CCAC Secretariat is hosted by the United Nations Environment Programme, Division of Technology, Industry and Economics. CLEANING UP THE GLOBAL ON-ROAD DIESEL FLEET 1 Rue Miollis, Building VII | 75015 | Paris | France A GLOBAL STRATEGY TO INTRODUCE T: (+33) 1 44 37 14 73 F: (+33) 1 44 37 14 74 LOW-SULFUR FUELS AND CLEANER DIESEL VEHICLES E: [email protected] W: www.ccacoalition.org/en/initiatives/diesel As prepared by the Heavy Duty Diesel Initiative of the Climate and Clean Air Coalition

August 2016

MEMBERSHIP OF THE HEAVY DUTY DIESEL INITIATIVE

The Government of the United States of America, the Government of Canada, the Government of Switzerland, the United Nations Environment Program, the International Council on Clean Transportation

AUTHORS OF THIS STRATEGY

For the International Council on Clean Transportation: Chris Malins, Drew Kodjak, Sebastian Galarza, Sarah Chambliss and Ray Minjares

For the United Nations Environment Programme: Elisa Dumitrescu, Rob de Jong, Jane Akumu, Veronica Ruiz-Stannah and Bert Fabian

ACKNOWLEDGMENTS

With thanks to the Climate and Clean Air Coalition, Vered Ehsani, Ensys Energy, MathPro, Stephanie Searle, Nikita Pavlenko, Kate Blumberg, Jim Blubaugh, Sonja Henneman, Vance Wagner, Reto Thönen and George Maina. CLEANING UP THE GLOBAL ON-ROAD DIESEL FLEET

A GLOBAL STRATEGY TO INTRODUCE

LOW-SULFUR FUELS AND CLEANER DIESEL VEHICLES

As prepared by the Heavy - Duty Diesel Initiative of the Climate and Clean Air Coalition

August 2016 Cleaning Up the Global On-Road Diesel Fleet terms of both healthandclimategains. low-sulfur fuels. It alsoidentifies the benefitsof introducing low-sulfur fuels onaglobalscalein and vehicle emissionstandards worldwide, including the barriersandopportunities to introducing The first section(chapter 1)of the strategy looks at the current situationandstateof low-sulfur fuel standards. may alsobedelivered through improved measures for compliance andenforcement of adopted emissions standards to ultra low-sulfur fuels andassociatedstandards, and that additional benefits health andclimatebenefitsare available from moving beyond 50ppm fuels andassociatedvehicle these countries are not assessedin this strategy, itisimportant to note that considerable additional countries includemostof the OECD nationsaswell asChinaandRussia. Whileopportunitiesin sulfur standards and associatedEuro 4/IV equivalent vehicle emissions standards. These excluded This strategy doesnot consider countries that have already adopted, ataminimum,50ppm fuel refineries studies, with the case studies and the health modeling, form the basis of this strategy. fuels andcleaner diesel vehicles were modeled aspartof this strategy. Combined, the markets and case studieswere analyzed indifferent regions and the healthbenefits of switching to low-sulfur opportunities for refineries to upgrade to allow for the production of low sulfur diesel fuels. Several oil and fuel flows in terms of quality and quantity worldwide, and a refinery study which analyzed This strategy was developed on the basisof anoilanddiesel fuel market strategy whichanalyzed low sulfur fuels coupled withcleaner technology. institutions, governments and experts also concerned with the climate and clean air benefits from this global desulfurization effort and it is our hope that this strategy will guide the work of those and regions for action. This strategy isalsoaninvitation to partner with the HDDIandCCAC in analysis andseveral casestudies to illustrate the benefits, identify opportunitiesand target countries set of preparatory studies,whichincludeamarket analysis, arefinery analysis, ahealthbenefits (and beyond). This document builds the case for astrategic globalapproach by expandingona emissions from newandexistingheavy-duty dieselvehicles andengines through the nextdecade developed to inform the direction of our work to virtually eliminate fine particleandblackcarbon on Clean Transportation (ICCT). of Switzerland, the United Nations Environment Programme (UNEP)and the International Council the Government of the United States of America, the Government of Canada, the Government five co-leads of the ClimateandCleanAir Coalition’s (CCAC) Heavy Duty Diesel Initiative (HDDI): The premature deathsper year. of low-sulfur fuels andcleaner dieselvehicle standards. This canprevent anestimated500,000 particulate and blackcarbonemissions from the globalon-road diesel fleet through the introduction public transport vehicles in the globaleconomy. This strategy presents aroadmap to reduce small Diesel enginespower the dominant share of goodsmovement, construction equipment, and P 2 For more information about the ICCT see:www.icct.org For more information about UNEPsee:www.unep.org ReducingEmissionsFromHeavyDutyDiesel/tabid/133573/Default.aspx For more information about the Heavy Duty Diesel initiative of the CCAC see:http://www.unep.org/ccac/Initiatives/ 1 reface Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Supporting refinery andmarket studiesavailable from http://www.ccacoalition.org/en/initiatives/diesel For more information about the CCAC see:http://www.ccacoalition.org/ 1 It constitutes acore outputof the CCAC HDDI,supportedand

| 2

has been developed by the 2

in each. fuels incities.It outlines36countries for immediateactionbasedon the opportunitiesavailable has yet to match fuel quality with vehicle emission standards or has chosen to prioritize clean categories of actionbasedonwhether acountry primarily imports fuel, hasrefining capacity, on the fuel trade relationships between countries andwithinsub-regions. We define four main countries that are the highestpriorities for action,andpresenting a‘markets approach’ based The second section(chapter 2)presents aroadmap to move to low-sulfur fuels, identifying the 3 |

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet standards isattainable for these countries. The transition to low-sulfur fuel standards can bemore low-sulfur fuels are readily available on the globalmarket. Therefore, rapid adoption of low sulfur Import-dependent countries these countries andmarkets tomove tolow-sulfur fuelswithinafeasible timeframe. This strategy focuses onthelocal markets inwhichcountries are operating andproposes ways for with imports,whilemany have norefinery capacity atallandare entirely dependent on fuel imports. in fact, someexportconsiderable quantities of excess fuel. Otherscomplement local fuel production The global fuels market iscomplex. Somecountries are entirely self-sufficient inrefinery capacity; rule promulgation and implementation will beneededbutshouldnot take more than five years. should not take more than two years. For countries withrefining capacity additional time between climate benefitsof desulfurization.In import-dependent countries, implementing newstandards available low-sulfur fuels with the vehicle emissionstandards that secure the full air quality and struggling to secure financing for refinery upgrades, and those that have yet to matchalready- climate goals.Achieving this changewillrequire a focus oncountries that are fuel importers, those diesel vehicles withinthenext decade This document presents astrategy for how theworld can transition tolow-sulfur fuelsandcleaner and climatebenefitsare associatedwithultra low-sulfur fuels of 10or 15 ppm. desulfurization canbedelivered with50ppmlow-sulfur fuels, but the largest healthimprovements over the pastdecade,butitneeds to beaccelerated andmore widespread. Many of the benefitsof Africa, the Middle EastandAsia-Pacific. Global progress ondesulfurizationhasbeenimpressive These are mainly low-and middle-income countries spread across LatinAmerica, the Caribbean, low-sulfurHowever, fuels. sulfur fuels through updated fuel quality standards and/or by upgrading their refineries to produce Many countries worldwide have already capitalized on these benefitsby moving to low andultra low- therefore, desulfurization andemissioncontrols are estimatedataround $1.1 trillion over the sameperiod; The net present value of the healthgains to 2050isestimatedat$18 trillion. The total costs of in the countries considered here would result inabout500,000avoided deathsper year by 2050. A global transition to low sulfur on-road dieselandassociatedvehicle emissionsstandards by 2030 standards of Euro 4/IVequivalent or higher. 85%of road transportation ispowered by dieselengines. already adopted both on-road fuel sulfur standards of 50ppmor below andvehicle emissions This strategy considers desulfurizationof on-road fuels globally. It excludes countries that have through thereduction of short-lived climatepollutants cleaner fuelsandvehicles willhave major healthbenefitsanddeliver substantial climatebenefits and effective operation of cleaner vehicles andemissioncontrol technology. This combination of and ideally ultra low 10or 15 ppmsulfur. Low-sulfur fuels are alsonecessary for the urgent needtointroduce low-sulfur fuels PM of will continue to increase. The maincauseis fine particles(PM air pollution.Withoutadditionalactions, the contribution of outdoor air pollution to early deaths carcinogenic to humans(Class 1).Nearly halfof these early mortalitiesare associatedwithoutdoor health risk. 2012 were a result of air pollution exposure, making this the world’s single largest environmental According totheWorld Health Organization (WHO), approximately oneineight globaldeathsin E xecutive 2.5 andinmany cities the major source. To reduce PM estimated benefitsto2050outweigh costs by afactor of around 16. The International Agency for Research on Cancer has classified diesel engine exhaust as S ummary more thanhalfof theworld’s countries are still usinghigh-sulfur fuels are generally atanadvantage in the adoption of low-sulfur fuel standards; . It alsooutlineswhy this isimperative for both healthand – fuels withnomore than 50partsper million(ppm) sulfur, | 4 (i.e.blackcarbon). 2.5 emissions from vehicles there isan 2.5 ). Vehicles are significant sources introduction . fleets to benefit from cleaner fuels available. sulfur standards incities, The fourth “City First”category includesthree countries that have introduced more stringent fuel Europe for immediate action. The first three categoriesprioritize countries inAfrica, Asia,SouthAmerica,Middle EastandEastern experience withimplementing low-sulfur fuel in regional forums. and heavy-duty vehicles; they canalso take aleadership role within their regions, sharing their stricter vehicle emissionstandards that alignwith the already-available fuel quality for both light- health and climate benefits from cleaner fuels and vehicles. These countries can gain from adopting fuels but have not yet implemented commensurate cleaner vehicle standards The third category “Vehicle Standards” identifies 12countries thathave already achieved low-sulfur through nationalpolicy. private refineries to recover refinery upgrade investments. This is a barrier that should be addressed Some refining countries stilloffer fuel subsidies that may undercut the ability of nationaland to anever-growing market for low-sulfur fuels, especially whencombined withincreased capacity. they stand to gain from the investment by offering ahigher-value fuel product that canbesold While these countries face challengesinsecuring financing to upgrade their domestic refineries, capacity that must be upgraded to support low-sulfur fuel standards domestically andregionally. The second category, called “Refiners,” shortlists 13countries. These countries have refining high-sulfur fuel to low-sulfur fuel willalsospur investment inRefiner (category 2)countries. be provided through imports from the international market and the shiftinregional demand from up the largest group of countries andhave extensive influence onmarkets. Low-sulfur fuel could pollution nationwide anddriving forward regional andglobaldemand for low-sulfur fuels. They make fuel, thesecountries can actrelatively quickly toadopt new fuelstandards, We identify 13 countries in the “Importers” category. Because they are dependent onimported opportunities foraction. markets andrefinery operations several countries withineachcategory standout as key near-term categories guidesour globalapproach to desulfurization.Based on the supportingresearch on ‘refiners’, ‘vehicle standards’ and‘cities first’. The division of countries andregions into these This document describes global effort andhastendesulfurizationby 2030. in motion andpartneringwithinitiatives andinstitutionsbeyond the CCAC willonly strengthen this in alldeveloping markets global markets, benefits from desulfurizationandare well-placed to invest indesulfurizationwithinregional and in related markets. potential healthbenefitsare greatest andwhere actionmay catalyze additionalimprovements and markets inwhichprogress willlikely lagor stagnatewithoutadditionalsupport,where the Climate and Clean Air Coalition (CCAC) support and engagement should be targeted to countries to berecouped through increased salesrevenue. increased refinery capacity investors canimprove the financial case for projects by allowing costs highlight casestudies of where this hashappened.By coupling desulfurization to investments in and development/donor finance have allowed desulfurization to proceed inmany countries andwe desulfurization capacity to produce low and-ultra-low sulfur fuels. Partnerships of private, public challenging for a global transition andmarket for cleaner fuels and vehicles will require support refining countries While someof the largest refineries and fuel markets offer the largest health . The CCAC’s engagement canbe transformative insetting this transition or inurbanareas andalongmajor transit corridors, four strategic categories of regional and national action since considerable investments mustbemobilized to increase 5 | This adoption pattern is prevalent in South America, thereby reducing air that would maximize and require cleaner : ‘importers’,

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet Table A in smallparticulateemissionsandblackcarbon of theglobalon-road vehicle fleet. in anear-elimination of on-road high-sulfur fuelsandpave theway for reductions of 90%or more options for multipleapproaches. countries (Nigeria, Pakistan, Malaysia, Indonesia, Tunisia) are identified in two categories,indicating Our analysis identifies 36countries in four categories for possibleimmediateaction(Table A).Five and plananationwide transition to low-sulfur fuels following urbanimplementation. location, suchasaBus Rapid Transit system. Countries should consider this a transition strategy, when accelerated fuel andvehicle standards are paired withacaptive fleet witha centralized fueling The strategy doesposelogisticaldifficultiesandrisksof mis-fueling, but these riskscanbereduced transitioning to low-sulfur fuel production butdo not have the capacity to meetnationaldemands. cleaner fuel andvehicle standards inhigh-impacturbanareas during the periodwhenrefineries are and hasalsobeenpursuedinChinaIndia. The “city first” modelallows for rapid adoption of North Africa Middle Eastand East Europe the Caribbean Latin America& Asia Sub-Saharan Africa : Priority countries foraction,byregion andstrategic category R egion region: ElSalvador, C Central America ategory Nicaragua and Mozambique Bangladesh Guatemala, Honduras Moldova Lebanon Pakistan Ethiopia Georgia Nigeria Tunisia 1: I mporters Implementing therecommendations of thisstrategy would result C ategory Cote d’Ivoire South Africa United Arab Venezuela Indonesia Emirates Malaysia Pakistan | 6 Ukraine Bahrain Nigeria Kuwait Ghana India 2: R efiners East Africa region: Tanzania, Rwanda C

Kenya, Uganda, ategory and Burundi Indonesia Barbados S Malaysia Panama Tunisia Brunei tandards Oman 3: V ehicle

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a 2.4.1. 2.3.1. Regional Assessments 2.2.1. Regional and Assessments Approaches Categories 46 and of 1.5.5. Approaches 1.5.4. 41 Countries 1.5.3. Selected 1.5.2. Refinery 1.5.1. case Market analysis studies 28 Learning 26 analysis 1.4.4. Lackofpoliticalprioritizationlow-sulfurfuels 25 Global from byregulated fuelprices 1.4.3. Cost canbe madedifficult recovery 1.4.2.low-sulfur existing 1.4.1. fuel standards 23 availability Cost 23 Cost to of 1.1.1. ofgloballow-sulfurfueladoption Assessmentofthehealthbenefits consumers refinery 21 capacity 20 Health benefits of sulfur reduction 11 W

Category 2,‘Refiners’: Countries Requiring Upgrade Refinery Financing Category 1,‘Importers’: Countries Dependent onFuel Imports A Prioritizing Global Countries Strategy: and Priorities Regions for 33 Action 38 Progress on low-sulfur fuel Barriers adoption Opportunities 23 to Climate 18 for low-sulfur ultra fuel low-sulfur adoption 20 fuels 19

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A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet or below. Countries in whichlow-sulfur fuels are already matchedby Euro 4/IV equivalent vehicle Thailand andseveral North African countries have completed amove to low-sulfur fuels of 50 ppm including China,someSouthAmerican,allEast African countries, several EastEuropean countries, Much has been achieved already. Over the past decade several low-and middle-income countries, with low, or ideally ultra low, sulfur fuels. particulate filters required by Euro 6/VIemissionsstandards, but these devices are only effective from dieselengines. Black carbonassociatedwith dieselcombustion canbecontrolled usingdiesel of modernemission control devices. Sulfur in fuel isalsoabarrier to dealingwithclimatepollution emissions of harmful sulfur compounds suchassulfates, andindirectly by inhibiting the effectiveness Sulfur in fuel isproblematic becauseitleads to increased air pollution. This occurs directly through electric vehicles may beappropriate insomemarkets. to note that non-diesel alternatives suchascompressed natural gas,biofuels, hybrid-electric or fully technology. While this strategy doesnot address alternative technologies indetail,itisimportant will persist for years, ifnot decades, to come. Analternatepathwould beashiftaway from diesel current turnover rates of existing fleets (upwards of 10-15 years), the vehicle technology adopted today However, citiesandcountries may opt to shiftaway from diesel technology altogether. Given the fossil fuels and internal combustion engines will continue to dominate road transport through 2030. International Energy Agency projections show that vehicles canbereduced by over 90percent. particles andblackcarbon from on-road diesel This document explainshow emissionsof ultra-fine this globalstrategy. to prevent these avoidable deathsis the focus of each year in these countries. Mappingoutaway deaths from transport-related air pollution occur cleaner fuels. Anestimated80,000premature standards totakeemissions ofadvantage these have not implemented corresponding vehicle countries have access to low-sulfur fuels they limited access to low-sulfur fuel. Andwhilesome people inover 120countries have noaccess or high levels of sulfur. Asitstands,4.1 billion worldwide every year, thirty percent contains 900 billionlitersof on-road diesel fuel consumed exceeding 500ppmandeven 5,000ppm.Of the countries, still have high fuel sulfur levels - often many countries, especially low-and middle-income of 50partsper million(ppm) or below. However, have now moved to fuels withasulfur content move to low-sulfur fuels. Most developed countries Over the pastdecade the world hasseenagradual doe 1. over the nextdecade. have adopted timetables to reach 50or 10/15ppm fuels. However, accelerated progress isneeded sulfur levels to intermediate levels (from red/ orange to green in the mapinFigure 1.1), andmore emission standards are not assessed in this strategy. More countries have moved from high fuel

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lo in ordertoavoiddamageemissioncontrol systems parts permillion(ppm) (‘low-sulfurfuels’) are needed below somemaximumlevel.Sulfur levelsbelow50 withthegoalofrestricting sulfurcontentthe refinery desulfurization processes, suchashydrotreating, at Low-sulfur fuelshavebeensubjectedto compounds. equipment, andleadtoairborneemissionsofsulfur processes, causecorrosion inrefinery refining can deactivate(“poison”) catalystsusedincertain streams highsulfurlevelsinrefinery Sufficiently these, from anairpollutionperspective,issulfur. to pure hydrocarbons. The mostimportantof All crudeoilcontainscertainimpuritiesinaddition W by filter-forcing standards by filter-forcing tomeetlimitssetthe emissionreductions necessary toachievesystems, suchasdieselparticulatefilters, required for themosteffectiveemissionscontrol levels of10 to15ppm(‘ultra low-sulfurfuels’) are in Euro 4/IVvehiclesandabove.Maximum sulfur w hat - s

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Cumberworth, 2003). up 15% to 50%of dieselPM without fuel sulfur limits,dieselsulfur content is typically 500 to 2,000ppm, andsulfates make of sulfur indiesel,make upasignificant share of total fine particulate emissions.In countries (Krewski etal.,2009). Whendieselsulfur content ishigh,sulfate particles, formed from combustion pollutant associatedwithheartdisease,lungcancer, andarange of other harmful healtheffects First, fuel sulfur directly increases production of fine particulatematter (PM Removing sulfur from vehicle fuel isof two-fold importance inpreventing harmful vehicle pollution. transportation (Scovronick, 2015). sulfur levels isavital element of any globalstrategy to reduce the healthimpactsassociatedwith where vehicle andeconomic activity isconcentrated (Health Effects Institute, 2010). Reducing fuel is a major contributor to outdoor air pollution, particularly near major roadways and in urban areas average by more than 2percent annually since 1998(van Donkelaar etal.,2015). Motorized transport et al.,2015). The maincauseis fine particles(PM strategy, the contribution of outdoor air pollution to early deathscould doubleby 2050(Lelieveld in low- andmiddle-income countries (WHO, 2014b). Withoutadditionalactionsdescribedin this (WHO, 2014a). Some88%of premature deathsdue to ambient (outdoor) air pollutionoccurred identified by the World Health Organization ascontributing to onein eight deathsglobally in 2012 Outdoor air pollutionranks among the top ten globalhealth risks.Air pollutionexposure hasbeen 1.1. h

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A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet Euro 4/IV(there are no North American equivalent standards based on a 50ppm fuel sulfur limit). as ‘filter-forcing’ standards, andrefer to the standards associatedwithmaximum50ppm fuels as particulate filters. In this strategy, we will refer to standards associated with ultra low-sulfur fuels more advanced technologies to beemployed inorder for compliance to beachieved, includingdiesel for passenger vehicles, andEuro VIand the U.S. 2010standards for heavy-duty vehicles, require 10 or 15ppm). These stronger emissionsstandards, includingEuro 5and6,U.S. Tier 2and3, the optimal system willpair astronger vehicle emissionsstandard withultra low-sulfur fuel (maximum ppm fuels – for instance, diesel particulate filters will still deliver benefits with 50 ppm diesel – but advanced emissioncontrol technologies associatedwithhigher standards canalsooperate with 50 light- andheavy-duty vehicles respectively require 50ppmdiesel fuel to beeffective. Somemore policy, whichmeansmatchingvehicle emissionsstandards to fuel quality. The Euro 4/IVstandards for Vehicles and fuels mustbe treated asasystem to achieve the optimum benefits from emissionscontrol similar emissionscontrol technologies to the equivalent European standards. 2010 standards for heavy duty vehicle emissions). The North Americanstandards force adoption of of vehicle standards (e.g. U.S. Tier 1-3 standards for passenger vehicle emissions,andU.S. 2004and vehicle emissionstandards. vehicles, Roman numerals to heavy-duty vehicles. The EUstandards are the basisof the UNECE By convention, Arabic numerals usedin the context of the Euro standards refer to light duty ppm fuel withnocontrol requirement. diesel will result in an approximate 99% reduction in PM both PM cleaner fuel combined withemissioncontrols atEuro IVandabove results indrastic reductions in and proportional reductions inPM Euro I-VI standards inheavy-duty dieselvehicles. Whilelowering sulfur indiesel fuel results indirect standards willresult inmajor particulate matter (PM) reductions. This figure shows the impactof Figure 1.2shows that acombined approach of introducing low-sulfur fuels andcleaner vehicles realized whenlow-sulfur fuel iscombined withappropriate vehicle emissionsstandards. fuel sulfur reduction alonedelivers significant healthbenefits, the full benefitsof cleaner fuels are that control nitrogen oxides, a pollutant that leads to smog and additional PM (May etal.,2007;Health Effects Institute 2013). High-sulfur fuel canalsodamagesomesystems higher quantity, andability to penetrate deepwithinlung tissue andcross into the bloodstream of ultrafine particles,whichare thought to have agreater toxicity than larger particlesdue to their content of 10 or 15 ppm. These filters control not only PM et al.,2002).Diesel particulate filters, for example,perform bestwithamaximumdieselsulfur and other pollutants from the exhaust stream (including particulate filters and catalysts) (Corro engines) and allow for the efficient performance of equipment designed to remove small particulates Second, low-sulfur fuels are necessary for cleaner engines(for examplehighcompression diesel 4 https://www.dieselnet.com/standards/eu/ld.php 3 http://www.unece.org/trans/main/welcwp29.html 2.5 andblackcarbonemissions.Euro VIstandard-level technology combined with10/15ppm 3 It shouldbenoted that North Americahasadifferent, butsimilar, set 2.5 emissionsinallvehicles (even those withoutemissioncontrols), | 12 2.5 2.5 mass, but also can reduce the emission as compared to combustion of 2,000 4

2.5 formation. While formation. nitrates, reflecting anapproach taken insimilar studies(Chambliss etal.,2014b). Diesel engines in urbanareas, whichincludesblackcarbon butexcludes secondary particlessuch assulfates and This analysis focuses onpremature mortality from exposure to primary tailpipe PM The full listof countries includedin the modelingisprovided inAnnexC. countries inother regions that have already adopted low-sulfur fuels andaccompanying standards. accompanied by Euro 4/IVequivalent vehicle emissionsstandards (or better), butdoesincludesome countries in the EU as these countries have already achieved low and ultra low-sulfur levels in fuels, population. It excludes China,Russia, Japan, SouthKorea, Australia, the United States, Canada,and America, andEurope withacombined 2015populationof 4.6billion,or about64%of the global (see Figure 1.5). The health benefits analysis covers countries in Africa, the Middle East, Asia, Latin ppm) isphasedinprogressively, representing the majority of globalon-road dieselsupply by 2030 most countries by 2020and for allremaining countries by 2025,whileultra low-sulfur diesel(10 sulfur levels inglobalon-road diesel fuel. In the analysis, low sulfur diesel(50ppm) isphasedin for For this strategy, we have assessed the healthbenefitsby 2050of agradual transition to lower Assessmentofthehealthbenefitsgloballow-sulfur fueladoption 1.1.1. Figure 1.2.Impact of fuel sulfur levels andemissionscontrol standards onPM Figure 1.3.Summary of globallow sulfur timeline vehicles (grams/km) 13 | 2.5 emissions from heavy-duty diesel 2.5 emissions

