

-  No import dependence : In the longer term, the existing brands will need to go for more "indigenisation" to make the vehicles more affordable and maintenance easier, with quick availability of parts (no dependence on import). This would ensure better services to customers; this, as of now, is a pain point.

- Schemes like FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles)  should be adopted to incentivise local manufacturing and the growth of domestic technology. 

- Policy push in line of ‘cash for clunkers’ scheme of Germany  : Under which, those who traded in an old vehicle and bought a new one got a cash rebate.

- Thus,  a "scrappage policy" is needed to drive new-vehicle sale.

>>> Challenges : 

- However, while no greenhouse gas emissions directly come from EVs, they run on electricity that is, in large part, still produced from fossil fuels in many parts of the world. 

- Energy is also used to manufacture the electric vehicles – and, in particular, the battery (lithium ion battery).

>>> Conclusion :

The goal of any sustainable transport policy is to ensure that our transport systems meet society's economic, social and environmental needs.

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