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United Nations Environment Programme
  • Introduction
  • Systems approach
  • Why low sulphur fuels
  • The tools
  • Implementation
  • Case studies
  • Contacts

The Partnership for Clean Fuels and Vehicles (PCFV) has been working with developing and transitional countries to reduce vehicular air pollution through the promotion of cleaner fuels and vehicles. This regulatory toolkit is part of that ongoing campaign and is meant to introduce the need for a systems approach to vehicle emission reduction. A systems approach matches fuels and vehicle improvements - to move towards tighter vehicle emissions regulations.

This toolkit will support developing and transitional countries to introduce requirements for 50 ppm and below sulfur fuels; produce or import lower emitting and more efficient vehicle technologies; establish vehicle emissions control roadmaps; and ultimately improve air quality and human health in these countries. The toolkit will show by examples how to build a regulatory strategy, establish enabling legislation and regulatory standards, and set up enforcement mechanisms. The toolkit will also use specific case examples to illustrate how countries can integrate cleaner fuels and vehicles emission standards. Many developing and transitional countries - through support of the PCFV - have completed the phase-out of leaded petrol, followed by the adoption of targets and roadmaps to introduce lower sulfur fuels. Most of these countries however have yet to introduce vehicle emission standards as shown in the map below. Euro 3 vehicle emission standards will require 150 ppm sulfur in petrol and 350 ppm sulfur in diesel in order to meet emissions limit.

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Vehicle Emission Standards April 2015. Source: PCFV Secretariat

One of the most important lessons learned in the approximately 50-year history of vehicle pollution control worldwide is that vehicles and fuels must be treated as a system. Improvements in vehicles and fuels must proceed in parallel if significant improvements in vehicle related air pollution are to occur. A program that focuses on vehicles alone is doomed to failure; conversely, a program designed to improve fuel quality alone also will not be successful.

A second important lesson is that a program that focuses on improving vehicles and fuels as a system can be successful. Many countries are following the EU system which lays out a clear roadmap with explicit links between vehicle emissions standards and the associated technologies with appropriate fuel parameters and specifications needed to optimize emissions performance.

Structure of the Toolkit

This toolkit guides policy makers in developing countries towards the development of a regulatory framework to address vehicle emissions and fuel quality, including technical and policy background and case studies of existing regulatory approaches.

This toolkit:

  • First summarizes the impact of fuel sulfur content on vehicle emissions and assesses the implications for the phase-in of tighter new vehicle standards.
  • The second part then looks at why countries are moving towards very low sulfur levels in fuels and the impact of sulfur on advanced vehicle pollution control technologies.
  • The third part provides a set of tools that can be used to move towards cleaner fuels and vehicles regulations.
  • The last section summarizes the approaches including regulatory governance taken by various countries to require or stimulate lower sulfur fuels and more stringent vehicle standards.

Fuels and Vehicles as a System

Gasoline Vehicles and Fuels

Gasoline is a complex mixture of volatile hydrocarbons used as a fuel in internal combustion engines. The emissions of greatest concern from gasoline-fuelled vehicles are Carbon Monoxide (CO), Hydrocarbons (HC), Nitrogen Oxides (NOx), Particulate Matter (PM) and certain toxic hydrocarbons such as benzene, formaldehyde, acetaldehyde, and 1,3-butadiene. Each of these can be influenced by the composition of the gasoline used by the vehicle. The most important characteristics of gasoline with regard to its impact on emissions are sulfur concentration, volatility (typically expressed as vapor pressure), aromatics, olefins, oxygenates, and benzene level.

Two- and Three-Wheeled Vehicles

Most two- and three-wheeled vehicles currently used are not equipped with catalytic converters to control emissions. Therefore it would seem that the impact of the various fuels parameters is similar to those from pre Euro 1 cars. Where Euro 3 limits have been introduced however, vehicles are impacted by sulfur and lead in a manner similar to Euro 1 and 2 gasoline fueled cars. For two- and three-wheeled vehicles equipped with 2-stroke engines, the amount and quality of the lubricating oil is probably more important for emissions than fuel quality but this technology is rapidly being phased out in most countries. This is fortunate as 2-stroke engines have very high PM emissions relative to 4-stroke engines.

Diesel Vehicles and Fuels

Diesel fuel is a complex mixture of hydrocarbons with the main groups being paraffins, napthenes and aromatics. Organic sulfur is also naturally present. The actual properties of commercial automotive diesel depend on the refining practices employed and the nature of the crude oils from which the fuel is produced. The quality and composition of diesel fuel can significantly influence emissions from diesel engines.

Diesels emit high levels of oxides of nitrogen and particulates. Modifying engine parameters to simultaneously reduce both NOx and Particulates (PM) is difficult and limited since the optimal settings for one pollutant frequently increases emissions of the other and vice-versa. Achieving very low levels of NOx and PM therefore require exhaust treatment. Reformulated diesel fuels can effectively reduce oxides of nitrogen and particulate emissions from all diesel vehicles. These fuels have reduced sulfur, reduced aromatics, and increased Cetane Number. To reduce PM and NOx emissions from a diesel engine, the most important fuel characteristic is sulfur because sulfur contributes directly to PM emissions and high sulfur levels preclude the use of or impair the performance of the most effective PM and NOx control technologies.

Why The World is Moving Toward Very Low Sulfur Fuels

Sulfur Levels

It is now understood that sulfur content must be reduced to very low levels if the maximum benefits are to be achieved by the most advanced technologies used with combustion engines today. When crude oil is processed into gasoline and diesel fuel in the refinery, some sulfur finds its way into the fuel. The higher the density of the crude oil, the more difficult it is to remove the sulfur. Depending on the crude oil used and the refinery configuration, sulfur levels in gasoline can be anywhere from 10 to as high as 1000 ppm or more, and in diesel fuel it can be from 10 or lower to more than 10,000 ppm. Below is a global map of the current sulfur levels in diesel fuels.

