激斗油品国标
财新《新世纪》
记者 王小聪
Caixin's in depth analysis of China's fuel standards (especially Beijings new V standard) and a description of the how the automotive manufacturers and the oil refiners are at odds on what to do, and on the evolution of new standards in the standard setting body. Contains thorough analysis of the refining fundamentals that put the car mfg and the refiners in oppostion, i.e., how 降硫禁锰 (jiang4 liu2 jin1 meng3) decreasing sulfur and removing manganese lowers octane ratings (辛烷值 xin1wan2zhi2) which decreases fuel efficiency and causes knocking. This is because 70% of China's refining capacity is for heavier crude. At present the Octane ratings are being overstated in Beijing although the prices were not dropped. It was a hidden price increase. Who bears the costs of having cleaner fuel in the long run? The consumer.
China acts to combat air pollution
FT
Leslie Hook in Beijing
China has announced aggressive new standards for vehicle fuel in an effort to combat air pollution, its first concrete response to the heavy smog that has blanketed many Chinese cities this winter.
On Wednesday night the state council said that a new, low-sulphur standard for automotive diesel would become mandatory by the end of 2014. A stricter ultra low sulphur standard for both gasoline and diesel will take effect by 2017.
Wednesday’s announcement singles out the oil companies – CNPC, Sinopec and Cnooc – and mandates that they complete the necessary upgrades to their refineries on time.
Because low-sulphur fuel is more expensive to produce, Chinese oil companies had lobbied for years to delay stricter fuel and vehicle emissions standards. One example is a new standard for exhaust emissions for diesel trucks that was supposed to go into effect in 2011, but was delayed several times because the oil companies did not produce compliant fuel.
Vehicle emissions, along with coal burning, are a major cause of air pollution. In Beijing at least 19 per cent of small particulate matter – the kind that can trigger respiratory and heart disease – comes from vehicles, according to the Chinese Academy of Sciences.
The state council said in its statement: “With vehicle ownership growing quickly, the impact of tailgas emissions on air pollution increases every day.”
As public anger over pollution has grown, China’s oil companies have had to go on the offensive to address the criticism. Fu Chengyu, head of Sinopec, China’s biggest oil refiner, admitted last week that oil refineries bore some of the responsibility for air pollution, but defended Sinopec’s oil products as fully compliant with national standards.
By choosing to target fuel standards, the state council has effectively called the oil companies to task, an approach that could signal a tougher attitude towards state-owned enterprises from China’s leadership. It represents a major victory for China’s relatively toothless environment ministry, which has often found its policies and regulations stymied or ignored by more powerful government bodies.
Politics of pollution: China's oil giants take a choke-hold on power
Reuters
By Sui-Lee Wee and Hui Li
BEIJING | Sat Feb 2, 2013 6:10pm EST
The search for culprits behind the rancid haze enveloping China's capital has turned a spotlight on the country's two largest oil companies and their resistance to tougher fuel standards.
Bureaucratic fighting between the environment ministry on the one hand and China National Petroleum Corp (CNPC) and Sinopec Group on the other has thwarted stricter emission standards for diesel trucks and buses -- a main cause of air pollution blanketing dozens of China's cities.
To be sure, many sources contribute to air pollution levels that hit records in January, but analysts say the oil companies' foot-dragging and disregard of environmental regulations underscore a critical challenge facing a toothless environment ministry in its mission to curb air pollution.
With widespread and rising public anger changing the political calculus, it also poses a broader question of whether the incoming administration led by Communist Party chief Xi Jinping will stand up to powerful vested interests in a country where state-owned enterprises have long trumped certain ministries in the quest for economic growth at all costs.
"I think the Communist Party's new government should weaken CNPC and Sinopec," said Wang Yukai, a professor from the National School of Administration. "These interest groups have too much power."
Delays in implementing stricter emission standards are rooted in money -- chiefly, who should pay for the price of refining cleaner fuels? By some estimates, auto emissions contribute as much as a quarter of the most dangerous particles in Beijing's air.
To supply cleaner diesel, the oil firms must invest tens of billions of yuan (billions of dollars) to remove the sulfur content, said Xiaoyi Mu, a senior lecturer in energy economics at the University of Dundee in Scotland.
PetroChina, the listed arm of CNPC, said in a statement sent to Reuters that all automotive diesel produced by PetroChina in 2012 met existing Chinese emissions standards.
