Navigant Research Blog

Driving Green in India

— December 31, 2015

Beijing’s infamous smog attracts more media attention, but there’s another city that holds the title in terms of pollution. The World Health Organization (WHO) dubbed Delhi the world’s most polluted city based on data from 1,600 cities collected between 2008 and 2013. How bad is the city’s air pollution problem? The WHO found that levels of PM2.5 (particulate matter under 2.5 microns) in Delhi were 15 times the maximum advised level. Delhi is not alone; Indian cities scored 13 spots in the WHO’s assessment of the 20 most polluted cities in the world.

So why does Beijing attract more attention? It’s partly due to China’s economic power, and partly due to its emergence as a global power and its leaders’ evident interest in expanding the country’s influence in global affairs. China declared its first ever red alert warnings in Beijing in early December, right in the middle of the Paris climate change talks, where China played a central role in the agreement negotiations. The pressures on India are somewhat different, as India has not taken quite the same high profile approach to global economic, environmental, or diplomatic debates. China has also been ahead of India in monitoring its pollutants. However, Indian political leaders are increasingly feeling the need to address the problem, especially as outside agencies such as the WHO catalog the issue.

Sources of Pollution

Vehicle emissions are a major contributor to India’s pollution problem, but the country’s vehicle emissions regulations lag behind those in Europe and North America, and it has seen little adoption of cleaner fuel vehicles. We are now seeing Delhi embracing brute-force mechanisms to control vehicle emissions, including vehicle bans and driving limitations. From January 1 to 15, drivers in Delhi will only be allowed to drive on alternate days. Given the number of exceptions, the policy may have limited impact.

India is also ending its recent—and relatively short-lived—love affair with diesel. India’s favorable taxation rates for diesel meant it was cheaper than gasoline, and the country saw diesel vehicles reach 50% or higher of new passenger car sales in the past 5 years. Diesel fuel is now back closer to parity with gasoline, so gasoline vehicle sales are rising. India was also touched by the Volkswagen (VW) diesel emissions scandal. VW will have to recall over 300,000 diesel vehicles that were found to be emitting more than is allowed under Indian regulations—regulations that were already much less stringent than European and U.S. standards. This spells trouble for diesel in India, with the capital region already declaring bans or restrictions on various types of diesel vehicles.

India is going to have look increasingly to alternative fuels to help reduce vehicle emissions. In Delhi, taxis and ridehailing services like Uber must switch to natural gas. India is also looking to spark adoption of hybrid and electric vehicles.  The Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) program provides subsidies for hybrid and plug-in cars, buses, scooters, and rickshaws through 2020. The government’s goal is to have around 6 million electric or hybrid vehicles on the road by 2020. While only the goal for passenger cars is just 8% of the 6 million, given the anemic sales of hybrid and electric cars to date, even that will be challenging. Navigant Research estimates that sales of hybrid and electric cars make up less than one-fifth of 1% of the current passenger car market in India. India will have to significantly ramp up domestic manufacturing of hybrid and electric vehicles and offer additional incentives to be able to reach this goal.


Why Africa, and Why Now?

— December 31, 2015

As I noted in a previous blog on the Paris Climate Summit, it is estimated that over one-fifth of humankind lacks modern energy services. According to the United Nations (UN), 78% of people residing in rural areas are often served by primitive energy systems that spew carbon into the atmosphere.

I would argue that Africa is uniquely positioned to determine the success of the COP21 goals. The proximity of Africa to Europe, which has historically funded a variety of programs for former colonies, is one major reason for the continent’s pivotal role in limiting climate change. Others factors include nomadic populations not concentrated in dense pockets (as is the case in India) that support more centralized infrastructure solutions. For example, even microgrids are a challenging value proposition here for the majority of indigenous peoples in Sub-Saharan Africa. As a result, nanogrids seem to be favored by funders for bottom of the pyramid (BOP) deployments since they are seen as less risky and can reach potential consumers quicker.

