Cost-Effective Green Mobility A Joint CII – A.T. Kearney Report As vehicle sales soar in India, how does the country minimize the environmental impact while maintaining its growth momentum? This joint study presents a blueprint for building a cost-effective, greener mobility future for India.
Cost-Effective Green Mobility 1 Contents
Preface
Executive Summary
1. Introduction: The Case for Change – page 11
2. Adopting Green Technology – page 17
2.1. Enhancing Efficiency of Conventional Vehicles – page 18
2.2. Deploying Alternate Powertrain Technologies – page 28
2.3. Adopting Alternate Fuels – page 35
3. Enabling Infrastructure Enhancement – page 48
3.1. Improved Urban Planning – page 49
3.2. Traffic Decongestion – page 50
3.3. Modal Shift to Public Transportation – page 52
3.4. Modal Shift of Goods Traffic from Road to Rail – page 58
4. Improved Maintenance and Recycling – page 62
4.1. Inspection & Maintenance (I&M) and Eco-driving – page 62
4.2. Recycling – page 64
5. Conclusions: Key Imperatives for Government and Industry – page 68
Cost-Effective Green Mobility Preface Continued economic growth in India is driving the need for increased transportation of goods and people and hence increased vehicle sales. While this growth is spurring the Indian economy, it is also associated with the challenge of minimizing environmental impact.
This challenge raises some important questions: How can India minimize the environmental impact caused by the transportation sector without impacting the country’s growth momentum? Which green technology options and infrastructure upgrades should be adopted? How can we bring about positive change at a price that will suit cost-conscious Indian consumers? What obstacles stand in the way?
To answer these questions, a joint study was undertaken by A.T. Kearney and CII to identify and prioritize key actions for cost-effective green mobility. This report explores various options available to India to move toward a green mobility paradigm with lower carbon dioxide equivalent (CO2e) emissions—and therefore less impact on global warming—and lower emission of regulated pollutants such as particulate matter (PM), monoxides of nitrogen (NOx), carbon monoxide (CO) and unburned hydrocarbon (HC). The report attempts to estimate the potential reduction in emissions achievable relative to base case projections for 2020. The base case assumes limited improvements in technology, infrastructure, and maintenance levels from the current scenario. The base case also assumes that current trends affecting road transportation, such as changing modal patterns and the shift to higher-segment cars, are likely to continue at the current pace.
This report draws on A.T. Kearney’s global expertise and intellectual capital on green mobility. In addition, experts across the automotive value chain, the oil and gas industry, and academia, along with environmental specialists and government representatives, have been asked to contribute their insights.
The goal of this report is to present the potential opportunities available for a cost-effective greener mobility future for consideration by all key stakeholders: industry, government, and consumers. The potential emission reduction and cost assessments outlined in this report are intended as guidelines to provide a directional sense on the relative costs and benefits of each option. The true impact is subject to variation, depending on actual conditions and the implementation of various scenarios.
Confederation of Indian Industry I A.T. Kearney
Cost-Effective Green Mobility 3 Executive Summary
The green mobility study reveals opportunities for cost-effectively reducing CO2 emissions as well as emissions of pollutants such as PM, NOx, CO, and HC. Tapping into these opportunities will require a collaborative effort from government bodies, the automotive and oil and gas industries, the infrastructure sector, and automotive consumers. It will would involve multiple measures, including adopting greener vehicle technologies and alternate fuels, improving the transportation infrastructure, balancing modal patterns, and enhancing the focus on vehicle maintenance and recycling. With the concerted use of these measures, India could cost-effectively reduce the following:
• CO2e emissions from road transportation by 80 to 100 million tons over the base case projections for 2020
• Emissions of regulated pollutants from road transportation, including PM, NOx, CO, and HC by 25 to 40 percent over the base case projections for 2020
The global community is grappling with several environmental challenges, the two most notable being the release of greenhouse gases that cause global warming and the emission of air pollutants that affect human health. The transportation sector is one of the contributors to both of these environmental challenges. On a well-to-wheel basis, it accounts for 8 to 10 percent of the total CO2e emissions in India, with road transport accounting for 80 to 85 percent of that. Similarly, vehicles in major metropolitan cities account for an estimated 7 to 40 percent of PM10, 30 to 40 percent of NOx, 70 percent of CO, and 50 percent of HC emissions.
Movement of goods and people is an integral part of any economy, and as India’s economy grows, the mobility needs will rise as well. Demand for both passenger and goods mobility is expected to increase by 9 to 12 percent over the next decade. Meanwhile, the number of vehicles in India is expected to double between now and 2020, and annual automotive sales are likely to reach 35 to 40 million units by 2020.
An increase in vehicle emissions is therefore inevitable. By 2020, CO2e emissions from road transportation could climb to 480 to 500 million tons (defined as the base case in this report). Emission of PM, NOx, CO, and HC (referred to as regulated pollutants) are expected to increase to 1.5 to 1.7 times the current levels.
However, as technologies for reducing emissions become widely available, it is possible to meet the twin objectives of economic growth and reduced emissions. Achieving this requires an integrated approach based on three key pillars of green mobility. The pillars include:
• Use of greener vehicle technologies
• Development of a better mobility infrastructure
• Better management of in-use fleets of vehicles
Following is a summary of each pillar, its potential impact by 2020, and the cost-effectiveness
Cost-Effective Green Mobility 4 for different segments. The reduction potential is from the base-case projection of emissions in 2020, assuming continued use of the current generation of vehicle technology, limited improvement in mobility infrastructure, and limited enhancement of vehicle maintenance and recycling processes.
Use of greener vehicle technologies
Adopting green technologies has the potential to reduce CO2e emissions by 37 million to 44 million tons. We estimate the net annual cost to achieve these reductions to be INR (Indian rupee) 14,000 to 18,000 crores. Technology can also help reduce combined emission of NOx, CO, and HC by more than 1 million tons and particulate emissions by as much as 32 million kilograms. This reduction will cost an additional INR 8,500 to 10,500 crores annually. Several technologies can drive this process, including:
Powertrain and non-powertrain enhancements in conventional internal combustion (IC) engine-based vehicles. The optimal technology solution from a cost and green benefit perspective entails improving fuel efficiency of IC engines and using advanced after-treatment systems to reduce emissions. We believe adopting a wide range of technologies would result in fuel economy improvement of 14 to 25 percent for four-wheelers, 6 to 8 percent for two-wheelers, and 10 to 20 percent for commercial vehicles over the next decade. This could lead to a total CO2e abatement of 26 million to 29 million tons. The net annual cost of this abatement is likely to be INR 8,000 to 12,000 crores (see figure 1). Adopting a few additional emission-control technologies and using higher quality fuel could produce a 30 to 60 percent
Figure Impact and cost of improvements on ICE-based vehicles in
Annual CO e reduction potential Net annual abatement cost of ICE through ICE technology improvements technology improvements
(Million ton COe) (INR ’ crore)
~33.5~2629 Net incremental 3W 33% ~56.5 tax revenues 67% 2W ~1416 and subsidies >A1 87% ~2629 saved
~1819 13% A13
S&LCV 27% ~1820
~812 M&HCV 73% ~1820
Commercial Passenger Two- and Total Passenger Two- Commercial Govern- Net cost vehicles vehicles three- reduction vehicles and three- vehicles ment2 to country wheelers consumer wheelers consumer
Cost of fuel in net of all taxes assumed as Rs. per liter for Includes commercial vehicles with GVW up to T gasoline and Rs. per liter for diesel Includes commercial vehicles with GVW greater than T Includes increased vehicle tax revenue from new components, Includes passenger vehicles with engine size <cc decrease in tax revenues, and fuel subsidies on fuel saved Source: A.T. Kearney analysis Source: A.T. Kearney analysis
Cost-Effective Green Mobility 5 reduction in emissions of NOx, CO, and HC, and an 80 to 90 percent reduction in PM emissions from new vehicles. The key challenge to achieving this would be the potential impact on vehicle demand as a result of an increase in cost, especially for price-sensitive customers.
Biofuel blending. In our study, biofuel blends emerge as a potential alternate fuel solution for India because of their impact on the vehicle population and their cost effectiveness vis-à-vis conventional fuels. Adopting a uniform 10 percent ethanol blending regimen for gasoline and a
5 percent biodiesel blending regimen for diesel could potentially reduce CO2 emissions by 3 to
4 percent, creating a total abatement of 10 million to 12 million tons of CO2e. Because biofuels are likely to be a more cost-effective source of energy than gasoline or diesel, an effective blend regimen could also deliver annual economic savings of INR 8,000 to 10,000 crores to the nation. A few challenges need to be overcome to achieve this. First, significant effort must be directed toward ensuring an adequate supply of biodiesel and ethanol, either through enhanced production from existing feedstock or from alternate biofuel feedstock. Second, adequate care would be needed to ensure proper blending of biofuel with conventional fuel to mitigate possible damage caused by inconsistent blending. The potential damage to older-generation two-wheelers (10 to 20 percent of two-wheelers in 2020) as a result of 10 percent ethanol blending (E-10) would need to be addressed through proper phasing of the transition to E-10 fuel and ensuring availability of regular gasoline in the interim. Finally, any change in land use that converts forests or grazing lands for biofuel cultivation could have a significant adverse effect on overall CO2 emissions, so every effort should be made to avoid such a scenario.
Hybrid and electric vehicles. Hybrid and electric vehicles (EVs) designed on frugal engineering principles could begin emerging as viable options by 2020. Hybrids could potentially offer a 25 to 40 percent reduction in CO2 emissions, while electric vehicles could lead to a 10 to 20 percent reduction. The green benefits of EVs and plug-in hybrid electric vehicles (PHEVs) would further improve with a greener electricity-generation mix. Cost-effectiveness would rely on a breakthrough in battery technology and wider use of frugal engineering principles. CO2e abatement of two to three million tons would be possible by 2020 at an annual economic cost of INR 12,000 to 15,000 crores. The potential impact beyond 2020 is expected to be much larger, indicating a clear need to invest in these technologies today.
Development of a better transport infrastructure
Improvements in mobility infrastructure can go a long way in reducing emissions. We project that infrastructure improvements could reduce CO2e emissions by 30 million to 38 million tons—the result of movement of goods and passenger traffic to greener modes, dissipation of congestion levels on urban roads and highways leading to improved fuel economy, and the development of self-contained urban centers that lessen the need for travel.
While most of these measures will require large upfront investments in infrastructure, much of it can be recovered from lower operating costs of alternate modes and fuel saved by lower congestion levels or less need for mobility (see figure 2 on page 7). The annualized capital cost of these investments is estimated to be INR 65,000 to 70,000 crores. The key spend areas will include investments in public transportation (42 to 44 percent), in urban and highway road infrastructure (28 to 30 percent), in rail infrastructure (21 to 23 percent), and in other traffic- decongestion measures (5 to 7 percent). After accounting for lower operating costs and reduced fuel consumption, infrastructure enhancements emerge as cost-neutral.
Cost-Effective Green Mobility 6 Figure Impact and cost of infrastructure enhancements
Annual CO e reduction potential Net annual abatement cost of infrastructure through infrastructure enhancements enhancements
(Million ton COe) (INR ’ crore) Due to migration ~- to cost-effective ~- modes and fuel ~- saved from less ~- traffic congestion ~ - ~- ~- ~-
~()-() Road Highway Public Urban Urban Total Incremental Reduced annual Net cost to to rail de- transport de- planning reduction annual capex cost operating costs country congestion congestion for consumer
Cost of fuel in net of all taxes assumed as Rs. per liter for gasoline and Rs. per liter for diesel Source: A.T. Kearney analysis
The most crucial advances in mobility infrastructure include the following:
Enhancements in public transport infrastructure. In the past few decades, the rising demand for public transportation has overwhelmed existing public transport systems in India. With the country’s deteriorating quality of services and consumers’ rising incomes, there has been a marked increase in the modal share of private vehicles, a trend that is likely to continue. Effective and timely execution of the government’s ambitious plans to set up mass transit systems (metros, monorails, and bus) in major cities can potentially mitigate this challenge. Doing so will require:
• Capacity addition of 200 to 250 billion passenger kilometers per year in the form of metro rail and monorail facilities and urban buses
• Better last-mile feeder connectivity in the form of auto-rickshaws, small commercial vehicles, and pedestrian infrastructure
• Attractive pricing vis-à-vis the cost of operating personal vehicles
The estimated impact on CO2e emissions is 7 million to 8 million tons. Enhanced public transportation would also help relieve traffic congestion on major urban roads. Other measures of traffic decongestion include increased road capacity and intelligent traffic management, both of which could improve average traffic speeds and lead to reduced CO2e emission of 7 million to 9 million tons.
Enhancements in rail infrastructure. Transport of goods via railways is estimated to be 50 to 70 percent less carbon-intensive than via heavy-duty trucks. However, bottlenecks in the rail infrastructure have led to a steady migration to road transport. This migration can be reversed with a significant increase in rail capacity that can be done by setting up dedicated freight corridors and adequate last-mile connectivity, introducing new-generation locomotives with more speed and higher axle loads, and optimizing rail tariffs. If rail share rises by 8 to 10 percent, annual CO2e emissions could fall by as much as 14 million tons by 2020, which would also help
Cost-Effective Green Mobility 7 relieve congestion on major highways. Other measures such as widening roadways and installing electronic toll booths will also help in reducing highway congestion. These measures can improve traffic speeds of heavy-duty trucks on highways and lead to a substantial reduction in CO2e emissions, estimated to be 4 million to 5 million tons in 2020.
Better management of in-use vehicle fleets
Robust vehicle inspection-and-maintenance (I&M) regimens, structured recycling programs, and organized fleet-modernization drives will be important ways to control emissions. We estimate their potential impact to be 13 million to 18 million tons of CO2e abatement, about a 0.5 million-ton reduction of combined HC, NOx, and CO emissions, and 10 million to 15 million kilogram reduction of PM emissions. This potential would be driven by the following actions:
Adoption of a structured I&M regimen. A structured regimen for I&M will lead to better vehicle maintenance and significant reduction in CO2e and other emissions. While investments of INR 8,000 to 10,000 crores might be required to establish I&M centers across the country, effective I&M practices can improve fuel economy and eventually lead to INR 2000 to 3000 crores net cost savings for the country.
Systematic recycling of vehicles. Systematic recycling can maximize the recovery of scrap material at the end of their useful lives, thus saving resources and energy and resulting in 6 million to 8 million tons of CO2e reduction.
Together, these three pillars have the potential to significantly reduce annual emission levels in India. Their implementation will require a collaborative effort from the government, industry, and end users. Overall, an 80 million- to 100 million-ton reduction in CO2e emissions can be effected over the base case projection for 2020 (see figure 3 on page 9).
This reduction can be achieved cost-effectively with minimal incremental economic cost to India as a country. The net annual cost is estimated at INR 9,000 to 12,000 crores (net of all taxes, subsidies, and duties). While some of this can be passed on to consumers, the government must also do its part by offering tax breaks, subsidizing green technologies, and investing in infrastructure improvements (see figure 4 on page 9). Moreover, there will be substantial social and health benefits to the nation beyond the economic implications.
Some of the CO2e abatement levers discussed here, such as I&M and traffic decongestion, will also help reduce emissions of regulated pollutants. On the technology front, while some of the above changes can deliver the twin benefits of reduced fuel consumption and lower pollution, in many cases there is a trade-off between fuel economy and emission of regulated pollutants. Four more technology measures will hence be required to keep regulated emission levels under control:
• Use after-treatment technologies to comply with BS-4 or BS-5 standards, including diesel particulate filters for commercial vehicles and diesel passenger vehicles, and three-way catalytic converters (to enhance existing catalytic converters) for passenger vehicles and two-wheelers.
• Upgrade existing oil refineries to supply low-sulfur diesel and gasoline across the nation: Sulfur content will need to be contained within 50 parts per million (ppm) for BS-4 implementation and 10 ppm for BS-5 implementation.
Cost-Effective Green Mobility 8 Figure
Contribution of key levers for COe abatement from road transport in
(Million tons) +% - - - -. -. - - - - - - - - - -
Vehicle technology Infrastructure In-use fleet mgmt.
~- MT COe ~- MT COe ~- MT COe
FE Biofuel FE FE Hybrids Road Public Urban I&M + Recycling base improve- blending improve- improve- and EVs with to rail transport planning with eco- green case ment CV ment PV ment green and + infra- driving mobility W/W technology high- traic strucure way decongestion decongestion
These levers will create a bigger impact in - time period
Refers to technologies leading to fuel e iciency improvement on IC engine vehicles - Source: A.T. Kearney analysis
Figure CO e abatement cost curve for India ( )
Abatement Cost (INR per kg COe)
Fuel economy Hybrids improvement and EVs 2W/3W
61 Road to rail and Fuel economy highway decongestion improvement PV 18 Fuel economy Biofuel Public transport Recycling improvement CV blending and tra ic decongestion 12 I&M and Eco-driving 50% of the PV beneits would come at negligible economic cost 6
10 0 -3 Million 10 20 30 40 50 60 70 80 90 tons CO e -6 -23 2 -20 abated -28 -30-32 -34 -34 -12
Vehicle technology In-use leet management Infrastructure Cumulative cost to country (INR ’000 crore)
Cost of fuel in net of all taxes assumed as Rs. per liter for gasoline and Rs. per liter for diesel Refers to technologies leading to fuel eiciency improvement on IC engine vehicles I&M refers to better inspection and maintenance of vehicles Source: A.T. Kearney analysis
Cost-Effective Green Mobility 9 • Increased penetration of CNG vehicles for city applications (cars, small commercial vehicles, three-wheelers and buses) with focus on retrofitting older vehicles with CNG kits.
• Roll out modernization programs for on-road vehicle fleets, targeting replacement or upgrade of all BS-1 and BS-2 standard vehicles. While implementing such an initiative can be a challenge, a mix of policy levers including upgrade mandates along with financial incentives can ease the process.
The combined impact of the CO2 abatement levers and the above measures would reduce the combined emission of NOx, CO, and HC by about 30 percent over the base case. Similarly, estimates call for particulate matter to decrease by about 40 percent. The estimated net annual cost to the nation is INR 11,000 to 13,000 crores over and above the cost of the CO2e abatement discussed earlier. Each lever’s impact on emissions and the additional annual costs to the nation are shown in figure 5 and figure 6.
Figure Contribution of key levers for HC, NOx, and CO abatement by
(Million kilograms) ,-, -,
- ,- , - - - ,- , - - % - ,- ,
Vehicle technology Infrastructure In-Use fleet management ~- Mn kg ~ - Mn kg ~ - Mn kg
BS CNG Public Road Urban Inspection Fleet base norms and EV with transport to rail planning with and moderni- green case penetration green and infrastructure mainte- zation mobility technology traic nance deconge- stion
These benefits would require additional measures and costs beyond the COe levers
Source: A.T. Kearney analysis
Figure Estimated additional annual cost of emission reduction in
(INR Crore) ,- , ,- , ,-,
2,0003,000
1 Fleet modernization Fuel quality upgradation BS5 technologies2 Total
Additional annualized cost between BS- and BS- vehicles Cost for use of diesel particulate ilter on diesel PVs and LCVs, improved catalytic converters on passenger vehicles, and use of catalytic converters on two- and three-wheelers Source: A.T. Kearney analysis
Cost-Effective Green Mobility 10
-2030 time period 1. Introduction: The Case for Change Movement of goods and people is an integral part of any economy. As the economy grows, this need for movement is bound to increase as well. While this growth is essential for economic progress, there are two key environmental challenges that need to be mitigated.
On one hand, vehicles emit pollutants such as particulate matter (PM), monoxides of nitrogen (NOx), carbon monoxide (CO) and unburned hydrocarbon (HC) that impair air quality and, as a consequence, human health. Vehicles in major metropolitan cities are estimated to account for 7 to 40 percent of PM10, 30 to 40 percent of NOx, nearly 70 percent of CO, and 50 percent of HC emission loads of these cities. Moreover, road transport is the key source of the finer PM2.5 emissions in cities, which have a more adverse impact on human health.
Historically, norms for controlling emissions have progressively evolved in most global markets. Introduction of Bharat Stage norms in 2000 and a gradual reduction in allowable emission levels have thus far kept emissions under control. Over the past decade, emissions of key pollutants have decreased substantially on a per-vehicle basis (see figure 7).
Figure Reduction in vehicular emissions with Bharat Stage norms
Emission control regulation history in India (All igures in g/kWh)
. . . .
-% . -% -% -% . . . . . . . . . . . . . .
CO NOxHCPM
Before BS II India BS III BS IV
Emission standards for large diesel engines, all igures in g/kWh engine output Sources: ARAI; A.T. Kearney analysis
On the other hand, emission of greenhouse gases (GHG), primarily CO2, contributes to global
warming. The transportation sector accounts for 8 to 12 percent of the total CO2e emissions in India (see figure 8 on page 12). Of the various transport modes employed in the country,- road
transport is responsible for the dominant share (about 80 to 85 percent) of CO2 emissions. Within road transport, passenger transportation accounts for nearly half of these emissions, and the movement of goods accounts for the rest (see figure 9 on page 12).
Cost-Effective Green Mobility 11 Figure CO e contribution of road transport
Split of CO e emissions by producing sector, India (Million tons COe)
1,728 Total well-to-wheel (WTW) CO e 2 215 emissions from road transport = ~ 145 Mn Ton CO e (8.4%) 165 117 79 130 ~21 18 138 Well-to-tank (WTT) ~124 CO e emissions from road transport Tank-to-wheel (TTW) 719 CO e emissions from road transport
Electricity TransportResidential Other CementIron and Other Agriculture, Total energy Steel industry waste, and LULUCF
Other energy includes CO e emissions from petroleum reining, fugitive emissions from transport, and storage of fossil fuels, among others Source: Ministry of Environment and Forests; A.T. Kearney analysis
Figure CO e emissions split by vehicle segments in
100% 1012%
4043%
4749%
1315%
1920%
1314%
PV 2W and 3W Bus Total M&HCV S&LCVTotal passenger
HCV refers to commercial vehicles with GVW of tons and above SCV refers to commercial vehicles with GVW less than tons Source: A.T. Kearney analysis
Given the larger proportion of small cars in India, the average fleet fuel consumption is lower than that of other markets, including the United States and even China. With greater focus on
Cost-Effective Green Mobility 12 global warming, CO2 emissions from vehicles are increasingly a focus in mature markets, with many, including the United States, China, and the European Union, introducing regulatory
controls on CO2 emissions. The introduction of these norms has had a clear impact there (see figure 10).
Figure Global CO emissions performance and standards for light-duty vehicles
Gram CO per km EU USA Japan China
270
240
210
180
150 India
120
90 0 2000 2005 2010 2015 2020 2025
Over a normalized to NEDC cycle. Illustrative for passenger vehicle/ LCV segment; target for China currently under review Source: ICCT
Across vehicle segments, OEMs and suppliers have optimized vehicle specifications and focused research and development efforts on improving fuel economy, which have helped in
lowering CO2 emissions. Over the past decade, there has been a significant improvement in powertrain and vehicle-level systems, resulting in more fuel-efficient vehicles and lower emissions of harmful pollutants. While technologies that help lower emissions have become commonly available, other requirements for green mobility, such as adequate infrastructure and appropriate regulation, are equally important to ensure that the technology potential can be tapped.
The challenges ahead
India is expected to continue its robust growth story over the next decade. Demand for both passenger and goods mobility is expected to grow by 8 to 12 percent year-on-year until 2020 (see figure 11 on page 14). The number of vehicles hitting the road in India is expected to double between now and 2020, which will create a corresponding increase in emission levels.
Our cautious optimism about a substantial reduction in per-vehicle emissions and the continued demand for smaller, more fuel-efficient vehicles is somewhat tempered by the population’s growing affluence and the likely increase in demand for heavier, more powerful vehicles. Trends such as increased penetration of air conditioners and automatic transmissions would adversely affect the average fuel economy of India’s vehicle fleet.
Cost-Effective Green Mobility 13 Figure Projected growth in passenger and goods mobility
Rising demand for passenger mobility Rising demand for passenger mobility
Total passenger– km Total passenger Total ton–km Total goods (Billions) carrying vehicles (Billions) vehicles (Millions) (Millions)
+11% +9% +12% +10% 88.4 280290 44.4 1213
33.3 95100 1.71.6 4.14.4
2010 2020P 2010 2020P 2010 2020P 2010 2020P
Projected emissions in are based on a base case scenario assuming Projected emissions in are based on a base case scenario current state of technology and emission standards assuming current state of technology and emission standards Source: A.T. Kearney analysis Source: A.T. Kearney analysis
Moreover, four aspects of the Indian landscape make a move toward green mobility even more challenging
Limited availability of high-quality fuel. The limited availability of low-sulfur fuel (with less than 50 ppm sulfur), which is crucial for BS-4 implementation across India, is a major impediment to green mobility. Because adherence to the BS norms involves significant capital from both the automotive and energy sectors, industry players are finding it uneconomical until the government clarifies the timelines and targets for BS-4 and beyond. In addition, the lower octane rating of standard gasoline available means that engines cannot be tuned to operate at higher compression ratios that would improve fuel economy.
