Cost-Effective Green Mobility

Transcription

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.
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
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
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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
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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 1
Impact and cost of improvements on ICE-based vehicles in 2020
Annual CO2e reduction potential
through ICE technology improvements
(Million ton CO2e)
~5-6.5
~3-3.5
3W 33%
Net annual abatement cost1 of ICE
technology improvements
(INR ’000 crore)
~26-29
67% 2W
~14-16
~26-29
>A1 87%
~18-19
S&LCV1
13%
Net incremental
tax revenues
and subsidies
saved
A13
27%
~18-20
Commercial Passenger Two- and
vehicles
vehicles
threewheelers
Total
reduction
Passenger
Two- Commercial Govern- Net cost
vehicles and three- vehicles
ment2 to country
consumer wheelers consumer
1 Cost of fuel in 2020 net of all taxes assumed as Rs. 61 per liter for
gasoline and Rs. 62 per liter for diesel
Includes commercial vehicles with GVW up to 9T
2
Includes commercial vehicles with GVW greater than 9T
3
Includes passenger vehicles with engine size <1000cc
2
Source: A.T. Kearney analysis
1
~8-12
~18-20
M&HCV2 73%
Includes increased vehicle tax revenue from new components,
decrease in tax revenues, and fuel subsidies on fuel saved
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 trafficdecongestion measures (5 to 7 percent). After accounting for lower operating costs and
reduced fuel consumption, infrastructure enhancements emerge as cost-neutral.
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Figure 2
Impact and cost of infrastructure enhancements
Annual CO2e reduction potential
through infrastructure enhancements
(Million ton CO2e)
~6-9
~4-5
~1-2
Net annual abatement cost1 of infrastructure
enhancements
(INR ’000 crore)
Due to migration
to cost-effective
modes and fuel
saved from less
traffic congestion
~31-38
~7-8
~65-70
~68-72
Incremental
annual capex cost
Reduced annual
operating costs
for consumer
~12-14
~(2)-(3)
Road
to rail
Highway Public
Urban
Urban
Total
detransport
deplanning reduction
congestion
congestion
Net cost to
country
1 Cost of fuel in 2020 net of all taxes assumed as Rs. 61 per liter for gasoline and Rs. 62 per liter for diesel
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
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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.
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Figure 3
Contribution of key levers for CO2e abatement from road transport in 2020
(Million tons)
+19%
480-500 18-19
10-12
5-6.5
3-3.5
1-3
450-460 16-19
80-100
13-17
1-2
7-10
6-8
400-410
In-use fleet mgmt.
~13-18 MT CO2e
Infrastructure
~30-38 MT CO2e
Vehicle technology
~37-44 MT CO2e
2020
base
case
415-425
Urban
2020
Public
Road
Hybrids
2020
FE
Biofuel
FE
FE
with
to rail transport planning
with
improve- blending improve- improve- and EVs
infra+
and
green
ment
ment PV1
ment CV1
strucure
traffic
technology high2W/3W1
way decongestion
decongestion
I&M + Recycling 2020
green
ecomobility
driving
These levers will create a bigger impact in 2020-2030 time period
-
1 Refers to technologies leading to fuel efficiency improvement on IC engine vehicles
Figure 4
CO2e abatement cost1 curve for India (2020)
Abatement Cost
(INR per kg CO2e)
Fuel economy
improvement1
2W/3W
61
18
Road to rail and
highway decongestion
Fuel economy
improvement1 CV
Biofuel
blending
Fuel economy
improvement1 PV
Public transport
and traffic
decongestion
Recycling
I&M2 and
Eco-driving
12
Hybrids
and EVs
50% of the PV benefits
would come at negligible
economic cost
6
10
0
10
-6
20
-20
30
50
60
70
-3
80
-23
-28
-12
Vehicle technology
40
-30
In-use fleet management
-32
Infrastructure
-34
90
Million
tons
CO2e
abated
-34
Cumulative cost to country (INR ’000 crore)
1
Cost of fuel in 2020 net of all taxes assumed as Rs. 61 per liter for gasoline and Rs. 62 per liter for diesel
2
Refers to technologies leading to fuel efficiency improvement on IC engine vehicles
3
I&M refers to better inspection and maintenance of vehicles
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 5
Contribution of key levers for HC, NOx, and CO abatement by 2020
(Million kilograms)
6,800-7,000 900-1,100
60-80
5,700- 5,900 140-160
Vehicle technology
~1000-1100 Mn kg
2020
base
case
BS
norms
140-160
20-30
5,400-5,600 280-300
Infrastructure
~250-350 Mn kg
CNG
2020
Public
and EV
with
transport
penetration green
and
technology traffic
decongestion
Road
to rail
220-240
-30%
4,800- 5,000
In-Use fleet management
~500-550 Mn kg
Urban
planning
2020
Inspection
Fleet
with
and
moderniinfrastructure maintezation
nance
2020
green
mobility
These benefits would require additional measures and costs beyond the CO2e levers
Figure 6
Estimated additional annual cost of emission reduction in 2020
(INR Crore)
2,500-3,500
11,000-13,000
6,000-7,000
2,000-3,000
Fleet modernization1
Fuel quality upgradation
BS-5 technologies2
1
Additional annualized cost between BS-2 and BS-3 vehicles
2
Cost for use of diesel particulate filter on diesel PVs and LCVs, improved catalytic converters
Total
on passenger vehicles, and use of catalytic converters on two- and three-wheelers
Cost-Effective Green Mobility 10
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 7
Reduction in vehicular emissions with Bharat Stage norms
Emission control regulation history in India1
(All figures in g/kWh)
11.20
14.40
-87%
4.50
2.40
-76%
8.00
7.00
4.00
0.36
-81%
1.10 1.10
0.15
5.00
2.10
-94%
0.10
0.66
3.50
0.46
1.50
0.02
CO
Before 2000
1
NOx
BS II
India 2000
HC
BS III
PM
BS IV
Emission standards for large diesel engines, all figures 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).
