Home >Market >Stock-market-news >Oil slump heightens pollution challenge from Delhi to Shanghai

Hong Kong/Mumbai/New Delhi: A brisk walk in India’s capital New Delhi on Christmas Eve was rated ‘hazardous’ to health, while a similar stroll in the Chinese city of Shanghai was ranked ‘unhealthy.’ Two of Asia’s biggest cities with the same problem: Air pollution.

This year, it could get worse. As the plunge in oil prices filters through to lower costs at the petrol and diesel pump, more cars, buses and trucks will be on the roads adding to the smog, warns researcher Anumita Roy Chowdhury, executive director at the Centre for Science and Environment (CSE) in New Delhi.

The lower oil price brings the problem, but also holds a solution, she says.

“The need of the hour is not to fully pass on the benefits of falling crude oil prices to the consumers, but to create a fund that can be used in building infrastructure to produce cleaner fuel and also implement better emission norms."

Brent crude, a benchmark for more than half of the world’s oil, dropped 48% last year causing pump prices to fall by as much as 14% in India and 23% in China.

In November, both countries acted to try and slow the price decline by raising taxes on transportation fuels.

India increased taxes on petrol and diesel, the fuel blamed for the worst of Delhi’s air pollution, twice again since November. China raised taxes on a range of fuels, including petrol and diesel.

Taxes versus air

“Too low a price in petrol and diesel will only spur demand and consumption and may cause some direct setbacks to our goal to cut emissions," Yin Zhongqing of the National People’s Congress said in Beijing on 16 December. “I think people may live with higher taxes in exchange for better air quality."

China’s ministry of finance echoed this view in a statement in November, adding that a “suitable price" will not only curb pollution, but also help develop renewable energy industries.

So far, the fuel taxes don’t seem high enough to achieve those goals. China’s petrol sales in November grew 16% on year. Diesel rose 3%.

In India, consumption of diesel—which outsells petrol by four times—rose 3.4% to 6 million tonnes in November from a year earlier.

Part of the difficulty for India is it freed diesel prices from state control mid-October. Refiners cut retail prices by 3.37 per liter immediately after that. Indian Oil Corp. Ltd, the nation’s biggest refiner, has cut prices another three times since then and the government has raised taxes on diesel by 4.5 a litre.

Pollution increase

The preference for diesel in India makes the health issue more acute. Vehicles running on the fuel aren’t required to use equipment mandated in Europe to scrub exhaust gases of lethal particle emissions.

Diesel engines emit a pollutant known as PM2.5, or airborne particles and liquid droplets measuring less than 2.5 micrometers or one-thirtieth the width of a strand of hair. Because of their size, they penetrate deep into the lungs and pass into the blood stream, according to the US Environmental Protection Agency.

In October 2013, the World Health Organization classified PM2.5 as a Group 1 carcinogen, similar to asbestos and tobacco. Short-term spikes can kill, triggering strokes, heart failure and asthma attacks, according to the American Lung Association.

“Diesel consumption has only increased in the past year and as more bigger vehicles are being sold today we think the fuel efficiency of the system will go down causing more pollution." said Sumit Sharma, a fellow at The Energy and Resources Institute in New Delhi.

“More vehicles, absence of any stringent measure by the government in the past one year means the pollution levels will only increase." Bloomberg

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