In a 2015 report, the World Bank stated that "urbanisation leads to concentration of economic activity, improves productivity and spurs job creation, specifically in manufacturing and services." In doing so, the report added, urbanisation had the “potential to transform economies to join the ranks of richer nations in both prosperity and liveability.” Statistics support the above point. Over 54% of the world’s population now lives in urban areas, accounting for 80% of GDP. Yet these same cities also consume two-thirds of the global energy and account for 70% of GHG emissions. Herein lies the paradox. Growth and environmental sustainability, on which there is now consensus, has to be a dual goal, achieved not in sequence but in parallel.
The Indian urbanisation process has not escaped this paradox—cities that are proxies for economic growth have also become centres of air pollution that threatens to undermine the benefits of growth. One particular challenge that best articulates the above paradox is that of achieving urban mobility while minimising environmental damage.
According to the Central Pollution Control Board, the transport sector contributes more than 30% of the ambient air quality in major Indian cities. How can this challenge be addressed?
The answer lies in creating sustainable and clean public transport solutions for urban mobility here and now. To take it one step further, this means creating a public transport system which is green and moves towards using non-fossil-based renewables, such as ethanol, as well as rapidly building supporting infrastructure for the same.
Take buses, for example, which are are likely to a play a crucial role in mobility solutions, since they allow greater flexibility, are cost-effective and offer space efficiency. At the moment, for buses to function well, cities need bus infrastructure. This includes bus stations, depot facilities, workshops and bus shelters. This issue is alarming in Delhi, where not enough space has been allocated to park buses. The second aspect is the need to introduce new generation of technologies and fuels. For example, bioethanol. In 2009, India set a goal to reach 20% biofuels in the transport sector by 2017—we have just one more year to achieve this target. However, despite the current law of 7%, we have still not achieved even 5%. Biofuels have a great potential in India. If the country can shift up to 14% of its current fossil-based energy mix to biofuels in the next decade, it would boost the economy and provide support to the target of inclusive growth.
There are successful examples—in Europe and even in emerging markets—from which Indian cities can learn. In the 1970s, Sweden was the most oil-dependent country in the industrial world. Since then, oil dependency for heating and electricity production has been reduced by 90%, bringing down carbon dioxide and sulphur emissions to the levels before World War I. Biofuels have played a critical role in this shift. Today, around 30% of Swedish energy use comes from biofuels. Sweden also has the largest ethanol bus fleet in the world, with over 600 buses running on ED95, mainly in Stockholm. Dozens of municipalities have started producing biogas from sewage, which is a menace in India. Similar models can be replicated here.
In Sweden, the shift to sustainable transport solutions was made possible by the government, industry and citizens working together. For example, in order to encourage biofuel transport, a number of government incentives were put in place. Biofuels were exempted of the CO2 and energy taxes in Sweden until 2009. This resulted in a 30% price reduction at the pump of E85 fuel over gasoline and 40% for biodiesel. A major driver of the shift has been political ambition and will—fossil-free public transport in Stockholm and the goal of 75% of the bus traffic to be run on biofuels by the end of 2016—leading to clear formulations in public procurement tenders for buses with requirements for biofuels.
On the demand side, there have been local initiatives where investment support has been given—such as the Clean Truck and other funds mainly used for infrastructure investment. Flexifuel vehicle owners get a SEK 10,000 (about $1,300) bonus, exemption from the Stockholm congestion tax, up to 20% discount on auto insurance, free parking space and lower annual registration taxes, and then there is a 20% tax reduction for flexifuel company cars. The government also ruled that 25% of their vehicle purchases (excluding police, fire and ambulance vehicles) must be alternative fuel vehicles. By the first few months of 2008, this package resulted in sales of flexifuel cars forming 25% of new car sales. This illustrates that an initiative connected with the fuel is the most successful since it is long-term and technology-neutral.
For India to voluntary shift to renewable fuel-based transport, the government’s enabling role will be crucial—industry and consumers will follow. It is only when this joint effort is operationalised will Indian cities continue to be growth engines.
The author is president, Scania India