Figure 8
CO2e contribution of road transport
Split of CO2e emissions by producing sector, India 2007
(Million tons CO2e)
1,728
Total well-to-wheel (WTW) CO2e
emissions from road transport =
~ 145 Mn Ton CO2e (8.4%)
215
165
117
79
18
138
~124
Tank-to-wheel (TTW)
CO2e emissions from
road transport
719
Electricity
1
Transport
130
~21
Residential
Other
energy1
Well-to-tank (WTT)
CO2e emissions from
road transport
Cement
Iron and
Steel
Other
industry
Agriculture,
waste,
and LULUCF
Total
Other energy includes CO2e emissions from petroleum refining, fugitive emissions from transport, and storage of fossil fuels, among others
Source: Ministry of Environment and Forests; A.T. Kearney analysis
Figure 9
CO2e emissions split by vehicle segments in 2012
100%
10-12%
40-43%
47-49%
13-15%
19-20%
13-14%
PV
2W and 3W
Bus
Total
passenger
M&HCV1
S&LCV2
Total
1 HCV refers to commercial vehicles with GVW of 9 tons and above
2 SCV refers to commercial vehicles with GVW less than 2 tons
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
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 10
Global CO2 emissions performance and standards for light-duty vehicles
Gram CO2 per km1
EU
Japan
USA
China
270
240
210
180
India
150
120
90
0
2000
1
2005
2010
2015
2020
2025
Over a normalized to NEDC cycle. Illustrative for passenger vehicle/ LCV segment; 2020 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.
Figure 11
Projected growth in passenger and goods mobility
Rising demand for passenger mobility
Rising demand for passenger mobility
Total passenger– km
(Billions)
Total ton–km
(Billions)
+10%
+11%
+9%
280-290
8-8.4
3-3.3
2010
Total passenger
carrying vehicles
(Millions)
1.7-1.6
95-100
2020P1
2010
4-4.4
2020P1
2010
Total goods
vehicles
(Millions)
+12%
12-13
4.1-4.4
2020P1
1
Projected emissions in 2020 are based on a base case scenario assuming
current state of technology and emission standards
1
2010
2020P1
Projected emissions in 2020 are based on a base case scenario
assuming current state of technology and emission standards
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.
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 12
Estimated emission trends (2010 - 2020)
Road transport regulated emissions trend
PM
emissions1
(Million tons)
NOx + HC + CO
emissions1
(Million tons)
6.8-7
~0.09
4-4.5
~0.06
Per capita GHG emissions from road transport (kg of COeq)
GHG emissions from road transport (Mt of COeq)
Million Ton CO2e
Kg CO2e
+9%
500
+5%
+4%
Road transport CO2e emissions trend
400
+6%
300
200
100
2010
2020P1
2010
0
2020P1
2000
2005
1
Projected emissions in 2020 based on a base case scenario assuming
current state of technology and emission standards
1
2010
2015P1 2020P1
350
300
250
200
150
100
50
0
Projected emission in 2015, 2020 are based on a base case scenario
assuming current state of technology and emission standards
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 13
Key levers for green mobility
Vehicle
technology
• Technologies
leading to
incremental
improvements in
powertrain and
non-powertrain
efficiencies to
reduce energy
needs
• Cost-effective
alternate
powertrain
technologies with
better efficiencies
Transportation
infrastructure
• Better urban
planning to reduce
need for mobility
• Increased use of
more energyefficient modes of
passenger and
goods
transportation
• Reduce traffic
congestion in
urban centers and
on major highway
corridors
In-use fleet
management
• Structured
inspection
and maintenance
regimen leading to
well-maintained
vehicles
• Fleet modernization
programs to replace or
upgrade older
polluting vechicles
• Timely vehicle
scrappage and
efficient recycling
• 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-effective greener vehicles
• Offering incentives for use of efficient modes of transport
• Ensuring inspection, maintenance, and recycling
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 14
Technology levers for emissions reduction
2.2
2.1
Efficiency enhancement of
conventional powertrains
Use of greener powertrain
technologies
Driveline / engine friction reduction
Hybrid
electric
vehicles
Start-stop
Advanced injection technologies1
Downsizing with turbo charging
Transmission optimization
Reduce
emissions
through
technology
SCR / EGR
Particulate filters
Non-powertrain enhancements
Strong hybrids
Plug-in hybrids
Electric
vehicles
Range extender
Fuel cell
Fuel cell vehicle
Electric vehicle
Use of alternate fuels
Low sulphur gasoline/diesel
Braking system optimization
Biofuels (ethanol/biodiesel)
Accessories and loads optimization
CNG
Tire-resistance
and loads reduction
LPG
-stop
-
2.3
Aerodynamics optimization
Weight reduction
1
Mild hybrids
-stop
Hydrogen
and loads
Includes gasoline direct injection and high-pressure common rail technology, among others
Sources: Primary interviews; A.T. Kearney research
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 emissioncontrol 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
Figure 15
Summary profile of non-powertrain enhancement technologies
Non-powertrain
enhancement
technologies
1
Description
Fuel economy gain in India
PV/S&LCV
M&HCV
2W/3W
1
Aerodynamics
optimization
• Streamlined vehicle body design to minimize energy
losses due to air drag
1-2%
2-3%
Very limited
2
Weight
reduction
• Use of lightweight materials and structural redesign for
weight reduction
• New manufacturing technologies
1-4%1
1-2%2
1-2%
3
Tire resistance
reduction
• Reduction in tire rolling resistance toward minimizing
rolling friction losses
1-2%
1-2%
1-2%
4
Accessories
and loads
optimization
• Reduction in power consumption in ancillaries and load
systems based on
– Electrification of current mechanical systems of
actuation and loads
– Optimization of electrical systems and use of electronic
controls where possible
2-3%
2-3%
-
FE impact numbers based on 100 kg reduction in weight
Payload-to-kerb mass ratio in India is ~1.5-2 vs. global benchmarks of <1; in practical situations,
this factor is higher given heavy overloading in Indian trucking conditions
2
Sources: IEEP-TNO Study 2011, EPA TSD 2011; 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
Figure 16
Energy balance for a passenger car and components of powertrain losses
100%
60-62%
Efficiency losses
in powertrain
9-11%
5-6%
22-26%
Total
energy
Transmission
Engine losses
Thermodynamic
losses
(friction, pumping,
losses (exhaust,
radiator, etc.) other combustion losses)
Energy delivered
by powertrain
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.
