The National Green Tribunal’s decision to bar the registration of new and old diesel vehicles in Delhi till its next hearing on January 6 comes as a blow — though a temporary one for now — to passenger vehicle manufacturers. Automobile-makers have, in recent years, been building (from scratch, in a few cases) and scaling up their production capacities for diesel cars, driven by the surge in demand for diesel-powered vehicles as the fuel was subsidised and far cheaper than petrol. The differential between petrol and diesel prices has narrowed substantially since the government commenced the deregulation of diesel pricing in 2013, and diesel now is only 22 per cent cheaper than petrol. But diesel vehicles, including the sport utility vehicles, or SUVs, that are ubiquitous status symbols in the National Capital Region and beyond, now constitute 50 per cent of the auto industry’s passenger car sales. That vehicular exhaust from diesel cars, SUVs and freight trucks has been identified as one of the major contributors to the alarming levels of particulate matter in Delhi’s atmosphere is well-established. The tribunal has asked the Delhi and Central governments to decide whether a more permanent injunction prohibiting the registration of diesel vehicles in the NCR would be advisable, given the “serious contribution of vehicular pollution” to the city’s air quality. Separately, the Supreme Court is set to hear on December 15 an independent plea to ban diesel vehicles in Delhi.

Industry has reacted predictably, terming the move as unfair and discriminatory, and calling for a more holistic solution, while questioning the overall policy approach to diesel. With most of them investing to upgrade their technology to meet the more stringent BS-V (Bharat Stage-V) standards due in 2019, they suggest fleet modernisation to replace the older commercial transport vehicles, considered an equally major source of polluting exhaust emissions. Rating agency ICRA expects the share of diesel vehicles in annual auto sales to decline to 30-35 per cent by 2017 as the price difference between diesel and petrol narrows further. That may not help much in Delhi, the nation’s largest urban market for cars and SUVs. By way of comparison, the U.S. has decided to curb emissions from vehicles by moving towards higher fuel efficiency standards for new cars, though economists say it may only encourage people to drive even more. India is pursuing similar goals, but as Volkswagen’s ‘defeat device’ to rig emission tests for diesel vehicles shows, governments aren’t capable of enforcing such norms efficiently. In the backdrop of the latest climate change commitments and the toxic air that hangs over Delhi, it could be an opportune moment for Indian policymakers to use the tools of behavioural economics to alter people’s commuting preferences. Tax and other fiscal incentives to shift both freight haulage and public road transportation to cleaner CNG- and LPG-based technologies is one thing. But it’s perhaps time to take a bolder step and levy a hefty green tax on diesel-fuelled private vehicles and SUVs.

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