A variety of both binding and aspirational goals is expected to affect the remote power supply market opportunity, with activity likely to increase over time for both microgrids and nanogrids. The following sampling of programs and projects are expected to help drive this overall market forward:

  • The UN’s Sustainable Energy for All initiative (SE4ALL), launched in 2011, set goals for ensuring universal access to modern energy services; doubling the share of renewable energy; and doubling the global rate of improvement in energy efficiency in buildings, industry, agriculture, and transport by 2030. More than 70 governments worldwide have been engaged in this effort with over $50 billion pledged to realize these goals.
  • Energy Africa consists of 14 African countries that have pledged to bring solar energy to the 620 million people living in the African continent that currently lack access to electricity.
  • The African Development Bank aims to mobilize $55 billion in private funding under its New Deal for Energy in Africa program designed to eliminate Africa’s energy deficit by 2025.
  • Powering Africa, launched by the U.S. Agency of International Development, has pledged $7 billion to help bring power to Sub-Saharan Africa.

The recent Paris Climate Summit is building on this momentum and accelerating funding. The African Renewable Energy Initiative increased a previous target of 10 GW of renewables by 2020 to 300 GW by 2030. Among the funders of this new venture are The World Bank ($16 billion) and the Green Climate Fund ($100 billion).

This long list of programs implies adequate support for energy access in Africa via cleaner power sources that produce less carbon. Of course, one could turn this assumption on its head. The plethora of programs speaks to the need for subsidies to make such ventures economic. According to a recent report from Navigant Research, the Middle East & Africa region is expected to be the global market leader in remote power. Project implementation revenue is forecast to exceed $4.7 billion in 2015 and increase to more than $11.0 billion by 2024, edging out the Asia Pacific region both at the start and the conclusion of the forecast horizon.

Annual Remote Market Capacity and Revenue by Region, World Markets: 2015-2024

Peter Blog Dec 30


(Source: Navigant Research)

So why Africa? Because it is the most difficult market for energy access. Why now? Because the Paris Climate Summit put a spotlight on Europe’s leadership role in combating carbon, both at home as well as on its neighboring continent.


Renewed U.S. Tax Credit Gives E-Motorcycle Market a Boost

— December 29, 2015

An important federal tax credit for electric motorcycles (e-motorcycles) expired at the end of 2013, but has just been reinstated as part of the enormous $1.1 trillion spending package approved by Congress in December 2015. The federal tax credit will offset 10% of the purchase price for qualifying plug-in two- and three-wheel vehicles (must have a top speed of at least 45 mph and a 4 kWh battery or larger). The maximum credit available to consumers will be $2,500 and the credit will apply retroactively to all e-motorcycle purchases since January 1, 2015.

This effort, reportedly spearheaded by California-based manufacturer Zero Motorcycles and non-profit Plug In America, will likely serve as a sales boost for the e-motorcycle industry in the United States. However, e-scooters and e-bikes do not receive the same tax advantages since these technologies generally have a top speed limit of 30 mph and 20 mph, respectively. So why are lower speed electric vehicles (EVs) left out of the incentive regime?

Highway-Capable and Gas-Powered Vehicle Replacement

Part of the reason is likely due to the fact that only on-road or highway-capable vehicles are considered to be worthy of tax credits, based on the larger volume of emissions being avoided from these vehicles. Another explanation specific to e-bikes may be that the technology is seen as replacing bicycles (already a clean technology), not cars. However, this assumption may not be entirely accurate.

A consumer survey conducted by the Oregon Transportation Research and Education Consortium (OTREC) demonstrates that the primary reason respondents bought e-bikes was to replace some car trips (see Figure 1 below). Additionally, the main reason cited by respondents for using an e-bike was to commute to work or school (see Figure 2). The survey from OTREC suggests that e-bikes are used for commuting and to replace car trips much more than lawmakers think or even recognize. Speaking from personal experience, my e-bike replaced both my traditional bicycle and my gasoline-powered car—with the primary purpose of using the e-bike as a commuting vehicle.