Figure 17
Summary profile of powertrain enhancements on IC engine vehicles
Powertrain enhancement
technologies1, 2
1
Engine
friction reduction
2 Start-stop systems
(micro-hybrid)
Description
Fuel economy gain in India
PV
2W/3W
CV
• Reduced engine friction through
multiple levers such as conversion
to electrical drives, use of roller
bearings
1-2%
1-2%
1-2%
• Reduced idle-state fuel
consumption through engine
shutdown
3-5%
2-3%
2-5%
Current market penetration
PV
2W/3W
CV
Ongoing R&D by
OEMs, suppliers
3a
Direct
injection –
gasoline
• Injection of fuel directly in
combustion chamber leading to
more efficient fuel utilization
2-3%
3-6%3
-
-
3b
3 Fuel
injection
Port fuel
injection –
gasoline
• Injection of fuel into an intake port
for mixing with air followed by
introduction in combustion chamber
Base
Case
2-5%
-
-
3c Common
rail – diesel
• A high-pressure common fuel rail
injecting all engine cylinders
allowing for better injection control
4-5%
4-5%
4-5%
Diesel
4a (new-gen
turbos)
• Use of new-gen variable geometry
turbos offering better control on
air intake and engine efficiency
3-5%
-
4-6%
-
• Replacing a larger engine with a
smaller, more efficient engine while
matching performance through
turbocharging
4-15%
-
-
-
5 Variable valve timing
and lift
• Varied timing and lift of engine
valves depending on engine
load to optimize air intake and
exhaust
3-7%
3-5%
1-2%
6 Cylinder deactivation
• Reduced engine losses through
partial deactivation of engine
cylinders depending on load
4-5%
-
1-2%
-
7 Automated manual
transmission
• Lower gear shift losses through
electronic control of clutch
and shift
3-5%
-
3-5%
-
Selective
8a catalytic
reduction
• High-efficiency aftertreatment
system that allows for optimized
engine combustion; injection of
a urea-based compound
removes Nox
4-6%
-
4-6%
-
8b Exhaust gas
recirculation
• Mixing of cooled exhaust gases
with fresh air intake to reduce
combustion temperature and
hence NOx
0%
-
0%
-
4 Downsizing
(with
turbo) 4b Gasoline
engines
8 NOx
control
systems
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; efficiency improvements in auxiliary systems
1
Diesel: engine combustion improvements; thermo-electric conversion; secondary heat recovery cycle;
auxiliary systems efficiency improvements; thermal management systems
2
3-6% benefit from implementing gasoline direct injection on 4-stroke engines. For 2-stroke engines, air-assisted direct injection or GDI technology
has been shown to deliver 30-40% improvement in fuel economy.
3
Sources: TNO-IEEP Report 2011 for European Commission, EPA TSD 2011; primary interviews; A.T. Kearney analysis
Figure 18
Cost-effectiveness of ICE vehicle based enhancements - Example for a gasoline PV1
Cost per % CO2e benefit2
(INR per %)
Automated
manual transmission
Gasoline direct
injection
4,500
Valve
timing
& lift
Aerodynamics
optimization
3,500
Low rolling
resistance
tires
2,500
Engine
friction
reduction
Downsizing &
turbocharging4
Start-stop
systems
Electrification
of ancillaries
1,500
Cost-effective technologies5 –
cumulative cost ~INR 2,000 per % CO2e reduction
500
Relatively expensive technologies; cumulative
cost ~INR 3,800 per % CO2e reduction
Decreasing CO2e benefit per Rupee spent
0
0%
1%
2%
3%
Powertrain technologies
4%
5%
6%
7%
8%
9%
10%
11%
12%
13%
14%
15%
16%
17%
18%
19%
20%
Cumulative CO2e benefit3
(%)
Vehicle-level technologies
Illustrative for an A2 segment passenger vehicle
Estimated cost in 2020 excluding all taxes and duties
3
Standalone CO2e benefit of each of these levers is higher than shown in the graph; reduction is to account for technology levers not being
independent/additive
4
Downsizing and turbocharging is a cost-effective lever, however the need to implement direct injection makes the combined technology package
more expensive
5
At INR 2,000 per % CO2e reduction, the upfront cost can be recovered in 5 years assuming an annual mileage of 10,000 kilometers for an average customer
Sources: TNO-IEEP Report 2011, EPA TSD 2011; primary interviews; A.T. Kearney analysis
1
2
Figure 19
Distance-to-payback for advanced ICE technology across segments in 2020
(In ‘000s of kilometers of operation)
310-390
100-130
95-125
125-160
10-12
9-12
110-140
75-95
A1 segment A2 segment A3 & above
PV (gasoline) PV (gasoline) segment PV
(gasoline)
Years till
payback1,2,3
180-230
140-180
7-9
Diesel PV
12-15
Two-wheeler
20-25
Small CV
(cargo &
passenger)
8-10
Light CV
Medium &
heavy CV
4-5
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 8-10,000 kilometers per year compared to an M&HCV truck which would travel
70-80,000 kilometers per year
2
Incremental technology cost and fuel prices both exclude all taxes and duties
3 Cost of fuel in 2020 net of all taxes assumed as INR 61.0 per liter for gasoline and INR 61.7 per liter for diesel
1
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
Figure 20
Summary of emission control technologies on IC engine vehicles
Gasoline technologies for improved emission control
In-cylinder
control
• Air-fuel management for cold-start
control through control on fuel
injection, engine valve train
optimization, and turbocharging
• Incremental improvements to
combustion system
Diesel technologies for improved emission control
In-cylinder
control
• Exhaust gas recirculation (EGR) with
electronic control systems
Aftertreatment
• Improvements to three-way catalytic
converter (3WCC) operation
• Use of gasoline particulate filters
(GPFs) for direct injection engines
Aftertreatment
• High-pressure fuel injection (up to
1900 bar)
• Variable geometry turbines for
improved air-fuel management
• Variable valve timing and fuel injection
for regeneration of diesel particulate
filter
• Continuous R&D for combustion
system improvements
• Exhaust gas recirculation with DC
motor actuator
• PM after treatment with diesel
particulate filters and diesel oxidation
catalysts
• NOx reduction based on selective
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 threewheelers 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
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
lower CO2e emissions, and two-wheelers with 6 to 8 percent lower CO2e emissions.1 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 threewheelers, 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.
abatement cost to the country of INR 10 to 20 per kilogram of CO2e2 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 21
CO2e abatement cost comparison for advanced IC engine vehicles in 2020
Abatement Cost
(INR per kg CO2e1, 2)
Two & threewheelers
75
60
Diesel PVs
45
Gasoline PVs
(<1,000 cc)
30
Gasoline PVs
(>1,000 cc)
Light CVs
Small CVs
(cargo and passenger)
Medium and heavy CVs
(trucks and buses)
15
0
0
4
8
-15
1
12
16
20
24
28
Cumulative reduction potential
(million tons of CO2e)
Excludes all taxes and duties, representing the net cost to country.
