Six months after environment minister Jairam Ramesh launched a diatribe against those who drive diesel-powered sports utility vehicles (SUVs), a planning commission committee has backed his call for higher taxes. "We have suggested that there should be higher tax on diesel and diesel-run SUVs," Kirit Parikh, head of the government-appointed panel has said. The suggestion is misdirected just as the environment minister's diatribe against diesel-run vehicles is misleading. As argued earlier in this space, if the idea is to discourage buyers from flocking to diesel vehicles, parity between petrol and diesel prices is unlikely to achieve the desired result. Diesel vehicles actually outsell their petrol counterparts in much of Western Europe where the buyers are niether ignorant nor wilful polluters.

Here is the piece published on December 22, 2010:

So much hot air over diesel

Motormouth minister's "criminal" diatribe is noxious 

When the central cabinet skews so heavily in favour of muddled minds and motormouths, and in far too many cases a combination of the two, it is perhaps natural that not all outrageous outpourings are subjected to equal or even adequate scrutiny. Environment minister Jairam Ramesh’s misdirected diatribe against those who drive diesel-powered sports utility vehicles falls into this category. It has been summarily rejected by the finest German manufacturers named by the minister. The German government has protested. But it has not triggered quite the uproar that it should. It needs stronger refutation simply because it is so misleading.

To recount, at a United Nations conference last month, the minister claimed that the subsidy on diesel was fuelling the demand for diesel-driven SUVs, that the real beneficiaries of the subsidy were owners of the “BMWs, Benzs and Hondas (the last, incidentally, are only petrol-driven and hybrid cars and SUVs)” and not the farmers for whom the subsidy was intended, and that the use of such vehicles was “criminal”. The minister also called for fiscal penalties on such vehicles. Despite protests from the automobile manufacturers, the minister repeated most of his remarks a fortnight later.

The minister’s diatribe is so much hot air for several reasons. To begin with, isn’t he barking up the wrong tree when he rants on about the availability of subsidised diesel to those who drive SUVs? Isn’t it the job of the government to either stop the subsidy on diesel or make sure that the subsidised fuel reaches only the farmers? Shouldn’t the minister, then, reserve his suggestion for the cabinet meetings?

In any case, SUVs form a minuscule, if growing, percentage of vehicles on Indian roads. To suggest that the buyers are flocking to the BMWs and Benzs because of cheaper fuel is laughable. Across Europe, which does today to contain vehicular pollution what the rest of the world follows years later, diesel vehicles have actually been gaining ground. In Britain, diesel cars actually outsold petrol vehicles for the first time in July this year. And, as the minister will never tell you, this has happened even as diesel has not only been not subsidised in Britain but has actually remained marginally costlier than petrol for years.

But, yes, successive governments in India have indeed encouraged car makers to come up with diesel variants. The beneficiaries have not been the BMWs and the Benzs of the world but rather the Tatas and the Mahindras who have been joined by every serious manufacturer who wishes to compete in the fastest-growing automobile market in the world. Even Suzuki, which did not possess diesel technology, forged an alliance with the Italian car maker Fiat to source diesel engines for its small cars. Ten years ago, a buyer looking for a diesel-driven small car had to choose between the Tata Indica and the Fiat Uno – the Maruti Zen diesel had flopped because its body was too light for the heavy Peugeot engine that the company had chosen. Now, almost every manufacturer offers diesel variants.

The minister’s point about fiscal penalties is indeed interesting. Does he realise that even ten years ago, buyers had to shell out as much as a third extra to opt for a diesel car? Despite the growing competition, diesel cars continue to be significantly costlier than their petrol counterparts. And, again, as the minister did not say, in Delhi, the largest market in the country, buyers are already paying extra in taxes levied only on diesel vehicles.

Finally, as for environmental concerns, it is well-documented that diesel cars produce less carbon dioxide, the main gas responsible for climate change. Petrol cars use more fuel than their diesel counterparts and therefore produce more carbon dioxide. Diesel engines have come a long way since the 1970s and the leading manufacturers are now producing engines that are as clean as they are efficient. Of course, the best petrol cars still produce fewer toxic emissions, but diesel engines last much longer and are better suited for bigger vehicles. So diesel engines have other undeniable advantages as well. Much of the problem in India has been diesel adulterated with subsidised kerosene, a problem that successive governments have failed to address.

The worst disservice that an environment minister or any government can do is to give a technology a bad name and condemn it. This happened when Delhi replaced its diesel-driven bus fleet with CNG buses. The more sensible experts had cautioned at the time that the government should fix emission norms rather than mandate a technology. Studies in Europe had shown higher invisible toxic emissions from CNG. However, the government went ahead and the result is a city with still higher pollution simply because the number of buses was drastically reduced and private vehicles continued to mushroom. The solution then, as ever, was to encourage people to use public transport.

If the minister is indeed serious about discouraging the use of diesel, he should prevail upon the government to subsidise petrol and make diesel prohibitively expensive. The full market price of diesel will still leave an incentive for buyers because diesel engines are much more fuel efficient.

Indeed, if the minister had been serious about containing emissions, he would have done something to encourage the use of electric cars. Reva, the brave indigenous effort in this technology of the future, could not even manage to stay on the road on its own charge.

Whatever else the minister does, he should stop his noxious diatribe against diesel.