The Supreme Court of India has taken a strict stand on the pollution in India’s capital city and ordered a ban on the registration of new diesel cars and SUVs that have engine capacity of more than 2000 cc across National Capital Region, one of the strongest passenger vehicle consumption markets in the country, till 31 March 2016.
Latest studies claimed that diesel cars contribute at least 60-70 per cent of PM2.5 from vehicles in different parts of Delhi. This means that vehicles are the second largest polluter for both particulates and NOx.
The rich, benefit from the diesel subsidy
“It is noteworthy that diesel vehicles of 2000 cc and above and SUVs are generally used by more affluent sections of our society and, because of the higher engine capacity, are more prone to cause higher levels of pollution. A ban on registration of such vehicles will not therefore affect the common man,” the judgement said.
Of course, the SC order comes as a shocker to the passenger vehicle industry that is just coming out of a longer-than-expected sluggish demand phase. The auto industry has held the view that passenger cars are responsible for only very low percentage of the pollution in New Delhi.
The auto industry body, Society of Indian Automobile Manufacturers Association (SIAM), said that the pollution issue in Delhi needed to be looked at holistically if the objective of improving the air quality was to be achieved. SIAM rebuts asking to take back older vehicles from the road.
“In light of this, the order banning private diesel passenger vehicles and SUVs of 2000 cc engine
capacity and above, is most unfortunate,” it said adding, “while this would certainly hurt some segments of the automotive industry, it will not bring about any perceptible improvement in the air quality of Delhi.
SIAM pointed out that the SC order had been passed after totally ignoring the findings of the recent study that revealed vehicles were responsible for only 20 per cent of the pollution in Delhi, out of which only 14-15 per cent is attributable to passenger cars. This makes the overall pollution load of passenger cars a miniscule number of just three per cent.
It further said that restricting sales of BS IV compliant vehicles will further delay the proportion of BS IV vehicles on the road, while older BS 1/2/3 vehicles would continue to ply. If reduction of pollution was the objective, the SC could have encouraged more BS IV vehicles to be sold and could have restricted use of older vehicles that pollute more, as one old vehicle emission is equivalent to five new vehicles..
While the automobile industry is disappointed, the SC order is also seen as a warning signal to the growing backlash against diesel-powered vehicles, especially the big and luxury SUVs, which are bought mostly by the affluent. There was a view that wealthy people were allowed to drive SUVs on cheaper fuel, along with the essential goods transporting community.
M&M might feel the pinch...
It is estimated that diesel variants accounted for 37-40 per cent in overall passenger cars sold in India, while about 90 per cent of the big and small SUVs are powered by diesel engines.
The biggest impact is expected to felt by the largest UV marker in the country, Mahindra & Mahindra, that has a slew of SUV models and all of which are powered by diesel engines.
“We believe that SC ban is likely to have negative impact on M&M as about 95 per cent of its passenger vehicle portfolio is above the 2000 cc range. The news would not have much impact on Maruti Suzuki (it hardly has any product above the 2000 cc segment) and Tata Motors (Tata Motors earnings are driven largely by JLR which is a global player),” said Bharat Gianani, Auto Analyst at Angel Broking.
“We think the auto industry is likely to have dialogue with the government and provide a permanent solution which could be banning of the older vehicles or further improving the emission for new vehicles which could then possibly result into the ban not extending beyond 31 March, 2016,” he added
The SC ruling will also impact German luxury car makers. Mercedes Benz is expected to see bigger impact than its rivals Audi and BMW, who have lesser number of models powered by above-2000 cc diesel engines.
Meanwhile, environmental activists have welcomed the SC order stating that it was a landmark judgment for controlling pollution in Delhi-NCR regions.
Lung of every third child is impaired!
“These steps are expected to catalyse longer term solutions to clean up the air. This winter, Delhi has already experienced rapid increase in pollution – PM2.5 levels have remained three to four times the standards and on smoggy days, the level can go up to six to seven times the standards. The Chief Justice bench has taken strong notice of the evidences of health impacts which indicate that the lung of every third child is impaired,” said Sunita Narain, Director General, Centre for Science & Environment (CSE).
“By barring the luxury diesel segment, the Supreme Court has established a critical principle that diesel taxed low for poor farmers and freight cannot be mis-utilised by the rich car owners for luxury consumption and add to pollution,” she added.
CSE also pointed out that the current emission standards in India legally allow diesel cars to emit more particulate matter and nitrogen oxides – which are the most serious pollutants of concern in our city’s air – than petrol cars. Diesel cars are legally allowed to emit three times more NOx than petrol cars. But emission factor of the Automotive Research Association of India (ARAI) shows that diesel cars emit five times more particulate matter and seven times more total air toxins compared to petrol cars.
Apart from ban on new luxury diesel cars and SUVs, SC has also barred entry of pre-Euro III trucks into Delhi and doubled the environment compensation charge on all trucks entering the capital city. It has also mandated all taxis in NCR to convert to CNG before 1 March 2016, while seeking stringent action on trash burning and road dust.
Boost to CNG consumption...
“While the manner in which the auto industry responds to latest set of challenges remains to be seen, the ban on diesel car sales and conversion of all taxis to CNG in Delhi would boost CNG consumption growth in the near term,” said rating agency ICRA.
It is estimated that about 30,000 non-CNG cabs are operating in Delhi-NCR which would be replaced/converted to CNG. With a demand of 15-20 kg/day, the additional volumes could be about 5 lakh kg/day per vehicle, which is significant in relation to IGL’s (Indraprastha Gas Ltd) CNG sales of about 22 lakh kg/day. Additionally, the Delhi government has decided to restrict only even numbered vehicles to ply on even numbered dates and odd numbered vehicles to ply on odd numbered dates from 1 January 2016 for a trial period of 15 days.
As a result, the need to strengthen the public transport system is clearly an imperative which may result in expansion of the Delhi Transport Corporation bus (average consumption of about 70 kg/day of CNG per bus) fleet over the next 1-2 years, pointed out Icra.
Of course, the current focus may be on Delhi due to alarming levels of pollution. But, the SC order may trigger increased focus on air quality and similar actions in other parts of the country.