Adoption and Implementation of Cleaner Fuels and Vehicles In India Workshop on Advancing Vehicle Emission Standards and Related Policies Umang Jain Managing Associate WRI India Sustainable Cities [email protected] Manila, Philippines February 24, 2016

Fuel Scenario in India

Background Energy, the engine of growth for any economy plays a vital role in the socio-economic development of a nation. Fossil fuels are dominant sources of energy that generate electricity and power transportation systems and hence ,

“fuel” “fuel”the theeconomy economy.

Production & Consumption of Fuel in India

Background

th

Largest consumer of

fuel in the

World

Energy Consumption-Sector wise Transport accounts for 7% of the energy consumption

18%

42%

40%

Road Rail Others

Mode wise consumption (2011-12)

42%

by Road

40%

by Rail

10%

by Domestic Navigation

8%

by Non specified(Transport)

Source: Central Statistics Office , GOI,2013

Oil Production & Consumption-India Thousand Barrels/Day 3500 3000

Total oil Consumption

2500 2000

Imports

Net

1500 1000

Total oil Production

500 0 2001

Source : EIA

2003

2005

2007

2009

2011

Trends in Diesel Consumption Million Tons

69.08 Million Tons

= Source : Nielsen , 2013

$ 47.6 Billion / 2012-13

Trends in Petrol Consumption Million Tons

15.74 Million Tons

= $10.8 Billion / 2012-13 Source : Nielsen , 2013

Diesel to Gasoline Ratio In India

Imports

77% of required crude oil is met from

Imports

Major Import Sources

67% of crude oil &Petrol Products

are imported from Gulf

Countries Saudi Arabia 19%

Iran 6%

Other Middle east10 %

Western Hemisphere 18%

Kuwait 10% c

United Arab Emirates 9%

Africa 15% c

Iraq 13 %

Projections

Diesel Consumption -Projections Million Tons

The projections for crude oil demand for 2012-2025 are for the case where Real GDP grows at 7% per annum and real crude oil prices grow at 3% per annum

Petrol Consumption-Projections Million Tons

The projections for crude oil demand for 2012-2025 are for the case where Real GDP grows at 7% per annum and real crude oil prices grow at 3% per annum

Subsidy

Definition

Subsidy is a measure that keeps prices for consumers below market levels, or for producers above market levels or that reduces costs for consumers and producers. -OECD study.

Fuel Subsidy 161,029 Cr 138,541Cr ($23.52bn) 39,558

29,997

78,190 Cr 2,227

27,352

29,410

21,772 19,484

81,192

92,061

($13.52bn)

34,706

2010-11

For 2012-13

2011-12

2012-13

Petrol

PDS Kerosene

Domestic LPG

Diesel

Source : ONGC,Ministry of Petroleum and Natural gas; GOI,2013

Calculation of Under-Recoveries

Source :Ministry of Petroleum and Natural Gas , 2013

Compensation for Under-Recoveries Rs Crores

Source : Ministry of Petroleum and Natural gas; GOI,2013

Sharing of Under-recoveries by OMCs

Source :Oil India Limited (2013)

Subsidy (India Vs Rest of the World)

Global Scenario

Average Subsidization rate : (50.7% - 87.8%) (23.2% - 50.7%) (0.3% - 23.2%) Source : IEA, 2013

Subsidies -Global Scenario

0

20

40

Electricity

Natural Gas

Coal

Oil

Billion USD Source : Institute of Energy Research, 2013

60

80

Energy vs GDP

GDP

8.4% for fiscal year 2011

In the year 2011, the GDP growth of India was the 10th highest in the world Source : http://profit.ndtv.com/news/corporates/article-india-gdp-growth-to-slow-to-6-9-for-2011-12297327

India’s GDP & Energy consumption Billion U.S dollars

Quadrillion Btu

4500

25

4000 20

3500 3000

15

2500 2000

10

1500 1000

5

500 0

2003

2004

2005

2006

Total energy consumption Source : EIA

2007

2008 GDP

2009

2010

2011

0

Vehicles (Million)

