Global petrol and diesel fuel specifications during the COVID-19 crisis
In this issue of our In Focus newsletter, ACFA would like to share some observations about the coronavirus impact on the oil industry and the possible implications this might have on consumers, their car fleet and everyone’s environment. Global movement restrictions are now affecting more than half the global population and reduced air and road transportation as well as reduced operating rates in the stationary refining and petrochemical industry have already contributed to improvements in particulate emissions and for the ozone layer. Air quality improvements were first observed in China but are now apparent in India, Europe and elsewhere in the world. However, the COVID-19 pandemic also had a severe and massive impact on the economy and governments across the globe have launched fiscal and other support measures at an unimaginable scale until recently. The global oil industry has been hit very hard by the latest developments and colossal fuel demand reductions have already led to reduced operating rates, high stockpile levels and extremely negative production margins. This had led to a range of specific requests by the industry, potentially changing mandatory guidelines in terms of fuel quality and emission standards.
Short-term specification changes for transportation fuels in the world.
EPA Announces Steps to Protect the Availability of Gasoline during COVID-19 Pandemic
On March 27 the U.S. Environmental Protection Agency (EPA) announced several steps the Agency is taking to protect the Nation's gasoline supply in response to the COVID-19 pandemic. In its news release the press office states that the EPA intends to provide additional flexibility to the marketplace to transition from winter-grade, high volatility gasoline to summer-grade low vapour pressure gasoline. Due to the steep fall-off in gasoline demand as a result of the COVID-19 pandemic, gasoline storage capacity is limited and more time is needed to transition the distribution system in order to come into compliance for the summer driving season. EPA will temporarily waive the summer low volatility requirements and blending limitations for gasoline. and beyond.
Without a waiver of the summer gasoline requirements, parties upstream of retailers and wholesale purchasers would be required to stop selling the winter gasoline sitting in their storage tanks on May 1, 2020, which would prevent them from loading summer gasoline into the storage tanks, resulting in a shortage of gasoline. By waiving the low volatility and blending limitations through May 20, 2020, EPA will ensure a steady supply of gasoline. EPA will continue to monitor the adequacy of gasoline supplies and, should conditions warrant, may modify or extend this waiver at a later date.
"The reason we have to do this is because people are driving fewer miles and the winter blends are stockpiled in all the tanks," EPA chief Andrew Wheeler told Reuters in an interview. "There’s no place to put the summer blend."
The EPA announcement also states that the agency intends to extend the RFS (Renewable Fuel Standard) compliance date for small refineries to provide them with additional flexibility.
Additionally, the news release states that EPA does not intend to unilaterally revisit or rescind any previously granted small refinery exemptions issued for prior compliance years. As noted in the temporary policy on COVID-19 Implications for EPA's Enforcement and Assurance Program, issued yesterday, EPA is focused on protecting our employees and ensuring continued protection of public health and the environment from acute or imminent threats during the COVID-19 pandemic. Therefore, investigating and initiating enforcement actions against small refineries that were previously subject to an exemption is a low priority for the agency. EPA intends to develop an appropriate implementation and enforcement response to the Tenth Circuit's decision in RFA v. EPA once appeals have been resolved and the court's mandate has been issued.
There are also similar fuel-related requests in Europe with the main request focused on the extension of the winter-summer switch date for gasoline (May 01 for European countries applying climate class A) to work off high inventory levels of winter-grade gasoline blocking tank space for new summer-grade supplies.
There have also been concerns raised on the possibility of blending aviation jet fuel with road diesel to help clear stocks of jet fuel which have been swelling due to sharply reduced demand.
While the current situation requires some exceptional measures in support of the oil industry, ACEA, the European Automobile Manufacturers Association, has raised some concerns about these potential steps. ACEA issued a position paper on “EU petrol and diesel fuel specifications during the COVID-19 crisis” to the EU Commission, highlighting that:
A) While sympathetic to extending the switch over date to allow fuel suppliers to reduce the stock of winter petrol built up during the COVID-19 crisis, ACEA draws attention to the fact that the US EPA has given a time-limited waiver to allow the extension of the respective date only from 1 May to 20 May.
