CRC study indicates problems with E15

▪ CRC study indicates problems with E15

Automakers and oil companies stepped up their campaign against gasoline blended with ethanol, releasing a study on February 1 that showed that the fuel containing 15% ethanol could cause cars to break down on the road.

Ethanol makers, who are facing growing political obstacles, said the study was flawed and that the problems identified in the study might be tied to car components, not the fuel itself.

So far, only a handful of gas stations in the United States offer E15, a gasoline that contains 15% ethanol instead of the standard 10%. Ethanol makers successfully pushed for government approval of E15 and have been seeking wider adoption, but they have run into skepticism.

A study by the Coordinating Research Council (CRC)–a group backed by Ford Motor Co., Honda Motor Co. and Toyota Motor Corp., among others–said testing showed that E15 could cause erratic fuel gauge readings and check-engine alerts. The tests involved fuel pumps and gas tank sensors used in five popular models, including the 2004 Ford Ranger and 2007 Nissan Altima, CRC said.

In worst-case scenarios, the ethanol caused components to swell and, "could result in breakdowns that leave consumers stranded on busy roads and highways," said Robert Greco, a director with the American Petroleum Institute (API), which is also a member of the CRC.

Greco said a fuel-pump component in at least one test either froze or broke apart, preventing gasoline from reaching the engine.

Growth Energy, a pro-ethanol group, said oil companies and automakers had a political agenda and were cherry-picking data. "Today's study is no surprise," said Tom Buis, the group's chief executive. "Oil companies are desperate to prevent the use of higher blends of renewable fuels." (February 2, 2013)

▪ New Chinese emission standards come with huge price tag

Beijing will become the first city in China to ban registration of petrol vehicles that fall below the new National V emission standard.

China's State Council said the new requirement would be extended to the whole country by 2017.

China's National V standard was lifted from Europe's Euro V emission standards, which requires the fuel sulfur content to be no more than 10 parts per million (ppm), as compared to 50 ppm for the National IV standard.

The new emission standards take effect on March 1, 2013.

While the technology required for the upgrade posed few challenges to foreign carmakers, the extra costs involved to meet this new more stringent standard, which is estimated at 2,000 yuan (US$319) per car, could pose a bigger burden for local carmakers.

According to a list of car models compliant with the BJ V emission standard from Beijing's Environmental Protection Bureau, 33% are imported models and 40% are locally made foreign models. Only 27% are local models.

Geely Automobile's Executive Director Lawrence Ang said the mainland carmaker was much more prepared for the upgrade this time than when the Pearl River Delta and major cities like Beijing and Shanghai raised their emission standards to National IV from National III.

"Now most of our cars are priced in the area of 100,000 yuan (US$15,900). That makes the additional costs of 2,000 yuan (US$319) per car much less significant than the last upgrade when most of our cars were priced at around 30,000 yuan (US$4,788)," he said. (February 25, 2013)`

▪ India to subsidize electric and hybrid vehicle sales

The Indian government has made another move to encourage sales of electric and hybrid vehicles by providing in the next fiscal year subsidies of up to Rs 1.5 lakh (US$2,700) for cars and Rs 50,000 (US$929) for two wheelers, according to government sources.

The move comes ahead of Prime Minister Manmohan Singh's unveiling of the National Mission Plan for Electric and Hybrid vehicles on January 9. The plan had been originally announced in the 2011 budget.

In a subsidy scheme announced in November 2010, the government made available a corpus of Rs 95 crore (US$18 million) to provide up to a 20% incentive on ex-factory prices of vehicles, subject to maximum limits of Rs 4,000 (US$74) for low-speed electric two-wheelers, Rs 5,000 (US$93) for high-speed electric two-wheelers, and Rs1 lakh (US$1,900) for electric cars, provided the vehicles had a minimum of 30% parts made in India. Under the scheme, the benefits would be passed on by the manufacturer to the customers, who would later claim a refund from the government. Electric vehicles sold in India in 2011-2012 totaled around 130,000 units, according to the Society of Manufacturers of Electric Vehicles lobby group.

India is prepared to spend at least Rs 22,500 crore (US$4.2 billion) over the next eight years to promote electric and hybrid vehicles, with the government providing Rs.13,000- 14,000 crore (US$2.4-2.6 billion) in subsidies. The remaining amount will be invested by the auto industry in research and development to reduce dependence on fossil fuels.