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet Estimating achangeinhealthoutcomes from achange in fuel quality andemissionsstandards requires 2004). The methods for estimatingpremature mortality are detailedinAnnexC. in children from acuterespiratory infection associatedwithlong-term PM adults: cardiopulmonary diseaseandlungcancer (Krewski etal.,2009). some countries would increase the healthbenefits,while slower adoption inother countries would new vehicles ischallengingbutachievable (MathPro 2015b). Amore rapid adoption of standards in This timetable for low-sulfur fuel deployment and the adoption of improved emissions standards for several stages of modeling. These stages are shown in Figure 1.2.1 below. Moving from left to right: functions for selectedmajor causesof deathassociatedwithprolonged exposure to PM impacts would increase the calculatedbenefitsof sulfur control. This analysis adopts exposure response health impacts that are associatedwithexposure to dieselemissions.Modeling additionalhealth impacts of dieselenginesbutclearly provides anunderestimate of the broad anddiverse range of their association with premature mortality this analysis is narrowly focused on the greatest health asthma, but these also for simplicity were not modeled.By focusing onprimary PM fine particlesisassociatedwithacuteandchronic non-fatal healthimpactssuchasexacerbation of simplicity the healthimpactsof these were not modeled.Furthermore, exposure to dieselexhaust produce a toxic mixture of pollutants that includesother gasessuchasnitrogen oxides, but for ischemic heartdisease,cerebrovascular disease,inflammatory heartdisease,chronic obstructive pulmonary disease,andasthma. 5 The category of “cardiopulmonary diseaseincludesupper andlower respiratory infection, hypertensive heartdisease, 4. 3. 2. 1. reduce the riskof premature death. per statisticallife (VSL),whichexpresses the aggregate willingnessof society to pay to of the transition caseare expressed asaneconomic value usingavalue called the value emissions isestimated for both the baselineand transition policy cases. The healthbenefits Health Effects ->Economic Benefit: respiratory infection inchildren under age5. we focus on:cardiopulmonary diseaseandlungcancer inadultsover age30,andacute based onlong-term epidemiologicalstudies,andare specific to the three healthoutcomes average annual PM Concentration->Health Effects: caused by vehicle emissions. a setof metricscalled“intake fractions” to predict the annualchangeinurbanair quality for both policy cases. The urbanportionof these emissionsisdeterminedandusedwith Emissions ->Concentration: the transition case,describedbelow. countries donot advance beyond the fuel andvehicle standards currently enforced, and inventory isgenerated for eachof the two policy casesconsidered: the baseline,inwhich account for the level of emissioncontrol anddieselsulfur content. Adifferent emissions global inventory of on-road vehicle emissions. The emission factors usedin this calculation Source ->Emissions: Figure 1.4.Modeling steps to estimatehealthimpactsof vehicle emissions 2.5 concentration using exposure-response functions. These functions are The ICCT Roadmap modelusesvehicle activity projections to create a The Roadmap produces ameasure of annualPM We estimate the healthimpactsassociatedwithachangein | 14 Premature mortality associatedwith tailpipe PM 5 It alsoconsiders mortality 2.5 exposure (Cohen etal., 2.5 exposures and 2.5 2.5 pollution for emissions 2.5 to improved fuel quality and vehicle emissions standards. Even without further intervention, it more detailinAnnexC. This healthbenefitsassessment considers the overall benefitsof a transition standards caseassumesnoadvancement beyond policies that are currently enforced, describedin the Middle East. These levels are heldconstant in the baseline case. The baselinevehicle emissions (except 500ppminBrazil and350ppminMexico), 350ppminnon-EUEurope and2,500ppmin ppm across Africa, 1,000ppminAsia-Pacific (except 350ppminIndia), 2,000 ppminLatinAmerica ppm fuel. The sulfur content of the remnant high-sulfur diesel fuel in2015isassumed to be1,200 The baselineincludescurrent low-sulfur fuel usageineachregion, splitbetween 50ppmand10 market studies prepared to support this strategy in order to inform the baseline diesel sulfur content. Estimates of emissionsreductions are basedon the ICCT Roadmap model,using the refinery and fuels. Percentage on left axisrepresents volume fraction of suppliedroad diesel fuel ateachsulfur level. *New vehicle sales are assumed to meet the emissions standards made possible by the availability of lower-sulfur ppm) meet Euro 6/IV standards. This matching of vehicles to fuels optimizes the available benefits. ppm) meetEuro 4/IVstandards, whileallnewvehicles incountries withultra low-sulfur fuel (10 become available, soin the low sulfur caseallnewvehicles incountries withlow-sulfur fuels (50 assumes that inallcasesimproved vehicle emissionsstandards are introduced asappropriate fuels engine emissionsstandards would deliver considerable additionalbenefits.Note that the analysis beyond 2030–continued progress to globalultra low-sulfur fuels andcommensurate vehicle and reduce them proportionately. The modelingdoesnot includeadditionalimprovement in fuel quality Figure 1.5.On-road dieselsulfur levels over time in the countries includedin the healthbenefitassessment* 15 |

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet the associatedincrease inexpectedmortality rates over time ifnoactionis taken. per year in these countries) reflects the expectedgrowth in fuel consumption over this period,and number of annual avoided mortalitiesby 2050(compared to current estimatedmortalitiesat80,000 2030 would result in500,000avoided mortalitiesper year by 2050(see Figure 1.6). reduced mortalitiesper year by 2030,andeven without further improvement of fuel quality beyond 7,000 avoided mortalitiesper year by 2020,40,000avoided mortalitiesper year by 2025,100,000 this mortality reduction metric, the low sulfur transition described in Figure 1.5 would result in estimate that considers only the healthimpactsof direct pollutant emissionsinurbanareas. absence of newpolicies. The mortality reduction assessed for this strategy represents aconservative urban areas incountries assessedwillincrease by over 50percent by 2030 from 2015levels in the diesel) could save thousands of lives annually. Early deaths from on-road dieselPM As aconsequence of emissionsreductions, the introduction of low-sulfur fuel (for both petrol and cutting 14millionmetric tons cumulatively through 2050. and more stringent vehicle emissionsstandards could reduce vehicular PM considered, that amove from current policies to low andultra low-sulfur fuels (50ppm,10ppm) will deliver additionalemissionsbenefits. The ICCT Roadmap modelestimates,across the countries Only effectsthe of dieselsulfur reductions were considered; reductionsin gasolinesulfur content specific CCAC interventions. and similarly doesnot attempt to assess the healthbenefits that might bedirectly attributable to rate of desulfurization that canbedelivered by interventions by the CCAC or other organizations, continue in this timeframe. This strategy doesnot attempt to assess the marginal increase in the is expected that progress towards lower sulfur fuels and tighter vehicle emissionsstandards will Figure 1.6.Urban health benefitsof on-road fuel desulfurizationincountries considered across Africa, Asia-Pacific, Latin 7 Transportation. The impactof stringent fuel andvehicle standards onpremature mortality andemissions. The International Council onClean 6 Source: ICCT Roadmap modeling Using the samemethodology developed inChambliss,S.,Miller, J., Facanha, C., Minjares, R.,&Blumberg, K.(2013).

America, andMiddle East Source: ICCT estimates | 16

2.5 emissionsby over 70%, 7 The very high 2.5 exposure in 6 By By by a factor of around 16. Estimated benefits to 2050outweigh costs could beup to andaround $1.1 trillion. desulfurization andvehicle emission controls 2050. Therefore,billion to ofcosts thetotal ¢/barrel for 10ppmdiesel,would be$16.5 50 ppmdiesel,andanadditionalcost of 10 refinery operational costs of 20¢/barrel for sulfur diesel,assumingmarginal increase of the operational cost to produce lower total capital cost of $300billion.Finally, estimate basedonMathPro, 2015a), for a estimated additional $70billion (authors’ most countries by 2030would require an billion. Delivering ultra low-sulfur fuel of this investment would beup to $230 capital charges for 15years, the total cost Energy andMathPro, 2012)andapplying an annualcapitalcharge ratio of 0.25(Hart to bringallrefineries to 50ppm. investment of $70billion would berequired (described inmore detailbelow), a total Based on the refinery analysis by Ensys largest cost is that of refinery upgrades. this would cost $790billion. The second emission control technology over the period, assumes noreduction incost of vehicular new vehicles. In aconservative estimate that controlemission appropriate technologiesto The largest cost isassociatedwith fitting fuel quality andvehicle emissionscontrols. than the cost associatedwithimproved This total benefitismany times greater adjusted to reflect the different average incomes in the countries considered. to an avoided mortality based on an assessment by the U.S. EPA of the ‘value of a statistical life’, al. (2014), andadopted inMiller et al.(2014). In this methodology, amonetary value isassigned prevention of mortalities. The monetizationisbasedon the methodology described by Minjares et vehicles to enter into the existingvehicle fleet, and the lagbetween adoption of standards and the years by 2030. The increased rate of accrual of benefits in later years reflects the time it takes new approximately $18 trillion by 2050. health benefitsof moving to low-sulfur fuel andcorresponding vehicle emissionsstandards is When a monetary value is assigned to these projected benefits, the present value of the cumulative 10 could belower. 9 It islikely, inpractice, that someof the refineries that would bemost expensive to upgrade willbeclosed,inwhich casecosts 8

Modeled as10ppmandbelow by MathPro (2015a). This includesdiscounting at3%per year. This discounting isalsoapplied to the cost estimatesgiven here. 9 Assuming 8 Abouta tenth of this ($1.6 trillion) isachieved in the first fifteen 10 in in 17 | climate-forcing emissions. black carbon,andthusindirectly playsarole inreducing depending onenginetechnology, engineload,and—for The amountofanythesecomponentsvariesgreatly • • • emitted byanengine,generallycategorizedinto: A numberofcomponentsmake up the totalmassofPM C tuning thatreduce thesolidandsolubleorganic fractions the useofadvancedemissioncontrol technologies andengine other components(e.g. blackcarbon). However, itdoesenable sulfate production, butdoesnotdirectly lowerproduction of 1.3.Lowering sulfurlevelsdecreasesillustrated infigure produced, andasaconsequenceincreases totalPM Higher fuel sulfurcontentincreases themassofsulfates (Kittelson, 1998). sulfur limitswere 500ppm U.S. in1998,whendiesel engine operatedinthe of aheavy-dutydiesel shows acompositiontypical of thefuel.The chartbelow sulfates—the sulfurcontent omponents water Sulfate particles,includingsulfuricacid andadsorbed Soluble organic fraction,includingunburntfuelandoil Solid fraction,includingblackcarbonandash

of

PM 2.5 2.5 , as 2.5 of of

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet emission standards* (millions ofmetrictonsCO2-equivalent, basedonGWP-100)climate benefit through lowsulfurdieseland Table 1.1. Annual (and cumulative) reductions inblackcarbonemissions(millions ofmetrictons) andnet would be partially offset by increases inenergy useat the refinery level. by cleaner fuels andvehicle emissionstandards. In addition, the benefits from blackcarbonemissions note that inspection and maintenance programs are necessary inorder to maintain the gains made carbon emissions from on-road vehicles by over 85% throughout these regions by 2050.However, an estimated 7.1 million metric tons through the year 2050. and vehicles asoutlinedinsection1.1.1 would reduce cumulative emissionsof dieselblackcarbonby along with lowering fuel sulfur content globally. A move to more stringent standards for diesel fuel Therefore, there are substantial climatebenefits to begainedby advancing vehicle emissionsstandards also reduced. implementation of fuel economy standards) and thus the CO2 emissionsof these vehicles are often technologies, is that these modernvehicles are generally more fuel-efficient (because of the parallel vehicles through the applicationof filter-forcing standards, withcleaner andmore efficient engine engines meetinga filter-forcing standard. Anadditionalbenefitof the introduction of more modern standards are not equippedwithparticulate filters andsodeliver lower emissionreductions than improvements incombustion technology; but,ingeneral, vehicles meetingEuro 4/IVequivalent 99%. Euro 4/IVstandards alsolead to reductions inblackcarbonemissionsof up to 90%by forcing for controlling dieselblackcarbon,reducing PM standards that require particulate filters (i.e. filter-forcing standards) are the mosteffective option black carbonaswell asother climatepollutants (Bond etal.,2013). Euro VI-equivalent emissions Pairing low sulfur diesel fuel with the right emissioncontrol technologies leads to reductions in reducing CO a direct andimmediateimpactonclimatechange,can therefore beavaluable complement to lived climatepollutant. Reducing emissionsof short-lived climatepollutants like blackcarbonhas Because black carbon only has a life in the atmosphere of less than a week, it is a so-called short- black carbon, is a potent climate forcer that absorbs sunlight andreleases heat, causing warming. constituents of PM The largest publicbenefitsachievable through sulfur control are health-related, butmany of the 1.2. desulfurization least 4.5billionmetric tons of CO2 equivalent. this globaldesulfurizationcould beup to 1billionmetric tons of CO2. This leaves anetbenefiton100-year time horizon of at the absence of further decarbonizationof refinery energy supply, we estimate that cumulative refinery emissionsassociatedwith 20-year time horizon. Desulfurization alsorequires additionalenergy expenditures at the refinery, increasing refinery emissions. In equivalent of 5.5billionmetric tons of CO2 over a100-year time horizon, or 22 billionmetric tons of CO2-equivalent over a for concurrent reductions inother short-lived climatepollutants, the implementation of stringent standards would save the of 6.0billion metric tons of CO2; over a20-year time horizon, the CO2-equivalent is23 billionmetric tons. Accounting 11 Accelerated

c scenario When the climateimpactisassessedover a100-year time horizon, these blackcarbonreductions amount to the equivalent limate 2

emissions asa tool to limitclimatechange. B lack .02 (.04) R 2.5 eduction alsohave aneffect onclimatechange.One component inparticular of PM

C arbon 2020

N 16 (30) et benefit

climate

| 18 B lack R 2.5 .17 (1.0) eduction emissionsby up to 99%andblackcarbonby over

C arbon 2030

11 This would bring down annual black 130 (780) N et benefit

climate

B lack R .41 (7.1) eduction

C arbon 2050

N (5,500) et benefit 320

climate 2.5 ,

from 50ppm to 10ppmisestimated to bearound 0.1 USD per barrel of on-road dieselproduced. for desulfurizinggasoline.Asnoted above, the operational cost of additionaldieseldesulfurization only to produce 50ppm fuel. Two thirds of this is the cost to desulfurize diesel,and the balance is represents anadditional 15 to 32percent investment cost increase compared to the cost of upgrading and gasoline to 10 ppm diesel and gasoline is between 0.4 and 0.7 USD per barrel of capacity. This global refineries the additionalweighted-average investment cost to transition from 50ppmdiesel be moderate compared to overall project costs. Anestimateby MathPro (2015a) finds that for 226 The costs of goingall the way to ultra low-sulfur fuel instead of stoppingat50ppmwill tend to (as in the caseof the Egyptian Refining Company, seesection1.5.5). of the package of upgrades may alsoassistinraising finance, for instance from development banks benefits on the backof capacity increases. In somecasesimproving the environmental performance way inonestep takes maximumadvantage of the opportunity afforded to deliver environmental cases, there isavery strong argument to go the full distance to ultra low-sulfur fuel. Goingall the below, desulfurizationinvestments often occur aspartof larger refinery upgrade programs. In such and optimizing the choice of capacity additions.Asdiscussedin the casestudiesinsection1.5.5 of in two stepsincludereduced overhead associatedwithmanagingand financing multipleprojects on-road andnon-road diesel fuels. Potential cost savings by goingdirectly to ultra low-sulfur instead steps possible(MathPro, 2015a) and to build to capacity to desulfurize all their diesel fuels, including reduce the overall cost of sulfur control investments by choosing to leap to 10/15ppmin the fewest ppm to ultra low-sulfur levels andwillincur increased runningcosts. Countries withrefineries can In almostallcases,refineries willrequire additionalinvestment to bringsulfur levels down from 50 ultrafine particlesby atleasta factor of 100(Health Effects Institute, 2013). A dieselparticulate filter canreduce particlemass from amodelyear 2004engineby 90%and primary source of ultrafine particles in urban areas, anddiesel vehicles are the largest contributor. lungs than larger particles,andmay therefore have enhanced toxicity. Motor vehicle exhaustis the Institute, 2010). Ultrafine particles,due to their smallsize, canbeinhaledmore deeply into the diameter or less,andregulated in the European Union via particlenumber standards (Health Effects particles. Ultrafine particlesare the smallest fraction of particulate matter, 100nanometersin Diesel particulate filters are very effective at controlling not only black carbon but also ultrafine and Chileare harmonized to the U.S. 15ppmlimit. led to the deployment of dieselparticulate filters, the maximumdieselsulfur level is15ppm.Canada 2007 and2010heavy-duty vehicle emissionstandards and Tier 3passenger vehicle standards have emission standard hasamaximumdieselsulfur content above 10 ppm. In the United States, where the Euro 6/VIvehicle emissionsstandards, andnocountry that hasadopted the Euro 6/VIvehicle and fuel policy package. Fuel standards inEurope setalimitof 10ppmsulfur diesel to accompany strategy is the introduction of dieselparticulate filters aspartof a filter-forcing vehicle standard strategies for the control of short-lived climatepollutants. In the transportation sector the key The UNEPIntegrated Assessment onBlack Carbonand Tropospheric Ozone put forward 16win-win 1.3. overall.improved emissionsstandardsoffsetthisreductionincoolingandresultsubstantialclimatebenefits Black carbonreductionsassociatedwithbetterfuelqualityandsulfate productionalonedeliversnoclimatebenefit. carbon (OC) and sulfates. Sulfates emissions actually have a cooling effect in the atmosphere, and therefore reducing emissions can temporarily increase butstillremain lower overall. 12

o *The net climate benefit includestheeffectsofmethane(CH4),*The nitrousoxide(N2O), netclimatebenefit blackcarbon,organic During regeneration events, whoseduration and frequency willvary by enginedesignandduty cycle, ultrafine particulate pp ortunitie s

for

ultra

lo w - s ulfur 19 |

fuel s 12

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet of upgrading arefinery to produce low-sulfur fuels are generally substantial. Refinery upgrades lower-sulfur fuels andaprice premium that offsets the costs incurred to produce them. The costs Refiners willnot make investments inhydrodesulfurization unless there isaclear market for processes whichcreate hydrogen, reducing salesor increasing imports). arranging anincreased hydrogen supply (either by addinghydrogen capacity, adjustments from other either replacing, expanding or retrofitting existing or adding distillate hydrotreating capacity and distillate hydrotreating. Reducing the sulfur content of dieseloutputata given refinery involves increased operational costs. The primary process for delivering sulfur reductions for diesel fuel is specifically for the purpose of sulfur control, and this is associated with capital expenditures and to reach 50 or 10/15 ppm sulfur standards will normally require additional units to be installed may alsodeliver improvements inrefinery yield, and therefore may pay for themselves. However, fuels requires oilrefineries to installspecialized refinery units.Someunits that reduce sulfur levels crudes”, >0.5%sulfur) or lower (“sweet crudes”, <0.5%sulfur). Reducing the sulfur content of refined All crudeoilcontains some fraction of sulfur asanimpurity – this fraction could behigher (“sour capacity Costofrefinery 1.4.1. have prevented the introduction of low sulfur fuels. the politicalprioritizationof fuel desulfurization.Often, there isasetof interlinked reasons that fuels; difficultiesinrecouping investments inmarkets where fuel prices are regulated; andalackof the cost of investment inincreasing refinery capacity; the increased cost to consumers of low-sulfur There are many reasons why countries thus far have not introduced low sulfur fuels. They include 1.4. of dieselparticulate filters in the vehicle fleet. countries shouldaspire to 10/15ppmdiesel production inorder to achieve the widespread adoption instead of 50ppm fuel ismodestcompared to the potential environmental benefits. Allrefining ultra low-sulfur fuel standards, and the additionalcost to deliver ultra low-sulfur fuel at10/15ppm carbon (UNEP, 2011).Allcountries that systematically force the useof dieselparticulate filters have are oneof the 16win-win strategies for control of short-lived climatepollutants, includingblack In summary, dieselparticulate filters aspartof a filter-forcing package of fuel andenginestandards refinery upgrade package could make acompelling financial case. be economically attractive withoutstringent standards beingimposed, desulfurizationaspartof a produce higher value products. In such acase,while the desulfurizationproject onitsown may not in whichdesulfurizationwas made financially appealingwhencombined withincreased capacity to improve refinery margins. The caseof the Egyptian Refining Company (1.5.5below) isanexample investment in desulfurization to larger investments in capacity increases or upgrades designed to In some cases, the overall investment picture for a refining project may be improved by coupling order of $200 million. Section 1.5.4 below contains additional details on costs for each region. 30,000 barrels per day of dieselproduction capacity, refineries than for smaller ones. For a‘typical’ developing economy refinery needing to upgrade barrel per day of additionallow-sulfur fuel capacity, the average investment required to upgrade arefinery to produce 50ppm fuel isabout$4,000per for this strategy (referred to here as‘therefinery study’, seeSection1.5.4below) estimates that typically require hundreds of millionsof dollars of investment. Analysis by the consultancy Ensys of low sulfur capacity because the ‘typical’ (median) refinery is smaller than the average refinery. production capacity atanaverage cost of about$6,000per barrel. This cost ishigher than the average cost for anadditionbarrel 14 barrel of oilevery day. 13

b This typical refinery would have about90,000 barrels per day of nameplatecapacity andbeable to increase low-sulfur fuel A barrel per day of desulfurization capacity refers to adding enoughcapacity to arefinery to desulfurize oneadditional arrier s

to

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fuel

ado p tion | 20 13 withper-barrel costs typically lower for large 14 the required investment would beof the fuels while fuel prices were decreasing. fixed by government intervention. Several countries have madeuseof this by introducing low-sulfur sulfur fuels issignificantly less than normalmarket price fluctuations unless the price iscompletely market fuel prices. Fuel prices fluctuate significantly sointroducing a few cents’ premium for low- The price increase associatedwithdesulfurization isalways smaller than the normal fluctuation of differential between highandlow sulfur diesel fuel isbelow normal fuel market price fluctuations. also hasanadvantage of getting10ppm fuel atMOPAG 500ppmprices. Therefore, the price Arabian Gulf (MOPAG) 500ppm.Since refineries around the world have shifted to 10ppm,Kenya that the country continued to procure low sulfur diesel fuel (50ppm) at the price of Mean of Platts that the oil trader with the lowest premium imported fuel for the other traders. This system ensured market prices. In addition, the Kenya government introduced an open tender system that ensured production cost. Following the closure of the refinery, the country could benefit from prevailing 30% of the crudeoilproduced was also fuel oil(low endof production) whichmeant ahighoverall on the globalmarket. The Mombasa oilrefinery was inefficient, leading to a5% fuel loss.Around the surrounding countries andKenya switched to importedlow-sulfur fuels that were actually cheaper created a captive market for the national refinery’s high-sulfur product. After the refinery’s closure, to sub-regional trade arrangements, demand for this fuel was highandKenyan nationalregulations refinery (see section1.5.5below). The refinery hadproduced high-sulfur fuels athighcosts; due sulfur diesel. In 2015 East Africa introduced low-sulfur fuels following the closure of the Mombasa percent today. In other markets the pumpprice may actually drop with the introduction of low difference hasdropped from more than 5per cent several years ago to between one-half to one may behigher. For example,SouthAfrica markets both 50ppmand500diesel the price down to 10ppm(ICCT, 2012b). In somelocalmarkets, withlocalproduction, the price differential 2.1 U.S. cents when going to 50 ppm (depending on the baseline fuel quality), up to 3.2 cents going According to onestudy, dependingon the market the cost of aliter of dieselcould increase by 0.6 to In general, the price difference between highandlow-sulfur fuel hasdecreased inrecent years. directly totaxpayersorconsumers. fuel imposed on the localrefining sector or, in the caseof import-dependent markets, passed through governments are often reluctant to impose higher standards becauseof the costs that would be Without tighter nationalstandards asadriving force andguarantee, refiners may not invest. However, where nationalrefineries sellinto localmarkets or abroad where refineries are oriented for export. The market for lower-sulfur fuel isdriven by the adoption of fuel quality standards, either domestically Costtoconsumers 1.4.2. further complicate the investment process. are also unwilling to encourage further investment. Mixed ownership structures of refineries can may be unwilling to allow the closure of ailing refineries with a questionable long-term future, but in the short term andrefinery viability in the long term. For energy security reasons, governments of shippingrefined product are alloutsideof acountry’s control andcanaffect refinery margins the efficiency of the domesticrefineries and their competitive position,and the relatively low cost refining outlook.Market conditions includingvariable oilprices, worldwide excess refinery capacity, Long-term investment indomesticrefining canbe further complicated by achallengingglobal togetherbring agents. financing the financing arrangements are often complex, andwhichhave required agreat dealof effort to Section 1.5.5below we discussexampleswhere projects have goneaheadinrecent years inwhich on desulfurizationisbeingmade.In other countries, access to finance remains amajor barrier. In as ChinaandMexico, where the government hasbeenwillingandable to invest, rapid progress fund refinery upgrade projects through direct publicexpenditure (and borrowing). In countries such control over the national fuel market. In these casesgovernments may bereluctant or unable to Often, governments inlow-and middle-income countries own, or partially own, refineries andexercise 21 |

