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EVolution in the Air: Climate Financing Charges Up Profit of EV Companies and Cuts Carbon Emissions

Climate finance is proving to be a game-changer in the electric vehicle (EV) sector, with significant revenue increases and a push towards reducing carbon emissions.

It can increase a company's revenue by 20-25%, especially in the EV segment, said Sapna Nijhawan, Founder and CEO of Sustainiam, at India E-mobility Show during a panel discussion on ‘India’s Road to Net Zero Carbon by 2070.’

An example of this trend is Tesla Inc. The EV manufacturer generated a net 20% additional revenue in the financial year 2022 due to the sale of regulatory credits to peer manufacturers. These credits, earned through compliance with various regulations on zero-emission vehicles, greenhouse gases, fuel economy, and clean fuel, contributed $1.8 billion to Tesla's overall revenue of $81.5 billion. This income highlights the critical role played by these tradable credits in the electric vehicle giant's financial success.

“There is a shift of climate financing in terms of forward contracts and future growths where they are seeing climate emissions certificates having the strongest potential of additional revenue,” said Nijhawan on day 1 of the India E-mobility show, happening from October 11 to 13, organized by Valiant Business Media.

Climate finance is the allocation of funds to activities and programs aimed at addressing climate change, encompassing both mitigation and adaptation efforts across various economic sectors globally., as defined by the London School of Economics and Political Science. 

Future contract purchases on the climate financing platforms and emissions trading systems (ETS) platforms are the driving force of decarbonization, Nijhawan added. 

Amit Bhatt, Managing Director of ICCT, said that not all emissions are created equal. Emission factors vary significantly for fuel-based engines in tier-1, tier-2, and tier-3 cities, influenced by factors like acceleration, deceleration, and idling. Cities like Delhi and Mumbai recorded emissions 30% higher than other states.

Climate financing will accelerate when the government and international financing bodies mandate companies to report their carbon emissions and impose penalties for not transitioning to EV-based models, said Nijhawan.

India has set ambitious environmental goals, including meeting 50% of its energy needs with renewable sources and reducing projected carbon emissions by 1 billion tonnes by 2030. The country is targeting 500GW of non-fossil energy capacity and a 45% reduction in carbon intensity in the economy by 2030, compared to 2005 levels. The ultimate goal is to achieve net-zero emissions by 2070.

At the opening of the trade show, Ramlinga Reddy, Minister of Transport of Karnataka, highlighted the nation's commitment to sustainable transportation and the electrification of mobility. He emphasized the role of events like the India E-mobility Show, part of a global sustainability series, in the journey toward achieving net-zero carbon emissions.

'Net zero emissions' refers to achieving a balance between greenhouse gas emissions produced and those removed from the atmosphere, as defined by the Climate Council.

“Innovation meets responsibility with the automotive industry changing towards electric vehicles,” said the Minister of Transport of Karnataka. 

About the Event:

The India E-mobility Show focuses on elevating India's EV market globally and driving local EV adoption. The show is a platform for government representatives, businesses, thought leaders and industry professionals to connect, collaborate, and propel India's EV sector growth.


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