Fuel supplies fail to meet emission standards in China
Officials are calling for a new standard on car emissions to be delayed for two years until the right fuel can be supplied across the whole country.
China, the world’s second largest auto market, introduced the third generation of gas emission standards across the whole country by July 1. The new standard, similar to so-called European 3 regulations, cuts allowed emissions by half, compared with current rules. However, the National Environment Protection Bureau is facing hurdles in implementing the new standards. Government officials have called for the standards to be kept on hold until the end of 2009, when the right fuel will be available across the country.
"Major fuel refiners, including Sinopec and PetroChina, have so far failed to supply the fuel to fit the Euro 3 standard nationwide," said Li Wanli, a senior official from the National Development and Reform Commission, who is in charge of the industrial policy planning department. "They are updating their facilities and expanding capacity, and that takes time." There are about 85,000 gas stations in China, mostly operated by Sinopec and PetroChina.
Wang Liangju, a former fuel equipment expert in the national automobile association, was quoted earlier as saying that it takes oil companies at least three years to improve technology and make low-sulphur fuels, with investment estimated to cost between 20 billion yuan ($2.6 billion) and 30 billion yuan ($3.9 billion). Other analysts also suggest that the rule should be introduced gradually from first-tier cities to inland regions, as long as the higher quality fuel is available. Beijing, Guangzhou and Shanghai were the only three cities selected to implement the third-generation emission standard in a trial last year.
Beijing is also expected to be the first city to meet stricter fourth-generation standards by the end of this year, before hosting the 2008 Olympic Games. An official from Sinopec said only Beijing has supplies of the newer gasoline and diesel fuels, while Guangzhou and Shanghai only have limited capacity of the newer gasoline. "We still have lot of difficulties in supplying the whole country with high-quality fuel, and it is unrealistic for us to meet the demand right now," said the official. "The timing gap of having sufficient compatible fuel to match with stricter emission standards will exist for a long time. We should spread the application of new standards step by step in a drive toward a higher level." The State Environmental Protection Agency, however, insisted on starting the new rules on July 1.
The central government is trying to protect the environment by reducing exhaust wastes, including carbon monoxide and other emissions, amid a rapidly expanding number of vehicles. Car makers have been upgrading their models since last year to meet the standards. Most models now on sale, from the subcompact QQ cars made by Chery Automobile Co Ltd to luxury sedans made by overseas car makers’ Chinese joint ventures, are now able to meet the new standard. However, according to the latest test by China Automotive Technology & Research Centre, some of those vehicles would still produce emissions higher than the new standards if they use lower-quality fuels.
What’s worse, engines can be easily damaged by using the older fuels when driven over a long time. "We could sell models that could meet the higher emission standard in Beijing, but who should be blamed if the model breaks down after refilling with lower-quality fuels outside the city?" asked Zhang Suixin, vice president of Volkswagen (China). Car makers also complained about the higher production costs in making vehicles to meet various standards, and say the investment return for developing advanced vehicles will also be delayed if the emissions standard does not take effect.
Shang Yugui, communication director of Great Wall Motor Co Ltd, said the car maker’s diesel models still lack access to Beijing and Guangzhou because of the poor quality of available fuel. The car maker is China’s largest sports utility vehicle maker and the diesel models contribute to half its sales. Oil companies, which play a leading role in solving the problem, are also working hard to get compatible fuel ready to meet higher emission standards.
Sinopec Shanghai Petrochemical Co announced this month it has started operations at China’s largest diesel hydrofining unit in the city’s Jinshan District to help produce diesel that meets the Euro 3 vehicle emission standard. The 3.3-million-ton-a-year unit is part of a plan to boost quality of its fuel products, with more refining capacity coming on stream. The company said the new unit could be able to produce diesel in line with stricter Euro 4 standards in the future with a small additional investment for upgrades. (petrolplaza.com)
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.