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet Cleaner fuels andvehicles are rarely prioritized indeveloping countries, competing for resources Lackofpoliticalprioritizationlow-sulfur fuels 1.4.4. in world oilprices (Wulandari etal.,2014). start of 2015withoutexperiencing the same type of opposition,aidedby the concurrent reduction is possible to remove subsidiesrelatively smoothly. Indonesia drastically reduced fuel subsidiesat the removal (AssociatedPress, 2015;ElWardany, 2013). However, withgood timing andmanagement it while in2013 the Sudanese government was similarly faced withprotests after announcingsubsidy removal following nationwide strikes andprotests after fuel prices reportedly asmuchdoubled, government – for instance, in2012 the Nigerian government was forced to reverse course onsubsidy removal of subsidieshasresulted insocialupheaval and the lossof politicalcapital for the ruling costs of these subsidies,removing them isalmostalways adifficultpoliticalprocess. In somecases revenue due to low energy taxes), cost up to $836billion (IMF, 2013). Despite the documented high which the IMFincludesnegative externalities from fuel consumption andimpliedassumedlossof tax products account for around $211.2 billion annually on a pre-tax basis and on a post-tax basis (in economic pressures ondeveloping countries. The IMF(2013) estimates that subsidies for petroleum Direct andindirect fuel subsidiesare often regressive policies that imposesubstantial fiscal and market. This canmake investment financially non-viable from the point of view of the refiner. markets importershave nooption to pass through higher costs of low-sulfur fuel purchased on the capital and operational costs of desulfurization to consumers. Similarly, in these price-controlled interference with the market price of fuels means that refiners may beunable to pass through the fuels by imposingcontrols or limitson fuel prices, effectively subsidizing fuel consumption. This Many low-and middle-income countries, especially oilproducing ones,control the retail price of Costrecovery canbemadedifficultby regulated fuelprices 1.4.3. as away of improving public healthandameansof mitigating emissions.Whiledeveloping countries to the understandingandactions that result in the political support for cleaner fuels and vehicles of whatispossiblebutalso already available on the market. ‘Awareness’ refers specifically include increasing the awareness and knowledge baseof policymakers andconsumers –both in terms in large part to the advocacy efforts of cleaner fuel andvehicles programs worldwide. These efforts This changingenvironment and the increased importance of importinganddeveloping markets isdue of technologiesthattheytypes import. becoming market movers of cleaner technology by improving fuel standards andcontrolling the in place of emissionsstandards. Rather than actingaspassive consumers, developing markets are are instituting import standards including requirements for age restrictions that complement or act advanced, more efficient vehicles grows in developing markets. In countries like Kenya policymakers setting minimum technology standards atimport.However, this ischangingas the demand for more to continue functioning properly. These developing countries rarely control technology entry by have relatively advanced emissions technologies already installed,requiring low-sulfur fuels inorder However, used vehicles imported from markets with advanced emissions control requirements may more developed markets as these markets advance in terms of emissionsandair quality standards. developing markets have effectively become dumpinggrounds for obsoletevehicle technology from they are mainly importingmarkets andhubs for second-hand vehicle sales.In fact, insomecases In addition,developing countries have traditionally been‘takers’ of vehicle technology in that and healthchallenges from the transport sector. political agendaat the regional, sub-regional andnationallevels as feasible solutions to both climate low-sulfur fuels andcomplementary vehicle standards, these solutionscould begiven priority on the groups andbringinghigh-level attention to the policy and technology options available for promoting and attention withother nationaldevelopmental issues.By convening specialized nationalworking | 22 refinery upgrading. Interim standards could include the interim adoption of anintermediate sulfur standards andderogation periodshave beenused to allow adegree of staggeringin the process of refining capacity in need of upgrade (see section 2.4). In several past implementations, interim in the refining sector – these tools are particularly relevant to countries with their own domestic in the implementation of low-sulfur fuel standards inorder to support agradual implementation to assist the process inlow- andmiddle-income countries. Various regulatory levers have been used Much canbelearned from the experience of desulfurization inOECD countries that canbeutilized Learningfrom existing standards 1.5.2. the trend of growing healthandclimateimpacts from their fleets. vehicle fleets, it is important that all non-OECD countries move to cleaner fuel standards to reverse these andmany other countries are experiencingincreased fuel consumption andrapidly growing shift in the non-OECD market andisdriving significant newrefinery investments. Still, given that taken significant steps to transition inwholeor inpart to low or ultra low-sulfur fuels. This isamajor diesel fuel. Many rapidly developing countries –China,India, Mexico, Brazil, andSouthAfrica –have countries, however, have varying standards inplace, withmany at500ppmor above for automotive barrels of road diesel fuel per day, over 50%of the road dieselconsumed worldwide. Non-OECD Most OECD countries are now atultra low-sulfur fuels. These countries consume about8million region, withconsumption increasing by 4.4millionbarrels/day between 2008and2012. In 2009, for example, Asiaovertook North America as the world’s largest petroleum-consuming by 1.3% that year, consumption grew by 3.3%outside the OECD. This trend lookslikely to continue. In 2012 the world consumed 88.9 millionbarrels of oilper day. WhileOECD consumption declined Globallow-sulfur fuelavailability 1.5.1. opportunities, for aglobal transition to low-sulfur fuels. support the development of this global strategy, studies were conducted to identify obstacles, and the majority of middle-andlow-income countries stilllackplans to move to low-sulfur fuels. To While many countries have moved to low-sulfur fuels (50 ppm or below), or to intermediate levels, 1.5. million premature deathsavoided per year, of which125,000are children (Hatfield and Tsai, 2011). all Sub-Saharan countries were declared unleaded. The measured benefitswere immense:over 1.2 fuel, andnationalcampaigns that publicized bloodleadlevel testing inchildren. By January 2006 national, sub-regional andregional meetingsof policymakers andpractitioners specifically onleaded concerted efforts by the Partnership for CleanFuels andVehicles that included technical training, Africa by December 2005. The intervening years between the declaration and the phase-out date saw in whichdelegates from 28countries committed to phaseoutleadedgasoline in the Sub-Saharan 2001 witharegional conference inDakar, Senegaland the agreement of the “Dakar Declaration” out of leadedgasoline. The initiative to phase-outleadedgasolineinSub-Saharan Africa beganin of the benefitsifcleaner fuels could dramatically alter standards and emissionsis the globalphase- One of the mosteffective examplesof how working toward anincreased awareness andknowledge vehicleadvanced technologies. enabled by the quality of fuel used,allcontributing to lower emissionsand the utilizationof more by asystems approach that encompasses both the fuel used to power vehicles and the technology as abasicbuildingblock for low emission transportation systems. Better outcomes canbedelivered struggle with the consequences of rapid motorization, cleaner fuels and vehicles are often overlooked

P rogre ss

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fuel

ado 23 | p tion

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet East African countries shouldconsider introducing vehicle emissionstandards inorder to maximize emissions standards. Now that EastAfrica hasintroduced low-sulfur fuel standards of 50ppm, (maximum allowable 8 years) andmostimported used vehicles come from Japan, which has strict realizing the benefitsof desulfurization. In Kenya, for example, there isanagelimitonusedimports good compliance andenforcement mechanismsare inplace this shouldnot prevent countries from hand vehicles from Europe and Japan. However, aslongagelimitsor emissionstandards and must not beoverlooked. In someregions, particularly inAfrica, mostvehicle salesare second- In addition to fuel andvehicle standards, the importance of the globalsecond-hand vehicle trade that standards could beadopted muchmore quickly (see EastAfrica example,Section1.5.5below). sulfur fuels from the international market whileregional desulfurization capacity isupgraded means non need for staggered implementation). For fuel importingcountries, the ability to source low- implementation may beviable (for instance, for countries reliant onasinglerefinery there may be with refining capacity. Depending on the specificrefinery complex inagiven country, abriefer sufficient between announcement of anew low sulfur standard and full implementation inacountry and then in2015accelerated the deadline to 2017(3years lead time). In general, 5years shouldbe requiring full nationwide availability of 10ppmsulfur fuels by the startof 2018(5years lead time), sulfur fuel down to limitsaslow as10/15ppm. as the refining industry now hasagood understandingof the technologies required to deliver low- adopting low sulfur standards now, these historicalplanningperiodsmay belonger than isnecessary, of the interim standards periods) was about 5 years. Again, for low-and middle-income economies cases standards are already expectedby industry well before formal promulgation, andincludingsome average effective planningperiodavailable for the setof standards considered (given that inmost select strategies for compliance andraise the necessary capital.MathPro (2015b) conclude that the Previous programs have alsobeenpreceded by planningandpreparation periods to allow refiners to effectively leapfrog both in terms of technology and timeframe. costs. Therefore, itis feasible for low-and middle-income countries considering desulfurization to has now beenwidely demonstrated, with15years of opportunity to improve efficiency andreduce established). The portfolio of tools available to refiners to meetnew, more challenging,standards been widely appliedbefore (although the basicprocesses used for desulfurizationwere already well was driving the development andadoption of highseverity desulfurization technology that hadnot the U.S. ULSD standard was introduced in 2001 (followed shortly by the EUstandard in 2003), it standards was different than the context for countries considering adopting standards now. When standard. It isimportant to understand that the context for introduction of the U.S. andEuropean implementation, from 2.5years inCalifornia to 6years in total for the U.S. ULSDon-road diesel There hasbeenconsiderable variation in the time between program announcement and full technical capacity for upgrading and to avoid concurrent refinery shutdowns). where itisunrealistic to expectall facilities to upgrade simultaneously (for instance due to limited Measures of this sort can and have been used to manage a staggered process of refinery upgrade cost per barrel of additionaldesulfurizationcapacity could bemuchhigher than for larger facilities. there may beacase to provide derogation for a small refinery supplying aspecificregion where the refers to specificrelaxations allowed to standards after they come into general force – for instance, the introduction of regional sulfur standards before national rollout (see Section 2.6). Derogations grade, the temporary use of national average sulfur standards rather than an absolute sulfur cap process technologies hadnot yet beenproven incommercial use.” 16 and require an increase inoversight, administration, andaccompanying regulatory complexity. effective investments to bemade first. Such average sulfur measures and transitional provisions shouldbeconsidered with caution period of two and ahalfyears which includedanaverage of 150ppmover that periodbefore 2005 whichallowed for cost- some variable refinery outputswhileachieving the emissionsreductions from the overall average. There was alsoa transitional ppm asof 2005 This ischanging to a10ppmannualaverage starting 2017with the capremaining at80ppm.Such measures allow 15

MathPro note that “thepioneeringlarge ULSprograms hadlongimplementation times primarily because the required For instance, Canada’sSulphur inGasolineRegulations require anannualaverage sulfur level of 30ppmwithacapof 80 | 24 | 16 For example,Chinaannounced standards in2013 15 or or of low-sulfur fuels, making useof the outcomes of sub-regional andregional analyses like this one. approach inWest Africa. Chapter 2of this strategy willpropose aglobalroadmap to introduction 12 of itsneighbors,allof whichare exclusive fuel importers. This hassignificant implications for our mainly produce finished fuels for their internal market while Cote d’Ivoire exports high-sulfur fuel to Of the three main producers in West Africa – Cote d’Ivoire, Nigeria and Ghana – Ghana and Nigeria African sub-regions, apart from asmallvolume of sweet crudesales to Cameroon andSouthAfrica. for their internal market whileothers produce for export. There islittle trade interaction withother survey: Western Africa. The sub-region hassixrefining countries, withsomeproducing fuel mainly Figure 1.7 below is an example of one the sub-regional analyses and illustrations included in the market The refining andimport/export hubsidentified make itpossible to: forlow-sulfur fuels. to desulfurization,and thus aglobalstrategy requires diverse approaches to create viable markets an idealapproach to desulfurization.However, there isnosingle model for the right policy approach to agroup of importingcountries, the markets approach combined witharefinery upgrade would be to target efforts ondeveloping standards andincentives. In the caseof anexportrefinery supplying The aim of identifying andillustrating trade flows was to identify market drivers andhubs inorder fuels introduction. sub regions, alongwithaclearer understandingof opportunities to supportandpromote cleaner and quality of fuel flow allows the viewer to identify ‘hot spots’ or major fuel players inregions and regions, aswell ashighlight key countries ineachsub-region. This visual presentation of quantity The purposeof the mapswas to illustrate the major trade patternsand flows withinandbetween The collected fuel flow data(both crudeandrefined) was used to generate sub-regional maps. that refineries willadapt to supply the demandedproducts. focused oncountries that create the demand for low-sulfur fuels, through nationalstandards, assuming Europe & the Caucasus, Central Asia, South Asia, North Asia and South-East Asia. This approach Southern Africa, West Africa, Middle East,Central America& the Caribbean,SouthAmerica,Eastern sub-regions focused onlow-and middle-income markets: EastAfrica, Central Africa, North Africa, region by dividing each region into active sub-regions of fuel trade relationships. The market-based (UNEP, 2014). The market survey looksat the mixof refiners, exportersandimportersinagiven – both crudeoilandrefined fuels atdifferent sulfur levels –and the existingmarket relationships survey. The survey describes the trade inliquidhydrocarbons between countries around the world In preparation this strategy, the partnersof the HDDIof the CCAC commissioned a fuel markets Market analysis 1.5.3. vehicle emissions standards and/or poor regulation of usedvehicles import. emission reductions. At the moment, many low-and middle-income countries have very weak or no • • Highlight sub-regional groupings (both economic and political) where aharmonization of fuel Identify market pressure points where targeted intervention willhave effects throughout a quality andemissionstandards shouldbeprioritized for economic andsocialbenefits. sub-region and,perhaps,region and 25 |

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet America and$5billioninEasternEurope andCentral Asia (see Table 1.2). Caribbean (includingCentral andSouthAmericannationson the Caribbeancoast), $7billioninSouth in the Middle East,$13billioninSoutheastAsia,$12 the rest of Asia,$11billionin the Greater changes in future refined product demand.Seven billionof investment isneededinAfrica, $16billion analysis considers only existing facilities atcurrent utilizationrates, anddoesnot reflect possible capacity required (12million barrels per day), 83%is for dieseland the other 17% for gasoline. The current prices to deliver aglobalshift to 50ppm fuel standards. Of the additional hydrodesulfurization The analysis (Ensys, 2015) found that approximately $70billionof investment would berequired at list of countries considered andnumber of refineries modeledisincludedinAnnexD. program) andChina(which hasalready committed to apathway to low-sulfur fuel standards). The full at 50ppm fuel standards or below, Russia (which isin the middleof anextensive refinery upgrade outputs. the investment required to add desulfurization capacity to handle allexisting gasoline and diesel content of 50ppmor lower, the consultancy Ensys undertookaglobalrefinery assessment to estimate In order to better understandwhatwillberequired to support a globalshift to fuel withasulfur income countries. As partof this strategy HDDIpartnersalsocommissioned astudy of refineries inlow-and middle- analysis Refinery 1.5.4. 17

Available from www.theicct.org 17 The analysis was global,butexcluded mostOECD countries, someother countries already WESTERN AFRICA Different shadesofred for CrudeOil: Different shadesofbluefor Refined Products: or Refined, andwhat level ofSulphurisinit. Arrows are indifferent colours to indicate ifaflow isCrude QUALITY OFFUEL Green circle means50ppmorlower IN-COUNTRY CONSUMPTION ( (values in‘000sBBL/day): via thicknessofarrow andaletter on top ofthearrow 5 arrows indicate range ofquantity beingimported / exported, QUANTITY OFFUEL Sour (>10,000ppm) Sweet (<10,000ppm) >500 ppmSulphur 50 –500ppmSulphur 0 –50ppmSulphur E. >1,000 D. 500–1,000 C. 101–500 B. 10–100 1–10 A. Country withRefining Capacity > 1,000 500 –1,000 101 –500 10 –100 1 –10 KEY 000s BBL/day) Figure 1.7. Oil and fuel markets inWest Africa A Gambia Guinea Bissau A North America Source: UNEP, 2014 Senegal Siera Leone 42 8 A Guinea | 26 A Europe B 9 A B Liberia Mauritania A A 3 18 4 A B A A Europe A Cote d’Ivoire A 24 A B B A 10 A Burkina FasoBurkina Mali Ghana South Africa Europe 64 5 B A A Togo 11 A Benin A A D 32 B Algeria USA A C

A India C B Brazil C 6 Range offueltrade ows for2010-2013 Nigeria B 344 Niger A C South Africa C Netherlands India, USA, Brazil, Table 1.2. Figure 1.8). $10,000 per barrel or less,and70%could beupgraded for less than $5,000per barrel (as shown in of overall capacity. The analysis shows that 99%of capacity could beupgraded for aninvestment of of additionalcapacity, these outlier refineries withvery high costs represent only a small fraction and so on. While for the most expensive refinery the estimated costs run as high as $35,000 per barrel the investment required to desulfurize, dependent onstartingconfiguration, location,size, crudesupply As noted above, the refinery analysis shows considerable variation between refineries andregions in costs canbeexpected to accelerate rather than delay the low sulfur transition. improving margins andboosting the financial case for investment inprojects, taking on these additional investments are likely to dwarf the size of investments required for desulfurizationalone.However, by that can be processed and/or meet other fuel quality objectives. For some refineries, these accompanying often be combined with investments to improve yields, increase capacity, extend the range of crudes As seen from the casestudiesinsection1.5.5,reality itislikely that desulfurization investment will overall refinery investments. in refinery desulfurization, whilesignificant, is therefore well within the range historicand expected focus ondesulfurizationshouldbringaccelerated adoption well withinreach. A$70billioninvestment below 50ppmby 2025,withAfrica reaching 45ppmonaverage by 2040.Anenhanced international World Oil Outlook that allregions except Africa willhave reached average road dieselsulfur content $600 billionin the region assessed of around $20billionin the region assessed,and to predicted cumulative refinery investments of A cumulative investment of $70billioncompares to historical (2000-2013) annualrefinery investment in excess of $800billion. 19 18

OPEC (2014) forecasts regional investment of $450billionin the period to 2040, of a total investment and maintenance spend Non-OECD excluding China, Russia andCentral Asia Cost of refinery investment required todeliverlow-sulfurfuelsbyregionCost ofrefinery Europe andCentral Asia Greater Caribbean Southeast Asia South America Rest of Asia Middle East REGION Africa 18 in the period to 2035(IEA,2014). 27 | INVESTMENT ($ REQUIRED 19 OPEC forecasts in the 2014 16 16 13 13 12 12 11 11 5 7 7 BILLION)

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet cost of $300 million to desulfurize the existing diesel stream (Ensys, 2015). The Talara upgrade capacity and yields. The project cost isestimated at $3.5billionin total, compared to anestimated The Talara upgrade program willcouple additionaldesulfurizationcapacity withinvestments to increase for completion in2017, includingdesulfurizationandaddingheavy crudeprocessing capacity. Repsol to push anupgrade to LaPampilla. Repsol, aSpanish company, hasannounced upgrade plans oil company to upgrade Talara to produce low sulfur diesel, and has engaged with refinery operator 90% of domestic dieselproduction. The Peruvian Government haspassedalaw requiring the state refineries. Peru has6refineries, andof those, the two largest (Talara andLaPampilla) account for over of dieselisstilldomestically produced, a nationalstandard willrequire investment inupgrading local has beenable to import ultra low-sulfur fuel to meetexistingdemand,butgiven that the majority sulfur content indieselisstillas high as 1,500 ppm and the national standard is 5,000ppm.Peru gasoline nationwide. Whilesomeurban areas already have 50ppm fuel available, the national average make Euro 4/IVvehicle standards possible,Peru alsoneeds to transition fully to 50ppmdieseland standards, andnewheavy-duty vehicles willberequired to meetEuro IVrequirements. In order to imported vehicles. From 2016,newlight duty vehicles willberequired to meetEuro 4or U.S. Tier 2 Communications hasadopted aseriesof progressively tighter vehicle emissionsstandards for newand In the context of a fast growing automotive sector, since 2001Peru’s Ministry of Transport and Peru: Upgrading refineries tomeetlow-sulfur fuelstandard refinery upgrades. They show how combining government policies,refinery investment andmarket datalead to successful In addition to the market and refinery baseline studies, a number of case studies inform this strategy. Selectedcasestudies 1.5.5. Figure 1.8.Investment cost curve for additionalbarrels of 50ppm fuel output | 28 (Galarza andMalins,2016) • Key takeaways: refinery inVietnam,andwould produce 10ppmpetrol anddiesel Petroleum. The third newrefinery, Vung Ro, would be the only 100%privately owned and financed it willproduce 50ppmdiesel,andprocess importedcrudeoilincludingsuppliedby Qatar Ltd, Qatar Petroleum, andVietnamNational ChemicalGroup. Construction startedin2013and The second new refinery Long Son, will be co-owned by PetroVietnam, Siam Cement Public Company and Korea. The Kuwait Petroleum International willsupply the crude for the refinery. from the co-owners, and the other halfwillcome from avariety of financial institutionsin Japan Inc. willproduce 50ppmdiesel,andcost about$9billion to build.Half of the investment willcome Idemitsu Kosan Co. (Japan’s second-largest refiner), Kuwait Petroleum Corp., andMitsui Chemicals The first of the plannednewrefineries isNghi Son. This refinery, to beco-owned by PetroVietnam, stake in the upgraded refinery. the government. Half of the investment will come from Gazprom Neft, which will acquire a 49% over 9%. The margins of the upgraded refinery willbesupportedby favorable tax treatment from to other upgrades it is expected to be a profitable project, witha target internal rate of return of process heavier, sour crudes. The project will cost $1-2 billion,butbecausedesulfurizationiscoupled The Dung Quat project would couple desulfurizationinvestment withinvestment incapacity to projects are delivered andrunatcapacity, Vietnamwould become anetexporter of refined product. and by expanding the refinery sector with up to three new refineries opening by 2018. If all these with a10ppmstandard. This willbeachieved through upgrading the existingDung Quat refinery, requirements willbereplaced witha50ppm standard, andby 2021all fuel inVietnammustcomply with a dramatic increase in domestic refining capacity. Starting in 2016, the current 500 ppm In Vietnam, the adoption of more stringent fuel quality standards isscheduled to occur inparallel and Malins,2016) Vietnam: investing to become a regional hubfor refinery operations in SoutheastAsia • • • Key takeaways: contract to Tecnicas Reunidas for upgrade andmodernizationof the refinery (Brelsford, 2015). the forthcoming tightening of standards. In 2014,Petroperu lent a$2.7billionlump-sum turnkey Générale. The LaPampilla project isreliant onprivate investment raised by Repsol inresponse to of funding willcome from the private sector, including$500million from the French bank Société international market through bondissuesandloans,half from domesticsources. The other 23% is largely reliant onpublicinvestment (77%).Half of the public funding willberaised from the step (50ppm) and tax incentives, allowing industry anadequate implementation window. National government sets ambitious target for fuel quality (10 ppm) coupled with an intermediate by coupling desulfurizationcapacity withinvestments to increase capacity andyields. Funding for upgrades isoften acombination of both publicandprivate funds madeprofitable with aprivate refinery operator to ensure the deadline for upgrade ismet. The state-owned refineries are required by law to comply with the newstandard, partnering major cities. This buildsdemand for low-sulfur fuels, sendsaclear signal to producers. National government takes the leadinsettinganambitious fuel quality standard, startingwith 29 | (Searle