2 Cost of fuel in 2020 net of all taxes assumed as Rs. 61.0 per liter for gasoline and Rs. 61.7 per liter for diesel.
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.
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
CO2e abatement by 2020 at a net cost to the country of INR 8,000 to 12,000 crore per year.4 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.
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 22
Overview of alternate powertrain technologies
Alternate powertrain technologies
Description
Commercial examples1
• E-motor assists engine in acceleration
• Regenerative braking charges a small battery
• No all-electric propulsion possible
• India: None
• Global: Honda Civic Hybrid,
Mercedes Benz S400 Blue,
BMW 7-Series hybrids
Strong/Full
hybrid electric
vehicle (SHEV)
• Can run on just ICE, just batteries, or a
combination
• Combine E-motor and engine power that
optimizes output to the wheels throughout the
operating range
• Requires large, high-capacity battery pack
• India: Toyota Prius
• Global: BMW X6 Hybrid, Ford
Escape Hybrid
Plug-in hybrid
electric vehicle
(PHEV)
• HEV with battery large enough to run electric only
for a significant distance (10+ miles)
• Both a regular ICE and E-motor can be used for
propulsion
• Charging through regenerative braking or plug-in
• India: None commercialized,
Maruti Swift REEV concept
car exhibited
• Global: Toyota Prius Plug-in,
Audi A1 e-tron, BYD F3DM,
GM Volt
Battery electric vehicles (BEV)
• Runs solely on battery power, does not have ICE
• Range is limited by the size of the battery
• Recharge off the grid
• India: Mahindra Reva and E20
• Global: Nissan Leaf, Citroën
C-Zero, Ford Focus,
Mitsubishi i-MiEV
Fuel cell hybrid vehicle (FCV)
• Fuel cell functions like a battery producing
electricity
• Instead of recharging, must be refilled by H2
• Runs on an electric motor like standard hybrid
and standard electric vehicles
• Global: Not available
commercially
• Prototypes exhibited
Mild-hybrid
(Mild HEV)
Hybrid
electric
vehicles
(HEV)
1
Only select examples shown for illustration
• 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
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 23
Battery performance requirements for different alternate powertrain technologies
Applicable battery
technology
Lead
acid
High
Rationale
Mild
HEV
SHEV
(1-2 kWh)
NiMH
Li-ion
• Low power requirement, battery operated only
during coasting, braking, idling
• Low energy requirements as onboard ICE
recharges battery during most operating
conditions
Power density (kW/kg)
• Higher power requirement as battery powers
vehicle independently under some conditions
PHEV
(2-5 kWh)
REX
(12-20kWh)
EV
(12-40 kWh)
Strong
• Low energy requirements as onboard ICE
HEV
recharges during most operating condition
PHEV
MHEV
(<1 kWh)
Low
REX
High
Energy density
(kWh/kg)
Low
EV
Battery size (kWh)
• Battery power and energy requirements high due
to pure EV operating range
• To minimize battery size, high-power/energy ratio
batteries used for PHEV
• Battery power and energy requirements high due
to pure EV operating range
• Battery size constraints leads to high-energy/
power ratio batteries (lower power density)
• Battery energy requirement to extend range of
vehicle
• Battery size constraints leads to high energy/
power ratio batteries (lower power density)
Not Suited
Highly Suited
• 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 generating 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 requirements) 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 generation 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
Figure 24
Green impact of electric and hybrid vehicles in India
Relative well-to-wheel emissions1
(In g-CO2e./km)
Emissions from power sector
(In g-CO2e./kWh)
gCO2e/kWh of electricity lost in transmission
and distribution
1,200
gCO2e/kWh of electricity consumed
100
90-92
75-80
85-90
82-88
673
45
815
102
438
31
937
57
881
627
713
USA
Africa
300
900
407
Gasoline
ICE
Gasoline
MHEV
Gasoline
SHEV
Gasoline
PHEV
EV
Based on emissions of a typical compact car equivalent to A2 segment
passenger vehicle
1
European
Union
China
India
Sources: 2011 Guidelines on CO2e Conversion Factors for Company
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:
Figure 25
Lithium-ion battery price evolution
(In INR per kWh, 2012-2020)
Key reasons driving down costs of
lithium-ion batteries
58,00060,000
32,00035,000
• Significant R&D happening globally to identify
efficient chemistry and introduce cheaper
technologies like Li-air batteries
• Increasing penetration of EVs and HEVs is driving
economies of scale benefits
30,00032,000
– Modularization of batteries to fit various EVs and
HEVs for different OEMs will further increase scale
• Partnerships emerging between OEMs, battery
producers, and component manufacturers brings
down overhead costs
18,00020,000
EV
SHEV
2020P
2012
Figure 26
Net economic cost of hybrids and electric vehicles (PVs)
Annual economic cost to the country for alternate powertrain
technologies in 20201 (In INR ‘000)
Operational cost
Acquisition cost
Analysis done for comparable car configuration
124-128
Gasoline ICE
130-135
135-140
140-145
Gasoline MHEV2
Gasoline SHEV3
Gasoline PHEV4
EV5
133-138
CO2e abatement per
annum – KG6
170-190
420-440
370-390
240-260
CO2e abatement cost –
Rs. per KG6
30-40
25-35
35-45
30-40
1
Total cost of ownership for consumer with timeframe = 5 years, vehicle sold after 5 years for resale value of 25%, 80% cost financed at 10% p.a. for
4 years, excludes all taxes and duties, representing the net cost to country; illustrative for an A2 segment gasoline passenger vehicle
2
E-motor size / Battery Size / Battery type for MHEV = 8 kW / 1 kWh / NiMH
3
E-motor size / Battery Size / Battery type for SHEV = 15 kW / 2 kWh / NiMH
4
E-motor size / Battery Size / Battery type for PHEV = 20 kW / 4 kWh / Li-ion, Electric Drive =50%
5
E-motor size / Battery Size / Battery type for EV = 35kW / 12 kWh / Li-ion
6
In comparison to a conventional gasoline ICE; Cost of fuel in 2020 net of all taxes assumed as Rs. 61.0 per liter for gasoline and Rs. 61.7 per liter for diesel
• 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 specifications 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
Limited jointly developed Revolo,
a plug-in parallel hybrid solution
that can be used in new and
existing cars and light
commercial vehicles (LCVs). KPIT
Cummins pioneered the design
and engineering, and Bharat
Forge will manufacture and
assemble the vehicles.
