Sub-standard fuel from major oil companies is blocking Beijing’s efforts to introduce tighter pollution controls. Du Yueying and Xu Nan report.
China’s efforts to cut vehicle pollution have hit a roadblock. The introduction of tighter exhaust controls has once again been postponed. Announcing the delay in late December, the Ministry of Environmental Protection was explicit about the reason: “Supply of the fuel required for diesel vehicles to meet National Emission Standard IV [NES IV] is not yet in place, and this is causing severe delays in implementation of the standard.”
The traffic clogging up China’s cities is already causing serious problems.
In 2009, China’s passenger cars emitted around 5.3 million tonnes of nitrogen oxide, 6.7% more than in 2008. In 2010, the figure for motor vehicles overall was almost 6 million tonnes, 85% of which came from passenger cars.
Diesel vehicles are a particular problem. Transportation accounts for over 30% of total nitrogen-oxide emissions and, of that, 60% is from diesel vehicles. They are also responsible for almost all particulate pollution, which poses a serious threat to human health – fine particulates can penetrate human blood and lung tissue and trigger asthma, heart disease and cancer.
China has been striving for cleaner roads for more than a decade, ever since the successful elimination of lead in fuel in the year 2000. It has used European emission standards, Euro I to Euro V, as a basis for drafting its own set of standards, NES 1 to NES V. The aim is to use policy measures to cut vehicle emissions and lower the sulphur-content of fuel. Low-sulphur fuel means less pollution arising from combustion and is essential if high-efficiency catalytic convertors are to work properly.
In both the United States and the European Union, policymakers have always been careful to coordinate the introduction of fuel standards and vehicle-emissions standards: first they clean up the fuel and then require cleaner vehicles. Usually, there is a gap of around six months between the two stages. But in China, the availability of cleaner fuel has lagged behind vehicle standards and technology. This is particularly the case with diesel.
Yue Xin, associate researcher at the Chinese Research Academy of Environmental Sciences, told chinadialogue that problems persist even with implementation of China’s existing standard, NES III, for diesel vehicles. This set of rules came into effect in January 2008, and required matching fuel to be available by July 2011, but that fuel is still unavailable in many parts of China today.
The cities of Beijing and Shanghai introduced NES IV standards for vehicles, and corresponding fuel regulations, in 2008 and 2009 respectively – ahead of schedule. Nanjing and the provinces of the Pearl River Delta also gained permission from China’s State Council to bring in the measures early. They were efforts in vain, however: there was not enough NES IV-compliant fuel to go around.
The delay announced by China’s environment ministry is not the first. In 2010, officials pushed back implementation of NES IV for light and heavy-duty diesel vehicles by two years and one year respectively because NES IV fuel standards weren’t ready. As early as 2009, China published a directive stating that NES III-compliant diesel (with sulphur levels of 350 parts per million) would be available nationwide by July 1, 2011. To date, China’s oil firms have not achieved that goal.
In addition, the NES IV standard (which has much lower mandated sulphur levels of 50 parts per million) has not yet been officially promulgated. This has prompted the Ministry of Environmental Protection to hold back implementation of new vehicle standards by another 18 months, rescheduling the launch to July 1, 2013. What drew particular attention this time is the explicit statement about the cause: the delay is due to a lack of appropriate fuel, meaning vehicles and fuel are out of sync.
A researcher at China’s environment ministry, who declined to be named, said that samples of fuel available on the market were tested in advance of the announcement, with disappointing results. In some areas, fuel was found to contain much more sulphur than the mandated 350 parts per million.
Data from the European Union shows that emissions of nitrogen-oxides from a Euro IV engine are reduced by as much as 30% compared with a Euro III engine. A Euro V engine produces around 43% less than a Euro IV engine. And, the gap between Euro V and Euro VI, which is due to come into force in 2014, is as much as 80%.
According to calculations by the International Commission on Clean Transportation (ICCT), China’s delay in implementing the new standards will cause additional emissions of half a million tonnes of nitrogen oxides and 30,000 tonnes of particulate pollution. The Chinese Research Academy of Environmental Sciences has an even graver tally: it says the delay will mean between 30,000 and 40,000 extra tonnes of particulate pollution each year.
Problems cleaning up fuel are directly blocking progress in tackling road pollution and many blame chronic problems of weak management and powerful interests.
The vehicle industry is much more competitive than the fuel sector and has already prepared itself for NES IV and even NES V. Car makers have long complained about the damage done to their image by poor-quality fuel.
And so fingers are being pointed at the fuel companies, specifically China National Petroleum Corporation and Sinopec, the country’s two main suppliers of vehicle fuel.
Fu Wei is deputy head of the technical supervision office at Sinopec’s technology development department. He said China’s oil-pricing and taxation policies make it hard to improve fuel quality.
When new fuel standards are introduced in many other countries, he explained, the state will cover one third of the associated costs through tax breaks, while the company and consumer absorb the rest. But, in China, the government does not provide that kind of assistance. “Why is it always put off to the last minute? The key reasons are pricing and taxation,” Fu said.
These costs mean oil companies are reluctant to improve fuel quality. The industry has calculated a cost gap of about 20 billion to 30 billion yuan (US$3.2 billion to US$4.8 billion) for the current round of improvements.
But Gong Huiming, head of transportation projects at The Energy Foundation, pointed out that the petrochemical industry has long had the equipment and technology needed to provide NES III-compliant diesel. Oil companies have repeatedly breached state policy and standards by failing to supply adequate quantities of fuel, turning State Council standards into empty words.
The petrochemical sector consists mostly of large state-owned firms, which have a powerful role in policymaking, in particular in the formulation of standards.
In China, the National Oil Products and Lubricants Standardisation Committee (TC280) is responsible for setting and managing oil-quality standards. But the secretariat of that committee is based at the Research Institute of Petroleum Processing, which is a Sinopec subsidiary. Ninety percent of committee members are petroleum-sector representatives, while only 7% come from the vehicle manufacturing sector or the environmental authorities. This imbalance gives car makers and the environment officials a much weaker say in the process.
In effect, what the big oil firms say goes. Behind the problem with fuel lies a deeper institutional flaw: central state-owned firms dominate certain sections of the energy industry.
ICCT Chair Michael Walsh also points out that, in China, responsibility for vehicle emissions and fuel standards are fragmented between different bodies. In both the United States and European Union, the two sets of standards are managed by a single organisation.
Even so, all parties at least agree that standards should continue to get tougher. This is progress on a decade ago, when there was disagreement even on this point. Efforts are being made to increase dialogue between the different players and bring about a solution as quickly as possible.
A catalyst may be a statute currently being drafted – the Prevention of Atmospheric Pollution Law. According to Yue Xin, this will help to untie the knots around fuel quality, supply and oversight, and in so doing play an important role in cutting China’s road emissions.
Du Yueying is a reporter at China Economic Times. Xu Nan is managing editor in chinadialogue’s Beijing office.
This article is published as part of our Green Growth project, a collaboration between chinadialogue and The Energy Foundation.
Translated by Roddy Flagg
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