Optimal investment strategies for decarbonizing the Indian private road transport sector

Abstract

The Indian government's COP26 emission reduction target has led to explore strategies to decarbonize India's private road transport sector. Adoption of novel vehicle options such as E85, electric, and CNG vehicles and strong network of public transportation are expected to reduce the emissions significantly. A system dynamics model for India's private road transport sector has been developed previously. This study expands that model by incorporating the dynamics between public and private road transportation and uses it to identify strategy for optimal incentive allocation for novel vehicle adoption to minimize the GHG emissions. The idea of epsilon-constraint method for multi objective optimization has been used in this work. The results suggested a trade off between investment in incentives and reduction in GHG emissions. Incentivization strategy prioritized electric cars and two-wheelers, as well as charging/CNG stations, to discourage the adoption of petrol vehicles till CNG infrastructure was established. The minimum GHG emissions achieved was 535.5 Mt CO2e by 2050 with an investment of 137.74 trillion Indian Rupee when public transportation was not considered. Upon considering public transportation, the minimum GHG emissions further reduced to 464.5 Mt CO2e by 2050 with reduced investment of 128.25 trillion Indian Rupee, indicating greater emission reduction benefits per unit investment. However, beyond a certain threshold, increase in public transportation resulted in increased incentive investment due to a feedback effect. This necessitates incorporating dynamic analysis into policy strategy. Other strategies such as carbon tax and renewable share in electricity grid proves very effective in reducing GHG emissions as well as incentive investments. However, despite reducing emissions COP26 emission target for 2030 was missed by 34%. Banning the purchase of new petrol and diesel vehicles, along with restrictions on the use of existing petrol and diesel vehicles, could help bridge this gap.