Inadequate road infrastructure. Vehicle performance is affected by road conditions in India and by traffic congestion that leads to reduced vehicle speeds and lowered fuel economy. This in turn results in a significant reduction in green benefits regardless of vehicle technologies. Vehicles not only emit more pollutants during idling conditions, but also end up with 15 to 25 percent lower fuel efficiency. This is expected to worsen in the future with more vehicles on the road and the slow pace of improvement in road infrastructure.
Modal split. The lack of adequate and affordable public transportation options and a substandard pedestrian infrastructure is increasingly diverting passenger traffic to individually owned vehicles, such as two-wheelers and cars. While plans are in place for rolling out mass rapid-transit systems, including metro rail and bus, the slow pace of execution remains a concern. Similarly, a near stagnation in rail infrastructure development over the past two decades has pushed goods traffic to more emission-intensive over-the-road transport.
Inadequate vehicle maintenance. A significant portion of harmful emissions are caused by aged and poorly maintained vehicles. The lack of clear processes and policies for vehicle scrapping, fleet modernization, and recycling in India continues to be a major challenge. Practices such as overloading commercial vehicles are also significantly increasing emissions.
Cost-Effective Green Mobility 14 The environment stands to be affected by these trends. Figure 12 offers a base case scenario of emissions projected to 2020, assuming no further improvement in technology, infrastructure, or maintenance levels. Furthermore, this base case assumes that the trend of changing modal patterns is likely to continue. Under this scenario, the emissions of PM, NOx, CO, and HC (regulated pollutants) are expected to increase by 50 percent or more from current levels. On the other hand, CO2 emissions from road transport are likely to double by 2020.
Levers for a greener future
Reversing these trends in a cost-effective manner will be challenging and will require all stakeholders to shoulder the responsibility equally. While the automotive industry develops greener powertrains and vehicle-level systems that work well with alternate fuels, and the oil and gas industry ensures adequate availability of high-quality conventional and alternate fuels, the government will have to ensure infrastructure development and judicious use of incentives and regulations.
These changes will likely lead to higher prices for customers and will challenge companies to arrive at the right price points for their green products. The Indian consumer, while aware of the environmental impact of owning a car, is also extremely cost conscious; hence, cost will continue to be a key factor in purchasing a vehicle. Therefore, any green enhancements to mobility will need to be done in a cost-effective manner.
Figure 13 on page 16 illustrates three key levers for green mobility: vehicle technology, transportation infrastructure, and in-use fleet management.
Figure Estimated emission trends ( - )
Road transport regulated emissions trend Road transport COe emissions trend
PM NOx + HC + CO Per capita GHG emissions from road transport (kg of COeq) GHG emissions from road transport (Mt of COeq) emissions emissions
(Million tons) (Million tons) Million Ton CO eKg CO e
+9% +5% +4% 6.87 ~0.09 +6% ~0.06 44.5
2010 2020P2010 2020P 2000 2005 2010 2015P2020P
Projected emissions in based on a base case scenario assuming Projected emission in , are based on a base case scenario current state of technology and emission standards assuming current state of technology and emission standards Source: A.T. Kearney analysis Source: A.T. Kearney analysis
Cost-Effective Green Mobility 15 The following sections examine each lever in more detail to assess the potential reduction in vehicular emission of CO2 and regulated pollutants by 2020. The assessment also estimates the net annual economic cost to the country in the form of capital investments and operational costs.
Figure Key levers for green mobility
Vehicle Transportation In-use fleet technology infrastructure management
• Technologies • Better urban • Structured leading to planning to reduce inspection incremental need for mobility and maintenance improvements in regimen leading to powertrain and • Increased use of well-maintained non-powertrain more energy- vehicles eiciencies to eicient modes of • Fleet modernization reduce energy passenger and programs to replace or needs goods transportation upgrade older • Cost-eective polluting vechicles alternate • Reduce traic powertrain congestion in • Timely vehicle technologies with urban centers and scrappage and better eiciencies on major highway eicient recycling corridors • Alternate fuel options available, delivering energy with fewer emissions
Policies and incentives Appropriate and adequate regulations and incentives aimed at • Promoting widespread penetration of cost-eective greener vehicles • Oering incentives for use of eicient modes of transport • Ensuring inspection, maintenance, and recycling
Source: A.T. Kearney analysis
Cost-Effective Green Mobility 16 2. Adopting Green Technology Continued economic growth in emerging economies such as India will significantly increase the need for goods and passenger mobility. This will lead to increased energy requirements for mobility and, hence, higher emissions. Globally, however, the automotive propulsion landscape is evolving rapidly. Several vehicular technologies are being tapped to reduce the automotive sector’s environmental impact. The available levers can be classified in three broad buckets (see figure 14):
• Enhancing efficiency of conventional vehicles. This can be achieved by reducing efficiency losses in the vehicle powertrain and drag losses in vehicle propulsion.
• Deploying alternate powertrain technologies. This aims to adopt new powertrain architectures with substantially higher efficiency than conventional powertrains, including hybrids, electric vehicles, and fuel-cell vehicles.
• Adopting alternate fuels. This aims to use alternate energy sources, which can lead to lower emissions for given energy requirements. Potential options include biofuels, natural gas, liquefied petroleum gas, hydrogen, and higher grades of existing fuels.
Technology can play a significant role in emission reduction, but OEMs would need to pull multiple levers simultaneously to bring about substantial improvement in emissions. A detailed assessment of the available levers, the various technologies within each, their green impact, cost-effectiveness, and the applicability to different vehicle sub-segments follows.
Figure Technology levers for emissions reduction
2.1 2.2 E iciency enhancement of Use of greener powertrain conventional powertrains technologies
Driveline / engine friction reduction Mild hybrids Start-stop Hybrid
electric Strong hybrids Advanced injection technologies1 vehicles Plug-in hybrids Downsizing with turbo charging Range extender Transmission optimization Electric vehicles - Electric vehicle SCR / EGR Reduce Fuel cell Fuel cell vehicle Particulate filters emissions through technology 2.3 Non-powertrain enhancements Use of alternate fuels
Aerodynamics optimization Low sulphur gasoline/diesel
Braking system optimization Biofuels (ethanol/biodiesel)
Accessories and loads optimization CNG
Weight reduction LPG -stop -stop Hydrogen Tire-reandsistance loads reduction and loads
Includes gasoline direct injection and high-pressure common rail technology, among others Sources: Primary interviews; A.T. Kearney research
Cost-Effective Green Mobility 17 2.1 Enhancing efficiency of conventional vehicles
ICE vehicles emit CO2 as a result of the fuel combustion. In addition, they emit pollutants such as particulate matter (PM), mono-nitrogen oxides (NOx), carbon monoxide (CO), and unburned hydrocarbons (HC), which result from incomplete and high-temperature combustion.
Over the years, OEMs across the world have introduced several improvements in conventional powertrains, along with enhancements in vehicle design that have helped reduce emissions. Regulations have played their part in accelerating the adoption of these technologies globally. Emission norms such as the Euro standards have led to the adoption of advanced emission- control technologies. Similarly, introduction of CO2e targets in some of the world’s largest automotive markets—North America, the EU, and Japan—has accelerated the adoption of multiple innovations to reduce fuel consumption.
These improvements can be classified in two broad buckets, based on whether they focus on reducing fuel consumption through efficiency improvements in powertrain or non-powertrain subsystems, or containing the amount of regulated emissions.
Many cost effective, evolutionary technologies have emerged to improve fuel economy of ICE vehicles. While some of these technologies can deliver the twin benefits of reduced fuel consumption and lower pollution, in many cases there is a trade-off between fuel economy and the emission of pollutants. Thus, a combination of technologies is crucial to maximize green impact on both fronts.
Improving fuel economy
Fuel economy of a conventional ICE vehicle can be improved through technologies that reduce various losses in the vehicle level subsystems or the powertrain. Most of these create only an incremental impact as standalone technologies, but a combination of such technologies can lead to substantial improvements.
Reducing non-powertrain losses: The inevitable losses sustained while a vehicle is in use result in significant energy and fuel wastage. Several factors contribute to this issue, including the energy requirements of auxiliary units, losses during braking and idling, and energy used to counter drag from poor aerodynamics, vehicle weight, and tire rolling resistance.
The resistance offered by different systems varies according to the application and drive cycle. While driveline friction and vehicle weight are important in urban conditions, aerodynamic losses are important in highway conditions—air drag causes significant fuel consumption at speeds greater than 75 to 80 kilometers an hour. Passenger vehicles (PVs), small & light commercial vehicles (S&LCVs), and buses used primarily in city driving will benefit from driveline and vehicle-weight optimization, while aerodynamic design optimization will improve medium & heavy commercial vehicle (M&HCV) performance.
Overall, the combination of the non-powertrain technologies can create a sizable impact on fuel economy (see figure 15 on page 19). While this would vary based on vehicle segments and drive cycle, adopting these technologies can deliver 3 to 7 percent average improvement in fuel economy across vehicle segments in the medium term. The realizable green impact of non-powertrain enhancements is limited by poor operating conditions and road infrastructure in India. Several levers like lowering of ground clearance for aerodynamics improvement and adoption of low friction tires are unlikely to be effective in India. Similarly the benefits of weight
Cost-Effective Green Mobility 18 Figure Summary proile of non-powertrain enhancement technologies
Non-powertrain Fuel economy gain in India enhancement Description technologies PV/S&LCV M&HCV 2W/3W
1 Aerodynamics • Streamlined vehicle body design to minimize energy 12% 23% Very limited optimization losses due to air drag
2 Weight • Use of lightweight materials and structural redesign for 14%1 12%2 12% reduction weight reduction • New manufacturing technologies
3 Tire resistance • Reduction in tire rolling resistance toward minimizing 12% 12% 12% reduction rolling friction losses
4 Accessories • Reduction in power consumption in ancillaries and load 23% 23% - and loads systems based on optimization – Electriication of current mechanical systems of actuation and loads – Optimization of electrical systems and use of electronic controls where possible
FE impact numbers based on kg reduction in weight
Payload-to-kerb mass ratio in India is ~.- vs. global benchmarks of <; in practical situations, this factor is higher given heavy overloading in Indian trucking conditions Sources: IEEPTNO Study , EPA TSD ; A.T. Kearney analysis reduction is likely to be lower in commercial vehicles in India due to the high degree of overloading and a very high payload-to-kerb mass ratio.
Powertrain efficiency enhancement: CO2 emissions from ICE vehicles can be reduced by improving fuel economy. This would require OEMs to tap multiple technologies simultaneously. OEMs in India have already started adopting some of these green technologies, but many remain untapped.
On average, 74 to 78 percent of fuel energy is lost in the powertrain (see figure 16 on page 20). About 60 percent of this is from thermodynamic losses, with the rest from losses in engine and transmission subsystems. Technologies focusing on reducing these losses can help reduce CO2 emissions.
Summarized in figure 17 on page 21 are the most relevant powertrain improvements, in combination with potential fuel economy benefits and penetration in the Indian automotive market.
Powertrain technologies with the most significant overall emission-reduction impact include the following:
• Downsizing in conjunction with turbocharging and migration to gasoline direct injection (GDI) on gasoline engines
• Use of high-pressure common rail (CR) injection systems with advanced turbochargers for diesel engines. Use of selective catalytic reduction (SCR) after-treatment in larger diesel engines
• The shift to fuel injection in two- and three-wheelers
Cost-Effective Green Mobility 19 Figure Energy balance for a passenger car and components of powertrain losses
%
-%
Eiciency losses -% in powertrain -%
-%
Total Thermodynamic Engine losses Transmission Energy delivered energy losses (exhaust, (friction, pumping, losses by powertrain radiator, etc.) other combustion losses)
Sources: MIT Labs for Energy and Environment, ICCT; A.T. Kearney analysis
Cost of fuel economy improvements. While a combination of the above powertrain and non-powertrain technologies can lead to substantial improvement in fuel economy, this would be accompanied by a sizable increase in vehicle cost. Prioritizing the available technologies needs to be done based on a cost-benefit analysis.
Figure 18 on page 22 highlights the cost-effectiveness of both powertrain and non-powertrain enhancements for an A2 segment (less than 1,200 cc engine displacement) gasoline-powered
passenger car. The technologies highlighted as cost-effective can deliver a 10 percent CO2e reduction at an incremental upfront cost of about INR 2,000 per percentage reduction, net of taxes. As we move toward the right in figure 18, incremental reductions come at a significantly higher cost. In gasoline cars, more expensive technologies such as automated manual
transmissions (AMT), GDI, and downsizing cumulatively deliver another 10 percent CO2e
reduction, albeit at nearly double the per-unit cost. As shown in figure 18, a total CO2e reduction potential of 18 to 20 percent is possible for an A2 segment car, at an incremental upfront cost of INR 60,000 to 65,000 net of taxes. In the absence of disruptive technological innovation,
incremental CO2 reduction will become significantly more expensive on ICE vehicles, with every additional rupee spent delivering diminishing incremental fuel economy benefits.
The net cost of these technologies depends on the extent of increase in upfront cost and fuel savings accrued for every kilometer of travel. Vehicle applications running for larger distances
stand to benefit more. As seen in figure 19 on page 22, CO2 abatement in light and heavy commercial vehicles is much more cost-effective for this reason.
Cost-Effective Green Mobility 20 Figure Summary proile of powertrain enhancements on IC engine vehicles
Fuel economy gain in India Current market penetration Powertrain enhancement Description technologies, PV 2W/3WCV PV 2W/3W CV
• Reduced engine friction through 1 Engine Ongoing R&D by multiple levers such as conversion 1-2% 1-2% 1-2% friction reduction to electrical drives, use of roller OEMs, suppliers bearings
2 Start-stop systems • Reduced idle-state fuel (micro-hybrid) consumption through engine 3-5% 2-3% 2-5% shutdown
Direct • Injection of fuel directly in 3a injection – combustion chamber leading to 2-3% 3-6% -- gasoline more eicient fuel utilization
Port fuel • Injection of fuel into an intake port 3b Base Fuel injection – for mixing with air followed by 2-5% -- 3 Case injection gasoline introduction in combustion chamber
• A high-pressure common fuel rail 3c Common injecting all engine cylinders 4-5% 4-5% 4-5% rail – diesel allowing for better injection control
Diesel • Use of new-gen variable geometry 4a (new-gen turbos oering better control on 3-5% -4-6%- turbos) air intake and engine eiciency 4 Down- sizing (with • Replacing a larger engine with a Gasoline smaller, more eicient engine while turbo) 4b 4-15%- --- engines matching performance through turbocharging • Varied timing and lift of engine valves depending on engine 5 Variable valve timing 3-7% 3-5% 1-2% and lift load to optimize air intake and exhaust • Reduced engine losses through 6 Cylinder deactivation partial deactivation of engine 4-5% -1-2%- cylinders depending on load • Lower gear shift losses through Automated manual 7 electronic control of clutch 3-5% -3-5%- transmission and shift
• High-eiciency aftertreatment Selective system that allows for optimized 8a catalytic engine combustion; injection of 4-6% -4-6%- 8 NOx reduction a urea-based compound control removes Nox systems • Mixing of cooled exhaust gases Exhaust gas with fresh air intake to reduce 8b 0% -0%- recirculation combustion temperature and hence NOx
Low High
Several other technologies also exist to improve fuel economy – Gasoline: thermodynamic cycle improvements (e.g., split cycle, PCCI/HCCI, CAI; thermo-electric waste heat recovery; secondary heat recovery cycle; eiciency improvements in auxiliary systems Diesel: engine combustion improvements; thermo-electric conversion; secondary heat recovery cycle; auxiliary systems eiciency improvements; thermal management systems -% beneit from implementing gasoline direct injection on -stroke engines. For -stroke engines, air-assisted direct injection or GDI technology has been shown to deliver -% improvement in fuel economy. Sources: TNOIEEP Report for European Commission, EPA TSD ; primary interviews; A.T. Kearney analysis
Cost-Effective Green Mobility 21 Figure Cost-eectiveness of ICE vehicle based enhancements - Example for a gasoline PV
Cost per % COe beneit
(INR per %) Automated Gasoline direct manual transmission injection 4,500
Valve Downsizing & Aerodynamics timing turbocharging4 3,500 optimization & lift
Low rolling resistance Engine Start-stop 2,500 tires friction systems reduction Electrification of ancillaries 1,500
Cost-eective technologies5 – Relatively expensive technologies; cumulative cumulative cost ~INR 2,000 per % CO e reduction cost ~INR 3,800 per % CO e reduction 500 2 2
Decreasing CO2e benefit per Rupee spent 0 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20%
Powertrain technologies Vehicle-level technologies Cumulative COe beneit (%)
Illustrative for an A segment passenger vehicle Estimated cost in excluding all taxes and duties Standalone COe beneit of each of these levers is higher than shown in the graph; reduction is to account for technology levers not being independent/additive Downsizing and turbocharging is a cost-eective lever, however the need to implement direct injection makes the combined technology package more expensive At INR , per % COe reduction, the upfront cost can be recovered in years assuming an annual mileage of , kilometers for an average customer Sources: TNOIEEP Report , EPA TSD ; primary interviews; A.T. Kearney analysis
Figure Distance-to-payback for advanced ICE technology across segments in
(In ‘s of kilometers of operation)
-
- - - - - - -
A segment A segment A & above Diesel PV Two-wheeler Small CV Light CV Medium & PV (gasoline) PV (gasoline) segment PV (cargo & heavy CV (gasoline) passenger)
Years till 1012 912 791215202581045 23 payback1,2,3
Payback of incremental technology cost to customer through fuel economy related savings, based on average kilometers covered by customers in a segment. For example, a PV customer will travel on average -, kilometers per year compared to an M&HCV truck which would travel -, kilometers per year Incremental technology cost and fuel prices both exclude all taxes and duties Cost of fuel in net of all taxes assumed as INR . per liter for gasoline and INR . per liter for diesel Source: A.T. Kearney analysis
Cost-Effective Green Mobility 22 Control of regulated emissions
Internal combustion engines emit various pollutants as a result of the combustion process. Pollutant emission issues are different for gasoline and diesel engines due to fundamental differences in the combustion process and engine technologies used.
• Diesel combustion occurs under excess air (lean) conditions, where HC and CO emissions— products of incomplete burning—are already controlled in the combustion process. High pressure and temperature combustion typical of diesel engines and wide use of direct injection mean that NOx and PM are the key emissions to be controlled.
• Gasoline engines typically operate under higher fuel-air ratios, leading to some incomplete combustion. HC and CO are the key emissions from gasoline vehicles. NOx emissions, though lower than diesel, are also important. Current multipoint-port injected engines have negligible PM emissions, but if the expected migration to GDI technology takes place, then PM emission levels will also have to be addressed.
Two broad types of technologies are used to manage regulated emissions for both diesel and gasoline engines: in-cylinder control and after-treatment systems.
• In-cylinder control involves changes to the engine system to reduce emissions before exhaust gases leave the engine.
• After-treatment systems aim to reduce emission levels in engine exhaust gases before they are released into the atmosphere.
Many of these technologies are already in use in India, and the major types of technologies needed to reduce regulated emissions are summarized in figure 20 on page 24.
The challenge of high sulfur content in fuels. The quality of fuel used in an ICE affects the level of pollutant emissions from a vehicle. The presence of chemicals such as lead, olefins, aromatics, and sulfur in gasoline and diesel increases the emission of pollutants. While the quantum of these adulterants has been significantly reduced or even eliminated over the past decade (lead, for example), sulfur levels in fuel are still below the standards required for emission control in line with the BS-4 norms.
Sulfur limits the performance of after-treatment devices, such as particulate filters, lean NOx traps (LNT), and SCR, the effective functioning of which is important for achieving the levels of NOx and PM mandated by BS-4 norms and beyond, particularly in diesel engines. SCR and diesel particulate filters (DPF) require fuel sulfur levels of less than 50 ppm, while LNT requires less than 15 ppm for effective operation.
The current level of sulfur in gasoline and diesel is very high throughout India—350 ppm in diesel and 150 ppm in gasoline—versus the 50 ppm required for BS-4 standards. While 50 ppm sulfur has been mandated in 20 Indian cities, it has been implemented fully in only 13. Here again, because actual vehicle usage is not restricted to these cities, they might be refueled elsewhere with low-quality fuel, leading to high emission levels. The lack of countrywide availability of low-sulfur fuel severely hampers industry efforts to improve air quality.
Upgrading refineries to make low-sulfur fuel available throughout India is crucial to the future of green mobility. The provision of adequate fiscal incentives for oil companies to undertake the required investment for improving fuel quality (INR 30,000 to 40,000 crore, as estimated by many oil companies) will likely be necessary. The government would also do well to implement structured fuel-quality tracking mechanisms and disincentives for non-compliance across all
Cost-Effective Green Mobility 23 Figure Summary of emission control technologies on IC engine vehicles
Gasoline technologies for improved emission control Diesel technologies for improved emission control
• High-pressure fuel injection (up to • Air-fuel management for cold-start bar) control through control on fuel • Variable geometry turbines for injection, engine valve train improved air-fuel management optimization, and turbocharging In-cylinder In-cylinder • Variable valve timing and fuel injection control • Incremental improvements to control for regeneration of diesel particulate combustion system filter • Exhaust gas recirculation (EGR) with • Continuous R&D for combustion electronic control systems system improvements • Exhaust gas recirculation with DC motor actuator
• PM after treatment with diesel • Improvements to three-way catalytic particulate filters and diesel oxidation After- converter (WCC) operation After- catalysts treatment treatment • Use of gasoline particulate filters • NOx reduction based on selective (GPFs) for direct injection engines catalytic reduction (SCR) or lean NOx traps (LNT)
Sources: ICCT; primary interviews; A.T. Kearney analysis
fuel handlers in the supply chain, a scenario in line with global best practices.
The challenge of emission control in two- and three- wheelers. In India, motorized two-wheelers are the most widely used form of personal transportation. About 80 percent of the two-wheeler market is dominated by the budget segment (less than 125cc), which is highly cost sensitive. This has resulted in the development and adoption of motorcycles that are low-priced and boast best-in-class fuel efficiency.
Adoption of BS-3 norms in 2010 has led to a 50-plus percent reduction in key regulated emissions over 2000 levels. Current regulated emission norms are in line with global two-wheeler norms, with CO levels lower than those required by Euro-3 norms as well as current Chinese norms. The combined emission levels of HC and NOx for two- and three-wheelers are also on par with Euro-3 levels. However, due to the sheer size of the market, two- and three- wheelers account for a sizeable portion of regulated emissions from vehicles in urban areas.
So far two-wheeler OEMs have adopted a “lean” burn paradigm that drives high fuel economy but leads to high NOx emissions. Reducing NOx emissions in the future is likely to affect fuel economy and lead to higher CO2 emissions. The key challenge for India would be to balance HC, NOx, and CO emission reductions and fuel economy improvements from this segment. A concurrent reduction in regulated emissions and improvement in fuel economy will likely depend on new technology solutions and hence difficult to implement in a 2020 timeframe. Active research will be needed to make any new solutions cost effective, as the use of expensive technologies could have a strong implication on the growth of this segment.
The following are key technology options currently available for improving fuel economy and reducing two-wheeler HC, NOx, and CO emissions:
• Fuel injection technology. Four-stroke engines using basic carburetor technology dominate
Cost-Effective Green Mobility 24 India’s two-wheeler market. Fuel-injection technology is the next main technology upgrade for the two-wheeler industry to evaluate. A few models in the 125cc and above segment have already started to adopt fuel-injection technology. Migrating to fuel injection can lower regulated emissions and improve fuel economy by 2 to 5 percent over carburetor technology. However, the incremental cost to consumers for a fuel-injected four-stroke engine is estimated at more than 10 percent of current average vehicle price, which makes it expensive relative to the benefits it delivers, especially given two-wheelers’ already low fuel consumption. Direct injection systems can deliver marginally higher benefits due to the ability to use a leaner fuel-air mixture; however, this will result in increased NOx emissions.
