October 27, 2020

Asian Lube Map 2020 | Leaderboard | 600×75
article image

 

Diesel engines power the dominant share of goods movement, construction equipment and public transport vehicles in the global economy, and the global on-road fleet is set to triple by 2050. A global roadmap has been developed by the Climate and Clean Air Coalition’s (CCAC) Heavy Duty Diesel Initiative (HDDI) to reduce small particulate (PM2.5) and black carbon emissions from the global on-road diesel fleet by more than 90% through the next decade (and beyond) through the introduction of low-sulphur fuels and cleaner diesel vehicle standards. The report, which was released in September, contains recommendations for near-term support in 36 countries.

CCAC’s Heavy Duty Diesel Initiative has five co-leads, which include the governments of the United States, Canada and Switzerland, the United Nations Environment Programme (UNEP) and the International Council on Clean Transportation (ICCT).  It analysed oil and fuel flows worldwide, and opportunities for refineries to upgrade to enable the production of low-sulphur diesel fuels.

Air Pollution from Diesel Engine Exhaust

According to the World Health Organization (WHO), approximately one in eight global deaths in 2012 were a result of air pollution exposure, making air pollution the world’s single largest environmental health risk, the main cause being PM2.5.

Sulphur in fuel leads to increased air pollution through emissions of harmful sulphur compounds such as sulphates, and by inhibiting the effectiveness of modern emission control devices. Sulphur directly increases production of PM2.5, which is associated with heart disease, lung cancer and a range of other harmful health effects (Krewski et al., 2009). Sulphur is also a barrier to dealing with climate pollution from diesel engines. Black carbon associated with diesel combustion can be controlled using diesel particulate filters required by Euro 6/VI emissions standards, but these devices are only effective with low or ultra low, sulphur fuels.

Transition to Low-Sulphur Fuels

The health benefits by 2050 of a gradual transition to lower sulphur levels in global on-road diesel fuel have been assessed. In the analysis, low-sulphur diesel fuel (50 parts per million or ppm) is phased in for most countries by 2020 and for all remaining countries by 2025, while ultra low-sulphur diesel fuel (10 ppm) is phased in progressively, representing the majority of global on-road diesel fuel supply by 2030.

Low-sulphur fuels have been subjected to desulphurization processes. Sulphur levels below 50 ppm are needed in order to avoid damage to emission control systems in Euro 4/IV vehicles and above. Maximum sulphur levels of 10 to 15 (ultra low-sulphur fuels) are required for the most effective emissions control systems, such as diesel particulate filters, to achieve the emission reductions necessary to meet limits set by filter-forcing standards.

More than half of the world’s countries are still using high-sulphur fuels, mainly in Latin America, the Caribbean, Africa, the Middle East and Asia-Pacific. In import-dependent countries, implementing new standards should not take more than two years. For countries with refining capacity, additional time between rule promulgation and implementation will be needed but should not take more than five years, the report said.

Vehicles and fuels must be treated as a system to achieve the optimum benefits from emissions control policy, which means matching vehicle emissions standards to fuel quality.

Costs and Benefits

The many reasons why countries thus far have not introduced low sulphur fuels include the cost of investment in increasing refinery capacity; the increased cost to consumers of low-sulphur fuels; difficulties in recouping investments in markets where fuel prices are regulated; and lack of political prioritization of fuel desulphurization.

The combination of cleaner fuels and vehicles will have major health benefits and deliver substantial climate benefits, the report emphasised. Many of the benefits of desulphurization can be delivered with 50 ppm low-sulphur fuels, but the largest health improvements and climate benefits are associated with ultra low-sulphur fuels of 10 or 15 ppm.

The mortality reduction due to the introduction of low-sulphur fuel represents a conservative estimate that considers only direct pollutant emissions in urban areas, and results in 7,000 avoided mortalities per year by 2020, 40,000 by 2025, 100,000 by 2030 and 500,000 by 2050.

When a monetary value is assigned to these projected benefits, the present value of the cumulative health benefits of moving to low-sulphur fuel and corresponding vehicle emissions standards is approximately USD18 trillion by 2050. The total costs of desulphurization and emission controls are estimated at around USD1.1 trillion over the same period; therefore, estimated benefits to 2050 outweigh costs by a factor of around 16.

Many of the constituents of PM2.5 also have an effect on climate change. One component in particular, black carbon, is a potent climate forcer that absorbs sunlight and releases heat, causing warming. Reducing emissions of black carbon has an immediate impact on climate change.

