Millennium Post

Volkswagen fraud raises pertinent doubts

One of the biggest corporate frauds in the global automobile industry has come to light. The popular diesel car models of Volkswagen have been found to be patched with defeat devices wired to trick the official emissions tests under the Clean Air Act in the US. In this biggest-ever fraud, Volkswagen has sold more than 11 million cars across the US and Europe between 2009 and 2015 that emit several times more nitrogen oxide (NOx) than the certified levels. These are all popular two-litre engine car brands including Jetta, Beetle, Passat, and even Audi. This fraud went public when <g data-gr-id="252">Volkswagen owned</g> up and admitted to the cheating to the US authorities in September this year.
The matter exploded when the US Environmental Protection Agency (US EPA), which is responsible for enforcing the Clean Air Act and emission standards in the US, issued a “Notice of Violation” to the entire Volkswagen group on September 18, 2015. In this scathing notice that Down To Earth has, the USEPA has laid bare the gory detail of the scam.

How did this come to light?
Suspicion had begun to grow after the US-based International Council on Clean Transportation (ICCT), along with the West Virginia University, tested 2012 and 2013 diesel car models in 2014. The results showed that the real-world NOx emissions far exceeded the US-EPA Tier2-Bin5 standard by a factor of 15 to 35 for the car equipped with lean NOx catalyst and by a factor of 5 to 20 for the car fitted with urea-SCR. These tests were done using a portable emissions measurement system that can monitor real-world emissions. Moreover, such tests were operated over a variety of test routes and diverse driving conditions of major cities in California.

According to the US EPA notice of violation to the company, after the release of the ICCT-West Virginia University study, Volkswagen claimed that the increased emissions from these vehicles could be due to technical issues or unexpected in-use conditions. The company issued a voluntary recall of all these cars in December 2014 and claimed to have rectified the problem. After that, the EPA and California Air Resources Board (CARB) did more follow up tests but found little impact of the recall programme on actual emissions.  They found it strange that while these vehicles emissions were so high, their on-board diagnostic system could not detect the high emissions. When challenged, Volkswagen could not give an adequate or convincing explanation.

“It is only when the USEPA and CARB threatened that they would not approve certification of conformity for the Volkswagen 2016 model year until the company explained adequately, did Volkswagen admit it had designed and installed a defeat design,” mentions the EPA Notice of Violation. It is the rigorous and persistent follow-up with the testing of the cars by CARB that finally brought the matter to light. CARB has carried out several tests. It now remains to be seen how USEPA will negotiate the penalty and penalise the company.

Why did Volkswagen do this? 
This incident has exposed how the diesel vehicle industry can try to circumvent tighter emissions standards and targets to stay in the market. One may recall that Volkswagen had to move out of the US market in 2007 as it could not meet the new US Tier II standards for diesel cars that had come into force then. But there was an enormous urgency to re-enter the market, which it did in 2009 but with what now seems like a cheating strategy. Volkswagen had started to resort to this cheating from its 2009 model onwards. The compelling reason was to bypass the tighter US Tier II emissions standards of 2007. The internal investigation will throw more light on this. Such revelations are reported to have shaken customer confidence in the brand. There are reports of class action legal suit in the US against the company.

What implications does this have for clean diesel?
This incident and a series of other studies have now highlighted a larger concern over how diesel vehicles emit a lot more in the real world, after being certified to meeting stringent emission standards. Clean diesel technologies that meet the best standards in Europe and the US are emitting a lot more during real world operations than their certified emissions levels. Another study by ICCT in Europe confirms these findings. It found that on an average, on-road emission levels of NOx were at least seven times the certified emission limit for Euro VI vehicles. Such a result shows that even though the technologies for “real-world clean” emissions below Euro VI emission limits exist, in reality, on-road performance is much worse. Therefore, policies are needed to ensure that manufacturers will use these technologies and calibrate them to control effectively emissions over a large majority of in-use operating conditions, not just those covered by the test cycle during certification.

In fact, European cities are already facing the brunt. Several European cities are failing to meet the targets of ambient air quality standards for NOx. Only last year, the United Kingdom was dragged to the European Court of Justice for violating their ambient NOx standards. These events have led to a serious backlash against diesel cars. Now, eight cities in the UK are planning to ban diesel cars, and more are banning them in the areas of towns that have been declared as low emission zones. Paris is also bringing a restrictive action on diesel cars.