Two-stroke engines, which are primarily used in the three-wheeler market, also have technology options for shifting to fuel injection. Air-assisted direct injection technology has the potential to improve fuel economy by 30 to 40 percent at an incremental cost estimated to be around 5 percent of vehicle cost, which would make this technology a cost effective solution for two-stroke-engine vehicles. Air-assisted direct injection could bring the fuel economy of two-stroke engines at par with that of four-stroke engines. In addition, given the lower NOx emissions from two-stroke engines, a shift from four-stroke to two-stroke could
represent a potential evolutionary pathway for optimizing CO2 and NOx emissions. • Three-way catalytic converter (3WCC) systems are potential solutions for NOx control. Significantly lower HC+NOx emission targets or the decoupling of NOx from HC would require use of 3WCCs. However these cannot be operated efficiently with the lean-burn paradigm that currently drives the segment’s high fuel economy and hence the use of 3WCCs would mean an increase in fuel consumption from two-wheelers. The shift to 3WCC systems would need to be accompanied by a shift to fuel injection systems as well, due to the need for accurate control of the fuel-air mixture.
• Close-coupled and start-up catalysts and improved exhaust insulation, to help improve the performance level of catalytic converters and improve cold-start emissions.
• Multiple catalysts and substrates with higher conversion efficiencies, to meet the need for efficient versions of the oxidation catalyst after-treatment systems currently in use.
Conclusions
A combination of the powertrain and non-powertrain enhancements can result in passenger vehicles with 15 to 25 percent lower CO2e emissions, commercial vehicles with 10 to 20 percent 1 lower CO2e emissions, and two-wheelers with 6 to 8 percent lower CO2e emissions. The potential improvement in near term will be lower. For passenger vehicles, this is estimated to be around 7 to 11 percent; for commercial vehicles, around 3 to 11 percent; and for two- and three- wheelers, around 2-3 percent.
The above discussed technologies would lead to an increase in upfront cost, but that would be partially offset by reduced operational costs resulting from better fuel economy. Commercial usage segments—trucks, buses and taxi-cabs, for instance—can easily offset the increased upfront costs. CO2e reduction on commercial vehicles will deliver a net economic saving to the country at INR 5 to 15 per kg abated. For most personal users, however, the lower share of operating cost will mean an overall increase in total cost of ownership. The net annual
1 For gasoline PVs, CO2e reduction potential estimated at 14, 19, and 25 percent for A1, A2, and >A3 segments respectively. For diesel PVs, a 14 to 16 percent average reduction is estimated. For CVs, potential of 9, 20, and 18 percent estimated for SCVs, LCVs, and M&HCVs respectively. Both powertrain and non-powertrain levers are considered.
Cost-Effective Green Mobility 25 2 abatement cost to the country of INR 10 to 20 per kilogram of CO2e is estimated for passenger vehicles. Fuel efficiency in two- and three-wheelers can be improved by 6 to 8 percent but is expensive at INR 55 to 65 per kg of CO2e. Analysis of the economic cost to the country for CO2 abatement across vehicle segments is shown in figure 21. Taxes and duties on both technology and fuel have been excluded in the analysis of net economic cost to the country and the estimation of abatement costs.
Taxes will further increase the upfront acquisition cost of vehicles for customers, while also increasing the saving from lower fuel consumption. In absolute terms however, customers would have to bear a higher cost. The impact of taxes is most significant for PVs and two-wheelers as their lower average kilometers of running amplify the impact of higher acquisition costs. The increase in acquisition cost of vehicles with fuel-efficient technologies would be 40 to 65 percent higher for PVs and 35 to 40 percent higher for two-wheelers, compared with the cost excluding taxes.3 In the case of an A2 segment gasoline PV, the net incremental cost for a consumer in 2020 would be INR 30,000 to 32,000.
Powertrain improvements can also help reduce emission regulated pollutants. Diesel-powered vehicles can achieve as much as 85 percent reduction in NOx and 90 percent reduction in PM emission, while gasoline engines could emit 55 to 60 percent less CO, 50 to 55 percent less HC,
Figure
CO e abatement cost comparison for advanced IC engine vehicles in
Abatement Cost (INR per kg COe ,)
75 Two & three- wheelers
60
Diesel PVs 45 Gasoline PVs (<1,000 cc)
30 Light CVs Gasoline PVs (>1,000 cc)
Small CVs Medium and heavy CVs (cargo and passenger) 15 (trucks and buses)
0 0 4 8 12 16 20 24 28 Cumulative reduction potential -15 (million tons of COe)
Excludes all taxes and duties, representing the net cost to country. Cost of fuel in net of all taxes assumed as Rs. . per liter for gasoline and Rs. . per liter for diesel. Source: A.T. Kearney analysis
2 Net cost to the country calculated as incremental total cost of ownership (TCO) for a customer purchasing an advanced ICE vehicle, relative to a customer purchasing a base ICE vehicle in 2020. Taxes on vehicles, technology and fuel are excluded to make this a net cost to the country. TCO is calculated over a 5-year period and annualized to give per year incremental cost to country and divided by
CO2e abated per year to arrive at abatement cost to the country. For TCO assumptions please refer to appendix section A3. For detailed note on methodology, please refer to appendix section A4.
Cost-Effective Green Mobility 26 and 60 to 65 percent less NOx. Achieving such substantial reductions will require clear guidelines for rolling out emissions norms. Specifically, there should be clarity on timelines for the implementation of BS-4 and BS-5 emission norms for four-wheelers. Similarly, developing clear-cut regulations for two- and three-wheelers will be crucial for containing overall emissions. Also, effectiveness of the above technologies would be contingent on nationwide availability of low-sulfur fuel. This is a major roadblock in implementing the next level of emissions norms.
Overall, improvements in ICE vehicles can potentially deliver 25 million to 29 million tons of 4 CO2e abatement by 2020 at a net cost to the country of INR 8,000 to 12,000 crore per year. This cost includes benefits to the government in terms of reduction in subsidies and increased tax revenues to the tune of INR 18,000 to 20,000 crore.5 CV customers would get a net benefit of INR 14,000 to 16,000 crore as a result of lower operating costs delivered by lower average fuel consumption. On the other hand, PV and two-wheeler customers would face a net incremental cost of INR 42,000 to 46,000 crore, assuming the current tax regime is still in place in 2020. Upgrade of emission standards to BS-5 would lead to an additional cost to nation of INR 8,500 to 10,500 crore per year, including the cost of low-sulfur fuel and emission control technologies needed beyond those used for fuel economy improvements.
3 Taxes considered are import duties on components, excise duty, VAT and motor vehicle / road tax. Tax regime assumed to be as current.
4 Cumulative costs to the country calculated from segment-wise net CO2e abatement cost per year and estimates of the on-road vehicle population by segment in 2020. All costs are expressed as annualized figures and represent the cost the country will need to bear per
year for the above-mentioned CO2e abatement. 5 Subsidy on diesel assumed to be INR 9 per litre and current tax regime assumed to hold in 2020.
Cost-Effective Green Mobility 27 2.2 Deploying alternate powertrain technologies
The emergence of various alternate powertrain technologies presents newer and much bigger opportunities for moving toward greener mobility (see figure 22). These systems can replace or augment conventional ICE systems. The most prominent examples of emerging alternate powertrains follow:
Figure Overview of alternate powertrain technologies
Alternate powertrain technologies Description Commercial examples
• E-motor assists engine in acceleration • India: None Mild-hybrid • Regenerative braking charges a small battery • Global: Honda Civic Hybrid, (Mild HEV) • No all-electric propulsion possible Mercedes Benz S Blue, BMW -Series hybrids
• Can run on just ICE, just batteries, or a • India: Toyota Prius combination Strong/Full • Global: BMW X Hybrid, Ford • Combine E-motor and engine power that Escape Hybrid Hybrid hybrid electric optimizes output to the wheels throughout the electric vehicle (SHEV) operating range vehicles • Requires large, high-capacity battery pack (HEV) • HEV with battery large enough to run electric only • India: None commercialized, Plug-in hybrid for a significant distance (+ miles) Maruti Swift REEV concept car exhibited electric vehicle • Both a regular ICE and E-motor can be used for propulsion • Global: Toyota Prius Plug-in, (PHEV) • Charging through regenerative braking or plug-in Audi A e-tron, BYD FDM, GM Volt
• Runs solely on battery power, does not have ICE • India: Mahindra Reva and E Battery electric vehicles (BEV) • Range is limited by the size of the battery • Global: Nissan Leaf, Citroën • Recharge o the grid C-Zero, Ford Focus, Mitsubishi i-MiEV
• Fuel cell functions like a battery producing • Global: Not available electricity commercially Fuel cell hybrid vehicle (FCV) • Instead of recharging, must be refilled by H • Prototypes exhibited • Runs on an electric motor like standard hybrid and standard electric vehicles
Only select examples shown for illustration Source: A.T. Kearney analysis
• Hybrid electric vehicles combine two sources of propulsion energy: a consumable fuel such as gasoline and a rechargeable source. Charging can occur in three ways: regenerative braking to capture energy lost during braking, energy from fuel combustion in the ICE, and grid electricity.
• Electric vehicles are electric-motor propulsion systems that use batteries or ultra-capacitors to store energy. This energy provides all of the vehicle’s propulsion and auxiliary power. Batteries are recharged from grid electricity and braking-energy recuperation. Electric vehicles (EVs) can have zero tank-to-wheel emissions of greenhouse gases and regulated emissions (NOx, PM, HC and CO). Electric-drive vehicles are being mass produced in India as two-wheeled bikes and scooters, but most of these are low-end models that cannot be compared to ICE two-wheelers in terms of performance.
• Fuel cell vehicles use hydrogen-powered fuel cells to produce electric power for their
Cost-Effective Green Mobility 28 electric-motor propulsion systems. Fuel cell technology is in its infancy and is not expected to be commercially viable in India until 2020.
Many hybrids and electric vehicles are commercially available. These vehicles are slowly gaining consumer acceptance, particularly in mature markets. The main challenge for hybrid and electric vehicles is the reliance on batteries, which have low energy and power densities compared with liquid fuels.
The main difference between hybrid and electric vehicles is the role and sizes of batteries. Also, batteries are one of the biggest differentiators and cost drivers for alternate powertrain vehicles, as compared with ICE vehicles. As seen in figure 23, when all-electric propulsion is desired for a long distance, the battery’s energy density needs to be higher. The power density must also support the larger electric motor. There is a tradeoff between the energy density, power density, and material choice. Having a battery with both high energy and power density will make the battery large and cost-prohibitive.
Green assessment. Hybrids and EVs can produce two environmental benefits: reduced load on
ambient air and reduced CO2 emissions.
Impact on CO2 emissions. CO2 emissions from EVs and hybrids come from two sources: fuel combustion during vehicle operation and electricity generated to recharge batteries.
Figure Battery performance requirements for di erent alternate powertrain technologies
Applicable battery technology Lead Rationale NiMH Li-ion acid
• Low power requirement, battery operated only during coasting, braking, idling Mild
High • Low energy requirements as onboard ICE SHEV HEV (1-2 kWh) recharges battery during most operating conditions
) • Higher power requirement as battery powers
kg vehicle independently under some conditions Strong
W/ PHEV (2-5 kWh) REX • Low energy requirements as onboard ICE
(k HEV (12-20kWh) y recharges during most operating condition it
dens EV • Battery power and energy requirements high due r (12-40 kWh) to pure EV operating range
we PHEV MHEV • To minimize battery size, high-power/energy ratio Po (<1 kWh) batteries used for PHEV
• Battery power and energy requirements high due to pure EV operating range REX
Low • Battery size constraints leads to high-energy/ High Low power ratio batteries (lower power density) Energy density (kWh/kg) • Battery energy requirement to extend range of vehicle EV • Battery size constraints leads to high energy/ Battery size (kWh) power ratio batteries (lower power density)
Not Suited Highly Suited
Source: A.T. Kearney analysis
Cost-Effective Green Mobility 29 • Emissions from fuel combustion during vehicle operation: A typical ICE vehicle has many inefficiencies leading to significant loss in fuel energy. Hybrids can recover some of these energy losses using different kinds of technologies designed to harness and utilize “lost” energy. These include:
−− Avoiding energy loss during idling by shutting off the combustion engine
−− Recuperating energy from regenerative braking
−− Using battery energy to assist the engine, thus allowing for smaller engines
−− Running the combustion engine at its maximum load, where engine efficiency is maximized
Compared with gasoline-powered vehicles, PHEVs, strong HEVs, and mild HEVs can improve fuel economy by 50 to 55 percent, 20 to 25 percent, and 8 to 12 percent, respectively. The benefits are lower when compared with advanced gasoline-powered vehicles that use start-stop technology and smaller engines.
Electric vehicles completely eliminate the need for fuel combustion and hence have zero fuel-related emissions.
• Emissions from the electricity generated to recharge batteries: CO2 emissions from gener- ating electricity are linked to two factors:
−− The efficiency of the electric drive determines the amount of electricity needed per kilometer. Electric drive can be three to six times more efficient than an IC engine, so the energy required for the same amount of work is much lower for electric vehicles. Also, electric drive specifications can be significantly optimized for Indian driving conditions (high intra-city usage leading to less daily commute, low top speed and low power require- ments) for very high efficiency. A subcompact passenger car with electric drive can produce efficiency levels as high as 120 watt-hours per kilometer travelled.
−− The means of power generation determines the emission factor per unit of electricity
consumed. Electricity produced from coal-fired power plants results in much higher CO2 emissions compared with other sources. The predominant use of coal-fired power gener- ation in India (about 60 percent), coupled with very high transmission and distribution
(T&D) losses of about 25 percent, results in very high CO2 emissions per unit of electricity
consumed. As a result, EVs are less effective at controlling CO2 emissions in India (see figure 24 on page 31).
However, the power sector’s carbon intensity could be significantly reduced in the future. Achieving even the current carbon intensity levels of Chinese power plants would make EVs
better than ICE vehicles in terms of CO2 emissions. The government should actively pursue initiatives that can help improve the carbon footprint of India’s power sector and adopt strong measures to cut back on transmission and distribution losses. Policies to promote renewable
sources of power generation can also help reduce CO2 emissions. With the onset of such changes in the power sector’s carbon footprint, the automotive industry’s efforts to develop
electric vehicles can reduce CO2 emissions even more significantly. Impact on regulated emissions (NOx, HC, PM, CO). The biggest green advantage of electric vehicles is zero regulated emissions, making it a possible answer to the mounting challenge of poor urban air quality. The major benefit of a move toward electric vehicles will be through reduction in emissions from two-wheelers, city buses, taxi-cabs, and auto-rickshaws, which are the major vehicle contributors to urban air pollution. In an HEV, the combustion engine is less
Cost-Effective Green Mobility 30 Figure Green impact of electric and hybrid vehicles in India
Relative well-to-wheel emissions Emissions from power sector (In g-COe./km) (In g-COe./kWh)
gCOe/kWh of electricity lost in transmission and distribution , gCOe/kWh of electricity consumed
- - - -
Gasoline Gasoline Gasoline Gasoline EV European USA Africa China India ICE MHEV SHEV PHEV Union
Based on emissions of a typical compact car equivalent to A segment Sources: Guidelines on COe Conversion Factors for Company passenger vehicle Reporting (UK Government); Planning Commission, India Sources: Central Electric Authority reports; MoEF reports, U.S. Environmental Protection Agency; A.T. Kearney analysis
exposed to accelerations (transient loads) and burns fuel under more stable conditions, thus emitting less pollution.
Cost assessment. Battery prices are among the biggest cost drivers for hybrid and electric vehicles. High battery prices result in prohibitive costs for hybrids and EVs. However, we expect a significant drop in the cost of lithium-ion (Li-ion) batteries through 2020 due to better technology learning and the impacts of larger scale (see figure 25 on page 32).
Based on these price trends for Li-ion batteries, the upfront cost of mild and strong hybrids would remain higher than an equivalent ICE vehicle by 12 to 15 percent and 25 to 35 percent, respectively. Similarly, costs for comparable PHEVs and EVs are likely to be 45 to 55 percent and 50 to 70 percent, respectively. A comparison of the cost-effectiveness of alternate powertrains, in contrast to the powertrain and non-powertrain improvements, is shown in figure 26 on page 32. This highlights the notion that hybrids and EVs are both likely to remain less cost effective than improvements in ICE vehicles.
A customer would need to have a very high level of vehicle usage to have a lower total cost of operation (TCO) than conventional ICE vehicles. Hence, hybrids and EVs are likely to be more compelling for commercial applications (trucks, buses, and taxis) and non-commercial users travelling long distances. However, the limited expected range of EVs and PHEVs (less than 100 kilometers) could potentially reduce their attractiveness to commercial users.
The following measures would make these emerging technologies more attractive to customers:
Cost-Effective Green Mobility 31 Figure Lithium-ion battery price evolution
(In INR per kWh, -) Key reasons driving down costs of lithium-ion batteries ,- , • Signiicant R&D happening globally to identify e icient chemistry and introduce cheaper technologies like Li-air batteries • Increasing penetration of EVs and HEVs is driving economies of scale bene its ,- ,- , – Modularization of batteries to it various EVs and , HEVs for dierent OEMs will further increase scale
,- • Partnerships emerging between OEMs, battery , producers, and component manufacturers brings down overhead costs
EV SHEV
P
Source: A.T. Kearney analysis
Figure Net economic cost of hybrids and electric vehicles (PVs)
Annual economic cost to the country for alternate powertrain Operational cost technologies in (In INR ‘) Acquisition cost
Analysis done for comparable car coniguration
- - - - -
Gasoline ICE Gasoline MHEV Gasoline SHEV Gasoline PHEV EV
CO e abatement per annum – KG 170£190 420£440 370£390 240£260
CO e abatement cost – 30£40 25£35 35£45 30£40 Rs. per KG
Total cost of ownership for consumer with timeframe = years, vehicle sold after years for resale value of %, % cost inanced at % p.a. for years, excludes all taxes and duties, representing the net cost to country; illustrative for an A segment gasoline passenger vehicle E-motor size / Battery Size / Battery type for MHEV = kW / kWh / NiMH E-motor size / Battery Size / Battery type for SHEV = kW / kWh / NiMH E-motor size / Battery Size / Battery type for PHEV = kW / kWh / Li-ion, Electric Drive =% E-motor size / Battery Size / Battery type for EV = kW / kWh / Li-ion In comparison to a conventional gasoline ICE; Cost of fuel in net of all taxes assumed as Rs. . per liter for gasoline and Rs. . per liter for diesel Source: A.T. Kearney analysis
Cost-Effective Green Mobility 32 • Government subsidies and incentives. The proposed subsidy of more than INR 100,000 for electric cars, along with exemption from excise, would make EVs more attractive to customers who drive between 50 and 80 kilometers per day.
• Frugal engineering and de-specification. Frugal engineering and optimizing the specifica- tions of electric and hybrid vehicles can make them far more attractive. Examples of such optimized products are the Mahindra E2O and the Revolo plug-in hybrid (see sidebar: Retrofit Hybrids: The Case of Revolo).
Retrofit Hybrids: The Case of Revolo
KPIT Cummins and Bharat Forge 800 and 3,000 cubic centimeters. Current state of technology. Limited jointly developed Revolo, Vehicles receiving this upgrade Revolo has been acclaimed for its a plug-in parallel hybrid solution must be equipped with either green impact with limited that can be used in new and lead-acid or lithium-ion cell additional infrastructural existing cars and light batteries. requirements. It has gone through commercial vehicles (LCVs). KPIT successful testing, but its Cummins pioneered the design Green impact. According to KPIT on-the-road performance and and engineering, and Bharat Cummins, Revolo will improve market acceptance still remain to Forge will manufacture and fuel economy by 35 to 40 percent be seen. assemble the vehicles. and is ideally suited for stop-and-go city driving. It will The road ahead. The overall
Technological overview. The also increase engine life and impact of hybrid solutions on CO2 Revolo kit has an electric provide a power boost, thus emissions will be limited unless induction motor, a controller, a permitting the use of smaller, they are applicable to both old battery pack, and a management greener engines. and new vehicles. Hence, system with proprietary software. technologies like Revolo that are The package can be installed in Cost angle. Although Revolo kits relevant to a wide range of four to six hours either in the cost INR 65,000 to 150,000, they existing vehicle applications can factory or as an aftermarket are extremely cost-effective have a sizable green impact. upgrade on gasoline and diesel because they have the benefits of vehicles with engines between a full hybrid at a lower cost.
• Innovative financing and charging models. One way to make EVs more attractive is by bundling the cost of batteries into the daily costs of recharging, allowing consumers to pay for batteries over time. Decoupling battery costs from the vehicle purchase price could enable EVs to be sold at more competitive prices. However, this may be closely linked to the devel- opment of EV infrastructure and the associated business models.
Infrastructure challenges for electric vehicles. In addition to cost, the vehicle-charging infrastructure poses a significant hurdle. Major urban centers will need convenient charging stations near offices, shopping centers, and parking areas. For example, stations near corporate parks would be attractive for people travelling to and from work. The current public EV charging infrastructure is limited or non-existent in most cities, although some—Bangalore, for example— have made advances in this area. Some customers are better positioned to overcome infrastructure challenges, including those with well-defined usage patterns and fleet vehicles such as taxis, autos, and small buses. Stations at strategic locations across the city could easily help these customers overcome infrastructure related challenges.
Cost-Effective Green Mobility 33 Conclusions: Investment for Future Gains
Hybrids are the first real step on the electrification path in India and can help reduce greenhouse gas and regulated emissions. For most personal users, however, hybrids will remain less cost effective than ICE vehicles in 2020. The annual abatement cost would be INR 35 to 45 per kg of CO2e abated, for passenger-vehicle applications. Hybrids can be more cost effective for commercial uses that cover much longer distances annually, such as S&LCVs, buses, taxis, and three-wheelers. For example, a pickup vehicle with strong hybrid technology is likely to have a negative abatement cost.
The initial penetration of hybrids in the Indian market will largely depend on government incentives and CO2e reduction targets for the industry, which must strive to take advantage of local resources to minimize upfront cost. Retrofitting solutions such as the Revolo could increase market penetration and put green benefits on a faster track.
Electric vehicles are the end stage of the electrification path. They can have a substantial impact on the ambient air quality of India’s cities but would be less effective in controlling CO2e emissions on a well-to-wheels basis given the country’s current energy mix. Be that as it may, the potential impact of EVs in controlling damage to ambient air and their long-term potential for sustainable CO2 reduction cannot be overemphasized. Like hybrids, EVs are likely to remain cost-ineffective for personal users until 2020. The lack of a charging infrastructure and drivers’ range anxiety can further hinder EV penetration in India. However, with strong government incentives, electric vehicles with downsized specifications can be targeted for specific segments, including low-end two-wheelers, small city buses, three-wheelers, and small A1-segment cars.
With a judicious mix of government incentives and regulations, hybrids and EVs could aggressively penetrate several vehicle segments (see figure 27).