The Strategy

Cleaner fuels and vehicles are rarely prioritised in developing countries. By convening specialised national working groups and bringing high-level attention to the policy and technology options available for promoting low-sulphur fuels and complementary vehicle standards, these solutions could be given priority on the political agenda as feasible solutions to both climate and health challenges.

The strategy focuses on the local markets in which countries are operating and proposes ways to move to low-sulphur fuels within a feasible timeframe. CCAC’s support should be targeted to countries and markets in which progress will likely lag without additional support, where the potential health benefits are greatest and where action may catalyse additional improvements in related markets.

Categories of Countries

The market and refinery studies identify four categories of fuel and vehicle operating environments where similar approaches could help to move countries to low-sulphur fuels and commensurate vehicle emissions standards.

“Importers” are dependent on imported fuel and can act relatively quickly to adopt new fuel standards. They make up the largest group of countries and have extensive influence on markets.

“Refiners” require upgrade of their refineries and need financing for this. They may produce fuels only for their local market or may also export fuels to other markets.

“Vehicle Standards” have already introduced low-sulphur fuels but need to strengthen their vehicle policies to match the fuels and maximise the benefits.

These three categories prioritise countries in Africa, Asia, South America, Middle East and Eastern Europe for immediate action.

The “City First” category includes three countries: South America, China and India, where low-sulphur fuels and cleaner vehicles have been (first) introduced in urban areas prior to full national introduction.

Importers

Countries in this category lack a refinery or the refining capacity to meet national demand. They import high-sulphur fuel and usually do not have vehicle emission standards in place. These countries would benefit from targeted efforts to adopt policies for low-sulphur fuels, along with vehicle emissions standards. Support should combine intergovernmental dialogue, awareness and knowledge building and direct technical assistance.

Thirteen countries are priorities for action in the next five years. Details for countries in the Asian region follow. (Refer to the chart “Status of fuel quality and vehicle emission standards in Asia Pacific” and the map “Diesel Fuel Sulphur levels Asia Pacific July 2016.”)

Bangladesh has the eighth highest health burden from vehicle emissions in the world. As most of the fuel in Bangladesh is imported, it should be possible to improve the standard to 50 ppm. A similar situation exists in Pakistan, which has more than 50% reliance on imports from countries that will soon have low-sulphur fuels (Saudi Arabia and Kuwait). It is second in the world behind India in terms of deaths from vehicle emissions. The import standard could be changed to 50 ppm or below in a phased approach to match the timelines for refinery improvement in Saudi Arabia and Kuwait.

Afghanistan is a net importer of refined product. Its legislated national standard for diesel fuel is still 10,000 ppm. A phased approach with support to revise the national standard to match the quality of imports plus a roadmap for 50-ppm diesel fuel could be implemented. This could help support low sulphur refining in Turkmenistan, Uzbekistan and Pakistan, the suppliers. The phased roadmap should explore switching to other markets for low sulphur diesel fuel imports to Afghanistan.

Similarly, most of Mongolia’s fuel imports are 500 ppm or below, but the national standard is currently 5,000 ppm. Mongolia can be supported towards a longer-term target of low-sulphur fuels. Nepal imports refined product exclusively from India and the sulphur level of this product is approximately 500 ppm. Because India has a robust refining industry, there is an opportunity for Nepal to consider a national standard for ultra low-sulphur fuels. Sri Lanka imports crude oil from Saudi Arabia for domestic refining to meet half of its fuel needs and it imports crude oil and refined products from Oman, Singapore and Vietnam. Sri Lanka does not have fuel quality standards. Changing the import standard of refined products would significantly improve the air quality in urban areas and serve as a catalyst to improve national refining standards.

The Philippines is already importing low-sulphur fuels from Singapore and Thailand, and so is Vietnam, with the tenth highest health burden of vehicle emissions. Both countries already have roadmaps for reaching Euro 4/IV vehicle emission standards and 50-ppm sulphur levels. UNEP already supports the Philippines for January 2016 implementation of new fuel and vehicle standards, but there is scope for a further reduction to 10-ppm sulphur in fuels and higher vehicle emission standards. Vietnam is aiming for a major program of new refinery capacity additions, but could pre-empt a growing local supply of low-sulphur fuels by adopting import standards in advance. Longer-term opportunities for desulphurization and fuel quality standards in Southeast Asia also exist in Myanmar, Lao PDR (Laos) and Cambodia, which also imports from Singapore and Thailand.

