Top 100 Countries Ranked by Clean, Low Sulphur. Gasoline Limits INSIDE THIS ISSUE

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1 Top 100 Countries Ranked by Clean, Low Sulphur Gasoline Limits INSIDE THIS ISSUE A Monthly Publication by Asian Clean Fuels Association Vol. 7 Issue 5 - September 2009 Sulphur is a compound found naturally in crude oil; as a result, it passes into refined products such as transportation fuels. When sulphur is emitted into the air as a result of fuel combustion in auto engines, it is released in a gaseous state as SO 2 or in a particle state as sulphate formed when SO 2 reacts with other compounds in the air. Regardless of its concentration, sulphur has negative environmental impacts and health effects. Environmental damage to forests, crops and water supplies can result from long-term high sulphur emissions, which contribute to acid rain. When present in fuels, sulphur reduces the catalytic efficiency by poisoning the three-way catalyst, which removes pollutants, and leads to increased emissions. The process of desulphurization at the refinery results in octane loss, which can be countered with the help of blending components, such as oxygenates. Desulphurization also caused lubricity loss, which is countered by use of additives. Gasoline desulfurization helps to reduced emissions of sulphur and other pollutants, like hydrocarbons (HC), carbon monoxide (CO), and nitrogen oxide (NO 2 ). Because of its direct pollutant effects, high sulphur levels prevents the adoption of major pollution control technologies from being used in today s vehicles. The sulphur content in gasoline varies around the world. In industrialized countries, sulphur limits have been dramatically reduced in some cases to specifications below 10 ppm. Some countries continue to have in the market gasoline sulphur level exceeding 500 ppm or more. Figure 1 illustrates worldwide gasoline sulphur limits. The International Fuel Quality Center (IFQC) 1 recently updated its ranking of the top 100 countries based on sulphur limits in gasoline (see Table 1). Germany and Japan remained first and second, respectively, with the lowest limits and full market penetration below 10 ppm sulphur. Some countries rankings changed this year, even though regulated sulphur limits did not. The sulphur limits of all countries included in this ranking either improved or remained the same. In some cases, ranks also shifted because new information became available since the previous year s ranking. 1 International Fuel Quality Center, Hart Energy Consulting, Houston, Texas Top 100 Countries Ranked by Clean, Low Sulphur Gasoline Limits Interview with Mr. Kerry Rock, CDTECH Energy Security Conference Examines Asia-Pacific Issues Fuels Industry Updates Countries in this ranking were placed according to the following criteria: maximum allowable sulphur limits in national standards, sulphur limits in local/regional standards (such as specifications for cities/states), and by year of implementation. The analysis focuses on legislated limits, but to further specify the rankings of countries with the same specifications, market sulphur levels were used in some cases as additional criteria based on available data. Liisa Kiuru, IFQC executive director heading up the ranking report states that sulphur reduction still remains a focal point in fuel quality improvement. She further indicates that even though some countries are already discussing low carbon fuels and implementing biofuels policies and other such measures, sulphur is still a key concern when it comes to emissions. Industry and policymakers around the world have placed emphasis on reducing sulphur limits in fuels for decades now, but variations in those limits remain. Overall, the majority of countries around the world are moving toward lower sulphur fuels, including ultra-low specifications of below 20 ppm. All European Union (EU) countries placed within the top 50 now that 100% market penetration of sulphur-free (less than 10ppm) fuel is required in the EU as of January This specification establishes the region s role as a leader in clean fuels. With the implementation of sulphur-free requirements, a number of countries have dropped in the ranking, such as the United States now (Continued on p3) (USA); You can reach us at info@acfa.org.sg. Visit our Web site at Copyright Asian Clean Fuels Association. Disclaimer: The Asian Clean Fuels Association does not represent or warrant the accuracy, adequacy or completeness of the information and materials contained in this newsletter (the Content ), and expressly disclaims any liability for any error or omission in the Content, or for any action taken in reliance on the Content.