It added PetroChina would "push forward upgrading of fuel quality, and supply clean, good quality and diversified products".
Sinopec did not respond to repeated phone calls from Reuters seeking comment.
Sinopec chairman Fu Chengyu, quoted in state news agency Xinhua last week, acknowledged that China's refineries are one of the main parties that should bear responsibility for air pollution. Even so, he added that was not because fuel failed to meet standards but rather because fuel standards were not sufficient.
ONGOING FEUD
The bureaucratic tug-of-war has been going on for years.
Frustrated by the repeated delays in enforcing existing environmental standards, China's deputy environment minister, Zhang Lijun, called a meeting in late 2011 with officials from the country's two biggest oil companies.
In unequivocal statements, he sought to lay down the law: The ministry was not going to further delay the cleaner China IV emission standard for trucks and buses, despite reluctance by CNPC and Sinopec to supply the fuel that would cost more to produce.
"If the sulfur content in your oil is too high and does not meet the standards, and if cars break down, it'll be your responsibility. The environment ministry will have nothing to do with it," Zhang said, according to Tang Dagang, director of the Vehicle Emission Control Center, who was present at the meeting.
The officials from the oil companies responded by promising to supply the cleaner fuel after the Lunar New Year in 2012, a traditional holiday that fell in January that year.
But a few months later, a spot check by the environment ministry showed the companies were still supplying ordinary diesel, said Tang, whose policy research group is affiliated with the ministry.
With media focusing on a sudden worsening of the air quality in Beijing at the start of 2013 -- 21 days in January recorded "heavily polluted" levels or worse -- urban residents are increasingly impatient with the political wrangling.
"The air pollution is terrible," said Beijing resident Zhang Shuqing on a recent very polluted day. "They need to sort it out, the department responsible needs to sort out the environment."
The environment ministry, however, faces formidable odds in the face of China's complex bureaucracy and weak enforcement of laws.
BUREAUCRATIC MAZE
At least 10 government entities such as the powerful National Development and Reform Commission (NDRC) and the Ministry of Industry and Information Technology (MIIT) shape policies that affect the environment.
Unlike the U.S. Environmental Protection Agency, the environment ministry has no power to set fuel emission standards, and sometimes it is not even consulted on decisions taken by other government departments that would affect the environment.
For example, when the MIIT and the NDRC held a meeting to deliberate on a policy subsidizing energy-saving cars, they never contacted the environment ministry, said Ding Yan, deputy director of the Vehicle Emissions Control Center. As it turns out, some of these cars are actually relatively heavy polluters.
In 2008, China promoted the State Environmental Protection Administration to a full ministry in a bid to give it more weight in the country's fight against pollution.
Yet the ministry still lacks the authority to force big state-owned enterprises and local governments to toe the line. The ministry did not respond to a request for comment.
"Even a powerful environment minister is of no use," Ding said. "You need the highest leaders like Xi Jinping and Li Keqiang to really value the work of the environment ministry."
THE COST OF CLEAN AIR
Excessive pollution levels have already prompted the Beijing government to roll out a series of temporary emergency measures such as shutting down 103 heavily polluting factories and taking 30 percent of government vehicles off roads, but the capital's air has remained hazardous.
It remains unclear whether Xi will restrain the influence of the oil firms, but with public anger rising, and with a normally compliant media joining in the calls for action, political pressure is growing.
The problem for oil firms such as PetroChina, the listed arm of CNPC, and Sinopec is that central planners set prices at the pump, even when global energy costs remain high.
Tang said both CNPC and Sinopec have told the environment ministry that they would have supplied the fuels "if they had gotten a reasonable price".
Jiang Kejun, research professor at the NDRC's Energy Research Institute, says it is unreasonable to demand that CNPC and Sinopec bear the cost of refining cleaner fuels.
"I'm an environmentalist and I also hate the actions of CNPC and Sinopec," Jiang said. "But we have to tell the public: energy prices will rise significantly. To enjoy both low energy prices and also fresh air, there's no way you can have both."
With no supply of cleaner diesel fuel, Beijing had to delay the implementation of the China IV emission standard for diesel trucks and buses twice -- first in 2011 and then later in 2012, when it was extended to this July.
The new standard aims to cut emissions of particulate matter and nitrogen oxides -- two key components of urban smog -- from trucks and buses by 80 percent and 30 percent, respectively, said Vance Wagner, a senior researcher at the International Council on Clean Transportation.