Vehicles Vs GDP

Fuel Consumption Vs GDP

Total Fuel consumption (MT)

2500 2000 1500 1000 500

2016-2017

2021-2022 2026-2027 BAU GDP 7.5%

2031-2032 GDP 8%

2032-2037 2039-2040 GDP 8.5%

FUEL EMISSION STANDARDS

Introduction The primary reason for mandating stringent fuel and emission standards is public health Vehicular emissions are governed by combination of: Vehicle technology Automotive fuel quality Vehicle maintenance Driving patterns

Why India went in for Emission Standards

India did not have a comprehensive Auto Fuel Policy before 2001 Management of air quality within acceptable limits is the principal objective of regulating vehicle emission regimes

Why India went in for Emission Standards

It is the tailpipe emissions and not the fuel per se that determine the impact on ambient air quality. In India, automotive fuels are produced in petroleum refineries as per BIS standards.

History of Emission Regulations in India Vehicular emission norms for new vehicles notified for first time in India in 1991 for both at manufacturing stage as well as for in-use vehicles. Idle emission norms (PUC) for on-road vehicles came into force from 1991 Major initiatives towards vehicular emissions and auto fuel quality launched with the notification under the Environment (Protection) Act 1996

History of Emission Regulations in India Progressively vehicular emissions and fuel quality were tightened in 1996 and 2000 Lead free gasoline for vehicles with catalytic converters introduced in 1995 India achieved totally lead free gasoline in Feb 2000

History of Emission Regulations in India The Bharat Stage emission standards are norms instituted by the government to regulate the output of air pollutants from internal combustion engine Fuel specifications based on environmental considerations were notified first in April 1996 — to be implemented by 2000, and incorporated in BIS 2000 standards. BS-IV norms are currently applicable in 33 cities in which the required grade of fuel is available; the rest of India still conforms to BS-III standards.

Emission Standards Date

Diesel

Gasoline/Petrol

1995

10000 ppm (nationwide)

-

1996

5000 ppm (Delhi, select cities)

-

1998

2500 ppm (Delhi)

-

1999

500 ppm ( Bharat II, Delhi, limited supply)

-

2000

2500 ppm (nationwide)

-

2001

500 ppm (Bharat II, selected cities)

-

2005

500 ppm (Bharat II, nationwide) 350 ppm(Bharat III, 500 ppm (Bharat II, nationwide) 150 selected cities) ppm(Bharat III, selected cities)

2010

350 ppm (Bharat III;nation wide) 50 ppm (Bharat IV; 150 ppm (Bharat III; nationwide) 50 ppm selected cities) (Bharat IV; selected cities)

Progression from Pre Euro Standards-Euro VI

Auto Fuel Policy 2003 The Govt. of India constituted an Expert Committee, under the chairmanship of Dr R. A. Mashelkar, DG, CSIR in September, 2001 to evolve a long term plan and road for implementation Terms of Reference: recommend an Auto Fuel Policy for the country including major cities devise a road map for its implementation recommend suitable auto fuels and their specifications considering availability and logistics of fuel supplies fiscal measures for ensuring minimisation of social cost of meeting given level of environmental quality

Auto Fuel Policy 2003 The

following

road

map

was

recommended: Euro-III standard auto fuels for 13

identified cities &

BS-II standard auto

fuels for rest of the country w.e.f. 1.4.2005

Auto Fuel Policy 2003 BS-IV auto fuels (Gasoline/Diesel) in NCR & 13 identified cities from 01.04.2010

BS-III auto fuels (Gasoline/Diesel) in the rest

of the country from 01.04.2010

Comparison- Specifications Product

Gasoline

Diesel

Quality Specifications Sulphur- 500 ppm BS-II Benzene- 3% (Metros) & 5% (Rest)