2 Mr. Rock has over thirty five years of experience in the oil and gas refining, chemical and petrochemical industries. His experience includes research and development, process design and management of projects for dehydrogenation, desulfurization, gasoline reformulation, fuel ethers, methanol, hydrogenation, oil and gas production, transportation and processing and biomass gasification, flue gas. He holds a B.S. and M. S. in Chemical Engineering from the University of Houston. Q: Could you give us a brief overview about your company and describe your functions and key responsibilities within the company? CDTECH provides advanced process technologies to the refining and petrochemical industries. Most of the technologies take advantage of the unique benefits of catalytic distillation due to the combination of reaction and distillation in a single vessel. As Director Technology Commercialization, I lead a team of talented process engineers that is responsible for transforming the results of our R&D into successfully commercialized technologies. Q: Significant changes in environmental requirements for fuel production have been occurring in the oil industry in recent years. Can you tell us how your company has helped the industry adapt to these developments? CDTECH s early success was in the economical production of fuel oxygenates, as required by the 1990 Clean Air Act Amendment for the reduction of CO and hydrocarbons in exhaust gases. For the past 10 years, CDTECH has been active providing technology to reduce sulfur in gasoline in North America and Europe. Sulfur reduction was implemented in several phases, following either U.S. or EURO schedules, down to levels as low as 10 ppm using the CDHydro/CDHDS processes. Also important were the reduction of benzene in reformulated gasoline, in EURO III, and later in MSAT II via the Benzene CDHydro process. Most recently, CDTECH has licensed the CDAlky process for the production of the cleanest-burning component of the gasoline pool alkylate. Q: Sulfur reduction is an important part of fuel quality improvements, especially for transportation fuels like gasoline. Could you briefly tell about the key steps in achieving sulphur reductions? FCC gasoline, which contributes nearly all of the sulfur in the gasoline pool, contains significant levels of high octane olefins. Most refiners primarily focus on this stream for sulfur reduction. This can be achieved either by pretreating the FCC feed or by post-treating Expert Talk Interview with Mr. Kerry Rock, Director Technology Commercialization, CDTECH the FCC gasoline. The post treatment route is much less capital intensive and is therefore the preferred choice of the refiner. Q: Refinery processes and technologies for sulphur removal are sometimes accompanied with octane loss. In what ways can refiners achieve octane replacement due to sulphur reductions? Rather than replace octane lost during sulfur reduction, the best choice would be to not lose octane in the first place. Technology selection is key to achieving this goal. At the reaction conditions required for sulfur reductions, it is very easy to saturate the olefins with hydrogen, which results in low-octane paraffins. Conventional technology, based on fixed bed reactors, subjects the olefins to the high temperature required to desulfurize the heavy sulfur compounds, resulting in high olefin saturation and large octane loss. CDTECH s CDHDS process reduces sulfur with minimal octane loss because it separates the gasoline into light and heavy fractions that are then treated at different reaction conditions. Therefore, most of the olefins are not exposed to the high temperature required to treat the heavy sulfur compounds and as a result, octane loss is minimized. Outside of the U.S., many refiners use the light FCC gasoline to produce high octane ethers to add to the gasoline pool. These can largely offset the octane loss from the desulfurization of the FCC gasoline. Q: With transportation fuel demand continuing to grow globally, what challenges do you se in the refining industry to meet these demands? Most of the fuel demand growth will take place outside of the U.S. and Europe and will be accompanied by increasing octane requirements. At the same time, most of that new demand will need to meet increasingly stringent fuel standards, mostly based on EURO requirements. These refiners will require technologies to produce octane-boosting components (ethers and alkylate) as well as reduce gasoline sulfur and benzene content with minimum octane loss and hydrogen requirement. CDTECH has developed technologies that address these inter-related needs. Q: Clean air strategies are recognizing the link of clean fuels with clean vehicles. What trends, and challenges, do you see as part of the development of cleaner-burning fuels? Reduction of sulfur and benzene will require increased hydrogen production, which is accompanied by increased greenhouse gas emissions. Refiners will be challenged to identify technologies that minimize hydrogen consumption. Catalytic distillation has proven to be a low hydrogen consumption option for these applications. September 2009 Page 2

