India Races Forward in Electric Cars
(Bloomberg Opinion) -- This hasn’t been the best of years for those of us who worry about climate change. The U.S. administration has firmly turned against emissions controls. State backing for construction pushed China’s emissions higher. And, far from peaking or even stagnating, worldwide emissions actually increased at the fastest rate in the past seven years, according to the Global Carbon Project. The longer term prospects don’t look great, either, with the developing world -- led by China and India -- still firmly addicted to coal. However, I’m holding on to one piece of good news that’s emerged in the past week: It looks like India is serious about electric vehicles.
Now, promises from India’s government usually don’t mean a whole lot. The government has a tendency to set targets it calls “aspirational” and which are so ambitious that officials get points just for trying. It looked for awhile like plans to electrify India’s fast-growing fleet of cars would meet the same fate. The minister in charge of transport famously declared that India’s roads would be all-electric by 2030, only to have his promise humiliatingly walked back by colleagues within months. The new target -- for 30 percent of all vehicles to be electric by 2030 -- seemed more than ambitious enough, especially given that India’s powerful automakers have over and over again demonstrated their ability to block or delay any regulations meant to address climate change.
It’s in this context that the government’s draft policy for the infrastructure needed to support an electric fleet is a surprising and refreshing change. India’s legacy carmakers have long moaned about the lack of charging infrastructure being a major reason why they wouldn’t invest in producing electric vehicles. For once, India’s bureaucrats might not crush an emerging sector by over-regulation. In fact, most of the rules they’ve proposed are meant to insulate charging stations, say, from bad regulations in other fields.
For example, the draft suggests that the price of electricity at charging stations shouldn’t be more than 15 percent higher than the average cost of supply for their location. Interestingly, public charging stations have been promised “open access” -- a term with fraught echoes in Indian economic history. Back in the early 2000s, the government tried to reform the power sector by saying that all consumers, anywhere, could shop around for the lowest tariffs available and then buy from that electricity provider, even if their local utility charged a lot more. The policy got tied up in litigation and was never really properly implemented. If power for electric vehicles manages to change that, it wouldn’t just help build an electric fleet — it might force reform in India’s power sector.
The fun part, in my opinion, is a nifty little loophole that the designers have -- perhaps deliberately -- left in the draft. People setting up charging stations won’t need a license; anyone can do so. And domestic users will be allowed to charge electric vehicles at the electricity tariffs appropriate for households.
In India, that means everyone will be charging everyone else’s vehicle as long as they can take a little bit off the top. This is exactly how new technology spreads here. Long before we all had mobile phones, the telecommunications revolution had already begun because of tiny little kiosks, mostly unlicensed, that sold long-distance phone calls. In India, the crucial constraint for charging stations would normally be getting hold of enough land to park cars for the time it takes to charge them. If anyone with a bit of spare space and an electricity connection can run a low-cost charging station, you might be able to solve that problem.
The plans aren’t perfect; the technical requirements for a public charging station appear excessive, for example. But, as long as those restrictions are changed in keeping with the laissez-faire instinct that appears to inform the rest of the rules, things should work out.
There are lessons worth taking home from this. First, while the future of climate change will be determined by India -- nothing any other economy will do matters if India decides to climb up to prosperity the same emissions-heavy way everyone else has -- failure isn’t preordained. This country still has the ability to surprise us all. All it needs to do is bulldoze through the self-serving objections of interest groups such as its unlovable car companies.
More important, it’s worth remembering that combating climate change isn’t always about new regulations. Often, it’s about ensuring that rules new and old aren’t inhibiting the spread and uptake of new technology. We’ve been trying to fight climate change the way China has developed -- through giant, centralized endeavors. That’s failing. Perhaps we should think instead about doing it the way India develops: through individual initiative, micro-enterprise, and strategic deregulation.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Mihir Sharma is a Bloomberg Opinion columnist. He was a columnist for the Indian Express and the Business Standard, and he is the author of “Restart: The Last Chance for the Indian Economy.”
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