Our regulators have a penchant for feeble arguments. For instance: if diesel car numbers are increasing in Europe, why should the same be controlled in India? It is true that in some European countries such as Belgium and Austria, the number of diesel cars has increased. The reason is typical: the low price. Also, European countries had actively encouraged diesel vehicles to reduce carbon dioxide emissions and so address the problem of greenhouse gas emissions. But new research, as in Germany, shows that while diesel technology provides some carbon dioxide reduction benefits, it results in 60 per cent higher particulate emissions than earlier projections for 2020.
European Union countries are increasingly worrying about rapid dieselisation, and so have demanded tighter NOx and PM standards for diesel. Though Europe will move to Euro IV norms in 2005 (with mandated diesel sulphur level of 50 ppm) the European Parliament has set an additional deadline of 2009 for EU-wide changeover to near zero sulphur fuel (10 ppm) diesel and petrol for road transport. Future norms, Euro V and Euro VI, will now be designed to address PM and NOx emissions. They are expected to be equally stringent and reduce the advantages presently accorded to diesel vehicles.
Emerging science has also negated the global warming benefit angle. Diesel soot has been implicated in global warming. This came to sharper focus in 2001. Mark Z Jacobson, of US-based Stanford University, found that diesel vehicles emit about 18 per cent more carbon per gallon than petrol vehicles. He predicted there would be greater global warming with diesel than with petrol over the next 100 to 150 years. Ways to address global warming due to soot, according to Jacobson, include tightening emissions standards by a factor of four to eight, eventually switching from diesel to hydrogen fuel cells.
Even as our regulators use arguments the science is uncertain, they say for example to actually resist changes, regulatory authorities elsewhere are more proactive. Assessing the health effects of diesel particles to decide emissions standards for heavy-duty diesel vehicles, the US EPA recognised that there were bound to be uncertainties in assessing an environmental risk range. "As with any such risk assessment for a carcinogen," the EPA states "it is the Agencys best scientific judgement that the assumptions and other elements of this analysis are reasonable and appropriate for identifying the risk potential based on the scientific information currently available."
Proceeding precisely on the basis of uncertain science the US EPA has come up with the most stringent emissions standards for heavy-duty vehicles in the world. Furthermore, they have actually calculated the public health benefits that such standards will provide. The new vehicle standards, which require 15 ppm fuel, will sharply reduce PM and NOx emissions from diesel vehicles. This will prevent 8,300 premature deaths, 5,500 cases of chronic bronchitis, 361,400 asthma attacks and 7,100 hospital admissions per year by the time it is fully implemented. Children will significantly benefit: the new standards will prevent 17,600 cases of childhood acute bronchitis, 193,400 cases of upper respiratory symptoms in asthmatic children and 192,900 cases of childhood lower respiratory symptoms per year.The monetary benefits of the new standards to be at least US $70.4 billion.In this way, the USEPA also carries people along.
Another reason the USEPA has set these stringent fuel-neutral standards is that they expect sales of diesel cars and light trucks to substantially grow in future, a trend the standards obviously offset. They predicted that with higher sales, these vehicles could easily contribute between one-half and two per cent of the PM10 concentration their national ambient air quality norms allow the contribution could be as high as five to 40 percent in some roadside situations with heavy traffic.
With such increases in diesel sales, the USEPA reasoned, it would be even more difficult for a few counties that needed further emission reductions to attain national air quality standards. More counties, specifically those that have already exceeded standards marginally, will be at greater risk. Thus, reasoned the USEPA, a more stringent PM standard would help address environmental concerns about the potential growth in the numbers of light-duty diesels on the road even if that growth was substantial.
The Agency received strong public support for increasing the stringency of heavy-duty truck and bus emission standards, and for further controls on sulphur in diesel fuel that would enable the necessary exhaust emission control. The EPA also carried people along. Public officials and representatives of environmental, public health, or community-based organizations testified to the link between public health ailments, such as asthma and lung cancer, and air pollution caused by diesel exhaust and particulate matter. The health and welfare concerns raised during the public hearings, held countrywide, were significant.So whats holding India up?
While the automobile industry has publicly professed that it is capable of meeting tighter standards, refineries hold back. In its voluntary roadmap announced in 2000, The Society of Indian Automobile Manufacturers (SIAM) claimed it was prepared to meet Euro IV standards for passenger cars in 2006, and heavy-duty vehicles in 2008. Some companies such as Hyundai have come up with advertisements in newspapers, stating they are ready to comply by Euro III norms. Yet there is no policy to make automobile companies accountable for these claims.
