Budget 2021: Hits and misses for Auto LPG and clean energy sector

Budget 2021: Hits and misses for Auto LPG and clean energy sector

By Suyash Gupta

Introduction of pollution fund, extension of city gas distribution are welcome initiatives but budget 2021 missed opportunity to capitalize on Auto LPG.

Budget 2021 was widely anticipated to initiate measures to help a Covid-hit Indian economy back on a revival path. Understandably, economic revival and healthcare were the two most notable pillars of Finance Minister Nirmala Sitharaman’s third budget. Apart from boosting healthcare expenditure and infusing infrastructural activity and capital expenditure into the economy, energy transition and renewable energy also received some attention.

A notable measure in this regard has been the announcement on the Hydrogen Energy Mission for generating hydrogen from green power sources. The budget also furthers the government’s longstanding commitment to non-conventional energy with a capital infusion of Rs 1,000 crores to the Solar Energy Corporation of India and Rs 1,500 crores to the Indian Renewable Energy Development Agency. 

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Interestingly, the government has given due importance to environmental concerns and laid out over Rs 2,000 crore in allocation for 42 urban centres for efforts to clean up air pollution. The Finance Minister also announced the extension of the city gas distribution project to 100 additional districts along with committing to increase the reach of Ujjwala Yojana to another crore users.

An estimated 70% of India’s population is projected to be connected with the CGD network over the next few years laying the ground for a gas-based economy.

While the government has set the right narrative when it comes to clean energy, are the efforts enough to make rapid gains on the environmental front? Perhaps not!

City gas distribution project must include Auto LPG

The city gas distribution project that was unveiled in 2018 in 219 districts has been a promising clean energy initiative that seeks to build a gas-based economy. The Finance Minister announced an extension of this gas network to 100 additional districts over the next three years while simultaneously announcing setting up of an independent Gas Transport System Operator.

Vehicles using Auto LPG as fuel also emit much lower CO2, making Auto LPG one of the most eco-friendly fuels on the block.

An estimated 70% of India’s population is projected to be connected with the CGD network over the next few years laying the ground for a gas-based economy. However, the project puts CNG as the only option for consumers despite the fact that Auto LPG is a more convenient and easily transportable fuel that is highly eco-friendly.

Giving consumers a wider choice of gases will not only increase their uptake but also help the automobile industry market hybrid cars and Auto LPG variants. Auto LPG is the world’s third most widely used fuel after petrol and diesel. It has almost 50% lesser PM (particulate matter) emissions than CNG and Petrol and 80% lower PM emissions than Diesel.

Vehicles using Auto LPG as fuel also emit much lower CO2, making Auto LPG one of the most eco-friendly fuels on the block. Several governments across the world have adopted aggressive policies to encourage consumers to switch to Auto LPG, thereby making significant environmental gains.

Vehicle owners can easily convert their cars and two-wheelers to Auto LPG and CNG by installing retrofit kits.

Despite being one of the cleanest and most easily available fuels, Auto LPG remains highly under-utilized in India’s transport sector. Unfortunately, the country has failed to capitalise on this fuel to reduce environmental pollution in urban areas. We hope the city gas project is diversified to include Auto LPG in its ambit along with CNG which is the current focus. Importantly, it doesn’t even take the construction of a wide pipeline network to transport Auto LPG which can easily be transported in tankers.

Adequate policy action must accompany the pollution fund

The Finance Minister also announced an outlay of Rs 2,217 crore to be allocated for 42 urban centres to initiate efforts to tackle air pollution. Given the fact that as many as 14 Indian cities feature in the list of the world’s top 20 polluted cities, the anti-pollution allocation is a welcome feature of the budget. However, funds need to be complemented by well thought out policies that can bring about an immediate improvement in air quality.

Promoting a large scale shift of vehicles towards gaseous fuels like Auto LPG and CNG should be an important element of this strategy. We hope under this outlay, the government will undertake schemes to encourage and incentivise vehicle owners to switch from petrol/diesel to clean gaseous fuels like Auto LPG and CNG.

Vehicle owners can easily convert their cars and two-wheelers to Auto LPG and CNG by installing retrofit kits. However, the government needs to craft the right messaging to increase awareness and offer incentives such as subsidies and GST cuts on retrofit kits to enable a mass shift.

Total Auto LPG station vehicular pollution

Scrappage policy and green tax may boost alternate fuels

Ms. Sitharaman also announced plans to roll out a vehicle scrappage policy is aimed at phasing out cars and commercial vehicles older than 20 or 15 years respectively. Together with a Green tax that is being considered by the government on vehicles older than eight years, this policy may give a major boost to hybrids and vehicles running on alternate fuels such as CNG, Auto LPG, and ethanol.

While the revenue collected through the green tax will be utilised for tackling pollution, the penalty will push a number of consumers to switch to alternative fuels. It will also boost the automotive sector and incentivise it to invest in Auto LPG and CNG variants.

Also Read: Budget 2021: What we got

(Suyash Gupta is Director General of Indian Auto LPG Coalition.)

(Disclaimer: The views expressed in the article above are those of the author’s and do not necessarily represent or reflect the views of Autofintechs.com. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.)

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