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Diesel Fuel Sulphur Levels: Global Status April 2015. Source: PCFV Secretariat

Concerns About Sulfur

[to be added]

Lessons Learnt

Lesson 1

One of the most important lessons learned in the approximately 50-year history of vehicle pollution control worldwide is that vehicles and fuels must be treated as a system. Improvements in vehicles and fuels must proceed in parallel if significant improvements in vehicle related air pollution are to occur. A program that focuses on vehicle standards or fuel quality alone will be less effective than a program designed to improve both in a coordinated fashion.

Lesson 2

A second important lesson is that a program that focuses on cleaning up vehicles and fuels as a system can be successful. Many countries are following the EU system for cleaning up vehicles and fuels and this system has laid out a clear roadmap which carefully links vehicle emissions standards and the associated technologies with appropriate fuel parameters and specifications needed to optimize emissions performance.

Lesson 3

A third important lesson is that most vehicles new and used available for import into developing nations have some form of pollution control technology and without the lower sulfur fuels to enable the efficient operation of these technologies, the vehicles end up having the technologies not functioning optimally, removing any potential clean air gains that could have been available.

The primary reason for introducing lower sulfur vehicle fuels is to enable the introduction of emissions control devices that can significantly reduce vehicle emissions and to allow them to achieve their full emissions reduction potential.

There are many tools compiled in this toolkit which can be used to move towards cleaner fuels and vehicles. This chapter will review a cross section of the tools that have been used in many countries over the years.

A. Mandatory Standards

Mandatory standards are the most direct method for adopting cleaner fuels and cleaner vehicles. In most cases, countries model their requirements on the standards already adopted by either Europe, as transposed into United Nations Economic Commission for Europe (UNECE) Regulations, or the United States. Very often countries will make slight variations to suit local conditions or select a different mix of requirements. For example, with regard to vehicle emissions standards:

  • When Brazil first put in place its PROCONVE program during the mid-1980’s, it took account of the widespread use of alcohol in its gasoline and added an aldehyde standard to what were otherwise similar to the US light duty vehicle requirements.
  • Early this century, Hong Kong realized that the first few generations of European standards provided weaker requirements for diesel cars than for gasoline cars for NOx and PM; since these were the most serious air pollution challenges in the region, Hong Kong adopted European requirements for gasoline cars but California’s much more stringent requirements for diesels.
  • As evaporative emissions become a larger fraction of light duty gasoline vehicle total hydrocarbon emissions, countries such as China are considering adding the US evaporative standards and even the Onboard Refueling Vapor Recovery requirements to their China 6 limits. Beijing will likely introduce these requirements earlier than the national government.

Similarly with regard to fuels, most countries tended to follow the US or European roadmaps for lead and sulfur levels but varied some of the other parameters depending on local conditions. For example:

  • China’s clean fuels roadmap for gasoline varies olefin limits from those in Europe in recognition of the differing refinery configurations in China.
  • Volatility requirements, expressed as Reid Vapor Pressure (RVP) often vary from those adopted by Europe or the US, based on the ambient temperature conditions in a given country or region within the country or season.

Adopting fixed standards for vehicles and fuels and a time schedule for their implementation has the advantage of removing uncertainty for all the stakeholders involved. Vehicle and fuel providers know what will be required of them and can plan and if necessary invest accordingly. Similarly, their customers can anticipate the types of products that will be available to them and when. And environmental and health officials can estimate the future trajectory of vehicle emissions and possible consequences.

In adopting and implementing standards for fuels and new vehicles sufficient resources are needed for a strong and effective compliance program. Details of the fuels and vehicles compliance program in the US are provided under Case Studies.

B. Import Restrictions

Many countries import some or all of their vehicles and those imported vehicles can be either new or used. Placing restrictions on the types and quality of imports can be a very important tool and can take many forms:

New Vehicle Standards

As noted above, such standards are a very effective tool for reducing vehicle emissions.

Used Vehicle Standards

Many countries import large numbers of used vehicles each year and the emissions from these vehicles can have wide variations from relatively clean to highly polluting. For example, many vehicles imported into Mexico from the United States are old and poorly maintained, inexpensive vehicles which are highly polluting. These so called Chocolates are a major concern to Mexico’s environmental authorities. Under consideration is some kind of inspection scheme that could weed out the highest polluting vehicles and prevent them from entering the country. New Zealand has instituted such an approach where all imported cars are given a simple inspection test to assure that at a minimum the catalytic converter is functioning.

Another approach assumes that as a vehicle ages its pollution control technology will generally deteriorate. Therefore some countries will limit imports to vehicles that are less than a certain age – 10 years or 5 years or even 3 years. For example, Kenya has adopted a restriction that prohibits imported vehicles that are over 8 years old.

C. Economic Incentives

Economic incentives such as tax variations or price variations can also play a very important role in shaping the phase in of cleaner vehicles and fuels and these have been used very creatively in the past. Many examples exist including:

  • When Hong Kong was experiencing issues associated with the introduction of lead free gasoline, one challenge in particular stood out: many fueling stations were quite small and were unable to have two pumps, one with leaded gasoline and one with unleaded. Since some customers still wanted leaded gas, Hong Kong authorities felt that it would be difficult and even perhaps inappropriate to mandate a complete switch overnight. Their solution was to adopt a tax policy that while allowing both fuels to be sold made clear that unleaded fuel would be less expensive than leaded. Within only a few months of adopting this policy, the vast majority of Hong Kong’s consumers had opted for the unleaded fuel and it rapidly dominated the market. As demand for the more expensive leaded fuel gradually disappeared Hong Kong was able to make lead free mandatory.
  • Thailand faced a similar challenge in that different customers wanted different fuels. Recognizing the routine fluctuations in the price of crude oil in the global marketplace and the impact of this on the price of gasoline. As the price of crude oil rose, they allowed the retail prices of leaded and unleaded gasoline to rise accordingly. However, when the market price of crude oil went down, they only allowed the price of unleaded gasoline to decline, locking in the high price of the leaded fuel. As the gap between leaded and unleaded widened, the market shifted almost entirely to unleaded and demand for leaded fuel almost disappeared. Thai officials were then able to ban leaded gasoline with almost no public backlash.
  • Several European countries adopted creative tax policies to incentivize cleaner vehicles with catalytic converters (and in later years particulate filters) and unleaded and lower sulfur fuels as key elements moving toward mandatory requirements.