When the Auto Fuel Policy was proposed in 2002, it had reaffirmed the position of the refineries that it was too expensive to clean up transportation fuels, diesel and petrol, and that any major improvement in the short term was not even necessary, since the incremental benefit from more stringent emissions standards were too small to justify large investments.
The porposal advocated an incremental step to Euro III norms, that too only in 11 cities. Euro II norms were to be enforced in the rest of the country by 2005. Subsequently, Euro IV norms were to be introduced in the same 11 cities, even as Euro III norms became operative at the national level in 2010.
What does all this mean? It means that metros that have moved ahead are to wait for 10 more years to get Euro IV norms. Other critically polluted cities can wait even longer. Cunningly, and as pure justification for inaction, the government has further diluted the proposed deadline of 2010 for Euro IV. There is to be a review in 2006, to decide whether the deadline for Euro IV is appropriate or not. This clearly opens a window from where the countrys clean air initiative could get easily thrown out. Moreover, this review will be based on an emissions inventory study being done with funding support from four refineries in six Indian cities. In short, refineries and not regulators will decide the fate of Indias ambient air.
The largest shareholder in the Indian oil business, the Indian government is averse to pushing oil companies to upgrade and innovate fiscal strategies to meet costs. In the face of objection from the finance ministry, the government while approving the Auto Fuel Policy disallowed fiscal incentives to refineries to improve fuel quality standards. It is estimated to cost around Rs 18,000 crore to meet Euro III norms in 11 cities and Euro II in the rest of the country by 2005. An additional investment of around Rs 12,000 crore is required to achieve Euro IV in 11 cities and Euro III in the rest of the country by 2010.
In India the government does not undertake evaluation and reanalysis of cost estimates that the refineries churn out. There is very little information in the public domain to challenge them. Other governments crosscheck the cost claims of industry and refineries first but not our government.
Reanalysis of cost claims of the industry to meet environmental standards in the US and Europe have shown how grossly overestimated these are. A similar assessment to meet Euro III and Euro IV standards in Europe had found that industrys cost claims for achieving 30 ppm sulphur petrol were overestimated by 17 percent, and for 50 ppm sulphur diesel by 55 per cent.Cant we be direct and leapfrog?
It is most cost effective to reach the best target directly, rather then spreading resources thinly over many small steps over a long and excruciating time period. Reforms in the oil sector are underway in India. Since 1999, the maximum expansion in refining capacity has occurred; it has nearly doubled in a short span of three years. The problem is that the new investments are not being linked to leapfrogging standards. Catching up later will only compound costs. Privatising without tightening up the standards can spell disaster. New investments must be linked to leapfrog standards.
Studies conducted in other countries demonstrate that going directly from several thousands ppm sulphur to near zero sulphur is more cost effective,. and provides greater benefits than reducing it in steps. A recent study by the US-based Transenergy, on Chinese refineries, shows that moving from 2000 ppm sulphur in diesel to near zero sulphur would cost US $ 0.04 per gallon or Rs 4.86 per litre and from 800 ppm to near zero would cost less than US $ 0.02 per gallon or Rs 2.24 per litre.
This small increase in incremental costs can be easily offset with a well thought-out taxation policy that our regulators refuse to look at. Worldwide, governments use green taxes to accelerate clean technology developments. In Germany, diesel engines are taxed higher to compensate for lower fuel tax rates on diesel. Vehicle tax includes an additional incentive to buy low-emitting, fuel-efficient cars. Low emissions cars get a tax bonus. Fuel tax rates are also differentiated by sulphur content.
Greening of fiscal reforms is possible only if we break the rigid mindset of the fiscal planners. Government should peruse new studies, such as the recent White House study conducted by the office of the management and budget in the US. It found that the health and social benefits of enforcing tough clean air regulations in the past decade were five to seven times greater, in economic terms, than the cost of complying with the rules.
Today, our government has no policy either to hold refineries or car companies accountable for the public health fallout of the products they produce. Carmakers can produce diesel cars with abandon. Refineries can keep producing dirty, sulphur-rich fuels. This isnt illegal, but adds to the premature death count in cities. Now only the customers verdict can seal the fate of the devils car.
European countries had actively encouraged diesel vehicles to reduce carbon dioxide emissions and so address the problem of greenhouse gas emissions. But research has now implicated diesel soot in global warming