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet petrol in sub-Saharan Africa in December. Following this, the UNEP-based Partnership for Clean adoption of low-sulfur fuel standards began in 2005 follwing the successful elimination of leaded introduction of low-sulfur fuels (maximum sulfur content of 50 ppm in diesel). The process towards This signaled the completion of the EastAfrica Community’s harmonized approach anditslandmark completed its transition to low sulfur diesel fuel for cars, trucks andbuses,asshown inFigure 1.9. In January 2015 the EastAfrica sub-region (Burundi, Kenya, Rwanda, Tanzania andUganda) formally East Africa: sub-regional introduction of low-sulfur fuelsandclosure of Mombasa refinery Key takeaway: in debt by anarray of private banks, development banksandexportcredit agencies. investors from Egypt andGulf Cooperation Council countries. The other $2.6billionwillbeprovided (3% share), the Dutch and German development banks FMO and DEG, InfraMed Fund, and other Petroleum International, Qalaa Holdings (formerly CitadelCapital), the World Bank affiliated IFC required for the new facility willcome inequity from the Egyptian Petroleum Corporation, Qatar improving the case for private and development finance. $1.1 billion of the $3.7 billioninvestment the ERC part of the project will offer better margins than achievable for a whole new refinery, distillation (CORC) from the higher-margin businessof running the complex refinery units(ERC), deep-conversion refinery. However, by separating the low-margin business of simple atmospheric In effect, once the ERC facility isbuilt, the CORC andERC taken together willrepresent asingle hydrotreater, anda32,000barrels/day distillatehydrotreaters), halfof whichwillbe 10ppmdiesel. 40,000 barrels/day hydrocracker, a25,000barrels/day delayed coker, a23,000barrels/day naphtha refined product andbyproducts per year (including a80,000barrels/day vacuum distillation unit,a of processing crudeoildirectly) andusedeep-conversion processes to deliver 4.5million tons of markets withoutdesulfurization. The ERCproject will take this fuel oilasrefinery input(instead and contributes to localair pollutionbecause the produced fuel issoldinto localheatandpower oil). Producing suchalarge fraction of fuel oilreduces the revenue potential of the CORC refinery, largest refinery, alow-conversion refinery, andproduces 67%low-value atmosphericresidue (fuel The context for the ERCproject is that the Cairo Oil Refinery Company (CORC) operates Egypt’s on delivering improvements inlocalenvironmental quality. decision to produce 10ppmwas madeinorder to gainaccess to development funding contingent led by private financial interests (Citadel Capital)rather than government objectives, and the regulated andmay reach ashigh10,000ppminsomecases.Rather, the ERCproject isbeing by any government commitment to tighten fuel quality standards. Indeed, dieselsulfur isnot mentioned inprevious sectionsbecause the commitment to produce 10ppm fuel isnot informed The caseof the Egyptian Refining Company (ERC)isdifferent from the casesinPeru or Vietnam Egypt: buildingafinancingcoalition toupgrade low-value fuel oil • • • a profitable upgrade. when Investment indesulfurizationiscoupled withinvestments inimproved capacity, ensuring Private investment is mobilized for refinery expansion and improvement. This is usually feasible International financial institutionsanddevelopment bankscould play acatalyzingrole by Development funding criteria/conditionality for improvement of air quality paired withprojected offering co-financing andriskmitigationby convening financing partnerships. favorable economic benefitscanincentivize decisions to produce low-sulfur fuels. | 30 (SearleandMalins,2016) weighing its technology options for plannedBRT corridors, includingEuro V, VIandCNG technology. vehicles, whichrunmostefficiently andcleanly onlow-sulfur fuel. The city of Nairobi iscurrently in the region, includingKenya, have setvehicle import agelimitsandare importing filter-equipped Bus Rapid Transit projects. The recent move to low-sulfur fuels isparticularly timely becausecountries market allows major cities like Nairobi to consider advanced vehicle emission standards for planned The region’s adoption of low-sulfur fuel standards and the availability of low sulfur dieselon the through Kenya and Tanzania. the landlocked countries of Uganda, Rwanda and Burundi relied (and still rely) on fuel imports revision of standards to lower sulfur fuels requiring the importationof cleaner fuels. In addition, The fact that mostEastAfrican countries imported their fuel provided apolicy window for the at 150ppmand the implementation date for these limits was set for 1 January 2015. African Ministers adopted standards that set the maximumdieselsulfur level at50ppmandpetrol inefficient and were abandoned in 2013 leading to the closure of the refinery. In June 2013, East product available on globalmarkets, KPRLupgrade plans(valued atUSD 450million) were deemed fuel quality standards and to produce 172,400barrels/day. But withcheaper andhigher quality actively explored options for the 27,500 barrels/day refinery to beupgraded to meetimproved refinery was contentious due to economic andstrategic considerations. The Kenyan government demand, andalsoexported to neighboringcountries, the decisionabouthow to dealwith the sulfur fuels (diesel standard at10,000ppm). While the refinery could only meethalfof Kenya’s Africa: the Kenya Petroleum Refineries Limitedplant (KPRL),anoutdated facility producing high One major step towards desulfurizationin the region was the closure of the only refinery inEast addressing diesel fuels in the region. content inpetrol. The PCFVwas joinedby the CCAC in2013,amplifying efforts to desulfurize by Fuels andVehicles (PCFV)beganworking withgovernments in the sub-region to reduce fuel sulfur Figure 1.9. East Africa’s transition to low-sulfur fuels 2002-2015 Source: UNEP, 2015 31 |

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet Key takeaways: • • • of upgrades, both in terms of healthandeconomic benefits. may need to close.Policymakers andprivate sector willneed to weigh the costs andbenefits Refineries deemed inefficient and unable to keep up with the demand for better quality product standards inonekey country canchange the fuel quality inanentire sub-region. Due to regional trade reliance and infrastructure (Kenya as import hub) improving fuel quality quality andvehicle emissionstandards. Supporting apoliticalprocess at the sub-regional andregional levels canlead to changein fuel | 32 enforcement. low- andmiddle-income countries are uniquely atriskdue to alackof standards, investments and all countries have the capacity to address air pollution,vehicle emissions,and fuel quality and strategies, vehicles and fuels are manufactured, produced and traded inaglobalmarketplace. Not While desulfurizationwill, to someextent, always bedriven by nationalconcerns andnational in other large andrapidly developing countries, suchasChina. air pollution,and the resultant impactsonlarge at-risk populations. This transition continues today undertook independent, complex regulatory and industrialoverhauls to address vehicle emissions, Beginning in the late1990sandearly 2000s, Japan, North Americaand the European Union focus of this globalstrategy. significantly over time. Desulfurization of the fuel consumed in these high-sulfur countries is the the fraction of mortalities occurring in the countries that still have high-sulfur fuels will increase of vehicles equippedwith the associatedemissioncontrol technologies. If nothing else changes, time between implementation of the fuel andvehicle emissionsstandards and the deployment The number of mortalitiesstilloccurring incountries withlower sulfur standards reflects the lag distribution of premature deathsismappedagainstlocalon-road diesel sulfur levels inFigure 2.1. premature deaths from transport-related air pollution globally (Chambliss et al., 2014b). The global from transport-related air pollutionoccur eachyear in these countries, and240,000 annual population, withlimitedor noaccess to low-sulfur fuels. Anestimated80,000premature deaths in over 120countries, yielding anestimated4.1 billionpeople,or more than halfof the global this contains more than 50 ppm sulfur. According to our analysis, high-sulfur fuel is consumed Every year, 900billionlitersof on-road diesel fuel are consumed worldwide and30percent of 2.1. emissions by enablinglow-sulfur fuel coupled withvehicle emissionstandards. of this globaldesulfurizationstrategy is to reduce outdoor air pollutionandglobalblackcarbon Initiative for accelerating access to low-sulfur fuels andsoot-free This chapter willdetail the approach developed by the co-leads of the CCAC Heavy-Duty Diesel accomplished. upgrade their refineries. Anditprovided casestudieswhere refinery upgrades were successfully of low-sulfur fuels and cleaner diesel technology to the challenges faced by countries seeking to obstacles facing the globaldesulfurization– from alackof awareness andknowledge of the benefits cleaner on-road diesel fuels coupled withemissioncontrols ondieselvehicles. It alsooutlined the The preceding chapter detailed the vast climateandhealthbenefitspossiblewith the useof 2. buses, alongsideother fuel/engine types includingconventional dieselengines. emission levels for particulatematter setby Euro 6/VIor US2010. This canincludecompressed natural gasor electric-powered 20 a

For the purposesof this strategy, asoot-free enginewillbedefinedasany fuel andvehicle combination that meets P rioritizing

G lobal

C S ountrie trategy s

and

for R egion

33 | D s e s ulfurization 20 diesel technology. The goal

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet total estimatedoutdoor air pollutionburden (Chambliss etal.,2014b). for each country based on the transportation-attributable fraction of outdoor air pollution and the the countries withlimitedor zero access to low-sulfur fuels. to identify the highest priorities for actionwe ranked the transport air pollutionburden ineachof opportunities. However, the healthburden of high-sulfur fuels isnot equally distributed.In order lack access to low-sulfur fuel. Section2.2below identifies nationalandsub-regional desulfurization Global on-road fuel desulfurizationwillrequire actioninevery oneof the countries that currently production capacity. coupled withmeasures to deliver refinery investment in order to increase globallow-sulfur fuel transition, aprogressive adoption of low-sulfur fuel standards by importersandproducers mustbe increasing supply, allowing investments inlow-sulfur fuel capacity to berecouped. For the global India. Standards adopted by anever-growing share of the dieselmarket creates demand to match had 50ppmsulfur standards inplace, taking advantage of available capacity in the Middle Eastand initiative to reduce vehicle emissions.From early 2015Kenya andother EastAfrican countries have ultra low-sulfur fuels from Singapore inadvance of new fuel andvehicle standards aspartof an requirements onimports.Sri Lanka, despitehaving no fuel quality standard, haschosen to import modest additional cost of low-sulfur fuels are in a stronger position than ever to adopt low sulfur Singapore produces low-sulfur fuels andexports them to Sri Lanka. Countries willing to pay the instance, refiners produce low-sulfur fuels for export to markets inEurope andIndia makes aprofit. and hasmotivated investment inrefinery desulfurizationcapacity inseveral regions. In India, for value-added by producing low and ultra low-sulfur fuels can make refinery operations more profitable Today any country that demands low-sulfur fuels canbuy them on the international market. The 10 ppmsulfur dieselnationwide from 2017. 21

Figure 2.1. Cumulative distributionof globalon-road dieselconsumption andhealthburden of transport-related air Note that Chinaisnot considered ahigh-sulfur fuel country since ithasimplemented 50ppmdieselin2014andwilldeliver | 34 pollution 21 Transport air pollutionisestimated Table 2.1. just one-third of high-sulfur fuel consumption. in sixcountries –India, Pakistan, Indonesia, Ukraine, Mexico, andEgypt –whichcombined account for high-sulfur diesel fuel consumed. Three quartersof healthburden amonghigh-sulfur countries occurs account for anestimated70,000annualpremature deathsand2.7millionbarrels/day of annualon-road burden associatedwithhigh-sulfur fuel occurs injust13countries aslistedin Table 2.1. These 13countries The results of this analysis andglobal rankings are provided below. Eighty-eight percent of the health **Annual road sector diesel fuel consumption is taken from Econ Stats (2011). from consideration includeChina,Russia and the OECD nations. *In this context, ‘highsulfur’meanscountries withon-road dieselsulfur content above 50ppm.Countries excluded RANK 10 Total (13countries) 13 12 11 4 8 9 6 5 3 2 7 1 ( THOSE COUNTRY IN PRODUCERS) ALSO Bangladesh DPR Korea Indonesia BOLD Top 13high-sulfur*nations,ranked byhealthburden ofvehicleemissions Malaysia Pakistan Vietnam Ukraine Nigeria Mexico Egypt Brazil India Iran IN ITALIC TOP DEATHS OUTDOOR S HARE CUMULATIVE TRANSPORT premature deaths 70,000 annual AMONG NATIONS 86.0% 83.0% 84.5% 64.2% 43.9% 58.2% 70.2% 52.3% 75.6% 88.1% 81.5% 79.1% 87.1% POLLUTION AIR - SULFUR HIGH RELATED 35 | OF SULFUR HIGH CONSUMPTION OF S HARE CUMULATIVE 2.7 millionbbl/d on-road diesel consumption ON - 60.4% 44.2% 60.6% 24.4% 46.3% 33.6% 23.3% ROAD 41.8% 31.0% 14.9% 41.9% 17.6% 41.1% NATIONS** DIESEL AMONG SULFUR DIESEL (PP LIMIT NATIONAL 10000 5000 3000 7000 500 500 500 500 500 200 N/A N/A 350 S) M

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet Table 2.2. Saudi Arabia South Korea Philippines Azerbaijan Venezuela Singapore Argentina Indonesia Province of China Malaysia Thailand Ukraine Belarus Taiwan, Algeria Mexico COUNTRY (NAMES IN Egypt Brazil India UAE Iraq Iran BOLD ARE ALSO IN TOP 30 FOR HEALTH IMPACTS)** Largest producers ofhigh-sulfur on-road diesel,from countries assessedbyEnsys (2015)* 22 10 13 4 4 4 8 8 9 9 9 6 6 6 5 5 3 2 2 7 1 NO. REFINERIES 344,000 208,000 244,000 360,000 503,000 302,000 685,000 228,000 479,000 507,000 108,000 257,000 109,000 145,000 831,000 281,000 195,000 155,000 215,000 131,000 131,000 HIGH SULFUR DIESEL PRODUCTION (bbl/d) 0.4 0.8 0.5 4.6 3.4 TOTAL INVESTMENT 0.7 3.7 1.4 4.1 1.5 1.9 1.9 1.7 1.7 10 1.1 .6 4 5 2 1 TO DESULFURIZE ($ BILLION)*** | 36 4,800 5,000 5,400 5,400 4,300 4,200 4,200 4,200 6,800 5,800 3,800 2,800 5,500 3,500 3,900 7,900 7,900 7,300 4,100 1,500 6,100 COST PER BARREL PER DAY ADDITIONAL CAPACITY 80% 50% 46% 42% 59% 70% 65% 56% 62% 53% 25% 78% 74% 67% 75% 37% 72% 77% 10% 19% 31% CUMULATIVE FRACTION OF HIGH-SULFUR FUEL Target of 50ppmby 2018 Target of 50ppmby 2016 Target of 30ppmby 2016 Target of 50ppmby 2015 Target of 50ppmby 2015 50 ppmavailable inmajor some metropolitan areas; 15ppm available inmajor implement aprogram of 10 ppm fuel available in metros. Nationalmetros. target Domestic dualstandard investment to 50ppm It hasbeenreported may bepreparing to 500 ppmelsewhere metros. Developing of 50ppmby 2017 Domestic standard Domestic standard Domestic standard Domestic standard national target ofnational target Target of 10ppm that PERTAMINA 50 ppmby 2016 15 ppmby 2017 of 50/10ppm fuel by 2016 of 50ppm of 50ppm of 10ppm of 10ppm No target No target No target No target No target

NOTES ***Note that investment cost, taken from Ensys (2015), includesdesulfurization of gasolineproduction capacity. trajectory inplace for adoption of low-sulfur fuel standards, whilered denotes no firm trajectory. **For the countries that alsoappear in the top 13 for healthimpacts,green coloration denotes that there isa provided inAnnexD. with domestic 50ppmstandards (or better). A full listof the countries whoserefinery capacity was assessed is *The refinery capacity analysis excludes the EU, U.S., Canada, Russia andChina,butdoesincludeseveral countries adoption of higher standards. Of these, India already haslow sulfur dieselavailable insomeareas prioritized in section 2.2 below as countries in need of support for refinery upgrades and for the production, seven countries – India, Pakistan, Indonesia, Malaysia, Nigeria, Brazil, andUkraine –are Of the ten countries that fall on both lists, having both highhealth burden andhigh volumes of to encourage investment anddiscourage exportsof dirty fuels. phasing out this high-sulfur fuel supply, or otherwise by usingdomesticpolicy inrefining nations to accelerate this transition by making finance for other refinery investments contingent upon to these refineries by allowing them to sellproduct into awider range or markets. It may bepossible invest andimprovements. Investing inadditionaldesulfurizationcapacity willalsoprovide flexibility in the rest of the world willprovide animpetus for the remaining refineries in these countries to presumably for non-road markets and/or export.Ever-growing market demand for low-sulfur fuels Colombia alllimitnationalsulfur in diesel to 50ppmor below, the high-sulfur fuel produced is high-sulfur fuel. Since South Korea, Thailand, Singapore, Taiwan (Province of China), Belarus, and that have adopted low-sulfur fuel standards domestically are stillproducing substantial volumes of the mosthigh-sulfur dieselproduction capacity. The datashow that several countries andregions countries withhighhealthburdens identified in Table 2.1 are alsoamong the 30countries with countries produce 89percent of high-sulfur diesel,according to Ensys analysis (2015). Ten of the sulfur fuel producers. Table 2.2shows the top high-sulfur diesel fuel producing countries. Thirty Increasing the globallow-sulfur fuel supply willrequire investment inrefinery upgrades by high- Libya Antilles Netherlands South Africa Kazakhstan Colombia Pakistan Nigeria

Kuwait COUNTRY (NAMES IN Syria BOLD ARE ALSO IN TOP 30 FOR HEALTH IMPACTS)** 5 1 4 4 5 3 3 2 7 NO. REFINERIES 80,000 81,000 101,000 84,000 84,000 88,000 86,000 96,000 89,000 HIGH SULFUR DIESEL PRODUCTION (bbl/d) 0.6 0.6 0.8 0.6 0.9 TOTAL INVESTMENT 1.5 1.3 1.1 1 TO DESULFURIZE ($ BILLION)*** 37 | 4,100 5,500 6,800 5,800 5,600 6,300 8,700 7,600 7,900 COST PER BARREL PER DAY ADDITIONAL CAPACITY 88% 89% 84% 86% 85% 83% 82% 87% 81% CUMULATIVE FRACTION OF HIGH-SULFUR FUEL to Venezuela) No target (refinery linked No target Target of 50ppmby 2018 Target of 50ppmby 2016 Domestic dualstandard of 500/50ppm; target Domestic standard of 10ppmby 2017 of 50ppm No target No target No target

NOTES

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet 1.5.4), andasetof casestudiesof previous desulfurizationprojects (see section1.5.5). The market the investment needed for refineries to produce low-sulfur fuels (“therefinery study”, seesection and oilmarkets countries are operating in(“themarket study”, seesection1.5.3); anassessment of benefits deliverable through global fuel desulfurization (see section1.1.1); ananalysis of the fuel As mentioned earlier, several studies form the basisof this strategy; ananalysis of the health of desulfurization, isprovided here. approach to desulfurization,inwhichimportingcountries are includedasmarket drivers anddrivers in desulfurization can come both from domestic standards and external demand and so a markets envisions working both withmajor refiners andwithimportingcountries. The impetus to invest to consumers, e.g.subsidiesand fuel costs. The strategy isbasedonacombined approach and and decision-makingpressures including nationalbalance of payments, energy security, andcosts standards (or lack marketthereof), positions, the policy networks withinwhichcountries operate, in whichacountry importsand/or refines fuels, the current fuel quality andvehicle emission low-sulfur fuels. It provides analysis of specificregional andcountry contexts, including the way This section outlinesproposed actionsinregions, sub-regions andcountries for aglobalshift to desulfurization projects by refiners andby public,intergovernmental andprivate financiers. benefits of action on desulfurization, and by building the case for more aggressive investment in profile of desulfurizationasahealthpolicy priority, helpinggovernments understand the costs and act asadriver for wider change. This strategy proposes that driving this changerequires raising the most effective andwhere the adoption of standards by onecountry (or onegroup of countries) can strategy for global engagement also requires identifying opportunities where intervention can be These are major factors in identifying priority countries and regions and interventions, but a cohesive refining capacity andrequire the mostinvestment to desulfurize the globalon-road dieselsupply. burdens due to the useof high-sulfur fuels, and the countries that have the largest high-sulfur diesel The preceding sectionidentifies the individual countries that currently suffer the highesthealth 2.2. national approach, allcountries worldwide canachieve this. to low-sulfur fuels andvehicle emissionsstandards, butalsohow, through acombined regional and A global strategy is outlined in the next section that shows not only how these countries can move the strategy asahighpriority for CCAC action. Iran. This may beamore challengingcase for CCAC engagement, andis therefore not identified in already well along the path to desulfurization. recent politicalinstability. Mexico isnot identified asapriority for actionin this strategy asitis list of first prioritiesasengagement ondesulfurizationisconsidered relatively challenginggiven the Egypt casestudy insection1.5.5 for discussionof arecent upgrade project). It isnot on the and, therefore, would require nationalstandards onimportsin tandem withrefinery upgrades (see in section2.2asacountry that is(currently) dependent onimported fuels to meetnationaldemand Of the three countries falling within both lists that are not considered first priorities, Egypt is discussed diesel inkey regional markets. not yet have target datesinplace for low sulfur standards, althoughBrazil already supplies10ppm availability butdoeshave a target date for adoption of standards. Brazil, Indonesia andPakistan do and has target dates for nationalavailability. Malaysia does not yet have significant low-sulfur fuel supported Mexico’s ongoingnationwide desulfurizationsince 2014. plans for 50ppmby 2015.Anumber of ongoingrefinery upgrades are meant to meetgrowing domestic demand. The CCAC has fuel isnow only available on the U.S. border andinmajor metro areas. The rest of the country isstillat500ppmwithrevised 22

a In 2006Mexico adopted a15ppmnationwide dieselstandard, but the target dateof 2009was not metby PEMEX;15 ppm

G lobal S trategy : P : rioritie s

for

A | 38 22 ction The remaining country featured onboth listsis ongoing globalaction on lowering emissions from the transport sector. and Vehicles and the Global Fuel Economy Initiative. This strategy represents the strengthening of vehicles by initiatives suchas the ClimateandCleanAir Coalition, the Partnership for CleanFuels The approaches described here buildonyears of experience andeffort oncleaner fuels and is available in the relevant studiesasdescribedinAnnexes AandB. nuances exist, these are includedin the country description. Additional information oneachcountry countries according to their maincategory to facilitate analysis andrecommendations. Where Note that, whileinreality countries may fit withinseveral categories,we have tried to organize in detailbelow, alongwithlonger-term opportunities. lack andcity-ledthereof), opportunities. The 36countries that have beenprioritized are described categorized according to fuel quality, refinery investment needs, vehicle emission standards (or emissions standards. By combining the refinery, market andhealthstudies, 103countries were a region andeventually the wholeworld can transition to low-sulfur fuels accompanied by vehicle This strategy prioritizes countries basedon these four categoriesinorder to describehow acountry, introduced inurbanareas prior to full nationalintroduction. 4, “citiesCategory first” low-sulfurintroduced; fuels need to strengthen their vehicle policies to match the fuels and maximize the benefits of having 3,“vehicleCategory standards” this. They may produce fuels only for their local market or may also export fuels to other markets; 2,“refiners”Category low-sulfur fuels relatively quickly; 1,“importers” Category key features that determine the actionsnecessary to deliver progress ondesulfurization. and commensurate vehicle emissions standards. The four categories include countries which share where similar approaches could help to move countries or groups of countries to low-sulfur fuels The market andrefinery studies Categories ofCountries 2.2.1. targeted interventions. have regional importance, or where there isanopportunity to deliver immediateprogress through largest healthburden from highsulfur fuels, butalsoincludeanumber of smaller markets that fuel trade for other countries. They includemany of the countries identified in2.1 ashaving the change, the largest health benefit to be gained, and those that operate as hubs of influence and action andsupportare drawn from those where there is the greatest chance of delivering rapid countries for near-and longer-term action within these categories. The first priority countries for i) the categorizationof markets basedoncountry operating environments andii)prioritizationof promoting cleaner fuels and vehicles, the authors of this strategy prioritize countries on two levels: drive a move to low-sulfur fuels. Based on these studies and on accumulated global experience in with the countries that have the market andpoliticalinfluence for near-term decisions that will and refinery studiesidentified regional andsub-regional hubs for refining anddistribution,along 23