D. Use Restrictions

Another approach used mainly by cities to incentivize the switch to cleaner vehicles was clean vehicle zones or low emissions zones (LEZs). A wide variety of cities and towns across Europe operate or are preparing LEZs, to help meet the EU health-based air quality limit values, where the most polluting vehicles are regulated. This means that vehicles may be banned or in some cases pay a fee if they enter the LEZ when their emissions are over a set level

Different vehicles are regulated, depending on the local conditions. All LEZs affect heavy duty vehicles, some also affect diesel vans, others also affect diesel and gasoline cars; in Italy, motor cycles and three-wheelers are also included.

One of the most famous LEZs is in London which has several elements and is constantly evolving. In London, if you drive an electric car, you can drive in and out of the city’s central zone without paying the steep $15.50 (£10) daily congestion charge. Since 2008, certain diesel-powered trucks, buses and large vans are “deterred” from driving in the city. The LEZ emissions standards are based on European emission standards relating to particulate matter (PM), which are emitted by vehicles, which have an effect on health. The following vehicles are not charged:

  • Larger vans and minibuses that meet the Euro 3
  • Lorries, buses, and coaches that meet Euro IV.
  • Cars and motorcycles

The Mayor of London has indicated that he is planning to turn the entire downtown core into an “Ultra-Low Emission Zone,” admitting only battery electrics and unspecified “low-emission vehicles” by 2020. This would include more than 1,600 hybrid buses for London by 2016 and all of the city’s new black taxis to be zero emission by 2020.

Another very successful program is in Berlin. The program started in 2008 and at that time, only diesel vehicles that met Euro 2 standards or better were allowed into the center of the city. Euro 1 diesel vehicles could also be admitted but only if they were retrofitted to reduce PM emissions. Gasoline vehicles had to be Euro 1 or cleaner. On January 1, 2010, the program was further tightened with only diesel vehicles meeting Euro 4 or Euro 3 with a particulate filter being allowed.  The illustration 'LEZ impact: change in particle emissions in berlin' indicates that the program has been a great success.

Beijing has a similar program in place which has expanded over time. Initially dirtier (so called yellow label vehicles) were banned from the central part of the city bounded by the second Ring Road over the normal work day (7 AM to 7 PM). Most recently these vehicles are banned from entering the area bounded by the 5th Ring Road

E. Special Exemptions For advanced technologies

There have been many steps taken by countries and cities around the world to stimulate the development and purchase of advanced technology vehicles. For example, as noted under 'Use Restrictions', London provides an exemption from its congestion charge scheme for electric vehicles. A few other examples include:

Exemptions from Episodic Restrictions

When Berlin adopted a high pollution episode scheme several years ago, it provided that only vehicles meeting the more stringent emissions regulations would be allowed to drive in the city when pollution levels exceeded certain hazardous limits. As a result, the city had one of the cleanest car fleets in Germany.

Car Pool Lane Privileges

In the United States, the State of Virginia exempted hybrid electric cars from its car pool lane restrictions. As a result Virginians had a much higher sales fraction of hybrids than other parts of the country.

Sales Restriction Exemptions

Beijing, China has adopted a monthly limit on the number of new vehicles that can be sold and selects eligible purchasers using a lottery system. Purchases of electric vehicles are exempted from the system and can be purchased with no limitation.

F. Voluntary Incentive Programs

There are several voluntary incentive programs available to entice vehicle owners towards cleaner transportation. One such example is the SmartWay Program.

The SmartWay Program is a public-private initiative between the US EPA, large and small trucking companies, rail carriers, logistics companies, commercial manufacturers, retailers, and other federal and state agencies. Its purpose is to improve fuel efficiency and the environmental performance (reduction of both greenhouse gas emissions and air pollution) of goods movement supply chains.

Launched in 2004, SmartWay is an EPA program that reduces transportation-related emissions by creating incentives to improve freight supply chain energy and environmental efficiency. It aims to accelerate the availability, adoption and market penetration of advanced fuel efficient technologies and operational practices in the freight supply chain, while helping companies save fuel, lower costs and reduce adverse environmental impacts. EPA helps SmartWay Partners move more goods, more miles with lower emissions and less energy.

In its first decade, the program is estimated by EPA to have achieved significant benefits including:

  • SmartWay partners have saved 120.7 million barrels of oil, saving $16.8 billion dollars to date.
  • SmartWay’s clean air achievements are estimated at 51.6 MMT CO2, 738,000 tons NOx, and 37,000 tons PM reduced so far helping protect the health and well-being of citizens, especially in low-income communities near ports, truck stops, and borders.
  • The United Nations, the World Bank, the Commission for Environmental Cooperation, as well as the governments of China, Mexico and Canada, have projects and programs that rely upon SmartWay’s technical assistance, methods and tools.
  • US ports rely on SmartWay’s Port Drayage Truck program to help reduce pollution and address environmental justice concerns in and around major US ports.

Similar efforts are underway in other parts of the world, building on this experience. A good example is the Green Freight China Program organized by Clean Air Asia with support from China Sustainable Energy Program (Energy Foundation) and partners (Ministry of Transport, US EPA and others). Its premise is that City level and regional level projects for the freight sector will be successful and sustained only if an integrated policy package is in place nationally, due to the freight being carried across regional boundaries. A Green Freight China Program is being designed that focuses on energy efficiency and reduced GHG and air pollutants.  