Figure Target penetration in for alternate powertrain technologies
Light Passenger Two- Three- Vehicle type commercial Buses vehicles wheelers wheelers vehicles
10 to 12 1 to 2 1 to 2 4 to 5 3 to 5 Hybrids percent percent percent percent percent
Electric 1 to 2 9 to 11 2 to 4 0 to 1 1 to 2 vehicles percent percent percent percent percent
Source: A.T. Kearney analysis
Cost-Effective Green Mobility 34 2.3 Adopting alternate fuels
Several fuel options have emerged globally as alternatives to conventional gasoline and diesel. While energy security is one of the key drivers in adopting alternate fuels in most countries, many of these options can be environmentally friendlier than gasoline and diesel. Alternate fuels have an important role to play in decarbonizing transport vehicles and moving to more sustainable methods of transportation. There is a wide range of non-petroleum-based fuel options (see figure 28):
• Biofuels comprising ethanol and biodiesel, which can be used either in pure form or as blended, petroleum-based fuels
• Alternative fossil fuels such as compressed natural gas (CNG) and liquefied petroleum gas (LPG)
• New-age fuels, including hydrogen and compressed air. While some concept cars have been tested and exhibited, hydrogen ICE and compressed-air cars are not commercially available and therefore not analyzed
Figure Summary proile of alternate fuel options
Availability Extent of change to Technology Description of fuel in existing ICE India by 2020
Biofuel Pure • Flex-fuel vehicles capable of burning pure ethanol Major changes to (biodiesel/ biofuel the engine ethanol) • Diesel ICE and associated parts need to be modi ied to run on pure biodiesel
Biofuel • Newer gasoline ICE can handle up to 15% ethanol Minor to no blend with changes to gasoline/ • Diesel ICE can handle blend of 5 20% of biodiesel the engine diesel
Green • Green diesel is a high quality drop-in fuel and is a No changes to diesel mixture of n-paraffin and iso-paraffin the engine • OMCs are starting to explore use of green diesel in their production facilities
Alternative CNG • Can be a part of OEM integrated solution or retrofitted Minor changes to fossil as an aftermarket solution the fuel fuels • Multiple OEMs offering variants across PVs, buses, intake system SCVs and three-wheelers
LPG • Modification required to traditional ICE with additional Minor changes to cylinder the fuel • Multiple OEMs offering variants across PVs and intake system three-wheelers New age Hydrogen • Slightly modified version of traditional ICE can handle Minor changes to fuel hydrogen fuel the fuel • Currently not commercially available intake system
Compressed • Motors are driven by expansion of compressed air Major changes to air stored under high pressure the engine • Currently not commercially available
No commercial availability for retail use Commercial availability comparable to gasoline/diesel
Source: A.T. Kearney analysis
Cost-Effective Green Mobility 35 The main drivers of alternative fuel choice are availability and cost. Viable alternatives to petroleum-based fuels need to be cost-effective from both a production and distribution perspective. The choices made by countries adopting alternative fuel programs are often based on cost. Brazil, for example, has a large number of pure ethanol or ethanol-gasoline blended flex-fuel vehicles, driven by the low cost and high availability of ethanol there. The ample supply of natural gas in South America has led Argentina and Brazil to adopt natural gas-based vehicles, and the region’s well-developed gas pipeline infrastructure allows for easy and cost-effective distribution. In addition to availability and cost, an important aspect of the migration to alternative fuels is the degree of modification needed to petroleum-based ICE vehicles. As shown in figure 28 on page 35, several fuel options require only minor modifications to IC engines.
This report focuses on CNG, LPG, and biofuel blends. In India, pure biofuel based vehicles are unlikely to emerge as a feasible option in the foreseeable future due to supply-side constraints. Fuel alternatives such as hydrogen and compressed air are also unlikely to be commercially viable in the near to medium term.
Biofuels
Biofuels are non-conventional liquid fuels derived from biomass resources such as woody biomass, sugar-rich crops, oil crops, and wet biomass. The most widely used are ethanol and biodiesel, which are used as substitutes for gasoline and diesel, respectively.
• Ethanol is produced by sugar fermentation. While technically any source of sugar can be used, ethanol is typically produced from sugarcane, maize, wheat, and sugar beets. Significant research has also been done in commercializing cellulosic ethanol. This would make a much wider range of cellulose-rich feedstock—for example, most types of woody biomass—available for ethanol production. Brazil and the United States are the major producers of ethanol, accounting for 85 to 90 percent of global production (see sidebar: The Ethanol Success Story in Brazil on page 27). Ethanol can be used either in pure form or blended with gasoline. By and large, blends of 10 to 15 percent ethanol in gasoline do not require modifications on new ICE vehicles. Higher-concentration blends require major changes to the base engine and associated parts such as hoses, gaskets, and filters. While India currently mandates 5 percent blending of ethanol, implementation of this requirement has not been widespread due to supply-side issues.
• Biodiesel is produced from vegetable oil seeds such as rapeseed, soy, palm seed, and jatropha. Biodiesel is commercially produced in the EU, the Americas, and some parts of Southeast Asia, with rapeseed, soy, and palm seed as the respective feedstocks. Low-cost sources such as waste cooking oil have also been successfully used as feedstock in the United States and China. In India, jatropha, which can grow in arid soils and dry climates, was expected to be the major viable feedstock, but low yields have ruled out this possibility, and other seeds such as pongamia and mahua are being considered as alternative options. Blends of up to 20 percent biodiesel can be used without major modifications to current diesel engines.
Green benefits. The well-to-wheel CO2e emissions of both ethanol and biofuel depend significantly on the method of production and the method of disposal of production waste. On a well-to-wheel basis, a 10 percent ethanol-gasoline blend is likely to emit 8 to 10 percent less
CO2e per kilometer than pure gasoline, with sugarcane or sugarcane derivatives as the feedstock. Ethanol blends are also marginally better than gasoline for NOx and PM emissions
Cost-Effective Green Mobility 36 The Ethanol Success Story in Brazil
Brazil is one of the few countries corn ethanol and about half as greenest biofuels, delivering an with significant penetration of expensive as in India. This up to 80 percent reduction in life ethanol-fueled cars. As of 2010, efficiency is supported by high cycle greenhouse gas emissions almost 90 percent of new vehicles sugarcane yield, improvements relative to gasoline, including sold were flex-fuel vehicles, in agri-industrial technology, direct and indirect land use which run on any ratio of ethanol and efficient use of waste change effects. This is largely and gasoline blend. The bagasse. because of high sugarcane yields government’s National Alcohol and the efficient use of bagasse in • Targeted government Program drives biofuel usage heat and power generation. regulation. The Brazilian through policy incentives and government has used a variety regulation to ensure automotive of policy incentives such as industry cooperation. Several lower taxes for ethanol-fueled drivers helped the success of this cars, mandatory blending program, including: requirements, and mandatory availability of ethanol at all • Low cost of ethanol. Ethanol in refueling stations. Brazil is 30 to 35 percent more economical than U.S.-based Brazilian ethanol is also one of the
Figure Cost of ethanol production by region
( per litre)
. .
.
.
Brazil (sugarcane) US (maize) EU (wheat) India (bagasse)
Source: A.T. Kearney analysis
-2030 time period
Cost-Effective Green Mobility 37 (see figure 29). Similarly, a 5 percent biodiesel blend is likely to emit about 2 to 3 percent less
CO2e per kilometer than pure diesel, with jatropha as the feedstock. While biodiesel blends also have lower PM emissions, their NOx emissions are likely to be higher than diesel. Harmful land-use changes caused by cultivation of biofuel feedstock or improper disposal of production waste can quickly reverse the well-to-wheel green benefits.
Figure Relative emissions performance of biofuels
Gasoline Diesel Relative CO e emissions Relative NOx and PM emission (In g-CO e./km, gasoline = ) (In g/km, gasoline = ) E5 B5 E10
- - - -
- - - -
COeNOx PM
Source: ANL GREET model; IEA; A.T. Kearney analysis
Optimizing engine design to take advantage of ethanol properties can create additional green benefits. For example, the higher octane rating of ethanol can allow engines to be designed to run at higher compression ratios, delivering 5 to 7 percent more power than a typical engine running on pure gasoline. This can enable engine downsizing, which will improve fuel economy
and increase CO2 benefits. However this will need a continuous and assured supply of blended ethanol since a vehicle tuned for use with a certain level of ethanol blending but made to run on pure gasoline will have engine knocking issues.
Cost assessment. Since blending of biofuel typically requires no major vehicle modifications, the cost-effectiveness of blending is dependent on the cost and energy intensity of the blended fuel. Ethanol and jatropha have lower carbon intensity than gasoline and diesel, respectively, but also have lower per-liter energy content. Pure ethanol has about two-thirds the energy content of a liter of gasoline, while biodiesel has about 91 percent the energy content of a liter of diesel. Consequently, vehicles running on biofuel blends will consume more liters of fuel. The cost of a liter of fuel is, however, dependent on the costs of biofuels relative to petro-diesel.
At current ethanol prices, the cost of a 10 percent ethanol blend is less than that of pure gasoline. However, the increased fuel consumption leads to a net incremental cost to the
country of INR 1 to 2 per kg of abated CO2e (see figure 30 on page 39). Both domestic and imported ethanol, however, have shown significant price variations. Domestic ethanol is highly
Cost-Effective Green Mobility 38 Figure Incremental economic cost assessment of biofuel blends
Annual incremental economic cost to the country for biofuel blends in In INR
- Marginally higher operating cost due to higher fuel consumption driven by low volumetric eiciency of ethanol
Marginally lower operating cost as biodiesel price is expected to be lower than diesel on an energy equivalent basis
Incremental operating cost () - ( )
E blend ICE relative to gasoline ICE B blend ICE relative to diesel ICE
COe abatement per annum, KG - -
COe abatement cost, INR Per KG .- . ( ) - ( )
Illustrative for a -wheeler passenger vehicle; no technology changes to base vehicle assumed; excludes all taxes and duties, representing net cost to the country Cost of fuel in net of all taxes assumed as Rs. . per liter for gasoline, Rs. . per liter for E- , Rs. . per liter for diesel and Rs. . per liter for B- Sources: ANL GREET model; A.T. Kearney analysis
dependent on the price of bagasse, which can vary significantly depending on sugarcane production cycles. Similarly, imported ethanol, while currently cost effective, has varied in price anywhere from 30 to 70 percent of gasoline prices. However, the price of ethanol globally is expected to increase only modestly until 2020 due to easy availability from several countries, including Brazil and the United States.
Jatropha-based biodiesel blends are also less expensive compared with non-subsidized diesel. The cost of pure biodiesel is about 60 percent that of non-subsidized diesel. Even a significantly higher price of biodiesel, close to 80 to 90 percent the price of diesel, will not result in a net incremental economic cost to the country. B5 blending can be cost effective, delivering a net benefit of INR 10 to 15 per kg of CO2e abated. Biofuel blending is overall a highly cost effective lever, delivering benefits across the entire vehicle fleet, at a negative abatement cost of INR 6 to 7 per kg of CO2e abated. Challenges and imperatives. Biofuel blends offer significant green potential relative to conventional fossil fuels, at limited abatement cost. While this makes biofuel blending a powerful green lever, there are some serious challenges to implementing it:
• Supply-side constraints. While government policy has a clearly stated objective of using biofuels to increasingly replace gasoline and diesel, implementing the currently mandated 5 percent biofuel blend has proved a major obstacle. In the case of ethanol, the supply issues are a result of the pricing mechanisms adopted by the government for the procurement of ethanol by oil marketing companies (OMCs). A fixed price, set for three years, which is 40 to 50 percent less than the current market price is a disincentive to ethanol suppliers, who can supply the alcohol or chemicals industry instead. In addition, ethanol production in India
Cost-Effective Green Mobility 39 is linked with sugarcane, the supply of which is highly uncertain. The actual procurement amount of ethanol has been much lower than contracted quantities. To address these issues, there needs to be a more transparent mechanism for ethanol pricing, one that is closer to market pricing and which incentivizes ethanol supplies to OMCs. In addition, the import of ethanol should be adjusted to increase the supply base.
Biodiesel production in India is based on jatropha feedstock. However, insufficient yields necessitate huge tracts of land for cultivation—nearly 2 million hectares would be needed to meet current biodiesel requirements, which is unfeasible in India. While the possibility of biodiesel production from alternative crops such as pongamia and mahua can be explored, these options may not be feasible in the near-to-medium term. Other sources such as used edible oilcakes, used cooking oil, and byproducts of palm oil production such as palm stearin, have been developed globally and warrant exploration. In the long term, it will be important to invest in technology that can convert agricultural waste and other biomass into biodiesel. An additional complication with biodiesels involves their low oxidation stability index that limits shelf life to 6 to 12 weeks, making handling much trickier.
OMCs have sought to address supply-side constraints through partnerships with biofuel suppliers. For example, HPCL owns sugar mills, while IOCL and BPCL have undertaken ventures with jatropha suppliers. Focused R&D and investment through these ventures will be needed if blend ratios higher than 5 percent are to be realized. While higher blend ratios will be beneficial, the government should take additional care to mandate a fixed, uniform blend ratio for ethanol in gasoline and biodiesel, and to clearly communicate timelines to automotive companies so that engine design can be optimized for maximum fuel economy at a particular blend ratio.
• Infrastructure requirements. Additional oil refinery infrastructure is needed in the form of blending machinery and storage systems, requiring OMC investment. The corrosive nature of biofuels, especially at higher blend ratios, might also mean changes needed to distribution infrastructure. Replacing pipeline materials can be disruptive, and policies incentivizing or mandating these investments will be needed.
Biofuels are sensitive to oxygen and water. At the retail end, there is a risk of biofuels separating from gasoline and diesel if tanks are not kept clean, which can result in subpar vehicle performance and damage to vehicle parts. Established standard operating proce- dures for tank filling, mechanisms for blend-ratio tracking, and regular pump checks will be needed to ensure that vehicles are not affected.
• Direct and indirect land-use change. Because biofuels are usually produced directly from
cultivated crop feedstock, a true life-cycle view of CO2 emissions needs to include the effect of change in land use. If the area used to cultivate biofuel feedstock is deforested or
converted grazing land, the emissions from land-use change can be as high as 1,000 g-CO2e/ MJ of biofuel. By way of comparison, conventional petro-diesel releases only around 85
g-CO2e/MJ of fuel burned. As a result, any land-use changes that convert forests or grazing
lands for biofuel cultivation are likely to have a significant adverse effect on overall CO2 emissions. This is of particular concern for low-yield crops such as jatropha, which need larger arable areas. Higher-yield crop sources should be explored to limit the effects of land-use change. Producing biofuels from secondary feedstock such as used oil seeds and agricultural
waste will almost entirely eliminate any negative CO2 impacts from land-use change (see sidebar: Green Diesel: An Emerging Opportunity on page 31).
Cost-Effective Green Mobility 40 Green Diesel: An Emerging Opportunity
Significant research has been diesel can be produced from a improves startability and done to address some of the wide variety of vegetable and higher oxidation stability index deficiencies of biodiesel, such as animal feedstock, including reduces deterioration of fuel in poorer NOx performance, low-cost feedstock such as storage and impact on vehicle dependence on low-yield waste animal fats and grease. parts in usage. jatropha feedstock, and potential Green diesel properties show a • Drop-in fuel. Green diesel impacts on vehicle systems. One good degree of invariance blends can be developed using of the most promising is green relative to feedstock source. a drop-in mechanism that diesel, which is produced through • Improved emissions doesn’t require complex a de-oxygenation-isomerization performance. While green blending infrastructure as in process of base feedstocks. diesel is marginally poorer on the case of biodiesel. Green diesel has several CO e performance, it is advantages over biofuels that 2 However, because of limited significantly better on NOx and could make it the future biofuel of maturity, it is not expected to be PM emissions. choice: commercially adopted in 2020. • Better fuel properties. Better • Feedstock flexibility. Green cold flow performance Figure - Emission performance of green diesel relative to diesel and biodiesel
Relative COe, NOx and PM emissions
(In g-COeq./km for greenhouse gases and g/km for NOx/PM; Gasoline = )
Diesel B Green diesel
CO2eNOx PM
Sources: ANL GREET model; A.T. Kearney analysis
• Fuel properties for higher blend ratios. The corrosive properties of ethanol mean that on older vehicles, parts such as hoses, gaskets and filters could suffer damage if blend ratios higher than 5 percent are used. While many of these older vehicles would not be plying in an 8- to 10- year timeframe, this could be a particular issue with some models, where the materials used on current vehicles are not suited for use with blend ratios higher than 5 percent. This will need to be considered when implementing blend mandates. A phased shift to higher blend ratios will need to be ensured with both 5 percent blend and the higher blend fuel simultaneously available at retail outlets. In addition, government will need to ensure
Cost-Effective Green Mobility 41 that the timeline for transition to higher blending levels is announced well in advance, so that OEMs can switch to materials suitable for use with higher blends. Further, the proposed timeline will need to minimize the number of in-use vehicles impacted.
Alternative fossil fuels
CNG and LPG are gaseous alternative fuel options and the most widely adopted alternate fuels in India. About 1.1 million CNG vehicles and 0.65 million LPG vehicles were on the road as of 2011, serviced by about 774 CNG and 950 LPG refueling stations.
• CNG is derived from multiple sources, with fossil fuel-based natural gas reserves being the most common source. Renewable source-based CNG, known as bio-methane, will be an important fuel in the long term due to its low-carbon nature. The most commonly used renewable source is waste biomass in sewage treatment plants and landfill sites. However, this is not very scalable due to the specific nature of the feedstock used.
Biosynthetic natural gas (SNG), on the other hand, can be produced from a wide variety of biomass feedstock. SNG production is not yet commercially viable, but will be important in the long term for the shift to a gaseous fuel with less carbon than CNG. It is based on renewable sources. An increasing number of European pilot projects are aimed at producing and using biomethane for automotive applications.
Since 2001, CNG programs have been rolled out in about 30 Indian cities, with Delhi and Mumbai making up almost 50 percent of all CNG vehicle sales. In several cases, CNG adoption has been driven by court orders mandating the use of CNG in public fleets to reduce pollution. In addition, the price differential between CNG and petroleum fuels has also driven commercial interest in adopting CNG. For example, CNG retrofit kits are now widely available, with several OEMs also providing CNG models. Vehicle segments using CNG include four- wheeler PVs, buses, three-wheelers, and small & light commercial vehicles (S&LCVs).
• LPG, also known as auto gas, or auto LPG when used in vehicles, is a mixture of petroleum gases such as propane and butane. LPG expands to about 250 times its volume when gasified, allowing large amounts of energy to be stored and transported compactly. The LPG market in India has been driven by retrofits and government mandates—Bangalore, for example, has mandated the conversion of all auto-rickshaws in the city to run on LPG.
OEMs are increasingly offering CNG- and LPG-fitted vehicles. Many of these models are increasing in penetration in markets such as Delhi, Mumbai, and Gujarat, all of which have sound CNG retail infrastructure.
Green benefits. The most notable environmental advantage of CNG and LPG is their lower levels of PM emission. While they also produce lower NOx emissions than diesel vehicles, after-treatment solutions such as catalytic converters are still needed for NOx control. On a well-to-wheel basis, CO2e emissions from CNG are better than gasoline by 2 to 13 percent (see figure 31 on page 43). However the benefits depend on the source of natural gas used, the distance over which the gas is transported, and whether gas transportation is through a pipeline or LNG. For example, domestically produced shale gas-based CNG is 12 to 13 percent better than gasoline on well-to-wheel CO2e emissions. However, imported CNG derived from conventional sources and transported over long distances via pipelines is likely to be no more than 2 percent better than gasoline. LPG is only marginally better than gasoline on CO2e emissions. Both CNG and LPG would not be effective CO2 abatement substitutes for diesel vehicles.
Cost-Effective Green Mobility 42 Figure Emissions performance of CNG and LPG relative to gasoline/diesel
Relative CO e emissions Relative PM and NOx emissions Gasoline
(In g-COe/km, gasoline = ) (in g/km, gasoline = ) Diesel LPG CNG - - -
CO2e NOx PM
Sources: ANL GREET model; A.T. Kearney analysis
The biggest advantage of CNG and LPG is the ease of retrofitting kits in the aftermarket to allow gasoline or diesel vehicles to run on CNG or LPG. However, the possibility of using substandard catalytic converters poses a challenge and can negate the green impact of CNG and LPG vehicles. In addition, leakage of methane gas during the production or distribution of CNG can quickly negate its green benefits due to the much higher potency of methane as a greenhouse
gas relative to CO2. Even a 1 to 2 percent methane leakage can nullify any benefits of using CNG
in CO2e terms. A unique benefit of using gas-based fuels is the relative difficulty in adulteration, something that is particularly relevant in India.
Cost assessment. The cost effectiveness of CNG and LPG vehicles is largely governed by the price differential to gasoline or diesel. The fuel-intake system of a base gasoline engine needs modifications for intake of a gas, with the consumer cost of a conversion kit in the range of INR 30,000 to 50,000 for LPG and INR 40,000 to 60,000 for CNG.
A CNG vehicle’s operational cost depends on the source of gas used. Vehicles using domestic gas are highly cost effective, as seen in markets such as Delhi and Mumbai, as they enjoy administered price mechanism (APM)-based pricing. This advantage may be short-lived due to the probable deregulation of domestic gas prices as well as a severe shortage of domestic gas. Based on the current recommendations of the Rangarajan committee, the cost of domestic CNG is likely to double. In addition, given the limited domestic supply, any long-term projections for auto CNG would have to assume high dependence on imported LNG and market-based pricing.
Based on current prices in Gujarat, a state dependent on market-priced domestic gas and LNG imports, a CNG vehicle delivers a net economic benefit to the country. With a possible oversupply of global LNG, imported LNG prices are likely to remain stable at current levels. Indeed, the shale gas boom in North America could even result in a significant reduction in gas prices—the Gas Authority of India Limited (GAIL) recently contracted a supply of shale gas from
Cost-Effective Green Mobility 43 the United States at a rate 40 percent less than current LNG sourced from Qatar. Given this development, significant increases in the price of crude oil would make imported CNG extremely competitive relative to gasoline or diesel. Based on the projected long-term LNG price of $16 per million British thermal units (MMBTU) and crude price of about $140 per barrel, CNG vehicles will remain cost-competitive for all segments.
LPG vehicles, on the other hand, have a higher operational cost than gasoline vehicles. Based on current auto LPG prices, LPG vehicles are 10 to 15 percent more expensive than gasoline vehicles in terms of total economic cost to the country. This translates to an abatement cost of
INR 180-200 per kg of CO2e. The high cost and low abatement potential of LPG limits it’s utility as an alternate fuel.
A comparison of the cost effectiveness of CNG and LPG vis-à-vis gasoline and diesel is highlighted in figure 32.
Challenges and imperatives. While CNG can be a highly cost effective fuel alternative, there are three main challenges limiting its potential penetration: supply-side crunches, limited distribution infrastructure, and a dearth of refueling stations. Discussions of each challenge follow:
• Supply-side crunches. Only 70 to 80 percent of India’s demand for NG is addressed by domestic production. The balance is met through relatively expensive imported LNG. This demand-supply gap is projected to widen: Domestic production is expected to increase by 35 to 40 percent, while demand is expected to increase by 80 to 90 percent until 2020.
Figure Net economic cost comparison of CNG and LPG small car
Projected annual economic cost in Operational cost In Rs. ‘ Acquisition cost
Analysis done for comparable car coniguration
- - -
Gasoline ICE (E5) CNG LPG
CO2e Abatement per annum – KG - ( ) - ()
CO2e Abatement cost- Rs. Per KG ()- ( ) NA
TCO timeframe = years, car sold after years for resale value of %, % cost inanced at % p.a. for years, annual usage of , KM, excludes all taxes and duties, representing the net cost to country; illustrative for an A segment gasoline passenger vehicle Cost of fuel in net of all taxes assumed as Rs. . per liter for gasoline, Rs. . per liter for diesel, Rs. . per KG for CNG, and Rs. . per KG for LPG Source: A.T. Kearney Analysis
Cost-Effective Green Mobility 44 Government prioritizes the supply of domestically produced gas to a few critical industries, such as the fertilizer and power industries. The CNG supply for automotive applications comes under the City Gas Distribution (CGD) segment, which is low on the priority list. The sensitive nature of priority gas industries and relatively small consumption in the automotive sector make it unlikely that the CNG supply for vehicles will be given priority. CNG demand will hence need to be met through LNG imports. This solution is currently limited by the high cost of LNG, which is nearly three times the government-mandated APM price. However, with a possible decline in long-term LNG prices due to higher global supply (partly driven by shale- based gas production) the CNG supply challenge is not insurmountable
• Limited distribution infrastructure. The slower than expected expansion of the CGD pipeline network has affected CNG supply at the customer end. Only nine states have the necessary distribution network, with the majority of the supplies concentrated in the metros and tier 1 cities. Although there is a plan to expand CGD infrastructure to more cities over the next few years, the high cost of pipeline construction coupled with the small size of current CNG vehicle markets make it unfeasible to expand CGDs purely for use in vehicles. For example, providing 0.5 billion cubic meters per year of CNG to green-field regions would require an investment of INR 250 to 350 crore. Synergies with other CGD segments such as industrial, commercial, and household applications will be important to justify an expansion of pipeline networks. Alternatively, mother-daughter systems, which use tankers to transport CNG from the nearest piped source, have been used globally and can be explored in the Indian context in the event that pipelines are not economical.
• Dearth of refueling stations. More retail infrastructure is needed, both in cities where CNG is already in use and in those where it is likely to be rolled out in the future. While levels of 600 to 1,000 vehicles per refueling station are accepted as optimal from consumer-availability and economic-viability points of view, India currently has around 1,500 vehicles per refueling station (see figure 33 on page 46). Levels higher than 1,000 vehicles per refueling station will likely result in significant queues for CNG refueling. There are several difficulties with boosting retail infrastructure. CNG filling stations are significantly more expensive and technically more complex to set up than conventional stations. Policies that incentivize upfront investments in retail outlets and integration of gas suppliers into retail outlets can spur quick expansion. Also, a larger number of CNG vehicles will encourage the development of more refueling stations.
