Can we afford not to change? Can we afford the change?
The to-be-or-not-to-be question of our age. Given the crisis that confronts us—inequality and poverty in our immediate midst and growing climate insecurity in our world—we have no choice but to change. But how will this change be afforded? If we cannot find an answer to this one, what we will get is a lot of talk and little action. In fact, we will regress, literally and deliberately.
Take the public transport challenge. Today, everybody agrees we need a massive transition towards buses in our cities. Because of pollution, congestion and because, in our cities, cars have not replaced buses, only marginalized them. As much as 40-60 per cent of the people in rich and poor, old and new cities use some form of public transport. Yet, increasingly, we build and decide for private transport. This has to change. Nobody disagrees. But we are not changing, because we do not grasp the ‘affordability’ challenge.
In Delhi, for instance, there is tremendous political and bureaucratic buy-in into public transport. They know in spite of all the investment in building roads and flyovers, the private vehicles numbers will swarm it: road speeds are down and pollution and congestion are up. More importantly, there is clarity that large numbers in the city still travel by buses. It is known current bus numbers are inadequate and service pathetic, driving people away to other modes.
So the city agrees, first, to revitalize its public bus agency—give it new buses and reform its profitability and management. Second, it decides to procure modern and convenient buses, including air-conditioned ones, to build a new image for this transport of the many. Third, it decides to overhaul the private bus transport system—the killer blue line service, so called for the accidents the buses cause. It now plans to divide the city into clusters, which single operators can bid for. These buses, running along the existing service, will be low-floor vehicles, with GPS controls to manage reliability and service benchmarks. All in all, reform.
But it is not so simple. Private bus operated on meager margins—a household business, running basic buses, with basic services. To upgrade this means paying a price. The cost of the service will be a minimum of Rs 50 per km (buses run roughly 200 km a day or 6,000 km a month). The catch is revenues are less than half—Rs 20 per km. The so-called corporate sector is not interested in a fabled public-private partnership in such a venture.
Look carefully and you will find a real challenge. A substantial part of the cost of the reformed service comes from buying buses more user-friendly and convenient. But who will pay? The answer is complicated when people cannot pay. In Delhi, where per capita income is highest, a large proportion walk or cycle to work because they cannot even afford a bus. Then there are competing modes—it costs roughly Re 1/km to travel in a two-wheeler. So, if the cost of travel in a bus is increased, it will push people out—of the bus or into a private vehicle. Neither are options.
So, how does a city work on this affordability challenge? Tough. The one real option is to cut down on the capital costs of the transition by not buying modern low-floor buses. This will reduce the gap that needs financing but also not bring the image and comfort makeover buses need. But even if this tough choice is made, it will not be enough. The city has other choices to increase revenues—by substantially increasing taxes on private vehicles, putting public transport cess on petrol and diesel and other measures. Paris, for instance, collects a public transport fee from all large offices in the city; London authorities are charged by bus operators for congestion—if the bus cannot complete its journey in time because of traffic on the road, it is London that pays, and charges road users for it. The bottom-line is somebody will have to pay.
We forget this also when we talk about solar energy. The world glibly talks about the great solar transformation, but does not consider how and who will pay for it. The bus story again.
We know today the price of solar energy is its biggest barrier. It is also clear this will change if there is a steep ‘learning’ curve—large amounts of solar technology are deployed at higher costs and little experience, which will create conditions to diminishing costs with increased experience. In other words, the scale can push down costs, increase efficiency and mature the technology. But who will go first?
Currently the model is simple: countries agree on a limited amount of energy they will pay higher prices for. France pays 42 cents/kwhr (roughly Rs 20/kwhr); Greece 50-75 cents/kwhr (Rs 25-35/kwhr). Utilities absorb the costs; they can, in their rich and energy-connected world, spread it across the consumers, ending up with little change to lose. They are cautious not to spend much. They want a win-win solution.
But how will we afford the solar bill? Our utilities can pay roughly Rs 3.50/kwhr, while solar would be Rs 17-19/kwhr. Already the cost of energy in India is high, hiking the cost of economic growth. In the current situation, we cannot afford the investment. We cannot afford the change.
Now, I say this clearly, this change can be afforded if the world gets serious about climate change. It will have to put a carbon tax on the rich—a tax which will hurt, for it will increase the cost of energy. But this real money can be used to make a real transition. Over time, as the costs of solar energy drop, because of deployment in the developing world, everyone will benefit.
We will get change we believe in. And it will not cost us the Earth.