Measures to reduce fuel use and emissions from trucks include:

  • Vehicle activity and driving pattern improvement
  • Enhanced maintenance
  • Tire and wheel technologies and equipment
  • Aerodynamics technologies and equipment
  • Idling control through technologies and behavior
  • Fuel, oil and lubricant improvement
  • Oil by-pass filtration system
  • Emissions control technologies
  • Fleet and engine modernization

G. Vehicle Scrappage Programs

Several mandatory and voluntary vehicle scrappage programs exist in many countries and most of them are government and industry funded.  Vehicle scrappage programs promote the acceleration for replacement of old vehicles with newer ones. The older high polluting vehicles are taken off the road and destroyed.  Vehicle owners can receive different incentives offered by the local programs which can include monetary reductions when purchasing new vehicle or incentives towards public transportation or cleaner mode of transportation.  Pollution levels can be greatly reduced.

China is attempting to bring this about and has mandated that all yellow label vehicles across the country be destroyed by the end of 2017; in the three main regions, all these vehicles are to be scrapped by the end of 2015. All gasoline vehicles that were produced without a catalyst (so called Pre-Euro or pre 2000 Model Year) and all pre Euro 3 diesel vehicles receive a yellow registration label.

H. Court Actions

In some countries, citizens have gone to court to challenge governments to do more to provide them with clean, healthy air and this can be the basis for accelerating the move to clean fuels and vehicles. Examples include:

Experience in Europe: The binding character of the limit values also emerges from the individual right of every EU citizen living in a non-attainment area, that the air quality (AQ) management authority undertakes all proportionate efforts to bring air pollution below the limit value or at least to reduce the excess of the limit value to the extent possible. That an individual right for action emerges from the excess of the AQ limit values was confirmed by the European Court of Justice, ruling on request of the German Superior Administrative Court, which in turn confirmed the claim of a citizen living along a heavily polluted arterial road in Munich, that the administration had not brought forward appropriate measures to reduce air pollution in the neighborhood and that more ambitious measures needed to be implemented to minimize the excess of the limit values and to meet them as soon as possible. As a result, the city of Munich had to revise its AQ plan by adding new measures. Forced by the court ruling, Munich eventually introduced a low emission zone where vehicles not meeting certain emission standards were banned. Only recently, the European Court of Justice clarified, again on request of the German Superior Court, that NGOs also have the right to file an action against insufficient local air quality planning. 

Experience in India: Fuel specifications based on environmental consideration were for the first time notified in the country by the Ministry of Environment & Forests in April 1996 for achievement by 2000. These norms mandating lead free gasoline were incorporated in the Bureau of Indian Standards (BIS) 2000 standards. Further, based on the Supreme Court order of April 1999, Ministry of Surface Transport (MoST) notified Bharat Stage-I (BIS 2000) and Bharat Stage-II vehicle emission norms broadly equivalent to Euro I and Euro II for introduction in entire India and NCR respectively.

In further response to the Supreme Court, the Ministry of Petroleum & Natural Gas (MoP&NG), Government of India constituted an Expert Committee, under the Chairmanship of the  then Director General, Council of Scientific & Industrial Research (CSIR) in 2001 to recommend an Auto Fuel Policy for the country including major cities; to devise a road map for its implementation; to recommend suitable auto fuels and their specifications considering the availability and logistics of fuel supplies, the processing economics of automotive fuels, and the possibilities of multi-fuel use in different categories of vehicles; to recommend attributes of automobile technologies, fiscal measures for ensuring minimization of social cost of meeting a given level of environmental quality and institutional mechanisms for certification of vehicles and fuels, as also the monitoring and enforcement measures.  The Expert Committee submitted their report to the Government of India in August 2002, which included their recommendations for achieving the desired objectives. Based on these recommendations, MoP&NG released the “Auto Fuel Policy” as approved by the Government in October 2003, which contained the recommendations for implementation, along-with the time frame, wherever applicable.

The Auto Fuel Policy (2003) addressed measures to cover various areas in which action was required viz. vehicular emission norms, fuel quality and the standard of CNG/LPG kits, measures to reduce emissions from in-use vehicles, vehicle technology, air quality data and Research & Development. It also covered air quality data and health effects of air pollution.

How to Implement a Clean Fuels and Vehicles Program

As countries or regions or cities consider a move to cleaner fuels and vehicles, they find themselves in many different circumstances - a strong or weak government agency with the power to mandate requirements, a domestic industry that produces vehicles and or fuels and that is an important source of jobs versus one that only imports these products or some hybrid of these, for example. But whatever the structural situation might be, a usual starting point involves raising public awareness of the health or environmental consequences of inaction.

A. Educate the public and get their support

Without strong public support it is highly unlikely that it will be possible to move forward with a strong and effective clean vehicles and fuels program. First it will be important to pull together a good summary of available information. International information is easily available and is briefly summarized later in this website. Health information highlighting potential adverse impacts on children, the elderly and other sensitive groups is usually most important. Beyond health impacts, in some areas, other environmental effects may be considered very important by some influential groups. (In Europe, for example, dying forests and lakes due to acidification motivated action as much as health concerns.)

Where local data is available to supplement international data that should be gathered as well. This can be critically important.

Getting this information to the public and policy makers and policy shakers is then critical. Press events, press background briefings, public workshops and other activities of this type can be useful means to get the word out. Often, the NGO community can play a critical role in doing this.

The affected industries – at a minimum the oil industry and the vehicle industry – need to be involved in this process. At best, they will support what you are trying to do. But even if not, it is wise to know their concerns and to learn what their objections or disagreements might be.