Conclusions
Alternate fuels can go a long way toward promoting green mobility. The main advantage of alternate fuels is the ease with which a larger vehicle population than only new vehicle sales can be targeted. While biofuel blending can easily address the entire vehicle population, CNG retrofitting offers an opportunity to address the older vehicle population as well.
Alternative fuels offer several green benefits. While ethanol-blended gasoline and CNG can lead to a 2 to 13 percent CO2e reduction over gasoline, using 5 percent blended biodiesel instead of diesel can potentially reduce CO2e emissions by 2 to 3 percent. In addition, there can be a significantly positive effect on ambient air quality due to lower PM and NOx emissions. The relative difficulty in adulterating CNG offers the additional benefit of reducing the higher emissions caused by impure fuels.
A number of questions on the overall green impact of biofuels and CNG need to be addressed before they are adopted:
Cost-Effective Green Mobility 45 Figure Refueling infrastructure for CNG
Number of CNG vehicles per refueling station
Optimal level
Iran India Argentina Brazil Italy Pakistan China
Source: IEA; A.T. Kearney analysis
• The green benefits of biofuel need to outweigh any adverse effects of land-use change and any potential impact on food security. It is important to control the use of forest or grazing land for biofuel feedstock cultivation. This is especially relevant for biodiesel made from
jatropha grown expressly as a fuel feedstock. The negative impact of deforestation on CO2 emissions will outweigh the benefits of using biodiesel.
• The CO2 benefits of CNG can quickly be negated by methane leakage during distribution. Special care must be taken to avoid leakage. In addition, the high dependence of well-to- wheel benefits on the CNG supply mix can mean low actual benefits.
• Quality control of installed aftermarket catalytic converters needs to be strictly enforced.
If these challenges are overcome, alternative fuels can create tangible green benefits cost-effectively. Replacing gasoline with CNG based on imported LNG, 10 percent blending of ethanol in gasoline and 5 percent blending of biodiesel can abate CO2 at almost negligible incremental cost. However, creating substantial impact will be largely dependent on supply availability and distribution and retail infrastructure. Aggressive pursuit of alternate fuel programs could help abate 12 to 17 million tons of CO2e, largely driven by biofuel blending. CNG is expected to be pursued more for local pollution reduction in urban areas. Achieving these goals will require the following actions:
• Uniform 10 percent ethanol blending and 5 percent biodiesel blending across India. If achieved by 2020, this would require annual supply of 3 to 4 billion liters of ethanol and 4 to 5 billion liters of biodiesel. The government can consider taking the following measures:
−− Encourage the production of ethanol and biodiesel with monetary incentives
−− Increase import by means of incentives to help OMCs cope with potential shortfalls from domestic production
−− Support the use of technologies for increased yield of sugar cane and jatropha
−− Boost R&D investments to develop second-generation biofuels derived from agricultural waste feedstock
Cost-Effective Green Mobility 46 −− Ensure the availability of both 5 percent and 10 percent ethanol in gasoline blends at retail pumps during the transition period; ensure OEMs switch to materials suitable for use with a 10 percent blend at the earliest; set full migration timeline contingent on an estimation of the number of on-road vehicles that can potentially have performance issues when used with a 10 percent blend
• Government-backed incentives for the adoption of CNG vehicles
−− Encourage CNG kits through subsidies and incentives to end users and mandates for city transport vehicles
−− Incentivize automotive OEMs to offer CNG-compatible vehicles with the assurance of long-term supply support and positive consumer economics
• Competitively priced supply of CNG, sufficient to meet the annual demand estimated at 7 to 8 billion kg of CNG. The government would need to take the following measures:
−− Allocation of more domestic gas to the automotive sector or subsidies on imported LNG prices
−− Acceleration of deployment of urban gas distribution infrastructure with the target of covering more than 200 cities by 2020
−− Aggressive increase in number of retail outlets with a target of about 15,000 outlets by 2020. Focus on areas where distribution infrastructure already exists.
Cost-Effective Green Mobility 47 3. Enabling Infrastructure Enhancement While the emergence of new emission-reducing technologies is a bellwether for a greener future, success does not begin and end with improvements at the vehicle level. Vehicle operating conditions such as average speed, acceleration, and stop-start events are determined by factors such as road quality and traffic congestion, and have a significant impact on the levels of CO2 and regulated pollutants resulting from road transportation. Improvements in infrastructure can lead to a greener mobility paradigm in three key ways (see figure 34):
• Reduction in need for travel through development of self-contained urban centers
• Reduction in traffic congestion on urban roads and highways
• Modal shift to greener forms of transportation, including
−− Shift from personal mobility to public transport
−− Shift from road freight to rail freight
Figure Infrastructure levers for emissions reduction
Infrastructure Enhancement
Improved urban planning to Modal shift of passengers to 1 2 Tra ic decongestion 3 reduce need for travel greener transport forms
• Investment in “green” townships • Investment in construction of new • For passenger traffic, promotion of and cities designed for minimal roads and bypass routes, both in an integrated multi-modal public emissions from transport cities and on highways (freight transport system, optimized to suit corridors, etc.) the movement patterns of the city • Transit oriented development in expanding urban areas designed to • Eicient traic management encourage public transport and systems to reduce congestion, by reduce commute distances means of intelligent signaling, Modal shift of goods to greener electronic toll collection, 4 transport forms congestion pricing, etc. • Promote modal shift from road to rail for long haul goods mobility through sustained infrastructure investments and appropriate pricing
Sources: IEA; A.T. Kearney analysis
Cost-Effective Green Mobility 48 3.1 Improved urban planning
India is poised for rapid urbanization in the next few decades. Today, 370 million to 390 million people live in urban households, comprising just over 30 percent of the country’s population. That figure should rise to 450 million to 470 million, or about 35 percent of the population, by 2020. This urbanization will require construction of new townships and satellite cities and augmentation of existing ones.
Rising urbanization usually implies increased CO2 emissions due to increased power consumption, construction activities, and regular transport demand. However, there exists a significant opportunity for CO2 abatement through improved urban planning strategies. For example, urban areas can be designed to minimize negative impact on the environment. This involves inclusion of parks and green spaces, energy-efficient building design, and transport- demand management (TDM). For the purpose of this report, we have considered the potential impact of TDM on emission levels.
TDM includes a variety of urban design methods to reduce the green impact of transportation through reduction of average trip length and disincentives to private mobility.
• Land-use mix. Mixed commercial and residential neighborhoods reduce trip distances for work and recreation
• Transit-oriented development. Locating high-density development around transit hubs and corridors, thus enabling and encouraging use of public transport
• NMT infrastructure. Exclusive cycle tracks along all roadways and cycle stands at transit hubs, enabling increased use of NMT for short distances and last-mile connectivity
• Parking management. Priority parking for carpools and shared cars and heavy charges for single-user cars.
In addition to these levers, certain employment-based levers can be encouraged, such as flexible work schedules, telecommuting, and employee carpooling and sharing.
For this lever to achieve its full potential, significant investment in construction of new townships will be required. Some green townships have already been developed in India, such as Mahindra World City, near Chennai, and Magarpatta City, near Pune. These can serve as models for future townships across the country. Targeting 10 percent of new urban households to be developed in such green townships, and assuming reduction in average trip length by 50 to 60 percent, annual abatement of about one million tons of CO2e is possible by 2020, as is reduction in annual emissions of HC, NOx, and CO by 20 to 30 million kg.
Cost-Effective Green Mobility 49 3.2 Traffic decongestion
The considerable rise in automobile sales has resulted in a huge increase in the number of on-road vehicles over the past two decades. Since this trend has not been supported by an equivalent degree of infrastructure development, India’s roads are characterized by severe traffic congestion and low average speeds (see figure 35).
Figure Trends indicating increased congestion in Indian cities
Vehicle population versus road length Average speed trends Kmph 25
20 5 3 15
2
10
5
Vehicle parc (millions) CAGR: % Metro cities Tier cities Tier cities Road length (million km) CAGR: %
Average speed on major corridors Source: Ministry of Road Transport and Highways, SIAM Source: Ministry of Urban Development reports
Several studies indicate that average vehicle speeds on most urban roads have declined by 10 to 20 percent over the past five years and average about 15 to 20 kmph. Even on highway corridors connecting major cities, vehicle speeds average only 20 to 30 kmph.
Such low speeds, idling conditions, and start-stop events typically lead to reduced fuel economy and increased emissions of CO2 and regulated pollutants. Traffic decongestion is thus an important focus area for greener mobility over the next decade. Key steps that can ensure traffic decongestion include:
• Expansion of roadways to support the growing number of vehicles
• Use of intelligent traffic management, leveraging real-time traffic data and signal control
• Promoting the use of non-motorized transport
• Triggering a modal shift toward greener forms of transportation
• Disincentivizing the use of personal mobility
Cost-Effective Green Mobility 50 Each needs to be supported by specific actions to ensure the realization of green benefits from a 2020 perspective (see figure 36).
Figure Key imperatives to alleviate traic congestion
Key leverAction steps
Expansion of roadways • Enhance rate of capacity expansion and pace of construction activities. New link roads and intra-city road networks, inner-city roads, bypasses, and major arteries
• Develop corridors for major arteries within cities and between major cities
• Develop bridges, lyovers, and underpasses, among others
Intelligent traic management • Implement intelligent signaling system to control traic low to:
– reduce vehicle idling times and fuel wastage
– increase speed and therefore fuel economy
Promote non-motorized transport • Build pedestrian-friendly infrastructure and transit-oriented development to encourage use of non-motorized and public modes of transport
Modal shift • Enable modal shift of passenger traic, from personal to public transportation modes or non-motorized transportation
• Enable migration of goods traic from major highways to railways
Disincentivize excessive use • Charge for congestion. Put a high price on single-user cars entering of personal vehicles central business districts and high-density urban areas
• Manage parking. Provide priority parking for carpools and shared cars, and charge more for single-user cars.
Source: A.T. Kearney analysis
Cost-Effective Green Mobility 51 3.3 Modal shift to public transportation
Moving passengers toward environment-friendly forms of transportation is important for promoting green mobility. Many of India’s citizens already use non-motorized or public transportation, primarily for economic reasons (see figure 37). However, public transportation systems have failed to keep pace with the substantial increase in demand over the past few decades. Bus services in particular have deteriorated, and their relative modal share has been further reduced as passengers have turned to private travel and intermediate public transportation such as three-wheelers. Despite India’s growing urban and sub-urban population, the number of buses in the fleets of most state transport undertakings (STUs) has decreased over the past 20 years. Moreover, continuously rising fares for public transportation options are making personal travel in two-wheelers or small cars a more affordable option. Increasing traffic congestion and deteriorating pedestrian infrastructure are also factors leading to a decrease in the share of non-motorized transport.
Figure Modal shift of passenger transport in top cities
Public transport Non-motorized transport Private mobility and intermediate public transport % % %
% % %
% % %
% % %
P
Sources: Ministry of Urban Development reports; A.T. Kearney analysis
Increasing the use of public transportation
The use of mass transportation systems can lead to reduced emissions and lower fuel consumption by virtue of the use of inherently greener transport modes and lessening traffic congestion. While public transportation is used extensively by segments of the Indian population for reasons of affordability, there is an opportunity to enhance the green benefits by encouraging the use of public transportation by all segments of the population, including vehicle owners.
Cost-Effective Green Mobility 52 A variety of mass transportation systems exist worldwide. However, three systems are particularly relevant to India: metro-rail, monorail, and buses (standalone or in the form of bus rapid transit systems) (see figure 38). A typical city requires an integrated, multimodal transit system with a mix of high- and low-capacity systems operating in conjunction. In addition to these, intermediate public transportation options such as three-wheelers and passenger SCVs are vital to providing last-mile connectivity from major transit stations to surrounding areas.
Figure Summary of potential mass transit solutions for India
Transit Mode DescriptionTechnology Applicability Examples
Metro • High-speed, high- • Fixed-rail, grade • Primarily in large • Singapore MRT, frequency systems separated systems metropolitan cities Delhi metro, London • High-capacity, • Can be surface, • Service from underground many stations underground, city to suburbs or elevated
Monorails • Low-speed, • Fixed-rail, grade • Networks are usually • Sydney monorail, short distances, separated systems, shorter, used for Mumbai monorail frequent stops usually elevated dedicated commutes (under construction)
• Low-capacity system • Can be fully automated
Bus rapid • High-frequency, • Busways are usually • Metropolitan and • Ahmedabad transit moderate speeds, at-grade exclusive, smaller cities Janmarg frequent stops, on surface. and towns BRTS, Bogota’s TransMilenio • Moderate capacity • Extensive networks, from city to suburbs
Source: A.T. Kearney research
The configuration of public transportation systems best suited to any given city or township is a function of the volume of traffic, movement patterns, city size, population density, and street-grid patterns. For example, highly populated cities, such as Mumbai, which have mainly round-trip transit patterns, are best served by high-capacity mass transit systems with a linear route design.
Promoting non-motorized transportation (NMT)
Every urban multimodal transit system includes non-motorized transportation such as walking and cycling. It is the ideal solution to the last-mile problem of passenger transportation: cost-effective, green, and flexible.
NMT is especially important in developing countries such as India, which has a significant proportion of NMT users, primarily in the lower-income bracket. However, the proportion of motorized transportation is projected to grow, especially in urban areas. Also, the use of NMT is limited among middle- to high-income groups. Increasing the number of NMT users across various segments will require infrastructural investments that improve safety and convenience for pedestrians, cyclists, and other NMT users.
Cost-Effective Green Mobility 53 NMT is clearly emerging as a key area of focus for several countries in their journey toward green mobility. Illustrative global examples of incentives and policies driving NMT include:
• Development of dedicated cycle lanes and footpaths in cities such as Bogota, Colombia, and Amsterdam, the Netherlands
• Integration of NMT infrastructure to support to-and-fro trips linked to public transportation systems in Japan, resulting in a 35 to 40 percent penetration of NMT among commuters
Green impact of public transportation
Public transportation systems such as metro and buses can yield a high CO2 benefit, even when compared with the most efficient use of cars, with buses boasting the lowest emission per passenger-km (see figure 39). Higher-capacity systems such as metros also lead to strong green benefit when used effectively. When these systems are operating at low utilization, however, the green benefit is reduced. A focus on branding and an emphasis on the advantages of public transportation—such as convenience, comfort, and safety—will be important for implementing such a shift.
Figure
Well-to-wheel COe emissions comparison across transportation modes
gCOe/passenger-km
-
- % - %
-
- - -
Car Two- Monorail Metro Bus wheeler
Note: Average occupancy of cars (. persons) and of two-wheelers (. persons) assumed. Optimum capacity of % used for public transit modes. Source: A.T. Kearney analysis
The green impact of public transportation systems can further be increased by using greener technologies. Following are examples:
• Regenerative braking technology to recapture lost energy. The Delhi Metro uses regen- erative braking technology to recapture energy lost in braking by converting it to electrical energy, which is then fed back to the grid for other trains to use. Regeneration rates of up to 34 percent of traction energy have been achieved.
Cost-Effective Green Mobility 54 • CNG hybrid buses. Low-floor intra-city buses were introduced for the use of athletes partici- pating in the 2010 Commonwealth Games in Delhi. The vehicles are powered by a parallel IC-CNG engine and electric powertrain, which consumes less fuel per km and also results in decreased emissions.
Cost impact of public transportation
The construction of public transportation systems involves significant investment costs, which scale with passenger capacity (see figure 40).
Figure Comparison of capital expenditure versus peak capacity across public transportation modes
Capacity Capital cost Cost ( PPHPD ) (INR Crore/km) (INR crore / km/ PPHPD)
Metro - - - - (underground)
Metro - (elevated) - -
- Metro - (surface) - -
- Monorail - -
< Bus rapid - .- transit
Passengers per Hour per Direction Sources: A.T. Kearney research and analysis
Transit applications involving large commuter volumes are best handled by trains and metro systems. While surface metros will be the most cost-effective, their construction is likely to be a challenge in highly populated areas with limited available space. In such cases, metro systems such as elevated or underground systems should be explored, even though their cost can be up to five times higher than surface systems. Monorails can be used for cities and towns with low-transit volumes of 25 to 50 passengers per hour per direction (PPHPD).
Buses are the most effective form of public transportation from an investment-cost-per- passenger perspective. However, they best serve transit volumes of less than 25 PPHPD, making them suitable for use in tier 1 and tier 2 cities and as a feeder service for metros where applicable.
Cost-Effective Green Mobility 55 There are three key steps for implementing green, cost-effective public transportation systems (see figure 41).
Figure Action steps for implementation of cost-eective public transit systems
Key leverKey actions
Enhance capacity of • Add new capacity via the timely construction and eective public transport infrastructure leveraging of new metro, BRT, and monorail systems on the basis of passenger volume requirements
• Upgrade existing infrastructure to meet additional capacity requirements
• Develop integrated, multi-modal public transportation systems; design hub-and-spoke models, with lower capacity modes (BRT, monorails) feeding into higher capacity modes (metro systems)
• Integrate NMT infrastructure, developing pedestrian- and bicycle-friendly infrastructure around all mass transit hubs, ensuring last-mile connectivity for all
Increase utilization • Conigure routes on the basis of passenger movement data patterns rates of public transport • Reformulate fare pricing to ensure the price structure is strictly across all segments formula-based, and factor in the cost of fuel and inlation
• Emphasize convenience, oer choices such as o-board ticketing and smart cards. Maintain clean transit stops designed for user comfort and safety
• Emphasize branding with a strong focus on attracting media and public support
Use of green technologies • Use advanced vehicular technology in city bus leets to reduce pollutants and COe emissions, and to improve urban air quality levels
Source: A.T. Kearney analysis
Overall green impact and abatement cost: As discussed above, CO2 abatement in urban India can be achieved via migration of passenger trips to public transportation modes, as well as from decongestion of road traffic and enhancement of NMT infrastructure. The success of each of these levers is strongly dependent on the successful implementation of the others, and hence they are best evaluated together as one holistic green mobility solution.
Over the next 8 to 10 years, annual capital investment of INR 25,000 to 30,000 crore in metro and monorail infrastructure in major urban centers can potentially absorb 110 to 120 billion passenger-km-per-year from private transportation. Similarly, annual investment of INR 1,500 to 1,600 crore in urban bus systems and bus rapid transport (BRT) systems can increase public transport capacity by 50 to 60 billion passenger-km-per-year. Furthermore, investment of INR 6,500 to 7,000 crore per year in intelligent traffic-management systems, NMT, and urban road infrastructure can contribute to decongestion of passenger and freight traffic in urban areas.
Cost-Effective Green Mobility 56 This is likely to improve fuel efficiency of vehicles operating on urban roads by an average of 6 to 10 percent.
Together, modal shift of passengers and decongestion of urban areas can yield annual CO2e savings of 13 to 17 million tons, with a net economic saving to the country of INR 0.2 to 1 per kg of abated CO2e. Of this reduction, seven to eight million tons are achieved by modal shift to public transport, and six to nine million tons from urban traffic decongestion. The net savings accounts for the capital and operating costs incurred on the public transportation and road infrastructure, as well as fuel and maintenance cost savings accrued to the public. Similarly, these levers can potentially reduce combined annual emissions of HC, NOx, and CO by 140 to 160 million kg, and PM by as much as one million kg per year. Achieving these reductions is contingent upon smooth implementation of government plans and timely execution of projects.
Cost-Effective Green Mobility 57 3.4 Modal shift of goods traffic from road to rail
Driven by strong economic growth in the coming decade, India’s freight demand is projected to grow from about 1.8 trillion ton-km in 2010 to as much as 3.8 to 4.0 trillion ton-km by 2020.
Historically, the share of road freight over rail has steadily increased, with road freight currently comprising 63 percent of total freight volume (see figure 42). However, rail freight is both more economically viable for long-haul, high-volume transportation and significantly greener than road freight.
Figure Modal share of freight transport
Billion Ton Km
Road freight - Rail freight
+% %
-
- % - % % % % % % P
Source: A.T. Kearney analysis
Green impact of road to rail
Rail transport in India is a mix of diesel locomotives and electric-powered trains. Based on this mix, the average well-to-wheel emission of railways is about 15 to 25 gm CO2e per ton-km. Long-haul road transportation comprises a range of heavy-duty vehicles, including tractor- trailers and multi-axle and single-axle trucks. Based on the current mix of light and heavy trucks, average fuel efficiency, and average loading patterns, the well-to-wheel emission of trucks is about 60 to 70 gm CO2e per ton-km. A paradigm shift from road to rail would enable green mobility, as every ton-km of freight shifted from road to rail would save about 45 grams of CO2e emissions. In addition, such a shift would help ease highway congestion, thus yielding further reductions in emissions.
Creation of an additional capacity of about 300 billion ton-km on the Indian Railways network by 2020 can be achieved by setting up at least three dedicated freight corridors. This would allow migration of 10 percent load from heavy-duty road vehicles to rail by 2020 and reduce emissions by about 12 to 14 million tons of CO2e. In addition, the reduced highway congestion
Cost-Effective Green Mobility 58 would improve fuel efficiency by an estimated 5 percent on average. This will lead to an additional reduction in emissions by four to five million tons of CO2e.
Cost impact of road to rail
The migration of freight transport from roadways to rail will require upfront investment for setting up the requisite infrastructure and upgrading existing systems. However, operating expenses for rail freight are much lower on a per ton-km basis.
Clearly, there is much green benefit to be realized by moving freight from road to rail. However, the success of this modal shift will hinge on the ability of Indian Railways to surmount key impediments, including:
• Infrastructure deficit. Rail traffic has grown tenfold over the past 60 years, but track length has increased less than 20 percent. Tracks are now highly congested, with 16 percent of the rail network catering to more than 50 percent of traffic. In addition, passenger traffic is given priority over freight, extending transit time and delaying shipments. A comparison between the railway systems in India and China indicates that India has substantial room for improvement (see figure 43).
Figure Railway network comparison: India versus China
Parameters India China
Railway addition - km , km
Investment - billion billion
Planned addition in the next decade , km , km
Carrying capacity of wagons - tons tons
Tare weight¹ to payload ratio :. :
. The weight of an empty railway car Source: Mid-term Review of the Eleventh Five-Year Plan
• Suboptimal asset quality. The current asset quality of Indian Railways is substandard and uncompetitive compared with road transport. Higher axle loads and faster, longer freight trains are needed to make the most efficient use of track capacity. Major challenges are long turnaround times in ports and old rail terminals and susceptibility to frequent breakdowns.
• Unattractive pricing and tariffs for freight transport. Between 2001 and 2011, rail-freight tariffs rose by 31 percent, followed by another 20 percent rise in 2012. This is due in part to the policy of using freight tariffs to subsidize passenger tariffs. Consequently, rail freight in India is only economical for medium- and long-distance transit (see figure 44 on page 60).
There are four key focus areas for the government and Indian Railways, which will support an enhanced use of rail systems for freight transport (see figure 45 on page 60).
Cost-Effective Green Mobility 59 Figure Global passenger-to-freight rail fare ratios
.
. .
.
India ChinaGermany Japan
. Ratio of rail fare for passenger-km and ton-km of freight Source: A.T. Kearney analysis
Figure Imperatives for increasing freight modal share of railways
Key leverKey actions
Enhance rail capacity • Set up dedicated freight corridors (DFCs), ensuring the timely completion of the Western and Eastern DFCs and investment in at least four more DFCs across the country by .
• Ensure last-mile connectivity between the DFCs and major ports, cities, and industrial regions.
• Establish a dozen logistics parks interspersed across freight corridors, highways, and last-mile links, functioning as multi-modal hubs supporting the movement of freight between rail, road, and the coast.
Upgrade existing rail assets • Introduce new generation, fuel-e icient, faster locomotives to reduce transit times and fuel costs, and further reduce COe emissions.
• Increase axle loads from the current tons to U.S. and China levels of tons. Continued investment in stainless steel wagons to increase the net payload of the track.
• Expedite electriication of tracks and gauge conversion to meet the larger axle load requirements.
• Fast-track implementation of automatic block signaling (ABS) technology to allow six to eight trains to run between two stations, increasing network capacity.
Review the current pricing regime • Optimize taris for goods transport to make rail freight competitive with road transport.
• Index fares to fuel costs to make rail freight more sustainable, potentially attracting private players as well.
Attract private investment in • Stabilize haulage charges to ease hikes in haulage charges container rail operations that are a serious concern for operators.
• Appoint an independent ombudsman to settle disputes between private players and Indian Railways.
