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Cleaner fuel pledge likely to lead to higher prices

6 February 2013
Sinopec, Asia’s biggest oil refiner, has pledged to supply cleaner oil products from next year in response to rising public concerns about air pollution in China. The company said it will build upgraded desulphurisation facilities in 12 refineries by the end of 2013 and will sell oil products that meet the national 4 standard for pollutant emissions.

China has no nationwide standard on sulphur content in petrol. Beijing is its only city to have adopted the national 5 standard, similar to the Euro V vehicle emissions standard, which caps sulphur content below 10 ppm (parts per million). Other developed regions, including Shanghai, Jiangsu and Zhejiang, use the national 4 standard, 50 ppm or below, while the rest of the country has adopted the national 3 standard, which allows the sulphur content in fuel to be as high as 150 ppm.

As has happened in the past, cleaner fuel is likely to lead to higher prices. Fuel rates are currently set by the National Development and Reform Commission. However, in March last year Xinhua reported that China will, in future, let oil companies set fuel prices according to guideline rates posted by the government as part of planned reforms.

Dense smog this winter in China’s central and eastern parts have led to a public outcry over air pollution. Fu Chengyu, board chairman of Sinopec, has admitted that oil refining companies were partly responsible for the smog.

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