This paper highlights successful implementation of an innovative project aimed at enhancing resource efficiency and mitigating emissions from transport by introducing pollution free, fuel efficient and safe public transport in a fragile ecosystem of the Himalayas in India (Himachal Pradesh). After analysing the environmental concerns of the state emanating from the transport sector, results of the study are discussed, project components are explored and an implementation framework is presented. Towards the end, project outcomes are highlighted and conclusions are drawn. It is argued that public transport, as an activity offering services of a merit good nature, suffers from serious market and policy failures. It is therefore essential that any attempt to improve public transport should not be confined to purchase of new buses alone, but it should include a wide- ranging reform agenda to correct market and policy distortions to bring about a modal shift from private modes to public transport.
