EU refiners' fears

David Knott
London
[email protected]

European refiners fear that proposals by the European Commission (EC) to tighten fuel specifications are going to be made stricter still, unfairly.

In 1996, Europe's downstream industry helped develop, under a program called Auto-Oil 1, a set of measures for reducing carbon monoxide, nitrogen oxides, and volatile organic compounds emissions.

New fuel specifications were intended to reduce these air pollutants by 60-70% from current levels by 2010 and would require Europe's oil companies to invest $9 billion by 2000 (OGJ, July 22, 1996, p. 22).

At the time, the EC recognized that still more tightening of fuel specifications would be required by 2005 to meet further anticipated anti-pollution measures.

These are currently being debated by the EC and oil and auto industries under a program called Auto-Oil 2. The three parties are expected to publish their conclusions in mid-1999.

But a Finnish Member of the European Parliament (MEP) has riled the oil industry by proposing tightened specifications in the draft directive based on Auto-Oil 1, due for debate in the European Parliament starting Feb. 16.

Hautala's proposals

Heidi Hautala, a member of EC's Green Group of MEPs, has produced a draft directive for debate containing lowered permissible pollutant levels.

Hautala proposes setting the sulfur content maximum for gasoline at 50 ppm, compared with 150 ppm in the earlier draft backed by the European Council.

Other gasoline figures have also been lowered in the draft: a 35 vol % maximum for aromatics compared with 42 vol %, and a 14 vol % maximum for olefins compared with 18 vol %.

For diesel fuel, Hautala proposes introducing two fuel grades, with maximum sulfur contents of 50 and 200 ppm, compared with 350 ppm as proposed under Auto-Oil 1. Similarly, maximum aromatics content would be reduced to 6 vol % from 11 vol %.

European Petroleum Industry Association (Europia) contends that refiners would have to spend a total 50 billion ecus ($49.5 billion) to meet Hautala's proposals, compared with 20 billion ecus ($19.8 billion) for the earlier plan.

Refiners' fear

Michel Flohic, deputy secretary general of Europia, said, "Our fear is that, if Mrs. Hautala's proposals are followed, the cost to the refining industry would be increased by a large amount with little impact on air quality."

Flohic said an analysis of additional costs to meet Hautala's proposal shows that almost two thirds of spending would be required in southern Europe, with other EU countries providing the bulk of the rest and Scandinavia almost nothing.

"This kind of amendment would be totally unfair," said Flohic. "Mrs. Hautala wants to fix now limits for fuel specifications in 2005, rather than wait for Auto-Oil 2.

"Politically, she can't say she's against the Auto-Oil program. This way, she appears to be trying to support the second Auto-Oil program while seeking to limit it to an evaluation of alternative fuels."

Luckily for refiners, Hautala's proposals are likely to be watered down in passing through EU's byzantine regulatory procedures.

If Hautala's proposals are accepted by the majority of MEPs in February, said Flohic, there will follow a conciliation process: "Representatives of the European Parliament will have to negotiate what will become law. It is far too early to say what will be the outcome."