RUPINDER PAINTAL is Director, Market Development – India at ExxonMobil Lubricants
With the 2030 deadline for the global agenda on sustainability, economies across the world are using the potent combination of policy, technology and collaboration to get there. Under its Nationally Determined Contributions (NDCs), India too, stays committed to reducing the emissions intensity per unit of GDP by 33-35 % by 2030 relative to its 2005 levels.
In India, the new Bharat Stage 6 (BS 6) – technically equivalent to Euro 6 – will come into effect from April 1, 2020. By 2025, the rule will be applicable to most scooters and motorcycles. India Inc. is working hard to be on track for these adoptions. The global energy intensity is expected to improve over the next few decades from about one per cent between 2000 and 2017 to around two per cent per year from 2017 to 2040. As a result of these, the industry is expected to witness about 45 % reduction in energy-related CO2 emissions per unit of GDP, globally by 2040.
PATHWAYS TO TRANSFORMATION
It was in February 2016 that the Ministry of Road Transport and Highways (MoRTH) had notified the enforcement of the new BS 6 emissions regime from April 1, 2020. The Indian auto sector started working on the transformation required for its proper adoption and implementation. The impact of this envisaged transformation has been carefully studied in the report “India Leaps Ahead: Transformative Mobility Solutions for All”, produced jointly by the NITI Aayog and Rocky Mountain Institute. The report states that the move makes it possible for India to save as much as one gigaton of carbon emissions between 2017 and 2030, and approximately $ 60 bn in annual diesel and petrol costs by 2030.
A step change in standards is typically predicated on transformation; the switch to a new auto emissions regime will be no different. To ensure the plan for greenhouse gas (GHG) emission reduction is a success, there is a need for a synergetic impact created by simultaneous improvements in design, manufacturing and systems.
The biggest challenge of BS 6 is that each variant of the vehicle component will have to undergo changes. For instance, Maruti Suzuki has over 50 variants and is working on all of them. Moreover, having adequate quantities of BS 6 in advance for testing and validation will pose challenges. The whole process will involve long gestation periods and costs depending on the base emission type.
In a bid to meet the April 2020 deadline, OEMs have been working on design aspects and synchronising with the supply chain to ensure new designs are in place, without compromising on quality. To meet the new emission mandate, Indian companies will use technology that is already available in Japan and Europe, which explains the number of collaborations in the mobility components market with global brands such as Bosch, Denso, Continental and Valeo. According to the Society of Indian Automobile Manufacturers (SIAM), the cost of these upgrades will be around $ 1 tn; and around 30-40 % will be met by the auto components industry.
NEW BUSINESS OPPORTUNITIES
The investments made in the transformation will be huge, but acquired technologies and capabilities through joint ventures will now provide component manufacturers a lifetime opportunity to move up the value chain. For global brands like Bosch and Cummins, it presents an opportunity to create an economy of scale for a low-cost emission control system. The Indian market can subsequently serve as a development ground for technologies for other emerging markets as well.
One of the biggest virtues of the new directive is that, in addition to global partnerships on technology, many Indian engineering brands have invested heavily in R&D to build new emission reduction capabilities. The entire manufacturing process at almost all automotive factories is undergoing upgradation and overhauling to ensure it can handle several tests, calibrations and validations. The new processes need to fit in not only with the norms, but also the pockets and skill sets. The result will certainly be an upward movement for Indian firms in the technology and components arena and will contribute towards the dramatic development of the technology upload in the industry as a whole.
While emissions are certainly on the radar for meeting the 2030 goals, electric vehicles (EVs) could also play a substantial role in ensuring sustainable environmental goals. Interestingly, approximately 120 years ago, in the US, more than one-third of automobiles on the road were EVs, and over 40 % were steam-powered. In fact, the first Porsche was an EV – the Model T and its popularity changed the equation unrecognisably. However, in 2017, EVs were only one per cent of the global fleet of cars on the road. Governments across the world, including India, are planning to boost EV production over the next few years, primarily to reduce emissions.
India, the world’s fourth-largest auto market currently, has vast potential for EVs but the adoption has been slow and there are several reasons – lack of charging infrastructure, limited finance availability among others. India falls short of China, which is the world’s largest EV market and has around 456,000 charging points according to official data, as against India’s estimated 650 charging stations for cars and SUVs, in 2018. However, international brands have seen the Indian market as an opportunity. The government has initiated various measures, including import duty exemptions for certain EV parts, so that the market can witness healthy growth.
However, the mass EV adoption does not necessarily mean becoming oil free. The increasing population will drive up oil consumption by 2035, but the higher EV adoption and cleaner-burning internal combustion engines might increase the demand for cleaner automobile fuels, by about 11 mn barrels per day. Besides, 100 % EV sensitivity by 2040 would require all passenger vehicle sales to be electric starting 2025.
Building on proven history of energy technology expertise, oil manufacturers continue to unlock new possibilities for automotive manufacturers and consumers by pushing product innovation boundaries. When it comes to EV performance, consumers are worried about range and safety and OEMs are focussing on making their EVs more efficient and durable.
PATH AHEAD FOR ENERGY EFFICIENCY & TWO DEGREE (2°) SCENARIOS
The progress of human society is based on its energy-generation capabilities. However, ironically, that has become the basis of its destruction too. A significant number of challenges faced by countries today pertain to poisons in the air and warming of seas, and most of these issues can be controlled if the developed economies find alternate means to drive growth sans the misuse of energy. Technology will play a huge role in this endeavour and many global brands are committed to this aim.
These challenges are magnified when we consider that the global population is projected to grow from 7.5 bn currently to 9.2 bn by 2040. However, by then, the combined effects of lower energy intensity and less carbon-intensive energy sources will drive down carbon intensity of the global economy by around 45 %. There is a strong need for ensuring an improved energy and emissions policy globally that is in line with the need for a cleaner environment as that will help everyone.