Moneycontrol News

India, which is grappling with "severe" air quality index, imports the filthiest fuel, pet coke, and offers a tax advantage on it, according to a report from Environment Pollution (Prevention & Control) Authority for the National Capital Region.

The new tax regime incentivizes the use of pet coke, or petroleum coke, which is a refinery by-product, as it is taxed at 18 percent, much lower than alternate cleaner fuels such as natural gas.

Even though natural gas is excluded from the new tax regime, it is subjected to local levies that add 30 percent to its cost, according to a Bloomberg report.

The quality of fuel used for combustion is based on the quantum and toxicity of emissions. Pet coke contains 65,000-75,000 ppm of Sulphur (SO2 —a toxic air pollutant) which is higher than the emission standard of 210 SO2 or 600 mg/Nm3.

On October 24, the Supreme Court had banned the use of pet coke and furnace oil (FO), another dirty fuel, in NCR from November 1 following a rapid fall in the city's air quality. It also asked industries to meet standards stipulated in the draft notification issued by Ministry of Environment, Forest and Climate Change (MOEF&CC) by December 31, 2017.

Also Read: Delhi air quality recorded at 'hazardous' levels - the worst that can be measured

The Air Act of 1980 (section 19.1 and 19.3) enables the government to prohibit the use of fuel, which is likely to cause air pollution, in air pollution control areas.

Imports of pet coke under Open General License (OGL) in India has gone up over the past two years after its prices fell sharply in the global market. India imported 14.37 million tonnes of pet coke in FY17.

The sudden fall in prices was because of the key importer countries like China stopped its import due to domestic pollution concerns.

The United States, one of the exporter countries, have laid down restrictions on the use of pet coke in their country for the same reason.

In contrast, India increased the import of pet coke because it was cheaper than the alternative fuels like pulverized coal or light diesel oil that was used until recently.

The declining air quality index across the country has, however, is forcing India to take strict measures to reduce air pollutants.

India has an option to switch back to pulverized coal or light diesel oil that are cleaner fuels compared to pet coke or FO, but it will have a higher price and bear additional costs of installing the required pollution control equipment and strictly monitored for compliance.

A rapid switch to cleaner fuels like natural gas is one of the options too, however, it will include initial costs of conversion to change the burner to natural gas and also to get the pipeline infrastructure inside the plant.

Also Read: NITI Aayog favours ‘National Council for Electric Mobility’ for e-vehicle push

The government's push towards electric vehicles in the country encourages a much cleaner source of energy. India is moving forward in the same direction by acquiring electric busses, promoting manufacturing of e-vehicles and their use.

The report suggests that switch to electricity for cleaner source could be a "long-term" solution.