Taxi operators are set to enjoy higher fuel efficiency as the government will allow them to introduce diesel-powered taxis in the second half of next year.

The Ministry of Land, Infrastructure and Transport has paved the way for the taxi industry to operate vehicles powered by diesel. The ministry argued that fuel diversification is necessary to improve the financial status of the operators and to weather fluctuations in the cost of liquefied petroleum gas.

Most of the 250,000 taxis nationwide run on LPG because it is cheaper than gasoline. Though LPG is also cheaper than diesel, it has much lower fuel efficiency than diesel.

The taxi industry has been asking policymakers for permission to operate diesel taxis since 2005. It recently alleged that oil refiners have frequently engaged in price-fixing to prevent further drops in LPG retail prices despite the globally low crude oil prices.

Further, the Transport Ministry has mapped out a plan to offer a certain amount of subsidies for higher diesel prices.

The Ministry of Environment had earlier clashed with the Transport Ministry over the possible aggravation of air pollution. However, it now appears to have backed off, to support the Park Geun-hye administration’s earlier commitment to diversifying the energy requirements of the taxi industry. The diversification is also beneficial to the oil refinery industry and carmakers.

The ministry plans to hold a series of public hearings to placate opponents by suggesting policies to introduce the diesel taxis on a step-by-step basis.

The Environment Ministry is having to respond to recent research by the Korea Automotive Technology Institute, which says that an average diesel-powered vehicle emits 29 times more nitrogen oxide than an LPG vehicle.

In a 45-kilometer test, the institute said it had found that the nitrogen oxide emissions of a Grandeur diesel sedan came to 0.176 grams per kilometer while those of a Grandeur LPG sedan were 0.006 grams.

Seoul City officials and environmental advocates are expressing mounting concerns, given that more than half of the nation’s 250,000 taxis are operated in Seoul alone.

“The government should do thorough reviews after adopting (the diesel models) in provincial areas in advance,” said Kang Hee-eun, a director of Seoul City, at a forum.

But while the operators have called for the introduction, more and more taxi drivers are opposing it.

Some taxi drivers’ unions say that drivers are sharing the burden of fuel costs with their companies, and the burden of the diesel-operated taxis would be too high. They also said the drivers would be the main victims of the harmful pollutants.

Environmental activists stress that Korea’s policy swims against the tide, citing the cases of France and the United Kingdom, both of which have decided to ban the operation of diesel taxis. Some other European countries are following suit despite lobbying by the automotive and oil refinery industries.

Korea’s carmakers and foreign brands in the local market are gearing up to gain a bigger share of the diesel car market and actively tap the emerging diesel taxi market.

Diesel-powered cars have been enjoying growth in sales, backed by the appeal of higher fuel efficiency, which is 20 to 30 percent better than those that run on regular gasoline. Last year, diesel-engine car sales exceeded those of regular gasoline-powered vehicles for the first time.

The Ministry of Environment and the Ministry of Trade, Industry and Energy said the carbon dioxide emissions target would be lowered to 97 grams per kilometer for the 2016-2020 period.

It also said it would be lowered from the 140 grams per kilometer target for the 2012-2015 period. The plan comes after the country earlier postponed the introduction of a vehicle carbon emission tax to 2020.

By Kim Yon-se (kys@heraldcorp.com)