The biggest reason why EVs are lauded today is because it results in zero emission of smoke or carbon dioxide at the point of usage. But people often wonder whether EVs are actually beneficial to the environment, because more EVs à more consumption of electricity à more fossil fuels burnt to generate electricity. But there’s more to it than meets the eye. The entire status quo between the policy makers and the cause of emission changes when EVs replace ICE vehicles at scale. We’ve broken it all down for you…
But first, here’s some perspective into why curbing vehicular emission matters so much:
We’re all aware of the impending climate crisis that our planet is headed for – increase in global temperatures beyond 1.5 degree Celsius from pre-industrial levels. More greenhouse gas emission (like CO2) continues to heat up our planet. Interestingly, you need not travel too far to find out who to blame for all of it, as one of the biggest culprits is sitting in your garage! Yes, Motor Vehicles which made our lives easy up until now, are now ironically making our lives difficult, as they contribute to a whopping 24% of the world’s direct CO2 emissions. So now you know why the EV revolution is such a big deal for humanity.
But, if vehicles are such a big menace, why haven’t we done anything about them?
The government’s futile attempts to reduce carbon footprint of citizens
It will not be fair to say that we haven’t tried to keep vehicular emissions in check. Time and again the Indian Government has taken measures to address this. Like:
The PUC certification required to be done by vehicle users, to ensure that vehicles are not causing tailpipe emission more than acceptable limits.
The Vehicle Scrappage Policy implemented in 2021 that mandates very old cars to pass a fitness check or be scrapped.
Heavy investment in public transportation, that are made available at subsidized prices to incentivize the citizens to use public transport for daily commute over personal cars.
Delhi government’s historic odd-even rule implemented first in 2016, then in 2017 and 2019, owing to alarming pollution levels in the national capital region.
So why haven’t we seen any positive effects of these policies?
With rising population, urbanization and per capita income, there’s only so much that could have been done. Today, India ranks third amongst countries with the world’s worst air quality. 13 North Indian cities are among 15 of the world’s most polluted. And to make it worse, personal vehicle ownership has risen drastically over the past decade – number of motor vehicles registered per 1000 Indians has risen from just 99 in FY2009 to 246 in FY2020 (source: Statista).
The problems have clearly outpaced the solutions. But, just as every effort seemed to go in vain, electric vehicles came to save the day.
So why are Electric Vehicles the obvious answer to this clingy problem?
With no tailpipe emission, pure electric cars produce no carbon dioxide emissions when driving. This reduces air pollution considerably. In a year, just one electric car on the roads can save an average 1.5 million grams of CO2, which is equivalent to about 25 tree seedlings grown for 10 years. So, all in all, EVs will drastically improve the quality of life in Urban India.
Now you know why the Indian government is dishing out incentives in all directions to accelerate the number of electric vehicles on the road.
But wait, what about the excess electricity required to run these vehicles?
Before, we answer this, let us first understand that by solving the problem of air pollution in the cities, the government will get rid of a huge headache. Wouldn’t you agree that it is far more difficult to impose rules and policies on 300 million vehicle owners, as compared to less than 1,000 electricity generating companies? So, by electrifying vehicles, the government essentially shifts its focus for policymaking from individuals to corporates, and we all know the kind of control it garners over money minting companies😉.
Now back to the question – It goes without saying that more EVs means more electricity required to be produced by power generation plants. The sad reality is that majority of the power plants in India have predominantly been thermal based i.e. they burn fossil fuels like coal to generate electricity. Which means we will be back to square one. But what if these power generation plants use renewable sources of energy to generate this electricity? This way, the generation will also become emission free. Win-win, right? And it’s not a moon-shot idea. India has been aggressively scaling up its non-fossil-based energy capacity in the past decade. From a meagre 13% in 2014, we’ve come a long way to a whopping 44% of the total installed electricity capacity in the country from non-fossil-based sources (as on 31.10.24, source: pib.gov.in) , emerging as the 4th best in the world in terms of renewable energy capacity.
To further accelerate the shift to Green Energy, here are some policies that the GOI has come up with:
Massive allocations in the annual finance budget towards development of Solar, Hydro and Wind energy projects.
Several tax incentives have been declared for companies setting up Solar Power Plants and even manufacturers of solar modules.
Income Tax Holiday, subsidised customs duty and 100% FDI have also been declared to boost wind power generation projects.
To enhance renewable energy capacity in the country, in a recent announcement in Nov’22, the Power Ministry proposed to make it compulsory for any thermal power producer aiming to set up a new generating capacity after 1st April, 2024, to either set up or procure renewable energy capacity equivalent to at least 25% of the additional capacity.
In 2015, the GoI released strict emission norms, which are to be complied by all thermal plants by 2024. The norms, inter alia, mandate installation of emission control equipment by all thermal plants.
In a Carbon Credit like mechanism, under NMEEE (National Mission for Enhanced Energy Efficiency), thermal power plants were given a target to reduce carbon emissions over a certain period. Those who overachieve the target are issued Energy Savings Certificates (ESCerts) that can be traded to those who are unable to achieve the target.
Plans to implement a $238 Mn national mission on advanced ultra-supercritical technologies for cleaner coal utilization.
So now you see the big picture? More population and disposable income have only increased the number of vehicles on the road. Vehicles contribute to about 1/4th of CO2 emissions. So, replacing ICE vehicles with EVs will reduce overall CO2 emissions drastically. Government will then pursue policy making for corporates more aggressively, like installation of pollution control equipment, compulsory investment in renewable energy capacity, compulsory shift to renewable energy in the long run, rewarding those who invest in clean sources of energy and other such policies. Result? The air quality in our cities and towns will drastically improve. India will gradually achieve its short-term target of 50% energy capacity from renewable sources by 2030 and catapult its way to achieve its long-term target of net zero emissions by 2070.
This article is a part of the March'24 edition of our Startup Newsletter. Here's the complete publication:
