The Edge Factor - Feb 2016

 

Contributions by: Sahil Kapoor, Mayank Kumar, Neha Uttam  

 

Emission norms impact on Economy

Your opinion counts

BS IV to BSVI norms: Are we ready to Go Green yet?

Supreme Court refused to advance BS VI norms deadline to April 2020 and skip the BS V norms completely, as proposed by the Government of India. Is it a right step from the Supreme Court, considering vehicular pollution being talk of the town? Which type of infrastructure and logistic issues may crop up, in case we go ahead with the advancement of BS VI emission norms?

This advance to BS VI is bound to put cost pressures for the automotive and allied industries and subsequent price increase for the consumers

This advance to BS VI is bound to put cost pressures for the automotive and allied industries and subsequent price increase for the consumers. On the technology front, BS emission norms are directly imitating the Euro norms. As auto firms are already exporting vehicles to Europe, it should not be a very difficult task to implement the changes, even though automakers are of a different opinion. The real challenge lies not in the technology but in the ecosystem of implementing the system.

The technology, which is used by manufacturers to meet Euro 6 norms throughout the world is Selective Catalytic Reduction (SCR). The component that is critical to the use of this technology is the Diesel Exhaust Fluid (DEF) which uses Urea as a major input. Urea in India is a controlled commodity and its price is fixed at ₹ 5,360 per ton. The difference between cost of production and selling price is paid as subsidy to manufacturers. Presently, majority of urea is used for fertilizer production. New emission norm if implemented, will put additional pressure on manufacturers to increase output to meet the DEF demand.

It would also be critical to have the Infrastructure set up to ensure DEF availability at fueling stations on major routes across the country

It would also be critical to have the Infrastructure set up to ensure DEF availability at fueling stations on major routes across the country. So, how much DEF will be used? For over-the-road operations, manufacturers employing SCR predict DEF “dosing rates” of around 85-125 km/ltr in commercial vehicles. Currently in the US DEF costs around $ 0.8 (which turns on to be ₹ 52) per liter and hence it would be critical for fleet owners to include this component in their overall running costs, something that eventually will be transferred to the end users.

Along with auto companies, it would also require technological upgradation of oil companies to supply BS VI compliant fuel on time. As per The Ministry of Petroleum and Natural Gas (MoPNG), downstream oil PSUs will be required to spend about ₹ 288 billion to upgrade their existing refineries. This will result in higher auto fuel prices, which will be ultimately passed on to the consumer.

In order to tackle the pollution problems, the upgradation to stringent fuel standards is required. The usage of BS VI-compliant fuel will help in reducing pollution and hence cleaner cities. However, the transition from BS IV to BS VI, is not easy as technology is critical for implementation of BS VI norms. Moreover, the production of urea, the core ingredient of SCR technology, and its distribution, is an equally critical area. At the end, the velocity of BS VI norms implementation would heavily depend on both of these factors.

REFERENCES:
http://economictimes.indiatimes.com/news/politics-and-nation/supreme-court-refuses-to-advance-bs-vi-norms-deadline-to-april-2020/articleshow/50676444.cms
http://economictimes.indiatimes.com/articleshow/49567897.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
http://www.eurekalert.org/pub_releases/2008-11/i-uto111008.php
http://www.edmunds.com/ram/1500/2014/long-term-road-test/2014-ram-1500-ecodiesel-adding-def-breaking-down-the-cost.html
http://auto.economictimes.indiatimes.com/etanalytics/reports/industry/bs-vi-norms-implication-is-the-industry-ready-kotak-institutional-equities/283

Something we found interesting

"An interesting video on how Euro 6 regulations are affecting diesel drivers. Euro 6 actually saves money and is environmentally friendly."
 

Watch full video at: https://www.youtube.com/watch?v=UZBF2YyqEgQ

 

 

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