3 Top 100 Countries Ranked by Clean, Low Sulphur Gasoline Limits (continued from p1) ranked in 44th place. However, the sulphur limits of all countries included in this ranking either improved or remained the same, making all the changes in rank attributable mainly to the improvement of sulphur limits in certain countries, or further consolidation of ranking criteria and availability of additional data. The key to emissions reductions from the transport sector is to view fuels and vehicles as a unified system. Sulphur reduction will remain an essential part of these emissions reductions, thereby helping to lower airborne pollutants and result in improved public health. Oil-rich nations Qatar and the United Arab Emirates (UAE) again ranked in the top 50 for low sulphur limits in gasoline (Qatar 50th and UAE 47th). Two new countries in the top 100 this year include Jordan (52nd) and Laos (80th). Several others made remarkable improvements, such as South Korea, up by 29 spots to rank ninth (tied with 25 EU nations), and Morocco, up by 76 spots to rank 43rd. Other Asian countries that ranked in the top 50 were Hong Kong, Taiwan, New Zealand and Australia. China and India followed close in the 55th and 56th spot. Rank Country from 2008 Rank Country from 2008 Rank Country from Germany +0 2 Japan +0 Austria +0 Denmark +0 3 Estonia +13 Finland +0 Hungary +0 Sweden +0 Albania +36 Belgium +3 Bulgaria +7 Cyprus +7 Czech Republic +7 France +3 9 Greece +7 Iceland +7 Ireland +7 Israel +7 Italy +7 Latvia +7 Liechtenstein +7 Lithuania +7 Luxembourg -6 Malta +7 Netherlands +7 Norway +7 Poland +3 9 Portugal +7 Romania +7 Slovakia +3 Slovenia +7 South Korea +29 Spain +7 Switzerland +7 United Kingdom Chile Armenia +5 Macedonia Hong Kong Taiwan New Zealand -1 Turkey Morocco United States Canada Mexico United Arab Emirates Ukraine Australia Qatar Suriname Jordan NEW 53 Belarus Croatia China India Argentina Egypt Moldova -1 Uganda Bolivia -3 Tanzania +1 The complete tables ranking the top 100 countries, along with last year s ranking, can be found on the IFQC s Web site at September 2009 Page 3

4 Energy Security Conference Examines Asia-Pacific Issues The Energy Studies Institute of the National University of Singapore held earlier this year an Energy Security Conference to examine a range of energy-related issues from nationalism to regional security to economic recovery. Participants of the one-day event represented various research institutes, governmental agencies, advisory councils, nongovernmental organizations, and industry. The issues of energy, security and economy have become central to Asia-Pacific regional and, indeed world-wide development, prosperity and sustainability. Figure 2: Oil Supply Security Index Dr Elspeth Thomson, senior fellow, Energy Studies Institute (ESI), opened the conference to the international delegates attending. Mr Khoo Chin Hean, executive director of ESI, gave the opening address. He stated that energy is a crucial requirement for a county to ensure economic sustainability and growth to meet the needs of its people. Although alternative energy sources, such as solar and wind power, are growing in use, fossil fuels of oil, natural gas and coal will remain the major sources for baseload electricity and for transport needs. Mr Khoo reflected on other key energy issues of price stability, technology and resource development, climate change, and the energywater nexus. He concluded that with the global changes taking place it is more important than ever for cooperative efforts to find common solutions. Figure 3: Freshwater Use Comparison Dr S. Narayan, visiting senior research fellow at the ESI, presented on Energy Nationalism. He noted that economic progress and development in the Asia-Pacific region has deepened competitive actions on resources (including energy), markets, supply routes and investments. The result is that energy security is now near the top of the strategic agenda for Asia-Pacific regional powers. Dr Narayan illustrated this in Figure 2 showing oil supply security index comparisons for China, Japan, South Korea and USA. In the medium-term, Asia will dominate the non-oecd demand