As the hype surrounding the Tata Nano subsides, we're seeing a sharper picture of what a $2,500 car means for the environment and global energy demand. It doesn't look good.



The world's cheapest car is a marvel of engineering and ruthless cost-cutting sure to bring greater mobility to people throughout the developing world. And that is what makes it so troubling.

The Nano doesn't go on sale until fall, but already environmentalists say it will bring big increases in carbon dioxide emissions and pollution. "This car promises to be an environmental disaster of substantial proportions," Yale environmental law professor Daniel Esty told Newsweek. Some energy experts say all those new cars will increase demand for gasoline, with one telling CNN, "we'll get into a situation where we'll have to compete with them for gasoline, $4, $5 a gallon. Who knows how high we could go?"

It would be easy to denounce the naysayers as western do-gooders with no moral standing to criticize India. But the most vocal critics include Indians who say the Nano will deepen the country's critical pollution, infrastructure and traffic woes.

Could the Nano really be so bad?

At first glance it looks like an eco-friendly ride. It has a 623 cc engine that produces 33 horsepower, gets close to 50 mpg, meets Euro III emissions standards and according to the Economist should be able to meet tougher Euro IV standards "with a bit of tweaking."

But the prospect of tens or even hundreds of thousands of Nanos on the road worries environmentalists. India's Economic Times says the Nano potentially could expand the country's auto market by 65 percent and spur a 20 percent increase in auto sales in its first year. Honda, Toyota and Fiat are among the companies developing competitors to the Nano. The proliferation of cheap vehicles could prompt as much as 25 percent of the 50 million people who ride scooters to buy cars, the Center for Science and Environment in New Delhi says.

India is the world's fourth-largest overall producer of the greenhouse gas (it ranks far lower in per-capita terms). Its carbon emissions are expected to triple by 2020, according to the United Nations, and climate experts are only beginning to ponder what the "Nano effect" may mean for the global environment.

"In none of our reports did we assume there'd be a car like this," Judi Greenwald, a researcher with the Pew Center on Global Climate Change, told Newsweek. "This is a new category. It will effect everybody's projections."

The Center for Science and Environment warns more cars will only exacerbate congestion and smog-related illnesses in a country where 57 percent of cities already face critical levels of air pollution.

Tata counters that the Nano is cleaner than the scooters it will replace and claims the car's catalytic converter cuts emissions by 80 percent. The Nano supposedly emits 30 grams of carbon dioxide per kilometer, well below the 160 g/km average of Europe's cars and far less than the 130 g/km standard the European Union will adopt in 2012. Even if half a million Nano's hit the road and each of them travels 5,000 miles a year, they will be responsible for less than 8 percent of India's annual CO2 emissions, Economic Times reports.

Most of the hand-wringing over the Nano has focused on its environmental impact, but some are beginning to ponder what the car will mean for global energy supplies. There is mounting concern that increased demand for petroleum will boost prices.

The International Energy Agency has said "alarming" growth in worldwide energy needs could, among other things, bring worldwide shortages. It said India's motor vehicle fuel consumption will triple by 2030. Growth in the U.S., by comparison, is expected to increase 40 percent.

Auto sales in India are expected to double, to 3 million, by 2015, according to J.D. Power & Associates. Although the Nano is very fuel efficient, energy policy experts see two problems, according to CNN. First, Nano buyers will be moving up from scooters, which typically get much better fuel economy. Second, the Nano - and the cheap cars that are sure to come along to compete against it - are "gateway vehicles" the automakers hope will entice customers to upgrade to larger, and less fuel efficient, cars down the line.

Not everyone is convinced a $2,500 car in India means $5 gas in Illinois. Michael Robinet, vice president of global vehicle forecasts for CSM Worldwide, notes that gasoline refining blends vary by country and the high prices we pay in the U.S. are due largely to refining bottlenecks. And, he said, if India is going to follow the West's development model, it's better that they do it in subcompact cars that get 50 mpg than SUVs that get 15.