Harmonization of Fuel Quality Standards in ASEAN

Harmonization of Fuel Quality Standards in ASEAN Source: hutchinsontransmission.com Dr Ruengsak Thitiratsakul Petroleum Institute of Thailand February 23, 2016 Petroleum Institute of Thailand 11 th Floor, Energy Complex Building B, 555/2 Vibhavadi Rangsit Road, Chatuchak, Bangkok 10900 Tel: (662) 537-0440 Fax: (662) 537-0449 Website: www.ptit.org E-mail: ptit_centre@ptit.org

ASEAN Transportation Fuel Demand Transportation Demand MBDOE Light Duty Vehicles Million Rail Marine Aviation Heavy Duty Light Duty ExxonMobil 2015 Outlook for Energy

ASEAN Population of Vehicles is Increasing at the Rate of 11% ASEAN Number of Vehicles per 1,000 People 2012-2016FC Country Brunei Cambodia Indonesia Lao Malaysia Myanmar Philippines Singapore Thailand Vietnam Avg. Growth -1% 27% 13% 16% 5% 16% 4% 1% 5% 13% Source: ASEAN Statistical Yearbook 2013

ASEAN Automotive Sales and Production Source: ASEAN in the Eyes of Global Green Automotive Manufacturers as Strategic Hub of Auto Production to the World by Thailand Automotive Institute, pp.27, June 2013 4

Vehicle Pollution is an Increasingly Important Challenge! 5

Current ASEAN Transportation Fuel Quality Gasoline 91/95 (EURO II) High Sulphur Diesel Gasoline 90/92/95 (EUROII) E5 90/92/95 (EUROII) E10 90/92/95 (EUROII) Diesel (EUROII) Gasoline 92 (EURO I) High Sulphur Diesel Gasoline 95 (EUROIV) E10 91/95, E20, E85 (EUROIV) Diesel (EUROIV) Gasoline 87*/95*/92/97 (EURO I) High Sulphur Diesel Gasoline 81/93/95 (EUROII) E10 91/95/97 (EUROII) Diesel (EUROII) BRUNEI Gasoline 85/92/97 (EURO I) Diesel (EUROI) Gasoline 95/97 (EUROII) Diesel (EUROII) SINGAPORE Gasoline (EUROIV) Diesel (EUROV) Source: IFQC, 2014 * Leaded Gasoline Gasoline 88/91/95/E5 (EUROII) High Sulphur Diesel Diesel (EUROII) 6

Current and Trend Transportation Fuel Quality in ASEAN Country 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 Brunei EURO 1 EURO 4 Cambodia G EURO 1 Cambodia D 2 Grades (Sulphur max 2,500 ppm / Sulphur max 5,000 ppm) Indonesia G EURO 2 EURO 4 Indonesia D (1) Sulphur max 3,500 ppm Indonesia D (2) EURO 2 EURO 4 Lao G EURO 2 Lao D Sulphur max 5,000 ppm Malaysia EURO 1 EURO 2M EURO 4 Myanmar G EURO 1 Myanmar D Sulphur max 5,000 ppm Philippines EURO 1 EURO 2 EURO 4 Singapore G E 1 EURO 2 EURO 4 EURO 5 Singapore D E 1 EURO 2 EURO 4 EURO 5 Thailand G EURO 1 EURO 2 EURO 4 Thailand D EURO 2 EURO 3 EURO 4 Vietnam (3) EURO 2 EURO 4 EURO 5 Note: G = Gasoline, D = Diesel (1) PSO: Public Service Obligation (2) Non-PSO: Non-Public Service Obligation (3) Motorcycle uses EURO 3 from Jan 2017 Source: PTIT, 2014 7

Pros and Cons of Harmonization of ASEAN Fuel Standards People Environment Economy Pros Flexible trade across border. Confident in filling fuel. Reduce health risk. Reduce exhaust emission. Reduce climate change. Better air quality. Economic value. Logistic efficiency. Better ASEAN fuel types synergy. Economy of scale in fuel trading. Security of Supply in term of ASEAN Strategic Reserve. Cons Higher fuel costs. Investment to upgrade refinery. Higher production cost. Others No enforcement law mechanism in ASEAN. It cannot be pushed to be the national law. 8

Thailand Case Study: Benefits of Sulfur Reduction in Diesel Euro 3 to Euro 4: US$ 1,800 million Less CO, NOx, PM Emission Health Care Cost Reduction Less Lung Disease & Respiratory Health Patients

Should ASEAN follow European Union in Harmonizing Their Quality Standards?

Systematic Fuel Quality Improvements in the European Union January 2005 EURO 5 (January 2009) Sulfur Limit = 10 ppm (on-road Fuel) Sulfur Limit = 10 ppm (non-road Fuel) January 2000 October 1996 EURO 1 EURO 2 EURO 3 Sulfur Limit = 500 ppm October 1994 Sulfur Limit = 1000 ppm (Gasoline) Sulfur Limit = 2000 ppm (Diesel) EURO 4 Sulfur Limit = 50 ppm Sulfur Limit = 150 ppm (Gasoline) Sulfur Limit = 350 ppm (Diesel) 11

