Setting Out

The Indian automobile industry got a rude shock on October 29 when the Centre for Science and Environment released the environment rating of one of the most poorly regulated sectors in India. The industry has come of age. But in terms of corporate environmental management, even the giants prefer to remain greenhorns

 
Published: Sunday 07 June 2015

Setting Out

-- since the release of the environmental rating of the automobile sector by the Centre for Science and Environment several people have told us that it must have taken some courage to rate the auto sector, which is headed by some of the most powerful industrial stalwarts like Rahul Bajaj and Ratan Tata.

We had never thought on these lines. On the contrary, we found the industry extremely docile and cooperative.

Consider this. First, the automobile industry shared data with us that they don't even share with the various agencies of the government. We asked companies to send us the specific emissions of their vehicles and produce emission certificates from the Automotive Research Association of India (arai) for each vehicle that we were rating. This data, we know, is never shared. Certainly, the arai refuses to part with this information even to the Central Pollution Control Board (cpcb) considering it private and confidential. We have always remarked that this is private information collected in public interest. But the public is kept in the dark.

Secondly, Tata Engineering (telco), with which our Right to Clean Air Campaign has had a running battle for the past four years, participated willingly and with interest in our environmental performance rating exercise. Our relationship with telco has not been very genteel. Not only has telco taken potshots at us, we have also not hesitated to give it back. The problem has been telco's interest in diesel based vehicular technology and our efforts to reduce the use of diesel to clean up the air of Delhi.

It is clear to us that though the civil society is still very weak on pollution related issues, this situation will inevitably change as noxious fumes grow around us. In many cases, the interaction between the civil society and industry will be confrontational as they have often been across the world. But, as this exercise shows, there can also be spaces where the interaction can be more cooperative.

In fact, we believe our effort will provide critical help to the industry to develop an environmental vision and strategy. The detail with which we have studied the automobile industry will help industry owners make much better decisions in the future. This is the first comprehensive green audit of the sector. Our experience with the green rating of the pulp and paper sector was that our rating helped the company management to get a perspective, perhaps for the first time, of just what is needed. And because we place high standards -- measuring the current status with the global best practice -- it makes ceos map the road ahead.

Our key finding was that while with economic liberalisation the world's leading companies have invested in India, these global giants -- the best in the world -- are not bringing in their most emission efficient products. In other words, the country is not getting the advantage of receiving environmentally friendly technologies. We found that multinational companies, scored higher marks, but were only marginally better than their Indian counterparts.

But is industry to blame? Or is the government, which is extremely callous and indeed oppositional to the environmental problem, more responsible? At the meeting to release the rating, Aditya Vij, managing director, General Motors India Limited, said his company was prepared to manufacture Euro iii emission compliant vehicles and even better. "But we need cleaner and compatible fuel," he said. Indeed, we found that many Indian auto manufacturers have vehicles capable of meeting much better emission norms, even today. But clean fuel and stricter emission norms remain a real handicap. Given the shenanigans of this near monopolistic, government owned oil industry, which is controlled by ministers who care two hoots about the environment, getting clean fuel is a near impossible task. They will move only when there is a hammer from the courts.

In fact, we have often wondered if we should also rate the oil industry. But then we gave up the idea, simply because they would have no reputational incentive or disincentive. And we are sure there will be a total lack of cooperation from them. In fact, what is amazing is that the private sector, for all its ills, remains more accountable to public pressure in a democracy. On the other hand, the public sector, supported by politicians and bureaucrats with all their vested interest, has no public accountability. Our experience is that markets and democracy can function, but not monopolistic industry, even if controlled by democratically elected netas .

Our rating is based on a complete life cycle analysis -- from sourcing of raw materials, to production plants, product and finally its disposal. We found that designing a life cycle study had to be dynamic -- different for different industrial sectors. In the pulp and paper sector, the maximum weightage was on the production facility, simply because it had the greatest environmental impact. However, in the auto sector we reworked the criteria to give emphasis on the product, the vehicle, as over 80 per cent of the primary energy consumption and most emissions are at this stage. But we failed on one count: to give adequate importance to the issue of disposal of the product. As Saifuddin Soz, former Union minister for environment and forests and a member of our Project Advisory Panel, pointed out, it is becoming more and more necessary to force industry to take responsibility for the disposal of the product, not just its manufacture. In Europe, for instance, auto manufacturers will soon have to take back the vehicle for disposal. This pushes them to use more and more recyclable components.

Time seems to have stopped for Indian manufacturers as far as the design of the vehicle engine, the basic driver, was concerned. We found engine technology is at least a decade old. Even the catalytic converters used to control emissions are not built to fit the engine, but are add-on features, which we found were mostly unsuitable. Interestingly, the environmental imperative has pushed industry. It is the infamous polluting two-stroke two-wheeler, which has seen the maximum development to make it emission efficient.

It is clear from our analysis that, on the whole, individual companies will be reluctant to invest in advanced technologies, without any incentive. Today, the situation is that companies have a vested interest in maintaining technological status quo , simply because they have already spent money on incrementally upgrading their product. In other words, they have gone from producing Euro I to Euro II vehicles for instance. But the need in India, which is choking with pollution and has a large number of dirty vehicles already on the roads, is to bring in the world's best technology, today. Not even tomorrow. When a company moves from Euro ii diesel to compressed natural gas (cng) vehicles, it can leapfrog emissions to reach Euro iv norms, in the case of particulate emissions. But investment in cng makes sense only for technological laggards and so there is enormous resistance to this change.

The option would be to give financial incentives to those companies which go beyond existing norms. Essentially, reward the emission efficient. Tax the emission inefficient. This is absolutely vital for India if it wants to deal with its growing pollution. And we are definitely one of the most polluted countries in the world today. But for mandarins of the finance ministry and the finance minister in particular, environment is of little concern. And they do not hesitate to say so publicly.

We can rate the various sectors of the Indian industry and maybe even make some change. But will there be any reputational advantage of rating our netas . Ultimately, and sadly, it is our brown netas and sahibs who are the biggest culprits when it comes to the slow murder of the Indian people.

-- Anil Agarwal and Sunita Narain

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