The Union Minister for Environment, Forest and Climate Change emphasized the critical role of decarbonizing the transport sector to reduce Greenhouse Gas (GHG) emissions and achieve the ambitious net-zero emissions target by 2070 set by the Government of India. Speaking at a side event on the India-US “Payment Security Mechanism (PSM)” for e-buses, the Minister highlighted the significance of transitioning to electric vehicles (EVs), particularly electric buses, to achieve these environmental goals. A press release on the event was issued on December 9, 2023.
The Minister noted that buses, serving the mass public, play a crucial role in decarbonizing the transport sector. However, the transition to electric buses poses challenges for Public Transport Authorities (PTAs) due to high upfront costs and lower revenue realization from operations. The India-US PSM for e-buses aims to incentivize Indian and international Original Equipment Manufacturers (OEMs) and bus operators to participate in e-bus operations and potentially establish a manufacturing hub in India, contributing to the growth of the e-bus industry and exports.
During the event, the Minister reminded the audience of the India-US Government Joint Statement, released during Prime Minister Shri Narendra Modi’s visit to the USA, outlining the intention to develop a “Payment Security Mechanism (PSM)” to facilitate the deployment of 10,000 made-in-India electric buses. This commitment was reaffirmed during India’s G20 Presidency, emphasizing the importance of reducing carbon emissions in the transport sector.
The Minister also expressed confidence that the PSM scheme would encourage private sector participation in the procurement and operation of e-buses over an extended period of 10 to 12 years, fostering their adoption throughout India. He stated, “PSM scheme represents a comprehensive strategy to address financial uncertainties, fostering widespread and sustainable adoption of e-buses not only within India but also on a global scale.”
Secretary John Kerry, US Special Presidential Envoy for Climate, emphasized the significance of the PSM in helping India electrify its bus fleet and taking an Indian solution to maximize opportunities for decarbonizing the transportation sector. India’s ambitious plan involves electrifying its existing bus fleet of 1.5 million, most of which currently run on diesel. The large-scale adoption of e-buses, supported by the PSM, is expected to contribute significantly to achieving the target of 50,000 e-buses, with 12,000 already in different stages of contracting.
The collaborative effort aims to establish a payment security mechanism with contributions of $240 million from the Government of India and $150 million from the US government and their partners. The PSM seeks to guarantee delayed payments from financially constrained state bus companies, unlocking up to $10 billion in non-recourse lending to e-bus manufacturers in India to deploy 38,000 buses.
The session concluded with joint commitment of India and the US to drive a structural change in the transportation sector through the widespread adoption of electric vehicles.