Editorial 1: The private sector holds the key to India’s e-bus push

Context

If there is to be scale in the electric bus market in India, private sector participation is critical.

Introduction

In a major push toward achieving India’s climate targets, the Union Cabinet recently approved the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme, which allocates funding for electric vehicles (EVs) across many segments. This includes ₹4,391 crore for subsidies/demand incentives that support procurement of 14,028 electric buses in nine cities. This is an important move that strengthens the public transport sector’s shift to EVs. But private bus operators are left out of the subsidy framework, which raises concerns about the potential to scale electric mobility beyond State-run buses.

 

Public sector driven despite fleet size

• Electric bus deploymentin India: has thus far been driven by the public sector, which was supported with financial subsidies under the national Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME India) scheme.
  • Under FAME I, from 2015-19, 425 buses received approval for purchase subsidies, which rose to 7,120 buses
  • Under FAME II, which ran from 2019-24.
• Target entities for incentives:  The incentives were available to State and city transportundertakings, municipal corporations, and other public entities.
  • But public transport buses make up only 7% of the 24 lakh registered buses in India.
• Public vs. Private Buses: Indeed, despite private buses representing 93% of the buses in India, they are not yet included in any major national schemes or special incentive programmes.
• Private Sector Adoption: While a few leading private bus operators such as NueGo and Chartered Speed have electric buses in their fleets, the numbers remain small.
  •  If there is to be scale in the electric bus market in India, the transition of private buses is critical, and there are several areas where policy can help.
• Key challenges identified: A recent International Council on Clean Transportation (ICCT) study suggested that the limited availability of financing is a key hurdle for the uptake of electric buses by the private sector.
  • Higher perceived risk-return profiles,
  • high upfront costs, and
  • low perceived resale value of electric buses as collateral have made financing a challenge.
  • Uncertainty regarding battery life increases this perceived risk.

The hurdles

• Profitability Comparison: Studies show that electric inter-city buses can be more profitable than diesel buses over their service life.
  • High interest and loan instalment costs make them less financially viable during the loan period.
• Benefits for private operators: Despite this, private intercity bus operators in India could benefit greatly from electric buses, as they would offset rising fuel costs.
  • Intercity buses play a major role in India’s transport, with 22.8 crore passengers daily,
  • covering 57% of total ridership and
  • 64% of vehicle-kilometres.
  • 40% of intercity trips fall within the 250 kilometre to 300 km range that current electric bus models can cover on a single charge.
  • These operations are well suited for electric bus deployment.

Goals and Financing Solutions

• Electric bus replacement target: India aims to replace 8,00,000 diesel buses with electric ones by 2030,
• Favourable Financing Options: ICCT report has highlighted the potential of offering favourable financing options such as
  • interest subsidies and longer loan tenures to ease the financial burden.
  • credit guarantees, potentially rolled out through government banks and
  • other designated financial institutions, are a way to help reduce investment risks for financiers.

Infrastructure challenges

• Another key hurdle for private electric bus adoption is charging infrastructure.
• Charging Infrastructure Issues: FAME-funded facilities are limited to the depots of State transport units, and as 90% of private bus operators in India manage fleets of fewer than five buses, the high land and infrastructure costs can make investing in charging facilities economically impractical.
• Additional Challenges: Even if the required space of 70 square metres to 120 sq.m. is available, the high cost of land lease rental could severely impact the economic viability of charging stations.
  • Private intercity bus operators may also face challenges due to
    • power supply interruptions,
    • limited grid capacity, and
    • inadequate upstream infrastructure.

Solutions for accelerating adoption

• Infrastructure build up: To accelerate private-sector electric bus adoption, it is essential to develop shared public charging infrastructure within cities and on high-traffic highways, particularly key intercity corridors.
• Role of State governments: could lead the development by leveraging financial subsidies offered under the PM E-Drive scheme, which aims to subsidise 1,800 bus chargers.
• Role of State Governments: To encourage private investment, States could also offer additional fiscal incentives or structure tenders for shared charging infrastructure on a design-build-operate-transfer (DBOT) basis, and ensure viability through guarantees of minimum daily energy consumption per charger.

Way Forward: A business model worth following

• Another emerging business model, Battery-as-a-Service (BaaS), could reduce the high upfront costs of electric buses by separating battery ownership from vehicle ownership, as seen in China and Kenya.
• This model, along with battery swapping, has the potential to accelerate private electric bus adoption through usage-linked leasing and other solutions, such as Macquarie’s Vertelo platform in India.

Conclusion

To create scale and reduce costs in the electric bus market in India, promoting uptake in the private sector is crucial. As the government forges ahead in supporting the EV transition under the new PM E-DRIVE scheme, there are opportunities for policy in the areas of financing incentives, charging infrastructure, and innovative business models to help overcome barriers to electric bus adoption by private operators.