Refiners

Countries included in the “Refiners” category have refining capacity and have demonstrated some commitment to low-sulphur fuels. Some may act as regional hubs for refined fuel flows to surrounding countries. However, they all lack the necessary financing for refinery upgrading to produce low-sulphur fuels. A portfolio of tools is available to refiners to meet new and more sophisticated fuel quality standards.

The strategy for refining countries is to:

i) Identify key countries that, with targeted refinery investments, would unlock cleaner fuels for large local populations and/or entire sub-regional markets,

ii) Quantify the investment necessary for desulphurization in order to provide a benchmark for investors and national negotiators,

iii) Ensure that both policymakers and multilateral financial institutions are aware of and act upon information that shows where a relatively lower cost investment would affect the largest markets for clean fuels, and

iv) Seek to facilitate dialogue between multilateral financial institutions, government officials and private finance for upgrades.

Global strategy to introduce low sulphur fuels and cleaner diesel vehicles

Status of Fuel Quality in Asia-Pacific. Source: UNEP.

The refiners’ approach will prioritise low-sulphur fuel policy and investments and will identify economies of scale and knowledge-sharing that may overcome barriers that would be more difficult if faced on a country-by-country basis. Support should integrate private sector participation and assistance by engaging with industry experts who can advise on public/private financing and strategies for project financing, design and management.

Asia-Pacific has had the largest growth in refining capacity of any region in recent years at almost 8 million barrels of oil per day (MMbbl/d) since 2002, with most of this growth taking place in China and India. Countries with domestic oil product but insufficient refining capacity for 50-ppm fuels are India, Malaysia, Indonesia, Pakistan and Vietnam. These countries have plans or are already working on increasing their domestic refining capacities. Based on refinery modelling by Ensys, transitioning Asian refineries (excluding China) to 50-ppm gasoline and diesel fuel would cost around USD25 billion. Of these, India, Malaysia, Indonesia and Pakistan are considered top priorities for near-term action in this strategy.

Vehicle Standards

The Association of Southeast Asian Nations (ASEAN) is prioritised, as most of the countries in Asia have developed, or have begun to develop, vehicle emissions standards and fuel quality road maps. There is more integration within the Southeast Asian market both in terms of trade (refined and unrefined fuels) as well as policy harmonisation. Market integration is expected to occur under the ASEAN Community initiative. Brunei and Malaysia will implement 50-ppm fuel sulphur limits by 2016. Such efforts in the ASEAN present a good opportunity to add on vehicle emissions standards. Priority should be given to supporting the countries leading in the implementation of cleaner fuels (Brunei, Malaysia) as well as Indonesia. Efforts should also include a strategic plan to replicate a national approach for desulphurization in Laos, Cambodia and Myanmar.

Global strategy to introduce low sulphur fuels and cleaner diesel vehicles

Diesel Fuel Sulphur Levels: Asia-Pacific (July 2016). Source: UNEP.

The Philippines and Vietnam are already importing low-sulphur fuels from Singapore and/or Thailand. Both countries already have roadmaps for reaching Euro 4/IV vehicle emissions standards and 50-ppm sulphur levels in fuels. There is scope for an additional reduction to 10-ppm sulphur in fuels and corresponding filter-forcing standards.

Cities First

Some countries, such as China and India, choose to introduce lower-sulphur fuels in cities prior to rolling them out at the national level. This allows for a gradual and lower-cost introduction of cleaner fuels for selected fleets. While a national approach is preferred, selective city-level introduction of cleaner fuels and vehicles is an alternative when countries are not yet prepared for full adoption.

In existing dual-standard countries, cleaner fleets in cities would be prioritised, concentrating on municipal buses and trucks. Documenting city progress would allow for the promotion of low-sulphur fuels and vehicle emissions standards at the national level.

Conclusion

The goal of this global desulphurization strategy is to reduce outdoor air pollution and global black carbon emissions by enabling low-sulphur fuel coupled with vehicle emission standards. Vast climate and health benefits are possible, and, combined with vehicle emissions control technologies, they greatly outweigh the costs of new emissions controls and the production of low-sulphur fuels.

The success of these strategies depends on interaction and agreement among groups of countries. The concurrent adoption of low-sulphur fuel standards by refiner and importer countries in a region can deliver complementarity, while a failure to coordinate could disrupt fuel markets and pose a challenge to the successful implementation of new standards.

< Previous

Fuel flexibility of future combustion engine power plants

Five bio-based companies to watch

F+L Week 2021