The environmental cost of continuing to subsidise diesel has seldom been detailed. New Delhi has an annual average of 153 micrograms of small particulates, known as PM2.5, per cubic metre. An increase of only 10 micrograms per cubic metre of PM2.5 significantly raises health risks. Higher exposure such as that in Delhi winters, or that in Patna, Gwalior and Raipur, which ranked next badly in India, leads to hospitalisation for asthma, lung diseases, chronic bronchitis, heart damage and lung cancer
True to its word, India’s new government led by Bharatiya Janata Party is likely to reduce subsidies on diesel in the national budget to be presented later this week. It is estimated that fossil fuel subsidies – including on kerosene and liquefied petroleum gas – will cost the government Rs 1.4 lakh crore ($23.3 billion) in 2014-15 and severely curb expenditure on welfare schemes. Prices at gas stations are now being increased by 50 paise (less than one US cent) a litre a month since January 2013, bringing down the loss for state-owned oil companies to Re 1.50 (2.5 US cents) per litre. Even this, in a strange case of robbing Peter to pay Paul, will not be borne by consumers since the excise duty on diesel will be cut by Rs 1-2 (US 1.6-3.3 cents) a litre.
Unfortunately, fossil fuel subsidies have mostly been viewed from the financial perspective – the loss to the exchequer. In the 2012-13 budget, the then finance minister noted that India’s fiscal deficit had increased by 1% in 2011-12, due largely to a 26.7% increase in such subsidies. The previous UPA government intended to maintain total subsidies (including on fertilizer and food) at under 2% of GDP that year, reducing to under 1.75% of GDP over the following three years, although food subsidies would continue to be fully provided for. It is now 2.44%.
Two years ago, the Geneva-based Global Subsidies Initiative, an arm of the International Institute for Sustainable Development, estimated that increasing diesel prices in the country by 25% would only lead to around 1% rise in general price levels. Around 60% of the diesel consumed is on transport. Large-scale truck operators would see an 8% increase in costs. Rail transport costs would rise 2.5-3.5%, and industry an average of 0.25%. In the agriculture sector, the costs of cultivating wheat would rise 2.75% and sugarcane 0.75%. These increases would be manageable.
However, the environmental cost of continuing to subsidise diesel has seldom been detailed. In May, the World Health Organisation (WHO) reported that Delhi had the worst air quality in the world, while noting that Chinese pollution data may be an under-estimate. This, despite the capital having switched over to compressed natural gas (CNG) for all public vehicles some years ago. As many as 13 of the 20 dirtiest cities in the world are Indian.
The Centre for Science & Environment (CSE) in Delhi has been almost single-handedly running a campaign against diesel due to its tremendous toll on people’s health. According to Anumita Roychowdhury, who was the lead researcher for the CSE’s 2006 study Clearing the Air in Asian Cities, the consequence of these subsidies was that more motorists were switching over to diesel cars, goods were being transported by truck rather than rail and farmers were using diesel generators instead of electric ones.
According to the WHO, New Delhi has an annual average of 153 micrograms of small particulates, known as PM2.5, per cubic metre. An increase of only 10 micrograms per cubic metre of PM2.5 significantly raises health risks. Higher exposure such as that in Delhi winters, or that in Patna, Gwalior and Raipur, which ranked next badly in India, leads to hospitalisation for asthma, lung diseases, chronic bronchitis, heart damage and lung cancer. A 2005 study by the Chittaranjan National Cancer Institute in Kolkata found that a quarter of Delhi’s residents had undergone chromosomal changes due to air pollution that can prove a precursor to cancer.
Actually, even worse off are the urban poor. In a city like Mumbai where six out of every ten residents live in a slum, very often abutting roads, the exposure to diesel fumes is deadlier. A study of Delhi revealed that 55% of the population lives within 500 metres of a freeway and 50 metres of a major road. When the World Bank reviewed three Indian cities, it found that vehicles as a whole contributed half the direct particulate matter emissions. Dirty and dangerous diesel, along with other fuel emissions, can even kill foetuses.
In 2012, the International Agency for Research on Cancer (IARC) of the WHO reclassified diesel exhaust as a Group 1 carcinogen that has definite links to cancer. These exhausts are now in the same class of deadly pollutants as asbestos, arsenic or tobacco. The IARC has urged there should be global efforts to reduce exposure to diesel fumes as much as possible.
Diesel has a higher carbon content than petrol and the rush to buy diesel cars, prior to the gradual monthly increases in the price of this fuel, leads to more carbon dioxide being trapped in the atmosphere, causing global warming. However, black carbon emissions from diesel exhausts also trap more heat than carbon dioxide. The European Commission has found that the lifetime pollution costs of diesel cars – from manufacture to running – are far higher than petrol models.
Since diesel is used mainly for truck transport here, it contributes along with emissions from inefficient woodstoves to the climate phenomenon known originally as the Asian Brown Cloud, a pall of smoky pollutants which hangs over south Asia. When India and other Asian countries protested against the UN Environment Programme against this formulation, it was renamed the “Atmospheric Brown Cloud”. Over the Himalayas, diesel emissions throughout the Indo-Gangetic belt lead to greater snowmelt as carbon particles lodge in the snow.
The foremost authority on this sub-continental environmental threat is V. Ramanathan from the Scripps Institution of Oceanography at the University of California in San Diego. As he informed journalists at a New Delhi conference before the 2009 Copenhagen climate summit, the dust particles travel beyond the Himalayas and even reach the Arctic, accelerating the polar ice cap melt and raising ocean levels.
Hence, there is an overwhelming need to phase out diesel subsidies for both economic and environmental reasons. As Bhamy Shenoy, a Mysore-based consumer activist and oil expert, told indiaclimatedialogue.net, “Passing on the additional cost of diesel resulting from any crude oil price increase will not have detrimental impact on the poor. This is the case even after considering any indirect impact through the cascading impact of price signals through the economy.”
“There is no free lunch since India imports more than 78% of its crude oil requirements. If the government has to bear the costs of not passing on the cost of crude price increases by keeping diesel price artificially low, it will result in deficit financing and also reduce government expenditures on education, health etc. That can have far more debilitating impact on the poor.”