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The shift away from petrol and diesel run vehicles will be driven by a mix of tax interventions and behavioural change, according to IHS Markit.
Speaking at the India Energy Forum by CERAWeek, Gauri Jauhar, Director, Energy Research & Analysis, IHS, said, “There will be a lot of emphasis on using taxation like the preferential taxes for electric vehicles as opposed to diesel and petrol cars.”
“We also need to look at behavioural changes. That means people using public transport or availing ride-hailing services,” she added.
Jauhar said that the number of cars in the country is going up. “The current car usage in the country is about 5 per cent and the target utilisation is about 15 per cent,” he said.
The switch to alternative fuels is not the only concern for the oil industry. Refiners are also worried that shipping laws are changing to their disadvantage.
“The uncertainty in the policy and compliance pathway has created a hindrance to investment in the refinery industry or the oil shipping industry,” said Kurt Barrow, Vice-President, Oil Markets, Midstream and Downstream, IHS Markit.
According to Shell Global, many refiners are unprepared for the International Maritime Organisation’s (IMO) MARPOL 73/78 Annex VI (IMO 2020).
“These regulations, which will substantially tighten the global cap on the maximum sulphur content of marine fuel oil, could have a major impact on refiner’s profitability,” Shell said in a statement.
Because of these regulations, from 2020, refiners can expect demand for high-sulphur fuel oil to fall, demand for low-sulphur fuel oil to increase and a corresponding price differential between the two to open up, Shell added.
But, according to Barrow, the Indian refining industry is in a pretty solid position because of the complexities of its refining system and its ability to handle varying levels of sulphur content in crude oil.
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