At the end of the day, unless there is a perceived need for action by a cross section of the public, it will likely not occur.

B. Identify The Decision-makers that Must Be Convinced to Act

This can vary widely from country to country

  • In the US, the EPA has the power to set vehicle and fuel standards but often there will not be one agency or organization blessed with this power.
  • In Europe, there are different roles with the Commission in the lead initially to develop proposals but with the Member States and the Parliament playing critical roles and having the power to strengthen or weaken whatever the Commission proposed before it is finalized.
  • In India, special expert committees have played a key role with the courts often applying important pressure.
  • In China, multiple organizations are involved – certainly the Ministry of Environment Protection (MEP) but also the State Council and others. Beyond the national government, local efforts such as those in Beijing and Shanghai can play a critical leadership role.

Each country is unique with its own political culture and power structure. This must be understood in order to be effective in bringing about real action.

C. Find a Champion or Champions

Within the decision making structure or power structure, it is usually important to find a person or an organization that supports your objectives for clean vehicles and fuels and to do what you can to help that person.

D. Gather the Facts

At the end of the day, policy makers will want to know and will need to know the facts:

  • Why are clean vehicles and fuels needed?
  • Is this possible technically? Politically? Economically?
  • How much will it cost?
  • Who will be affected?
  • How much time is needed

E. Match tools to circumstance

Is a mandatory regulation the most likely initial step to bring about success or will tax incentives or disincentives work better in your country or region? Important considerations might include:

  • Are all vehicles imported or are some vehicles manufactured or assembled in your country?
  • Is there a local refinery industry or is all your gasoline and diesel imported?
  • If vehicles or fuels are imported, what is the status of controls in the country or countries from which you import?
  • What are the potential jobs impacts in your country if you move forward toward cleaner vehicles and fuels?

F. Develop a strategy to get decision - makers to Act

It can be very helpful to determine who will be your allies and who will be you adversaries in this effort and what you need to do to bring them around to your point of view – to make it possible for the outcome to be positive after appropriate debate.

G. Enforcement

Experience has shown that regulations and standards have limited value unless they are enforced. The following section discusses the details of the enforcement and compliance programs for fuels and vehicles in the United States.

A fuel compliance program is important to ensure that fuels sold at the retail stations meet all the mandated specifications. A fuel compliance program becomes more critical with the use of advanced emission control devices that can be damaged by impurities in fuel (e.g., high sulfur fuel). Identification of compliance points within the fuels distribution system (e.g. port of import, refinery gate) can ease enforcement.

New vehicle emission standards can only serve to protect air quality if vehicular emissions are actually reduced when the vehicles are in normal use. To fully deliver the promise of environmental and health benefits from new vehicle standards, an effective vehicle compliance and enforcement program has to be in place to ensure emissions of new and in-use vehicles are effectively controlled.

H. Governance

Regulatory governance connects the essential pillars of environmental change which include: impact awareness of the environmental issue, actions to address the environmental issue and the instruments to enable the action to address the environmental issue. Regulatory governance is generally enabled by a central government-led agency that writes the laws and regulations, administers and enforces the regulatory requirements.

For any program including regulatory there needs to be appropriate resources, financial and human to develop, implement and monitor the program. The range in complexity of a program can be correlated to the complexity of the industry and of the flexibilities provided within a program.

Each country or jurisdiction will have different ways of gathering resources to support an initiative such as a regulation. The lead agency will need to submit to the appropriate authorities the requirements for the new initiative. In this case the initiative would be the introduction of clean fuels to the market. Budgets will be needed for each phase of the regulatory process which includes regulatory development, implementation and administration. Once the regulations are implemented there would be the on-going regulatory administration, compliance promotion and enforcement. These units may be separate, but in all cases they should work closely together as illustrated below.

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Key Lessons

Some lessons learned on regulatory governance and the development of regulations:

  • Consulting with industry and other government departments is key to the design of a successful regulation.
  • Alignment with major trading partners enables a “level playing field” and smooth trade activity in regards to competition and market forces.
  • The more complex a regulation or instrument, the tougher it is to enforce.
  • But complex regulations/instruments can allow for industry flexibility.
  • Extensive training of administration/enforcement officers and the stakeholder/regulated community helps ensure compliance and a smooth application.
  • Designing the regulation/instrument is the “tip of the iceberg” – much more follows. Implementation and administration can include:
    • Compliance promotion
    • Training
    • Data collection,
    • Reporting
    • Performance measurement
    • Compliance verification
    • Enforcement
    • Amendments, etc.

Canada's Progress in Addressing Clean Fuels and Vehicles

Background

The Canadian Environmental Protection Act (CEPA) gives Environment Canada (EC) broad authority to regulate both vehicles and fuels and EC has used this authority to put a very strong program in place. The CEPA is similar to the US Clean Air Act.  The Canadian vehicle industry is closely integrated with the US industry and many vehicles are manufactured in Canada for the US market. Because of this close integration, the Canadian vehicle industry is strongly supportive of vehicle and fuels regulations that are closely harmonized with the US and that, in fact, has generally occurred. In addition to close consultations with stakeholders in the development of environmental regulations, Environment Canada coordinates closely with its main trading partner, the US.

Environment Canada was created in 1971. Since then the Canadian federal government has adopted increasingly stringent standards for smog-forming emissions from motor vehicles. Several key initiatives helped to develop the Canadian regulatory fuels and vehicles program. There have been considerable efforts by the federal government and industry directed towards providing cleaner gasoline and diesel fuels for Canadians. Fuel related initiatives include the removal of lead in gasoline, the reductions of summer vapor pressure, and lowering benzene in gasoline and lowering sulfur levels in both gasoline and diesel fuels. Many of the federal initiatives were developed on the recommendations from a special committee called the Canadian Council of Ministers of the Environment (CCME) Task Force on Cleaner Vehicles and Fuels (October 1995) with representation from both federal and provincial governments.  Part of the process of the CCME was to determine an appropriate level of sulfur in gasoline and diesel.

