‘The Power of the Consumer’ celebrates E10 repeal in Mexico

▪ ‘The Power of the Consumer’ celebrates E10 repeal in Mexico

El Poder del Consumidor (The Power of the Consumer), is a non-profit NGO that protects consumer rights in Mexico. On March 20, they issued a press release signed by multiple environmental NGOs celebrating the repeal of the 2017 modification to NOM-016 that allowed E10 in Mexico outside of the metropolitan zones and granted them a 1psi-vapor pressure (RVP) waiver, called a “permit to pollute” and established an uneven playing field for oxygenates in Mexico.

The organization published the following press release:

Closing the door on ethanol in 10% gasoline is a triumph for the environment and for the Mexican consumer

  • We recognize the effort of the SCJN to ensure the right to a healthy environment.
  • The update of the emission control standard for light vehicles is urgent.
  • We demand to improve the quality of gasoline.

Mexico City, March 18, 2021. – Today, March 18, expired the 180-day period established by the Energy Regulatory Commission (CRE) as the limit to commercialize gasoline in Mexico with a content of up to 10% of ethanol as an oxygenating agent.

This transition period was established as a result of the ruling of the Supreme Court of Justice of the Nation (SCJN) against the expansion of the limit of ethanol content as oxygen in gasoline, returning this to 5.8%.

The prohibitions on the use of ethanol in gasoline sold in the metropolitan areas of Mexico City, Monterrey and Guadalajara continue due to the multiple considerations of negative environmental impacts derived from the use of alcohol as an oxygenate for gasoline.

From the Citizen Observatory of Air Quality (OCCA) * we recognize the effort of the SCJN to ensure the right to a healthy environment, taking into account the principle of environmental precaution, and the procedure of the CRE in having attended the SCJN's ruling.

Despite restoring the original limit for ethanol as an oxygenate in gasoline, the introduction of ethanol in our country continues to present risks for various reasons: the lag of more than 16 years in the light vehicle emission control standard (NOM- 042-SEMARNAT-2003), the various air quality problems due to the formation of ozone in at least 30 cities and metropolitan areas of the country (which did not comply with NOM-020-SSA1-2014 in 2018) 2 and the type of volatility of gasoline distributed throughout the country throughout the year.

    Therefore, from the OCCA we ask the following:
  • The exclusion zone for the use of ethanol is extended to the megalopolitan region and to all cities and metropolitan areas that have not complied with NOM-020 on ozone.
  • Efforts to improve fuel quality continue:
    • Reduce the volatility of gasoline destined for cities and metropolitan areas with ozone problems in the hottest months.
    • Reduce the maximum sulfur content to 10 parts per million to be able to transition to the most advanced technologies in the control of light vehicle emissions.
  • NOM-042 is updated to adopt the most efficient emission control standards to reduce polluting emissions in light vehicles.

The resolution of the SCJN is in line with the recommendations of various federal and local, independent and government institutions, which have pointed out the negative impacts that ethanol has on air quality, among which the following stand out: the National Commission for Human Rights Human (CNDH), the National Institute for Ecology and Climate Change (INECC), the Mexican Petroleum Institute (IMP), the Ministry of the Environment and Natural Resources (Semarnat), the Ministry of the Environment of the City of Mexico (Sedema) and the Ministry of the Environment and Territorial Development of Jalisco (Semadet).

In addition to the health risks from the use of ethanol, there would be damages to consumers due to the damage it can cause in vehicles that are not designed to operate with ethanol-gasoline blends, coupled with the loss of power that this implies.

In the Regulatory Impact Analysis, a possible impact on more than 16.8 million vehicles was estimated due to the use of 10% ethanol and a total cost for these damages of more than $ 46 billion pesos.

The same document also calculates a cost of between $ 43 million and $ 72 million pesos for each Storage and Distribution Terminal (TAR) that has to be conditioned to store the ethanol-gasoline mixture.

▪ After pandemic, oil firms in South Africa even less willing to cover cost of clean fuel plan

After being hit by the pandemic, oil companies in South Africa are unlikely to upgrade refineries to cut sulphur emissions unless the government allows them to pass the costs on to consumers or offers other support, the South African Petroleum Industry Association (SAPIA) says. New rules requiring oil refineries in South Africa to cut diesel sulphur levels to 10 parts per million (ppm) had been due to come into effect in 2017 but have been postponed indefinitely due to a disagreement between the government and SAPIA, which represents oil majors, over who will cover the cost.

SAPIA has estimated that it would cost $3.9 billion for all refineries in the country to upgrade to meet the new rules. "In the current worldwide refining environment ... margins are hovering around zero and a large overhang of ... product is presently depressing prices," Avhapfani Tshifularo, executive director of SAPIA stated. "Investment in cleaner fuels in the absence of government support is unlikely to occur," he said. Pump prices are government-regulated in South Africa and talks with the government on how companies will recover the cost of investment in cleaner fuel are deadlocked.