Studies available from www.ccacoalition.org/en/initiatives/diesel are countries that require upgrade of their refineries andneed financing for are countries where low-sulfur fuels and cleaner vehicles have been (first) are countries that are dependent on fuel importsand that canswitch to are countries that already have introduced low-sulfur fuels but 23 identify categoriesof fuel andvehicle operating environments 39 |

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet of priorities for actionisexplainedinmore detailinsection2.3.1 below. and implement low-sulfur fuel policieswithin ashort timeframe; andsize of healthburden. The choice considerations of: key market position(i.e.role assub-regional import/export hubs); ability to adopt The following 13countries are priorities for actionin the near-term (i.e.next 5years) basedon Toolkit inSection3below includesguidance onenforcement andgovernance). which would includereporting onimplementation andanadequate system of verification (the PCFV also need for enforcement of aclean fuels andvehicles program, e.g. through anassociatedprogram, that have successfully shifted their fuel importcontracts in favor of lower sulfur diesel fuel. There is an obstacle to these countries. Guidance on this issuecanidentify bestpractices amongcountries the mechanisms for sourcing and financing higher value low-sulfur fuel on the globalmarket canbe fuel relatively quickly through changes to fuel importcontracts; however pastexperience shows that Countries that import asubstantial share of their diesel fuel canshift to low- andultra low-sulfur • • • cooperation anddialogueplatforms specific to fuel quality standards, namely: On the ground, this meanssupporting(through funding and technical expertise) nationalprocesses, countries that currently importhigh-sulfur diesel fuel for the adoption of policies for low-sulfur fuels. intergovernmental dialogue,awareness andknowledge buildinganddirect technical assistance for standards to utilize those fuels for maximumemissionandefficiency benefits.Support shouldcombine regional efforts to adopt policy for low-sulfur fuels alongwith the complementary vehicle emissions Overall Approach: countries to ensure aharmonized approach. cases, action in these countries may be coordinated with actions on domestic standards in refiner network, the adoption of newstandards shouldbeaccompanied by intra-regional dialogue.In some passed directly to fuel consumers. Where countries are partof awell-established regional fuel supply and incentive schemes(including fiscal programs). The costs of improved fuel standards canbe technology both regionally and globally through national standards, import standards and restrictions, drivers for desulfurization. These countries are powerful drivers of demand for cleaner fuels and which are the majority of developing countries stillusinghigh-sulfur fuels, canbeimportant market sulfur fuel andusually donot have vehicle emissionstandards inplace. Import-dependent countries, entirety. They lackarefinery or the refining capacity to meetnationaldemand. They importhigh- Countries in this category import their fuels for the majority of their consumption, ifnot for the 2.3. and financing iskey. fiscal). Engagement withindustry expertswhocanadvise on fuel supply sourcing, contracting national and/or sub-regional levels andensuringlinkages withother related policies(particularly the provision of specialized technical expertise onstrategic implementation issuesidentified at the to supportlow sulfur fuel importsand integrate the publicandprivate sectorsandare aimedat the revision or development of policy the formation of specialized nationalworking groups at the nationaland/or regional levels that national and/or sub-regional platforms for discussionand training, c ategory Countries in this category would benefit from targeted national, regional andsub- 1, ‘ 1, I m p orter s ’: ’: C ountrie s

| 40 D e p endent

on

F uel

I m p ort s reliance onshared storage facilities inMozambique. Zimbabwe could alsomove quickly onstandards withleadership from Mozambique due to their fuel specificationgiven that they sometimesshare fuel supply vessels withEast Africa. Malawi and With the East African countries now using low sulfur diesel, Mozambique could adopt the same Mozambique and refiners categories(see alsoSection 2.4below for refinery analysis). detailed explanationbelow). Therefore, Nigeria isaddressed in this strategy inboth the importers major fuel producer, itisalsoamajor importer inWest Africa due to low refinery capacity use(see Ethiopia Mozambique and specifications in6-12 months. The first two African countries that are prioritized in this category are import cleaner fuels. From our experience in the region, countries were able to introduce new fuel local refineries are not required, these countries could quickly improve their fuel specificationsand the region and are therefore not dependent on the region’s refineries. Because large investments in According to the market study, asignificant number of African countries import their fuel from outside Africa Regional 2.3.1. opportunities ineachregion. Detailed analysis basedon the markets study isprovided below for each,includinglonger-term Table 2.3. M E L A A atin ast sia frica iddle

E

A urope

merica E ast

& importsrefined fuels andre-exports to two other countries: Malawi andZimbabwe. List ofpriority countries inthe‘Importers’ category T he Assessments and

C aribbean . The third is third. The Tunisia Lebanon Moldova Georgia Nicaragua andHonduras Central Americaregion: ElSalvador, Guatemala, Pakistan Bangladesh Nigeria Mozambique Ethiopia Approaches Nigeria 41 | 41 . AlthoughNigeria isidentified in Table 2.2above asa

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet

to access alow-sulfur fuel supply is to diversify from regional refineries to the globalmarket. in these countries would help to drive refinery upgrades in the supplying countries. Another option countries would impact the other two. All three import from Nigeria. A change in fuel specifications Guinea Bissau. Benin, Togo andMaliare linked in that implementation of cleaner fuels inany of these changes in Liberia and Guinea could spread to more countries in the region including Sierra Leone and South Africa andKenya) andBotswana andNamibia (import from SouthAfrica). Fuel specification region. These include Guinea, Liberia (both import from Cote d’Ivoire), DR Congo (imports from Longer-term opportunities for desulfurizationexistwithcountries that import from refineries in the by Ethiopia would alsoaffect fuel specifications inDjibouti due to shared fuel import facilities. already engagingwith fuel supplierson the availability of cleaner fuels; the importof cleaner fuels the plannedrefinery isstilladecadeaway andEthiopia willremain animportingcountry. Ethiopia is on constructing arefinery inanticipation of the commercial development of itsoil fields. However, refined product (at 2,000–500 ppmsulfur indiesel) from Kuwait andSaudiArabia andisplanning According to the market study, Ethiopia, whichhasdieselsulfur levels up to 5,000ppm,imports – as they often share vessels importing fuel. be to harmonize fuel import specifications across all 18 West African countries – including Nigeria local refineries make the necessary investments (see alsoSection2.4.1). The approach here would Ghana). Anationalstandard applicable to importscould beaccompanied by fixed-term waivers while In addition, tankers supplying Nigeria often alsosupply smaller countries inWest Africa (Togo, Benin, standards in Nigeria could help to shift a significant part of the fuels used in Nigeria to low sulfur. around 50%)andNigeria importsclose to 50%of its fuel. Therefore, introducing low sulfur import demand. However, due to operational challenges the refinery utilization rate is low (estimated to be With anameplatecapacity of 445,000barrels/day production could, inprinciple,exceed domestic of vehicle emissions–see Table 2.1 and Table 2.2above) imports fuel andhasseveral refineries. Nigeria (which isamajor fuel producer in the region andalsoanationwithvery highhealthburden Different shadesofred for CrudeOil: Different shadesofbluefor Refined Products: or Refined, andwhat level ofSulphurisinit. Arrows are indifferent colours to indicate ifaflow isCrude QUALITY OFFUEL IN-COUNTRY CONSUMPTION ( (values in‘000sBBL/day): via thicknessofarrow andaletter on top ofthearrow 7 arrows indicate range ofquantity beingimported / exported, QUANTITY OFFUEL MO Sour (>10,000ppm) Sweet (<10,000ppm) >500 ppmSulphur 50 –500ppmSulphur 0 –50ppmSulphur E. >1,000 D. 500–1,000 C. 101–500 B. 10–100 1–10 A. Z AMBIQUE’S FUELTRADE Refinery Figure 2.2.Mozambique’s fuel exportrelationships inSouthernAfrica > 1,000 500 –1,000 101 –500 10 –100 1 –10 KEY 000s BBL/day) Source: UNEP, 2014 | 42 | 609 S outh A fric a 21 Zimbab 5 w e B M 12 ala

wi A M 22 o B zambique and Cambodiawhoalso import from Singapore and Thailand. desulfurization and fuel quality standards inSouthEastAsia alsoexistinMyanmar, Lao PDR(Laos) supply of low-sulfur fuels by adopting import standards in advance. Longer-term opportunities for aiming for a major program of new refinery capacity additions, but could preempt a growing local for a further reduction to 10ppmsulfur in fuels andhigher vehicle emissionstandards. Vietnamis the Philippines for January 2016implementation of new fuel andvehicle standards, but there isscope reaching Euro 4/IVvehicle emissionstandards and50ppmsulfur levels in fuels. UNEPalready supports highest healthburden of vehicle emissions,see Table 2.1). Both countries already have roadmaps for already importinglow-sulfur fuels from Singapore and Thailand andsoisVietnam(with the tenth In SouthEastAsia the Philippines(despite beingamajor producer of fuel, see Table 2.2above) is improve the air quality inurbanareas and serve asacatalyst to improve nationalrefining standards. or even ultra low-sulfur diesellevels, especially inmore populatedurbancenters, would significantly Lanka doesnot have fuel quality standards. Changing the importstandard of refined product to low it imports crude and refined products from Oman, Singapore and Vietnam. As mentioned above, Sri Sri Lanka importscrudeoil from SaudiArabia for domesticrefining to meethalfof its fuel needsand standard forlow-sulfurultra fuels. Singapore, Europe andNorth America- there isanopportunity for Nepal to consider anational 500 ppm.Because India hasarobust refining industry -exporting ultra low-sulfur diesel to Japan, Nepal importsrefined product exclusively from India and the sulfur level of this product isapproximately it isactually importing,withalonger-term target of low-sulfur fuels. currently 5,000ppm.We cansupportMongolia to develop standards that reflect the quality of fuel Similarly, mostof Mongolia’s fuel importsare at500ppmor below, but the nationalstandard is Afghanistan. the phased road map should explore switching to other markets for low sulfur diesel imports to in Turkmenistan, Uzbekistan andPakistan. Keeping inmind the complexities of refinery upgrades, imports plusaroadmap for 50ppm diesel. This, in turn, could help to supportlow sulfur refining approach inAfghanistan with support to revise the nationalstandard down to match the quality of national standard for dieselisstill10,000ppm. This presents anopportunity to implement aphased and dieselat150ppm350sulfur levels, respectively. However, Afghanistan’s legislated is anetimporter of refined product, relying on Turkmenistan, Uzbekistan andPakistan for petrol Longer-term opportunitiesare available inAfghanistan, Mongolia, Nepal andSri Lanka. Afghanistan of delivery of refinery investment. introduction of low-sulfur fuels on a cities first basis, or a reduction in average sulfur content ahead would require refinery investment, butintroducing animportstandard could allow either aphased timelines for refinery improvement in Saudi Arabia and Kuwait. Similarly to Nigeria, full desulfurization be changed from the current 5,000 ppm to 50 ppm or below in a phased approach to match the the world behindIndia in terms of mortality (see Table 2.1). Therefore, the importstandard could Arabia andKuwait). It alsohasoneof the highesthealthburdens from vehicle emissions,second in with more than 50%reliance onimports from countries that willsoonhave low-sulfur fuels (Saudi Pakistan, whichdespite having considerable refining capacity (Table 2.2)isalsoamajor fuel importer imported, itshouldbepossible to improve the importstandard to 50ppm.Asimilar situationexistsin Table 2.1 above) andimportsmostof its fuel. Given that mostof the fuel consumed inBangladesh is highest health burden from vehicle emissions in the world due to high-sulfur fuel consumption (see There are near-term opportunities for supportin Asia: 43 | Bangladesh and Pakistan . Bangladesh has the eighth

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet dependent Syria, Morocco andIraq that alsoimportrefined products. Lebanon and Tunisia are fully import- Most countries in the Middle Eastare netexporterswith the exception of Jordan, Egypt, Algeria, Middle East andNorth Africa: and corresponding Euro-level vehicle emission standards. on importsmake Moldova a goodcandidate for arapid transition to ultra low-sulfur fuel standards quality legislationdoesnot supportclean fuels. Its proximity to European markets anditsreliance (Lukoil, Petrom, Rompetrol) sellEuropean-grade dieseland petrol fuel (10ppm) butnational fuel fuels and Azerbaijan is transitioning to 10 ppm in 2018-2020. All major fuel distributors in Moldova leapfrog to ultra low-sulfur fuels since Turkey andRussia are already producing ultra low-sulfur fuel from neighboringAzerbaijan, Turkey andRussia. Currently at150ppmdiesel,Georgia could Georgia Eastern Europe: longer-term target for regional low-sulfur fuels would involve refinery upgrades inVenezuela. fuels available to these countries and to support the local adoption of low sulfur standards. A Venezuela, S.A.(PDVSA) and the Government of Venezuela willbenecessary to make low-sulfur Venezuelan economy from low oilprices, butwhileitisinplace the engagement of Petróleos de at below-market prices. The long-term future of Petrocaribe isunclear given challenges to the agreement, under whichcountries in the region getaccess to oilandrefined product imports In the Caribbean the majority of countries are import-dependent from Venezuela via the Petrocaribe region. Therefore, harmonizationwillhelp to lower costs. strategy isimportant becauseasingleregional tanker delivers fuel to many countries in the sub- target to 50ppmandupdate the target dates.Ascost is the mostimportant barrier, asub-regional target the sub-regional agreement whilealsoworking at national level to modify the fuel quality and Honduras by 2015,ElSalvador by 2017andNicaragua by 2018. The approach here would be to 2014 Resolution No. 341-2014, was approved that targets 500ppmwith target dates for Guatemala specifications that are binding to member states;however, country adoption isvariable. In April is the Reglamento Técnico Centroamericano (RTCA). The RTCA is charged with regulating fuel group that designs the technical regulations for fuel quality standards for the member countries is madeupof all the relevant nationalministrieswhoapprove or ratify agreements. The working The decision-makers for SICAare the Consejo deMinistros deIntegración Económica group that with the exception of Panama, are partof the Sistema delaIntegración Centroamericana (SICA). Central Americacomes mainly from the Gulf of Mexico. Allof the countries inCentral America, are countries that could update their national fuel specifications to import50ppm. The fuel for opportunities for desulfurizationexistinElSalvador, Guatemala, Nicaragua andHonduras; these there are some flows coming from Russia, West Africa, SouthAmericaand the USA.Medium-term While these countries importmainly from Venezuela and Mexico, the market study shows that Central Americaand the Caribbeancountries have abroader trade network than SouthAmerica. agreements, includingMERCOSUR and the AndeanCommunity. other markets, includingWest Africa. Intra-regional flows fall within the scope of regional trade the region continue to rely onrefined product imports–primarily from the USAbutalso from smaller markets within the region. Yet despiteaccess to vast cruderesources, mostcountries in and Venezuela) andmostare netcrudeexporters,supplying the USA,ChinaandIndia aswell as Many countries inLatinAmericaare oilproducers (notably Brazil, Colombia, Ecuador, Mexico, Peru Latin America: and Moldova are prioritized in this region. According to the market study Georgia imports | 44 for both private andstate-owned refineries, andsupport for the development of refinery upgrade plans include the publicandprivate sectors, the provision of technical expertisespecific to refinery upgrades sub-regional dialoguesand training events, the formation of specialized nationalworking groups that country-by-country basis.On the ground, the types of support provided may includenational and/or of scaleandknowledge-sharing that may overcome barriers that would bemore difficultif faced ona The refiners approach willprioritize low-sulfur fuel policy andinvestments andwillidentify economies Overall Approach: Our strategy for refining countries is to: 2025 reaches 50ppmsulfur levels and,where feasible, aleapfrog/reduction to 10ppmby 2030. strategies (including financing) for upgrades that ensure all on-road diesel fuel produced in the year Similarly to the approach inimportingcountries (above) support to these countries shouldenable considering desulfurization to effectively leapfrog both in terms of technology and timeframe. sophisticated fuel quality standards. Therefore, itis feasible for low-and middle-income countries best practice demonstrates that aportfolio of tools isavailable to refiners to meetnewandmore governance, existing policy, and economic factors (including fuel subsidies). However, international Major barriers to producing low-sulfur fuels includeaccess to capital,access to technical capacity, countries iskey to unlocking the deployment of soot-free dieselengines,butitisalsochallenging. necessary financing for refinery upgrading to produce low-sulfur fuels. Fuel desulfurizationinrefining may actasregional hubs for refined fuel flows to surrounding countries. However, they alllack the commitment to low-sulfur fuels via nationalstandards, declarations and/or regional agreements. Some Countries included in this category have refining capacity andhave demonstrated somesortof a 2.4. place, nationalpolices canbedeveloped in tandem to drive upgrades andensure regulatory guidance. they alsohave plansinplace to upgrade their refineries. Therefore, whilerefinery upgrades are taking these countries (Jordan, Egypt, Morocco and Iraq) have poor fuel standards (> 500 ppm diesel) but through their own refinery andhave animportshare inmarketed fuels of more than 10%.Furthermore, The second group of longer-term opportunities is formed of countries that cannot meet local demand and procurement to guarantee optimum prices and terms for fuel importsshouldbeprioritized. different quality demonstrate smalldifferences. Capacity buildinginglobal fuel markets forecasting near-term due to their reliance onimportswhere international pricingpatterns for diesel fuels of For this category, both continued improvement and to prevent any backslidingor significant delays. hand withsupport for policy development at the nationalandregional levels asakey driver for private finance for upgrades. Based onour experience, refinery investments usually gohand-in- iv) investment costs given in the refinery study) would affect the largest markets for clean fuels, and information that shows where a relatively lower cost investment (as compared to the wide range of iii) Ensure that both policymakers andmultilateral financial institutionsare aware of andactupon investors andnationalnegotiators (as already done through the refinery study), ii) large localpopulationsand/or entire sub-regional markets, i) c Seek to facilitate dialoguebetween multilateral financial institutions,government officials and Quantify the investment necessary for desulfurizationinorder to provide abenchmark for Identify key countries that, with targeted refinery investments, would unlockcleaner fuels for ategory 2, ‘ 2, R efiner Lebanon s ’: ’: and C ountrie Tunisia s

are goodprospects for improving dieselquality in the R 45 | e q uiring

R efinery

U p grade

F inancing

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet Priority countries for investment in the region include Africa: 2.4.1. longer-term opportunitiesineachregion. Detailed analysis basedon the markets andrefinery studiesisprovided below for each,including Table 2.4. in more detailinsection2.4.1 below. burden; andhighsulfur fuel production capacity. The choice of priorities for actionisexplained and implement low-sulfur fuel policiesandupgrade planswithinashort time-frame; size of health considerations of: key market position(i.e.role asmajor regional/global refiner), ability to adopt The following 13countries are priorities for actionin the near-term (i.e.next5years) basedon shows where arelatively lower-cost investment would affect the largest markets for clean fuels. ensure that both policymakers and multilateral financial institutions are provided with analysis that actors. In addition,engagingwithindustry expertswhocanadvise oncreative financing modelswill and globallevels willbeonbuildingpartnershipsbetween private, publicanddevelopment/donor design andmanagement. Whenitcomes to financing for upgrades, the emphasisat the national with industry expertswhocanadvise onpublic/private financing andstrategies for project financing, Support to refining countries shouldintegrate private sector participationandassistance by engaging health, climateandair pollutionco-benefits. this category, opportunitiescould alsobesought for climate finance for projects demonstrating plans that willsupport the modernizationof refineries to produce low andultra low-sulfur fuels. In (including investment analysis). The final aimof this type of supportis the development of detailed in theses 4countries totals around $2.7billion. gasoline anddieselwould benearly $7billion. The cost of upgrading the 10refineries prioritized Africa. M E L A A atin ast sia frica iddle

E

A urope

merica E Regional Based on the refinery study the cost of transitioning Africa’s 39refineries to 50ppm ast

& List ofprioritycountries inthe‘Refiners’ category the

C Assessments and aribbean Approaches United Arab Emirates | 46 Cote d’Ivoire South Africa Venezuela Indonesia Malaysia Pakistan Ukraine Bahrain Nigeria Kuwait Ghana India Cote d’Ivoire, Nigeria, Ghana, and South This cost isrelatively low inabsolute terms compared to the average refinery upgrade cost in the about $130millionor aninvestment of about$4,500per barrel of additionallow sulfur capacity. its neighbors.According to the refinery study the cost of upgrading Cote d’Ivoire’s refinery is which itrefines for itsown market andalso exportsashigh-sulfur fuel (2,500 ppm) to twelve of crude, mostof whichitexports to North AmericaandEurope. It then importscrude from Nigeria, important role asasub-regional refining hubinWestern Africa. Cote d’Ivoire produces somesweet in the region and is home to more than half of the region’s population, Cote d’Ivoire also plays an While Nigeria isasignificant oilproducer on the globalmarket, has the largest refining capacity program would bemore costly, butmay make abetter overall financial case(see section1.5.5). desulfurization investment in Nigeria’s four refineries standards (discussed above) and to supportrefinery upgrading. The refinery study estimates that a hub. The strategy for desulfurizationinNigeria would bedual: to promote achangein fuel import Modernization could result in fuel surpluses, turning Nigeria into asub-regional fuel-exporting countries. The refineries in Nigeria operate well below capacity (estimated to be around 50%). Ghana because the ships that bringinrefined products for Nigeria alsosupply other importing that itshighdieselsulfur fuel standard (3,000ppm) impactsBenin, Mail,Burkina Faso, Togo and significant amount of refined product to the Western African sub-region, the market study shows a major producer of high-sulfur fuels (see Table 2.2). AlthoughNigeria doesnot directly supply a Nigeria ranks thirteenth globally in health burden from vehicle emissions (see Table 2.1), and is also a widerange ininvestment costs needed to enable them to produce low-sulfur fuels. iii) a third group, the largest group, on the leftin the graph, of relatively smallrefineries that see low (on the right handsidein the graph); ii)agroup in the middlewithalarger range incosts; and larger refineries where the per-barrel costs to upgrade to produce low-sulfur fuels are relatively Figure 2.3shows that there are broadly three groups of refineries inAfrica: i)agroup of a few Port Harcourt Refining Co., Warri Refinery &Petrochemical Co. 24

Kaduna Refinery &Petrochemical Co., Port Harcourt Alesa Eleme:Port Harcourt Refining Co., Port Harcourt Rivers State: Figure 2.3.Investment costs vs. refinery size inAfrica Source: Ensys, 2015 47 | 47

24 would cost $1.1 billion. A full modernization

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet acts asa transit for fuel exports from Chad and supplies fuel to CapeVerde andcrudeoil to SouthAfrica, Cameroon regional refined fuel supplier. Currently, Angola supplies oil producers in the region andcould easily turn into a terms of Africa’s fuel supply. Angolaisoneof the largest Gabon. These countries stillplay asignificant role in planning to move to 15ppm), Cameroon, Angolaand desulfurization opportunitiesincludeAlgeria (already Additional African refining countries withlonger-term major producer of high-sulfur fuels (see Table 2.2above). according to the refinery study. SouthAfrica isalso a of SouthAfrica’s four Mozambique, Zambia, Zimbabwe andMalawi. Anupgrade and export hub for Botswana, Lesotho, Namibia, Swaziland, the market study shows SouthAfrica serving asrefining Most SouthernAfrican countries are at500ppmdieseland opportunity to connect cleaner fuels withadvanced bus technology. supplier in the region. In addition, the plannedbusrapid transit corridors inAccra present agood prioritized for two reasons. Withrecent oildiscoveries, Ghana could become asignificant fuel $6,500 per additionalbarrel per day of low sulfur capacity. Refinery upgrading inGhana hasbeen Ghana’s smaller Tema oilrefinery would cost $140million to upgrade, aninvestment of about cost per barrel per day of additionallow-sulfur fuel capacity. region (see chapter 1),andisoneof the leastexpensive upgrade options in the region in terms of Ltd., Durban: Shell andBPPLC Petroleum Refineries Pty. Ltd. 25