ACEA also draws attention to the following concerns regarding the impact on vehicle operation that drivers and operators may face:
In further reference to the last point raised above, ACEA comes back to national recommendations to stay at home as far as possible and avoid all non-essential travel, which may lead to a relatively low frequency in MIL events if any extension of the switch over date would be relatively short, similar to the US EPA waiver. However, it points out that if the extension period would be longer into the warmer early-summer months, the consequences for vehicles and customers may become greater.
ACEA states that in accepting a time-limited extension, the automotive industry can take no responsibility for vehicle non-compliance during that period (and beyond with winter grade petrol still in vehicle fuel tanks) or cases where the fuel is seen to be the reason for MIL activation.
ACEA urges the European Commission to take a view at the conditions on member states regarding the vapour pressure of petrol they permit to be sold in the summer period, as outlined in Articles 3(4) and 3(5) of the Fuel Quality Directive, in their coordination efforts with member states that are already considering measures. If such time-limited extensions are granted, ACEA would request authorities create a consumer education website to explain the need for allowing winter grade petrol to be sold for longer than normal and to explain the potential impacts to customers and their vehicles. ACEA pointed out that the organization and its members are considering publishing such consumer information.
B) The COVID-19 crisis is having a major impact on air travel, causing a significantly reduced demand for aviation jet fuel. As of now an estimated 90% of all global passenger flights has been grounded and jet fuel stockpiles are near capacity levels, in terms of stationary and floating ullage. This has triggered the discussion about the possibility of blending jet fuel with road diesel, emerging in a range of countries.
In its position paper to the EU Commission ACEA point out that jet fuel has a maximum sulphur content of 3,000 ppm substantially higher than the very low levels (less than 10ppm) in road diesel. The sulphur content of road diesel is kept low to protect important vehicle exhaust after treatment systems. Pretty much all diesel engine cars, vans, trucks, buses and coaches throughout the EU have exhaust after treatment systems that depend on the use of diesel fuel with a sulphur content no higher than 10 mg/kg (Fuel Quality Directive and EN 590).
The engine-after treatment-fuel is a system optimised for fuel efficiency and low CO2 and pollutant emissions, so it is vitally important to maintain proper engine operation and the efficiency of the complete chain starting at the engine and through the various components of the exhaust after treatment system.
ACEA indicates that the blending of jet fuel into road diesel would:
ACEA concludes that the use of a diesel fuel blended with jet fuel would not be covered by vehicle warranties so any operational consequences will land customers and operators with potential repair bills of hundreds of Euros. Therefore, the automotive industry does not support any measures to change, even for a limited time, the important operational characteristics of road diesel fuel as required through the Fuel Quality Directive and EN 590.
For the ACEA position paper, please refer to the association’s website which can be found here.
The US EPA press release can be found in full here.
In this issue of our “In Conversation with” we talked to Mr. Jeff Hove, acting Vice President and Executive Director at the Fuels Institute. In recent years we have seen some initiatives to consider policies to ban the sale of vehicles equipped with internal combustion engines (ICE), predominantly emerging in Europe, but also spreading out in parts of Asia.
In this issue of our “In Conversation with” we talked to Dr Tilak Doshi, an energy sector consultant based in Singapore. Dr Doshi shared his views and observations about the global “2050 decarbonisation” plan and move towards Electric Vehicles (EVs) with us. We would like to thank Dr Doshi for his efforts to comprehensively answer our questions which provide some highly valuable and very interesting insights into this matter, highlighting a range of topics often overlooked in the political discussion between the various stakeholders in the race to save the world from impending climate catastrophe.
In this issue of our “In Conversation with” we talked to Dr Sanjay C Kuttan, Chairman of the Sustainable Infrastructure Committee at Sustainable Energy Association of Singapore (SEAS).
.svg)
.svg)
