Govt body NRDC suggests mandatory policy framework for zero emissions

An organisation under the Ministry of Science and Technology has recommended a portion of a vehicle manufacturer’s annual sales, to be set each year, should be zero-emission vehicles (ZEVs).

 

The National Research Defence Council (NRDC), a body which is under the Ministry of Science and Technology and which, with the Ministry of Heavy Industries, works on environmental solutions, in its report released on Wednesday, has made the proposal, which is in line with the government considering a shift in its policy framework for increasing electric-vehicle (EV) penetration by moving from incentive-based support and subsidies under Faster Adoption and Manufacturing  Electric (and Hybrid), or FAME, to supply-side regulation.

 

ZEV credits will be calculated based on the difference between the ZEV-mandated requirements and the number of vehicles sold by the manufacturer.

 

If the difference is positive, each additional ZEV sold will earn one credit. Those who fall short of their target will have a deficit. 

 

Manufacturers will be allowed to trade in credits. Those in deficit can buy from those who have credits to sell.

 

The move comes on the heels of the NITI Aayog just a week ago endorsing a similar view, saying that till now the EV policy has been based on incentives, which include FAME subsidies on EVs, besides original equipment manufacturers receiving benefits under the production-linked incentive scheme.

 

The NITI Aayog has pointed out that though ₹45,000 crore has been spent in the past 10 years on incentives, the penetration of EVs has reached only 7.6 per cent when all vehicles are considered. 

 

It has argued that continuing incentives is not enough if one wants to reach the target of 30 per cent in the next five years.

 

So there is a need to shift to gentle mandates and disincentives so as to signal the required direction more firmly.

 

The NRDC has justified a new model by bringing out the fact that in each segment the penetration of EVs is far behind even the moderate projections made by the government and experts. For instance, in two-wheelers, electric penetration in FY25 was 6.15 per cent of sales with four companies at zero.

 

In the passenger car space, the penetration is an abysmal 2.59 per cent with eight companies showing zero to below 1 per cent penetration.

 

Among light-goods vehicles it is only 1.01 per cent and among buses 5.5 per cent.

 

Only in three-wheeler rickshaw sales has the penetration hit 23.72 per cent.           

 

The NITI Aayog has focused, among other things, on supply-side mandates, where a certain share of the production would be ZEVs, set stringent emission standards, and imposed higher input price on ICE (internal combustion engine) vehicles, making them more expensive.

 

It has suggested mandating a certain percentage of the vehicles of a fleet operator be electric.

 

The think tank has endorsed the NRDC’s view that in four-wheelers a certain percentage of vehicles should be mandated for EV sales.