Source: A.T. Kearney analysis
Cost-Effective Green Mobility 60 Overall green impact and abatement cost: Achieving this modal shift in freight transport will require annualized capital investment of INR 14,000 to 16,000 crore in rail infrastructure, and another INR 14,000 to 16,000 crore in highway infrastructure. Together, these two levers can result in annual CO2e reduction of 16 million to 19 million tons. This reduction can be attained with net economic cost savings to the country of INR 1 to 2 per kg of abated CO2e. These savings account for the increased expenditure on infrastructure addition as well as the reduced fuel and maintenance costs borne by road freight operators. In addition, these levers can reduce annual emissions of HC, NOx, and CO from road transport by 140 million to 160 million kg, and PM by 1.5 million to 2 million kg.
Cost-Effective Green Mobility 61 4. Improved Maintenance and Recycling
4.1 Inspection and maintenance (I&M) and eco-driving
A large number of old vehicles operate on India’s roads (see figure 46), due mainly to the lack of well-defined policies on vehicle deregistration and replacement, and to the limited rules governing vehicle maintenance. These vehicles are responsible for a significant share of emissions, given that they were designed for lower fuel economy and emission performance compared to current standards. It is estimated that 45 to 55 percent of all regulated pollutant emissions from vehicles today are emitted by vehicles that have been on the road for more than five years.
Figure Current age distribution of in-use leet vehicles
% % % % % > 10 years % % % to years % < years % % %
% % % %
PV W W CV
Source: A.T. Kearney analysis
In India, vehicle fitness checks are currently mandated only on CVs, and these are required only once every two years. Private cars and two-wheelers are certified only once every 15 years. While pollution under control (PUC) checks—for CO and HC emissions for gasoline vehicles and smoke intensity for diesel vehicles—have been instituted across segments, their effectiveness in controlling vehicular pollution has been severely limited by inadequate capacity, sub-optimal processes and equipment, and a lack of skilled personnel for testing, measurement and data analysis.
A reduction in CO2 and regulated emissions from old, poorly maintained vehicles is of paramount importance in ensuring a green mobility paradigm for India. While the government would do well to implement clear norms for vehicle replacement and deregistration, ensuring adequate inspection and maintenance along with regular technological upgrades of vehicles in use will render them greener and safer to drive.
Enforcement of regulations mandating vehicle maintenance is however, a challenge in India.
Cost-Effective Green Mobility 62 Several options could lead to enhanced upkeep, maintenance, and overall green impact of vehicles, including:
• Introduction of regulatory norms mandating annual fitness tests for all vehicles along with age limits, regular monitoring and incentives—or disincentives—to ensure compliance
• Creation of inspection and maintenance infrastructure nationwide involving the estab- lishment of I&M centers equipped with adequate equipment and processes to ensure accurate testing and generation of meaningful results
• Use of on-board diagnostic (OBD) systems in vehicles to keep drivers and vehicle owners updated on the proper functioning of vehicle systems, especially after-treatment devices and filters, thus encouraging timely maintenance, repair, and responsible vehicle ownership
• Introduce regulations mandating fleet modernization or upgrade of BS-I and BS-II vehicles to the BS-III level by 2020
• Propagation of eco-driving practices involving speed control, minimization of idling time and vehicle overloading, tire pressure control, route planning and so forth, which can lead to a 20 to 25 percent reduction in fuel consumption
Green impact of I&M
Regular use of a vehicle without adequate maintenance contributes to degradation of the engines and other components, which in turn increases emissions levels and has an adverse effect on fuel economy. Performing regular powertrain maintenance, including air filter replacement and regular oil changes, can lead to a significant reduction in emissions, to improved fuel economy, and, consequently, to lower CO2 emissions. Effective vehicle maintenance facilitated by a structured and rigorous I&M regimen can abate seven million to ten million tons of CO2e annually, and can result in 5 to10 percent improvement in fuel economy of older vehicles. Further, a significant reduction in annual emission of regulated pollutants such as HC, NOx, and CO (280 to 300 million kg) as well as PM (three to five million kg) can be achieved through better maintenance of vehicle parts.
If fleets of old vehicles, currently compliant only to BS-II norms, were to be upgraded or modernized to BS-III levels, it would have the potential to lower regulated pollutant emissions such as HC, NOx, and CO by 220 million to 240 million kg a year.
Cost impact of I&M
The establishment of a rigorous I&M regimen across the country will necessitate the establishment of I&M centers requiring investments of between INR 10,000 and 15,000 crore. An effective I&M regimen is also likely to involve annual incremental maintenance costs to customers, especially owners of vehicles more than four years old. However, well-maintained vehicles will deliver better performance in terms of fuel economy, leading to fuel and cost savings. Thus, good maintenance practices in line with the proposed I&M regimen are likely to lead to overall cost savings to country to the extent of INR 2 to 4 per kg of abated CO2e. Regular vehicle inspection and maintenance is hence a cost-effective lever for achieving green mobility.
Cost-Effective Green Mobility 63 4.2 Recycling
Automobile recycling is typically not emphasized in emerging markets, but rapid growth in the number of on-road vehicles will make recycling an attractive proposition and an important lever for green mobility. Estimates indicate that the number of vehicles in India ready for retirement will triple from three million in 2010 to nine million by 2020 (see figure 47).
Figure Projected vehicle scrap volumes in
Estimated number of vehicles Estimated weight of vehicle scrap available reaching end-of-life in India for recycling
PV Mn - Mn Ton CV W Others PV 21% W .-. Mn Steel - Mn + % Plastic Mn .-. Mn
CV % % Mn % % Aluminum .-. Mn W %
W %
P Weight of Scrap composition vehicle scrap (tons)
Source: SIAM reports; A.T. Kearney analysis
Vehicle recycling can be very beneficial when done systematically:
• Conservation of natural resources. Metals, especially steel and aluminum make up nearly 70 percent of vehicle weight. Metallic components are inherently recyclable and, as such, represent the greatest opportunity for resource recovery. By 2020, we estimate that four to five million tons of vehicle scrap will be recyclable. For every ton of typical vehicle scrap recycled, there is a savings potential of up to 950 kg of iron ore, up to 500 kg of coal, up to 400 kg of bauxite, and up to 1,700 kilowatts of energy (see figure 48 on page 65).
• Reduction in greenhouse gas emissions. The physical process of melting scrap metal is much more energy-efficient than the chemical process of smelting ores, and significantly
reduces energy and CO2 emissions. Recycling one ton of vehicle scrap can reduce CO2e emissions by approximately two tons—or the approximate equivalent of up to 10 percent
reduction in CO2e emissions over the life of an average passenger vehicle. • Reduction in environmental contamination. Vehicles contain hazardous materials and fluids, which cause great harm if allowed to enter the environment. For example, heavy metals
Cost-Effective Green Mobility 64 Figure Non-renewable resources saved per ton vehicle scrap
Iron ore850-950 kg
Coal 400-500 kg
Bauxite 300-400 kg Electric energy 1,400–1,700 kWh
. Electrical energy used in aluminum processing Source: A.T. Kearney analysis
like cadmium and hexavalent chromium (present in coolant and battery fluid), and asbestos (present in brake shoes and clutches), are highly carcinogenic. Similarly, lead (used in lead- acid batteries), mercury (used in switches and lamps), and sodium azide (used in air bags) are toxic even in trace amounts. When vehicles or their components are not disposed of properly, these toxic chemicals can leak into the ground and eventually contaminate the water table, posing a significant threat to humans, animals, crops, and vegetation.
The current state of automobile recycling
India’s auto recycling ecosystem is in its infancy—vehicles are typically not scrapped even after prolonged use. This is largely a result of cultural factors, but is also driven by the absence of an effective I&M regimen. If regular maintenance of an older vehicle were to become more expensive than replacement, scrapping it would be a more attractive option. Additionally, of the small number of vehicles that do get retired, few are recycled in a responsible manner. The following examples illustrate how limited regulations result in ineffective recycling in India:
• On the design side, there is no end-of-life vehicle (ELV) regulation for OEMs that mandates the percentage of recyclable material in a vehicle. While most OEMs are already gearing up to comply with global standards, full implementation will take some time. The key bottleneck will be the tier 2 and tier 3 suppliers. A large majority are not compliant with global standards, which lowers vehicle recycling rates.
• There is no accreditation system for recycling units. As a result, the auto scrapping sector is unorganized and unmonitored. Most scrapping units use primitive technology, resulting in low material recovery and scrap yields. In addition, the use of environmentally unfriendly scrapping processes leads to groundwater contamination, air pollution, and health hazards in nearby areas.
• End users are not regulated. The lack of vehicle scrapping laws and deregistration programs means that vehicles can be indiscriminately used and disposed of.
Several global examples of effective recycling regulations are shown in figure 49 on page 66.
A key challenge to the recycling process is the effective segregation of individual components and materials, due to the wide variety of materials and regulations. To address this issue, recyclers and OEMs around the world use standardized material databases, including the International Material Data System (IMDS) and the International Dismantling Information System
Cost-Effective Green Mobility 65 Figure Global automotive recycling regulations
India United States EU Japan China
Recyclability None defined None defined 85% by 2015 None defined 80% by 2012, rate 85% by 2017
Recycling Informal Accreditation OEM has Shared Regulation is still model scrapping for recyclers but extended product responsibility taking shape; at very low no accountability responsibility to principle; end users OEMs, recyclers, volumes for OEM; industry ensure collection are accountable, and end users governed primarily and recycling OEMs are will all have a role by market forces also involved
Vehicle No scheme “Cash for Clunkers” Monetary incentives Buyers pay Monetary incentives scrappage scheme in cash is in Germany, France, recycling fee at to scrap old cars scheme proportional to Italy, UK, and others time of purchase and buy new ones mileage difference between new and old cars
Source: A.T. Kearney research
(IDIS). However, recyclers in India are currently not equipped with a materials database customized to the Indian market.
In summary, an integrated auto recycling ecosystem will be needed to meet the projected surge in demand and minimize the negative impact on the environment. This will require a modern recycling infrastructure backed by clear regulations.
A regulatory framework supporting an effective recycling regimen in India will need compliance from OEMs, end users, and recycling entities (see figure 50 on page 67).
Infrastructure priorities
An emphasis on setting up a sound recycling infrastructure in key automobile usage belts would go a long way toward reaping green benefits from recycling. The focus should be on leveraging existing facilities as much as possible, and on upgrading machinery, retraining employees, and adopting best practice processes. This will help protect the huge unorganized recycling industry, which will face increased competition from new entrants as it grows. The key priorities from an infrastructure perspective are:
• Adoption of a hub-and-spoke model within each belt, involving:
−− Decentralized collection and dismantling of ELVs, handled by small- and medium-size units located in major cities and towns (for proximity to supply centers)
−− Centralized shredding unit for every 10 to 15 dismantlers, operating on high volumes and entailing high costs
−− Availability of shredders in industrial areas where demand for scrap is high
• Use of manual labor where it is as effective as automation for dismantling and segregation,
Cost-Effective Green Mobility 66 Figure Policy levers for eective recycling
Key participantsKey action steps
OEMs and component • Establish guidelines for recyclability rates of percent by — manufacturers this recognizes the need for recyclability targets to be balanced with OEMs’ lightweighting needs and performance-cost trade-os
• Label material identiication codes on components and parts to ease segregation and recycling of individual materials
• Develop (by the automotive industry) an indigenous materials database along the lines of IMDS and IDIS to enable scientiic, e icient recycling of vehicles
End users • Establish mandatory deregistration and disposal of vehicles reaching a certain age (depending on vehicle type)
• Put onus on end user to ensure delivery of end-of-life vehicles to collection and dismantling centers
• Implement I&M program in which regular maintenance of older vehicles becomes progressively more expensive to encourage scrappage
Recycling units • Develop administrative framework, including accreditations and inspections to ensure compliance by recyclers
• Provide tax breaks and investment support to encourage upgrade of existing recycling units and development of new units
Source: A.T. Kearney analysis
thus capitalizing on low labor costs. Semi-skilled labor is sufficient for dismantling.
• Development of indigenous, low-cost, low-capacity shredding units customized to handle two-wheelers which, in 2020, will comprise 80 percent of ELV vehicles and 20 percent of the scrap weight.
• Replication of demo recycling units – similar to the one set up by the Society of Indian Automobile Manufacturers (SIAM) and the National Automotive Testing and R&D Infrastructure Project (NATRiP) in Chennai – across the country.
Abatement cost
An integrated system of regulation, infrastructure, and financial incentives is essential to successful automobile recycling in India. The green potential is significant: Recycling four to five million tons of vehicle scrap in 2020 will save six to eight million tons of CO2e emissions per year, or nearly 1 to 2 percent of the projected CO2 emissions from the road transport sector in 2020. Since the concept is not widespread in India, a phased introduction, with an emphasis on maintenance of old vehicles, followed by scrapping and recycling, will achieve the best long-term results.
Cost-Effective Green Mobility 67 5. Conclusions: Key imperatives for government and industry This report has explored a number of paths to green mobility and concludes with the identification of opportunities for emissions reduction. However, achieving these goals hinges on a collaborative effort involving government and industry. Following are key imperatives for such an effort to succeed:
Government imperatives
Key governmental focus areas toward a greener mobility future include:
Incentivize adoption of green technology and greener modes of mobility
• Offer incentives to focus R&D on developing greener technologies, including:
−− Economical production of biodiesel from Jatropha or alternative feedstock
−− Cost-effective battery technology for use in hybrids and EVs
• Provide demand-side incentives to lower costs to consumers by:
−− Continuing to support hybrid and electric vehicles
−− Ensuring attractive rail freight tariffs relative to road freight transport
−− Introducing incentives, including improved tariffs for public vs. private transport
Fast-track implementation of transportation infrastructure
• Invest in rail infrastructure and dedicated freight corridors to increase rail’s share in freight transport. The task will be to increase rail capacity, remove bottlenecks to key freight corridors, improve railway performance in terms of speed and handling, and optimize freight tariffs
• Invest in public transportation systems based on PPHPD metrics in the top 30 cities with populations of two million or more. The focus here is to shift personal (two- and four-wheeler) vehicle users toward public transportation. Achieving the proposed potential in 2020 will require:
−− Effective and efficient multi-modal public transportation systems, including:
• High-capacity systems such as metros and monorails combined with bus networks, with a target increase in public transport capacity of about 200 billion passenger-km per year over the base case
• Strong last-mile connectivity through intermediate transport modes and non-motorized transport
−− Affordable pricing vis-à-vis cost of personal mobility
• Reduce traffic congestion in cities as well as highways through improvements in road infra- structure and the use of intelligent traffic control.
• Promote development of self-contained urban centers in and around existing cities, with the aim of accommodating at least 10 percent of new households expected to join the strong urbanization trend over the next decade.
Cost-Effective Green Mobility 68 Establish an advanced I&M and recycling regimen
• Establish an advanced I&M regimen across India featuring model centers with best-practice processes and infrastructure
−− Set up I&M centers across the country, along with tracking infrastructure for checking on-road vehicles and audit systems to ensure compliance.
−− Ensure a well-developed, dependable I&M network based on best-practice inspection processes and instruments, and mobile testing infrastructure for random on-road testing.
−− Establish an advanced I&M framework linked to vehicle registration and insurance programs that incentivize regular maintenance and discourage the use of old, inefficient vehicles.
• Set up a nationwide recycling network of collection, dismantling, and shredding centers
−− Set up pilot recycling plants in the top 30 cities.
−− Develop a widespread recycling network, with shredding centers located at hubs supporting dismantling centers.
−− Achieve responsible recycling of all scrapped vehicles by 2020.
Develop and communicate progressive policy measures promoting green mobility
• Define a clear roadmap for transition to the next set of emission norms, focusing on nationwide BS-4 implementation in the short term, and then on BS-5 implementation in the medium-to-long term.
−− Ensure availability of low-sulfur gasoline and diesel needed for rollout of emission norms.
• Encourage improvement in fuel efficiency and reduced emissions from automobiles by incentivizing implementation of cost-effective green vehicle technology.
• Ensure nationwide availability of biofuels for the consistent blending of 10 percent ethanol and 5 percent biodiesel. Ensure a phased migration with simultaneous availability of regular and blended gasoline to mitigate any possible damage to older generation of vehicles not designed for ethanol blended fuel.
• Mandate inspection at specified I&M centers for all vehicle segments; roll out on-board diagnostics (OBD) norms.
• Drive fleet modernization or upgrade of BS-I and BS-II vehicles.
• Target use of recyclable material to achieve 85 percent recyclability; introduce norms for vehicle scrapping and limits on vehicle age.
• Discourage excessive use of personal travel through a mix of levies such as congestion tax.
Auto industry imperatives
The key priority areas for the automobile industry toward a greener mobility future are:
Invest in R&D to develop and implement cost-effective technologies that curtail emissions
• Expedite development and rollout of conventional platform ICE vehicles with lower emissions, with a focus on lowering technology cost through localization and frugal engineering.
• Along with improvements in conventional vehicles, focused efforts will be needed for
Cost-Effective Green Mobility 69 development of alternate vehicle technologies. The key focus of the industry will need to be on:
−− Improving the cost-effectiveness of hybrids and EVs through frugal engineering, optimized specifications, and collaboration with suppliers.
−− Offering OEM-fitted CNG models for passenger vehicle and small & light commercial vehicle segments.
−− Developing and supporting bolt-on after-market products such as hybrid kits and CNG kits that can effectively reduce emissions from the in-use vehicle fleet.
The potential improvement that can be targeted in different vehicle segments, as well as the target penetration levels of alternate vehicle technologies (hybrids, EVs and CNG) is shown in figure 51.
Figure Technology road map for tapping potential abatement
Potential CO reduction achievable through enhancements on automobiles in the near and medium term
SegmentsK% COe reduction ey technology levers Near Term Medium Term
PVs (gasoline)S-% -% tart-stop, friction reduction, weight reduction, efficient ancillaries, GDI, turbo + downsizing, VVTL, AMT
PVs (diesel) -% -% Start-stop, friction reduction, weight reduction, efficient ancillaries, VGT + downsizing, VVTL, AMT
Ws/WsF-% -% riction reduction, combustion optimization, weight reduction, start-stop, port fuel injection
SCVs -% -% Friction reduction, efficient ancillaries, radial tires, VVTL, AMT
S&LCVs -% -% Start-stop, friction reduction, weight reduction, efficient ancillaries, VGT + downsizing, VVTL, AMT, low rolling resistance tires
M&HCVs -% -% Start-stop, SCR, VGT + downsizing, radial tires, weight reduction, efficient ancillaries, VVTL, AMT
Penetration of alternate technologies in new vehicle sales by
SegmentsHybrids EVs CNG
PVs -% -% -%
Ws-% -% -%
Ws-% -% -%
S&LCVs -% -% -%
Bus -%-%-%
Wide range due to variation of potential between segments. An A segment (<,cc engine displacement) has a reduction potential of approximately %, while a >A segment vehicle would have -% reduction potential Source: A.T. Kearney analysis
Cost-Effective Green Mobility 70 Partner across the value chain
• This should be done from R&D to sales to improve resource-sharing and reduce development costs.
Incentivize adoption of green technology
• Adopt innovative business models and market-creation techniques such as battery leasing to drive scale for green technologies.
Oil and gas industry imperatives
The oil and gas industry will need to play a key role to:
• Ensure availability of low-sulfur gasoline and diesel. Fast-track upgrading of oil refineries to supply low-sulfur gasoline and diesel to support nationwide rollout of BS-4/BS-5 emission norms.
• Fast-track development of infrastructure for alternate fuels
−− Expedite deployment of distribution and retail infrastructure, as well as blending infra- structure to achieve mandated biofuel blend levels.
• Improve coverage of city gas distribution infrastructure to improve availability of CNG.
• Increase LNG regasification capacity to meet natural gas import requirements.
−− Explore forward and backward integration to ensure adequate supply of ethanol and biodiesel to meet blending targets through partnerships with suppliers.
Cost-Effective Green Mobility 71 Appendix
A1: Scope and Objective of the Report
The objective of this report is to identify cost-effective solutions for green mobility in India, through analysis and comparison of several options. Three key areas are focused on:
• Green vehicle technology includes powertrain technology enhancements on internal combustion engines, vehicle-level (non-powertrain) enhancements, alternate fuel options, and alternate powertrains such as hybrids and electric vehicles.
• Mobility infrastructure includes improved transport infrastructure, including the enhancement of public transport and a modal shift to rail freight.
• In-use fleet management includes improved maintenance of the in-use vehicle fleet and better disposal of end-of-life vehicles.
The results of this analysis are not meant to be used as tools for predicting or setting greenhouse gas reduction targets. These results are based on underlying assumptions and made on the basis of internal intelligence reports and interviews with subject matter experts from the industry. There is, however, a high dependence on extrinsic factors.
This report is not intended to influence regulatory decisions or provide an answer for government policy questions. It concludes with evidence-based results on the relative effectiveness of the various green levers stated above. These conclusions do not represent the opinion or objective of any external party or organization, nor do they seek to favor any particular lever over the other, except from a data-driven cost-effectiveness and green- effectiveness standpoint. Further, while subjective assessment of the ease of implementation of various green levers is considered in the report, it is understood that there may be significant external bottlenecks to implementation not considered in the report.
The green levers explored are not exhaustive, but considered on the basis of best available current technology, and a subjective assessment of implementation feasibility by 2020. Several technologies may therefore be excluded here, including advanced technologies still in the research stage—for example, fuel cell vehicle technology and technologies that are part of ongoing OEM R&D. Industry may find alternate, more cost-effective routes to carbon dioxide equivalent (CO2e) abatement through ongoing technology improvements or the accelerated commercialization of advanced technology still in the research phase.
A2: Study Methodology
The approach and methodology used in this report is based on A.T. Kearney’s expertise in the automotive sector. It builds upon our extensive work on fuel-efficient and alternate powertrain technologies, and has been validated through interviews with nearly 50 stakeholders across the automotive industry, oil and gas sector, government bodies and research institutes.
A common unit of carbon dioxide equivalent, or CO2e, is used to measure greenhouse gas emissions. CO2e emission calculations are done on a well-to-wheel (WTW) basis, wherein emissions during the entire life cycle of the fuel are accounted for. For example, in the case of electric vehicles and hybrids, emissions in the electricity generation and distribution life cycle are included. The potential impacts of various levers on reduction in emission of regulated pollutants such as particulate matter (PM), mononitrogen oxides (NOx), carbon monoxide (CO),
Cost-Effective Green Mobility 72 and unburned hydrocarbons (HC) are also evaluated.
To measure the aggregated potential impact of these levers, the report first defines a 2020 base case for CO2e and regulated pollutant emissions from on-road vehicles in India. The key assumption underlying the base case is that vehicle technology and transport infrastructure does not improve significantly from 2012 to 2020. This would mean, for example, that in the 2020 base case, India is still under the Bharat Stage-III (BS-III) emission norm nationwide and Bharat Stage-IV emission norm in select cities. It is also assumed that the average fuel economy of new vehicles in 2020 is not significantly better than fuel economy in 2012. Key automotive industry trends expected over the next decade have been captured, including a shift to larger cars, increasing penetration of automatic transmission and increasing penetration of diesel passenger vehicles, among others.
The report then develops a 2020 green case, which incorporates the impact of all green levers. When compared to the 2020 base case, the green case represents the potential for reduction in greenhouse gases and air pollutant emissions in India by 2020.
To correctly determine the relative cost-effectiveness of each lever, the report defines the unit of abatement cost as a ratio of the incremental cost impact of a lever to the incremental green impact of the lever. For CO2e abatement, the units of this cost are Indian National Rupee (INR) per kg of CO2e abated. A negative value for abatement cost signifies a net saving accrued. Abatement cost. The cost implication of each vehicle technology is split into upfront capital cost and operational cost incurred during the running life of the vehicle. To arrive at an annualized cost, the upfront capital cost is annualized over the lifetime of the vehicle. This annualized capital expenditure is added to the yearly operating expenditure to represent the annual total cost of ownership1 (TCO) for the vehicle. The cost impact is then measured as the incremental TCO, relative to the base case, for each technology. Similarly, for infrastructure levers, an amortized upfront investment and operational cost are considered and annualized over the expected lifetime of the investment.
The report uses a net economic cost to country approach, which excludes from the calculation any taxes and duties levied on components, fully assembled vehicles, or fuel. This is done to make vehicle technology levers comparable with other levers, including infrastructure levers, where tax regimes are fundamentally different from taxes on vehicles. Further, exclusion of taxes is important to ensure that abatement cost calculations and comparisons across levers are not skewed by the current tax regime. Tax policy is a lever that the government can use to reduce the cost to the customer appropriately rather than being fundamental to implementation of any particular lever.