"Diesel vehicles, especially trucks and buses, are a disproportionately large source of emissions," Wagner said in emailed comments. He cited environment ministry data that showed large trucks comprise only about 5 percent of China's vehicle fleet, but emit over 60 percent of particulate matter emissions.
In response, China's finance ministry has stepped in to negotiate preferential tax policies with the oil firms to help offset the higher costs of producing cleaner diesel fuel, say people close to the environment ministry.
Chinese media reported last week that new cleaner diesel fuel standards, similar to Euro IV standards that restrict sulfur content, could be issued soon in addition to the existing emissions standards. Even the new requirements, however, could give oil companies a two-year window for full compliance.
Without intervention at a higher level, the delays are likely to go on.
Yue Xin, head of the vehicle fuels and emissions lab at the Chinese Research Academy of Environmental Sciences, has spent more than three years sparring with CNPC and Sinopec on a committee that sets fuel standards.
Yue is one of two members representing the environment ministry on the panel while about 70 percent of the representatives are from the oil firms.
Now, Yue, whose group is affiliated with the environment ministry, is lobbying for the oil firms to put "detergents" in its gasoline, which will burn fuel cleanly.
The oil firms oppose it because of the costs, Yue said.
(Additional reporting by Maxim Duncan, Jimmy Jian, Terril Yue Jones and Beijing Newsroom; Editing by Ken Wills)
Sinopec boss passes the buck to government
Shanghai Ri Bao
Fu Chenghao
SINOPEC Corp Chairman Fu Chengyu's recent remarks on the worsening air quality in parts of China since the beginning of 2013 is not only a massive public relations disaster but also highlighted a serious lack of responsibility.
Fu, head of China's largest fuel supplier, acknowledged that the nation's refineries were among the culprits for the toxic smog that is choking Beijing and other cities. But he told Xinhua news agency last week that it was not that the refineries failed to meet the air-quality standards in the country but the government standards were rather lax.
In other words: "It's not our fault."
Fu was responding to media reports that pointed to the high sulfur content in fuels sold by his company and others.
Maybe what Fu said was true but it seems a bit disingenuous of him to just shirk the whole responsibility by blaming the government, the company's ultimate parent.
Let's face it, oil majors like Sinopec wouldn't want tougher fuel standards because that would mean upgrading their refining facilities, leading to higher costs and smaller margins in a system where the government still caps fuel prices to keep inflation in check.
These state oil majors, in their quest for growth at all costs, have strong lobbying power to resist tougher emissions standards, even trumping over government agencies such as the Ministry of Environmental Protection.
Currently, Beijing has the strictest emission standards among cities on the Chinese mainland, the so-called National V - similar to Euro V standards. Yet the nation's capital is among the worst hit by air pollution, largely due to its huge car population, the burning of dirty coal for heating and even its geography.
Surrounding mountains form a semi-circular basin that traps pollutants in a city that managed to clean up the air long enough to host the 2008 Olympic Games.
The pollution has been so severe some days that Beijing municipal officials have had to warn residents to stay indoors and issue rulings forcing some government vehicles off the roads.
Much of China still uses the National III vehicle emissions standards, which are similar to the Euro III standard - allowing the sulfur content in gasoline to be as high as 150 parts per million.
The Euro V standard caps the sulfur content at below 10 ppm.
Shanghai and some relatively developed regions like Jiangsu and Guangdong use the National IV standard.
Sinopec is not violating any rule or law in supplying most of China with National III standard fuel. But it does benefit from relatively low fuel quality standards.
Fu's response to hazardous levels of air pollution hardly reflects the image of a major state company fond of touting its corporate social responsibility.
Not surprisingly, his remarks unleashed a flurry of criticism from the media and on the Internet.
"Sinopec has acknowledged fuel is one of the culprits behind the bad air quality, but it's also good at evading the responsibility," one online post read.
Trying to dispel the public backlash, the company last Friday said it will upgrade desulfurization facilities at 12 subsidiaries by the end of this year, and will start selling cleaner gasoline that meets the National IV standard from next year. But that only triggered concerns about higher fuel prices.
This is not the first time Sinopec has run into trouble. In 2011, the company used its own workers to post online comments, supporting a rise in refined fuel prices, that would benefit the company's bottom line while making it dearer for motorists.
Fu might be advised to hire a new public relations team and think twice before commenting on sensitive issues.