After assuming the grouping’s presidency, India poised to steer G20 conversation towards transition to e-mobility, zero emission economies
The G20 nations represent 85% of the global GDP and 75% of trade worldwide, and in most of them, the trucking sector is central to the country’s economic growth as it fulfils the daily needs of business and consumers by moving most of the freight.
In a fast developing economy like India, the freight transportation sector moves 4.6 billion tonnes of goods annually at present. In this context, the G20 grouping also is central to issues related to the decarbonisation of freight and trucks, which despite accounting for only 4% of the on-road fleet globally, are responsible for 27% of the greenhouse gas emissions.
As India hosts a series of meetings on various sectors, including logistics, after assuming presidency of the powerful grouping from December 1, 2022, to November 31, 2023, it can play a crucial role in steering the G20 to act as an anchored pillar to encourage and facilitate global efforts towards Zero Emission Truck (ZET) transition, given the toll they take on the environment and health of citizens.
It is time for the members of the intergovernmental forum, which represent about two-thirds of the world population, to mobilise finance, deploy suitable charging or refuelling infrastructure and promote research innovation as well as knowledge exchange to foster the ZET ecosystem in G20 countries.
Fig 1: India assumed G20 presidency from December 1, 2022, to November 31, 2023
G20's role in ZET transition
Some of the G20 nations like the US and China have started realising the benefits of switching to ZETs and have introduced policies to enable this transition. This has led to a rise in ZET sales. The powerful grouping presents an opportunity for cross learning and collaboration to fast-track ZET deployment, given that the number of electric trucks stood at merely around 320,000 in 2022 globally. Their number is expected to grow to only 3.5 million by 2030. In contrast, the number of ICE trucks on the roads today stands at xxx.
To begin with, the G20 needs to create a global narrative on the urgency and need to switch to ZETs. There is also a stronger case to be made around its environmental and economic benefits that may help instil confidence in policymakers and industry players towards the transition, says recent report. The group can also provide policy recommendations and financing solutions.
The G20 nations, comprising 19 countries, including Argentina, Australia, Brazil, Canada, China, India, the US, and the UK, and the European Union can facilitate a multinational forum to start collaborative discussions among different groups, given the vast ZET value chain spanning a myriad of stakeholders and their interests.
The G20 can also promote research in sustainable mineral exploration, processing, and recycling to increase the availability of critical minerals. In addition, it can facilitate research in co-developing new battery chemistries, building energy-efficient ZETs, and promoting global standards for charging infrastructure. This apart, sharing learnings and experiences from the deployment of early ZET pilots within some G20 nations can accelerate this transition.
To further enhance the supply of ZETs, the focus must be on ensuring the availability of essential minerals,batteries and fuel cell components. The majority of this supply chain is concentrated in a few regions across the globe, so focusing on circularity and recycling of these materials can help diversify the supply chains and mitigate risks related to raw material availability and costs.
The G20 can take various measures, including hosting a forum for global truck OEMs, enhancing the opportunities for a circular economy and recycling materials, among others actions to create an effective supply chain ecosystem. India did update its battery recycling rules in August 2022 to mandate Extended Producer Responsibility, under which the battery manufacturers must recover all their batteries and recycle them.
Fig 2: Some nations have started realising the benefits of switching to ZETs
What does the G20 stand to benefit from this transition
Amongst theG20 economies, actions to ensure that all new HDVs are either ultra-low or zero-emission could avoid 3 million premature deaths through 2050. This is equivalent to 5 trillion USD in health benefits, another recent analysis showed.
The magnitude of these benefits would be greater with an accelerated transition to HD ZEVs. Regional studies from the United States, European Union and India have corroborated the large-scale air quality and health benefits of transitioning to zero-emission HDVs in ZEVTC markets.
HDVs are the main contributor to exhaust emissions and health effects, accounting for 86% of on-road diesel nitrogen oxides (NOx) emissions in 2015 in G20 economies. Besides the impact on air quality and public health, black carbon (BC) from diesel engine exhaust severely affects the climate as the particles produce significant near-term climate warming.
Expanded implementation of world-class standards in G20 countries in the 2023–2025 timeframe would substantially reduce HDV exhaust emissions and associated health impacts. Whereas NOx emissions are projected to increase by as much as 60% in countries yet to adopt them, expanded world-class standards could instead reduce NOx concentrations by 45%–85% over the next two decades.
Fig 3: Rapid transition to ZET has immense environmental, health benefits (Photo by Prasanna Mohanty)
Challenges for ZET transition in developing G20 economies
In developing nations including India, trucking demand is growing steadily, driven by the increase in economic output. However, the nascent ZET market faces key challenges, such as the lack of demand and supply, limited infrastructure, and the dearth of affordable finance and supportive policies.
Transportation cost is one of the key components of overall logistics costs and reducing this through ZETs can significantly lower logistics costs. This is crucial for developing countries where this expense can make up a large portion of the GDP.
In India, Indonesia, and Brazil, logistics costs account for 14%, 23%, and 12% of the GDP, respectively, which is much higher than the 8% and 10% average in developed nations. ZET adoption in India could reduce this share to 11.5 percent, leading to significant fuel cost savings.
The ZET market in most developing economies is nascent, with limited or no models available at the moment. Of all the medium and heavy ZET models available globally in 2022, 92% were in China, North America, and Europe, while India and Mexico contributed to a mere 5% of the total availability. This clearly indicates a lack of long-term policy and associated incentives that needs to be addressed urgently.
The lack of a dense network of charging and refuelling stations and power access in addition to reliable electricity supply limits the operational feasibility of ZETs. Similarly, low-carbon hydrogen’s share in total hydrogen production globally is just around 1%. Lastly, financiers too remain sceptical about ZETs’ technology performing at par with the internal combustion engine, leading to increased costs of borrowing and limited access to debt financing.
Apt time for India to take lead in ZET transition conversation
The freight and logistics sector in India provides direct employment to more than 22 million people and is estimated to be worth $160 billion. This sector in India moves 4.6 billion tonnes of goods annually at present and uses around 5.5 million trucks.
India is hosting the meetings and summit of G20, and therefore has the podium to play a crucial role in shaping and strengthening global architecture and governance on all major international economic issues. This could not have been more timely, as the world is undergoing great economic stress and there is a substantial risk to all the progress that has been made on climate action under increasingly polarised economic blocks.
After assuming the presidency of the grouping, the world's fifth largest economy thus has a great chance to test its growing clout globally by taking centre stage and steering the conversation towards achieving low carbon economies, which will include sectors like e-mobility transition and decarbonisation of the ever-growing freight sector.