While government and industry debate the best way for SA to follow the electrical revolution, SA hasn't worked out how to respond to previous "green" automotive technologies.
Last week's budget announcement by finance minister Pravin Gordhan that the introduction of a carbon dioxide emissions tax on cars will be postponed for six months is a case in point. Cars releasing an average of more than 120 g of COČ for each kilometre travelled will attract a penalty (ultimately paid by consumers) of R75 for every additional gram. There are plenty of cars around the world below the entry limit, but they accounted for only 0,4% of sales in SA last year.
Many clean-emission cars can't be imported as long as SA's fuel quality lags that of developed markets. The COČ tax should have come into play on March 1 but was delayed in the face of industry argument. Some companies wanted the opening emissions limit set at 160 g/km or 180 g/km to reflect current market reality, followed by steady annual reductions. Instead, treasury decided to get tough immediately. It's not clear yet what reductions are planned later.
David Powels, president of the National Association of Automobile Manufacturers of SA (Naamsa) and MD of Volkswagen SA, says the industry wanted an integrated approach. "It was [considered] imperative that government should legislate and provide incentives for the introduction of green fuel in SA, This would provide a quantum leap benefit in the reduction of COČ emissions of new cars sold. Correct fuel quality could reduce new car emissions by over 20%."
In Japan, the US and Western Europe, engine-damaging sulphur content - which occurs naturally in oil-based fuels - has been reduced in most petrol and diesel to no higher than 50 parts per million (ppm). Some oil companies have gone as low as 10 ppm and there are plans to reduce this to 5 ppm. In SA, most diesel and all petrol is 500 ppm. Some 50 ppm diesel is produced, but this accounts for only 10% of automotive demand. It can cost up to 20c/ more at the pumps, running against the trend in other countries, where the price is subsidised to encourage use.Anton Moldan, environmental adviser to the SA Petroleum Industry Association (Sapia), says wholesale production of 50 ppm fuel is at least six years away. "We have proposed to government that we produce 50 ppm from 2016 and looking ahead, around 2020, we should consider 10 ppm."
Sapia estimates that switching to cleaner fuel will cost refiners R40bn at 2009 prices. "We are talking about long-term commitments," says Moldan. "We need government to gazette changes before we invest."
SA is also pondering what to do about clean-engine technology. SA follows European engine and exhaust standards but has fallen several generations behind. So while Europe prepares to move to the Euro6 standard, which requires a 50% reduction in emissions from the already demanding Euro5, SA is stuck in Euro2.
Yet many of the imported cars sold in SA are built to Euro4 - which is why Stuart Rayner, chairman of Naamsa's committee on fuels and emissions, says government and industry are undecided whether the next upgrade, likely in 2014, should be to Euro4 or Euro5.
The latter requires fitting particulate filters, which were originally designed to clean soot from diesel engines but are now being adapted to petrol engines. They work in conjunction with catalytic converters, which clean exhaust emissions.
Moldan says refiners are talking to Naamsa about importing limited quantities of low-sulphur fuels to enable the import of superclean engines. Rayner says: "Japanese manufacturers have said that unless 50 ppm fuel is available all over the country, they will not send us vehicles equipped with filters."
The risk of damage is particularly acute in hybrid (petrol/electric) engines. Mercedes-Benz SA product manager Reandren Thulkanam says: "We don't believe it's right to bring in vehicles and tell owners there are only a few service stations with the necessary clean fuel. What do we do: ask them to sign a piece of paper accepting the damage risk?"
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