In this issue of our In Focus newsletter, ACFA reports on the implementation of the new Bharat Stage VI emission standards and fuel specification requirements in India and the implications the roll-out had on the refining and automotive industry, as well as the expected benefits to air quality in one of the most polluted countries in the world.

Amid the coronavirus lockdown measures and movement restrictions, which were initially triggered by the Indian government on 25-March 2020, India officially moved to a regime of tighter emission norms for motorised two- and four-wheelers on 01-April 2020. Stores selling motorcycles, passenger cars and commercial high-duty vehicles have to comply with stricter emission norms from the date on forward.

Bharat Stage VI is the new emission standard that all vehicles in the country will have to adhere to as from 01-Apr 2020. The sale of BS-IV vehicles has in fact been ceased from this day, after the Supreme Court had ruled on 24-October 2019 that no BS-IV vehicle can be sold after the 01-April deadline. However, Finance Minister Sitharaman clarified in a press conference that BS-IV vehicles purchased up until March 2020, will remain operational for the entire duration of their registration, putting to rest doubts about the viability of BS-IV vehicles post the deadline.

At fuel stations across the country, only the low-sulphur fuel that complies with Bharat Stage-VI specification requirements will be distributed. From an emissions and air quality perspective, the most important parameter change defined in the new fuel quality specifications is the maximum sulphur content of gasoline and diesel fuels. In both cases, sulphur content is limited to a maximum of 10 ppm in the proposed BS VI regulation, down from the 50 ppm norm in the BS-IV norm. This standard matches global best practices. Low sulphur fuels enable the use of advanced after-treatment control technologies, which greatly reduce emission rates of pollutants that have a significant human health burden, such as particulate matter (PM) and nitrogen oxides (NOX). While proposed BS VI fuel specifications largely follow European regulations, proposed limits for several commercial gasoline and diesel fuel parameters in India differ from EU values. These parameters include octane number and olefin content for regular grade gasoline; and density, 95% distillation boiling point (T95), and polycyclic aromatic hydrocarbon (PAH) content for diesel.

The proposed BS-VI regulation specifies requirements for two grades of commercial gasoline, regular and premium. The table underneath compares proposed Indian gasoline specifications with those set in other countries and regions with stringent motor vehicle emission control requirements. Specifications for premium grade BS VI gasoline match Euro 6 standards. For regular grade BS VI gasoline, a lower octane number and higher olefin content is permitted. The potential effects of these differences on air pollutant emissions will need to be looked into separately.

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For our readers’ reference, the full comparison between BS-IV and BS-VI gasoline grades are captured in the Bureau of Indian Standards release IS2796: 2017 Requirement for Motor Gasoline BS-IV and BS-VI Grades. A pdf-copy can be found here.

Indian Oil Corporation started selling BS-VI fuels at its 28,500 fuel stations two weeks prior to the deadline. Bharat Petroleum Corporation Limited said on Twitter that it had rolled out BS-VI fuel across its network of over 16,000 fuel stations. According to a company statement, the fuel outlets of Hindustan Petroleum had switched to “greener and cleaner fuel” across all retail outlets. “This is a big step towards sustainable development of the nation and we are proud to be a part of it,” a spokesperson of the company said. Several outlets in the Delhi-National Capital Region had already been selling BS-VI fuels.

“Pan-India roll out of environment friendly BS-6 fuel is a reflection of our commitment towards human and environmental health,” Union Minister for Petroleum and Natural Gas Dharmendra Pradhan wrote on Twitter.

However, while the automotive industry, which has been reeling under the impact of a host of adverse factors and one of the worst slowdowns ever, was set to transition to BS-VI emission standards on 01-April, car dealers were unhappy as several were unable to sell their stock of the older BS-IV engines, after motorcycle and passenger car sales in particular dropped in recent months. According to the Federation of Automobile Dealers Association (FADA), dealers nationwide are left with 0.7m two-wheelers, 15,000 passenger cars and 12,000 commercial vehicles. Separately, there are over 1.0m two-wheelers, 2,250 passenger cars and 2,000 commercial vehicles that have been sold, but were yet to be registered.

