Weeks after Environment minister Jairam Ramesh called for abolition of subsidy to gas-guzzling diesel cars, Sunita Narain’s Centre of Science & Environment has urged the government to introduce new taxes on diesel cars in the upcoming budget. India has low taxes on diesel to keep food prices down, but the policy has led to the creation of a big diesel car market as companies try to take advantage of the subsidy.
“We condemn this perverse subsidy,” Anumita Roychoudhury, head of CSE’s air pollution team, pointing out that diesel — a heavier fuel with more carbon than petrol — causes more global warming than petrol.
Diesel, a necessary by-product of petroleum distillation which is required for producing petrol, is used in heavier engines the world over, while cars and bikes run on petrol. The fuel, which is not suitable for small-engines, has been ‘forced’ on to cars in India due to the artificially low prices, environmentalist, experts point out.
While diesel prices are similar to those of petrol in the international markets (at around Rs 28 per litre), in India, petrol is around 30% costlier than diesel. Taxes on petrol are around 100% while diesel taxes are only around 50%.
While cheap diesel is primarily meant for trucks that transport essential commodities from one part of the country to another, Jairam Ramesh had recently pointed out how many rich people now big cars that run on diesel, partly due to the availability of cheap fuel.
“The combination of cheap diesel and lure of lesser taxes on small cars will make the diesel car numbers explode now. Already, diesel cars constitute 36 per cent of new car sales – this is expected to be half soon. Since 2008, the price gap has increased from 28 per cent to 35 per cent in Delhi. It is deplorable that cars are not being made to pay the full costs when the oil companies are losing Rs 7-9 per litre of diesel,” CSE said in a statement.
While 85 per cent of the petrol cars sold in India have less than 1,200 cc engines, 64 per cent of diesel cars are just under 1,500 cc, it said, pointing to the ‘big car’ trend in the market fueled by diesel. Cars use up 15 per cent of the total diesel in the country – compared to 12 per cent by buses and agriculture, 10 per cent by industry, and 6 per cent by the railways, it said.
CSE has already been taken to court for its anti-diesel car stand by Tata Motors which makes the largest number of diesel cars in India. Tata and others argue that diesel is no longer as polluting as it used to be, due to advances in technology.
Roychoudhury, however, argues that beiing a heavier fuel with more carbon atoms than petrol, Diesel cannot, but pollute more.
Auto industry’s claim of greater fuel efficiency and lesser carbon emissions from diesel cars is unacceptable as diesel fuel has higher carbon content than petrol. “If more diesel is burnt encouraged by its cheaper prices, more heat-trapping CO2 will escape. Also, black carbon emissions from diesel vehicles are several times more heat-trapping than CO2 and this nullifies fuel efficiency gains,” she points out.
CSE pointed out that the lower excise duty on diesel consumed by cars costs Rs 300 crore in Delhi alone.
It pointed out that in other countries, diesel cars owners are made to pay for the extra pollution they cause or to recover subsidies or to offset low taxes.
“In Brazil, diesel cars are actively discouraged because of the policy to keep taxes lower on diesel. In Denmark, diesel cars are taxed higher to offset the lower prices of diesel fuel. In China, taxes do not differentiate between petrol and diesel.
“The European Commission has calculated the difference in lifetime pollution costs of Euro IV compliant diesel car and petrol car. The total pollution cost of a Euro IV diesel car is 1,195 Euros vis-a-vis 846 Euros for a petrol car. This nullifies the marginal greenhouse gas reduction benefit of diesel car and costs higher to the society,” CSE alleged.
In the end, the organization urged the government to put in additional “substantial and effective” excide duty on diesel cars to prevent dieselization of car segment and restore the 24% excise and increase further the special duty on all big cars.
It also urged the government to withdraw the relaxation given to diesel cars. Currently small petrol car is legally defined as one with length not exceeding 4,000 mm and with an engine capacity not exceeding 1,200 cc. For diesel small car this has been relaxed to 1,500 cc for diesel cars. “Make it same as small petrol car for the purpose of tax measures,” it said.