World Energy Outlook Special Report on India highlights the rising oil demand in India.
Given this and the stringent emission norms in place, it is essential to ensure a modern oil refining sector to be adaptive and competitive.
What is the need?
Demand - According to International Energy Agency, India is moving to the centre stage of global energy markets.
India is notably the world's third largest consumer of energy.
With rising incomes and higher car ownership, the number of passenger cars in India is expected to multiply in the coming years.
The expected sharp rise in demand for mobility could more than double the demand for refined products by 2040.
Trade - However, India’s oil refining capacity is falling short of meeting the rising demand for oil products, resulting in huge exports.
India could become a net importer of oil products in the not-too-distant future.
Emissions - Higher dependence on oil products for mobility needs logically mean increased transport emissions.
This is a pressing issue for India where around 5 lack people die prematurely every year due to poor air quality.
Besides, India’s Hydrocarbon Exploration Licensing Policy (HELP) alone will not be feasible to address its demands. Click here to know more about HELP.
What are the government's measures in fuel efficiency?
India has already introduced fuel-efficiency standards not only for cars but also for trucks.
One of the most significant developments is the nationwide adoption of the Bharat Stage IV (BS IV) emission standards.
This is the regulation for transportation fuels in India (equivalent to the Euro IV standards) effective from April 2017.
It requires the sulphur content in gasoline and diesel to be no more than 50 parts per million (ppm).
The Government plans to move to an even more stringent standard by 2020 by limiting sulphur content in transportation fuels to less than 10 ppm.
To address the issue of increasing fossil fuel usage Indian government also plans to move to alternative fuels.
What is the concern?
Surging demand in domestic and export markets offers an attractive growth opportunity for Indian refineries.
On the other hand, tightening of emission standards for transport fuels is becoming a challenge for capitalising on this opportunity.
As, the successful implementation of better quality standards depends on the capability of domestic refineries to adapt to these.
If domestic refineries cannot produce compliant fuels, moving to a tighter standard would result in more imports.
What should be done?
Tightening emission standards for transport fuels is fast becoming an irreversible global trend.
In this rapidly desulphurising world, those able to produce a better quality fuel stand to benefit by gaining market share in an increasingly competitive refining market.
In this backdrop, India should ensure a modern refining sector with all the technical capabilities to produce high-quality fuels.
The Government has to devise mechanisms to provide the required infrastructure for the refining sectors.
The growth of India’s refining industry and the country’s sustainable future are therefore closely interlinked.
Quick fact
IEA
The International Energy Agency is an autonomous inter-governmental body based in Paris.
It was founded in 1974 to help countries collectively respond to oil supply disruptions.
IEA helps governments around the world provide energy access for all, reduce air pollution, and tackle the climate change crisis.
