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EU seeks tighter clean-air norms for oil companies - extended

European Union regulators plan stricter clean-air rules for oil companies, bolstering an environmental campaign that also targets carmakers.

The European Commission presented a draft law that would force the petroleum industry to cut emissions of gases blamed for global warming by 1% a year. The legislation would also tighten limits on fuel pollutants such as sulfur and allow a greater amount of environmentally friendly ethanol to be used in gasoline. The proposal „will further underpin Europe's shift toward the low-carbon economy that is essential” and „help achieve a significant reduction in the noxious pollutants from transport,” Environment Commissioner Stavros Dimas said in a statement today in Brussels. The initiative, which needs the backing of European Union governments and the European Parliament, supplements a commission plan for binding limits on carbon dioxide from cars.
The 27-nation EU is stepping up the fight against air pollution to reduce premature deaths from smog and counter the risk of environmental catastrophes from global warming. The bloc last year tightened caps on tailpipe pollutants including nitrogen oxide and in 2005 it imposed caps on factory and power-plant emissions of carbon dioxide, the main greenhouse gas.

Energy is the root cause of most air pollution and of climate change, accounting for four-fifths of greenhouse-gas emissions in the EU, according to the commission, the bloc's regulatory arm. The EU aims to limit the global temperature increase to 2 degrees Celsius above pre-industrial levels. The proposal would reduce EU greenhouse-gas emissions by a total of 500 million metric tons of carbon dioxide between 2010 and 2020, the equivalent of the current combined annual emissions of Spain and Sweden, according to the commission. „It is a concrete test of our political commitment to leadership on climate policy,” said the commission, which predicted a „further development of low-carbon fuels and other measures to reduce emissions from the production chain.” The draft law would compel makers of fuel for vehicles to monitor and report greenhouse-gas emissions during the fuel lifecycle including production and use starting in January 2009. The industry would have to cut emissions by 1% a year from 2011 through 2020.

„The targets that have been set are unrealistic,” Peter Tjan, secretary general of the European Petroleum Industry Association representing companies including Total, BP and Royal Dutch Shell Plc, said by telephone in Brussels. Under the global Kyoto Protocol, the EU is committed to reducing greenhouse-gas emissions by 8% in 2008-2012 compared with 1990. On January 10, the commission recommended that the EU seek further cuts of at least 20% by 2020. The fuel-production process including extraction and refining accounts for 15% of total emissions linked to the lifecycle of fuels, Tjan said. The burning of diesel and gasoline in vehicles is responsible for the rest, leaving oil companies little room to meet the proposed 1% annual reduction target without more biofuels, he said. Europe doesn't have enough biofuels and the draft law would likely encourage imports from countries such as Brazil and Malaysia, Tjan said. „It doesn't add up,” he said. „We are confused.” To allow more biofuels in gasoline, the proposal would create a separate gasoline blend with a higher permissible oxygenate content including up to 10% ethanol as of 2009 compared with 5% at present.

The vapor pressure limit would be increased for gasoline blended with ethanol and „all blends available on the market will be clearly labeled,” according to the proposal. „These changes will facilitate development of the biofuel market while avoiding the possible risks of damage to existing vehicles.” On January 10, the commission said it would seek a binding minimum EU target for biofuels of 10% of vehicle fuel by 2020. The current EU biofuels target is 5.75% by 2010. „The higher limit for ethanol in gasoline is the logical consequence of the new biofuels target for 2020,” Tobias Erfurth, head of investor relations at CropEnergies AG,  Suedzucker AG unit that estimates it produces about 10% of the ethanol in the EU, said by phone from Mannheim, Germany. „These are very good signs.” Guido Sacconi, an Italian member of the 785-seat European Parliament, said the assembly would back the draft law. Greater environmental protection offers the oil industry a chance to become more competitive, he said.

„We support the commission” because the need to tackle air pollution is „urgent,” Sacconi said in an interview at the Parliament's headquarters in Brussels. He is a member of the assembly's environment committee and its Socialist group, the second-biggest faction. The proposal would also lower the sulfur content in gas oil for non-road machines such as farm tractors to 10 parts per million from 1,000ppm and for inland-waterway vessels to 300ppm from 1,000ppm by 2010. The limit for inland-waterway vessels would then fall to 10ppm by 2012. The draft law would pare the maximum polyaromatic hydrocarbon content in diesel to 8% in 2009 from 11% and affirm a planned lowering of the limit on sulfur in diesel to 10ppm in 2009 from the current 50ppm. The commission originally intended to propose this legislation together with a policy paper pledging to come forward with a separate proposal for a binding limit on carbon dioxide from cars. That policy paper is now due next week. Dimas and Commission President Jose Barroso are urging binding curbs on carbon dioxide from cars, saying voluntary targets by manufacturers such as Volkswagen AG are inadequate. (Bloomberg)