rise for oil and energy resources. The global energy industry faces unprecedented challenges and will require cooperative strategic efforts to adequately respond. Mr Anthony D Agostino, research fellow at the Institute of Water Policy of Lee Kuan Yew School of Public Health (Singapore), spoke on The Energy-Water Nexus in Asia. Core points that he made were: Source: Institute of Water Policy (Singapore); UN FAO, US DoE To achieve and maintain energy security an understanding in needed on how energy depends on water availability and viceversa. Because of their interdependence, the energy-water nexus dictates inherent resource trade-offs. Figure 3, from Mr D-Agostino s presentation, shows the difference in freshwater resource uses between Asia and the USA. Energywater impacts and availability are crucial to agricultural irrigation, electricity generation, desalination, and biofuels production. As urbanization and industrialization progress throughout the region, water scarcity may undermine efforts towards energy security, thus energy policy needs to incorporate water considerations. (Continued on p6) September 2009 Page 4

5 China Car Sales Jump 90% in August The China Association of Automobile Manufacturers indicated that August 2009 auto sales jumped by 90% over the same period last year, to 858,300 passenger cars sold. This is nearly 26,000 more cars purchased over July s total. The sharp increase is attributed primarily to government stimulus measures, sales tax cuts and rebates for rural buyers. China s consumer confidence also appears to be growing again, based on these figures. The overall vehicle sales (passenger cars plus trucks) in August were up by almost 82% year-on-year to 1.14 million units sold. The demand for motor fuels is also expected to show similar increases with the vehicle growth and consumer confidence in the economy. New Zealand Ministry of Transport Releases E10 Test Results The New Zealand Ministry of Transport has issued results from the project Testing the Corrosive Effect of Ethanol Blended Petrol on Aluminum Materials. The testing carried out by SGS New Zealand Ltd was designed to evaluate the impacts of 10 vol.% ethanol blends (E10) in gasoline under immersion testing of aluminum alloys generally used for engine blocks. The results found limited effects from the E10 blends under the testing conditions used. The testing was conducted due to concerns about potential impacts to Japanese manufactured vehicles, which are designed under Japan s ethanol blending limit at 3 vol.% maximum. New Zealand also requires that corrosion inhibitors be added to ethanol blends under the Engine Fuel Specifications Regulations. Hong Kong Begins Public Consultation on Air Quality Objectives Review The Hong Kong Environmental Protection Department (EPD) has launched a four-month public consultation on its Air Quality Objectives (AQOs) review that proposed revisions and strengthening of standards that have been in place since The EPD proposes that World Health Organization (WHO) Air Quality Guidelines issued in 2006 be referenced for Hong Kong s AQOs to enhance the protection of public health and further improve air quality. The Who Air Quality Guidelines would be implemented as long-term goals and include concentration targets for sulphur dioxide, nitrogen dioxide, carbon monoxide, ground-level ozone, particulate matter (PM10 level), and lead. Fuels Industry Updates To help achieve these tighter air quality standards, the review recommends emission control measures to include capping and control, transport management, infrastructure development and planning, and energy efficiency measures. Once fully implemented, the control measures are expected to reduce hospital admissions attributable to air pollution by about 4,200 per year in Hong Kong, as a public health cost savings of about $1.228 billion per year. The EPD is seeking the views of the public on the proposed standards and emissions controls through the end of November China Invites Comments on New Passenger Car Fuel Economy Standards China s first fuel economy standards for new passenger cars came into force in The standards were implemented in two phases, from July 2005 (Phase 1) and January 2008 (Phase 2). Vehicle fuel consumption in China accounts for about 40% of total fuel use in the country, and average fuel consumption was about 8 litres/100 kilometers, significantly lagging behind most international standards. China is now in the process of developing its 3rd phase of fuel efficiency standards for new passenger vehicles. The China Automotive Technology and Research Centre (CATARC), the leading agency for setting up the standards, has