New Delhi, September 7, 2020: For everyone fighting for clean air, today – September 7 -- is a very special day. It is the very first International Day of Clean Air for blue skies. On December 19, 2019, the 74th session of the United Nations General Assembly had asked for this day to build awareness on clean air for health, productivity, economy and environment at all levels -- individual, community, corporate and government.
Ironically, the kick-off year for this day is 2020 – a year of unprecedented health and economic shock resulting from the COVID-19 pandemic, a situation that demands inventive strategies to sustain the clean air gains of the lockdown.
To mark this day, Centre for Science and Environment (CSE) has unveiled a new analysis, asking for a ‘green’ recovery strategy to help maintain and even exceed the level of ambition under the National Clean Air Programme (NCAP) -- about 20-30 per cent reduction in particulate pollution in non-attainment cities by 2024. The analysis presents examples from two critical next generation strategies in the transportation sector – bus transport and electrification of vehicular fleet -- to underscore the importance of accelerated roadmap for greening of mobility infrastructure and zero emissions transition in the automotive sector.
A case for ‘green’ recovery in the transport sector
The pandemic has deeply affected public transport. A revival plan is needed to reduce transport sector emissions. All clean air action plans have included bus transport strategy to cut transport sector emissions. But the public transport systems have nearly collapsed in cities. A survey conducted by the International Association of Public Transport (UITP) of 14 State Road Transport Undertakings (SRTUs) shows that 81 per cent of the operators have reported no ridership at all during the lockdown phases, while others have reported 90 per cent reduction in ridership from the pre-COVID level. Ridership of SRTUs in Maharashtra, Karnataka, Kerala, Delhi, and Hubli-Dharwad Bus Rapid Transit System (HD-BRTS) are still below 90 per cent. Recovery of ridership is expected to be slow due to fear of contagion. A CSE survey of middle to high income groups in Delhi and NCR has shown that preference for public transport is likely to reduce by 27 per cent within the six months of the lockdown.
Additional burden of safety protocols and social distancing requirements have added to the cost of operation. For example, Bus Operators Corporation of India (BOCI) has estimated that an additional cost of Rs 17 lakh (including capital and operational expenditure including cost of additional manpower engagement) is required for 100 buses per month only to meet the requirements of safety protocols.
Clean air action plans require bus revival strategy. This has serious implications at a time when India needs urgent scaling up of clean transportation systems to meet clean air goals. Already, there is a huge deficit in bus transport. Currently, urban India has 48,000 buses, but according to an estimate by GIZ, based on the guidelines of the Union Ministry of Housing and Urban Affairs (MoHUA), 188,500 buses are needed to properly fulfil consumer demand. The pandemic is cutting down the existing capacity by more than half.
SRTUs are already burdened with accumulated financial losses. The aggregated net losses of SRTUs between the years 2010 and 2016 have escalated by 48 per cent -- from Rs 5,899 crore to Rs 11,350 crore. The GIZ estimates further show that the traffic revenue will be reduced by 48 per cent in 2020-21 due to the pandemic.
This will increase the annual viability gap-funding requirement by 69 per cent for bus transport agencies in India. This results in poor bankability of the state transport corporations, limited revenue sources with urban local bodies, and disproportionate share of transport-related funding going to road infrastructure, which further aggravates the challenge.
India cannot delay fiscal bailout and sector reforms for long-term sustainability and recovery of bus transport. A massive turnaround to scale up modern and convenient public transport for effective modal shift to contain motorization needs a recovery plan. So far, at the state government level, only Odisha and Karnataka governments have exempted road tax for state-wide passenger buses for three months. All planned investments are on hold.
Without fiscal support, public transport reform will slow down.There are serious fears that all new investments needed to modernize the bus system, improve service level for wide geographical and population coverage in cities, upgrade IT-based passenger information system, etc. will get stalled if a fiscal strategy is not immediately available. Bus purchase in cities including Delhi will slow down. Also, the contract and deployment of 1000 electric buses under the FAME II scheme is at risk. Therefore, to address economic sustainability of bus transport, reforms have to be accelerated in the sector. It has been more than a decade since the National Urban Transport Policy (NUTP), 2006, provided for levy of dedicated taxes to be credited for an urban transport fund, which would be used exclusively to meet urban transport needs within the states. Even though only a few states such as Rajasthan and Karnataka have done that so far, this strategy needs to be further developed.