A government announcement previously released says that India hopes to have seven million electric vehicles on the road by 2020. In the next fiscal year, the government expects sales of electric two-wheelers to increase to 120,000 units and cars to 12,000 units. (January 4, 2013)

▪ Indian PM stresses need to curb energy subsidies

Indian Prime Minister Manmohan Singh has spoken on the need to curb energy subsidies. While at the laying of the cornerstone for the Rs 20,000 crore (US$3.6 billion) Integrated Expansion Project of the Bharat Petroleum Corp., the prime minister explained that, "Energy remains underpriced in our country, with coal, petroleum products and natural gas prices well below international prices. To meet our target of rapid, inclusive and sustainable development, we must undertake a phased rationalization of energy prices to bring them in line with global prices. The Central and the State government must work together to create awareness in the public on the need for curbing energy subsidies." (January 7, 2013)

▪ EIA expects global fuel consumption to accelerate through 2014

The U.S.-based Energy Information Administration (EIA) has released data which suggest that global fuel consumption will continue to accelerate through 2014. Although EIA expects oil markets to tighten in the first quarter of 2013, it is likely that the increasing global supply will offset higher consumption. In 2013, world supply is expected to increase by 1.1 million barrels per day (bpd), and 1.4 million bpd in 2014. Growth in 2012 reached 0.9 million bpd, with a total production of 89.2 million bpd.

EIA attributes a significant portion of this growth to China's strengthening economy, "as key manufacturing indexes and refinery crude oil inputs have increased." The agency estimates that fuel consumption in China alone increased by 380,000 bpd in 2012, and is likely to reach 450,000 bpd and 470,000 bpd in 2013 and 2014, respectively.

Such predictions seem more and more likely as the International Energy Agency (IEA) expects China's production to double in 2015. According to Fatih Birol, chief economist at the IEA, "China is set to become a major producing country outside of its borders." Since 2009, Chinese national oil companies have spent US$92 billion acquiring oil and gas assets overseas. (February 12, 2013)

▪ Singapore study shows that buying fuel-efficient cars are worth the extra cost

A study by Singapore's Ministry of Trade and Industry revealed that residents could save SG$536 (US$432) on fuel costs within five years when they switch to more fuel-efficient cars.

The study estimated that car buyers spend 0.6% more for every 10% improvement in fuel efficiency. The government study showed that the higher price tag can be recovered within five years.

Singapore car buyers have a strong incentive to switch to more fuel-efficient models. In January, Singapore launched a new Carbon Emissions-based Vehicle Scheme (CEVS), which qualifies buyers for rebates from S$5,000 (US$4,040) up to SG$20,000 (US$16,163) of cars that emit no more than 160g/km of carbon dioxide (CO2). The rebates will be offset against the Additional Registration Fee (ARF).

The CEVS will apply to all new cars, taxis and newly imported used cars registered from January 2013.

The CEVS adopts a broader outcome-based approach that takes into consideration vehicles' carbon emissions and fuel efficiency to encourage consumers to shift to low emission models. It replaces the Green Vehicle Rebate for cars and taxis based on specific engine types, which expired in December 2012.

Using a statistical model that filters out various other attributes that might influence a vehicle's price, the study found that the CEVS boosts the return on investing in a fuel-efficient car by almost 10 times.

However, car dealers said that the rebate works out to be less in reality; the tax cut translates to a smaller scrap value when the vehicle is finally de-registered. (February 28, 2013)

▪ New information highlights dangers of air pollution

Although China has been at the forefront of air quality discussions as of late, they are not the only country facing such issues. Tehran, for example has had pollution levels reach "suicide" levels within the last year. It is estimated that as many as 4,460 people have died within a one year period as a result of air pollution. Yousef Rashidi, director of Tehran's air quality monitoring services, estimates that cars contribute up to 80 percent of the city's air pollution. Rashidi did not attribute this to low-quality fuel however; as he believes that the vehicles' combustion systems are to blame.

Kabul is another example of the dire situation; the Afghanistan government estimates that air pollution causes over 3,000 deaths a year, almost as many deaths caused by military conflict. There are a number of contributing factors, including vehicles running on leaded gasoline with outdated exhaust systems. Overcrowding has also become the focus of concern, as Kabul is currently home to around five million people. According to Ghulam Mohammed Malikyar, a senior adviser at Afghanistan's Environmental Protection Agency, "Kabul is built for maximum one million population. The geographical limitation – it is a very, very limited city in a mountainous area." Compounding the overcrowding problem is the fact that many people use diesel generators to power their homes, and those who can't afford generators will sometimes turn to tires, plastic bags and other garbage as fuel. Kabul has begun to address these issues in a number of ways, most notable of which is the installation of air-quality monitoring systems throughout the city,

According to a study conducted via satellite imagery by Tel Aviv University, some cities in India saw double-digit increases in air pollution. Bangalore, Pune Mumbai and Nagpur were among the worst with around a 30% increase in pollution levels.