On February 19, 2001, the Minister of the Environment announced that the Government would make significant investments in new measures to accelerate action on clean air and published the Federal Agenda on Cleaner Vehicles, Engines and Fuels. The Agenda set out a series of regulatory and non-regulatory measures to be developed and implemented over the next decade to further protect the health of Canadians and the environment by reducing emissions from vehicles, engines and fuels.

The federal Sulphur in Gasoline Regulations took effect July 2002 and required an average gasoline sulfur concentration of 150 mg/kg as of July 2002 and 30 mg/kg as of January 2005.

More recently, Canada has proposed a further tightening of sulfur levels in gasoline. The proposed Regulations Amending the Sulfur in Gasoline Regulations (the proposed SiGR Amendments) would introduce lower limits on the sulfur content of gasoline (down to 10 ppm) in alignment with the United States Environmental Protection Agency (U.S. EPA) Tier 3 fuel standards. The proposed SiGR Amendments are published with the proposed Regulations Amending the On-Road Vehicle and Engine Emission Regulations and Other Regulations Made Under the Canadian Environmental Protection Act, 1999 (the proposed ORVEER Amendments). The proposed ORVEER Amendments would introduce stricter limits on air pollutant emissions from new passenger cars, light-duty trucks and certain heavy-duty vehicles beginning with the 2017 model year in alignment with the United States Environmental Protection Agency (U.S. EPA) Tier 3 vehicle standards. These two regulatory initiatives would work in concert to reduce vehicle air pollutant emissions.

The Sulphur in Diesel Fuel Regulations set maximum limits for sulfur in diesel fuel for use on-road, off-road, in rail (locomotive), vessels, and stationary engines. The goal of the Sulphur in Diesel Fuel Regulations is to ensure that the level of sulphur in diesel fuel used in Canada will not impede the effective operation of advanced emission control technologies installed on vehicles and engines.  

The Regulatory Process

The Sulphur in Diesel Fuel Regulations can be used here to illustrate how a regulation is developed, designed, implemented and then enforced in Canada. The full development of these regulations took place incrementally over 20 years. Specific parts of the diesel pool were addressed in tandem with the vehicles and engines that use that part of the pool. The table shows that on-road diesel was address first and then followed by other parts of the pool.

The first step was to develop the policy for how to address sulfur in diesel fuel. In the mid 1990s, the Canadian government set up a multi-stakeholder process, called the Task Force on Cleaner Vehicles and Fuels, which brought together provincial/territorial governments, vehicle and engine manufacturers, fuel producers and importers, fuel users, and environment and health non-governmental organizations. This inclusive process identified issues and advised the Federal government on priorities for action. The inclusion of all relevant stakeholders ensured broad acceptance of the final recommendations of the Task Force. It also insured that all relevant information was gathered and analyzed. By participating on this task force, staff in the Federal government (engineers, economists, lawyers, health and environmental scientists) gained valuable expertize on fuel related matters, and were able to make internal recommendations to the Minister of the Environment and other relevant members of the Cabinet.

In regards to sulfur in diesel fuel, the Federal government accepted the Task Force recommendation that the level in sulfur in diesel fuel should be lowered through regulation by the Federal government. Prior to this, voluntary and regional approaches had been used. This led to a number of issues: specifically, fuel producers that were voluntarily meeting a lower sulfur level were being undercut in the market by those who were not participating in the voluntary program, and fuel producers preferentially sent batches of low-sulfur diesel to provinces with regulations and sent other (high-sulfur) batches to provinces without regulations which became a “dumping ground” for poor-quality diesel fuel.

Once the policy was approved by Cabinet, regulations were developed. These regulations were legally authorized by the Canadian Environmental Protection Act. The first step was to design how the regulations would work. This was done primarily by engineers with the assistance of lawyers. On vehicle and fuel issues, Canada generally aligns with regulatory actions in the U.S., however it often takes a simpler approach to achieve the same regulatory levels (e.g., through fewer regulatory flexibilities and exemptions). At the same time and building upon the analysis of the task force, the costs and benefits of the regulation were determined (primarily by economists with the assistance of engineers and scientists). Stakeholders, especially fuel producers and importers, were consulted upon the details of the regulatory text and on the costs and benefits of the regulations. This process took several years, but ended in a regulation that met the policy requirements to reduce sulfur in diesel fuel and yet was understood and achievable by the affected fuel producers.

Sufficient time was given before the regulations came into force to allow for the design, construction approval, purchasing, installing and testing of the necessary equipment at the refineries (i.e., about 3 to 4 years). This delay may not be needed if a country only imports diesel fuel and there are already numerous sources of low-sulfur diesel fuel available for the source of imports. Once the regulations were in force, it was essential to the environment, to the engines and to the fuel industry itself that the regulated requirements were complied with. Parties seeking financial advantage by supplying non-complying, less-expensive, high-sulfur diesel fuel have to be identified and prosecuted to ensure environmental goals are met, the engines are not damaged and other fuel suppliers are not undercut in the market.

The first step was to ensure that the regulatees (the fuel producers and importers) understand the regulations and their obligations. Various types of guidance documents were developed, including a very detailed and technical question and answer document, and all inquiries from regulatees were responded to (primarily by the engineers that designed the regulations). In addition, the regulation required fuel producers and importers to provide information on the sulfur level in their diesel fuel on a quarterly and then later an annual basis. Government staff (engineers and administrative staff who administered the regulations) examined this data and compared it to other information to identify if there were issues and flag any such issues to those responsible for enforcing the regulations. This data also forms the basis for annual reports to the public on the level of sulfur in diesel fuel. Fuel producers, vehicle manufactures, fuel users, environment and health groups and provincial governments all find this data to be of considerable use.