Technological overview. The
Revolo kit has an electric
induction motor, a controller, a
battery pack, and a management
system with proprietary software.
The package can be installed in
four to six hours either in the
factory or as an aftermarket
upgrade on gasoline and diesel
vehicles with engines between
800 and 3,000 cubic centimeters.
Vehicles receiving this upgrade
must be equipped with either
lead-acid or lithium-ion cell
batteries.
Green impact. According to KPIT
Cummins, Revolo will improve
fuel economy by 35 to 40 percent
and is ideally suited for
stop-and-go city driving. It will
also increase engine life and
provide a power boost, thus
permitting the use of smaller,
greener engines.
Cost angle. Although Revolo kits
cost INR 65,000 to 150,000, they
are extremely cost-effective
because they have the benefits of
a full hybrid at a lower cost.
Current state of technology.
Revolo has been acclaimed for its
green impact with limited
additional infrastructural
requirements. It has gone through
successful testing, but its
on-the-road performance and
market acceptance still remain to
be seen.
The road ahead. The overall
impact of hybrid solutions on CO2
emissions will be limited unless
they are applicable to both old
and new vehicles. Hence,
technologies like Revolo that are
relevant to a wide range of
existing vehicle applications can
have a sizable green impact.
• 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 development 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.
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 27
Target penetration in 2020 for alternate powertrain technologies
Vehicle type
Passenger
vehicles
Twowheelers
Threewheelers
Light
commercial
vehicles
Buses
Hybrids
10 to 12
percent
1 to 2
percent
1 to 2
percent
4 to 5
percent
3 to 5
percent
Electric
vehicles
1 to 2
percent
9 to 11
percent
2 to 4
percent
0 to 1
percent
1 to 2
percent
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 28
Summary profile of alternate fuel options
Technology
Biofuel
(biodiesel/
ethanol)
Pure
biofuel
Description
Extent of change to
existing ICE
• Flex-fuel vehicles capable of burning pure ethanol
Major changes to
the engine
• Diesel ICE and associated parts need to be modified
to run on pure biodiesel
Biofuel
blend with
gasoline/
diesel
• Newer gasoline ICE can handle up to 15% ethanol
• Diesel ICE can handle blend of 5-20% of biodiesel
Minor to no
changes to
the engine
Green
diesel
• Green diesel is a high quality drop-in fuel and is a
mixture of n-paraffin and iso-paraffin
No changes to
the engine
Availability
of fuel in
India by 2020
• OMCs are starting to explore use of green diesel in
their production facilities
Alternative
fossil
fuels
CNG
• Can be a part of OEM integrated solution or retrofitted
as an aftermarket solution
• Multiple OEMs offering variants across PVs, buses,
SCVs and three-wheelers
LPG
• Modification required to traditional ICE with additional
cylinder
• Multiple OEMs offering variants across PVs and
three-wheelers
New age
fuel
Hydrogen
Compressed
air
• Slightly modified version of traditional ICE can handle
hydrogen fuel
Minor changes to
the fuel
intake system
Minor changes to
the fuel
intake system
• Currently not commercially available
Minor changes to
the fuel
intake system
• Motors are driven by expansion of compressed air
stored under high pressure
Major changes to
the engine
• Currently not commercially available
No commercial availability for retail use
Commercial availability comparable to gasoline/diesel
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
The Ethanol Success Story in Brazil
Brazil is one of the few countries
with significant penetration of
ethanol-fueled cars. As of 2010,
almost 90 percent of new vehicles
sold were flex-fuel vehicles,
which run on any ratio of ethanol
and gasoline blend. The
government’s National Alcohol
Program drives biofuel usage
through policy incentives and
regulation to ensure automotive
industry cooperation. Several
drivers helped the success of this
program, including:
• Low cost of ethanol. Ethanol in
Brazil is 30 to 35 percent more
economical than U.S.-based
corn ethanol and about half as
expensive as in India. This
efficiency is supported by high
sugarcane yield, improvements
in agri-industrial technology,
and efficient use of waste
bagasse.
• Targeted government
regulation. The Brazilian
government has used a variety
of policy incentives such as
lower taxes for ethanol-fueled
cars, mandatory blending
requirements, and mandatory
availability of ethanol at all
refueling stations.
greenest biofuels, delivering an
up to 80 percent reduction in life
cycle greenhouse gas emissions
relative to gasoline, including
direct and indirect land use
change effects. This is largely
because of high sugarcane yields
and the efficient use of bagasse in
heat and power generation.
Brazilian ethanol is also one of the
Figure 30
Cost of ethanol production by region
($ per litre)
0.52
0.50
0.30
0.23
Brazil (sugarcane)
US (maize)
EU (wheat)
India (bagasse)
-2030 time period
(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 29
Relative emissions performance of biofuels
Relative CO2e emissions
(In g-CO2e./km, gasoline = 100)
100
95-97
90-92
90-95
Relative NOx and PM emission
(In g/km, gasoline = 100)
Gasoline
Diesel
E5
B5
E10
400
578
88-90
500
100 96-98 93-95
CO2e
NOx
344
100 95-97
90-92
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
Figure 30
Incremental economic cost assessment of biofuel blends
Annual incremental economic cost to the country for biofuel blends in 20201,2
(In INR)
Marginally higher operating cost
due to higher fuel consumption
driven by low volumetric
efficiency of ethanol
240-250
Marginally lower operating cost
as biodiesel price is expected to
be lower than diesel on an
energy equivalent basis
Incremental operating cost
E10 blend ICE relative to gasoline ICE
CO2e abatement per annum, KG
CO2e abatement cost, INR Per KG
(485) - (495)
B5 blend ICE relative to diesel ICE
170-180
40-50
1.3-1.8
(11) - (15)
Illustrative for a 4-wheeler passenger vehicle; no technology changes to base vehicle assumed; excludes all taxes and duties, representing
net cost to the country
1
2 Cost of fuel in 2020 net of all taxes assumed as Rs. 61.0 per liter for gasoline, Rs. 59.2 per liter for E-10, Rs. 61.7 per liter for diesel and Rs. 60.5 per liter for B-10
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
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 procedures 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).
