JOIN USEnd of the road for diesel?
The diesel story has soured of late after being at the receiving end of a series of regulatory actions and headline-grabbing events globally. So much so that many have begun to wonder about the beginning of the end for diesel as a fuel, particularly for automobiles.
The trigger to these events was the Volkswagen Emissions scandal in September 2015, when the US Environmental Protection Agency (EPA) issued a notice of violation of the Clean Air Act to the German automaker, for intentionally programming diesel engines to activate certain emissions controls only during vehicle testing.
The programming caused the vehicles’ nitric oxide and nitrogen dioxide (NOx) output to meet US standards during testing, but emit up to 40 times more NOx in real-world driving. Volkswagen put this ‘defeat device’ in about 11 million cars worldwide, of which 500,000 were in the US, during model years 2009 through 2015. In India too, the group has ordered the recall of 3,23,000 diesel cars fitted with the EA 189 engines across three marques.
Courts step in
On December 11, 2015, the National Green Tribunal (NGT) cracked the whip, by barring the registration of diesel vehicles in Delhi until January 6, 2016, and asked the Central and Delhi governments to consider a ban on buying diesel cars. The tribunal had already barred diesel vehicles older than 10 years from Delhi.
On Wednesday, December 16, 2015, the Supreme Court bared its mind when it banned the registration of diesel SUVs and high-end vehicles in Delhi with engine capacities of over 2,000 cc until March 31, 2016; prohibited the entry of 10-year-old trucks into the city; and also stopped entry into Delhi for all commercial vehicles (CVs) not bound for the national capital. Total annual sales of CVs for the year ended March 31, 2015, stood at 6.15 lakh, out which roughly 7–9 per cent were registered in Delhi. Close to 95 per cent of the CVs were diesel-run. Out of 2.6 million passenger vehicles sold for the year ended March 31, 2015, roughly seven per cent were registered in Delhi. Of the total, close to 50 per cent were diesel-run.
The numbers attest that Delhi is a major market for diesel cars and CVs. Also, carmakers fear that regulatory fire would soon engulf other major cities, which too are battling serious pollution concerns. Although not fuel-specific, automakers fear that the Delhi government’s proposed odd-even rule for private cars and two-wheelers would also eat into diesel car sales. The space rationing would be initially tried out between January 1 and January 15, and if successful, would become a permanent feature in Delhi, and may get adapted by other cities.
The regulatory actions against diesel have fetched mixed reactions. “This is a very practical and appreciable approach by the Supreme Court, given the alarming levels of pollution existing in NCR,” says Abdul Majeed, automobile specialist and Partner at PwC. But Jagdish Khattar, former MD of Maruti Udyog who now heads Carnation Auto, had a different take. “Emissions from diesel in Delhi is very less. Instead of going after diesel, we should focus on the traffic issues in NCR. Also, I see there are no steps taken with regards to fuel adulteration, which in fact is more harmful. We have seen the Supreme Court’s policy. There is no government policy. It should come up with one,” he said.
Diesel was originally ‘green’
This might come as a surprise now, but diesel engines were once billed as ‘green’ by carmakers, governments, and environmental groups, because they are more fuel-efficient and emit less carbon dioxide (CO2), than petrol.
The EU even promoted diesel in the 1990s, driven by a focus on curbing global warming due to CO2. In most of continental Europe, diesel sells for about 15 per cent less than petrol. And then there are the tax breaks given to diesel cars. As a result, the share of diesel cars in Europe went up from 13.8 per cent in 1990 to 53 per cent last year. In contrast, the share of diesel is only three per cent in the US where there are no subsidies. Back in India, the diesel subsidy was considered necessary to control inflation, given that nearly all goods carriers ran on the fuel. It is this subsidy that carmakers, complemented by European diesel engines, leveraged to flood the Indian market with diesel cars, which now account for half of the passenger vehicles sold.
The shift in the perception about diesel began with the understanding that the particulates and NOx produced by diesel are no less harmful than CO2. Recent curbs and scandals just brought it to the forefront. Earlier this year, Anne Hidalgo, the Mayor of Paris, announced that no diesel cars shall ply on Paris roads by 2020. Then came the Volkswagen scandal. “Clearly, it has reinforced sceptics in North America. Here in Europe it has reignited concerns that in any case were already growing around the health impacts of diesel via poor air quality (as per Delhi of course). It will take time for regulators to adjust and the car lobby remains a powerful one, so even if the general outlook is not so strong, it will take time to take effect,” Peter Wells, Professor of Business and Sustainability, Centre for Automotive Industry Research, Cardiff Business School, told Deccan Herald.
The future of diesel
So is diesel on the way out? “I think this does herald the demise of diesel, but it will be a long, slow departure. There remains no effective substitute for heavy trucks, and it will take many years to phase diesel out of production systems, let alone out of the market. What is likely is a progressive contraction of the uses to which diesel is put... but given the overall growth in the passenger car market and the existing developments in favour of diesel such as an established supply chain and sunk investments in both the fuel and the engines, I do not expect a precipitous collapse,” says Prof. Wells. And what about the impact of the regulatory action on the wallets of car buyers? “Fuel costs and purchase costs tend to be treated differently by consumers.
They keep the two apart. Diesel may be cheaper than petrol, but note that the pump price is mostly accounted for by tax, and is, therefore, adjustable by governments for whatever reason; and second, global petroleum prices remain on a downward track. Toyota has recently said the latest Prius is expected to be sold in lower volumes precisely because petrol is so cheap,” says Prof. Wells. Khattar adds that one way the government can reduce the impact on the purchasing power of car buyers is by reducing the gap between diesel and petrol.
But can diesel be cleaned up? Opinions differ. “There is a case for diesel. It has more energy per litre than petrol, and diesel engines are inherently more efficient than petrol. In part, this has been the compromise: lower CO2 (and fuel bills) against increased air pollution. There is no case for subsidy of fossil fuel anywhere in the world...,” says Prof. Wells. But Daniel Sperling, Professor and Director of the Institute of Transportation Studies at the University of California, Davis, has a more sanguine view.
“Absolutely yes. Modern diesel engines are 98 per cent cleaner than uncontrolled diesel engines, and essentially the same as very clean gasoline engines. All new modern combustion engines are now close to zero emissions of local pollutants (NOx, PM, CO, Sox), though still high emitters of CO2,” he told Deccan Herald over the phone. He too agrees that the present curbs against diesel does mark a turning point.