However, given that Indian consumers are value conscious, it is important to understand the true impact of cost increases due to technology, since that is what a customer is likely to experience, unless the tax regime changes significantly. Hence, the net economic cost to country is split into cost/benefit to the customer and cost/benefit to the government for each key technology lever. This is done assuming the current tax regime is still in force in 2020. For example, in the case of diesel vehicle technology, the net economic cost to country calculation considered in the report would consider unsubsidized and untaxed diesel fuel and no import duties, excise duties, or value-added tax (VAT) on diesel vehicles and components. Motor vehicle and road taxes and registration taxes are also excluded. The cost to consumer would include the impact of increased cost due to taxes and reduced cost due to government
Cost-Effective Green Mobility 73 subsidies. The government would in turn benefit due to taxes or have to bear a cost due to subsidies.
Green impact. The green benefits of each lever are considered both for the abatement of CO2e emissions and emission of regulated pollutants. These are quantified by considering the reduction of emissions in the 2020 green case relative to the 2020 base case for each lever.
This report does not attempt to quantify the social and human health benefits of reduced air pollutant emissions, or of climate change mitigation via greenhouse gas abatement. Similarly, the social benefit of reduced congestion and enhanced public transport infrastructure has not been quantified. However, these benefits are considerably high and contribute significantly to the motivation for implementation of these levers.
A3: Detailed Assessment of Green Technologies
Detailed assessment of non-powertrain design levers
Weight reduction. Lighter vehicles, in addition to bolstering vehicle performance, also require less energy and fuel. About 60 to 70 percent of vehicle systems, especially structural parts and systems, are still made of steel, but there has been an increase in the use of lightweight materials during the past decade. Several OEMs and suppliers have replaced traditional iron and steel with lighter materials such as aluminum (used primarily in castings, heat exchangers, and powertrain systems), plastics (in place of sheet metal parts, auto-electrical system casings, manifolds, and so forth), and high-strength steel. These, in addition to employing structural optimization and new manufacturing technologies, result in lighter components and structures (see figure A-1).
Figure A- Key levers for vehicle weight reduction
Key Levers
Material substitution Structural low-weight design
Key alternate materials Evolving materials Structural optimization for replacing iron and steel lower-weight systems
Carbon Reduction in size of engine and other Aluminum ibertechnology subsystems
High-strength Magnesium Packaging improvements which lead to steel and alloys reduced vehicle exterior dimensions
Plastics and Glass iber Structural re-engineering toward composites technology lower-weight design
Source: A.T. Kearney research
Cost-Effective Green Mobility 74 Green impact. An 8 to 10 percent reduction in vehicle kerb mass through material substitution or structural redesign is likely to yield fuel economy benefit in the range of 1 to 4 percent. While fuel economy (FE) benefits from weight reduction apply to all vehicle types, the impact will be higher in passenger vehicles (PVs) and small & light commercial vehicles (S&LCVs) used for city driving, where inertial losses due to acceleration and deceleration are more frequent.
The green benefit of using lighter alternatives should be evaluated from an all-inclusive perspective rather than solely on the basis of achieved weight reduction. For example, the use of aluminum should be evaluated on a WTW basis, given the high-energy impact of aluminum extraction and processing. While exploring the use of plastics, the benefits of weight reduction need to be weighed against the needs of recyclability, durability, and performance, especially for high-temperature applications.
Abatement cost. Though material substitution will lead to overall weight reduction, it is likely to result in higher costs given the higher per-unit weight cost of aluminum and plastic currently vs. traditional iron and steel. Replacement of 8 to 10 percent by weight of a car by aluminum will lead to a net reduction in vehicle weight at an incremental cost of INR 8,000 to 12,000. While low-cost plastics are available, high-strength plastics are 5 to 10 percent costlier than their ferrous counterparts. Improved engineering in high-strength plastics through R&D is likely to drive the costs down.
Weight reduction can lead to green benefits in a cost-effective manner and may even lead to cost savings, if product and process innovations are applied well, even on existing parts and materials. A good example is the use of tailor-welded blanks and laser welding on traditional steel parts, which helps reduce the number of parts and, consequently, the weight, and achieves savings at the same time.
Applicability in India. For PVs, S&LCVs, and city buses, inertial resistance to motion governed by weight is a dominant driver of FE since acceleration is frequent. A reduction of 8 to 10 percent in kerb mass is likely to improve the fuel economy by 2 to 4 percent. In CVs, while there is scope to replace the iron and steel base with lighter materials, the realizable FE benefit in India from this change, when viewed in the context of the payload-to-kerb mass ratio, is very limited. The payload-to-kerb mass ratio for an Indian truck is almost 1.5-2, while the ratio globally is less than 1. Most Indian trucks in reality are loaded beyond their rated payloads, which limits the realizable green impact to just 1 to 2 percent.
Tire rolling resistance reduction
Energy is consumed in overcoming rolling resistance, comprised of frictional and hysteresis losses when rubber meets the road.
Key levers. The rolling resistance of tires is measured by the rolling resistance coefficient (RRC). A reduction in RRC can be accomplished by one or a combination of the following levers:
• Tire pressure control: Correct tire pressure helps control rolling resistance, with no trade-off in performance—tire flexing keeps hysteresis losses to a minimum. While, of course, OEMs and suppliers have limited control over pressure once a vehicle is bought by a customer, the use of a tire pressure monitoring system (TPMS) that alerts the driver to less than optimal pressure levels is designed to reduce rolling resistance.
• Design optimization of tires: The use of lower aspect ratios, tread depth reduction, lighter
Cost-Effective Green Mobility 75 rims, and the use of radial versus bias-ply technology (where relevant) will lead to lower rolling resistance.
• The use of silica: When used in tires, materials such as silica result in lower RRC levels, though it has adverse effects on tire durability and useful life. Silica is not as important in India, however, as wet traction is not as important as in European markets.
Green impact. Tire rolling resistance reduction can lead to fuel economy benefits in the range of 1 to 4 percent in Indian road conditions, depending on the vehicle segment in question. While lower rolling resistance will lead to lower energy loss and lower CO2 consumption, the use of each RRC reduction lever will need to be carefully weighed against any trade-offs in tire durability and performance.
Abatement cost. Several OEMs mandate low RRC targets from suppliers, with no trade-offs on tire durability and performance. Hence, design optimization of tires based on lower aspect ratios, tread depths, tire pressure control, and shift to radial technology is pursued as part of ongoing changes with a low cost implication to customer of around INR 1,000 to 3,000 per vehicle.
Applicability in India. While tire rolling resistance optimization is a green lever across segments, its impact is highest in CVs which operate under very high vertical load conditions. In CVs, RRC reduction can lead to an FE benefit of about 3 to 4 percent, primarily because of a shift to radial tires. Vehicles used in city driving such as PVs (cars and two- and three-wheelers, for example) and S&LCVs can leverage a 1 to 3 percent benefit following a reduction in aspect ratio and tire and rim weight.
Ancillaries’ power management
Minimizing the energy lost in overcoming various types of resistance in a vehicle’s ancillary systems, such as pumps, actuators, air suspension systems, compressors, and electrical loads such as air conditioners, is a small but significant factor in promoting green mobility.
Green impact. Although the amount of fuel consumption saved at the level of each load or ancillary system is small (less than 0.5 percent), a total net benefit of 2-3 percent CO2 reduction can be realized through a combination of one or both of the following methods:
• Electrification of ancillary units will lead to improved energy efficiency compared with conventional mechanical systems.
• Optimization of electric systems and loads will result in lower loading and dissipative losses in the electric circuitry. Individual high-load systems such as air conditioners can be redesigned to draw less current, and the overall vehicle electrical system can also be made to draw less current by decreasing system voltage.
Abatement cost. Optimization of vehicular electrical systems is driven as part of ongoing improvements by OEMs. Electrification of ancillaries is likely to result in an incremental cost of INR 2,000 to 5,000, with key cost drivers being the cost of electrical equipment, motors, circuits, and wiring. This cost will be higher for large commercial vehicles with more actuation requirements.
Applicability in India. While all vehicles, including two- and three-wheelers, will benefit from ongoing improvements in energy consumption of the loads and accessory systems, vehicles such as cars, S&LCVs, and M&HCVs with large pumps, actuation systems, and heavier
Cost-Effective Green Mobility 76 mechanical and electrical loads will benefit the most.
Aerodynamics optimization
A vehicle’s aerodynamic shape, quantified as coefficient of drag (Cd), plays an important role in fuel economy. Improved aerodynamics in vehicles is typically achieved through design solutions such as low frontal area and side skirts, among others. However, some of the globally adopted levers, such as lower ground clearance, are not applicable in India where road quality is not up to global standards.
Green impact. Aerodynamics is a key determinant of FE for vehicles traveling at speeds in excess of 75 km/h, whether cars or CVs. Typically, a reduction of 0.01 in Cd will lead to a 0.5 to 1 percent reduction in CO2 emissions (see figure A-2). Because truck speeds in India average about 30 to 35 km/h and even cars average only 45 to 50 km/h for highway travel, the effective
Figure A- Variation of aerodynamic drag with velocity
300 Aero- dynamic 250 drag (HP)
200
150
100 Other friction
Pow er consumption losses 50
0 30 40650 0 70 80 90 100 110 120 130 Vehicle speed (km/h)
Source: Global fuel economy initiative (GFEI) India symposium realizable green benefit is reduced to about 1 percent—a significantly lower level than that realized in many other parts of the world.
Despite limited potential impact of aerodynamics in India, OEMs are actively investing in R&D, testing, and wind tunnel facilities to continually improve aerodynamics; in doing so they are achieving lower coefficients of drag in a cost-effective manner.
Applicability in India. When infrastructure and highways improve to the point where vehicle speeds exceed 75 km/h, improved aerodynamic design will be a very important vehicle-level factor in driving green mobility in CVs and cars used in highway applications. Aerodynamics design optimization has relatively low green impact in two- and three-wheelers traveling at very low speeds in the city.
Cost-Effective Green Mobility 77 Detailed Assessment of Key Powertrain Technologies
Some of the key powertrain technologies that are likely to create a substantial impact on vehicle emissions in India are discussed in greater detail as follows.
Engine friction reduction
Approximately 9 to 11 percent of the energy consumed by a vehicle is lost to engine friction produced by the many moving engine components. Engine friction reduction is expected to be driven by incremental improvements to the design of reciprocating and rotating engine components such as piston rings, crankshaft bearings, materials and coatings, and mechanical engine pumps. Even minute improvements, when made to several components, can cumulatively deliver tangible engine friction reduction. Another big driver of engine friction is the viscosity of the lubricant used, which impacts friction between the engine’s moving parts. However, the low fuel economy benefit (about 1 percent) and the need for investment from oil companies means the use of low-viscosity lubricants is not a viable option in the near future.
Green impact. A 1 percent reduction in engine friction can deliver a fuel economy benefit of 0.2 to 0.3 percent. While a 5 percent improvement in engine friction could be possible by 2020, the exact potential will depend heavily on how much has already been done to improve base engine friction levels.
Abatement cost. Estimating the incremental cost of this lever is difficult and unlikely to be representative as it depends a great deal on the type of base engine and the component being improved. In line with similar global studies, initial cost for a 5 percent reduction in engine friction is estimated to be about 2.5 to 3 percent of the engine cost for 1,000cc to 2,000cc engines.
Applicability in India. Along with base engine improvement, engine friction reduction is continually explored by OEMs. Continuous evolution towards friction reduction will continue going forward, with replacement of the engine’s mechanical pumps and drives by electric systems being a key trend.
Start-stop technology
Start-stop technology (also referred to as idle-stop or micro-hybrid technology) shuts off the engine when a vehicle is idling and automatically restarts it as soon as the accelerator is pressed. It is a commonly adopted technology, with several global OEMs offering it as a standard feature already. Start-stop systems have entered the Indian market as well, the most notable examples being M&M’s Bolero and Scorpio “micro-hybrid” variants and the start-stop system in the TATA Ace. Premium segment OEMs including BMW, Audi, and Mercedes-Benz have already incorporated start-stop technology into most vehicles in their fleet. The technology requires upgraded starter motor and battery systems to withstand frequent stop-starts while maintaining useful life. Most current engines used in India can incorporate start-stop systems without major modifications.
Green impact. Start-stop systems deliver the twin green benefits of reduced overall fuel consumption and zero tailpipe emissions when idling, with fuel economy benefits as high as 12 percent for city driving. In the Indian context, this technology is of particular relevance, as vehicles can spend up to one third of total driving time at a standstill. A significant reduction of regulated pollutant emissions in congested areas and at traffic signals can also be achieved. The expected fuel economy benefit is 3 to 6 percent, increasing with engine size. Average reductions in HC and CO levels are respectively 3 to 4 percent and 15 to 20 percent.
Cost-Effective Green Mobility 78 Abatement cost. Implementing a basic start-stop system on a small car engine will result in an upfront incremental cost of INR 8,000 to 10,000 to the end consumer. This cost increases with engine size, as the absolute cost of upgrading the starter motor and battery increases for larger vehicles. A 2.4 liter engine would be 25 to 30 percent more expensive to upgrade than a 1.2 liter engine. There is no significant cost difference between gasoline and diesel vehicles.
Applicability in India. Start-stop systems may be the first engine technology for OEMs to target. Certain vehicle segments such as small cars, local buses, and S&LCVs, all of which are used widely in cities, will benefit most from start-stop systems. Fully localized manufacturing and scale benefits are expected to further reduce the costs of start-stop systems by 2020.
Start-stop technology can be a low-cost solution for two- and three-wheelers if the vehicle uses a starter motor. For example, the SKF Group recently introduced a start-stop technology for two-wheelers that can be retrofitted. Expected fuel economy benefits on two-wheelers will be 6 to 8 percent in city driving, with 2 to 3 percent being the average over a driving cycle. However a large proportion of two-wheelers do not use a starter motor, in which case implementing start-stop technology would be relatively expensive.
The main challenge for mass market adoption in the Indian PV segment is maintaining the air conditioning when the engine is shut off during idling—particularly important for India’s climate. Penetration in the PV segment would be contingent on the development of a cost-effective solution for this issue. Alternatively, providing users an easy way to activate and deactivate the start-stop option would help balance fuel economy improvement and passenger comfort. This would, however, decrease the overall CO2e reduction potential of this technology. Fuel injection technologies
Gasoline direct injection (GDI). GDI is an alternate fuel injection technology to the widely used port fuel injection (PFI) systems in current gasoline engines. Whereas PFI systems first inject fuel in an intake port before introduction into the engine cylinder, GDI systems inject fuel at high pressure directly into the engine cylinder for combustion. This allows the engine to operate at a higher compression ratio and reduces fuel consumption. In India, global OEMs including Skoda, Volkswagen, Hyundai, Mercedes-Benz, and Audi have introduced GDI engines in certain premium segment models.
GDI technology is further classified based on the air-fuel ratio. Basic GDI technology involves operating the engine with a stoichiometric air-fuel ratio—14.7 grams of air for every gram of fuel. Advanced GDI engines, such as the charge stratified or lean-burn type, use higher air-fuel ratios, making them more fuel efficient. However they are much more expensive than stoichiometric GDI engines and not expected to be commercially adopted in India by 2020.
Green impact. In isolation, GDI can improve fuel economy up to 3 percent over comparable PFI engines. PM emissions, however, are higher than from PFI engines and might necessitate use of gasoline particulate filters (GPF) to control PM levels. The real green benefit of GDI is as an enabler of downsizing and turbocharging. GDI engines deliver higher torque than comparable PFI engines and have lower risk of engine knocking when used with turbochargers.
Abatement cost. The incremental technology cost for a vehicle with GDI compared to PFI engines would be around INR 17,000 to 21,000 for a four-cylinder vehicle, and increase with the number of cylinders. The main drivers of cost are rugged high-pressure components and better control systems for fuel injection. A GPF will further add to the vehicle’s overall cost by INR 4,000 to 5,500.
Cost-Effective Green Mobility 79 Applicability in India. The major obstacles to widespread adoption of GDI systems are the high system cost, technology complexity, and low direct benefits. A regulatory push for IP transfers to drive faster localization will help reduce costs through local manufacturing. OEM investment in R&D and supplier capability improvement to develop the sophisticated control systems and high-pressure components needed for GDI implementation will be a priority.
Common rail direct injection in diesel engines. In India, direct fuel injection in diesel engines is already the norm across vehicle segments. The next stage of evolution for direct injection engines is common rail (CR) technology, which can help improve fuel efficiency and control on fuel delivery.
Green impact. CR engines have the potential to yield benefits on both CO2e reductions as well as on PM emissions due to efficient combustion and accurate electronic control. The actual impact is dependent on the engine calibration chosen and the design objective. Targeting lower PM emissions results in a simultaneous increase in NOx emissions, usually addressed through the use of exhaust gas recirculation (EGR). This, however, offsets the fuel economy benefits of the technology. If the NOx control is done through the after-treatment system (for example, the use of high-efficiency Selective Catalytic Reduction (SCR) systems) overall fuel economy can be increased by around 5 percent relative to a base direct injection engine.
Abatement cost. The incremental cost of a CR engine is about 25 to 30 percent higher than the base direct injection engine.
Applicability in India. CR technology has already been widely adopted in the Indian PV segment. This has primarily been to meet tighter emission standards under the BS-4 regimen. Adoption in CVs is low, due to limited rollout of BS-4 standards. Full BS-4 rollout will drive the migration to CR technology for most diesel engines.
Turbocharging and engine downsizing
Turbocharging boosts engine power by using the waste energy of exhaust gases. This enables downsizing of the engine while maintaining the performance at the level of a larger, naturally aspirated engine. Downsized engines have lower friction losses and pumping losses than larger engines. This leads to lower fuel consumption and CO2e emissions. Impact of turbochargers on gasoline and diesel engines are addressed separately.
Use of new-gen turbochargers on diesel engines. Almost all diesel PVs and CVs in India, with the exception of the small commercial vehicle segment (the low engine size of SCVs limits their downsizing potential), are turbocharged. Currently a majority of diesel vehicles are powered with basic waste-gate type turbochargers. Migrating to more advanced variable turbine geometry or two-stage turbochargers will allow for further downsizing and better engine calibration.
Green impact. A turbocharged diesel engine downsized by 30 percent relative to a larger, naturally aspirated engine can deliver 15-20 percent greater fuel efficiency. Use of advanced turbocharger technology will enable further downsizing and can deliver a further 3 to 5 percent benefit. Advanced turbochargers can also deliver lower PM, HC, and CO levels through greater control over air intake.
Abatement cost. The incremental cost to customer to convert a small diesel engine from a waste-gate turbocharger to variable turbine geometry is about INR 15,000 to 20,000.
Localization of turbocharger technology will be the main means of reducing the incremental
Cost-Effective Green Mobility 80 cost of this technology—80-90 percent of turbocharger costs are potentially localizable. It will also be important for Indian casting suppliers to improve capabilities with high-temperature materials.
Applicability in India. Most diesel vehicles are already turbocharged. Adopting advanced turbocharging systems will be governed by the ability of OEMs to meet emission control and fuel efficiency mandates. The high cost of advanced turbocharging systems will remain the biggest challenge. The SCV segment is expected to adopt turbocharging primarily as a means to improve load-carrying capacity and emission control and not expected to achieve any CO2e benefits (see figure A-3).
Figure A- Fuel economy improvement potential for turbocharged diesel, gasoline engines
Incremental fuel economy bene it Incremental fuel economy bene it from from downsizing a naturally downsizing a naturally aspirated gasoline engine aspirated diesel engine
Small car (1.2L) Sedan (2.4L) %
% % % % % % % %
30% Advanced Total beneit from 15% downsizing 30% downsizing 45% downsizing downsizing turbocharging advanced diesel enabling further turbocharging downsizing2
. For a small diesel PV with L naturally aspirated engine . Use of a variable turbine geometry turbocharger considered Sources: TNOIEEP ; EPA TSD ; primary interviews; A.T. Kearney analysis
Gasoline turbocharged engines. Gasoline engines have seen a much lower adoption of turbochargers globally due to their higher susceptibility to engine knocking. This is due to increase in engine temperature beyond the level that the engine has been designed for. Engine designers have overcome this by reducing the compression ratios of the engine. Further, use of GDI reduces the risk of knocking relative to PFI engines, allowing for more aggressive downsizing.
Green impact. For gasoline vehicles, a 5 to 20 percent increase in fuel economy is achievable, depending on the base engine size and the degree of downsizing. For example, a 45 percent downsized 2-liter gas engine will deliver a fuel economy improvement of almost 20 percent. Turbocharging will also enable lower HC and CO levels through greater control over air intake.
Abatement cost. The incremental technology cost varies significantly depending on the base
Cost-Effective Green Mobility 81 engine, the degree of downsizing, and the turbocharging technology, and is driven by the cost of the turbocharging-intercooling system and structural changes to the base (smaller) engine. To illustrate, the incremental cost to customer of a small four-cylinder gasoline engine downsized by about 30 percent and fitted with a turbocharger would be in the INR 22,000 to 25,000 range.
Localization of turbocharger technology will be the main means of reducing the incremental cost of this technology—up to 90 percent of turbocharger costs are localizable. It will also be important for Indian casting suppliers to improve capabilities in high temperature materials. If these challenges are addressed, it is likely that most gasoline vehicles will be turbocharged by 2020.
Applicability in India. The benefits of turbocharging, on the mass-market segment of small cars, will be constrained by low downsizing potential as the maximum engine torque may not be sufficient to propel the vehicle from standstill. Downsizing below 800cc levels has not been commercially explored at a global level. Technology for downsizing as low as a 600cc two-cylinder turbocharged engine exists. Adoption of higher-end passenger car segments is likely to be much faster due to higher benefits. This technology is not applicable in the large two-wheeler and three-wheeler markets.
Variable valve timing and lift
Variable valve timing and lift (VVTL) encompasses a family of engine valve designs that improve control over valve opening and closing. This is done by controlling both the timing of valve opening and closing and the degree of valve lift. Better valve control enables better air-fuel mixing and better control of in-cylinder gases, lowering tailpipe emissions. VVTL technologies also lower engine pumping losses (the work required to move air into and out of cylinders) which improves fuel efficiency. VVTL technologies are less effective as a fuel economy lever in the case of diesel engines, due to their already low pumping loss levels.
Multiple stages of adoption of the VVTL technologies are possible (see figure A-4 on page 83).
VVTL technologies are globally mature. Around 85 percent of new vehicles in the United States used variable valve timing technologies as of 2011. Honda’s VTEC engines were the first to employ discrete valve lift technology. Continuously variable valve trains are also in use—BMW’s Valvetronic engines and Fiat’s Multiair engines are the best-known examples.
Green impact. Dual cam phasing is expected to improve fuel economy by 4 to 6 percent compared to an engine without any valve optimizations. Discrete valve lift provides an additional 3 to 4 percent benefit over a dual cam phased engine. Continuously variable valve- trains can deliver a further 4 to 6 percent benefit over discrete valve lift engines. VVTL technologies are also used to improve in-cylinder emissions, but this is usually in concert with other technologies to achieve overall emission objectives.
Abatement cost. The addition of camshaft timing regulators or cam phasers to each engine bank is the biggest cost driver for VVT. For variable lift, mechanical or hydraulic actuation mechanisms are needed and these drive the incremental cost. Dual cam phasing and discrete valve lift on a four-cylinder engine are expected to increase customer costs by INR 4,000 to 6,000 and INR 11,000 to 13,000 respectively.
Applicability in India. Variable valve timing has already penetrated the Indian mass market. The 2011 Swift and Tata Indica Vista are prime examples. Dual cam phasing is expected to be prevalent in India by 2020. In terms of variable valve lift technologies, discrete variable valve lift
Cost-Effective Green Mobility 82 Figure A- Types of variable valve timing and lift implementations
Technology Description Fuel economy Examples in bene it (%) India
Intake cam phasing • The simplest VVT technology allows modifying the 2 – 3% timing of the engine intake valve (increase to base engine)
Variable Coupled cam phasing • Coordinated or coupled cam phasing modifies 1 – 3% Maruti Suzuki valve the timing of both the inlet and exhaust valves (increase to VVT engine timing by an equal amount base engine) 2011, Toyota (VVT) VVTi engines Dual cam phasing • The most advanced valve timing technology allows for 4 – 6% independent control of intake and exhaust valve (increase to opening and closing events base engine)
• Allows control of valve overlap that can be used for internal exhaust gas recirculation Fuel economy Discrete 2/3-step • Allows selection between 2 or 3 distinct cam profiles 3 – 4% Honda VTEC bene it (%) valve lift with each optimized to specific engine operating regions (increase engines to DCP) Variable • Typically applied together with VVT control valve Continuously variable • Allows full flexibility in the engine valve lift 4 – 6% BMW lift (VVL) valve lift (increase Valvetronic, • Typically applied in addition to valve timing, leading to DCP) Fiat MultiAir to completely variable valve train design engines
Only select examples shown for illustration Source: EPA TSD , A.T. Kearney research is expected to be in widespread use by 2020. More advanced continuously variable valve lift technology is, significantly more sophisticated and will only penetrate high end segments.