Green Diesel: An Emerging Opportunity
Significant research has been
done to address some of the
deficiencies of biodiesel, such as
poorer NOx performance,
dependence on low-yield
jatropha feedstock, and potential
impacts on vehicle systems. One
of the most promising is green
diesel, which is produced through
a de-oxygenation-isomerization
process of base feedstocks.
Green diesel has several
advantages over biofuels that
could make it the future biofuel of
choice:
• Feedstock flexibility. Green
diesel can be produced from a
wide variety of vegetable and
animal feedstock, including
low-cost feedstock such as
waste animal fats and grease.
Green diesel properties show a
good degree of invariance
relative to feedstock source.
• Improved emissions
performance. While green
diesel is marginally poorer on
CO2e performance, it is
significantly better on NOx and
PM emissions.
improves startability and
higher oxidation stability index
reduces deterioration of fuel in
storage and impact on vehicle
parts in usage.
• Drop-in fuel. Green diesel
blends can be developed using
a drop-in mechanism that
doesn’t require complex
blending infrastructure as in
the case of biodiesel.
However, because of limited
maturity, it is not expected to be
commercially adopted in 2020.
• Better fuel properties. Better
cold flow performance
Figure 2-18
Emission performance of green diesel relative to diesel and biodiesel
Relative CO2e, NOx and PM emissions
(In g-CO2eq./km for greenhouse gases and g/km for NOx/PM; Gasoline = 100)
578
Diesel
500
B5
Green diesel
400
344
92
90
90
CO2e
85
NOx
62
PM
• 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
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 fourwheeler 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.
Figure 31
Emissions performance of CNG and LPG relative to gasoline/diesel
Relative CO2e emissions
(In g-CO2e/km, gasoline = 100)
100
90-95
96-98
Relative PM and NOx emissions
(in g/km, gasoline = 100)
Gasoline
Diesel
LPG
125
100
CNG
400
500
90-95
100
71
59
0
CO2e
NOx
PM
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
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 32
Net economic cost comparison of CNG and LPG small car
Projected annual economic cost1,2 in 2020
(In Rs. ‘000)
Operational cost
Acquisition cost
Analysis done for comparable car configuration
124-128
Gasoline ICE (E5)
120-124
142-146
CNG
LPG
CO2e Abatement per annum – KG
35-45
(25) - (30)
CO2e Abatement cost- Rs. Per KG
(100)- (105)
NA
TCO timeframe = 5 years, car sold after 5 years for resale value of 25%, 80% cost financed at 10% p.a. for 4 years, annual usage of 10,000 KM,
excludes all taxes and duties, representing the net cost to country; illustrative for an A2 segment gasoline passenger vehicle
1
2 Cost of fuel in 2020 net of all taxes assumed as Rs. 61.0 per liter for gasoline, Rs. 61.7 per liter for diesel, Rs. 56.3 per KG for CNG, and Rs. 57.7 per KG for LPG
Source: A.T. Kearney Analysis
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 shalebased 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:
Figure 33
Refueling infrastructure for CNG
Number of CNG vehicles per refueling station
1571
1519
999
Optimal level
986
986
908
47
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-towheel 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
−− 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.
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 34
Infrastructure levers for emissions reduction
Infrastructure Enhancement
1 Improved urban planning to
reduce need for travel
• Investment in “green” townships
and cities designed for minimal
emissions from transport
• Transit oriented development in
expanding urban areas designed to
encourage public transport and
reduce commute distances
2 Traffic decongestion
• Investment in construction of new
roads and bypass routes, both in
cities and on highways (freight
corridors, etc.)
• Efficient traffic management
systems to reduce congestion, by
means of intelligent signaling,
electronic toll collection,
congestion pricing, etc.
3
Modal shift of passengers to
greener transport forms
• For passenger traffic, promotion of
an integrated multi-modal public
transport system, optimized to suit
the movement patterns of the city
4
Modal shift of goods to greener
transport forms
• 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
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 transportdemand 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.
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 35
Trends indicating increased congestion in Indian cities
Vehicle population versus road length
120
5
Average speed trends1
Kmph
25
20
49
3
15
2
10
20
5
1991
2001
2011
Vehicle parc (millions) CAGR: 9%
2007
Metro cities
2011
2021
Tier 1 cities
Tier 2 cities
Road length (million km) CAGR: 3%
1
Source: Ministry of Road Transport and Highways, SIAM
Average speed on major corridors
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
Each needs to be supported by specific actions to ensure the realization of green benefits from
a 2020 perspective (see figure 36).
Figure 36
Key imperatives to alleviate traffic congestion
Key lever
Action 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, flyovers, and underpasses, among others
Intelligent traffic management
• Implement intelligent signaling system to control traffic flow 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 traffic, from personal to public
transportation modes or non-motorized transportation
• Enable migration of goods traffic from major highways to railways
Disincentivize excessive use
of personal vehicles
• Charge for congestion. Put a high price on single-user cars entering
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.
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 37
Modal shift of passenger transport in top 87 cities
Public transport
Non-motorized transport
Private mobility and
intermediate public transport
100%
100%
28%
26%
100%
19%
34%
37%
35%
2007
36%
38%
2011
47%
2021P
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.
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 38
Summary of potential mass transit solutions for India
Transit Mode
Description
Technology
Applicability
Examples
Metro
• High-speed, highfrequency systems
• Fixed-rail, grade
separated systems
• Primarily in large
metropolitan cities
• High-capacity,
many stations
• Can be surface,
underground,
or elevated
• Service from
city to suburbs
• Singapore MRT,
Delhi metro,
London
underground
• Low-speed,
short distances,
frequent stops
• Fixed-rail, grade
separated systems,
usually elevated
• Networks are usually
shorter, used for
dedicated commutes
• Sydney monorail,
Mumbai monorail
(under construction)
• Low-capacity system
• Can be fully
automated
• High-frequency,
moderate speeds,
frequent stops,
• Busways are usually
at-grade exclusive,
on surface.
• Metropolitan and
smaller cities
and towns
• Ahmedabad
Janmarg
BRTS, Bogota’s
TransMilenio
Monorails
Bus rapid
transit
• 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.
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 39
Well-to-wheel CO2e emissions comparison across transportation modes
(gCO2e/passenger-km)
60-95
-70%
-80%
35-40
25-35
15-25
12-16
Car
Twowheeler
Monorail
Metro
Bus
Note: Average occupancy of cars (2.5 persons) and of two-wheelers (1.5 persons) assumed.
Optimum capacity of 80% used for public transit modes.