Editorial 2: Sustainability science for FMCGs

Context

FMCGs should be a priority target sector for ANRF, the new public-private partnership initiative, and the BioE3 policy of the government

Introduction

India’s new PPP initiative, the Anusandhan National Research Foundation (ANRF), established to promote research and development, and the recently announced BioE3 (Biotechnology for Economy, Environment and Employment) policy emphasise the need for academia-industry partnership; and the role of the bioeconomy in driving the economy while honouring India’s commitment to sustainable development and climate action. Specifically, the BioE3 policy notes the need to convert chemical-based industries to sustainable bio-based industrial models. It also provides an opportunity to revisit the impact of new technologies on existing industries such as Fast-Moving Consumer Goods (FMCGs).

 

Reducing palm oil in soap

• Contribution to Greenhouse Gas Emissions: The manufacturing of soap depends heavily on palm oil. About 90% of palm plantations are grown in Borneo, Sumatra, and the Malay Peninsula, where its lucrative production has led to replacing forested lands with palm oil fields.
• Dependency on Palm Oil: Although this deforestation has been well documented, replacing palm oil in soaps and other FMCG products has been difficult.
  • For one, palm has relatively higher yields as compared with other vegetable oils, making it more lucrative for farmers and cheaper for consumers.
  • Palm oil also accounts for about 40% of the global annual demand for vegetable oil.

Emerging Technologies for Replacement

• New  emerging technologies may provide avenues to replace or at least reduce palm oil consumption in soaps.
• Usage in Soap bars: Palm oil is the primary source of fatty acids that perform two functions in a soap bar —15-20% of the lower chain fatty acids contribute to the surfactant/cleansing function of the soap, while most of the longer chain fatty acids only provide structure to the bar.
• Synthetic biotechnologies: may be able to create artificial fatty acid chains that can replace the functionalities of palm oil, particularly those providing structure to the bar.
• The ‘structuring portion of the Total Fatty Matter’, which provides no consumer benefit, could be replaced with other local plant or bio-based materials such as plant-based polysaccharides.
• Germ protection: , with the total amount of ‘hard soap’ reduced, other benefit agents like antimicrobial peptides or other biologically active molecules could be added to the soap bar to improve its germ-protection function or preferably molecules which boost the skin’s immunity and provide germ protection.

Need for Support and Development

• Strong support from government and civil society.
• The development of solutions across the soap value chain, be it bio-based or bio-synthetic materials that could replicate the brick-and-mortar structure of the soap bar or packaging innovations that can reduce/eliminate plastic use.
• The recent PPP initiative under ANRF, linked seamlessly with the BioE3 policy, could support such partnerships through funding and by recognising the need to reinvent legacy products in addition to introducing new ones.

Locally grown palm oil

• Reliance on Sustainable Palm Oil: Until bio-synthetic or bio-engineered products become a reality, every day-use products like soaps will depend on domestic and international sustainable palm oil plantations.
• Government Initiatives: The Government of India launched the National Mission on Edible Oils-Oil Palm in August 2021
  • with the aim of increasing the oil palm production area to 10 lakh ha. and
  • boosting crude palm oil production to 11.20 lakh tonnes by 2025-26.
• Environmental Considerations: It is important that such plantations not only adhere to the policy of ‘No Deforestation, No Peat’, but that they are also carefully selected so that they don’t disrupt the surrounding biodiversity.
• A comprehensive ecological research programme to understand the long-term impact of these monocultures in the context of India’s biodiversity is also a strong need, along with regenerative agriculture practices, working with smallholder farmers.
• Economic Implications: The purchase of locally grown sustainable palm oil and investments in innovationto replace imported palm oil come at a cost, which, when borne by the company, may have to be passed onto the consumer.
  • In a competitive market, this can mean the loss of market share. Government support through funding for research or other fiscal incentives encourage such sustainable practices and help companies innovate in this space.

Need for Regulatory Support

• Creating a  false equivalency: Current toilet soap grades are decided based on the fatty material present in the soap.
  • This creates a false equivalency in the government’s and consumer’s mind that the higher the fatty material in the soap, the better the product’s quality and many publications disprove of this.
• Regulatory requirements for soap grades should move away from this old ‘vertical’ compositional standard based on a single material and embrace more horizontal and performance-based standards as those which exist in developed markets and incentivise newer technologies and methodologies linked to consumer benefit, product safety, and environmental sustainability.
• Consumer Awareness: Mandatory labelling of products on a sustainability scale based on their procurement and production practices can also help consumers make informed decisions.

Conclusion

The ANRF and the BioE3 policy are the right ways of moving towards a bio-based economy linked to a strong partnership between academia and industry. Products of everyday use might be a great first place to start, to make a real impact in terms of being both sustainable and self-reliant. To foster a sustainable soap industry, a multifaceted approach involving government support, regulatory reform, and consumer awareness is essential for transitioning away from palm oil dependency while protecting biodiversity.