3 August 2006

Consumers to get cleaner petrol and diesel

Associate Minister of Energy Harry Duynhoven today announced changes that will result in higher quality, cleaner petrol and diesel for New Zealanders.

Following a review of the Petroleum Products Specification Regulations (PPSR) 2002, the government has decided that from 1 January 2008, the level of sulphur in both grades of petrol will be reduced to 50 parts per million (ppm). From 1 January 2009 sulphur levels in diesel will be reduced to 10ppm, effectively making it 'sulphur-free'.

The reductions in sulphur levels will improve air quality, reduce the impact of particulate emissions on human health and encourage the uptake of newer, cleaner vehicles in New Zealand, particularly the introduction of low-emission diesel vehicles.

“The net benefit of improving the quality of petrol and diesel is a cleaner, healthier environment for all New Zealanders,” Harry Duynhoven said.

The government has substantially reduced the sulphur level in both petrol and diesel since the introduction of the Petroleum Products Specification Regulations in 2002.
The new changes are in line with similar moves by other countries in the region, thereby maximizing security of fuel supply and minimizing price impacts.

“The government remains committed to the introduction of zero sulphur petrol, but a decision on when sulphur levels in petrol will be lowered to 10ppm cannot be made until regional security of supply issues concerning the fuel have been resolved,” Harry Duynhoven said.

The government has also changed the current sulphur test methods to ensure tests are appropriate for the new levels of sulphur, and confirmed that the current test methods for diesel filter blocking tendency which aim to avoid engine filter-blocking problems with diesel are the most suitable available.

The current petrol manganese limit will remain in place until 2010, by which time it is expected that better information will be available internationally to make an informed review on the limit of manganese in petrol.

For further information please refer to the Questions and Answers.

Questions and Answers

Why are the changes to sulphur levels needed?

Changes to sulphur limits are needed for vehicle operability, consumer, health, and environmental reasons.

The changes to 50ppm sulphur petrol from 1 January 2008 and 10ppm sulphur diesel from 1 January 2009 are part of the progressive reduction in fuel sulphur levels since 2002. These changes will further reduce the amount of pollutants such as particulates (small airborne particles) that are emitted from vehicle exhausts. Particulates have been linked to health problems, in particular respiratory conditions.

The changes mean that New Zealand's petrol and diesel is of a suitable quality so that motorists and businesses can purchase newer-technology vehicles. These vehicles are fitted with advanced emissions control technologies which require fuel produced to these stringent sulphur specifications.

As the advanced Euro 5 technology diesel vehicles enter New Zealand from 2009, the air quality benefits of requiring 10ppm diesel (rather than 50ppm) are likely to increase.

Petrol vehicles that are built to meet emissions standards already in place in some overseas countries, require 50 ppm sulphur petrol. There are not likely to be major issues for new technology petrol vehicles, such as Euro 4, which arrive in New Zealand before 2008. At present whilst 150ppm sulphur petrol is required, New Zealand petrol generally has lower sulphur levels - generally below 100ppm sulphur and often below 50ppm sulphur.

Why are the proposed changes to sulphur levels not being introduced earlier?

Reliable local and regional supplies of petrol and diesel to meet the 2008 and 2009 sulphur limits are needed to ensure secure fuel supply and reduce the likelihood of significant fuel price increases for New Zealand consumers.

The timing of the 2008 and 2009 and later requirements takes into account the timing for refineries in the Asia-Pacific region and the New Zealand Refinery Company at Marsden Point, to upgrade to produce suitable fuel.

Why not move to 10ppm sulphur petrol immediately instead of 50ppm?

Many of the countries from which New Zealand imports petrol have not yet indicated when they will be requiring 10ppm sulphur petrol for domestic use or when the refineries will be producing 10ppm sulphur petrol.

The Government remains committed to the introduction of zero sulphur petrol in line with regional trends. Over the next few years the Government intends to monitor developments of fuel quality and emissions standards before deciding on a suitable date for requiring 10ppm sulphur petrol.

What will be the impact of the changes on vehicles?

The changes will enable the use of new and emerging vehicle technologies from other countries, including Europe and Japan. There are not expected to be any petrol vehicle operability issues from lower sulphur levels in petrol.

Reducing sulphur levels in diesel since 2002 has reduced the aromatic content of diesel and this has had an adverse effect on the rubber seals located in some older fuel injection pumps in diesel vehicles.

The aromatic content of diesel is now low, so the reduction of the diesel sulphur limit to 10ppm in 2009 is not expected to greatly affect aromatic levels. Little impact on seals is therefore expected as a result of a transition to 10ppm sulphur diesel.

The government will coordinate a public information campaign in advance of the introduction of 10ppm sulphur diesel to inform consumers of the change.

How will the proposed sulphur levels compare with international standards?

The proposed sulphur limits will align to a large extent with changes made, or being made in the European Union, Australia and some countries in Asia-Pacific.

Will the changes to sulphur levels lead to increased fuel costs for consumers?

The costs to refineries to produce these lower sulphur fuels are slightly higher (about 0.5 cents/litre higher than the costs of producing the present 50ppm sulphur diesel and 150pm sulphur petrol), so these small changes in price will potentially be reflected in the retail price of fuel.

Timing the changes made to New Zealand’s sulphur limits to match changes made in other countries will help to ensure that there are no significant cost increases due to refining capacity for these fuels.

The use of reduced sulphur fuels will result in reduced harmful emissions from the New Zealand vehicle fleet, with improvements in air quality and related health impacts. The benefits to society are expected to balance any small changes in the retail fuel price resulting from the changes to the regulated sulphur levels.

What is the Diesel Filter Blocking Tendency test?

The Filter Blocking Tendency (FBT) test measures the filterability of diesel, in order to ascertain what effect a fuel will have on a vehicle filter’s life.

Filterability is a measure of how well diesel flows through an engine filter, and is therefore an important component of overall diesel quality.

Why is the requirement for Diesel Filter Blocking Tendency changing?

In 2002, the regulations set down two internationally approved methods for testing diesel filter blocking tendency, and set a 2.5 maximum limit. However, given some uncertainty at the time around the performance of the test methods available and the chosen limit, this maximum limit was described in the regulations as ‘indicative for monitoring purposes’, meaning that oil supply companies did not have to strictly comply with the limit. Instead, oil supply companies had to meet a broader test that diesel ‘must be of acceptable filterability so that it is fit for common purposes’. This type of standard is common in consumer protection legislation. The regulations also included a requirement that the specification be reviewed by the end of 2006.

Since 2002, the oil supply companies have applied the diesel filter blocking tendency test methods and have researched other test methods, with the result that fuel of acceptable filterability has been supplied to New Zealand diesel users. Industry experience with the test indicates that the test methods listed in the regulations are the most suitable tests available.

Following the review this year, the “indicative” numerical limit of 2.5 maximum can now be confirmed as a suitable safeguard for vehicles and allows for flexibility in supplying diesel.

The Government proposes retaining the diesel filter blocking tendency specification as a regulatory requirement. This necessitates the removal of the ‘indicative for monitoring purposes’ term. This means that the diesel delivered to retail customers will have to comply with the 2.5 maximum and the requirement to be of ‘acceptable filterability so that it is fit for common purposes’.

Why is the manganese limit for petrol staying the same until 2010?

The review of the petrol manganese limits in the regulations has been postponed until 2010. It is expected that by 2010, other international reviews will provide sufficient information on the vehicle and health impacts of manganese in petrol. This information can be used to inform the New Zealand review.

Until then, the present petrol manganese limit of 2.0 mg/l maximum in the regulations will continue to apply to both Premium and Regular petrol.

ENDS

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