Quality

Specifications

Euro-II

Sulphur- 500 ppm Benzene- 3%-5%

BS- III

Sulphur– 150 ppm & Benzene – 1%

Euro- III

Sulphur– 150 ppm & Benzene – 1%

BS-IV

Sulphur– 50 ppm & Benzene – 1%

Euro-IV

Sulphur– 50 ppm & Benzene – 1%

BS-II

Sulphur– 500 ppm & Cetane Nominimum 48

Euro-II

Sulphur- 500 ppm & Cetane No-minimum 48

Euro- III

Sulphur–350 ppm & Cetane No-minimum 51

Euro-IV

Sulphur–50 ppm & Cetane No-minimum 51

Sulphur–350 ppm BS- III & Cetane Nominimum 51 BS-IV

Sulphur–50ppm & Cetane Nominimum 51

Recommendations- Auto Fuel Policy 2003 Use of CNG/LPG in cities that are affected by higher vehicular population. Comprehensive programme for encouraging zero emission vehicles

Replacement of the existing PUC system Inspection & Maintenance (I&M) system in 11 major cities and further extension throughout the country. Linking of vehicle insurance with Inspection and Certification. Retrofitting old vehicles with new engines or emission control devices. Developing incentives for replacement of old polluting vehicles.

Implementation- Auto Fuel Policy 2003

MoP&NG decided to expand BS-IV auto fuels to 50 more cities by March 2015 with preference to: most polluted cities state capitals cities with million plus population subject to logistics constraints

Future Plans for BS IV

The Committee has identified following 15 cities for implementation in 2013-14 subject to logistics The remaining 18 cities shall be identified during 2013-14 to complete target of 50 cities by March 2015.

Auto Fuel Policy 2025

Auto Fuel Policy 2025- TOR Recommend for the country: Roadmap for auto fuel quality till 2025 Suitable mix of auto fuels Vehicular emission norms for various categories of vehicles

Use of alternate fuels Fiscal measures for funding requisite upgradation of oil refineries, logistics and removal of inter-fuel pricing distortions

Auto Fuel Policy 2025 The auto fuel policy lays down the following: The stakeholders involved in formulating the vehicle emission norms The road map for adopting the BS IV standards and ultimately BS VI Standards The barriers towards implementation of the BS IV standards The possible measures to overcome the barrier The benefits of progressing from BS III to BS IV and beyond, due to change in physical properties of the fuel However, it also recommends that alternate fuels and public/mass transit would provide the real solution

Stakeholders Stakeholders Ministry of Petroleum and Natural Gas

Ministry of Environment and Forests

Responsibility Fuel Policy & Standards

Ministry of Finance

Disbursement of Funds

Ministry of Surface Transport

Fuel Policy & Standards

Supreme Court Oil Companies/Refineries

Production of Fuel

State Governments Vehicle Manufacturers-SIAM

Production of Vehicles

ARAI/Academia

Research/Experts

Central Pollution Control Board

As Members and other responsibilities

Petroleum Conservation Research Association(PCRA) Department of Heavy Industries Department of Health and Family Welfare Department of Consumer Affairs

Stakeholders-Regulatory Environment for Oil Sector in India

Key Players in Oil Sector In India

Barriers to Upgrade to BS IV Penetration of BS IV gasoline in the domestic market was 24% and that for BS IV grade high speed diesel (HSD) was 16% – even four years after introduction of the BS IV regime in metropolitan cities. The reason for the lower penetration, especially in the case of diesel, was felt to be the fact that in the periphery of the designated BS IV cities, BS III vehicles could be registered BS IV vehicles (especially heavy duty vehicles) were more expensive and BS III fuel was cheaper than the BS IV equivalent Thus, the economics tended to subvert the desired course of the statutory mandate

Barriers to Upgrade to BS IV Ability of oil marketing companies to upgrade from BS-III and BS-IV standards to BS-VI- Rs 40,000 crore.($5.88bn) Getting auto firms to make the leap Fuel Quality, Costs The government has been unable to move completely to BS-IV because refiners have been unable to produce the superior fuel in the required quantities.