Cape Town: Caltex Oil SA, Durban: Engen Petroleum Ltd., Sasolburg: National Petroleum Refiners of SouthAfrica Pty Different shadesofred for CrudeOil: Different shadesofbluefor Refined Products: or Refined, andwhat level ofSulphurisinit. Arrows are indifferent colours to indicate ifaflow isCrude QUALITY OFFUEL IN-COUNTRY CONSUMPTION ( (values in‘000sBBL/day): via thicknessofarrow andaletter on top ofthearrow 7 arrows indicate range ofquantity beingimported / exported, QUANTITY OFFUEL C O TE d’I Sour (>10,000ppm) Sweet (<10,000ppm) >500 ppmSulphur 50 –500ppmSulphur 0 –50ppmSulphur E. >1,000 D. 500–1,000 C. 101–500 B. 10–100 1–10 A. Refinery

> 1,000 500 –1,000 101 –500 10 –100 1 –10 V Figure 2.4.Cote d’Ivoire’s fuel exportrelationships inWestern Africa OIRE FUELTRADELIN 25 KEY refineries would cost $1.3billion 000s BBL/day) K S G S Sier ambia 42 G enegal Bissau uinea A Source: UNEP, 2014 a L 8 eone North Americ G uinea A B 9 Lib M | 48 A auritania eria 3 18 a Eur 4 A ope A A A C ot e d B 24 ’Iv A oir B e A 10 A Bur M G ali hana k 64 5 ina F (Rosenberg, 2009) wecalculatedatUSD43billion.benefits USD 6billionwhiletheestimatedhealth costsforupgradeswereestimated refinery of theregion through to2020. The inurbanareaspotential healthbenefits diesel and150ppmpetrol) intermsof in theregion tolow-sulfurfuels(50ppm upgradesevaluated thecostofrefinery Bank andtheAfrican Refiners Association A 2009studysupportedbytheWorld S S aso A tudy ub T o 11 A B go enin A 32 - S B aharan A A B 6 N B igeria 344 N A iger

A fri c a

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progress. the future. Given domesticbudgetary challenges,external finance islikely to bevital to achieving Petrocaribe members (and MERCOSUR) to integrate cleaner fuels into the trade agreement in Costa Rica) andmay bewilling to do the same for Venezuela. Another possibility is to encourage has beenlendingin the region for refinery upgrades (e.g. to Ecuador, andnow indiscussionswith nearly onemillionbarrels per day, would require over $2billionof investment onitsown. China $3.7 billion. The largest refinery, the Paraguana refining center witha total refining capacity of to bechallengedby low oilprices. Upgrading the five major refining centers The mainchallenge to desulfurization is the weak economy in the country, whichis likely to continue production (see Table 2.2above). trade, highhealthburden from vehicle emissions(see Table 2.1 above), andlarge high-sulfur fuel Priority for refinery investment shouldbegiven to Latin America sulfurSingapore. fuelfrom already ona trajectory towards domesticlow-sulfur fuel production, aswell asimportingultra low- Vietnam (which suffers from ahighrate of vehicle emissions-related mortality, see Table 2.1) is vehicle technology.matching move one of the world’s largest producers andconsumers of fuel to the cleanest diesel fuel and implementation of Bharat IV-VI, as opposed to only in major cities. This is a major opportunity to Bharat Stage VI(10ppm) from April2020.Akey consideration inIndia issupport for nationwide it willextendBharat Stage IV(equivalent to 50ppm) nationwide from April2017 followed by India iscurrently at350 ppmdieselnationwide andsuppliesallmajor citieswith50ppmdiesel; high-sulfur fuels (see Table 2.2). 13 in terms of the healthburden of vehicle emissions(see Table 2.1), andare major producers of an investment of approximately $5billion.All four of these countries are among the world’s top billion of investment. Upgrading refineries inallof Malaysia, Indonesia andPakistan would require near-term action in this strategy. Upgrading refineries in India would require approximately $10 $25 billion.Of these, transitioning Asianrefineries (excluding China) to 50ppmgasolineanddieselwould bejustover capacities. Based on refinery modelingby Ensys (as describedin the refinery study), the cost of are the countries that have plansor are already working onincreasing their domesticrefining refining capacity for 50ppm fuels are India, Malaysia, Indonesia, Pakistan andVietnam. These Cline andAssociates,2014). The countries in the region with domesticoilproduct butinsufficient 55%, 24% and21%of this extra capacity inChina,India and the rest of Asia,respectively (Gaffney, China andIndia (BP, 2013). Anadditional6MMbbl/d of refining capacity isexpectedby 2018with 8 millionbarrels of oilper day (MMbbl/d) since 2002,withmostof this growth taking place in Asia-Pacific has had the largest growth in refining capacity of any region in recent years at almost Asia: a major oilproducer in sub-Saharan Africa andcould become asub-regional fuel supplier. refined fuels to itsneighboringcountries of Congo-Brazzaville andEquatorial Guinea. Gabonisalso 27 Antilles, whichisanimportant refined product supplier in the region. 26

In addition to refineries in Venezuela itself, Petróleos deVenezuela, S.A.controls the large refinery in the Netherlands Cardon/Judibana Falcon, Maracaibo Zulia, ElPalito Puerto Cabello, Puerto delaCruz andSanRoque Anzoategui India, Malaysia, Indonesia 49 | 49 and Venezuela Pakistan are considered the top priorities for 26 due to itssignificant regional fuel 27 would cost around

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet Argentina (10 refineries with an estimated upgrade cost of $1.7 billion), Bolivia (one refinery needing have alarge internal market andhave shown politicalwill to move to low-sulfur fuels. These include Longer-term opportunitiesexistincountries withrefineries that produce for nationalconsumption, Ukraine's national oilandgascompany, announced that the Kremenchuk refinery hadcompleted ppm). The country’s largest refinery isalready upgraded: inDecember 2013Naftogaz Ukrayiny, standard update to 10ppm in 2018(Technical Regulation No. 927onFuel Quality, currently at50 geopolitical importance in the region meritattention. In addition, there are plans for anationwide fuels. Ukraine’s growing demand for European-grade fuels andvehicle technology anditsshifting Table 2.2).Recent upgrades of two refineries have allowed the production of low andultra low-sulfur associated with transport emissions andalarge refining sector inneedof upgrade (Table 2.1 and Ukraine Eastern Europe phased expansionof ULSDavailability inparallel to refinery investment. and key corridors (see below, Section2.6.1), the strategy for Brazil would be to supportcontinued refineries requiring $4.1 billioninvestment. Withanexisting supply of lower sulfur diesel for cities from transport emissionsandsignificant high-sulfur dieselproducer (Table 2.1 and Table 2.2),has13 funding is51% financed withVenezuelan contributions. Brazil, another country withhighhealthburden for 2017. However, the investments inEcuador andNicaragua may beatriskas the $6.6billion refineries, all of which will produce low-sulfur fuels. The investments in Peru appear to be on target and privately owned refineries, whileEcuador andNicaragua are in the process of buildingnew Jamaica (1 refinery with an investment cost of $65 million). Peru iscurrently upgrading major state investment of $5million), Dominican Republic (2refineries requiring $170millioninvestment), and Different shadesofred for CrudeOil: Different shadesofbluefor Refined Products: or Refined, andwhat level ofSulphurisinit. Arrows are indifferent colours to indicate ifaflow isCrude QUALITY OFFUEL IN-COUNTRY CONSUMPTION ( (values in‘000sBBL/day): via thicknessofarrow andaletter on top ofthearrow 7 arrows indicate range ofquantity beingimported / exported, QUANTITY OFFUEL VENE shouldbeprioritized in the region for CCAC support,asithasahighhealthburden Sour (>10,000ppm) Sweet (<10,000ppm) >500 ppmSulphur 50 –500ppmSulphur 0 –50ppmSulphur E. >1,000 D. 500–1,000 C. 101–500 B. 10–100 1–10 A. Refinery ZUELA FUELF > 1,000 500 –1,000 101 –500 10 –100 1 –10 KEY 000s BBL/day) Figure 2.5.Venezuela’s fuel trade inLatinAmericaand the Caribbean L O W S E Source: UNEP, 2014 cuador | 50 Colombia P eru Chile I ndia V

ene D 62 Bolivia 777 A z A uela B C Guy C

B C en ana P tr Suriname B ar al A 27 agu 50 mer China Urugua Br a y ica andtheC azil y ar ibbean

Kuwait, Middle East and North Africa: Kazakhstan astake in the country's refineries. privatization ishelping to secure sufficient crudesupply by offering oilexportersinRussia and barrels/day, were functioning significantly below capacity. However, the refining sector’srecent country’s sixcrudeoilrefineries, withacombined throughput capacity of approximately 1million Low domesticdemand for fuel (at justover 30%of the country's refining capacity) meant that the As anetimporter of refined andcrudeoil,Ukraine isdependent onRussia, KazakhstanandAzerbaijan. from $5,000(Lisichansk:TNK-Ukraina). to produce 50ppm fuel isaround $1billion,withcosts per additionalbarrel of low sulfur capacity ppm diesel.According to the refinery study the cost for upgrading the remaining five refineries quality standards with 10 ppm sulfur content, whereas previously the refinery was producing 1,500 modernization of itsequipment inorder to startproduction of diesel fuel that meets‘Euro 5’ . country isinvesting inrefinery upgrades andaiming for 10ppmdiesel from 2016. according to the refinery study. Asamajor producer of high-sulfur fuels (see Table 2.2above), the Saudi Arabia is the region’s largest refiner with8refineries whoseupgrade cost isover $5billion Political instability creates additionalchallengesinmany Middle Easterncountries. In the Middle East,mostrefineries are atleastpartially state-owned andoften inneedof upgrades. Jordan andLebanon) are netoilexporterswithsomerefining capacity. need to beupgraded to enable a full regional transition to low-sulfur fuels. Allcountries (except Kuwait and UAE have significant high-sulfur refining capacity (see Table 2.2 above), which would ppm sulfur indiesel.It isnot self-sufficient inrefined products, andimports fuel mostly from Kuwait. at 5,000ppm;Iraq (a major globalproducer of high-sulfur fuels, Table 2.2)iscurrently at10,000 UAE is currently at5,000ppmsulfur in fuels, planning to move to 10 ppm fuel by 2018. Jordan is are producers of sour crudeand the region hassomeof the highest fuel sulfur rates in the world. and Bahrain present opportunities for near-term support.Most countries in the Middle East The Gulf Cooperation Council countries of 51 | 51 United Arab Emirates (UAE),

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet In practice, this may meanbuildinga technical support facility to address common technical and taken for the adoption of emissionsstandards and timelines. standards hasbeen the approach for cleaner fuels the sameregional consensus approach would be formed around the adoption of fuel quality standards. In addition,where regional harmonizationof prioritize the development of vehicle emissionsstandards. This would buildoncoalitions already expertise andresources to convene practitioners) would sulfur fuels, support at the national level (including policy Overall Approach: Building on the availability of low- also tighten vehicle emissionstandards. will grow. Our goalis that category 1and2countries 1 and2above, move to low-sulfur fuels, this category As more countries, including those listedincategories can generate major emissionsreductions. standards for this group presents anopportunity that from desulfurization. Adopting vehicle emissions maximum societalhealthandenvironmental benefits the move to low-sulfur fuels, buthave yet to gain the carbon andCO2. Countries in this category have made efficient vehicles resulting inreductions inPM create favorablemarkets formorelow-emission, fuel- emissions standards. The adoption of standards would available cleaner fuel by adopting compatible vehicle an immediateopportunity to benefit from already- emission standards. This means that they are missing low sulfur standards butlack the corresponding vehicle The countries in this category have already adopted men 2.5. for actionisexplainedinmore detailinsection2.5.1 below. implement vehicle emissionstandards withinarelatively short time-frame. The choice of priorities considerations of: the size of healthburden from transport emissionand the ability to adopt and The following 12countries are priorities for actionin the near-term (i.e.next5years) basedon design andimplementation of performance standards for importeddieselenginesandequipment. design, governance andimplementation. This willincludeemissionsstandard designand the proper performance of soot-free engine technology, whilepolicy experts willbe invited to advise on policy (manufacturers aswell asemissioncontrols manufacturers) isnecessary to advise on the cost and including newvehicles, existingvehicles, andimportedvehicles. Working withindustry experts with aninterest inshifting their existingand future dieselengine fleet towards soot-free engines, requirements. The aimis to facilitate technical andpolicy exchange amongparticipatinggovernments respond to direct requests from nationalgovernments for technical support to implement such policy barriersamongcountries seeking to implement soot-free enginerequirements, and to c s urate ategory

w ith

3, ‘ 3, F uel V Q ehicle uality S tandard s ’: ’: A | 52 2.5 do , black p ting

V Source: UNEP, 2015a up enforcement. standards,andsetlegislation andregulatory strategy,a regulatory establishenabling It offerscaseexamplesonhowtobuild combined cleanerfuelandvehiclesstrategy. to reduce vehicleemissionsthrough a to prepare clearlong-termstrategies supports developingandtransitioncountries fuel andvehicleimprovements. The toolkit optimal emissionsreductions bymatching promote thesystemsapproach todeliver Fuels andVehicles Regulatory Toolkit to Vehicles (PCFV)offersthePCFVClean The Partnership forClean Fuels and emissions T ehicle he ‘ S

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similar agendas. Economic Cooperation and the South Asia Co-operative Environment Programme) in implementing Myanmar. This would helpinfluence the other regional blocs(such as the Central AsiaRegional include a strategic plan to replicate a national approach for desulfurization in Laos, Cambodia and producer of high-sulfur fuels (Table 2.1 and Table 2.2above). Efforts in the region shouldalso third highestranked country based on the healthburden of vehicle emissions and the 6thlargest (Brunei, Malaysia) aswell as Priority shouldbegiven to supporting the countries leadingin the implementation of cleaner fuels world’s top 13 nationsin terms of the healthburden from vehicle emissions(see Table 2.1 above). vehicle emissionsstandards that track the fuel quality standards roadmaps. Malaysia isoneof the by 2016; these ongoing harmonizationefforts in the ASEANpresent agoodopportunity to addon with the ASEANCommunity initiative. fuels) as well as policy harmonization. The market isexpected to become more integrated along is more integration within the SoutheastAsianmarket both in terms of trade (refined andunrefined developed, or have begun to develop, vehicle emissionsstandards and fuel quality road maps. There The Asia: include Mauritiusand Tunisia. Additional countries that could benefit from support for vehicle emissionsstandard development cleaner technology for selected fleets inurbancenters. vehicle emissionsstandards commensurate with the fuel quality available (Euro 4/IV),andpilot diesel vehicles. In addition,supportat the sub-regional andnationallevels canhelp to develop an opportunity to match the cleaner fuels withmore advanced vehicle technology, particularly in fuels (following onanearlier EastAfrican Community decision,seesection1.5.5above) provides vehicles through itsportinMombasa. The January 2015 transition of the sub-region to 50ppm as amajor conduit for petroleum products to itsEastAfrican neighbors,alongwithnewandused category: Countries in the EastAfrican region, where low-sulfur fuel isnow available, are prioritized in this Africa Regional 2.5.1. opportunities ineachregion. Detailed analysis based on the markets study is provided below for each, including longer-term Table 2.5. M L A A atin sia frica iddle Association of SoutheastAsianNations (ASEAN)

A

merica E ast Kenya, Tanzania, Uganda, Rwanda

& List ofpriority countries inthe‘Vehicle Standards’ category the

Assessments and C aribbean Indonesia Approaches , given itssignificance in the ASEANanditspositionas the Brunei East Africa: Kenya, Uganda, Tanzania, Rwanda andBurundi and 53 | and isprioritized asmostof the countries inAsiahave Burundi Malaysia . According to the market study Kenya acts willimplement 50ppm fuel sulfur limits Indonesia Barbados Malaysia Panama Tunisia Brunei Oman

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet vehicles. emission standards; itwould beaquickmover onpolicies that combine low-sulfur fuels andcleaner Oman Middle East andNorth Africa Costa Rica. to showcase the progress andresults inother countries, includingChile,Colombia, Uruguay and standard proposals that can then besubmitted for consideration by the government. There isaneed In somecases,countries require technical advice to support the development of vehicle emission the potential for acombined cleaner fuel andvehicles approach. emission reductions. Support for this transition would sendanimportant signalin the Caribbeanon 2013. However, there are novehicle emissionsstandards to complement this new fuel for optimal first Caribbean country to have made the move from 5,000 ppm directly to 15 ppm from December and15 ppm.None of these countries manufacture vehicles andare all fully importing.Barbados is the are lack the corresponding vehicle emissionstandards. The countries that shouldbe the near-term focus In the LatinAmericaregion several countries have recently moved to low-sulfur fuels, yet many still Latin America particularly in the Philippines,andcorresponding filter-forcing standards. 2011. However, there isscope to further encourage anadditionalreduction to 10ppmsulfur in fuels, vehicle standards. Meanwhile, Thailand hasimplemented Euro 4/IVvehicle emissionstandards since in fuels. UNEPhassupported the Philippines for January 2016implementation of new fuel and already have roadmaps for reaching Euro 4/IVvehicle emissionsstandards and50ppmsulfur levels 2.1 above) are already importinglow-sulfur fuels from Singapore and/or Thailand. Both countries among the world’s high-sulfur nationsbasedon the healthburden of vehicle emissions,see Table The Philippines(a major producer of high-sulfur fuel, see Table 2.2above) andVietnam(ranked 10th Panama hasadiesel fuel quality standard of 500ppmbuthas50 fuel available, yet lacksvehicle Tunisia and isalready at50ppmbutexistingvehicle standards canbeimproved. Barbados , where low-sulfur fuels are already mandatedandavailable at50ppm | 54 approach could bereplicated inother dual-standard countries in the region. test the program capabilitiesandgauge the feasibility of advancing inother city fleets. Asimilar gas temperature and the profiles are used to select the correct particulate filters. The project results cleaner diesel technology. Public transport busesare fitted with thermocouples to measure the exhaust there isalready aCCAC-supported clean fleet (diesel particulate filter) pilot that aims to demonstrate allow for the promotion of low-sulfur fuels andvehicle emissionsstandards country-wide. In Lima fleets. Demonstrating benefits in cities by combining low-sulfur fuels with matching technology would The strategy for dual-standard countries is to supportcleaner fleets incities,concentrating onpublic target date for 50ppmnationwide by 2017, butother countries have yet to follow. as newheavy-duty vehicles are integrated into the fleet andreplace older vehicles. Peru hasseta 500 ppm.Brazilian refiners have committed to increasing the supply of 10ppmdiesel to meetdemand to Euro V) that have been in place since 2012, while the rest of the country’s diesel sulfur contains urban areas andalongmajor transit corridors to support the PROCONVE P-7 standards (equivalent 1,800 ppm,and5,000ppmnationwide, respectively. In Brazil, for example,10ppmissuppliedin countries have 50ppmor lower dieselavailable incitiesbut fuel with sulfur levels up to 1,500ppm, to countries that are stillin a dual-standard situation-namely Argentina, Brazil, andPeru. These to 50ppmnationwide. These includeChile,Colombia, andUruguay and they canserve as examples In SouthAmerica there are several countries that have haddualsulfur standards prior to moving Latin America Regional 2.6.1. technology andlow-sulfur fuels andproviding targeted in-depth support for selectedcities. engage ongoingCCAC soot-free city busefforts, buildingacity network committed to clean fleet of low-sulfur fuels andvehicle emissionsstandards at the nationallevel. Acity-level approach would concentrating onmunicipalbusesand trucks. Documenting city progress would allow for the promotion Overall Approach: alternative when countries are not yet prepared for full adoption. is preferred for desulfurization, selective city-level introduction of cleaner fuels and vehicles is an high-profile way to highlight the availability andbenefitsof cleaner fuels. Whileanationalapproach and possibilitiesof cleaner diesel technology. Investments incleaner buses, for example,would bea and expandefforts for desulfurizationat the nationallevel by helping to demonstrate the benefits where low-sulfur fuels are already available isanapproach that would allow countries to buildon flows of different qualitiesmay not beeasy to segregate. The introduction of soot-free technology cleaner fuels for selected fleets. However, this phased approach canbelogistically difficultas fuel A phasedapproach isoften acompromise that allows for agradual andlower-cost introduction of sulfur fuels available incities for aperiodprior to rolling outlow-sulfur fuels at the nationallevel. choose to introduce dualsulfur standards for urbanandrural areas first. This entails makinglower- While the highest-impact approach for desulfurization isat the national level, some countries 2.6. c ategory Assessments and 4, ‘ 4, In existingdual-standard countries we would prioritize cleaner fleets incities, C itie s

F ir s t ’: P ’: Approaches romoting 55 |

C itie s

w ith

L o w -S ulfur

F uel s

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet should continue for tighter standards and for amove toward ultra low-sulfur fuels. great importance that alongsideprogress towards globaladoption of low sulfur standards, support be significant even incountries that have already achieved this baselinestandard. It is therefore of this goal.Finally, itisimportant to understand that the healthburden of vehicular emissionscanstill achieve 50ppmdieselworldwide by 2025, this document isalsoaninvitation to partner to achieve highlighted to catalyze globalaction. Therefore, inaddition to laying outaroadmap for how to equivalent or more stringent emissionsstandards for vehicles by 2025by focusing on the countries This strategy is targeted atglobalachievement of 50ppmor lower sulfur in fuels, andEuro 4/IV pull policy dynamics between refiner andimporter countries. goals across regions showcase successful implementation andresults and facilitate the desired push- Asia, Male’Declaration (SouthAsia) andECOWAS, SADEC, andEAC inAfrica canhelpalignnational new standards. International associationsandinitiatives like the RTCA inCentral America,ASEANin to coordinate could disrupt fuel markets andposeachallenge to the successful implementation of standards by refiner andimporter countries inaregion candeliver complementarity, whilea failure interaction andagreement amonggroups of countries; the concurrent adoption of low-sulfur fuel financing anddevelopment of regional partnerships. The success of these strategies dependson listed in the strategy shouldbe targeted for supportin the form of shared expertise,assistance with benefits from adopting better fuel quality andvehicle emissionstandards. However, the countries opportunities doesnot mean that that country would not accrue significant healthandenvironmental and the possiblehealthandclimategains. The absence of acountry from this assessment of priority ‘importers’, ‘vehicle standards’ and‘cities first’) basedonin-depth analysis of fuel markets, refineries, vehicle emissions standards. This was doneby organizing countries into four categories(‘refiners’, have the combination of 50ppmor lower sulfur fuel andEuro 4/IVequivalent or more stringent Air Coalition have identified thirty-six countries for priority actionby the CCAC that donot yet The co-leads of the Heavy-Duty Diesel Vehicles andEngines Initiative of the ClimateandClean and the production of low-sulfur fuels. with vehicle emissions control technologies, greatly outweigh the costs of new emissions controls In this strategy document, we have shown that the benefits of fuel desulfurization, when combined 3. c onclu s ion | 56 http://www.unep.org/transport/pcfv/PDF/Hatfield_Global_Benefits_Unleaded.pdf Health Hatfield, T.H., and Tsai, P.L. ofLeaded From 2011.Global Benefits Fuel. thePhase-out Brazil, andMexico. China,India, Washington DC,InternationalCouncil onClean Transportation Energy andMathPro,Hart 2012. Technical andeconomic analysis ofthetransition to ultra-low sulfurfuelsin no. EPA 420-R-03-001 M.2003. Glover E.L., Cumberworth, International Council onClean Transportation. S. andMalins, C.,2016.Case studyonadoption oflow-sulfurGalarza, fuelstandards inPeru. Washington DC,the gaffney-cline.com/downloads/The%20Future%20of%20Asian%20Refining.pdf Gaffney, orExports: ClineandAssociates.The Future 2014.Imports ofAsian Refining. Retrieved from: Clean Transportation. EnSys Energy, 2015. subsidies-amid-riots-minister-says September 29th,2013.Retrieved from: El Wardany, S.2013.SudanResolved Fuel to Lift Says. SubsidiesAmid Riots, Minister Bloomberg Business. Econ Stats. dieselfuelconsumption. Retrieved sector from: 2011.Road 106 Corro, G.2002. pollution. Comparative Quantification ofHealthRisks, 2,1353–1433. Cohen, A.J., Anderson, H.R.,Ostro, B., Pandey, M.,Künzli, N.,andSamet,J. D., air M.2004.Urban K. Krzyzanowski, walkthrough D.C.: The InternationalCouncil onClean Transportation. h N.,andMinjares,Chambliss, R.2014b. S.,Naik, bp-country/fr_fr/Documents/Rapportsetpublications/statistical_review_of_world_energy_2013.pdf PetroleumBritish (BP).2013.Statistical of Review World Energy. from: Brelsford, 2015. Robert. http://doi.org/10.1002/jgrd.50171 assessment. Bond, T. C.,Doherty, S.J., &Fahey, D. W. 2013. 2012. Retrieved from: Associated Press. restores 2012.Nigeria fuelsubsidyto quellnationwide protests. 16th, The Guardian. January 4.

r http://www.ogj.com/articles/print/volume-113/issue-6a/general-interest/petroperu-advances-talara-refinery-modernization.html . Volume 75,No. 5December 2011,pp. 8-14. eference

Journal ofGeophysical Journal Research-Atmospheres. Sulfur impact on diesel emission control—a review ondieselemissioncontrol—a Sulfur impact EnSys ICCT Transport Refinery Fuels BaselineAnalysis. . Office of . Office Transportation andAir Quality. U.S. Environmental Protection Agency. http://www.theguardian.com/world/2012/jan/16/nigeria-restores-fuel-subsidy-protests

Petroperu advances Talara modernization. refinery s

MOBILE6.1 EmissionFactor Particulate Technical Model Final Description Report http://www.bloomberg.com/news/articles/2013-09-29/sudan-resolved-to-lift-fuel- Bounding theroleBounding ofblackcarbon intheclimate system: Ascientific Morbidities Calculation: GuidelinesandWalkthrough.

