Financing for Decarbonization of Transport

In News

• Recently, a virtual consultation workshop on ‘Financing for Decarbonization of Transport’ is being held.

About

• It was conducted by NITI Aayog and World Resources Institute (WRI), India, with the support of GIZ India.
• It was conducted as a part of the NDC-Transport Initiative for Asia (NDC-TIA) project.

NDC-TIA Project

• GoI intention: 
  • The Government of India is actively working towards the decarbonization of transport, with a major focus on the adoption of sustainable mobility.
• Aim of the workshop:
  • To identify actionable strategies and bring together financing institutions and transport organisations to collectively work towards furthering innovative financing policies for the decarbonization of transport.

Need 

• Clean mobility: 
  • There is a need for more financial instruments to provide a further impetus to clean mobility in India. 
• Working together:
  • Need to bring states, domestic and international financial institutions, manufacturers and operators on the same page. 
• Global acceptance:
  • The financing mechanisms should be such that they are widely applicable, acceptable and, most importantly, sustainable. 

Nationally Determined Contributions-Transport Initiative for Asia (NDC-TIA) Project

• Joint venture: 
  • The NDC-TIA is a joint programme of seven organizations that engages India, China and Vietnam in promoting a comprehensive approach to decarbonizing transport in their respective countries. 
• Part of IKI:
  • The project is part of the International Climate Initiative (IKI). 
• Project supported by:
  • The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) supports the initiative on the basis of a decision adopted by the German Bundestag.
•  India’s implementing partner:
  • NITI Aayog is the implementing partner for the India component of the project.

Significance

• Transportation: 
  • Focus should be on shared mobility by leveraging private sector investments and unlocking financing for e-buses, which form the core of public transportation in our cities. 
  • Green financing will enable low interest cost financing of electric vehicles.
• Final results: 
  • Balancing the needs and aspirations of citizens, 
  • improve liveability and productivity by improving connectivity, 
  • bring down the cost of logistics and 
  • accelerate clean mobility while taking an approach which is climate-centric and sustainable—not just from an environmental point of view, but also from a financial perspective. 

Image Courtesy: Energy Post 

Decarbonizing the Indian Transport Sector

• Requirement: 
  • India requires a robust roadmap for the electrification of transport. Financing plays a crucial role here. 
• Solution: 
  • Mobilisation of capital is possible through multi-stakeholder collaborations. 
• Importance of NDC-TIA:
  • The NDC-TIA initiative brings together a wide spectrum of participants to facilitate peer-to-peer learning and information exchange on various themes, including “Financing the Decarbonization of Transport”
• Urgency:
  • Transport, the third-most greenhouse-gas-emitting sector in India, accounts for 14% of our energy-related CO2 emissions. 
  • It is also the most rapidly growing sector in the country. 
  • Therefore, moving towards a low carbon future would necessarily include accelerated decarbonizing of the transport sector.

Challenges

• Lack of financial availability:
  • The lack of availability of financing is one of the biggest impediments towards the decarbonization of the transport sector. 
• Shift to greener transport:
  • The deployment of low-carbon hydrogen is crucial and challenging to addressing the climate emergency, and to achieving a net zero, nature positive and equitable future for over 9 billion people to live well, within planetary boundaries, by 2050.
• Generating demand:
  • Raising awareness is a prerequisite to this. People need to be more educated on the same. The aggregation of demand by consumers can also send a much-needed demand signal to manufacturers.

Way Ahead

• Strategic investments and innovative financial solutions can kickstart an accelerated transition to 100% zero-emission motor vehicles, which is an essential takeaway from the COP26 declaration.
• Create an enabling environment for the financing of sustainable transport investments
• Climate proof of all new investments
• Eliminate all dirty spending
• Centre equity in all new investments and initiatives
• Raise awareness and coordinate to build capacity across the system
• Embed sustainability into strategic thinking, common methods, tools and standards across the finance system

Sources: PIB