Bridging the information asymmetry gap can reduce vehicular pollution

In India, the primary sources of air pollution are transportation, construction, episodic stubble burning, etc, as per the World Air Quality Report 2020.

Updated: Oct 19, 2021 11:09 AM
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The provision of clean air is a fundamental human right not an optional policy objective in this day and age. Worsening air quality can compromise the healthcare sector even further while it is reeling with the outbreak of COVID-19. The study published by Lancet suggests that 18% of the country’s total deaths in 2019, were due to air pollution. The economic loss associated with the lost output from premature deaths and morbidity from air pollution was equivalent to ₹260,000 crores ($36.8 billion).

In India, a country that has 22 of the 30 most polluted cities across the globe as per the World Air Quality Report 2020,  primary sources of air pollution are transportation, construction, episodic stubble burning, etc. Since road transport continues to heavily depend on oil it is the major contributor of GHG emissions and criteria pollutants like NOx, SOx, CO, HC, PM2.5, etc. in these cities compromising air quality. Short-and/long-term exposure to air pollution has been associated with a wide range of human and health effects including respiratory systems, heart and lung diseases, and even premature death. If India aims to reduce air pollution and meet acceptable air quality standards, then decarbonising the road transport sector is of paramount importance.

Two-wheelers dominate India’s road transport segment. The world’s largest two-wheeler market has seen vehicle sales almost double, from 11.77 million units in 2011 to 21.18 million units in 2019. Moreover, given India’s development agenda and objectives, two-wheeler vehicle sales are expected to continue growing. As per IEA, two-wheelers were the source of 30% of particulate emissions in 2019.  Given concerns on air pollution, this sub-segment provides an opportunity for India to reduce and avoid the emission of pollutants.

Demand-side interventions like an information programme on the environmental performance of vehicles can help consumers understand the external costs of using fossil fuel vehicles and the pollution caused by them. This can influence their behaviour to purchase fuel-efficient and less polluting vehicles, which in turn will incentivise manufacturers to introduce low-carbon technologies into the market. Some initiatives have been undertaken by the Ministry of Road Transport and Highways (MoRTH), but these have not been enough to bridge the information asymmetry on the environmental performance of vehicles.

Information Lacuna

To understand the impact of vehicular pollution, in 2017, MoRTH made it mandatory for automobile manufacturers to disclose data on pollution levels emitted by their vehicles. This road-worthiness certificate is known as Form-22. It includes information on the brand, chassis number, engine number, emission levels, etc.   However, the on-ground realities are different. In some cases, while auto dealers have been reluctant to share Form-22, most consumers are unaware of its presence. Moreover, the technical nature of Form-22 means that it is not easy for a layperson to decipher its content, limiting its usefulness to consumers in making an informed purchase decision.

Secondly, SIAM has not published the fuel economy estimates for BS-VI vehicles. Therefore, consumer information tools have to use the fuel economy data provided by the third-party dealer websites for the analysis. This data relies on self-declared information by the manufacturers based on results obtained in the laboratory/test environment. However, there is sufficient evidence that the consumer experience of on-road fuel efficiency is entirely different. Moreover, the obvious effect of deteriorating fuel economy of vehicles with use, and the absence of reliable de-rating data impedes robust analysis to bridge information asymmetry.

These two main issues mean that one party (manufacturers/ dealers) in the transaction has better information than the other parties (consumers). This disconnect inhibits consumers from choosing greener vehicles and results in uninformed decision-making. Even if sufficient information is provided, a consumer may likely be overwhelmed, especially in the absence of a measurement metric.

Addressing information asymmetry

To tackle this asymmetry in the information available to the consumers and other stakeholders, it is imperative to design information tools that help consumers choose wisely. These tools can act as a conduit for consumers to compare different vehicle models based on the real cost of ownership, accounting for damage costs from local pollutants and GHGs. Research has shown that the presence of these tools can influence consumer behaviour and allows them to choose greener options.

Therefore, to create consumer information tools it is necessary that the government, manufacturers, and auto-dealers agree upon a common data framework to share information transparently. This data can then be used by research scholars and civil society in coordination with central and state governments to create a consumer information initiative. Furthermore, these tools can assist policymakers to introduce novel initiatives like the ‘feebate’ system based on the ‘polluter pays’ principle or ‘star labeling’ program based on pollutant emissions profile and fuel economy of the vehicle models. Such proactive measures will accord primacy to reforms in the transport sector and help in improving air quality in the cities.

Author: Jaideep Saraswat and Dr Satish Kumar

Disclaimer: The views and opinions expressed in this article are solely those of the original author. These views and opinions do not represent those of The Indian Express Group or its employees.

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