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 regenerative 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.
• CNG hybrid buses. Low-floor intra-city buses were introduced for the use of athletes participating 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 40
Comparison of capital expenditure versus peak capacity across public
transportation modes
Capacity
(1000 PPHPD1)
Capital cost
(INR Crore/km)
50-7560-95
Metro
(underground)
50-75
Metro
(elevated)
35-40
50-75
Metro
(surface)
20-40
Monorail
<20
1
Bus rapid
transit
500-600
200-300
100-150
100-150
10-15
Cost
(INR crore / km/ 1000 PPHPD)
8-10
4-5
2-3
4-6
0.5-1
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-perpassenger 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.
There are three key steps for implementing green, cost-effective public transportation systems
(see figure 41).
Figure 41
Action steps for implementation of cost-effective public transit systems
Key lever
Key actions
Enhance capacity of
public transport infrastructure
• Add new capacity via the timely construction and effective
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
rates of public transport
across all segments
• Configure routes on the basis of passenger movement data patterns
• Reformulate fare pricing to ensure the price structure is strictly
formula-based, and factor in the cost of fuel and inflation
• Emphasize convenience, offer choices such as off-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 fleets to reduce
pollutants and CO2e emissions, and to improve urban air quality levels
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.
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.
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 42
Modal share of freight transport
(Billion Ton Km)
Road freight
3800-4000
Rail freight
+8%
70%
1600-1800
350-400
800-850
38%
62%
1990
61%
39%
2000
65%
30%
35%
2010
2020P
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 tractortrailers 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
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 43
Railway network comparison: India versus China
1.
Parameters
India
China
Railway addition 1990-2007
960 km
20,000 km
Investment 2005-2009
$31 billion
$154 billion
Planned addition in the next decade
3,000 km
40,000 km
Carrying capacity of wagons
55-60 tons
80 tons
Tare weight¹ to payload ratio
1:1.27
1:4
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).
Figure 44
Global passenger-to-freight rail fare ratios1
1.9
1.3
1.5
0.3
India
1.
China
Germany
Japan
Ratio of rail fare for 1 passenger-km and 1 ton-km of freight
Figure 45
Imperatives for increasing freight modal share of railways
Key lever
Key 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 2020.
• 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-efficient, faster locomotives to
reduce transit times and fuel costs, and further reduce CO2e emissions.
• Increase axle loads from the current 22 tons to U.S. and China levels
of 25 tons. Continued investment in stainless steel wagons to increase
the net payload of the track.
• Expedite electrification 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 tariffs 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
container rail operations
• Stabilize haulage charges to ease hikes in haulage charges
that are a serious concern for operators.
• Appoint an independent ombudsman to settle disputes between
private players and Indian Railways.
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.
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 46
Current age distribution of in-use fleet vehicles
100%
22%
100%
100%
10%
7%
100%
13%
25%
28%
40%
> 10 years
5 to 10 years
< 5 years
34%
69%
50%
50%
PV
2W
53%
3W
CV
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.
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 establishment 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.
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 47
Projected vehicle scrap volumes in 2020
Estimated number of vehicles
reaching end-of-life in India
PV
Estimated weight of vehicle scrap available
for recycling (2020)
9 Mn
CV
3W
4-5 Mn Ton
PV
2W
Others
0.4-0.6 Mn
21%
+12%
Plastic
0.55-0.75 Mn
5 Mn
CV
56%
69%
3 Mn
50%
50%
2010
Steel
2-3 Mn
2015
2020P
Aluminum
0.25-0.45 Mn
3W
4%
2W
19%
Weight of
vehicle scrap
Scrap composition
(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
Figure 48
Non-renewable resources saved per ton vehicle scrap
Iron ore
850-950 kg
Coal
400-500 kg
Bauxite
300-400 kg
Electric energy
1
1.
1,400–1,700 kWh
Electrical energy used in aluminum processing
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 leadacid 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
Figure 49
Global automotive recycling regulations
India
United States
EU
Japan
China
Recyclability
rate
None defined
None defined
85% by 2015
None defined
80% by 2012,
85% by 2017
Recycling
model
Informal
scrapping
at very low
volumes
Accreditation
for recyclers but
no accountability
for OEM; industry
governed primarily
by market forces
OEM has
extended product
responsibility to
ensure collection
and recycling
Shared
responsibility
principle; end users
are accountable,
OEMs are
also involved
Regulation is still
taking shape;
OEMs, recyclers,
and end users
will all have a role
Vehicle
scrappage
scheme
No scheme
“Cash for Clunkers”
scheme in cash is
proportional to
mileage difference
between new and
old cars
Monetary incentives
in Germany, France,
Italy, UK, and others
Buyers pay
recycling fee at
time of purchase
Monetary incentives
to scrap old cars
and buy new ones
(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,
Figure 50
Policy levers for effective recycling
Key participants
Key action steps
OEMs and component
manufacturers
• Establish guidelines for recyclability rates of 85 percent by 2020—
this recognizes the need for recyclability targets to be balanced with
OEMs’ lightweighting needs and performance-cost trade-offs
• Label material identification 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 scientific,
efficient 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
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.
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 infrastructure 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.
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
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 51
Technology road map for tapping potential abatement
Potential CO2 reduction achievable through enhancements on automobiles in the near and medium term
Segments
% CO2e reduction
Key technology levers
Near Term
Medium Term
PVs (gasoline)
9-11%
14-241%
Start-stop, friction reduction, weight reduction,
efficient ancillaries, GDI, turbo + downsizing, VVTL, AMT
PVs (diesel)
7-9%
14-16%
efficient ancillaries, VGT + downsizing, VVTL, AMT
2Ws/3Ws
2-3%
6-8%
Friction reduction, combustion optimization, weight
reduction, start-stop, port fuel injection
SCVs
3-4%
8-10%
Friction reduction, efficient ancillaries, radial tires,
VVTL, AMT
S&LCVs
9-11%
18-20%
efficient ancillaries, VGT + downsizing, VVTL, AMT,
low rolling resistance tires
M&HCVs
8-10%
16-20%
Start-stop, SCR, VGT + downsizing, radial tires, weight
reduction, efficient ancillaries, VVTL, AMT
Penetration of alternate technologies in new vehicle sales by 2020
Segments
Hybrids
EVs
CNG
PVs
10-12%
1-2%
9-10%
2Ws
1-2%
9-11%
1-2%
3Ws
1-2%
2-4%
25-30%
S&LCVs
4-5%
0-1%
8-12%
Bus
3-5%
1-2%
20-25%
1 Wide range due to variation of potential between segments. An A1 segment (<1,000cc engine displacement) has a reduction potential of approximately
14%, while a >A3 segment vehicle would have 22-24% reduction potential
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 infrastructure 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.
