Bloomberg News

India’s Diesel Subsidy Spurs Pollution Worse Than Beijing

February 28, 2014

Diesel Gas Pumps

Diesel gas pumps at a Bharat Petroleum Corp. gas station in New Delhi. Photographer: Kuni Takahashi/Bloomberg

Molecular biologist George Easow’s move to India to start a clinical diagnostics business lasted just three weeks before he was convinced to return to the U.K.

The convincing was done by his seven-month-old daughter Fiona. Within days of moving to New Delhi, the child was wheezing and gasping for air because of smog. “She could hardly breathe,” said her father.

Fiona was kept indoors and put on medication. Nothing worked. “We had to make a call,” Easow said, adding her symptoms disappeared once back in the U.K. and haven’t returned.

For the 16.8 million residents of India’s capital, the wheezing continues. The bad news is it’s going to get worse.

New Delhi isn’t alone as cities across the nation suffer from some of the worst air quality in the world. That’s costing the country 1.1 trillion rupees ($18 billion) in shortened life spans of productive members of the urban population each year, according to a June World Bank report.

While Beijing and Shanghai make the headlines for air pollution caused by factory smokestacks burning coal, Delhi residents get their smog right in the face from cars and trucks running on cheap diesel.

India subsidizes sales of the fuel to the equivalent of $15 billion a year, encouraging purchases of diesel vehicles that can pump out exhaust gases with 10 times the carcinogenic particles found in gasoline exhausts.

The result: Delhi’s air on average last year was laced with double the toxic particles per cubic meter being reported in Beijing, leading to respiratory diseases, lung cancer and heart attacks.

‘No Doubt’

“I have no doubt, 100 percent, that diesel exhaust is contributing to a rise in asthma, respiratory illnesses and hospitalizations,” said Dr. T.K. Joshi, director of the Centre for Occupational & Environmental Health in Delhi at Maulana Azad Medical College.

“Diesel exhaust is a carcinogen,” Joshi said in a Feb. 5 interview, referencing a report by the World Health Organization in October.

Diesel passenger vehicles accounted for 49 percent of all new cars sold in India last year, up from a third in 2008, according to the International Council on Clean Transportation, a not-for-profit known as the ICCT. The number of new passenger vehicles sold each year may almost double to 5 million by 2020 and the share of diesel models is surging as the fuel sells at a 24 percent discount to gasoline. Beside diesel being cheaper -- about $3.34 a gallon in Delhi -- it also provides more mileage than gasoline, adding to the economic attractiveness of vehicles running on the fuel.

Nine Years

In comparison, only 0.5 percent of China’s new passenger cars run on diesel, according to Germany’s Bosch Group, which makes auto exhaust cleaning systems for the fuel. China will increase domestic natural gas supply this year to curb air pollution, its National Energy Administration said today.

Benchmark zero-grade diesel sells in Beijing for 7.77 yuan per liter, a 6 percent premium to 89-octane gasoline, according to data compiled by Bloomberg.

India’s diesel fleet, which runs on emissions standards as much as nine years behind Europe, will remain on the roads for years to come even if tougher rules are introduced, said Anup Bandivadekar, India program director for the ICCT.

“The future implications are what make the problem so worrisome,” said Bandivadekar.

Air particulate pollution causes more than 116,000 deaths annually in India, hitting the younger, most productive members of the population the hardest, according to Muthukumara S. Mani, senior environmental economist at the World Bank.

Lethal Particles

Carmakers from Daimler AG’s Mercedes-Benz to Maruti Suzuki India Ltd. to General Motors Co. (GM:US) have all introduced new diesel models since 2010.

In India, diesel exhaust systems don’t come with equipment mandated in Europe to scrub exhaust gases of lethal particle emissions. The reason for that comes back to the fuel itself: Oil refineries produce diesel with levels of sulfur that would ruin the exhaust-scrubbing equipment.

The automobile industry will have “no difficulty” in installing exhaust technologies once India raises emission standards and fuel quality, the Society of Indian Automobile Manufacturers said in an e-mailed response to questions.

“General Motors is committed to following all emission requirements and agrees with the Society of Indian Automobile Manufacturers,” said P. Balendran, spokesman for the automaker in India, in a Feb. 24 e-mail.

“The auto industry has been asking for a single regime of fuel and emission norms across the country,” said C.V. Raman, executive director, engineering at Maruti Suzuki. A move to current European standards for the fuel would reduce emissions by as much as 80 percent from present levels, he said.

Daimler’s India unit didn’t respond to an e-mail and a phone call requesting comment.

Little Incentive

Hindustan Petroleum Corp., Indian Oil Corp. and Bharat Petroleum Corp., state-run oil refiners, have little incentive to invest in technology to lower sulfur in the fuel as they lose money on every gallon of diesel sold.

Upgrading one refinery to make Euro 5 equivalent fuel, Europe’s current standard, will cost 25 billion rupees ($403 million), said S. Roy Choudhury, chairman of Hindustan Petroleum, who is scheduled to retire today.

“Diesel prices need to be increased to cut demand,” he said. “That’s the primary issue.”

Yet, the government policy of subsidizing diesel is unlikely to end soon as it would raise prices during an election year.

Like Asbestos

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 they’re so small, they penetrate deep into the lungs and pass into the blood stream, according to the U.S. Environmental Protection Agency.

In October, the World Health Organization classified PM2.5 as a Group 1 carcinogen, similar to asbestos and tobacco, saying exposure can cause lung cancer, complicate births, and increase the risk of bladder cancer. Short-term spikes can kill, triggering strokes, heart failure and asthma attacks, according to the American Lung Association.

In 2013, the annual average concentration of PM2.5 in New Delhi was 173 micrograms per cubic meter, compared with 89.5 micrograms in Beijing, according to data from India’s Central Pollution Control Board and the Beijing Municipal Environmental Monitoring Center. The threshold for average annual exposure as recommended by the WHO is 10 micrograms.

Susheel Kumar, chairman of the government’s Central Pollution Control Board didn’t respond to e-mails and phone calls seeking comment.

Street Toxins

Fine particulate matter is also produced in India by coal-fired power plants, diesel generators, and cooking fuel.

But the major source in Indian cities is vehicles, said Sumit Sharma, a fellow at The Energy and Resources Institute in New Delhi.

“That’s dangerous because it’s happening closer to the breathing level of people,” said Sharma. “It’s not happening from a 220-meter high chimney but at the level of one meter.”

The World Health Organization uses data for larger, PM10 or 10-micrometer particles as a proxy. Its database for 2003 to 2010 shows annual average pollution in Delhi and Mumbai exceeded that of Beijing and Shanghai.

Anumita Roychowdhury, head of the air pollution program at the Centre for Science and Environment think-tank in New Delhi, agrees on the reason why: “The diesel subsidies have filled up your city with millions of tail pipes spewing carcinogens.”

To contact the reporters on this story: Natalie Obiko Pearson in New Delhi at npearson7@bloomberg.net; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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