57 | ttp://www.theicct.org/morbidities-calculation-guidelines-and-

Retrieved from: http://www.bp.com/content/dam/ . Reaction Kinetics andCatalysis Kinetics Letters,. Reaction 75(1):89-

http://www.econstats.com/wdi/wdiv_572.htm Washington, DC,InternationalCouncil on OGJOnline. June 8th, 2015.Retrieved

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A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet International Monetary Fund.International Monetary 2013. on Clean Transportation. on Searle, S.andMalins, C.,2016b. Case studyontherefineries in Vietnam. Washington DC,the International Council the International Council onClean Transportation. Searle, S.andMalins, C.,2016a.Case study ontheEgyptian Company Refining inCairo. project Washington DC, Switzerland. Geneva, Organisation (WHO), Scovronick, N.2015. 2009. Retrieved from: Project. Sector PresentedRosenberg, Africa Zeta. Refinery 2009.Sub-Saharan inAbidjan, Cote D’Ivoire. July20, curated/en/2014/04/19342185/reducing-black-carbon-emissions-diesel-vehicles-impacts-control-strategies-cost-benefit-analysis strategies, andcost-benefit analysis. Minjares, R., Wagner, D.V., Ackbar, S.2014. AECC_PAPER_for_Aachen_Final_20070716.pdf Regulations. to aLow-Emissions Engineto Evaluate theCapabilities ofFuture Systems forEuropean andWorld-Harmonised May, J., Bosteels, D., Nichol,A.,Andersson, J., andSuch,C.2007. Diesel Fuel And Gasoline. Washington DC,International Council onClean Transportation MathPro, 2015b. Implementation InvestmentsTimes For And Refinery Producing Ultra-Low Sulfur(<50ppm) Gasoline. Washington DC,InternationalCouncil onClean Transportation MathPro, Process 2015a.Refining Technology And Economics For Producing Ultra-Low SulfurDiesel Fuel And onaglobalscale.to premature Nature 525, pp.367-371) mortality Lelieveld, J. Evans, J. S.,Fnais, D., M.,Giannadaki, Pozzer, A.,2015. The contribution ofoutdoor airpollutionsource 140 No. 140).Boston, MA: HealthEffectsInstitute. Pollution Air Particulate oftheAmerican StudyLinking andMortality Analysis Cancer Society D.,Krewski, Jerrett, R.,Hughes, R.,Ma, M.,Burnett, E., Shi, Y., Tempalski, B., 2009. D.B.Kittelson, 1998. org/external/np/pp/eng/2013/012813.pdf International Energy Agency, 2014. mexico Clean Transportation. Ultra-Low-Sulfur Fuels inBrazil, China,India andMexico International Council onClean 2012. Transportation (ICCT), Panel Review Effects Institute onUltrafine Particles. Health EffectsInstitute. 2013. Exposure, andHealthEffects (HEI).2010. Health EffectsInstitute

Aachener KolloquiumFahrzeug- Aachener undMotorentechnik, Retrieved from Engines and Nanoparticles: areview.Engines andNanoparticles: Reducing global health risks: Through mitigation of short-lived climate pollutants.Reducing globalhealthrisks:Through mitigationofshort-lived http://www.unep.org/urban_environment/PDFs/BAQ09_ICF.pdf http://www.theicct.org/technical-and-economic-analysis-transition-ultra-low-sulfur-fuels-brazil-china-india-and-

. Special Report 17.HealthEffectsInstitute, Boston, MA. . SpecialReport Understanding the Health Effects of Ambient Ultrafine Particles ofAmbient Understanding theHealthEffects Washington DC; World BankGroup. Retrieved from

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Extended Follow-UpExtended andSpatial http://www.aecc.eu/content/pdf/

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articles/2014-12-31/widodo-makes-biggest-change-to-indonesias-fuel-subsidy-system Economy. Bloomberg Business. December 30th,2014.Retrieved from: Wulundari, F., Listiyorini, E., andChen,S.2014. Widodo Fuel BiggestChangeto Makes Indonesia Subsidies: Organization. Retrieved from: 2014b.World HealthOrganization (WHO). outdoorair/databases/FINAL_HAP_AAP_BoD_24March2014.pdf?ua=1 Air Pollution for 2012.Geneva; World HealthOrganization. Retrieved from 2014a.BurdenWorld ofdiseasefrom thejoint effectsofHouseholdandAmbient HealthOrganization (WHO). assessment ofglobalconcentrations matter. offineparticulate Environmental healthperspectives, 123(2),p.135. van Donkelaar, R.V., A.,Martin, Brauer, M.andBoys, B.L., 2015.Use for ofsatellite long-term exposure observations transport/pcfv United Nations Environment Programme. 2016.DieselFuel SulphurLevels: GlobalStatus. Vehicles. Retrieved from: United Nations Environment Programme. 2015.Clean Vehicles andFuels Toolkit. Partnership for CleanFuels and Ehsani. Nairobi, Kenya: United Nations Environment Programme. United Nations Environment Programme. BaselineStudy ofLow 2014.Market SulphurFuels. Prepared by Vered Protection_&_Air_Benefits.pdf ClimateActions Forcers: forControlling Short-Lived AUNEPSynthesis Report. United Nations Environment Programme (UNEP).2011. programs-china D.C.: InternationalCouncil onClean Transportation. Shao, Z.and Wagner, D.V., 2015.

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http://www.who.int/mediacentre/factsheets/fs313/en/ Costs ofmotor andbenefits vehicle emissioncontrol programs inChina Ambient (Outdoor) Air Quality andHealth.Geneva; Quality (Outdoor) Air Ambient http://www.theicct.org/costs-and-benefits-motor-vehicle-emission-control- 59 | Near-term Climate Protection Benefits: andCleanAir

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http://www.unep.org/ World Health World . Washington

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet maximize the utility andreal life applicability of the results. These included: In establishing the refinery baseline,several modelingdecisionswere made for eachrefinery to terms of Baseline yields or product sulfurs. levels andrepresented asituationwhere the refinery could not beexpected to doany better in realistic crudeslate. Those factors essentially entirely determined the product volumes andsulfur fully or largely used the available distillationandsecondary processing capacity whileemploying a The bottom linegoalin the Baseline analysis was to arrive for eachrefinery atasimulation that slate for eachrefinery andsought to identify asaccurately aspossiblerefinery process capacities. data usedasastartingpoint for refinery capacities.For eachrefinery, Ensys modeledarealistic crude In undertaking the analysis Ensys identified frequent errors andomissionsin the January 2014OGJ estimating January 2014refinery capacity. sulfur levels. The assessment was basedgenerally ondata from the Oil andGas Journal (OGJ, 2013) could realistically produce, withprimary focus ongasolineanddiesel, together with their associated For the product outputassessment, the overall goalwas to assess the “best”yields that eachrefinery contamination in the distributionchain. 40 ppmsulfur content, to reflect the needof refiners to allow for acertain amount of potential standards for allrefinery gasolineanddieseloutput. The modelingrequired fuels to bedelivered at outputs, Ensys (2015) undertookrefinery-by-refinery modelingof the cost of adopting 50ppmsulfur refineries worldwide. The refinery analysis involves the estimated assessment of refined product output capacity at 245 A 28 nnex

• • • • • • • The refinery isglobal,excluding the U.S., EU, Russia andChina. An estimatedcrudeslate for eachrefinery. units listedin the OGJdata. For most refineries, Ensys assumedindustry-typical operating modes for the genericrefinery in the OGJ data, the capacitieswere adjustedonarefinery-by-refinery basis. Where Ensys hadreason to believe that refinery capacity datawas wrongly listedor incomplete asphalt), production of these was forced in the modeling. Where specialty products were reported in the capacity data(such aslubes,aromatics or and jet fuel yields would beoptimized. Jet fuel outputwas basedonregional averages. Setting product output spread based on product prices and the assumption that diesel, gasoline sufficient desulfurizationcapacity to reflect the nameplate throughput. some cases beoverstated for refineries with low utilization rates, as the modelingrequires reported average utilizationrate of 30%). The estimatedcosts of desulfurizationmay in Estimating rate of capacity utilization(for instance, Nigerian refineries currently have a research. Product specifications basedonEnsys’ WORLDmodeldatabase supplemented by additional

m a 28 Based oninformation aboutrefinery capacitiesand these estimatedproduct ethodology

for | 60

refinery

analy s i s factors (increasing costs per additionalbarrel of desulfurizationcapacity). were simulatedasrunningbelow full capacity, this was taken into account insetting the scale factors led to costs up to 25%higher than those for aU.S. Gulf Coast refinery. Where refineries scale factors andlocation factors. Scale factors are basedon the 0.6power factor method.Scale refinery scaleof 100,000barrels/day throughput. These costs were adjustedby the applicationof are basedonareference locationon the U.S. Gulf Coast, construction in 2014 andareference The investment costs for newprocess unitswere taken from the Ensys WORLDmodel. The costs principles: sulfur content inboth the gasolineanddieselstreams. This assessment followed the following Having assessed the baseline configuration of all 245 refineries, Ensys estimated the costs to lower • • • • • switches to low sulfur crudesbeingusedasastrategy to achieve lower sulfur standards. Refineries were forced to useanidentical or similar crudeslateininvestment case, to prevent associated with full compliance withother aspectscovered by fuel quality standards. The analysis considered only desulfurization costs – it did not model any additional cost standards. The study didnot allow refineries to reduce outputasastrategy to achieve lower sulfur always deliver cost savings compared to installingnewplant. existing hydrotreating units to deep-hydrotreating duty are possible this would almost desulfurization. This will tend to overstate costs insomecases,aswhere revamps to convert The study didnot allow for revamping of existingunits to supportincreased severity of to improve product yields (and hence margins) andinvestments to reduce sulfur levels. improvement, inwhichcase there may besomecomplementarity between capacity added the report above, inreality itislikely that desulfurizationwilloften becoupled to yield patterns, and to consider suchoptions was outside the scope of the study. Asnoted in hydrocracking capacity or FCC feed hydrotreaters, as these would have altered yield plant capacity). The study didnot consider options to reduce sulfur through additional (hydrotreating units) plussupportingplant units(such asadditionalhydrogen andsulfur The study only allowed capacity additions with the direct purpose of limiting sulfur output 61 | 61

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet The following assumptions were madein the research andanalysis of the market study: regions, alongwithaclearer understandingof opportunities to supportandpromote cleaner fuels. was used to generate regional mapsandidentify ‘hot spots’ or major fuel players inregions andsub the study is available online from unep.org/pcfv. The resulting fuel flow data (both crude and refined) the market study. Updated information on diesel fuel quality and vehicle emissions standards used in Both onlineresearch anddirect country contacts were used to collect information on fuel flows for M and the vehicle fleet inuse(both newandused,importedproduced locally). on the fuel quality incountries, the quantities of crudeandrefined product traded andproduced, and analyzing the relative magnitudeof fuel andvehicle flows the market study provides insights sulfur fuels (inparticular, diesel fuel) are stillinuse(i.e. fuels above 50ppmsulfur). By mapping overview of auto fuel (both crude andrefined) andvehicle markets invarious sub-regions where higher The market baselinestudy complements the refinery study (see AnnexA)in that itprovides aglobal B A • • • • • ackground ethodology nnex was used.For example: India hasanationalstandard of 350ppm,but this study assumesitis standard, unlessinformation was found regarding actual fuel quality, inwhichcase this value is, at times, of abetter quality than the standard shows. However, the mapsindicate the low-sulfur fuel. This difference between actualandmaximummeans that the fuel beingused is the maximumlevel allowed), particularly whenacountry isimporting from asource with problematic assumption, as the actualsulfur levels willoften differ from the standard (which the actualsulfur level was unknown, the official nationalstandard was used. This isarather actual tested quality beingimportedby acountry was not always possible.In caseswhere The sub-regional mapsshow the quality of fuel beingimported/exported; to determine the and analyze the relative magnitudeof flows rather than specificandexactvalues, the authors 2010 to 2013(and a few datapoints from early 2014). Given that the aimof the study is to map time periodwithall the datarequired), andinsomecases data from different years spanning A variety of sources were used for fuel andcrude flow data(rather than one source withone are snapshots of average trade flows andrelations andshouldbeunderstoodassuch. always produces the sameamount every day or exports the sameamount. In reality, these maps mentioned above. The sub-regional mapsmight provide animpression that acertain country In addition, the values of the flows shift regularly aswell, for someof the samereasons as in any onegiven month, the actual trade flows might bedifferent. other between 2010 and 2013, in order to show all observed trade links in that timeframe; but An attempt was made to includeall the countries that have had trade connections witheach 2010-2013 was used. however, this is not the case onanon-goingbasis.For the sake of analysis, databetween The maps make the trade relations and flows lookvery static,as they are asnapshot in time; demand, products required, sanctions, conflict, economics, politics, refinery shutdowns etc. Countries regularly changewhere they import from /export to, dependingonprice, availability, the importingcountries. exporting higher-sulfur fuel to African countries becauseof the lower fuel quality standard in

t b

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s tudy The full study isavailable for download from • • • • readily available. products (unless otherwise specified),asdisaggregated values for different fuels were not However, refinery capacity and trade volumes indicatedonmapsandin text includeall fuel ppm, for diesel)andactual,in-use fuel (i.e.diesel)quality. only; this applies to fuel (i.e. diesel) quality standards, sulfur levels (in parts per million, or Unless indicatedotherwise, fuel quality discussed throughout this strategy is for diesel fuel which was not possible to achieve given the limitationsoutlinedabove. sources andspans three years, the useof ranges avoids the impression of aprecise flow volume, a senseof the relative magnitudeandimportance of trade. As the datacomes from various The mapsdonot provide exactnumbers,butrather indicateranges of fuel flow volumes to give are, for the mostpart,minimaland,given the purposeof the study, are acceptable. many of the countries (i.e.:production +imports≠consumption +exports), but the differences decided that this approach was acceptable for the purposeof this study. Because of the range of datasources andyears used, the values donot addupperfectly for 63 | www.unep.org/transport.

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet cases: The costs andbenefitsof a transition to lower-sulfur fuels are calculatedbecomparing two policy C cited above for longer andmore in-depth descriptions of these methods. The mostimportant detailsare provided here, butreaders are encouraged to look to the documents follows amethodology that hasbeenapplied,reviewed, andpublishedinseveral other analyses: of the refinery analysis, isused for the cost-benefit analysis describedinchapter 1. This analysis This sectiondescribes the underlying assumptions andmodeling that, combined with the results modeling A .1 • • • • • • nnex

support newstandards. for both nationalcommitments to low-sulfur fuels andadditionalinternational actions to filter-forcing, Euro 6/VI-equivalent standards in2030. This accelerated roadmap accounts standards and50ppmsulfur limits in 2025andmany moving to ultra low-sulfur fuel and and more stringent emissionstandards, withallregions meetingatleastEuro 4/IV-equivalent Case 2:“Transition to lower-sulfur fuels”, inwhichallcountries progress to low-sulfur fuel excluding Bosnia andHerzegovina, Ukraine, Belarus andMoldova). several years (e.g. urbanareas inIndia andBrazil; allcountries inEurope’s non-EUcountries does account for the provision of low-sulfur fuel inareas where ithasbeen required for (e.g. nationwide ultra low-sulfur fuel commitments in Mexico, Brazil, and India). This case not includecommitments to future reductions in fuel sulfur levels and tightened standards Case 1:“No Advancement Beyond Currently Enforced”. The policies modeledin this casedo and usedin the analyses of Miller, Blumberg, andSharpe (2014), andShao andWagner (2015). Bandivadekar, andGerman(2012).Similar methodshave beenapplied for heavy-duty vehicles more stringent emissionstandards are described for light-duty vehicles by Posada Sanchez, methods are alsodescribedindepth andappliedby Miller, Blumberg, andSharpe (2014). jointly by the World Bank and the ICCT andreviewed by membersof both organizations. These described andappliedby Minjares, Wagner, andAckbar (2014) inareport that was prepared Sharpe (2014). described andappliedby Minjares, Wagner, andAckbar (2014) andby Miller, Blumberg, and and Thomas McKone (University of California, Berkeley). These methodshave alsobeen Hubbell (U.S. Environmental Protection Agency), Julian Marshall(University of Minnesota), described inChamblissetal.(2013), AppendixIII. These methodswere reviewed by Bryan Chambliss etal.(2013), AppendixII. emissions resulting from new fuel andvehicle standards is the same as that described in The methodology to estimatereductions inblackcarbon,sulfate, and total primary PM The methods for assessing the costs of emissioncontrol technology necessary to meet The methodology andrationale underlying the valuation of healthbenefits follows that The methodology to estimate the healtheffects of emissionsreductions is the sameas that P olicy

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and

emi ss ion s

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Table A:Countries/refineries modeling includedinICCT healthbenefit policies may beappropriate whenconsidering the effects of vehicle standards for aspecificcountry. vehicles and the average ageandcondition of these imports. Amore detailedassessment of these enforced for newvehicles. The impactdependsonmultiple factors, including the originof imported market availability may result inashare of vehicles meetingstandards more stringent than those degree of uncertainty inhow these restrictions affect fleet emissions.Age-based standards and Age-based standards and import restrictions are also enforced in many countries, but there is a high The only vehicle emissioncontrol policiesconsidered are nationalstandards for salesof new vehicles. on-road vehicle PM emissions than those powered by gasolineor alternative fuels. diesel fuel andstandards pertaining to dieselvehicles, asdieselvehicles contribute muchmore to of countries considered isshown in1.1.1C.1Table A. This analysis focuses on the sulfur content of China, Russia, Japan, SouthKorea, Australia, the U.S., Canada,andcountries in the EU. The full list a combined 2015population of 4.6billion,or about64%of the globalpopulation.It excludes This analysis covers 158countries inAfrica, the Middle East,Asia,LatinAmerica,andEurope with Bosnia andHerzegovina Antigua andBarbuda Brunei Darussalam Central African Burkina Faso Afghanistan Cabo Verde Bangladesh Azerbaijan Cameroon Cambodia Argentina Botswana Barbados Republic Bahamas Armenia Andorra Burundi Bahrain Belarus Albania Algeria Bhutan Angola Bolivia Belize Benin Brazil Dominican Republic Equatorial Guinea Guinea Bissau El Salvador Kazakhstan Guatemala Honduras Indonesia Grenada Ethiopia Ecuador Georgia Jamaica Gambia Guyana Iceland Guinea Eritrea Jordan Gabon Ghana Egypt Israel India Haiti Iraq Iran Fiji COUNTRIES 65 | Papua New Guinea Marshall Islands New Zealand Mozambique Montenegro Micronesia Mauritania Nicaragua Mauritius Mongolia Myanmar Paraguay Morocco Maldives Malaysia Pakistan Namibia Monaco Panama Norway Nigeria Mexico Nauru Oman Nepal Niger Palau Mali Republic of Macedonia The formerYugoslav Trinidadand Tobago Solomon Islands Turkmenistan Sierra Leone South Africa South Sudan Timor-Leste Switzerland Seychelles Singapore Swaziland Tajikistan Suriname Sri Lanka Thailand Senegal Somalia Ukraine Uganda Tunisia Turkey Serbia Tuvalu Sudan Tonga Syria Togo

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet Of the 31remaining countries in LatinAmericaand the Caribbean, three countries, comprising Latin C.2.3 duty vehicles andEuro 3standards for light-duty vehicles. stringent PM controls. These standards are assumed to beequivalent to Euro IIIstandards for heavy- emission standards. We assume that vehicles comply withU.S.-based standards, whichrequire less 350 ppm in the rest of the country. Mexico allows two different compliance options for vehicle In Mexico, the baselinedieselsulfur content isassumed to be15ppmin40%of the country, and Mexico C.2.2 is 10ppmincreases accordingly. standards. AsEuro Vvehicles increase in their share of the fleet, the share of dieselconsumed that fleet are assumed to meetEuro 5/V-equivalent standards, inalignment withcurrent PROCONVE diesel isavailable butusedonly by Euro V-certified vehicles. Allnewvehicles introduced to the In Brazil, the baselinedieselsulfur content isassumed to be500ppm;itisassumed that 10ppm Brazil C.2.1 with more stringent standards are noted. of the regional refineries compiled by EnSys andadjusted for lower-sulfur fuel imports.Countries EU Europe andLatinAmerica), the baselinesulfur level is derived from the average sulfur content that are modeledinalarger, aggregate region (those inAfrica, the Middle East,Asia-Pacific, non- content nationwide, and that low-sulfur fuel isavailable inurbanareas asspecified.For countries individually (Brazil, Mexico, andIndia), we assume that fuel meets the maximumallowed sulfur Fuel sulfur level in this policy caseisdeterminedoneof two ways. For countries that are modeled C .2 Democratic Republic Democratic People’s Republic of Korea c Cote D’Ivoire of the Congoof the Costa Rica Colombia Dominica Comoros Djibouti a Congo Chile Chad Cuba s e 1: 1: America andCaribbean N o

A dvancement Democratic Republic Liechtenstein Lao People’s Libyan Arab Madagascar Kyrgyzstan Jamahiriya Lebanon Lesotho Kiribati Malawi Liberia Kuwait Kenya

B eyond COUNTRIES

C | 66 urrently Sao Tome andPrincipe Saint KittsandNevis Republic of Moldova Saint Vincent and the Grenadines Saudi Arabia San Marino Saint Lucia Philippines