For two-wheelers, similar valve management technologies are applicable. However, the difficulty in directly translating the complex mechanical or hydraulic systems used in four-wheelers to small engines points to a need to develop customized small engine-based solutions. A few such technologies are currently being researched. Mass market penetration in two-wheelers will depend on the development of these technologies.
Cylinder deactivation
Cylinder deactivation targets reduction in engine pumping losses by switching off half of the engine cylinders during cruising or at low loads. As a technology, it competes with VVTL technology as both attempt to reduce pumping losses. A fuel economy benefit of 5 to 7 percent is achievable for six-cylinder engines and 4 to 5 percent for four-cylinder engines. Cylinder deactivation is unlikely to penetrate in India by 2020 because of the following obstacles to the mass acceptance of this technology:
• Difficulty in implementation for I4 engines. Cylinder deactivation is easier to implement in six- and eight-cylinder engines. GM, Chrysler, and Mercedes-Benz were the pioneers in successfully incorporating cylinder deactivation systems into their large-engine vehicle families. While noise, vibration, and harshness (NVH) issues from fewer firing cylinders is a general challenge for cylinder deactivation, for four-cylinder engines this problem is particu- larly acute and difficult to control. The 2012 Volkswagen Polo (Europe) is one of the first
Cost-Effective Green Mobility 83 commercial examples of cylinder deactivation on a four-cylinder engine.
• High system cost and low benefits relative to VVTL. It competes with VVTL to eliminate pumping losses, and benefits on vehicles with variable valve technologies would be greatly reduced. For example, the incremental cost of adopting it on a six-cylinder engine is likely to be 5 to 10 percent higher than the cost of adopting VVTL technology, while the incremental fuel economy benefit will only be around 0.5 to 1.0 percent.
Automated manual transmission (AMT) systems
Of the total energy requirement across an average driving cycle, about 4 to 7 percent is lost in the transmission systems of a vehicle. The energy efficiency of the transmission system can be increased through continual improvements in areas such as gear ratio optimization. In addition, emergence of Automated Manual Transmission (AMT) systems offers a great opportunity. AMT systems can be used in place of manual transmission systems by replacing the clutch and shift actions with electronically controlled electromechanical actuators. This technology ensures highly efficient engine and driveline operations that are low on fuel consumption and CO2e emissions and improve the useful life of the clutch and driveline components.
Green impact. AMT systems can lead to a fuel economy benefit of nearly 3 to 5 percent over manual transmissions. The Indian automotive market is currently dominated by manual transmission systems. AMT systems not only provide FE benefits but also ensure driving comfort in line with an automatic system. AMT also has safety features that intervene during driving operations. For example, it can briefly interrupt the flow of torque in situations where there is a high risk of skidding.
Abatement cost. AMT will raise the economic cost to customer by around INR 20,000 to 28,000 per vehicle, versus conventional manual transmission systems, the result of ECUs and actuators being imported. An increase in volumes and localization levels may lead to lower costs.
Applicability in India. Although market penetration is low in India at present, uptake is likely to increase over the next decade as a result of the benefits of this technology from an FE, driving comfort, and safety perspective. Across vehicle segments, OEM-supplier partnerships for R&D and investments have played a critical role in pushing this technology to the market, a trend that will need to continue to drive penetration by 2020.
NOx control systems for diesel vehicles
The lean operation paradigm of diesel engines means that they have significantly higher NOx emissions relative to gasoline engines. As emission norms get more stringent, major changes to the diesel engine and after-treatment system need to be made to achieve lower NOx levels. Advanced NOx control in diesel engines is typically done in-cylinder or through after-treatment.
• In-cylinder NOx control through exhaust gas recirculation (EGR) controls NOx levels produced in the engine by mixing cooled exhaust gases with fresh air intake. This lowers engine peak combustion temperatures and directly reduces NOx produced by the engine.
• After-treatment NOx control through selective catalytic reduction (SCR) or lean NOx traps (LNT) reduces NOx levels in the vehicle’s exhaust stream. SCR involves injecting a controlled stream of water-based urea solution (called diesel exhaust fluid or DEF) into the engine-out exhaust, converting NOx to nitrogen and water. An LNT system uses platinum group metal catalytic surface to remove NOx.
In-cylinder and after-treatment NOx control are typically competing technologies, with OEMs
Cost-Effective Green Mobility 84 choosing one or the other route to achieve levels mandated by regulations. As allowed NOx levels decrease to near-zero levels, for example in Euro-6, it is likely that both in-cylinder and after-treatment control will be necessary. Within after-treatment control, LNT and SCR are competing options. LNT systems are more expensive for larger engine sizes, due to the increasing amounts of platinum group metals required, but they become more economical for engines of less than two liter displacement. However, LNT systems are extremely sensitive to fuel sulfur content, with sulfur levels less than 10 parts per million required for efficient catalyst functioning. Given that fuel quality and adulteration are major issues in India, it is unlikely that LNT systems will be widely adopted even on small vehicles.
EGR and SCR technology are compared in figure A-5. Both technologies have significant advantages and important drawbacks. The choice of NOx control technology will be a major decision for Indian OEMs as emission norms become more stringent.
Figure A- Comparison of EGR and SCR systems
EGR SCR
Operating • System efficiency loss in lower • Allows combustion efficiency to be economics temperature combustion leads to higher optimized to lower fuel consumption; fuel consumption while this increases engine-out NOx, the high NOx conversion efficiency of SCR (85-95%) controls emission levels
Additive cost • No additive required for NOx control • Requires injection of diesel exhaust fluid Operating during operation (DEF) at 3-6% the rate of diesel economics consumption; operating costs will vary with the cost of DEF
Payload • Little impact on payload and can • Need for separate urea storage tank provide a 150-200 kg benefit adds to vehicle weight and reduces to SCR payload
Oil changes, • Greater concentration of exhaust gases • No impact on engine operation engine durability in engine could degrade engine oil and since NOx reduction is done engine life on exhaust
Operating • No interventions needed from • Multiple issues related to DEF filling overhead driver customer – Dependence on adequate supply infrastructure and filling stations – Urea supply market not developed in India; urea critical to fertilizer industry – DEF not stable at extreme temperatures, will require storage
System design and • Some design changes, including • Need to incorporate bulky tank implementation cost better cooling, larger radiator could potentially require major design changes • Lower system cost than SCR • Higher system cost relative to EGR
In-use e ectiveness • Limited additional hardware • Need for compliance devices, including needed to ensure low NOx levels urea level sensor, NOx measurement sensors, etc. • Low scope to tampering and misuse • Mechanism needed to ensure diluted/ incorrect DEF not being used
Sources: Diesel Emissions Conference , Integer Research; A.T. Kearney research
Cost-Effective Green Mobility 85 Green impact. Both EGR and SCR technologies lower overall NOx levels. The degree of NOx reduction is driven by the flow rate of exhaust gases in EGR and the injection rate of DEF in SCR. The lower temperature combustion of EGR technology produces more HC, CO, and PM, but these emissions are controlled through use of a diesel oxidation catalyst (DOC) and diesel particulate filter (DPF) in the after-treatment system. While the optimized combustion enabled by use of SCR systems enables a lowering of PM levels in-cylinder, a DPF will still be needed to meet PM norms. SCR technology can typically provide a 4 to 6 percent fuel economy benefit relative to a base engine because designers can optimize engine combustion for maximum fuel efficiency with no NOx tradeoff, leaving the NOx reduction to the after-treatment system.
Abatement cost. The incremental cost of EGR systems is primarily driven by the need for exhaust valves that control the flow of exhaust gases and the mixing with fresh air intake. There is also a need for improved cooling systems for the exhaust gases. For SCR, the primary cost driver is the urea storage and delivery system. For a heavy truck, an EGR system would cost around INR 30,000 to 40,000 while an SCR system would cost INR 90,000 to 100,000 to the end customer, inclusive of taxes. For smaller vehicles, for example a 2,000 cc four-cylinder engine the cost NOx control systems would decrease by 40 to 50 percent.
Applicability in India. For most commercial vehicle segments except small commercial vehicles and pickups, it is expected that OEMs will adopt SCR for NOx reduction to achieve BS-IV emission levels and beyond. The benefit of SCR in enabling lower fuel consumption is likely to be the key factor driving its adoption. This will, however, be contingent on the development of widespread DEF filling infrastructure and a robust supply market. In addition, the cost of DEF will also need to be low enough to ensure that the cost of DEF consumption does not negate the savings from better fuel economy. For smaller commercial vehicles, EGR is expected to be most widely adopted, primarily due to the space and weight savings relative to an SCR system. Passenger vehicles have already largely adopted EGR systems. The inconvenience of getting private consumers to refill urea and the difficulties with incorporating a bulky urea system into small vehicle frames are the key reasons for its adoption.
Overview of Alternate Powertrain Technologies
Hybrid vehicles can have three broad types of driveline architecture:
• Parallel hybrid. In the most common, parallel hybrid, an electric motor and the internal combustion engine are installed such that they can power the vehicle either individually or together. The Honda Insight is an example of parallel hybrid.
• Power-split hybrid. In a power-split hybrid electric drive train there are two motors: an electric motor and an internal combustion engine. The power from these two motors can be shared to drive the wheels via a power splitter. The Toyota Prius is an example of this hybrid architecture.
• Series hybrid. In the series hybrid architecture, the engine does not drive the powertrain but drives a generator which provides power to an electric motor transmission, and also charges a battery bank. The Fisker Karma is an example of a series hybrid.
Hybrids for passenger vehicles (PV) and commercial vehicles (CV) are being produced globally for some years now. However, penetration of hybrid vehicles in India is limited because of high costs. For two-wheelers, hybrid technology is still in a nascent stage and is unlikely to be commercialized until 2020.
Cost-Effective Green Mobility 86 For a summary of hybrid technologies, see figure A6.
Battery technology. The main difference between hybrid and electric vehicles is the role and size of the batteries. Also, batteries are one of the biggest differentiators and cost drivers for alternate powertrain vehicles compared to internal combustion engine vehicles. As seen in the figure below, when all-electric propulsion is desired for a long distance, the battery’s energy density needs to be higher. The power density must also support the larger electric motor. There is a tradeoff between the energy density, power density, and material choice. Having a battery with both high energy and power densities will make the battery large and cost prohibitive.
Three major battery technologies are available: lead acid, nickel-metal hydride (NiMH), and lithium ion (Li-ion). Although Li-ion batteries deliver the best performance in terms of power and energy density, they are also the most expensive. However, with more research and development, the cost of Li-ion batteries is dropping by 7 to 8 percent each year, and this is expected to continue until 2020. Li-ion is expected to become the predominant battery technology.
China and South Korea have made great strides in Li-ion technology in recent years. Government investment has helped Chinese players, such as BYD, BAK, and CNOOC/Lishen. South Korea and Japan have also moved to the technology forefront with companies such as LG, Dow/Kokam, Sanyo, and Hitachi emerging among the global leaders. Indian suppliers, on the other hand, do not have any presence in the Li-ion space. Hence, OEMs in India might need to rely on imports to support its new-age battery requirements, at least in the short to medium term.
Figure A- Summary of hybrid technologies
Types of hybrids Mild hybrid Strong (or full) hybrid PHEV (plug-in hybrids) or range extenders
Technology • ICE + electric engine • ICE + electric engine • Electric engine + ICE • Charging through • Charging through • Charging through regenerative breaking regenerative breaking regenerative breaking
Driving mode • ICE and e-motor • Can run on just ICE, • Can run on just ICE, coupled just batteries, or a just batteries, or a • Runs on ICE only combination combination mode when cruising • Requires large, • Fuel-independent • No ICEOFF high-capacity for short distances all-electric propulsion battery pack • Extended range for long trips
Batteries • - kWh • - kWh • - kWh
Typical electric range • None (assists ICE) • - km • - km
ICE= internal combustion engine; HEV=Hybrid electric vehicle; PHEV=Plug-in hybrid electric vehicle; EV=Electric vehicle Source: A.T. Kearney research
Cost-Effective Green Mobility 87 Abbreviation Definition
2W Two wheeler 3W Three wheeler 3WCC Three way catalytic converter A/C Air conditioning ABS Automatic block signaling AMT Automated manual transmission ARAI Automotive Research Association of India BRT Bus rapid transit system BS norms Bharat stage emission norms CAGR Compound annual growth rate CNG Compressed natural gas CO Carbon monoxide
CO2 Carbon dioxide
CO2e Carbon dioxide equivalent CR Common rail CRDI Common-rail direct injection CV Commercial vehicle DCT Dual clutch transmission DEF Diesel exhaust fluid DFC Dedicated freight corridors DOC Diesel oxidation catalyst DPF Diesel particulate filter EGR Exhaust gas recirculation ELV End-of-life vehicles EV Electric vehicle FE Fuel economy GDI Gasoline direct injection GHG Greenhouse gas
GPF Gasoline particulate filter HC Unburned hydrocarbons HCV Heavy commercial vehicle (GVW of 9 T and above) HEV Hybrid electric vehicle I&M Inspection and Maintenance ICCT International Council for Clean Transportation ICE Internal combustion engine IDIS International Dismantling Information System IMDS International Material Data System INR Indian National Rupee IP Intellectual property JV Joint venture Km Kilometer Kmph Kilometers per hour kWh Kilowatt hour LCV Light commercial vehicles (GVW up to 9 T)
Cost-Effective Green Mobility 88 Abbreviation Definition
LNG Liquefied natural gas LNT Lean NOx trap LPG Liquefied petroleum gas M&HCV Medium and heavy commercial vehicles (GVW of 16 T and above) MHEV Mild hybrid electric vehicle MMBTU Million British thermal units MNRE Ministry of New and Renewable Energy NATRIP National Automotive Testing and R&D Infrastructure Project NiMH Nickel metal hydride NMT Non-motorized transport NOx Mono-nitrogen oxides including NO2, NO NVH Noise, vibration and harshness OBD On-board diagnostics OEM Original equipment manufacturer OMC Oil marketing company PFI Port fuel injection PHEV Plug-in hybrid electric vehicle PM Particulate matter PPHPD Passengers per hour per direction PT Public transport PUC Pollution under control PV Passenger vehicle R&D Research and development REX Range extender RRC Rolling resistance coefficient SCR Selective catalytic reduction SCV Small commercial vehicles (GVW up to 2 T) SHEV Strong hybrid electric vehicle STU State transport undertaking T&D Transmission and distribution TCO Total cost of ownership TPMS Tire pressure monitoring systems TTW Tank to wheel refers to emissions resulting from the combustion of fuels while the vehicle is in operation VGT Variable geometry turbine VVTL Variable valve timing and lift WTT Well to tank refers to emissions resulting from the fossil fuel extraction and refining processes WTW Well to wheel refers to the sum of well to tank and tank to wheel emissions
Cost-Effective Green Mobility 89 About CII
The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the growth of industry in India, partnering industry and government alike through advisory and consultative processes.
CII is a non-government, not-for-profit, industry led and industry managed organisation, playing a proactive role in India's development process. Founded over 117 years ago, it is India's premier business association, with a direct membership of over 7100 organisations from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 90,000 companies from around 250 national and regional sectoral associations.
CII catalyses change by working closely with government on policy issues, enhancing efficiency, competitiveness and expanding business opportunities for industry through a range of specialised services and global linkages. It also provides a platform for sectoral consensus building and networking. Major emphasis is laid on projecting a positive image of business, assisting industry to identify and execute corporate citizenship programmes. Partnerships with over 120 NGOs across the country carry forward our initiatives in integrated and inclusive development, which include health, education, livelihood, diversity management, skill development and water, to name a few.
The CII Theme for 2012-13, ‘Reviving Economic Growth: Reforms and Governance,’ accords top priority to restoring the growth trajectory of the nation, while building Global Competitiveness, Inclusivity and Sustainability. Towards this, CII advocacy will focus on structural reforms, both at the Centre and in the States, and effective governance, while taking efforts and initiatives in Affirmative Action, Skill Development, and International Engagement to the next level.
With 63 offices including 10 Centres of Excellence in India, and 7 overseas offices in Australia, China, France, Singapore, South Africa, UK, and USA, as well as institutional partnerships with 223 counterpart organisations in 90 countries, CII serves as a reference point for Indian industry and the international business community.
Cost-Effective Green Mobility 90 About TNTDPC
The Tamil Nadu Technology Development & Promotion Centre (TNTDPC) was established under the joint participation of the Govt. of Tamil Nadu and Confederation of Indian Industry (CII). The TNTDPC is incorporated as a society. An apex Governing Council chaired by the Secretary of the Department of Science & Technology, Government of India, and consisting of members from the Government of India, Government of Tamil Nadu, Industry and CII.
TNTDPC was conceived as a one-stop shop for technology development and promotion, technology upgrade, and induction of new technologies in Tamil Nadu – a unique model in the country. The Center’s primary task is to provide a helping hand to the small and medium industries and entrepreneurs in Tamil Nadu, and enable them to reach and compete in the global marketplace through technology innovation and compliance to international standards. The Center creates a user friendly environment, providing support and guidance from global experts, to drive industrial growth in the state. It uses networks of global institutions and agencies to stimulate and successfully accomplish technology projects of small and medium enterprises.
Broadly, TNTDPC offers the following services:
• Technology Awareness & Identification
• Technology Development and/or upgrade
• Research Promotion for NPI
• Technology Sourcing and/or transfer
• Technology Commercialization
• Quality control
• IPR services
• Promotion of Technologies leading to Societal Benefits (Concept-to-Commissioning Support)
Contact
G. K. Moinudeen Head Tamil Nadu Technology Development & Promotion Center 98/1 Velacherry Main Road, Guindy, Chennai 600 032. Tamil Nadu. Tel: +91 44 42 444555 / 530 Fax: +91 44 42 444510 Email: [email protected] Web: www.tntdpc.com
Cost-Effective Green Mobility 91 About A.T. Kearney
Who We Are
A.T. Kearney is a global team of forward-thinking, collaborative partners that delivers immediate, meaningful results and a long-term transformational advantage to our clients and colleagues. Since 1926, we have been trusted advisors on CEO-agenda issues to the world’s leading organizations across all major industries and sectors. Our work is always intended to provide a clear benefit to the organizations we work with in both the short and long term. We focus our resources, leverage our global scale, and drive excellence in all we do while enhancing our partner-like culture to ensure we are collaborative, authentic, and forward-thinking
Our Commitment
To deliver superior, sustainable results for our clients and each other, we will build on our rich legacy and full range of consulting services as we:
• Connect across all borders and boundaries, driving global innovation and collaboration
• Lead in all that we do to ensure our clients lead in all they do
• Sustain success by nurturing our people while harmonizing limited resources, social respon- sibility, and profitable growth
By doing good, we will do well for our clients, ourselves, and our community. We do this with passion for people, ideas, and the world in which we live.
Our People
We are 3,000 people strong worldwide, with 2,200 consultants who have broad industry experience and come from leading business schools. We staff client teams with the best skills for each project from across A.T. Kearney.
Our Locations
A.T. Kearney has 57 offices in major business centers in 39 countries.
Our Industry Specialization
• Aerospace and Defence • Pharmaceuticals and Health Care • Public Sector and Government • Consumer Products and Retail • Energy and Process • Private Equity • Automotive • Communications and High Tech
• Transportation • Utilities • Financial Institutions
Cost-Effective Green Mobility 92 Our Service Practices
• Organization and Transformation • Innovation and Complexity Management • Operations • Strategic Information Technology • Supply Chain Management • Strategy, Marketing and Sales • Procurement and Analytic Solutions • Mergers and Acquisitions
Our Clients
Globally our clients are large private- and public-sector organizations
Our Heritage
The company was founded in 1926, when Andrew Thomas (Tom) Kearney joined our predecessor firm. We still believe in Tom’s mantra that, “Our success as consultants will depend upon the essential rightness of the advice we give and our capacity for convincing those in authority that it is good.”
The A.T. Kearney Difference
We have a distinctive, collegial culture that transcends organizational and geographic boundaries. Our consultants are down-to-earth, approachable and have a passion for doing great, innovative client work. We always seek to deliver both immediate impact and growing advantage to our clients.
Cost-Effective Green Mobility 93 About the Authors
Manish Mathur is a Partner at A.T. Kearney’s Gurgaon office. He can be reached at [email protected].
Ram Kidambi is a Principal at A.T. Kearney’s Mumbai office. He can be reached at [email protected].
Siddharth Jain is a Manager at A.T. Kearney’s Mumbai office. He can be reached at [email protected].
Acknowledgments
This study was undertaken by A.T. Kearney with support from the Confederation of Indian Industry (CII). We would also like to thank the industry executives, institutions and government bodies for their contributions to the study.
We would also like to thank Goetz Klink (Partner, Automotive Aerospace and Industrial practice, EMEA), Stephan Krubasik and Tobias Gefaeller, consultants with A.T. Kearney Germany, for bringing their perspective to the report.
We would like to acknowledge the contribution of Barathi Srinivasan, Lakshminarayan Swaminathan, Joshua Abraham and Siddharth Shanbhag, consultants with A.T .Kearney India, in the analysis and compilation of this report.
Cost-Effective Green Mobility 94 Further Reading
A.T. Kearney has published several white papers and reports on the automotive and other sectors, including:
Frugal Re-engineering: Innovatively Cutting Product Costs
As rising commodity prices and other factors squeeze manufacturers, frugal re-engineering can cut costs and improve margins.
India's Auto Component Suppliers: New Frontiers in Growth
As India prepares to be a top three global automotive market by 2020, more component suppliers are entering the market to add capacity and upgrade technology. Can India's homegrown suppliers compete?
Ramping Up Supplier Capacity in Volatile Times
Still stinging from the recession, many suppliers remain averse to risk. How can manufacturers get suppliers to add capacity to help meet demand? By reducing the risks and sharing the rewards.
Plastics: The Future for Automakers and Chemical Companies
Engineered plastics are becoming the future for the chemical and auto industries as environmental concerns increasingly affect both. eMobility: The Long Road to a Billion-Dollar Business
Before long, electronic mobility will be a strategic necessity. For new entrants, what is the most profitable eMobility business model?
Telematics: The Game Changer
Telecommunications devices in cars can create whole new business models based on real-time transmitted information.
Creating Competitive Advantage Through Supply Chain: India Insights
An A.T. Kearney study for the Council of Supply Chain Management Professionals (CSCMP), India
Sustainable Transportation Ecosystem
This report by the World Economic Forum and A.T. Kearney offers guiding principles for achieving environmental sustainability in transportation.
For more information, please visit www.atkearney.in or www.atkearney.com
Cost-Effective Green Mobility 95 Confederation of Indian Industry 3rd Floor, IGSSS Building 28, Institutional Area, Lodi Road New Delhi-110003, India Tel: +91 11 45772019 Fax : +91 11 45772014 Web: www.cii.in
Tamil Nadu Technology Development & Promotion Center 98/1 Velacherry Main Road, Guindy, Chennai 600 032. Tamil Nadu. Tel: +91 44 42 444555 / 530 Fax: +91 44 42 444510 Web: www.tntdpc.com
Contact: Anjan Das, Executive Director, CII, New Delhi ([email protected]) G.K. Moinudeen, Head – TNTDPC & Director – CII, Chennai ([email protected])
A.T. Kearney Limited 14th Floor, Tower D Global Business Park, M.G Road Gurgaon – 122022 Tel: +91 124 4090700, +91 124 4069725
603/604, Piramal Tower Peninsula Corporate Park, Lower Parel Mumbai – 400 013 Tel: +91 22 40970700
Contact: Manish Mathur, Partner, A.T. Kearney Gurgaon ([email protected]) Ram Kidambi, Principal, A.T. Kearney Mumbai ([email protected])
© 2013, A.T. Kearney, Inc. All rights reserved. This report has been jointly produced by the Confederation of Indian Industry and A.T. Kearney Limited, the content of which is for informational purposes only. Both organizations have made every effort to ensure the accuracy of the information presented in this document. However, neither organization nor any of its office bearers, analysts, or employees can be held responsible for any financial consequences arising from the use of the information provided herein. No part of this publication may be reproduced, stored in, or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of CII and A.T. Kearney.