The Supreme Court of India recently imposed a ban on the use of petcoke and furnace oil in the states of Rajasthan, Uttar Pradesh and Haryana which are situated in the National Capital Region (NCR). The ban comes in the wake of several public interest petitions filed before the Supreme Court as well as the National Green Tribunal regarding the alarming rise in air pollution in Delhi and the associated health and environmental hazards.

The Court severely rebuked the Government for its lackadaisical attitude towards addressing the issue despite prior directions being issued by an expert panel appointed by the Court which demanded a prohibition on petcoke and other excessively polluting fossil fuels. Although, petcoke and furnace oil were officially banned in Delhi in 1996, their rampant use in neighboring states by the cement factories, dyeing units, brick kilns and other industries has turned Delhi into India’s air pollution capital.

What exactly is petcoke?

Petcoke is an exceptionally polluting form of carbon which is banned in several countries due to its severe toxicity. It is categorized as a “bottom of the barrel” fuel as it is essentially residual waste material which is obtained after refining coal to extract lighter fuels like petrol. Petcoke is abundantly used in India in several manufacturing industries such as cement, steel and textile and it is generated in vast quantities by refineries as it is significantly cheaper that coal, has high calorific value and is easier to transport and store.

Impact on health

While vehicular fuels like petrol and diesel contain 50 parts per million (PPM) of sulphur oxide, furnace oil contains 23,000 PPM and petcoke contains a whopping 74,000 PPM of sulphur content which is released into the atmosphere as emissions. Apart from sulphur, petcoke also releases a cocktail of other toxic chemicals such as nitrous oxide, mercury, arsenic, chromium, nickel, hydrogen chloride and greenhouse gases (GHG) which contribute to global warming. It is also important to note that petcoke is much more potent than coal and causes greater harm to the environment and health.

According to a 2015 report published by The Lancet Commission, 8 residents of Delhi die each day as a result of air pollution. Delhi has been ranked as India’s most polluted city and is also among the world’s most critically polluted cities.

As per the report, India has topped the list of pollution related deaths in 2015 with a staggering 2.5 million deaths due to pollution. The report also revealed that only a handful of cities in India comply with the air quality standards prescribed by the Central Pollution Control Board and identified that the primary cause behind increasing air pollution as fossil fuels.

In Delhi alone, 2.2 million children suffer from irreversible lung damage caused due to air pollution. Further, air pollution has contributed to a host of diseases including autism, epilepsy, headaches and cancer.

Petcoke has a deleterious effect on the respiratory system and particulate matter can get embedded in lung tissues, causing serious long term health hazards.

India’s carbon tax model and its impact on industry

The reason for the petcoke menace in the recent years can be directly attributed to the Central Government’s inherently flawed carbon tax policy. Carbon tax was introduced in India in 2010 and has since its inception been fraught with complications due to its improper structuring and pervasive maladministration. Among the many intrinsic loopholes in the carbon tax policy is its questionable coverage. Unlike many other jurisdictions such as Australia, the scope of India’s carbon tax is myopically restricted to coal, thereby excluding other forms of greenhouse gases (GHG) emitting fuels like petcoke and furnace oil; many of which have a deeper impact on the environment and health than coal.

Given that the main objective of carbon tax is to mitigate negative externalities of fossil fuels on the environment, and act as a pigouvian tax, logic dictates that it should be applicable on all sources of carbon emissions. A broad based coverage is a necessary component of any progressive carbon tax policy as evidenced from international experience. Yet, the Indian Government has chosen to maintain a narrow coverage, thereby diluting the purpose and efficacy of carbon tax and encouraging polluters to shift from the dirty coal to even dirtier petcoke.

The industry was quick to exploit this obvious loophole and shift from coal to other forms of carbon which were free from the tax bracket. Although petcoke is much more harmful than coal both from an environmental and health perspective, there is no tax or cess levied on the use or production of petcoke.

In order to circumvent the current carbon cess of Rs 400 per metric tonne on coal, cement and steel manufacturers have been heavily relying on petcoke, thereby increasing carbon emissions and air pollution. While India witnessed a decrease in coal imports by 20 million tonnes last year, petcoke imports doubled exceeding 10 million tonnes. In recent years, petcoke is also being used in captive power generation plants in India. Big polluters like Reliance and Essar have capitalized on this demand and made huge profits after the imposition of carbon tax.

India’ carbon tax policy has always been weak and riddled with inefficiencies; however, post GST it has become positively redundant. Earlier, proceeds from the carbon cess used to be accumulated in an earmarked non-lapsable fund known as the National Clean Energy Fund (NCEF). The NCEF was supposed to be used for funding clean energy projects and encourage industries to shift from fossil fuels to clean energy. Yet, over the years the fund has been treated more like a general corpus for the Government to dip into for ad hoc projects. In fact, out of the 57 billion USD accumulated in the NCEF, only a miniscule fraction has actually been deployed towards the original intended purpose. However, the coup de grâce to the NCEF and carbon tax was the introduction of GST under which all the proceeds are now being funneled to compensate states for loss arising out of the introduction of the GST regime.

Currently, China and India are the leading consumers and importers of petcoke in order to catalyze rapid industrialization and economic growth. However, since 2014, China has steadily been decreasing its dependence on petcoke by shifting to cleaner alternatives. India on the other hand, continues to increase its consumption of petcoke and other non-carbon fossil fuels. 

The need to translate words into action

In recent years, the government has experimented with several measures to curb the levels of air pollution and carbon emissions by levying carbon tax, cutting down traffic and most recently banning the sale and use of fireworks in Delhi. However, these measures have been met with lukewarm response due to poorly structured policies and lack of implementation.

The Supreme Court’s ban in a few select states is not going to solve the real problem. Petcoke, furnace oil and other non-carbon fossil fuel based alternatives to coal are used across India to avoid the carbon tax. In the ongoing COP 23 in Bonn this November, India will undoubtedly reiterate its ambitious plans to mitigate climate change by cutting down on carbon emissions and making efforts to switch to clean energy. Over the years, this very same rhetoric has been repeated ad nauseum.

It is high time that talk was translated into action. The need of the hour is to design a long-term sustainable fossil fuel policy which incorporates international best practices and does not allow polluters any flexibility to switch from one fossil fuel to another. Specifically, the carbon tax policy needs to be revamped entirely to reflect India’s ambitious international commitments towards mitigating climate change.

Srinivas Raman

B.A.,LL.B. (Business Law Hons.)

National Law University, Jodhpur