While the tax credits are welcome news for the e-motorcycle industry, e-scooters and e-bikes continue to be under-incentivized and under-utilized technologies in the United States. If the primary goal of tax credits for all EVs is to replace or reduce the number of gas-powered vehicle trips, then e-scooters and e-bikes should be considered in the future.

Figure 1: OTREC Survey Respondents’ Primary Reason for Purchasing an E-Bike

Ryan Blog Fig 1

(Source: Oregon Transportation Research and Education Consortium)

Figure 2: OTREC Survey Respondents’ Main Purpose for E-Bike Trips

Ryan Blog Fig 2

(Source: Oregon Transportation Research and Education Consortium)


A New Year and Newfound Potential for Data-Rich Buildings

— December 28, 2015

The perfect storm to realize the promise of the intelligent building is upon us. New policies on climate change and stakeholder demands for sustainability that will redefine best-in-class standards for commercial buildings have arrived, and building owners now have an opportunity to invest in intelligent building solutions that can transform their facilities and meet these changing demands. The result is a new set of competitive differentiators wherein dynamic facility operations optimize energy consumption and maximize comfort, along with a new market outlook for Class A commercial buildings in which owners and investors can realize economic benefits alongside stakeholder satisfaction.

Climate Change Pressures

At the end of 2015, the international convention on climate change orchestrated by the United Nations, or COP21, started a new chapter for the intelligent building history books. The Paris Agreement calls on 195 countries and the European Union to execute a global strategy for greenhouse gas (GHG) emissions reductions. So how does this trickle down to the commercial facility, and what does it mean for intelligent buildings? According to the U.S. Environmental Protection Agency (EPA), commercial and industrial buildings contribute about 45% of the total GHG emissions generated in the United States. As a result, energy efficiency represents a tremendous opportunity for climate change mitigation.

Stakeholder Demands

Policymakers, shareholders, activists, and forward leaning corporations are taking the helm in directing transparency on climate risk disclosures. At the end of October, 32 members of Congress sent a letter to the Securities and Exchange Commission (SEC) urging stronger enforcement and commitment to the 2010 SEC release 33-9106, “Commission Guidance Regarding Disclosure Related to Climate Change.” During that same month, 81 companies signed the American Business Act on Climate Pledge to showcase their commitment to climate change mitigation with goals as ambitious as up to 50% emissions reductions. In addition, to link back to the intelligent buildings market specifically, the evolving workforce is increasingly demanding sustainable and technology-driven workspaces. According to the Pew Research Center, 2015 marked a generational tipping point, with Millennials now representing the largest share of the U.S. labor force. This next generation in leadership brings a mind shift in priorities and expectations. Hosts of surveys have highlighted Millennials’ innate reliance on technology for all aspects of their lives and how this translates into expectations in the workplace. These workers also prioritize sustainability when evaluating career opportunities. This combination of a technology and sustainability mindset is expected to drive facilities industry leaders toward investment in intelligent building systems.

Economic Benefits

Economics are still the bottom line, and Navigant Research suggests that investment in advanced sensors, analytics, and services will help transform facilities into intelligent buildings, meet growing stakeholder pressures, and deliver economic benefits. The increased proliferation of the Internet of Things (IoT) is enabling the cost-effective deployment of intelligent building solutions that create a data-rich environment for improving facility operations. In addition, the intelligent building is optimized in terms of energy consumption for significant reductions in GHG emissions; these buildings also provide unprecedented transparency for monitoring sustainability, measuring cost savings, and integrating technology into facility management and the occupant experience.

Want to know more about our expectations for building innovations the coming year? Check out the new Navigant Research report, Intelligent Buildings: 10 Trends to Watch in 2016 and Beyond.


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