CSE questions auto lobby estimates on car diesel usage

CSE questions auto lobby estimates on car diesel usage

New Delhi: The Centre for Science and Environment (CSE) has challenged estimates by an expert group and the auto lobby that the share of diesel used by cars in the country is negligible, and has recommended additional levies on such vehicles.

In a letter to the finance minister, the group has suggested an additional levy of 81,000 on diesel cars with engine sizes of up to 1,400cc, as recommended in the Kirit Parikh committee report. For diesel cars with larger engines, it suggested an additional duty of 1.62 lakh.

“We support this estimation (by the Parikh group), but believe that there is a need for an increased duty on diesel cars in the large segment (which are luxury cars as well)," Sunita Narain, director-general, CSE, wrote to finance minister Pranab Mukherjee on 20 January. Mint has seen a copy of the letter.

This comes after Parikh admitted flaws in his report, as Mint reported on 9 January.

Based on a report of the working group on petroleum sector (WGP) for the 12th Plan, the Society of Indian Automobile Manufacturers (Siam) estimated that passenger cars accounted for just 0.6% of diesel consumption in the country, and sports utility vehicles (SUVs) and taxis only 5%.

Reacting to CSE’s letter, Vishnu Mathur, director-general, Siam, said the environment body does not have the expertise to come up with data on diesel use.

“We are the only body which can give such data. Even the government is asking us for the data," he said.

“If they have the expertise, then they should find out the actual data. They are an environment body and they should stick to that."

CSE said the auto industry is desperate to prove that cars use negligible diesel. “This is a ploy to avoid higher taxation on diesel cars," said Anumita Roychowdhury, executive director-research and advocacy, CSE. “The automobile industry is trying hard to prove that cars and SUVs are very small users of diesel, so that it can block the growing demand to put higher taxes on diesel cars to offset the revenue losses and cut public health risk."

CSE said Siam and the working group have in their estimates reduced the share of diesel use by all key sectors of the economy. Siam has “created a mysterious category called ‘others’ that uses up more diesel than the power and industry sectors put together", said Roychowdhury. “This undefined category ‘others’—which is said to be eating up 12% of the total diesel used in the country—has not been accounted for by Siam/WGP."

Mathur said the category comprised diesel used by industries to generate captive power. “You have millions of telecom towers across the country which run on power that is generated by diesel gen-sets," he said.

The government subsidizes diesel for use by farmers in pump sets. That has led to a rising demand for cars powered by the fuel as it is around 30 cheaper than petrol.

According to Siam, the share of diesel cars sold in India rose 6 percentage points to 25% in the past nine months as the difference between petrol and diesel prices widened to 30 a litre. India’s biggest car maker Maruti Suzuki India Ltd has four models—Ritz, Swift, DZire and SX4—that run on diesel as well as petrol. Of these, the diesel versions have accounted for 80% of its sales this fiscal. Luxury sedans built by Mercedes, BMW and Audi, among others, also run on diesel.

“Cheap diesel is pushing the car market towards bigger cars that guzzle more fuel. While 87% of petrol cars have an engine size less than 1,200cc, about 40% of diesel cars sold are above 1,500cc," said Roychowdhury of CSE.

“If this trend continues, then by 2020, we will have as many diesel cars as total number of cars sold today. In that case, imagine the public revenue losses and public health costs."

About 40% of diesel cars sold in the country have engine sizes above 1,500cc. So far in 2011-12, cars above 2,000cc, including SUVs, have clocked 41% growth in sales, according to CSE.

Roychowdhury said with each litre of petrol replaced by diesel to run a car, excise earnings of the government drop seven times. Also, according to CSE, diesel engines emit seven times more particulates and five times more nitrogen oxide than petrol engines.

Siam agrees with CSE on this charge. Nitrogen oxide is a gas that pollutes the atmosphere. This gas is a by-product of combustion, like in an engine, and is formed from the reaction between nitrogen and oxygen gases during combustion, especially at high temperatures.

“Petrol is better on some accounts, while diesel is good for the other. It all depends upon the quality of fuel, which has improved with Bharat Stage IV (emission) norms," said Mathur. “And in any case, all the vehicles meet the government’s emission norms."