The WHO global air pollution database report that ranked 14 Indian cities among the 15 of the world’s most polluted, in terms of particulate matter (PM) 2.5 concentration, received great attention in India. It needed to. Cities provide 60% to 65% of India’s GDP and 45% to-50% of our consumption. As per a World Economic Forum study, the number of million-plus urban conglomerates in India has increased from 35 in 2001 to 53 in 2011. By 2030, this number is expected to grow to 87. Cities are often the primary avenues that allow people escape out of poverty, especially from traditional agriculture. The next 2 decades will only see an acceleration of migration into our cities. Currently, the World Bank assesses health and welfare losses at 7.7% of India’s GDP (PPP adjusted). If these costs are unchecked, they will grow sharply in the coming decades. Hence, controlling urban pollution needs to be a key strategic objective for India.
India’s urban pollution as measured by PM 2.5 level is already about 40% above the global safe limits across major Indian cities. If we disaggregate urban pollution, we find 70% to 80% of it (as measured by PM 2.5) comes from vehicular emissions, domestic activity, construction activity, industry activity and road dust. Government policy can influence all these areas but we believe 2 require urgent attention and will create the largest short term impact – vehicular emissions and domestic activity.
The movement away from kerosene, coal and wood fires for cooking will have a big impact on domestic activity. We need to speed up the journey towards LPG and solar-powered stoves. The other area that is already critical and will keep getting worse, unless checked, is vehicular emission. Just vehicular pollution contributes around 35% of the total PM 2.5 emissions today. Of the total vehicular pollution, 40% to 45% comes from 2-wheelers and another 30% to-35% from 4-wheelers. In a future with internal combustion engines (ICE) vehicles (even post BS VI roll out), urban pollution will continue to remain 25% to 30% above safe global standards because of the growth in automobiles. This is where our focus needs to be.
Addressing vehicular emissions is within our grasp but requires a multi-pronged approach. It needs to combine the already-proposed tighter emission norms (in form of BS VI), with a push for shared mobility and public transport and adoption of alternate mobility technologies. While shared mobility can moderate the demand for individual vehicle ownership and usage, technology solutions today can allow for a sharp reduction in emissions per vehicle. Government policy will impact adoption that will affect both the extent and the future growth of urban pollution.
The policy roadmap should encompass 3 key elements based on global learnings. First, incentives for adoption of alternate mobility technologies. Second, restrictions on elements that contribute negatively to strategic objectives (such as congestion charges on polluting technologies), and last, provision of enabling infrastructure. Let me explore what these might be.
First, we need to assess and refine the monetary incentives that are offered to bridge the viability gap for electric vehicles for the purpose of containing urban pollution. These include upfront subsidies, road/registration tax, reduced taxes, and interest rate subsidy. Globally, incentives for adoption of alternate mobility technologies have been known to help – China grants a 45% subsidy on vehicle purchases and Norway and Brazil have their own schemes. As India formulates its long-term policy, it is imperative for the Government to continue the Faster Adoption and Manufacturing of Hybrid and Electric (FAME) vehicles programme under the Ministry of Heavy Industry and to keep refining it by measuring the programme’s impact on pollution.
Similarly, given their significance in an EV, India might need to consider pushing for battery localisation. Cell investments would need a long lead-time to materialise. Hence, the Government needs to drive immediate investments by providing subsidies and tax breaks to local OEMs along with support for research and development in the e-mobility domain. These incentives can reduce over time, as the battery costs come down. To drive localisation, it is critical to link subsidies to the level of localisation.
Non-monetary incentives must go along with subsidies. Technology choices should be rewarded with exemption from tolls/taxes, special toll lanes and other preferred access to public infrastructure. Globally, Norway gives preference to high occupancy vehicles and China gives preferential licence access. London imposes congestion charges during working hours on weekdays to vehicles entering the city centre. All these disincentives to traditional cars help in the push for electric vehicles.
Just incentives and subsidies will not do. There is a need to impose restrictions through supply-side regulations on OEMs to increase production of zero emission vehicles to curb urban pollution. Most Western countries adopt enforceable norms that ensure supply of electric vehicles. China has mandated OEMs to produce 10% electric vehicles of their total production. There will, of course, be the need to think about improving the provision of non-polluting public transport. These include electric buses, metros, and shared EV fleets to reduce traffic and usage.
Finally, for the alternative mobility technologies to settle, an enabling infrastructure is required. There is an early need to standardise charging infrastructure/equipment to ensure interoperability and make it widespread. European OEMs have formed a consortium, “Ionity”, to provide interoperable charging points across the continent. Similarly, China has standardised charging infrastructure to ensure increased usage and set up 16,000 charging points across the country. The country aims to set up more than 4.8 million charging points at an investment of almost $20 billion by 2020. China has regulations to include charging infrastructure in all residential buildings. India needs to start learning from global examples to push enabling infrastructure.
The need to address urban pollution is urgent. There are many lessons from China. There were no Chinese cities featured in the 15 top most polluted. India has to act now.
The writer is Chairman Asia Pacific BCG. Views are personal (Courtesy: IE)