Low carbon alternative fuels register hike in demand amid rising petrol, diesel prices & expected delays in EV rollout

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New Delhi : With COVID 19 pandemic and its impact giving a major impetus to sustainability and green recovery goals, alternative transport fuels are expected to receive a boost globally. India’s Auto LPG sector is upbeat about its prospects as rising diesel prices, growing environmental consciousness and delayed EV targets force consumers to look for sustainable alternatives.

From aviation fuels to road transport, the calls for a Green Recovery have been led by prominent voices globally including UN Secretary-General António Guterres who urged India and other countries to shift away from coal and other high carbon fuels and move on a path of sustainable economic growth.

“COVID 19 and its impact have created a ripe situation for clean energy and fuels with a growing global movement pushing for a Green Recovery from this economic turmoil. In India, the economic crisis is expected to push back automobile makers’ EV plans, while rising petrol and diesel prices have forced people to look for more viable and cheaper alternatives. Growing environmental consciousness is also expected to pave way for greater demand for eco-friendly transport fuels. The circumstances create a fertile ground for growth of an eco-friendly and easily deployable fuel like Auto LPG. We are expecting OEMs to look at Auto LPG variants as a low hanging fruit.” says Mr. Suyash Gupta, Director-General, Indian Auto LPG Coalition.

Directly or indirectly, Covid-19 has triggered the need for the policymakers as well as the automobile industry to contemplate moving away from carbon-based fuels to alternative fuels on a more permanent basis.

The impetus for alternative fuels may not be limited only to India, but a trend seen across the globe. For instance, alternative fuel vehicles have surpassed diesel in the UK for the new car market roiled by Covid-19. Similarly, according to a research report, the global butane (an LPG variant) market is to grow by $13.2 billion in the coming five years.

“Auto LPG is not only environment-friendly but has also been almost 40% cheaper than petrol consistently. Further, as the government attempts to revive the larger economy and businesses and people get back to everyday regular commuting and travel, there may be a jump in the use of personal vehicles over public transport due to the prevalent virus situation. Having a larger number of petrol/diesel cars on roads will be an environmental disaster. The government must therefore provide a policy climate conducive to the rise and uptake of clean gaseous fuels such as auto LPG and CNG,” said Mr. Gupta.

Ever since US shale discovery and the country becoming the largest LPG exporter, the concerns on supply-side security and stable pricing regime have been laid to rest. There is more LPG available today than ever before and at reasonable prices for the end-consumer. In the last ten years, prompted by environmental concerns, auto LPG consumption has surged by nearly 40 percent, a figure only likely to go up post-Covid-19.

However, what thwarts a large scale industry-level promotion; manufacturing and sale of LPG vehicles are certain restrictive policies that continue to cast a shadow on the country-wide uptake and use of LPG vehicles. As Mr. Gupta further elaborates, “The existing high GST rate of 18% on auto LPG and 28% on auto LPG/CNG conversion kits are a huge dampener. Not only this, the need for renewal of conversion kits for Type Approval coming at a high cost every three years inhibits the growth of the retrofitment market. For a fuel that has a Global Warming Potential of ‘zero,’ these policy constraints must be done away with immediately. If we are to retain the environmental benefits of lockdown in the long run, the authorities have to think creatively and pro-actively.”

The outbreak of Covid-19 is just the appropriate propellant for alternative fuels. And among alternative fuels, auto LPG holds tremendous promise.

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