It was also necessary to train the enforcement officers who would be enforcing the regulations to ensure that they understood the requirements of the regulations, and how to verify compliance with them. To this end, relevant guidance and training material was developed by the engineers that designed the regulations, and an internal working group of staff from policy, compliance promotion, regions and enforcement was set up and it continues to ensure that any developing issues regarding the regulations are identified and addressed.

After the regulations regarding sulfur in on-road diesel fuel were underway, the regulatory process started again for reducing sulfur in off-road diesel, and then again for the other diesel pools. This incremental approach allowed time for the on-road technology to be adapted for use in the off-road and other pools, and for the spreading out of the costs of sulfur reduction.

The regulations limiting sulphur and lead enabled the introduction of cleaner vehicle and engine regulations.

China’s Progress in Addressing Cleaner Fuels and Vehicles

Background

The vehicle population in China has experienced significant growth over the past thirty years.  The tremendous growth in the last decade has led China to become the largest vehicle producer and consumer in the world.  Annual sales of on-road vehicles (excluding 2-wheelers and rural vehicles) have grown from roughly 250,000 in 1980 to nearly 22 million vehicles in 2013. Over that same time period, 2-wheeler (motorcycles and electric bikes) annual sales have grown from about 600,000 to a staggering 50+ million. Since 2000, the total stock of cars, trucks, and buses has more than quadrupled from 13.5 to over 60 million vehicles. Over this ten-year span, the total stock of motorcycles has roughly tripled from 68 to over 200 million.

Given the sheer magnitude of vehicle growth over the past decade, the task of curbing the negative impacts of vehicle emissions has taken on increased significance. Looking at the history of efforts to improve air quality, emission control legislation in China has evolved greatly since its inception in the early 1980s. The Figure highlights a few select milestones in China’s mobile source emission control including the establishment and revisions of the Air Pollution Prevention and Control Law, the cornerstone of the air quality program.  The first significant policies targeting vehicle emissions were phased in with the implementation of ‘China I’ standards in Beijing and Shanghai in 1999.

Selected milestones in China’s Vehicle Emission Control Program

Selected milestones in China’s Vehicle Emission Control Program

Despite the massive growth in vehicle stock and activity, China’s vehicle emission control program has been effective in curbing criteria pollutant emissions. During the period from 2000 to 2010, China quickly moved from Euro 1 standards to Euro 4 for light duty vehicles. However, fuel quality did not keep pace because the Ministry of Environmental Protection (MEP) does not have the legal authority to regulate fuel quality. As a result, in 2010, China delayed the introduction of China 4 truck standards until 2012. In 2012, again because of poor fuel quality, the standards for trucks were delayed until July 2013. Even then, press reports indicate that many trucks are still entering the marketplace which do not meet China 4 standards.

One result is that the air pollution problem in many parts of China has reached crisis levels. Just three of 74 major cities recorded met national air quality standards throughout last year according to Wu Xiaoqing, deputy minister for environmental protection. Only Haikou in Hainan, Lhasa in Tibet and Zhoushan in Zhejiang met the new air quality standards.  Wu said the smog-plagued Beijing-Tianjin-Hebei area experienced air pollution on more than 60 per cent of days last year, the worst in the country. Annual average levels of PM2.5 - tiny pollutant particles smaller than 2.5 microns that can penetrate deep into the lungs - reached 106 micrograms per cubic meter in the region, more than 10 times the World Health Organization’s safety limit of 10. The area also has seven of China's 10 most polluted cities. Other built-up regions - city clusters in the Yangtze and Pearl River deltas - also registered chronic smog problems.

China plans to take more than five million ageing yellow label vehicles off the roads this year in a bid to improve air quality, with 330,000 cars set to be decommissioned in Beijing alone, the government said in a new policy document. The State Council said that as many as 5.33 million "yellow label" vehicles that fail to meet Chinese fuel standards will be "eliminated" this year, the document said. As well as the 330,000 cars in Beijing, 660,000 will be withdrawn from the surrounding province of Hebei, home to seven of China's smoggiest cities in 2013.

Beijing plans to limit the total number of cars on the road to 5.6 million this year, with the number allowed to rise to 6 million by 2017. Last year it cut the number of new license plates by 37 percent to 150,000 a year and also paid for another 200,000 ageing vehicles to be upgraded.

The State Council document did not say how the plan would be implemented, but Beijing's municipal government has previously offered subsidies of between 2,500-14,500 Yuan ($400-2,300) to drivers who voluntarily hand in their ageing vehicles to be scrapped.

Beijing currently forbids vehicles that do not meet required standards from entering the city, but officials have admitted that China currently lacks the monitoring and policing capability to ensure all cars make the grade, and drivers have also found ways to avoid detection.

The current emissions standards roadmap for China is summarized below. China 4 standards are currently in effect for cars, trucks and buses. China 5 standards are scheduled to go into effect in 2018 for light duty vehicles; no schedule for China 5 introduction for trucks has yet been announced. The national government has just announced its plan to develop China 6 regulations for all categories of vehicles in 2015 but has not yet indicated its plans for implementation timing.

Beijing Makes Strong Case for Aggressive Local Air Pollution Action Plan

Beijing's 5.35 million vehicles consume about 7 million metric tons of fuel and emit about 900,000 metric tons of pollutants annually. Vehicles contribute about 86 percent of carbon monoxide, 57 percent of nitrogen oxides, 38 percent of hydrocarbon, and 22 percent of small particulate matter (PM-2.5) emissions in the city.

As part of an action plan to reduce air pollution through 2017, Beijing will expand its roadside emissions monitoring network to 150 monitoring points. Information from the current 22 roadside monitoring points helped lead to fines for excessive emissions for operators of about 5,000 vehicles in the first half of 2013. Penalties for excessive vehicle emissions could be increased from 500 Yuan ($82) to about 3,000 Yuan ($490) under proposed ordinances.

