Role of Carbon Pricing in India’s Transportation Sector: Energy Consumption and CO2 Emissions

Decarbonization of the transport sector is an urgent need to combat the challenges of ever-increasing energy or fossil fuel demands, environmental emissions, and air pollution. Carbon pricing in transportation has emerged as an efficient instrument that can effectively reduce fossil fuel use. The present study investigates the long-term impacts of carbon pricing in the transport sector within passenger mode in India. GHG constraints are provided exogenously in the CO2 policy scenario, and the energy model calculates carbon tax accordingly. An integrated assessment model—the Global Change Assessment Model (GCAM)—is used to develop a comprehensive transport energy model and analyze various parameters such as service demand, energy mix, and long-term CO2 emissions of India’s transport sector. The results indicate that the passenger transportation sector in India will remain strongly dependent on fossil fuels, and the share of four wheelers (4W) will rise more than 80% over the century without any significant policy interventions. However, after imposing the carbon price, the share of electricity will increase from 8 to 69% compared to the baseline scenario in the year 2070 while minor change occurs in model shift/service choice. Furthermore, the role of electric vehicles is expected to be the most effective mitigation option for achieving net zero by the year 2070. The study highlights that carbon pricing leads to the imposition of a very high carbon tax (178.33 1990$/tC, 1605.69 1990$/tC, and 1861.77 1990$/tC for year 2050, 2070, and 2100, respectively) to achieve the net zero emissions target. Furthermore, other policy intervention pathways need to explore along with carbon pricing.