The Role of Policy and Infrastructure in Promoting LNG and EV’s in Commercial Fleet
By Anirudh Bhuwalka
India, one of the fastest-growing economies in the world, is witnessing significant transformation in its transportation sector. The rapid urbanisation, burgeoning middle class, and increasing demand for goods and services have spiked demand for commercial transportation. Traditionally, this demand has been met by vehicles powered by diesel and petrol, which have added to the air pollution and greenhouse gas emissions. Hence, the need for sustainable and eco-friendly transport solutions is more pressing than ever, driven by rising pollution levels and the global mandate to reduce carbon emissions.
In response to these challenges, the Indian government has been actively exploring and promoting sustainable fuels and technologies. Among these, Liquefied Natural Gas (LNG) and Electric Vehicles (EVs) have emerged as promising alternatives for commercial fleets. However, the widespread adoption of LNG and EVs in commercial fleets hinges on robust policy support and infrastructure development. The Indian government, recognizing the dual benefits of reduced environmental impact and enhanced energy security, has enacted a series of policies aimed at driving rapid adoption of these alternatives. Simultaneously underway is the process of developing the necessary infrastructure, such as charging stations for EVs and fuelling stations for LNG to support this transition.
Policy Impetus Driving LNG and EV Adoption
At the forefront of promoting the adoption of LNG and EVs in commercial fleets are government policies. Emission standards, tax incentives, and fuel mandates play pivotal roles in incentivising fleet operators to transition towards cleaner alternatives. Stringent emission standards act as catalysts for innovation, pushing manufacturers to develop cleaner and more efficient vehicles. Tax incentives, such as rebates and credits, help mitigate the upfront costs associated with purchasing LNG-powered trucks or EVs, making them more financially viable for fleet owners. Additionally, fuel mandates set targets for the use of alternative fuels like LNG, creating a market demand that stimulates investment in infrastructure and technology.
To support LNG for commercial transport application, the Indian government modified Central Motor Vehicles Rules 1989 in 2017 to include LNG as a transport fuel. In addition, an amendment to Petroleum and Natural Gas Regulatory Board (PNGRB) Regulations 2008 has included LNG fuel stations under the definition of natural gas stations. NITI Aayog, the government think tank, has proposed a range of financial and non-financial incentives to encourage the adoption of LNG in medium and heavy commercial vehicles. These measures aim to reduce carbon dioxide emissions and support the national objective of transitioning to a gas-based economy by increasing the share of natural gas in the primary energy mix to 15% by 2030.
Accelerating Infrastructural Growth
Following NITI Aayog’s recommendation, the Indian government has approved expanding LNG use in transportation by creating a dedicated policy to promote LNG as a transportation fuel. This greenlights LNG to be used in commercial transportation as it is particularly beneficial for long-haul road transportation. Consequently, infrastructure development becomes crucial in transitioning commercial fleets to LNG and EVs. Investing in LNG and EV infrastructure is essential to alleviate range anxiety and ensure seamless fleet operations. Strategically placing refuelling and charging stations along major transportation routes is vital to support long-haul journeys and efficient logistics.
India currently has four terminals capable of receiving LNG, importing around 20 million tons of the fuel annually. The government plans to build 11 more terminals over the next seven years. LNG is imported under an open general license with terms agreed upon between buyers and sellers, and it is traded domestically based on market mechanisms. For LNG trucks to operate efficiently, a network of readily available refuelling stations is essential. Governments can incentivize private companies to invest in building LNG stations along major transportation corridors and co-locate LNG stations with existing truck stops to enhance accessibility.
Finding Collaborative Solutions
By leveraging the strengths of both public agencies and private enterprises, Public-Private Partnerships (PPPs) facilitate collaboration, resource-sharing, and risk mitigation. Successful partnerships between government agencies, fuel providers, and commercial fleet operators have been instrumental in overcoming the barriers to infrastructure development. These collaborations often involve joint investment ventures, wherein the government provides funding support and regulatory incentives, while private entities contribute expertise and capital.
PPPs allow governments to share the financial burden of infrastructure development with private companies. This can unlock much-needed investment, especially in the initial stages of building an infrastructure network. Governments bring regulatory expertise and policy knowledge to the table, while private companies contribute operational know-how and experience in managing fuelling stations and charging networks. PPPs can foster innovation in infrastructure design and operation. Collaborative efforts can lead to the development of more efficient refuelling stations, faster charging technologies, and optimized network management systems.
Charting a Greener Course: Future Outlook
In conclusion, the role of policy and infrastructure cannot be overstated in promoting the adoption of LNG and EVs in commercial fleets. Government incentives and mandates create demand, while comprehensive infrastructure enables widespread use. Rapid advancements in battery and LNG technologies are transforming EVs and LNG-powered vehicles into viable long-haul options. Stricter emissions regulations and ambitious climate goals are accelerating the shift to cleaner transportation. As the world urgently moves towards decarbonizing the transportation sector, the emphasis on sustainable fuels and technologies grows stronger. Through innovation and collaboration, we can pave the way for a greener, more sustainable future in transportation.
(The author is Anirudh Bhuwalka, CEO, Blue Energy Motors, and the views expressed in this article are his own)
