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Fuel economy standards: sanctity of decision making process must be upheld

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Posted on: 1 Dec, 2012

Car industry's efforts to dilute standards approved by PMO will significantly reduce fuel savings

The desperate bid of the Indian car industry to reopen and dilute the proposed fuel economy standards after it was approved by the prime minister’s office (PMO) has shocked all. This violates the sanctity of the decision-making process. The approved proposal has been finalised after due diligence, inter-departmental deliberations, public consultations and the prime minister’s approval. This cannot be compromised and reopened through backdoor negotiations with the car industry unilaterally.

These standards are meant to set targets for fuel efficiency improvement in cars and conversely reduce carbon dioxide emissions that are directly linked with the amount of fuel burnt. The Corporate Average Fuel Consumption standards that have already been approved by the PMO in July this year has laid down a target of 18.15 km/litre (or 129.8 gm of CO2/km) in 2015 and 20.79 km/litre (or 113 gm of CO2/km) in 2020, after adjusting for increase in the average weight of the car fleet.

Industry bid to dilute standards

According to sources, the car industry, which is said to be unhappy with these standards, is trying to push the deadline of their implementation to 2018 and 2023. It is also making an effort to have the standards watered down. While the approved targets are aiming at 20 per cent CO2 reduction over 2010 levels in 2020, the car industry is proposing just 16 per cent reduction as late as 2023.

The car industry is also against adjusting the targets to account for the increase in average weight of the car fleet. It wants to keep lax margins for bigger cars. The average weight of the Indian car fleet is expected to increase in coming years. Bigger cars burn more fuel—standards must account for this. In fact, in 2010 the average fleet weight was 1,037 kg; this has already increased to 1,100 kg. The PMO approved standards has adjusted the 2020 target of 113 gm/km assuming that the average fleet weight will increase to 1,145 kg that in any case looks like an underestimation.

Car industry's low ambition
 

Fuel efficiency standards approved by PMO: 18.15 km/litre (or 129.8 gm of CO2/km) in 2015, and 20.79 km/litre (or 113 gm of CO2/km) in 2020, after adjusting for increase in the average weight of the car fleet.

The PMO-approved standards will enable fuel savings of close to 103 million tonnes of oil equivalent. The approved targets are aiming at 20 per cent CO2 reduction over 2010 levels in 2020. But the car industry is proposing just 16 per cent reduction as late as 2023.

The European CO2 standard for cars for 2012 is 140 gm CO2/km. But Europe will leapfrog to 95 gm/km in 2020. The US will bring down its levels from 187 gm/km in 2010 to 121 gm/km in 2020

 

Dieselisation will further push the market towards bigger cars and SUVs. While close to 87 per cent of the new petrol cars sold in 2010-11 had engine size less than 1,200 cc, more than 40 per cent of diesel cars were above 1,500 cc.  The Petroleum Planning and Analysis Cell of the Union ministry of petroleum and natural gas has, in its Sales Review Report of September 2012, said that there has been a 48.4 per cent growth in utility vehicles nationally, along with a 16.7 per cent jump in multipurpose vehicles—these cars are largely diesel-driven. This trend will increase the average weight of the fleet and worsen fuel efficiency performance.  But the car industry wants to do away with the weight adjustment that can weaken the effectiveness of the proposed norms.

If these reported efforts by the industry are true, then they violate the sanctity of the decision-making process and make a mockery of the system.

Lax targets will undermine energy savings, security

The PMO-approved standards will enable fuel savings of close to 103 million tonnes of oil equivalent. Any dilution will significantly reduce these savings. With the explosive increase in car numbers and gradual increase in average weight of the new car fleet, the energy penalty will be enormous.  India cannot afford to create margin for fuel guzzling in the personal car sector.  The cost increase due to compliance with the standards can be recovered quickly from the fuel savings.

This has serious implications given India’s dependence on imported crude oil and vulnerability of India’s economy to oil price vagaries. According to the International Energy Agency, future energy demand in India’s transport sector will be largely driven by cars, after the heavy duty segment. It is not fair to incur enormous energy costs and suffer climate risk from the use of personal vehicles.

India must not lose face in global climate talks

India will lose face in the ongoing climate talks if fuel saving targets slide below that of other major vehicle producing countries by 2020. India must not, by an act of public policy, aim to finish as the worst in the world despite starting from one of the best baselines in 2010—141 gm of CO2/km. The European CO2 standard for cars for 2012 is 140 gm CO2/km. But Europe will leapfrog to 95 gm/km in 2020.

Even the US, the climate renegade, will bring down its levels from 187 gm/km in 2010 to 121 gm/km in 2020. How can the Indian car industry aim for worse targets for passenger cars?

The government must uphold and notify the proposal that has already been approved by PMO. Even those targets could have been more effective. The standards cannot be reopened and renegotiated unilaterally with the car industry; this is a conflict of interest. India has lost a lot of time—close to five years—in getting these crucial fuel saving measures. India cannot wait any longer or tolerate ineffective fuel saving targets.

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