Indians to become more fuel efficient... - Views on News from Equitymaster

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Indians to become more fuel efficient...

Jul 21, 2008

The Indian government is poised to issue new, voluntary fuel-efficiency norms for four-wheeler passenger vehicles that will be made mandatory and more stringent starting 2010. It is estimated by the government that three in four passenger vehicles in India are so-called three stars, or having fuel efficiency equivalent to 12.6-16.8 km per litre of petrol. Under the norms, regardless of engine size, car buyers will have to be provided comparative information on fuel economy about passenger vehicles in the market. At the same time, the new norms could help boost sales of hybrid vehicles, which allow the use of petrol and an alternative fuel sources in India. Also, as in the case of energy efficiency labeling for appliances such as air conditioners and refrigerators, it will begin with a voluntary code that will later be made mandatory. The road transport and highways ministry estimates there were about 100 m vehicles on Indian roads at the end of 2007, of which about 17% were passenger vehicles. The Bureau of Energy Efficiency (BEE) anticipates that three-fourths of vehicle models in the market will receive a three-or four-star rating at present and the combination of fuel economy standards and labeling programme will provide the necessary impetus for development of several five-star rated vehicles by the end of first phase of labeling programme. Preliminary estimates show that the labeling programme will result in up to 20% reduction in oil use in year 2030 just from passenger vehicles.

...but not like the Japanese!
According to the International Energy Agency (IEA), Japan, by many measures, is the most energy-efficient country among the world's developed nations. After the energy crises of the 1970s, the country forced itself to conserve with government-mandated energy-efficiency targets and steep taxes on petroleum. Energy experts also credit the same to a national consensus on the need to consume less. It is also the only industrial country that sustained government investment in energy research even after oil prices fell.

Japan had consumed only half as much energy per dollar worth of economic activity as the European Union or the United States, and one-eighth as much as China and India in 2005. While the country is known for its green products like hybrid cars, most of its efficiency gains have come in less eye-catching areas, for example, by cutting energy use in manufacturing.

Corporate Japan has managed to keep its overall annual energy consumption unchanged at the equivalent of about 200 m tons of oil since the early 1970s, according to Economy Ministry data. It was able to maintain that level even during the country's boom years of the 1970s and 1980s, as the economy doubled. Japan's strides in efficiency are clearest in heavy industries like steel, which are the biggest consumers of power. Over the past 36 years, the Japanese steel industry has invested about US$ 45 bn in developing energy-saving technologies. Now, they are used to power generators that produce nearly 90% percent of the electricity used by the steel plants. Such innovations allow the mill to produce a ton of steel using 35% less energy than three decades ago.

IEA believes that if the global steel industry adopted Japanese conservation measures, it could slash carbon emissions by some 300 m tons a year, equal to the greenhouses gases released annually by Australia.

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