Doubling global auto LPG fleet would yield $59 billion in benefits : Study

Study released at a global LPG conference, advocates for lower taxes on LPG

LPG cylinders Liquefied Petroleum Gas is not a greenhouse gas and could prove a less-harmful alternative fuel | Reuters

As India struggles with deteriorating air quality and the resultant health burden, a new analysis estimates that doubling the global fleet of vehicles run on auto LPG by 2040 can yield Euro 54 billion or $59 billion (Rs 5900 crore) of social, economic and environmental benefits from cleaner air.

The results of the analysis were discussed at a global conference of the LPG industry held in Amsterdam recently where experts underlined the potential for LPG as a transport fuel and the need for devising favourable policies globally to increase its usage, according to a statement issued by Indian Auto LPG Coalition (IAC) here on Monday.

Trevor Morgan, a leading analyst associated with energy consulting firm Menecon Consulting, believes that the existing disparity in the success of autogas against petrol and diesel can be explained mainly by differences in government-incentive policies.

According to his research, just modest adjustments to fuel taxes and stronger measures to discourage diesel can help the Autogas fleet double by 2040.

"This, in turn, would result in a 4 per cent reduction in global NOx emissions, a 5 per cent reduction in particulate matter emissions and savings of 130 million tonnes on well-to-wheel emissions of CO2. On an aggregate, all these benefits would yield a benefit of Euro 54 billion from social, economic and environmental benefits from cleaner air," the statement said.

IAC director-general Suyash Gupta said globally concerns about air pollution and carbon emissions are driving major policy decisions.

"In India as well, the government is driving a clean fuel agenda, though its emphasis as yet has been on Electric Vehicles. However, this singular thrust on EVs is missing out on low hanging fruits such as Auto LPG that can bring about an immediate improvement in air quality. India can also reap rich dividends if it supports the auto LPG sector with favourable policies such as low GST rates and regulatory norms amenable to the conversion industry," he said.

Low taxation makes a difference to how long it takes someone to recover the investment after converting their engine to auto LPG.

In Bulgaria, a person can recover cost after driving 14,000 kilometres, while in Canada, it would take 100,000 kilometres.

In India, the conversion cost is modest and Auto LPG is much cheaper as compared to both petrol and diesel. "However, a number of unfavourable policies and government indifference is preventing the clean fuel from becoming a widely used alternative to petrol," the statement said.

Gupta said the central and state governments must offer incentives to private vehicle owners to push them to convert their vehicles to Auto LPG.

"An important policy intervention urgently required is changing the existing system of Type Approvals for vehicles converting to gaseous fuels," he said.

The Type Approval norms require companies to renew extremely cost-prohibitive Type Approvals for Auto LPG and CNG conversions every three years. This has resulted in a rapid dwindling of players in the retro-fitment market.

The Type Approval norms must be industry-friendly and its validity must be made perpetual in line with European norms, he said.

Also, the GST rate on LPG conversion kits for vehicles which currently lies in the highest slab of 28 per cent, must be reduced to 5 per cent as a measure to push up the rates of vehicle conversions to the environment-friendly fuel, he said.

Auto LPG is not a greenhouse gas and has a Global Warming Potential factor of Zero. It has 5-6 times lesser installation cost for refuelling stations as compared to CNG and lesser engine performance loss.