'Vilification of diesel fuel is not a fair solution'

The Supreme Court states: “Air pollution has reached dangerous levels in New Delhi-NCR region. Fine particulate matter (PM) is the major concern, and a type of it called PM2.5 is considered even deadlier as it is respirable by humans and can penetrate deep into lungs and other respiratory organs. So it has become extremely important that systematic and diligent steps be taken for arresting this degradation in air quality in NCR and other similar cities.”

The apex court on December 16 banned the registration of diesel cars with an engine capacity of 2,000 cc or more in the National Capital Region (NCR) for three months, beginning January 1, 2016.

Its impact

This order effectively results in approximately 8,000-10,000 diesel vehicles not getting on road for those three months. But many questions may remain unanswered even after this ban.

  Will it reduce the air pollution to safe-enough levels?   Are diesel cars the only contributor to PM pollution?   As it reflects the absence of legislative roadmap, will it not affect the overall investment environment in the country?

We have to see how the auto companies respond to this crisis. In the immediate term, there is no real choice other than biding time or at most recalibrating their logistics and trying to clear off the inventory by selling the cars in other regions. This is of course easier said than done.

Products of Mahindra, Toyota and Tata are most likely to be affected. Especially Mahindra, as its top sellers like Bolero, Scorpio, and XUV500 will be hardly hit. Luxury carmakers like Mercedes, BMW and Audi, which are mostly equipped with big diesel engines, will also be affected as NCR is among the biggest markets for luxury cars. This ruling might have a bearing on other cities as well, which face similar air pollution issues.

It is unlikely that the SC will extend the period of this order beyond three months. Nonetheless, this order has to be abided by for three months, and it could have serious implications in the short- and mid-term volume and strategic planning of the automotive companies. Automotive power train technologies follow long lifecycles and abrupt policy changes hurt the companies. It certainly shows the absence of a clear policy roadmap for auto companies to follow, which affect their technology adoption strategies.

Alternatives

Ideally, the Ministry of Heavy Industries, Road Transport Ministry and Industry stakeholders  should have come together to draw a long-term roadmap and follow it religiously. This would give the OEMs and suppliers fair amount of time to comply with the pre-set emission targets. The government should play its part by providing necessary support, like:

  Capability upgrades and capacity expansion of PSU oil refineries to refine higher grade fuel for the whole country. Currently, India has two separate emission norms — BS IV for around 64 cities/towns, and BS III for the rest of the country. As such, oil refineries have to maintain separate refining facilities for each grade of fuel.

In the last fiscal year, only about 22 per cent of petrol, and 17 per cent of diesel produced by the refineries were of BS IV grade. Compliance by both OEMs and oil refineries would get much easier if the government can do away with the two separate norms, and maintain only one norm across the country. The government has announced an investment of around $3.2 billion (Rs 20,000 cr) for upgrading capacities of oil companies in the public sector, and let’s hope its effects show on the ground sooner than later.

  Pipeline network expansion, in turn, making higher grade fuel available to the whole country.

  Enablement for the commercial vehicle segment for adopting cleaner/advanced emission control technologies. Currently, there is no clear picture from the government as a roadmap for the Commercial Vehicle segment. However, this may be achieved by implementing a regulatory framework for emission control and incentivising technology adoption via tax benefits.

  Adoption of strict, regular checks for overloading trucks/trailers, and swift execution of penalties for defaulters. In the absence of a strict policy for the load carrier trucks, there is rampant overloading taking place currently. The fleet operators, in conjunction with the local authorities, (police/road transport departments), are often seen operating overloaded trucks.

  Introduction of scrappage policy, i.e. incentivise scrapping of vehicles older than a particular age (the age can be worked out or NGT order may be followed, i.e. scrapping of vehicles older than 10 years).

  Bringing changes in the modified-Indian Driving Cycle (m-IDC) to depict the real-world driving cycles of congested Indian cities and towns. India has agreed to enact Worldwide Harmonised Light-vehicles Test Procedure(WLTC), though there is a lack of clarity on the implementation schedule.

Modern diesel engines are cleaner and more fuel efficient than ever before. Above all, they compliant with the existing emission norms.

And given a clear roadmap on emission targets and appropriate amount of time, OEMs can develop even cleaner technologies. So the unnecessary vilification of diesel fuel does not seem to be a fair solution.

(The author is Principal Analyst at IHS Automotive.)