In the meantime, the Volkswagen fraud is having a ripple effect. South Korea has already announced an investigation into the Volkswagen diesel car models sold in that country as they are concerned about high NOx levels. France, the UK, Italy have called for enquiries. There is a demand that the European Commission should investigate this Europe-wide. In fact, diesel car engines that are bigger than two-litre engines may also come under scrutiny. European laws in such matters are not as explicit as that of the US. In Europe, Volkswagen is claiming that they are meeting all legal requirements as far as emission norms are concerned. Euro V and Euro VI emissions norms have a weak provision. This matter came up in Europe only in the case of use of SCR in the heavy duty vehicles.

The Volkswagen scam is likely to have serious impacts on the future policy of compliance in Europe.  Euro VI emissions standards will be further reformed to include real world performance requirements. “The huge discrepancy in real-world performance among these vehicles makes it clear that without vigilant enforcement of air pollution laws, companies that comply with the standards will be placed at a competitive disadvantage. If left unchecked, that could undermine the whole regulatory framework. That is why the actions by EPA and CARB are so important,” according to John German of ICCT.

What <g data-gr-id="274">are</g> the implication for India?
It is not clear whether Volkswagen diesel car sales in India require an investigation. Market watchers say that sales of all Volkswagen cars are small but growing with nearly 12 percent market penetration in 2014-15. The numbers of sales of the affected models are not available. Official reaction from the Union Ministry of Road Transport and Highways to this development is not immediately available. But it is understood that the new development is on the watch list. The question remains whether India will also initiate a probe. Is India prepared to ensure that vehicles that it certifies meet emissions standards and continue to perform with minimum deviation from the conformity required when they are on the roads?

One may recall India’s brush with serious corporate fraud of a similar nature. Between 2006 and 2012, General Motors sold 114,000 units of the Tavera SUV model— both BS-III and BS-IV variants, by tampering with the conformity of production processes and type approval tests for vehicle certification. They had pre-selected and got models tested that were fitted with improved engines but in reality, they continued to sell the vehicles saddled with older engines until they were caught. The ministry of road transport and highways had to initiate a probe, and the company admitted to the fraud. The company had to recall 114,000 units of the Tavera. India is dieselising very rapidly. Diesel cars were just four percent of the new car sales in 2000 that has become more than half now. Moreover, diesel based freight has seen massive expansion. The current quality of diesel technology and fuels has serious health concerns. Such a situation demands a quick leapfrog to Euro VI emissions standards to meet a cleaner benchmark. While that will have to be pushed hard, it is also now necessary to ensure that the emissions control systems on new diesel vehicles perform all through the life of the vehicles.

India will require strong durability requirements and in-use compliance standards at 50,000 and 80,000 km (half to full life on the road). These requirements are needed to verify that vehicles are still functioning within the conformity factor without much variation when they are on the road. This system will have to be commissioned right away at the current Bharat Stage IV. Already, diesel buses meeting Bharat Stage IV standards are coming equipped with more complex emissions control systems like SCR that require the bus operators to refill urea. If these systems are not functioning optimally, NOx emissions from these buses will be uncontrolled. It is time to design and implement in-use compliance systems, along with emissions warranty and recall programme that is based on rigorous in-use vehicle testing. India needs these systems quickly to prevent frauds and to ensure lifelong performance of emissions control systems.  India needs an additional fiscal strategy to curb dieselization as well.

Ray Minjares and Anup Bandivadekar of ICCT observed, “Vehicle standards alone are not enough. They must be followed by a system of enforcement. This requires an independent government body with the resources (staff, testing labs) and authority (provided under law) to test real-world vehicle emissions and validate their performance. The law should provide such a body with the authority to issue recalls, levy fines, withdraw approval for sale into the market, and other actions necessary to ensure that vehicles conform with the stated emission standards.” This is needed to build consumer trust and confidence as well.  

These systems do exist in the US, but one potential limitation of the US approach is they do not conduct most real-world testing themselves. Otherwise, they could have caught the Volkswagen fraud themselves. But US EPA and CARB acted immediately when research results from the ICCT and West Virginia University study of non-compliance of Volkswagen diesel cars in the real-world were shared with them. The European approach is even weaker. European regulators do not have the same authority and do not place the same requirements on real-world performance. For years, they have struggled to take decisive action to resolve the high diesel NOx problem.  

The message is clear. India will have to speed up its technology roadmap to clean up diesel but at the same time fix the legal in-use compliance framework to ensure that the new technologies deliver on their intended emissions reduction targets.

(The views expressed are personal)
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