By the end of 2017, Beijing hopes to reduce fuel consumption by about 5 percent in the city. More than 4 million metric tons of gasoline and over 2 million metric tons of diesel fuel are currently consumed in Beijing annually, with diesel vehicles, particularly the more than 300,000 heavy trucks, contributing substantially.

As part of its plan, Beijing is aiming to hold the number of registered vehicles in the city to around 6 million by the end of 2017. It also aims to:

  • Introduce more controls on vehicles, particularly on those from outside the city, including expanding restrictions on which ones can enter inside the sixth-ring road (which runs around the city about 10 to 12 miles from the center) on certain dates and times;
  • Promote the use of alternative fuel vehicles to reduce air pollution;
  • Upgrade vehicle emissions standards to the equivalent of Euro 6 or tighter by 2016, add onboard refueling vapor recovery and further tighten fuel quality standards; and
  • Scrap about 1 million older vehicles that do not meet current tailpipe and fuel quality standards.

Other measures being considered include congestion fees and progressive parking pricing. These are in a study phase and it is uncertain when or if they would be implemented by 2017.

Beijing also plans to increase pollution discharge fees for sulfur dioxide and nitrogen oxides emissions and to begin charging pollution fees for volatile organic compound emissions. Environmental impact assessments for future projects in Beijing will need to include estimates of these emissions. Beijing hopes to establish an emissions trading system for these pollutants by the end of 2014.

Beijing will attempt to reach a goal of zero growth in the number of cars on its roads by the end of 2017. It plans to accomplish this, in part, by requiring the retirement of older vehicles that do not meet current exhaust and fuel standards and by limiting the number of license plates it issues each month. Starting next year (2015), the city plans more restrictions on which vehicles can be used within the fifth-ring and sixth-ring roads, including cars registered both in Beijing and elsewhere.

By the end of 2014, all new heavy-duty diesel vehicles will be required to install devices to trap particulate matter and to meet Beijing V tailpipe emission standards. Beijing also will implement plans to encourage the use of new-energy and cleaner energy vehicles, including those using natural gas, with an aim of having 200,000 such vehicles—particularly for public transportation—in use by the end of 2017.

By the end of 2015, all large cities in the three main air pollution control areas will be expected to have switched to China V gasoline and diesel fuel (the China equivalent to Euro V), which has a maximum sulfur content of 10 parts per million. China V gas is already being rolled out in several cities in those regions. China IV diesel fuel and gasoline with 50 ppm maximum sulfur content will be required nationwide by the end of 2014. China V diesel fuel and gasoline with 10 ppm maximum sulfur content will be required nationwide by the end of 2017.

Barriers to progress in China

Policy and political barriers

MEP lacks the authority to set fuel standards:While MEP is the lead agency for developing and enforcing vehicle emission standards and has proposed limits for toxics in fuels (e.g., benzene in gasoline), it does not have the clear authority to specify fuel quality parameters even if those parameters affect vehicle emissions. With MEP having no direct control of the stringency and implementation timeline of fuel quality standards, it has been unable to implement the systems approach and up until recently it has been unable to develop and implement a coherent vehicle emissions standards roadmap.

The technical committee that sets fuel standards is dominated by industry representatives: The development and management of fuel quality standards is led by the National Petroleum Products and Lubricants Standardization Committee (which is called TC280), a committee managed by the Standardization Administration of China (SAC), and a subcommittee under TC280 is dedicated to development of the fuel specifications. The secretariat organization of TC280, is the Research Institute of Petroleum Processing (RIPP), a research division of Sinopec, one of the largest oil companies in China. RIPP is responsible for staffing and managing TC280 and its subcommittee, as well as for drafting fuel specifications. Oil industry representatives and experts close to the industry dominate TC280 and its subcommittee—only three out of the 43 members in TC280 represent environmental and automobile interests and three out of the 30 members of the subcommittee are MEP or auto representatives. Such a small representation from the MEP and auto industry compromises the ba lance of the discussions on setting new standards due to the outsized influence of the oil industry’s perspective.

Financial barriers

Refineries may not recoup capital investment due to fuel price control:Retail prices of gasoline and diesel have always been set by the central government in China. Without a market pricing mechanism, it is difficult for the oil industry to recoup capital investments on refinery upgrades (such as adding desulfurization capacity at refineries) by passing on the higher production costs to consumers. Prior to its implementation, US EPA estimated the annual capital investment cost for meeting the ultra-low sulfur fuel requirements (15-ppm sulfur gasoline and diesel) would be USD 2.15 billion (15 billion RMB) in 2004 and USD 2.49 billion (17.5 billion RMB) in 2005. US refineries were able to raise prices of ultra low sulfur gasoline and diesel to recover investments for the desulfurization units. The incremental price was small compared to the variation in fuel price due to fluctuations in oil prices. To solicit industry’s support for setting more stringent fuel standards, MEP needs to explore ways to provide financial support for refinery upgrades.

Technical barriers

Limited technical expertise and data compared to the industry: There is a small team at MEP (including five staff in CRAES and two staff in VECC) working on fuels-related research and regulatory work and a laboratory in CRAES that performs fuel testing. But compared to the oil industry, MEP has far less expertise and technical capability, particularly on evaluating the emission implication of various fuel compositions, which is essential for recommending standard specifications. In addition, MEP has limited access data on refinery capacity and can only rely on the industry’s analysis of the cost and technical implications when considering adopting more stringent standards.

Lessons Learned from China’s Experience

A comprehensive clean vehicles program requires close coordination between vehicles and fuel quality – vehicles and fuels are a system.

Strong and innovative local actions can pave the way for strong national actions.

Partnership for Clean Fuels and Vehicles

Division of Technology, Industry and Economics

United Nations Environment Programme

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