A study released by The Lancet, a major contributor to health and medical media coverage worldwide, found that 3.2 million deaths in 2010 were attributable to air pollution; two-thirds of those deaths occurred in Asia. (March 3, 2013)

▪ China Implements First Car Air Quality Assessment Guide

On March 1st of this year, China's first Passenger Car Air Quality Assessment Guide officially took effect. The guide can serve as a reference for those wishing to file lawsuits against manufacturers on the grounds of poor air quality. The lack of access to information regarding acceptable standards has traditionally put consumers looking to take action at a disadvantage.

The guide is meant to provide consumers with pertinent information about the safe levels for chemicals inside a car. Formaldehyde, for example has an acceptable level of 0.10 milligrams per square meter, and some cars have had levels exceeding 70 milligrams. Other chemicals of concern include: benzene, toluene, xylene, ethylbenzene, styrene, formaldehyde, acetaldehyde, acrolein and other volatile organic concentrations.

According to Professor Ge Yunshan, who helped draft the new guidelines, "A large deal of pollution comes from automobile interiors, from places such as seats, dashboards and carpets, as well as from the glues and other materials used [in the interiors]." While the guidelines are certainly a step in the right direction, as well as a boon for consumer-protection, they are not legally binding. (March 1, 2013)

▪ China's MEP implements new emission standards

All gasoline-powered vehicles manufactured in, exported to and sold in China will be required to meet the new Fifth National Emission Standards beginning January 1, the Guangzhou Daily reported, citing an announcement made by China's Ministry of Environmental Protection (MEP).

Manufacturers are required to submit a report to the government on their vehicle production; MEP will issue certificates for vehicles that have passed emissions testing. Manufacturers are also required to have in place management systems that ensure that production sites, including for vehicles and auto parts, meet China's environmental standards.

The MEP said it will take extra measures to ensure that periodic inspection work is done to the highest standard. If vehicles inspected fail to meet emission standards, manufacturers will be given a grace period to fix the problem, after which, their license will be revoked. The MEP added that its regional offices will strictly enforce these new emission standards. (March 1, 2013)

▪ Thailand to tax vehicles based on CO2 emissions by 2016

The Thai government will start taxing vehicles based on carbon dioxide (CO2) emissions rather than engine sizes from January 1, 2016.

The new excise tax structure is divided into seven types according to vehicle type. Currently, cars with engine sizes not exceeding 2,000 cubic centimeters (cc) and 3,000 cc are taxed at 30% to 50%, while hybrid-electric cars not exceeding 3,000 cc are taxed at 10%.

A 30% excise tax will be applied to sedans and vehicles with no more than 10 seats, with a cylinder capacity of no more than 3,000 cc and CO2 emissions of no more than 150 grams/kilometer (g/km). A 35% tax will be levied if vehicular emissions are 150-200 g/km and 40% if emissions are more than 200 g/km.

A 25% tax will be levied on automobiles using E85 and natural gas, with a cylinder capacity of no more than 3,000 cc and CO2 emissions of no more than 150 g/km. A 30% tax will be applied if the CO2 emissions is between 150-200 g/km and 35% if more than 200 g/km.

Hybrid cars with a cylinder capacity of no more than 3,000 cc and emitting no more than 100 g/km of CO2 will be taxed at 10%. The tax rate will rise to 20% if CO2 emissions go up to 100-150 g/km, 25% if emissions go up to 150-200 g/km and 30% if emissions are more than 200 g/km.

A 3% tax will be levied on pick-up trucks with no space behind the driver and with a cylinder capacity of no more than 3,250 cc, releasing no more than 200 g/km of CO2, and 5% if above 200 g/km.

Pick-up trucks with space behind the driver and with no more than 3,250 cc cylinder capacity and less than 200 g/km CO2 emissions will be taxed at 5%; above 200 g/km CO2 emissions, the tax will be at 7%.

Double cab pick-up trucks with no more than 3,250 cc cylinder capacity and less than 200 g/km CO2 emissions will be taxed at 12%, while those emitting above 200 g/km will be taxed at 15%.

Twenty-five percent will be levied on passenger pick-up trucks with a cylinder capacity of no more than 3,250 cc, releasing no more than 200 g/km CO2, and 30% if more than 200 g/km.

The Finance Ministry is expected to earn revenues of THB25 billion (US$813.8 million) from excise taxes in 2016. (March 1, 2013)

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