invited public comments on the proposed standards until September 7, The proposed limits are applicable to the M1 category vehicles that use gasoline and diesel fuel with maximum design weight of 3.5 tons (various exemptions exist for specific vehicle types and fuels). The plan is to implement the Phase 3 standards in stages beginning in 2012 with full implementation by The average fuel consumption is expected to achieve 7 litres/100 kilometers by 2015, or about 15% improvement in fuel efficiency from 2006 levels. Southeast Asia Faces Soaring Economic Costs from Climate A recent study by the Asian Development Bank (ADB) concludes that Southeast Asia could experience soaring economic costs if climate change actions are not implemented. Southeast Asia is one of the most vulnerable regions in the world to impact from climate change. The ADB study indicates that the benefits to the region of taking early action to mitigate emissions leading to climate change would far outweigh the costs of such efforts. Without action, Indonesia, Philippines, Thailand and Viet Nam could incur damages to agricultural outputs, land loss/relocations, public health effects (Continued on p6) September 2009 Page 5

6 (continued from p5) (disease and stress) that accumulate to more than 6% of their countries gross domestic products each year by the end of this century. The ADB report indicates that Southeast Asian nations should address the threats of climate change and economic/financial crisis through green stimulus programs, including programs like energy efficiency measures, Fuels Industry Updates and cleaner transportation. The report also recommends closer regional cooperation on programs to mitigate emissions. The study, titled The Economics of Climate in Southeast Asia: A Regional Review, is available at adb.org/documents/books/economics-climate--sea/ PDF/Economics-Climate-.pdf Energy Security Conference Examines Asia-Pacific Issues (continued from p4) Mr Geoffrey Pakiam, senior political analyst at ESI, focused on the Southeast and East Asia energy security issues. He examined the energy trade flows underpinning relationships in the region and reasons for changes taking place. On key point made was the estimated years of future production (reserves to production ratios) for crude oil in the region, which ranges from only 11.3 years for China to 27 years for Vietnam. Natural gas reserves to production ratios fair somewhat better at 27 years for China to over 40 years for Malaysia and Myanmar. In going forward, Mr Pakiam noted the production projects being developed throughout the region, including cooperative strategies underway. fuels. Key paths forward will involve investments for resource development and technologies, private sector participation in energy, clean fuels development and infrastructure. Other presentations covered refinery security and response to the current financial crisis. The future growth and continued success in the Asia-Pacific regions will require coordinated policy development, communications and close relationships on trade, investment and diplomacy for energy, environmental and economic security. Figure 4: Energy Resources Consumption in South Asia Ms Ruchika Chawla, associate fellow at The Energy and Resources Institute (TERI) in Delhi, presented an update on South Asia region energy security issues. She noted the unique socio-economic aspects to this subregion where 23% of the world s population resides while contributing about 3% to total world GDP. However, it is one of the fastest growing areas of the world with economic advances ranging between 6% and 10% annually. This expanding activity will continue to drive energy and fuel demands for these countries. Some other regional energy challenges include equitable access, rising import dependency, infrastructure needs, inefficient technologies and high dependence on single Source: TERI Upcoming Conferences & Events 2nd APAC Refining Summit 6-9 October 2009, Hanoi, Vietnam 2nd Downstream Asia Roundtable October 2009, Kuala Lumpur, Malaysia Oil & Gas Outlook Asia 2 November 2009, Singapore Clean Energy Expo Asia November 2009, Singapore If you have any enquiries or feedback on ACFA News, please contact us at info@acfa.org.sg or contact Joanne Chong at (+65) or joanne@acfa.org.sg. Visit our website at Disclaimer: The Asian Clean Fuels Association does not represent or warrant the accuracy, adequacy or completeness of the information and materials contained in this newsletter (the Content ), and expressly disclaims any liability for any error or omission in the Content, or for any action taken in reliance on the Content. September 2009 Page 6