BS III- BS IV BS IV-VI

Rs 30,000 cr($ 4.41 bn) Rs 40,000 cr($ 5.88 bn)

Additional investments by automakers to upgrade will inevitably raise the prices of vehicles.

Barriers to Upgrade to BS IV Industry Arguments Vehicles must be fitted with DPF (diesel particulate filter), a cylindrical object mounted vertically inside the engine compartment. Bonnet length may have to be increased, which would make vehicles longer than 4 metres, and attract more excise duty under existing norms. Also, DPF would have to be optimized for Indian conditions. BS-VI vehicles also have to be equipped with an SCR which requires aqueous urea solution (AUS 32, which contains ammonia) At every stage, the technology is getting more complex. So, even if oil companies manage to leap, auto firms claim they need 6-7 years to switch to BS-VI.

Barriers to Upgrade to BS IV Two Wheelers- Cost can go upto Rs 10000 per unit($147) 3 wheelers Emissions Norms

S. No.

1.

BS III to BS IV

Fuelling technology/ After treatment Carburetion

BS IV to BS V

4 stroke

1,500–2,000

Evaporative system

Gasoline 2 stroke

1,000–1,500

CAT improvements

4 stroke

1,500–2,000

2 stroke Gasoline 4 stroke

5,600–6,000

2 stroke Gaseous 4 stroke

8,400–9,000

Fuel Injection

Emissions Norms 1.

Approx. cost, Rs/unit

1,000–1,500

Three Way Catalytic S. No.

Engine

Gasoline 2 stroke

Secondary Air Injection

2.

Fuel

BS III to BS IV

6,800–7,500 7,500–9,500

Fuelling technology/After treatment Approx. cost, Rs per unit Fuel Injection Equipment 5,000 Diesel Oxy catalyst consumption EGR POC

2.

BS IV to BS V

With new similar to common rail (CRS) fuel injection system, electrical cooled EGR & higher loading DOC with DPF

20,000

Barriers to Upgrade to BS IV

Passenger Cars & LCV Price may go up by Rs 70,000 per unit($ 1029) S. No.

Category

1

4W 10 yr old vehicles Strengthening PUC norms Phasing out in use vehicles Retrofitting Nox control devices-SCR

Ways to overcome the Barrier Emission norms for all kinds of vehicle to be in place Fiscal Support: Price Differential between BSIII and BS IV to go Equalisation of BSIII and BS IV by imposing High Sulphur Cess Special upgradation cess which shall accrue to OIDB

Rationalization of rates of Central Excise Duty to make price of ordinary and premium fuel same Inspection and Maintenance requires special focus

Benefits of Progressing from BSIII to BS IV Till date only 39 cities have adopted the BS IV standards in India The impact of the transition will be evident once a critical mass adopts the BS IV standards However, there are benefits which have accrued due to the adoption of the standards

Progression from BS I-IV Gasoline Quality Improvement Phasing out of Lead Reduction of Benzene Content Benzene is known to be a human carcinogen. An effective way to reduce human exposure to benzene is to control benzene in gasoline.

Progression from BS I-IV Reduction of Sulphur Content Reduced sulphur in gasoline results in reduced emissions from all catalyst equipped vehicles. Sulphur adversely affects exhaust gas sensors besides affecting efficiency of catalyst used in the after treatment devices

Progression from BS I-IV Octane Number Enhancement Octane number of gasoline signifies the improved performance of engine. Loss in octane number due to phasing out of lead was made up by installing new facilities in the refinery and changes in refinery operation. RON (Research Octane Number) of gasoline for BIS 2000 spec was increased to 88 RON was further increased to 91 for regular grade gasoline meeting BS III & IV specification respectively.