Critical Properties for Fuel and Biofuel Harmonization Gasoline Diesel Ethanol Biodiesel Main Critical Properties RON Sulfur Cetane Number Sulfur % Ethanol % Water content Organic Impurities % FAME Acid Number Lead Density MTBE RVP Olefins Aromatics Benzene T50 Distillation MON Oxygenates Phosphorus Density Viscosity Pour Point Flash Point Carbon Residue Polyaromatics T90 Distillation Aromatics Water Ash Oxidation Stability CFPP Copper Corrosion Other Critical Properties Density Flash Point Cetane Number Oxidation Stability 12

Critical Properties for Fuel and Biofuel Harmonization Gasoline Diesel Ethanol Biodiesel Main Critical Properties RON Sulfur Cetane Number Sulfur % Ethanol % Water content Organic Impurities % FAME Acid Number Lead Density MTBE RVP Olefins Aromatics Benzene T50 Distillation MON Oxygenates Phosphorus Density Viscosity Pour Point Flash Point Carbon Residue Polyaromatics T90 Distillation Aromatics Water Ash Oxidation Stability CFPP Copper Corrosion Other Critical Properties Density Flash Point Cetane Number Oxidation Stability 13

Harmonization of ERIA vs WWFC Worldwide Fuel Charter (WWFC), B100 Guidelines for B5 Items Units EAS-ERIA BDF Standard WWFC Guidelines specifications (EEBS):2008 Ester content mass% 96.5 min. <== Density kg/m3 860-900 <== Viscosity mm2/s 2.00-5.00 <== Flashpoint deg. C 100 min. <== Sulfur content mass% 0.0010 max. <== Carbon residue (100%) or 0.05 max. 0.05 max. mass% Carbon residue (10%) 0.3 max. Cetane number 51.0 min. <== Sulfated ash mass% 0.02 max. 0.005 max. Water content mg/kg 500 max. <== Total contamination mg/kg 24 max. <== Copper corrosion Class-1 Acid value mgkoh/g 0.50 max. <== Oxidation stability hrs. 10.0 min. (****) <== Iodine value Reported (***) 130 max. May unnecessarily preclude certain feed stocks. Methyl Linolenate mass% 12.0 max. Polyunsaturated FAME mass% N.D. (***) (more than 4 double bonds) 1max. Methanol content mass% 0.20 max. <== Monoglyceride content mass% 0.80 max. <== Diglyceride content mass% 0.20 max. <== Triglyceride content mass% 0.20 max. <== Free glycerol content mass% 0.02 max. <== Total glycerol content mass% 0.25 max. 0.24 max. Na+K mg/kg 5.0 max. <== Ca+Mg mg/kg 5.0 max. <== Phosphorous content mg/kg 10.0 max. 14

ASEAN+6 Meeting on Harmonization of Quality Standards Workshop on The Harmonization of Quality Standards for Transportation Fuels and Biofuels in ASEAN 7 November 2014 at Chatrium Hotel Riverside in Bangkok, Thailand 15

ASEAN Member Survey Result Necessity of improving fuel quality standards and beneficial to ASEAN All members agreed Necessity of the establishment of a working group or task force for the harmonization initiative The concept of harmonization of quality standards should cover ASEAN+6 All members agreed Comment: Should have representatives from technical body and automotive industry (Japan). All members agreed Consideration: Difficult because of the wide-range of quality standard in ASEAN+6. ASEAN standard should have better quality to decrease the environmental impact. Remark: Conclusion from questionnaire, interview and workshop on The Harmonization of Quality Standards for Transportation Fuels and Biofuels in ASEAN on 7 November 2014, Bangkok Thailand 16

Challenges of ASEAN Harmonization of Quality Standards Key Obstacles in Harmonizing ASEAN Quality Standards Fuel Quality Wide variety of fuel quality standards being used Awareness Degree of awareness of environmental impact Readiness Readiness to support the restructuring of the ASEAN fuel quality and standard 17

Roadmap of Fuel Quality Improvements in ASEAN Strategy set up* Propose implementation process for fuel quality standards in ASEAN Establish task force and set action plan Propose ASEAN fuel quality standards and action plan to SOME Short Term* Announce ASEAN fuel quality standards Set guideline and implementation plan to support ASEAN Members for better standards Strengthen cooperation and assistance in the quality standard Long Term* All ASEAN members consider the improvement of fuel quality standards as ASEAN+6 Set up ASEAN fuel quality monitoring Remark: * Subject to ASEAN Members SOME (Senior Officials Meeting on Energy) 18

Thank you 19

Strategic Implementation Plan for Fuel and Biofuels Quality Standards in ASEAN Phase 1 Phase 2 Phase 3 Establish Task Force Proposed and Set Action Plan TF Meeting Report to AMEM DOEB SOME TF SOME Present pros and cons of harmonizing ASEAN standards to SOME Propose to set up the transportation fuel quality task force Design roles and responsibilities Add action plan in ASEAN PLAN OF ACTION FOR ENERGY COOPERATION (APAEC) 2016-2020 Set up state meeting and mutual assistance in ASEAN Set guideline and support programs Coordinate with AAF, APWG, ASCOPE etc Conclude final ASEAN Fuel Quality Standards and action plan to SOME Report to AMEM Remark: AAF (ASEAN Automotive Federation) AMEM (ASEAN Ministers of Energy Meeting) APWG (Automotive Product Working Group) ASCOPE (ASEAN Council on Petroleum) DOEB (Department of Energy Business) SOME (Senior Officials Meeting on Energy) TF (Task Force) The Harmonization of Quality Standards for Transportation Fuels and Biofuels in ASEAN by Petroleum Institute of Thailand (PTIT) 20