New Delhi, August 20, 2024: Climate Policy Initiative (CPI) launched its latest report titled “Just Transition to Zero-Emission Trucking in India”. The report highlights the critical need for a fair and equitable shift towards zero-emission trucks (ZETs) in India, a move vital for meeting the country’s climate and air quality goals.

The road logistics industry in India is responsible for 4% of the country’s energy-related CO₂ emissions and 53% of particulate matter emissions. The sector will undergo a significant transformation with the introduction of ZETs. This transition will create a new demand for specialized skills in manufacturing and maintaining electric powertrains, batteries, and advanced electronics. At the same time, it is vital to ensure that the financial challenges faced by the disaggregated trucking sector, including informal sector job holders such as mechanics, are not exacerbated.

Mr. Arun Krishnan, Program Manager, Climate Policy Initiative and the report’s lead author, said, “A comprehensive approach is needed to address the social and economic dimensions of the shift to ZETs. Ensuring stakeholders in the current fossil fuel-dependent trucking industry are not left behind is critical. This includes stakeholders in the manufacturing and service sectors and trucking cluster-related stakeholders. A just transition for the trucking ecosystem will require a focus on equipping the truck manufacturing and services workforce with the necessary skills to adapt to the changes ahead. In addition, ensuring alternative livelihoods for those whose jobs are dependent on trucking clusters and who would be impacted by the transition is essential.”

Key Insights from the Report

1. With India’s truck fleet projected to grow four-fold by 2050, reducing emissions in this sector is essential for meeting the country’s climate targets. Transitioning to green mobility is also a public health imperative due to the transport sector’s significant contribution to harmful emissions.
2. Battery-electric technology is emerging as the most feasible solution for replacing internal combustion engine (ICE) trucks. However, transitioning to battery electric ZETs presents challenges, including higher total ownership costs and limited charging infrastructure. While the sector is expected to grow, driven by cost reductions and favorable government policies, a just transition will be critical to mitigate potential job losses.
3. The trucking industry in India employs millions across direct, indirect, and induced jobs. Adopting ZETs may lead to job losses, primarily in indirect jobs (ICE-related trades) and induced jobs (informal sector jobs in trucking clusters). Still, it will also create new opportunities in emerging areas. The co-benefits of adopting ZETs include reduced public health expenditure and improved quality of life, but a nuanced approach is needed to ensure an equitable transition.

Recommendations for a Just Transition

The report advocates for a people-centric transition that does not exacerbate existing inequalities. Policy and financial interventions should focus on the needs of direct, indirect, and induced workers, emphasizing training, reskilling, and job placement programs. Particular attention should be paid to communities impacted by trucking activities, particularly those near major transportation corridors, which may bear a disproportionate burden of the transition.

CPI recommends establishing a Just Transition Fund for India (JTFI) under the Ministry of Skill Development and Entrepreneurship (MSDE). This fund could leverage existing government schemes, such as the Pradhan Mantri Kaushal Vikas Yojana for skilling and the Pradhan Mantri MUDRA Yojana for loans, to finance reskilling programs and support alternative livelihoods for those unable to transition to new roles in the industry.

The report lays the groundwork for calculating the socioeconomic costs and investment requirements for a just transition to ZETs in line with India’s climate goals. The next steps involve identifying impacted stakeholders, designing targeted policy responses, and developing financial instruments to address their needs. Obtaining stakeholder feedback will be crucial for securing buy-in and refining intervention designs through pilot programs. Ultimately, a just transition financing facility can channel the necessary finance to support a fair and equitable transition to zero-emission trucking.

About Climate Policy Initiative

CPI is an analysis and advisory organization with deep expertise in finance and policy. Our mission is to help governments, businesses, and financial institutions drive economic growth while addressing climate change. CPI has seven offices around the world in Brazil, India, Indonesia, South Africa, the United Kingdom, and the United States.