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 greeneffectiveness 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),
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
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-1
Key levers for vehicle weight reduction
Key Levers
Material substitution
Key alternate materials
replacing iron and steel
Structural low-weight design
Evolving materials
Structural optimization for
lower-weight systems
Aluminum
Carbon
fibertechnology
Reduction in size of engine and other
subsystems
High-strength
steel
Magnesium
and alloys
Packaging improvements which lead to
reduced vehicle exterior dimensions
Plastics and
composites
Glass fiber
technology
Structural re-engineering toward
lower-weight design
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
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
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-2
Variation of aerodynamic drag with velocity
Power consumption (HP)
300
Aerodynamic
drag
250
200
150
100
Other
friction
losses
50
0
30
40
50
60
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.
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.
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.
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 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-3
Fuel economy improvement potential for turbocharged diesel, gasoline engines
Incremental fuel economy benefit
from downsizing a naturally
aspirated diesel engine1
Incremental fuel economy benefit from
downsizing a naturally aspirated gasoline engine
Small car (1.2L)
Sedan (2.4L)
3%
20%
18%
15%
16%
4%
30%
downsizing
Advanced
turbocharging
enabling further
downsizing2
Total benefit from
advanced diesel
turbocharging
1.
For a small diesel PV with 2L naturally aspirated engine
2.
Use of a variable turbine geometry turbocharger considered
6%
15% downsizing
7%
10%
30% downsizing
45% downsizing
Sources: TNO-IEEP 2011; EPA TSD 2011; 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
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 valvetrains 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
Figure A-4
Types of variable valve timing and lift implementations
Technology
Variable
valve
timing
(VVT)
Description
Fuel economy
benefit (%)
Intake cam phasing
•
The simplest VVT technology allows modifying the
timing of the engine intake valve
2 – 3%
(increase to
base engine)
Coupled cam phasing
•
Coordinated or coupled cam phasing modifies
the timing of both the inlet and exhaust valves
by an equal amount
1 – 3%
(increase to
base engine)
Dual cam phasing
•
The most advanced valve timing technology allows for
independent control of intake and exhaust valve
opening and closing events
4 – 6%
(increase to
base engine)
•
Allows control of valve overlap that can be used for
internal exhaust gas recirculation
Discrete 2/3-step
valve lift
Variable
valve
lift (VVL)
1
Continuously variable
valve lift
•
Fuel economy
Allows selection between 2 or 3 distinct cam profiles
3 – 4%
benefit (%)
with each optimized to specific engine operating regions (increase
to DCP)
Typically applied together with VVT control
•
Allows full flexibility in the engine valve lift
•
Typically applied in addition to valve timing, leading
to completely variable valve train design
•
4 – 6%
(increase
to DCP)
Examples in
India1
Maruti Suzuki
VVT engine
2011, Toyota
VVTi engines
Honda VTEC
engines
BMW
Valvetronic,
Fiat MultiAir
engines
Only select examples shown for illustration
Source: EPA TSD 2011, 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 particularly acute and difficult to control. The 2012 Volkswagen Polo (Europe) is one of the first
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
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-5
Comparison of EGR and SCR systems
EGR
SCR
Operating
economics
•
System efficiency loss in lower
temperature combustion leads to higher
fuel consumption
•
Allows combustion efficiency to be
optimized to lower 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
during operation
•
Requires injection of diesel exhaust fluid
(DEF) at 3-6% the rate of diesel
consumption; operating costs will vary
with the cost of DEF
Payload
•
Little impact on payload and can
provide a 150-200 kg benefit
to SCR
•
Need for separate urea storage tank
adds to vehicle weight and reduces
payload
Oil changes,
engine durability
•
Greater concentration of exhaust gases
in engine could degrade engine oil and
engine life
•
No impact on engine operation
since NOx reduction is done
on exhaust
Operating
overhead
•
No interventions needed from
driver customer
•
Multiple issues related to DEF filling
– 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
implementation cost
•
Some design changes, including
better cooling, larger radiator
•
•
Lower system cost than SCR
Need to incorporate bulky tank
could potentially require major
design changes
•
Higher system cost relative to EGR
•
Need for compliance devices, including
urea level sensor, NOx measurement
sensors, etc.
Mechanism needed to ensure diluted/
incorrect DEF not being used
Operating
economics
In-use effectiveness
•
Limited additional hardware
needed to ensure low NOx levels
•
Low scope to tampering and misuse
•
Sources: Diesel Emissions Conference 2011, Integer Research; A.T. Kearney research
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.
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-6
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
regenerative breaking
Driving mode
1
• ICE and e-motor
• Can run on just ICE,
• Can run on just ICE,
coupled
• Runs on ICE only
mode when cruising
• No ICE-OFF
all-electric propulsion
just batteries, or a
combination
• Requires large,
high-capacity
battery pack
just batteries, or a
combination
• Fuel-independent
for short distances
• Extended range
for long trips
Batteries
• 1-2 kWh
• 2-5 kWh
• 5-16 kWh
Typical electric range
• None (assists ICE)
• 2-5 km
• 20-80 km
ICE= internal combustion engine; HEV=Hybrid electric vehicle; PHEV=Plug-in hybrid electric vehicle; EV=Electric vehicle
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)
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
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.
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: tntdpc@cii.in
Web: www.tntdpc.com
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 responsibility, 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
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.
About the Authors
Manish Mathur is a Partner at A.T. Kearney’s Gurgaon office. He can be reached at
manish.mathur@atkearney.com.
Ram Kidambi is a Principal at A.T. Kearney’s Mumbai office. He can be reached at
ram.kidambi@atkearney.com.
Siddharth Jain is a Manager at A.T. Kearney’s Mumbai office. He can be reached at
siddharth.jain@atkearney.com.
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.
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
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 (anjan.das@cii.in)
G.K. Moinudeen, Head – TNTDPC & Director – CII, Chennai (moinudeen@cii.in)
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 (manish.mathur@atkearney.com)
Ram Kidambi, Principal, A.T. Kearney Mumbai (ram.kidambi@atkearney.com)
© 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.

Cost-Effective Green Mobility

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