India Mulls Fuel Standards Lagging Brazil as Cities Choke
India’s pumps may start selling fuels of the same quality sold in Europe by April 2021, according to a draft copy of recommendations by the oil ministry’s auto fuel policy panel, obtained by Bloomberg News. The deadline is contingent on state-run refiners such as Indian Oil Corp. (IOCL) getting the funds needed to upgrade their facilities, according to the draft.
“There are real constraints,” to upgrading emission standards, said Saumitra Chaudhuri, head of the panel and a member of India’s Planning Commission that formulates five-year economic plans, adding that the recommendations are a working draft and not meant to be public yet. “Our refiners are not the most profitable in the world.”
Losses on diesel, which is subsidized to keep inflation in check, dissuade state-run refiners from making the investment needed to produce cleaner fuels. While both Prime Minister Manmohan Singh’s Congress Party and the main opposition Bharatiya Janata party acknowledge the need to reduce fuel subsidies, refiners refrained from raising diesel prices this week and referred the decision to the election commission, which will conduct national polls starting next week.
In the time it will take India to upgrade its emission norms, annual sales of light vehicles are projected to almost triple, making it the world’s biggest market behind the U.S. and China, according to KPMG.
The World Health Organization said last week that air pollution causes more deaths worldwide than AIDS, diabetes and road injuries combined. It identified an airborne pollutant, PM2.5, as one of the most dangerous.
In India, which suffers from some of the world’s worst air pollution, PM2.5 emissions are emitted by diesel vehicles, whose tailpipe exhaust can carry 10 times the carcinogenic particles found in gasoline emissions. Diesel car sales in India are surging because the subsidized fuel is 23 percent cheaper than gasoline and more efficient on a per-kilometer basis.
The auto fuel policy committee’s draft target would put India 15 years behind the U.S. Fuel quality in Beijing is on par with Europe, while the rest of China is expected to switch over by January 2018, said Anup Bandivadekar, India program director at the not-for-profit International Council on Clean Transportation.
The timeline “will essentially put India on par with Vietnam,” he said.
Eliminating PM2.5 emissions requires upgrading to Euro 5-equivalent fuel that cuts sulfur content to a level that allows diesel particulate filters to be fitted to cars. India’s Bharat V standard would require all diesel passenger cars to have those, though diesel trucks and buses would be exempt until the next jump in standards, according to the recommendations.
Should the refineries fail to get extra funding, they may not be able to supply Euro 5-equivalent fuel until the end of 2024, according to the draft.
India has failed to gain from its most recent emissions upgrade, under which 13 major cities moved to Euro 4-equivalent standards from April 2010, the draft said. Trucks registered in towns with less-stringent norms have “subverted” improvements, according to the draft.
Upgrading one refinery to make Euro 5-equivalent fuel will cost 25 billion rupees ($417 million), S. Roy Choudhury, the former chairman of state-run refiner Hindustan Petroleum (HPCL) Corp., said before he retired in February. India has about 20 state-owned refineries, according to data compiled by Bloomberg.
The committee will make a final recommendation to the government on auto fuel policy in mid-April, Chaudhuri said.
To contact the editors responsible for this story: Reed Landberg at email@example.com Abhay Singh, Indranil Ghosh