Do not blame diesel

Do not curse diesel, for there is more to it than meets the eye
By Pawan Goenka, Economic Times, New Delhi, September 23, 2008

The author is President-automotive sector and member of the group management board, Mahindra Group

In the recent past, there has been increasing opposition to the use of diesel as a fuel and the so-called dieselisation of our vehicles. This opposition is ill-informed. In fact, there is a dear case for greater dieselisation of our fleet along the lines of the European Union. The only real issue with diesel today is the inability of the government to charge a higher price for diesel fuel, which would be closer to its economic cost. However, that is no reason to condemn diesel as a vehicle fuel.

If diesel was so bad for vehicles, then why would the EU sell more diesel personal vehicles than petrol powered ones? Clearly, the EU is as concerned as India about the negatives of diesel. Why is it that 4 of the top ten models sold in the world are diesel-powered? Why did diesel personal vehicle sales increase over 80% since 2000 in the US? Why are diesel vehicles forecast to make strong inroads into traditional petrol markets like the US and Japan-even when diesel is more expensive than petrol, as in the US? Why would the US government provide a tax incentive of up to $ 3,400 for buying a lean bum diesel vehicle-the same kind of incentive as that provided to a hybrid vehicle?

There are three main reasons. The first one is that a diesel engine is the most efficient internal combustion engine amongst fossil fuels. Its inherent higher efficiency leads it to need a lot less fuel than alternatives such as gasoline, compressed natural gas or liquefied natural gas. Diesel engines consume about 30% less fuel than petrol engines. Thus, from an energy security perspective, diesel offers a great advantage.

While updated numbers for end use of diesel are not available, it is estimated that personal diesel vehicles consumed about 3.3 million MT diesel in F-08-which is about 7% of India's diesel consumption. At 30% higher fuel efficiency, personal. diesel vehicles saved an equivalent consumption of about 1 million MT or Rs 3,000-crore worth of fuel imports.

The second reason for diesel's increasing global popularity is its lower greenhouse gas emissions as compared to petrol. Diesel vehicles generate about 30% lower CO2 emissions than petrol and on a well-to-wheel basis about the same carbon emissions as CNG. The third reason is the significantly improved performance of diesel vehicles with modem technology diesel engines that provide similar power as petrol, but greater torque, making them a pleasure to drive.

And the reduced NVH makes them much less noisier. Anyone who doubts this should drive a modem diesel vehicle. This has led to a complete change in the way diesels are viewed.

So why are we hearing this clamour for banning diesels in India?
There are two reasons. The first is that emissions of paniculate emissions (PM) and nitrous oxides (NOX) are higher in diesel as compared to other fossil fuels. However, with the improved fuel quality and tighter emission norms, combined emission values of personal diesel vehicles have reduced 94% between 1994 and 2005 in India. Future diesels will further have reduced emissions. Here the issue is really not the sale of new vehicle. The vehicular pollution in our cities is principally attributable to older vehicles.

To really reduce vehicular pollution, we need the implementation of a strong Inspection and Maintenance program, which will focus on controlling pollution from older vehicles of all fuel types. And to control air pollution per se, we need to also focus on non vehicle pollution sources which account for between 65-75% of air pollution.

The other issue is the built-in subsidy in diesel fuel due to which the Indian Government is unable to pass on the full cost on fears of increasing transportation costs. So how big is the issue of subsidised diesel being used by personal vehicles? Personal diesel vehicles account for only about 7% of India's diesel consumption.

Has an inherent fuel subsidy encouraged increased sales of diesel vehicles? The average savings of a personal-use diesel vehicle versus a petrol vehicle in fuel costs is about Rs 20,000 per year, but a diesel vehicle itself costs on average about Rs 1,00,000 more than a petrol vehicle. So, unless such a vehicle is used for intercity commutes or commercial purposes like a taxi, a buyer will not choose a diesel vehicle because diesel fuel is subsidised.

This is also borne out by the fact that the proportion of diesel cars and MUVs has remained between 17-19% in Delhi, India's largest vehicle market, from F03 to F-06 (being the latest year for which data is available).

So let's not make a mountain out of a molehill on this issue. We need to focus on the real issue. The bigger issue for the government is diversion of diesel as a substitute fuel. Given the power short-ages we are facing, and given that normal genset fuels have increased in price significantly more than diesel, there is an incentive of 22-25,000 MW captive power generators to use diesel instead of fuel oils.

This can be borne out by the fact that diesel consumption increased 11 % in F-08, marginally less than petrol consumption increase, but IDO consumption declined 8% and furnace oil consumption de-dined 1 %. Given a shortage of power from the grid, LDO and FO consumption should have increased with more generation from captive power.

Some sources attribute the consumption of diesel for power generation at about 20%. Hence, it would be beneficial to actually encourage the use of diesel vehicles. Of course, we must also focus on fuel conservation across the board and gradually progress towards tighter emission norms concurrent with cleaner fuel availability. And we must implement a strong inspection and maintenance programme for older vehicles to have the maximum impact of reducing vehicular pollution.