Tap into the global learning curve. Globally, governments have started to frame support policies for public transport. Hong Kong has taken the lead with the most elaborate package to support both bus operators and commuters. Transport for London (TFL) and Metropolitan Transport Authority (MTA) in New York have provided support to their respective bus systems. England, United States, Germany, Hong Kong, and New Zealand have come up with direct financial support whereas Singapore, China, Kazakhstan, and Turkey have come up with indirect financial support such as tax rebates.
A roadmap for electric vehicles to meet zero emissions targets
Economic recovery package must build ambition for zero emissions target. Zero emissions trajectory is an important part of the clean air action plans under NCAP. But after COVID-19 hit India, and the nationwide lockdown was put into place for 75 days starting March 24th 2020, the auto industry went into a slump. Overall vehicle registrations dropped significantly. But started recovering in June as the restrictions were lifted. However, CSE analysis shows that electric vehicle registrations suffered a bigger blow, dropping by 93 per cent between March and April and even after a significant recovery between April and June, the numbers were still 50 per cent of the pre-COVID levels (March).
Global electric vehicle (EV) market share tells a very different story. A comparison of Q1 2020 and Q1 2019 sales shows that the EV sales in the top European EV markets continued to increase strongly by 1.2 times. This was attributed to the slew of stimulus packages from the German, French and Spanish government aimed directly towards recovering the EV industry from the slump. The packages were a mix of direct purchase subsidy schemes and scrappage incentives linked with EVs. India needs a similar approach towards leveraging the recovery packages to push for EVs. Short term purchase incentive boosts for EVs, short to medium term scrappage policies to replace old oil guzzling vehicles with cleaner technologies and investment in EV startups, especially SMEs can be some of the immediate measures to start with.
Hasten implementation of FAME II and simultaneously frame strategies for post-FAME II programme to indicate the long-term commitment. Regulatory pathways are important to support to achieve the target of 30-40 per cent electric vehicle sales by 2030. This requires vehicle segment-wise strategy with appropriate accelerators. A well-designed and longer term incentive programme is needed now to address the upfront cost and total cost of ownership, and cost parity between electric vehicles and IC engines for deeper market penetration by 2030. Leverage economic recovery to achieve this target.
Tighten fuel efficiency standards to require electric vehicle transition. To accelerate electric vehicle roadmap, immediate steps are needed to tighten fuel efficiency standards for targeted vehicles segments -- passenger cars, two-wheelers, and commercial vehicles (medium and heavy duty). Tighter standards along with effective credit for electric vehicles can accelerate market growth.
Currently, the corporate average fuel consumption standards for passenger cars that are underway, and those scheduled for introduction in 2022, are very weak. These are not strong enough to require electric vehicles in the fleet. One of the reasons why Europe has seen fleet transformation to the level of EV being 10 per cent of the new cars sales is the tighter CO2 standards and the prospect of further tightening. European countries such as Germany and France (and soon Spain) have already earmarked direct purchase incentives for EV consumers for keeping up with the low-carbon transition.
Link scrappage policy with electric vehicle transition. The much awaited scrappage policy needs to link incentive package with targeted replacement of old fleet with electric vehicles to maximize emissions gains from fleet renewal.
State governments will need to set milestones to implement electric vehicle policy. State governments who have adopted electric vehicle policy need to set clear milestones along with state level fiscal strategy. In Delhi for instance, 25 per cent of all new vehicle registrations are to be battery operated electric vehicles by 2024. According to the VAHAN database of the Ministry of Road Transport and Highways, electric vehicles were only 3.2 per cent of the new vehicles registered in Delhi in 2019-20. Therefore, all the key elements of tax measures and fund mobilisation proposed in the policy need to be initiated immediately.
With the economy reopening, emissions are expected to rebound. The magnitude of the rebound will depend upon speed of recovery, consumer demand and the level of environmental safeguards. Already air pollution has increased from pandemic levels with the unlocking of the lockdown. In a post-COVID world, it is not a matter of choice but necessity to link economic recovery with pollution mitigation.