Rwanda E Samoa Qatar Peru nforced P olicie United Arab Emirates s United Republic of Tanzania Uzbekistan Venezuela Zimbabwe Vietnam Uruguay Vanuatu Zambia Yemen For the 37 countries in the Asia-Pacific modelregion, two enforce 10ppmlimitsondieselsulfur Asia-Pacific C.2.8 use 350ppm. vehicles, includingallEuro 4/IV-certified LDVs andBuses, use50ppmdiesel, while the remainder are required to meetEuro 3/III-equivalent standards. We assume that 25%of allin-usediesel diesel alsorequire Euro 4/IV-equivalent standards for light-duty vehicles andbuses.Other vehicles available nationwide hasamaximum sulfur content of 350ppm. Urban areas with50ppmsulfur In India, selecturbanareas require amaximum dieselsulfur content of 50ppm,while the diesel India C.2.7 heavy-duty vehicles are assumed to meetEuro I-equivalent standards. duty vehicles soldin these countries are assumed to meetEuro 2-equivalent standards, whilenew diesel sulfur content isassumed to be2500ppm,basedonrefinery andimportdata.New light- and enforce Euro 6/VI-equivalent standards. For the remaining 85%of the region, the baseline and distillateconsumption. Accordingly, 15%of the region isassumed to consume 10ppmdiesel Turkey andIsrael. These account for 23%of the region’s populationand12%of the combined gasoline Of the 15countries in the Middle Eastmodelregion, two have adopted 10ppmdieselsulfur limits: Middle East C.2.6 standards. Euro 2-equivalent standards, whilenewheavy-duty vehicles are assumed to meetEuro I-equivalent and importdata.New light-duty vehicles soldinallcountries in the region are assumed to meet diesel sulfur content for the remaining countries isassumed to be1200ppm,basedonrefinery new vehicles. We assume that 15% of the diesel consumed in this region is 50ppm. The baseline of the gasolineanddistillateconsumption. These regions have not adopted emissionstandards for ppm limitsondieselsulfur. These countries account for 20%of the region’s populationand14% 53 African countries are includedin the model.Of these, seven countries currently enforce 50 Africa C.2.5 are assumed to meetEuro 3/III. countries with 10 ppm fuel standards are assumed to meet Euro 6/VI standards, and the other half to be10ppm for half the vehicles in the region and350ppm for the other half. New vehicles in standards restricting diesel sulfur content to 10 ppm. The baseline diesel sulfur content is assumed and 56%of itscombined gasolineanddistillateconsumption have already passed fuel quality Of the 19countries inEurope not in the EU, 10countries comprising 36%of the region’s population European countriesnotintheEU C.2.4 Euro 3/IIIstandards. on refinery andimportdata.New vehicles soldin these remaining countries are assumed to meet For the remaining countries, the baselinedieselsulfur content isassumed to be2000ppm,based 5/V-equivalent standards, andanadditional15%isat50ppm fuel andmeetingEuro 3/IIIstandards. corresponding vehicle emissionstandards. We assume10% of the region is at15ppm fuel and Euro countries, Colombia and Ecuador, have adopted 50 ppm standards, butonly Colombia requires the emission standards for heavy-duty vehicles, andremain atEuro 5/V-equivalent or below. Two other adopted 15ppmdiesellimits.However, these countries have not yet adopted filter-forcing vehicle 8% of the region’s populationand13%of combined gasolineanddistillateconsumption, have 67 |

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet 2025, and then advance to 10ppmandEuro 6/VIstandards in2030. 2025. We model the remaining share of the region to move to 50ppm and Euro 4/VIstandards in Euro 4/VIstandards in2020,and then this share of the region will move to 10ppmstandards by currently atlessstringent standards (20%of the total) willenforce 50ppmdieselsulfur limitsand without concerns for financing upgrades of domesticrefineries. We model that 40%of the countries on imported fuel, they could choose to move from 50ppmlimits to 10 ppmlimits fairly quickly, population) have adopted or committed to 50ppmlimits.Since mostof these countries rely primarily In addition to the 10countries already enforcing 10ppmdiesel sulfur limits, three (20%of regional European countriesnotintheEU C.3.4 and 50ppmdieselsulfur limits. diesel and Euro 6/VI-equivalent standards, while the remaining 50% enforces Euro 4/IV standards standards willrise to 25%.In 2030,we assume that 50%of the region moves to ultra low sulfur ppm fuels andEuro 4/IV, and the share of the region with15ppmlimitsandEuro 6/VI-equivalent 2025, we model that the remaining 50% of the region with less stringent standards will move to 50 also model that the 10%of the region with15ppm fuel moves to Euro 6/VI-equivalent standards. In to advance to Euro 4/IV, resulting in40%of the total region at50ppmandEuro 4/VIin2020.We advance to 50ppmdieseland Euro 4/VI-equivalent standards, and model those at 50 ppm already standards. In this policy case,we model that in the year 2020anadditional25%of the region will the populationand33%of gasolineanddistillateconsumption, have setadate to adopt 50ppm Among the 31countries in the rest of LatinAmericaand the Caribbean, four, comprising 32%of Latin C.3.3 vehicle standards. Euro 6/VI-equivalent standards in2018. This isinlinewith the proposed NOM-044 heavy-duty Mexico isassumed to move to dieselwithamaximumsulfur content of 15ppminlate2017and to Mexico C.3.2 VI-equivalent standards in the sameyear. Brazil is assumed to adopt a nationwide 10 ppm sulfur limit for diesel in 2020, and move to Euro 6/ Brazil C.3.1 standards willspread throughout the rest of the region withina5-year-period. assumed that acore group of countries willmove more quickly to low-sulfur fuel, and then the legislation andcomments madeby nationalpolicymakers. In multi-country national regions, itis modeled individually (Brazil, Mexico, andIndia), dates for standards adoptions are basedonproposed lower, withmany moving to ultra low sulfur dieseland filter-forcing standards. In countries that are In this policy case,allcountries move to standards requiring dieselsulfur content of 50ppmor C new heavy-duty vehicles are assumed to meetEuro II-equivalent standards. light-duty vehicles soldin these countries are assumed to meetEuro 3-equivalent standards, while baseline dieselsulfur content isassumed to be1000ppm,basedonrefinery andimportdata.New region consumes 10ppmdiesel fuel andmeets Euro 5/Vstandards. For the rest of the region the distillate consumption. These countries require Euro V/5 emissionstandards. We assume5%of the (New Zealand and Singapore) and account for 1% of the region’s population and 6% of gasoline and .3 c a s e 2: 2: America andCaribbean T ran s ition

to

lo w er - s ulfur | 68

fuel s 2030. vehicle standards in the stagesshown for years 2020-2030. No further advances are assumedafter (bolded) remain for allremaining years. In Case2, the regions advance to more stringent fuel and These standards are summarized in1.1.1C.3.5Table Abelow. In Case1, the standards inplace in 2015 55% enforces Euro 4/IVstandards and50ppmdiesel sulfur limits. region isenforcing ultra low sulfur dieselandEuro 6/VI-equivalent standards, while the remaining meeting Euro 4/IV fuel andvehicle emissionstandards in2025.In 2030,we assume that 45%of the countries advance to low sulfur dieselandcorresponding standards, leading to 85%of the region increasing the share of the region at these standards to 15%.In this sameyear, we assumeallremaining the early actorsmoving to 50ppmwilladvance to ultra low sulfur dieselandEuro 6/VIstandards, to 50ppmdieselsulfur limitsandEuro 4/VIstandards in2020.In 2025,we assume that someof consumption have committed to 50ppmstandards, sowe model that 40%of the region moves additional 10 countries comprising 32% of the regional population and 50% of gasoline/distillate In Asia-Pacific, we model that the 5%already at10ppmdieselmove to Euro 6/VIstandards. An Asia-Pacific and finishing withEuro 6/VI-equivalent standards in2023. in 2017, progressing through Euro 5/V-equivalent standards and10ppmdieselsulfur limitsin2019 In India, we modelanationwide move to 50ppmsulfur limitsandEuro 4/VI-equivalent standards India limits andEuro 6/VIstandards in2030. region willmove from 50ppmdieselsulfur limitsandEuro 4/VIstandards to 10ppmdieselsulfur will meet50ppmsulfur limits,andadopt Euro4/IV standards. We model that a20%share of the 10 ppm and Euro 6/VI-equivalent standards rising from 15% to 40% in 2020. In 2025 the remainder in many casesplan to move directly to ultra low sulfur diesel.We model the share of the region at population and 38% of gasoline/distillate consumption) have committed to clean fuels policies and In the Middle East,of the 13countries that donot yet require low sulfur diesel,5(13%of the Middle East VI-equivalent standards. that the 50% of the region that were early actorswillmove to ultra low sulfur dieselandEuro 6/ whole region has moved to 50ppmdieselsulfur limitsandEuro 4/VIstandards. In 2030,we assume to 50ppmdieselsulfur limitsandEuro 4/VIstandards adopted in2020.In 2025,we assume the of 50ppmor lower. We model those commitments asanadditional35%share of the region moving gasoline anddistillateconsumption that have committed to future limitsondieselsulfur content on diesel, there are 8countries comprising 29%of the regional populationand49%of regional VI standards in2020.In addition to the share of countries already enforcing 50ppmsulfur limits In Africa, we model the 15%of the region already consuming 50ppmdiesel to move to Euro 4/ Africa C.3.5 69 |

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet Table A N L on A M atin sia iddle M - A B EU : Summary ofassumedstandards : Summary

-P frica razil exico A merica acific E

E urope ast Ultra low sulfur Ultra low sulfur Ultra low sulfur Ultra low sulfur Ultra low sulfur Ultra low sulfur High sulfur High sulfur High sulfur High sulfur High sulfur High sulfur High sulfur Low sulfur Low sulfur Low sulfur Low sulfur Low sulfur Low sulfur Low sulfur sulfur (15) Ultra low (2000) (2500) (1000) (1200) (500) (350) (350) 95% (Euro 3/II) 10% (Euro 5/V) 85% (Euro 2/I) 85% (Euro 2/I) 15% (Euro 2/I) 5% (Euro 5/V) Euro 5/Vonly 40% (Euro 60% (Euro 50% (Euro 50% (Euro 75% (Euro 15% (Euro 15% (Euro Euro 5/V All but 6/VI) 6/VI) 3/III) 3/III) 3/III) 3/III) 3/III) 2015 0% 0% 0% 0% 0% 0% | 70 | 10% (Euro 6/VI) 55% (Euro 3/II) 5% (Euro 6/VI) 60% (Euro 2/I) 50% (Euro 2/I) 100% (Euro 100% (Euro 40% (Euro 40% (Euro 40% (Euro 50% (Euro 50% (Euro 50% (Euro 30% (Euro 20% (Euro 6/VI)* 4/IV) 4/IV) 4/IV) 4/IV) 6/VI) 6/VI) 6/VI) 3/III) 3/III) 2020 ------15% (Euro 6/VI) 100% (Euro 40% (Euro 60% (Euro 30% (Euro 85% (Euro 70% (Euro 25% (Euro 75% (Euro 4/IV) 4/IV) 4/IV) 4/IV) 4/IV) 6/VI) 6/VI) 6/VI) 2025 0% 0% 0% 0% 0% ------100% (Euro 40% (Euro 60% (Euro 50% (Euro 50% (Euro 50% (Euro 50% (Euro 45% (Euro 55% (Euro 4/IV) 4/IV) 4/IV) 4/IV) 6/VI) 6/VI) 6/VI) 6/VI) 6/VI) 2030 ------in mortality from lower NOx andSO public health. The value doesnot includereduction innon-fatal healthimpacts, further reductions This methodpresents aconservative estimateof the total value of these policiesinimproving 2013, AppendixIII. Change inconcentration isestimated for urban areas usingmethodsdescribedinChamblissetal. that predict anincrease inriskof mortality basedonelevated exposure to PM (Cohen etal.2004). These healthimpactsare predicted usingconcentration-response functions mortality inchildren from acuterespiratory infection associatedwithlong-term PM pollution for adults(Krewski etal.,2009): cardiopulmonary disease This analysis considers the major causesof deathassociated with prolonged exposure to PM Concentration andHealthEffects C.4.2 II of Chamblissetal.2013. guidance (Glover andCumberworth, 2003). These methodsare describedinmore detailinAppendix sulfur in the fuel isconverted to sulfates, consistent withresearch findings (Corro, 2002)andEPA of sulfur onPM uses abottom-up emissionscalculationbasedonvehicle activity andemission factors. The effects uses estimatesof tank-to-wheel (tailpipe) emissionsof fine particulatematter (PM of greenhouse gasandlocalair pollutants from transportation sources (ICCT 2012a). This analysis The Global Transportation Roadmap Model produces estimatesof historical and future emissions Emissions Modeling C.4.1 in mortality from lower NOx andSO public health. The value doesnot includereduction innon-fatal healthimpacts, further reductions This method presents aconservative estimateof the total value of these policiesinimproving future discounting of 3%annually. monetized benefits from 2017 through 2050 are converted into present value terms, assuminga pay, multiplying eachprevented premature mortality by avalue per statisticallife. The cumulative monetary value of reduced mortality isestimatedusing the concept of aggregate willingness to The benefitsconsidered are reduced mortality from on-road vehicle primary PM emissions. The C *In Mexico andIndia, standard shiftsoccur inyears between those shown on the charts.Seedescription for exact dates. cerebrovascular disease, inflammatory heartdisease,chronic obstructive pulmonary disease,andasthma. 29 .4

h This category includesupper andlower respiratory infection, hypertensive heart disease,ischemicheart I ndia ealth

B 2.5 enefit Ultra low sulfur emissionsiscalculatedusingamass-balance approach that assumes that 2%of High sulfur Low sulfur (350) s

E s timate s 25% (Euro 75% (Euro 2 2 emissions,andhealthimprovement outsideof urbanareas. emissions,andhealthimprovement outsideof urbanareas. 4/IV) 3/III) 2015 0% 71 | 100% (Euro 5/V)* 2020 - - 29 andlungcancer. It alsoconsiders 100% (Euro 6/VI)* 2025 - - 2.5 concentrations. 2.5 ). The model). The 2.5 2030 exposure - - - 2.5

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet to be$71.4billionbased on the EnSys refinery study (Ensys, 2015). We assumeanannualcapital We estimate the capital investments necessary for global 50 ppm sulfur gasoline and diesel consumption chemicals, etc.) labor, overhead and environmental expense), and direct operating costs (e.g. energy, catalysts and annual fixed costs of operating these newunits(e.g. insurance, local taxes, maintenance, supplies, The costs of producing low andultra low-sulfur fuel includecapitalinvestments inrefinery capacity, Fuelproduction costs andrefinery C.5.1 assessment of the net benefitsof the regulation. The cumulative costs from 2017 through 2050are converted into present value terms, allowing an costs of producing lower-sulfur fuel, and the costs of dieselexhaust fluid andvehicle technology. sulfur fuel. The costs considered combine the capitalcost of refinery investment, incremental This analysis offers arough estimateof both the costs andbenefitsof the Roadmap to lower- C Table B (2013). Relevant modelingparameters are summarized in Table Bbelow. The steps for the estimationof VSL for this analysis are the sameas those followed by Miller etal. estimate derived from the research literature. due to amitigationoption and the value per statisticallife (VSL), ariskreduction-normalized WTP of agiven size. We estimate the WTPisasaproduct of the number of premature deathsavoided of the aggregate willingness to pay for smallreductions inannualmortality riskby apopulation To express the socialbenefitof fewer premature deathsinmonetary terms, we rely on the concept EconomicBenefits C.4.3 .5 forecast forregion totheeach Adjust EPA VSLestimate from per-capita income, 2017-2050 Project VSLbasedonincome 2006 dollars to 2010dollars elasticity andgrowth rate in 2010 U.S. per-capita income Compare per-capita income c estimate basedonstudies projected growth rate of Select income elasticity Quantify acentral VSL real per-capita income of the U.S. population : Steps fortheestimation ofVSL Quantify long-term o s t

PROCESS E s timate s population-weighted average is used for multi-country regions

7.4 million(2006USD), Varies across countries; 8 million(2010USD) published in2010 | 72 RESULT 1.0 Minjares etal.(2014) World Bank (2014) World Bank (2014) EPA (2010) BLS (2014) SOURCE vehicles Table C size is typical for developing countries. cost for heavy-duty trucks and buses assumes an average engine size of 6 liters; this smaller engine standards and the estimatedcost to the manufacturer is included in Table C below. The compliance sensors andother components andaccessories. The technologies used to meetsuccessive emissions such as catalyst volume, substrate, washcoat and urea injection system, as well as fixed costs, such as others dependonmaterials.Materialcosts includevariable costs that dependonenginedisplacement, engine designandnewaftertreatment technologies andare spread across allvehicles sold,while control technology required. Somecosts are incurred in the research anddevelopment of better The incremental costs of meetingnewemissionsstandards for dieselvehicles dependon the emission Vehicle andoperatingcosts technology C.5.2 low-sulfur fuel, would be$16.5billion to 2030. operational costs of 20 ¢/barrel for 50 ppm diesel, and an additional cost of 10¢/barrel for 10 ultra Finally, the operational cost to produce lower-sulfur fuel, assuming marginal increase of refinery (authors estimatebasedonMathPro, 2015), for a total capitalcost of $300billion. ultra low-sulfur fuel inmostcountries by 2030would require anestimatedadditional$70billion and estimate that the total cost of the investment would beapproximately $230billion.Delivering charge ratio of 0.25(c.f. Hart Energy andMathPro, 2012)andapply capitalcharges for 15years, EQUIVALENT) STANDARD Euro II Euro 3 Euro Euro 2 Euro Euro 1 Euro Euro I Euro EURO (U : Emission control technologyusedtomeetEuropean standards forlight- andheavy-dutydiesel .S. VEHICLE HDVs HDVs HDVs LDVs LDVs LDVs LDVs PE TY MOTIVATION challenges Addresses cold start

500 ppm 350 ppm SULFUR 73 | 2000 LIMIT FUEL ppm

44% 21% 58% 29% 26% BC PERCENTAGE REDUCTION 38% 21% 64% 45% 50% PM

NOx CO HC Diesel oxidation fueling methods fuel injectionat 900-1,300 bar injection, EGR Turbocharging retardation to Improvements Fuel injection TECHNOLOGY Common rail in electronic recirculation reduce NOx, with cooling exhaust gas ADOPTION catalysts, injection, systems indirect timing Direct INCREMENTAL COS TS COMPLY $370 $158 $86 $56 - TO

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet EQUIVALENT) STANDARD Euro IV Euro III Euro V Euro Euro 4 Euro Euro 5 Euro EURO (U .S. VEHICLE HDVs HDVs HDVs LDVs LDVs PE TY after treatment aftertreatment flow filtersfor MOTIVATION Forces NOx and partial- PM control flow filters Forces PM with wall-

50 ppm SULFUR 10 ppm LIMIT FUEL | 74 |

0% 95% 72% 49% 38% BC PERCENTAGE REDUCTION - 86% 80% 46% 33% PM

43% 28% 30% 50% NOx - - 30% 22% CO - - 29% - HC Diesel oxidation and intercooler, and intercooler, filter, Injection pressure raised pressure raised pressure raised aftertreatment aftertreatment larger vehicles Fuel injection turbocharger, TECHNOLOGY unit injection fuel injection reduction for Turbocharger turbocharger via selective to 1,900 bar Cooled EGR Adoption of fuel control to 1,300 toto particulate ADOPTION EGR, NOx electronic electronic 1,600 bar, geometry Increased 1,900 bar to 1,600- via single via diesel pressure, Injection catalytic catalyst, Variable cooled PM PM INCREMENTAL COST COMPLY $2,566 $349 $259 $473 $154 TO will beator below the price of diesel fuel andis forecasted to bein the $2-$3/gallon range. of DEFis to be$0.8USD/liter across allregions, basedonprojections by Cummins that DEFpricing operation, etc.,but the industry standard isapproximately 2%.We conservatively assume the cost consumed is 2% of total diesel consumption. Actual use varies depending on duty cycle, vehicle require the use of diesel exhaust fluid (DEF) to function properly. We assume that the level of DEF through Euro 6/VIstandards is the useof Selective CatalyticReduction (SCR)systems. These systems The control strategy used in diesel vehicles to meet the NOx reductions required by Euro 4/IV have assumeda1%annualreduction incontrol technology costs. in the future. This gives us a conservative, high-end estimate of compliance costs. Other studies We donot assume further optimization by vehicle manufacturers, whichcould lead to cost reductions EQUIVALENT) (U.S.2) Tier (U.S. 2010) STANDARD Euro VI Euro 6Euro EURO (U .S.

VEHICLE HDVs LDVs PE TY to address high catalyst inSCR Shift to zeoliteShift to aftertreatment NOx emissions addresses high aftertreament and addresses via real-world environments PN emissions in low-speed MOTIVATION Forces NOx driving test in-use NOx high in-use Forces PM SULFUR 10 ppm 75 | LIMIT FUEL

95% - BC PERCENTAGE REDUCTION 50% - PM

80% 66% NOx 72% - CO - - HC aftertreatment aftertreatment Fuel injection TECHNOLOGY actuator fuel or selective particulate ADOPTION filter Dual reduction, to 1,800- increased 2,100 bar via diesel NOx trap injectors catalytic pressure via lean NOx NOx PM PM INCREMENTAL COST COMPLY $1,464 $540 TO

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles Cleaning Up the Global On-Road Diesel Fleet strategies, andcost-benefit analysis EnSys Energy, 2015.EnSys 106 Glover E.L., Cumberworth, M.2003. Glover E.L., Cumberworth, Clean Transportation. Corro, G.2002. http://www.theicct.org/sites/default/files/publications/ICCT_HealthClimateRoadmap_2013_revised.pdf andemissions standards onpremature mortality Chambliss, S.,Miller, J., Facanha, C.,Minjares, R.,&Blumberg, 2013. K. C files/publications/ICCT_LDVcostsreport_2012.pdf Vehicles.Duty Posada F., Sanchez, Bandivadekar, J. A.,German, 2012. curated/en/2014/04/19342185/reducing-black-carbon-emissions-diesel-vehicles-impacts-control-strategies-cost-benefit-analysis Minjares, R., Wagner, D.V., Ackbar, S.2014. publications/ICCT_MexicoNOM-044_CBA_20140811.pdf (NOM 044). The InternationalCouncil onClean Transportation. Retrieved from Miller, M.,Blumberg, andSharpe, B. K., 2014. Gasoline. Washington DC,InternationalCouncil onClean Transportation MathPro, Process 2015.Refining Technology And Economics For Producing Ultra-Low SulfurDieselFuel And No. 140).Boston, MA: HealthEffectsInstitute. Pollution Air Particulate oftheAmerican StudyLinking andMortality Analysis Cancer Society D.,Krewski, Jerrett, R.,Hughes, R.,Ma, M.,Burnett, E., Shi, Y., Tempalski, B. 2009. pdf Retrieved from h International Council onClean 2012. Transportation (ICCT). andMexico.China, India, Washington DC,InternationalCouncil onClean Transportation Energy andMathPro,Hart 2012. Technical andeconomic analysis ofthetransition to ultra-low sulfurfuelsinBrazil, no. EPA of 420-R-03-001.Office Transportation andAir Quality. U.S. Environmental Protection Agency. .6

a nnex The InternationalCouncil onClean Transportation. Retrieved from Sulfur impact ondieselemissioncontrolSulfur impact

ttp://www.theicct.org/info/assets/RoadmapV1/ICCT%20Roadmap%20Model%20Version%201-0%20Documentation. C

R eference ICCT Transport Refinery Fuels BaselineAnalysis s . Washington DC; World BankGroup. Retrieved from MOBILE6.1 EmissionFactor Particulate Technical Model Description Reducing blackcarbon emissionsfrom dieselvehicles: impacts, control Cost-Benefit Analysis ofMexico’sCost-Benefit Analysis EmissionStandards Heavy-duty

. The International Council onClean Transportation. Retrieved from —a review. andCatalysis Kinetics Letters, Reaction 75(1):89- | 76 | Estimated Cost Technologies ofEmissionReduction for Light- Global Transportation andUserGuide RoadmapModel The impact ofstringentfuelandvehicleThe impact . Washington, DC,International Council on http://www.theicct.org/sites/default/files/ Extended Follow-UpExtended andSpatial http://www.theicct.org/sites/default/ http://documents.worldbank.org/ (HEI Research Report 140 (HEI Research Report Final Report Final Report

. Table D:Countries/refineries baselinereport includedinEnsys (2015) refinery A nnex Dominican Republic Congo, Brazzaville China, Taiwan Madagascar Ivory Coast Bangladesh El Salvador Kazakhstan Costa Rica Kyrgyzstan Azerbaijan Cameroon Argentina Indonesia Colombia Ecuador Jamaica Bahrain Belarus C Algeria Angola Jordan Bolivia Kuwait Bosnia Brunei Gabon Ghana Kenya Egypt Brazil Israel Chile Libya Cuba India ountry

Iraq Iran c d TOTAL# OF ountrie REFINERIES # of

R s 22 10 13 efineries 4 4 4 8 9 9 9 5 5 3 3 3 3 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

con s idered 77 | 77 Netherlands Antilles Papua New Guinea Turkmenistan South Africa Saudi Arabia North Korea South Korea

Philippines Martinique Uzbekistan Venezuela Nicaragua Singapore in VIETNAM Suriname Sri Lanka Myanmar Paraguay Morocco Malaysia Pakistan Thailand Uruguay Trinidad Senegal Ukraine Nigeria C Mexico Zambia Tunisia Yemen Sudan Oman Qatar Syria Peru ountry UAE

refinery 246

analy # of

R s efineries 4 4 4 8 6 6 6 6 5 5 3 3 3 2 2 2 2 2 2 2 7 7 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 i s

A Global Strategy to Introduce Low-Sulfur Fuels and Cleaner Diesel Vehicles