Road to Green Logistics: Top ways how logistic players can reduce their carbon footprint
Ashish Agarwal is Director & CEO at SEROS Logistics
For a long time, ‘Going Green’ has been a catchphrase for businesses to prove their commitment towards preserving Nature. Companies are trying to operate in the new era of ESG , and the logistics sector is no exception. India is the third-largest contributor to carbon emissions at the country level; businesses must be conscious of their practices.
Indulging in eco-friendly and green initiatives is significant for the carbon footprint of such companies. Even though the sector is working towards decarbonization, but is it enough? A global survey undertaken suggests that only 57% of the companies that took part measured their carbon emissions. Thus, a lower number is acting upon reducing the same.
While the industry is becoming increasingly technological-driven and organized, there’s much more that can be done.
Ways in which logistics players can reduce their carbon footprint
– Adoption of alternative fuels
Over the years, there has been much pressure to support climate change by shifting to lower carbon emissions. Having said that, the emergence of alternative fuels is a torrent of opportunities for the logistics sector to tap on.
Liquefied Natural Gas (LNG): Another swiftly emerging alternative fuel is LNG. It is becoming a reliable choice, primarily due to its lower transport and storage costs and lesser emissions. LNG is likely to gain further traction as the pressures to decarbonize increase.
With 95% methane and a small fraction of other components LNG is a clean fuel
LNG is currently available at a 30-35% discount to diesel but the initial cost is high. Small-scale LNG (SSLNG), a nascent industry right now, is an alternative solution to large-capacity LNG. Several logistics companies are using the SSLNG platform, producing LNG at remote locations, and conveniently transporting it using the latest technologies.
With 50 LNG stations being set up in the initial phase, the central government targets setting up 1000 LNG stations in the next five years. It can cater to as many as 1.5 lakh trucks. The Indian government is not leaving any stone unturned to promote LNG as a long-haul transportation fuel.
Compressed Natural Gas (CNG): Lead and sulphur-free, CNG is undeniably one of the most sought-after green fuels used for transportation. The Petroleum and Natural Gas Regulatory Board has eased the use of mobile CNG dispensing units. It is sold at a 35% discount to diesel in retail and is a cleaner fuel. Due to lower CO2 emissions, using CNG can help mitigate greenhouse gas emissions. Logistics companies using a carbon-neutral fleet for surface operations can tremendously reduce the carbon footprint.
Currently, there are 3200 dispensing stations in India, which are expected to grow at a CAGR of 17%. With the government’s efforts to speed up the gas infrastructure activities in the country, the Ministry of Petroleum and Natural Gas has also come up with a draft policy for CGD.
The use of CNG as an alternative fuel in the logistics sector will result in at least 25-30% lesser emission of GHG.. It is certainly a better choice for transportation.
Electric Vehicles (EV): Eco-friendly cars/trucks are undeniably a great way to reduce carbon footprint. Besides, with lower fuel costs and lesser maintenance, the benefits of electric vehicles for logistics companies go beyond reducing harmful emissions. For transportation, diesel engines have long been a solution for increased power. However, EVs provide a distinct advantage of instant torque over combustion engines.
To promote the manufacture and use of EVs in India, the government extended its Production Linked Incentive (PLI) scheme to several sectors, including the automobile. It was initially meant to boost domestic electronics manufacturing., the Indian government recently approved Rs. 25,000-crore PLI scheme for the automobile sector to promote domestic manufacturing of green vehicles.
EVs are cost-efficient and can help logistics companies save fuel costs up to 80%. While it has zero CO2 emissions, limited availability and charging infrastructure are roadblocks for EV adoption and a regulatory push is required to spur the growth of this segment in India
With high octane ratings and energy content, the benefits of hydrogen are reassuring in many ways.
India has started generating hydrogen from natural gas and blending 18% of CNG (H-CNG) for automotive purposes. While the cost of its production is cheaper, the cost of hydrogen transport to stations is relatively high. Therefore, there is a need to up the storage and refueling infrastructure to keep the overall costs low.
– Switch to maritime
With the increasing environmental consciousness, it is critical that the maritime industry, too, evolves and adapts to the newest technologies
Coastal shipping currently accounts for less than 10% of Indian cargo movement, contributing 6% of cargo traffic at ports. The Ministry of Ports, Shipping, and Waterways’ flagship Sagarmala Programme aim to double this by 2025. It envisions reducing the logistical cost and time of the cargo movement. Steps like abatement of service tax on coastal shipping and green channel clearance for coastal cargo and reducing GST on bunker fuel will aid the process.
Moreover, the proposed Merchant Shipping Bill will promote the growth of the Indian shipping industry by following pe International Maritime Organization protocols. It aims to bring essential measures to prevent air pollution from the ships operating at sea.
Consistent efforts like policy initiatives, improvement in shipbuilding, the ease of doing business, and the provision of multi-modal services for logistics movement through inland waterways will facilitate the sector’s transformation.
India’s logistics sector is currently valued at $160 billion and has the potential to grow at a CAGR of 10% in the coming years. The initiatives taken towards reducing the carbon footprint of the logistics companies cannot show results overnight, however, they can go a long way in terms of sustainability.