As the world is waking up to the harsh realities of climate change, radical policies are being formulated. The situation in India is no different. After the commitment made at the Conference of Parties (COP) in Paris in 2015, India is taking strong measures to cut emissions and reduce the carbon footprint of various sources. This is buoyed by growing public concerns with respect to health risks associated with high levels of air pollution across the country, especially in major cities, led by New Delhi.
A cornerstone of the government’s revised strategies to curb air pollution emanating from the transport sector is the fuel emissions policy. With April 1, 2017 marking the mandatory adoption of the Bharat Stage (BS)-IV emission norms throughout the country (many parts had these in place much earlier), the government is already working towards the next milestone – the transition from BS-IV to BS-VI emission norms by 2020, skipping the BS-V level.
The government seems very committed to achieving this transition within the stipulated time frame, notwithstanding strong lobbying from autombile manufacturers who are required to upgrade vehicular technologies at the same time. This also sets before the refining companies a huge task – that of making the cleaner fuels (confirming to BS-VI standards) available by 2020. The investment requirement to do this is, of course, huge.
What are BS emission norms?
These are norms stipulated by the Indian government for regulating the levels of air pollutants from internal combustion engine equipment, including that from motor vehicles. The country has had BS norms in place since 2000. These norms are equivalent to the Euro norms followed in most developed countries such as Japan, the US, and several European countries. Simply put, the higher the norms, the cleaner the fuel, and lower the emission levels. India has been implementing BS emission norms, though with a time lag of five years as compared to the countries implementing Euro standards.
The BS-IV emission norms were adopted across the country on April 1, 2017 with BS-IV fuel being made available as well (older vehicles can run on the better fuel). However, India still lags behind many of its developed counterparts globally that have BS-VI norms in place. In the developing world too, China, to which India is often compared, has had Euro-V equivalent (and thus, BS-V equivalent) norms in place for a number of years already.
In India, the transition from BS-III to BS-IV has been carried out in phases. Many parts of the country such as Punjab, Haryana, Delhi, Goa, Kerala and Karnataka already had fuel supply conforming to BS-IV norms much before April 2017. The supply of the superior fuel in the country, however, fell short as the refiners were unable to churn out the required output. Broadly, BS-IV petrol and diesel have 50 parts per million (ppm) of sulphur, as compared to 150 ppm for petrol and 350 ppm for diesel under the BS-III norms. According to industry reports, refining firms invested about Rs 300 billion between 2005 and 2010 to upgrade their facilities to produce BS-IV-compliant fuels.
This quantum of investments has been almost matched by auto manufacturers. However, with respect to BS-VI compliance, they are still asking the government to provide some relaxation in the timeline that would enable them to sell their stock of vehicles with older emissions technology. With the Supreme Court’s recent verdict (in March 2017) against this postponement, this stakeholder group is left with little option but to comply.
What is the plan?
As per the Auto Fuel Policy and Vision 2025, the government has drawn up roadmap to switch to BS-VI emission norms throughout the country by 2020. These norms demand a drastic reduction in nitrogen oxide and particulate matter emissions – to a tenth of BS-IV levels. According to the government’s original schedule of emission norms adoption, BS-V and BS-VI norms were to be implemented from April 1, 2022, and April 1, 2024, respectively. However, in January 2016, an interministerial decision (among the Ministry of Petroleum and Natural Gas, the Ministry of Environment, Forest and Climate Change, the Ministry of Heavy Industries, and the Ministry of Road Transport and Highways) was taken to advance the 2024 deadline to 2020, skipping the implementation of BS-V altogether. The bold move reiterated India’s stance on climate change, in alignment with its ratification of the COP agreement.
How are we progressing?
The stringent stance of the government and the judiciary to advance to BS-VI norms by 2020 has put a daunting task before the oil public sector undertakings in terms of upgrading their refining units to produce BS-VI fuels. According to government estimates, oil refining companies are required to invest at least Rs 400 billion to upgrade their facilities to BS-VI.
Reconfiguration of refineries lies high on the agenda of oil refining companies. Indian Oil Corporation Limited (IOCL), for instance, is treading ahead with its plans for expanding capacity in conjunction with technical advancements. The company is likely to invest about Rs 150 billion and aims to be ready with BS-VI infrastructure by September 2019. In December 2016, its Mathura unit despatched BS-VI high speed diesel to two auto companies for testing purposes. Earlier, in September 2016, IOCL appointed Engineers India Limited to provide engineering, procurement and construction management services for implementing the BS-VI upgradation programme at its refineries.
In November 2016, Bharat Petroleum Corporation Limited (BPCL) secured the environmental clearance to set up additional facilities at its Kochi refinery in order to meet BS-VI quality standards. Currently, BPCL is in the process of enhancing its refinery’s capacity from 9.5 million metric tonnes per annum (mmtpa) to 15.5 mmtpa as well as upgrading fuel quality.
Another major refiner, Hindustan Petroleum Corporation Limited (HPCL) is also pursuing similar plans. Recently, in April 2017, the company signed an MoU with the Rajasthan government for developing an oil refinery that will produce BS-VI fuel in Barmer district. The project, which entails an investment of Rs 431.29 billion and for which work is expected to start by March 2018, is scheduled to be completed within four years. In addition, HPCL is also undertaking expansion and technical upgradation works at its Mumbai unit. The project will add 2 mmtpa to the unit’s capacity taking it to 9.5 mmtpa.
Simply put, the limited time frame for transitioning to BS-VI standards poses a big challenge. To put things in perspective, BS was implemented in India in 2000. BS-II came into effect in 2005, while BS-III was implemented from 2010. For implementing BS-IV across the country, it has taken seven years. One of the key reasons for the delay was the lack of availability of BS-IV-compliant fuel. In other words, refiners were unable to meet the demand for the cleaner fuel. Globally, too, it took 10 to 12 years for Europe and the US to graduate from Euro IV to Euro VI standards.
To meet the April 2020 deadline, Indian refiners need to have already started work in this direction. It is understood that if expansion and upgradation works are completed by September 2019, only then will an uninterrupted supply of BS-VI fuels be available by April 2020. (The penetration of BS-IV petrol after its introduction in the metros was only 24 per cent for four years and that of BS-IV high speed diesel was merely 16 per cent.)
To meet the stipulated deadline, the industry must go back to the drawing board to figure out how to do the needful. In other words, it has to commit itself to research and development, especially because re-engineering is tougher with tight schedules.
Meanwhile, it is interesting to see the irony of the situation. Vehicles (in any segment) contribute less than 10 per cent to the overall pollution index of the country. With strong public concern, the government is playing its cards right, given the elections in 2019 and given the fact that vehicular emission is the most “visible” form of air pollution. Nonetheless, the steps that need to be implemeted by industry and the government’s intent cannot be disregarded. Though, to meet the ultimate goal of reduced emissions, other sources such as industrial pollution warrant similar focus. Until a comprehensive approach is adopted, India has a long way to go before it manages to clean up its air.