Progression from BS I-IV Limiting Olefin and Aromatics Content

Progression from BS I-IV Diesel Quality Improvement Reduction of Sulphur Content Sulphur in diesel fuel contributes to fine Particulate Matter (PM) emissions through the formation of sulphates both in exhaust and in the atmosphere. It can also lead to corrosion and wear of engine. Efficiency of some of the after treatment devices is severely affected at higher sulphur levels and these work well only with fuel having 50 ppm or less sulphur.

Progression from BS I-IV Increasing Cetane Number The Cetane number is a measure of compression ignition quality of diesel fuel and influences cold start-ability, exhaust emissions and combustion noise

Progression from BS I-IV Limiting Polycyclic Aromatic Hydrocarbon (PAH) Content Polycyclic Aromatic Hydrocarbons (PAH) are harmful to human beings. One of the reasons for presence of PAH in the air is due to burning and incomplete combustion of diesel or gasoline. Bulk of PAH in the air is of respirable size i.e. below 7 µm.

Physical Parameters Key Parameters for Motor Spirit or Gasoline Attribute

1 2 3 4 5 6

Unit

Density at 15°C Sulphur RON MON Benzene Aromatics Olefin

kg/m3 ppm max min min % vol. max % vol. max % vol. max

BS III Regula r 720−775 150 91 81 1 42 21

BS IV Premium 720−775 150 95 85 1 42 18

Regula r 720−775 50 91 81 1 35 21

Premium 720−775 50 95 85 1 35 18

Key Parameters for High Speed Diesel 1 2 3 4 5 6 7 8

Attribute Density @ 15°C Distillation: 95% volume recovery @ °C max Sulphur Cetane Number Cetane Index Flash Point, Abel, min KV @ 40°C Polycyclic Aromatic Hydrocarbon (PAH), max

Unit kg/m3 °C ppm max Min Min °C cSt % wt.

BS III 820−845

BS IV 820−845

360

360

350 51 46 35 2.0−4.5 11

50 51 46 35 2.0−4.5 11

Emission Norms for 2 Wheelers Following on discussions in Working Group and with manufacturers, emission norms for two (and three) wheelers have been developed conforming to BS IV standards. As of now two/three wheelers operate only with BS III fuels and have BS III emission norms The Indian Two Wheelers Industry is the second largest in the world with almost 12 million new customers every year. This industry provides employment to around 4 million direct and indirectly, in the country

Development of Emission Norms for 2 Wheelers In 1991 when the emission control regime started in India, the norms for two wheelers started with the only then existing UNECE regulation (R40) but with an India specific Indian Driving Cycle (IDC). Subsequently, these norms were progressively tightened, a Mass Emission Norms for BS IV for Two Wheelers Class

BS IV Emission norms (g/km)

Test Cycle

HC + NOx NOx

CO

As per GTR 2 Amend 1&2 Alt-A and WMTC Sub Class 2-1 equivalent BS III

1 & 2-1

1.403

0.790

2-2 3-1 & 3-2

1.970 1.970

0.670 0.340 0.400 0.200 D. F. is built into the above proposed emission norm These values are with BS IV fuel Norms to be applicable from 1st April 2016

1. 2. 3.

0.390

Class 1

Sub Class 2.2 Sub Class 3-1 Sub Class 3-2

50 cm³ ч engine capacity 150 cm³ and Vmax< 50 km/h or engine capacity < 150 cm³ and 50 km/h ч Vmax ч 100 km/h Engine capacity < 150 cm³ and 100 km/h 150 cm³ and Vmax ч 115 km/h 115 km/h 3,500 kg GVW

Fuel roadmap to be made available (conventional, bio-fuel and gaseous fuel) Fuel quality monitoring at retail outlet Enforcement law/order for curbing adulteration

Summary Improve energy efficiency of transport modes, fuel quality, and vehicle emission standards and introduction of alternative energy. Avoid-Shift-Improve Strategy can be used to achieve significant reduction in energy consumption and GHG emissions

Diversifying India’s fuel basket by introducing alternative fuels A road map for vehicle emission and fuel quality standards has to be established. Smoothen the process to adopt BS IV standards and eventually BS VI standards

Thank you!