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Emission standards

Bharat Stage Emission Standards were first introduced in 2000, the current BS-IV norms were enforced in 2017, after BS-II and BS-III norms, which were enforced in 2005 and 2010 respectively. BS-V has been skipped in order to have a more stringent standard to curb pollution levels, apart from the gap between the enforcement of different emission standards also dwindling.

Many automobile manufacturers have already launched BS-VI models. According to Maruti Suzuki, the country’s largest passenger vehicle manufacturer, BS-VI compliant petrol vehicles can run on BS-IV petrol also. The BS-VI petrol cars from Maruti Suzuki have been extensively tested with BS-IV fuel and there are no operational concerns, it said. Similarly, BS-IV cars can also run on BS-VI fuel, according to reports.

Comments from a range of technical advisors also confirmed that BS-VI vehicles can safely handle BS-IV compliant fuel. The only thing is the emissions from the tail-pipe will not be BS-VI level compliant. BS-IV fuel has 50 ppm sulphur content, which has been reduced to 10 ppm in BS-VI level fuel.

Maruti Suzuki reported that it had sold 200,000 BS-VI compliant vehicles, six months ahead of its actual enforcement. The carmaker has eight BS-VI compliant models in its portfolio currently. Hyundai, Kia Motors, and Mercedes have also launched some of their models with BS-VI compliant engines.

As per BS-VI emission norms, petrol vehicles will have to effect a 25% reduction in their NOx, or nitrogen oxide emissions. Diesel engines will have to reduce their HC+NOx (hydro carbon + nitrogen oxides) by 43%, their NOx levels by 68% and particulate matter levels by 82%.

According to Rajan Wadhera, President of the Society of Indian Automobile Manufacturers, the emission norms of these new vehicles are now on a par with Europe. The emission norms of all models of two-wheelers in India are ahead of Europe (2021) and Japan (2022), and India is the first country to adopt this level of emission norms. “More than 1,000 models and variants of BS-IV were to be developed to BS-VI emission norms in just 3 years, and the industry in the process is investing ₹70,000 crore (= US$ 9.3bn) for this achievement,” he said in a statement.

In 2016, the Narendra Modi government said India would directly progress from BS-IV norms to BS-VI, skipping the intermediary stage. Last October, when discussing Delhi’s air pollution, Minister for Environment Prakash Javadekar said BS-VI norms were a “revolutionary step” in the transformation of fuels. He added that there had been an 80% reduction in particulate matter emissions and a 30% reduction in NOx emissions in BS-IV heavy-duty diesel vehicles, compared with BS-III norms. Nearly 0.8bn US$ were spent on the switch-over to BS-VI fuels.

BS-VI fuel standards

Upon its launch Union Minister Prakash Javadekar said that the transition to BS-VI would reduce air pollution by 80-90%. Maruti Suzuki has said in a release that BS-VI compliant petrol vehicles will lead to a substantial reduction of nearly 25% in Nitrogen Oxide emissions. NOx emissions will be brought down by 70% for diesel engines.

The sulphur content of BS-VI fuel, which is five times lower than that in BS-IV fuel, is one of the major differences between the two. The presence of OBD (Onboard Diagnostics) and RDE (Real Driving Emission) on all vehicles will also enable real-time tracking of emissions.

According to reports, BS-VI compliant petrol cars are required to emit no more than 60mg/km of NOx (Nitrogen Oxides) emissions, versus the cap of 80mg/km for BS-IV vehicles. The particulate matter (PM) limit has been capped at 4.5mg/km for petrol engines that use direct injection, reports further state. As for diesel cars, NOx emissions have to be reduced from 250mg/km to 80mg/km, HC+NOx emissions from 300mg/km to 170mg/km, and PM emissions from 25mg/km to 4.5mg/km.

The reason why many car manufacturers in India have been rolling out BS-VI compliant petrol models, but were holding back on diesel is because the changes for petrol engines aren’t much. All BS-IV petrol vehicles were already fuel-injected, which is a primary requirement to meet BS-VI also. The main change is to the sensors used. A BS-VI petrol engine will require faster oxygen sensors and better injectors that can deal with low-sulphur fuel. Some gasoline-direct injection (GDI) turbo-petrol engines will also have a particulate filter in the exhaust system, while most will have changes to the ignition timing to ensure cleaner combustion. This will help reduce NOx levels.

Getting a BS-IV diesel engine to comply with BS-VI emission norms requires major changes to the hardware and layout of a diesel engine. Small capacity diesel engines will have to be fitted with a diesel particulate filter (DPF) to reduce particulate matter emissions (PM levels). In addition to bring down the NOx levels, small diesel engines will require a second catalytic converter or selective catalytic reduction (SCR) to break down nitrous oxides into nitrogen and water vapour. These are sometimes called Lean Nitrous Traps (LNT). Larger diesel engines achieve NOx reduction by urea injection. Here a separate tank with a urea chemical solution like Ad Blue, is injected into the exhaust gases to break them down. Vehicles will need more space under the bonnet with the addition of these components. The cost increase is nearly 20% over conventional diesels, as LNTs and DPFs are expensive.

As for the price, post the transition to BS-VI emission norms, the price of petrol vehicles is expected to see a surge of Rs 10,000 to Rs 20,000 (or more), with its diesel counterparts expected to be privy to a hike of up to Rs 100,000 or more. This is due to the higher cost of upgrading diesel vehicles to BS-VI norms.

Octane loss by Sulphur reduction

The much needed improvement in emission and fuel specification standards in India, helping to bring the country’s quality standard in line with other leading economies around the globe, comes at a cost for the refining industry. The change in the gasoline sulphur specifications, from 50ppm max in BS-IV to 10ppm max in the BS-VI standard, causes an octane loss for the producer. However, with an oxygen limit of 3.7 vol% max there is ample space left to utilize oxygenates in the gasoline composition, which are not only sulphur-free components but well-known for their beneficial impact on air quality.

India has a biofuel mandate in place since 2009, which initially required gasoline retailers to blend 5% fuel-Ethanol into their fuel, which was meant to be increased to 10% and 20% respectively by 2030. However, till date the country falls short of achieving these targets nationwide. Gasoline Ethanol blends are utilized and distributed in different grades by region, depending on availability and economics. While the country has significant production capacity and output, the available, locally produced Ethanol is often sold into other applications, achieving a significantly higher return than the fuel-use would generate.

Based on the given flexibility, Indian refiners can draw their octane requirements from another source, as the country has an estimated 270 KT of MTBE capacity available, with an additional 320 KT planned to come on-stream in 2022. Beyond this, sporadic gasoline imports can be called into play as the prevailing MOGAS92 market standard in Asia allows a max blending percentage for MTBE of up to 10 vol%. Looking at it in a rather simplistic, one-dimensional mode, in the extreme case in which indeed 10 vol% MTBE are contained in the supplied fuel, there would be enough space to top this up with 5 vol% fuel-Ethanol if so desired. In a more realistic case, the typical composition of fungible MOGAS92 contains on average 2-5 vol% of MTBE, which would leave space for 8-10 vol% of Ethanol.  

In 2019, the Indian oil industry imported large volumes of gasoline during the transition phase from BS-IV to Bharat-VI, which required refiners to temporarily suspend fuel production. The import specification for gasoline stipulated a non-oxy standard at the time, which led to situation in which Indian importers were paying a significant premium over the standard price of MOGAS92, for what was in fact in inferior, lower-octane (91.5 RON) fuel. The non-oxy requirement for imported gasoline was widely regarded as unnecessary.

To conclude, we believe that the new fuel-specification standard and much needed air quality improvements can be achieved by utilizing the oxygenates allowance in the gasoline specification in full, keeping cost at a reasonable level and ultimately helping India to reduce their dependence on fuel-Ethanol imports.