Cutting diesel sulphur levels to 10 ppm would be in line with European rules. "Future investment will depend on clarity of the regulations guiding ... cost recovery," said a spokeswoman for Royal Dutch Shell, which operates South Africa's largest crude refinery, Sapref, in Durban in a 50/50 joint venture with BP. The pandemic, lower oil demand and pressure from investors to cut carbon emissions have forced oil majors to close some refineries around the world that were operating on very slim margins.

In 2006 South Africa, a net importer of petroleum products, banned lead from petrol and limited sulphur dioxide levels in diesel to 500 ppm, a six-fold decrease. Some refiners have reduced levels to 50 ppm. Still, according to the International Council on Clean Transportation, the health impact of exhaust emissions in South Africa has worsened in recent years. In 2015, there were 1,420 premature deaths linked to vehicle exhausts, a 6.5% uptick from 2010, a report by the council in 2019 showed.

In 2019, South Africa refined 70% of its 12.9 billion litres of diesel needs locally. Some refinery owners have suggested they could exit the domestic market, as the high costs of upgrading refineries to meet cleaner fuel specifications and a new carbon tax are among factors that weigh on capital expenditure projects. Environmentalists say it is unfair to expect consumers to pay for investment in cleaner fuel. "Why should the consumer pay for cleaner fuels when they (oil companies) have made huge profits at the expense of the people living next to the facilities and who have been affected with asthma, cancer and leukaemia for many years?" said Desmond D'Sa, coordinator of the South Durban Community Environmental Alliance. Durban is the hub of South Africa's petrochemical industry.

▪ IEA report: India to be largest source of energy demand growth to 2040

India will make up the biggest share of energy demand growth at 25% over the next two decades, as it overtakes the European Union as the world's third-biggest energy consumer by 2030, the International Energy Agency (IEA) said. India's energy consumption is expected to nearly double as the nation's gross domestic product (GDP) expands to an estimated $8.6 trillion by 2040 under its current national policy scenario, the IEA said in its India Energy Outlook 2021 released in early February 2021.

"This is underpinned by a rate of GDP growth that adds the equivalent of another Japan to the world economy by 2040," said the IEA, the energy agency and policy adviser for members of the Organisation for Economic Cooperation and Development. India's growing energy needs will make it more reliant on fossil fuel imports as its domestic oil and gas production has been stagnant for years despite government policies to promote petroleum exploration and production and renewable energy.

India's oil demand is expected to rise to 8.7 million barrels per day (bpd) in 2040 from about 5 million bpd in 2019, while its refining capacity will reach 6.4 million bpd by 2030 and 7.7 million bpd by 2040, from 5 million bpd. The world's second-biggest net oil importer after China currently imports about 76% of its crude oil needs. That reliance on overseas oil is expected to rise to 90% by 2030 and 92% by 2040, the IEA said. Rising oil demand could double India's oil import bill to about $181 billion by 2030 and nearly treble it to $255 billion by 2040 compared with 2019, the IEA said.

The world's fourth-largest LNG importer, which ships in about half of its natural gas needs by tanker currently, is spending billions of dollars to build infrastructure to boost use of the cleaner fuel. Liquefied natural gas (LNG) imports are expected to quadruple to 124 billion cubic metres (bcm), or about 61% of overall gas demand by 2040, IEA said. That would be up from imports of 76 bcm, or about 58% of gas consumption by 2030.

▪ Call for coherent EU policy on low-carbon liquid fuels

A growing number of policymakers, industrial sectors, and stakeholders in the European Union (EU) are calling for a coherent policy strategy for low-carbon liquid fuels where the various proposals to be published for each of the individual transport sectors will enable the deployment of a smart and sustainable mobility strategy.

On March 15, Messe Frankfurt, in cooperation with the Representation of the State of Hessen to the European Union, held an online event debating the need for the EU to launch a Low Carbon Liquid Fuels Strategy.

There was general consensus among speakers that a long-term strategy for low-carbon liquid fuels is required at the EU level to ensure the adoption of a coherent and comprehensive policy response to the challenge of decarbonising aviation, maritime and road transport and achieving EU’s climate neutrality ambitions.

Commissioner Adina-Ioana Vălean, European Commissioner for Transport, underlined the role of renewable and low carbon liquid fuels in achieving climate neutrality in aviation and maritime sector, and in transport in general. She added that to enable the scaling up of these fuels, the commission was setting up an Alliance for Renewable & Low Carbon Liquid Fuels Value Chain.

FuelsEurope Director General John Cooper welcomed the commissioner’s initiative and ensured the industry’s active cooperation. FuelsEurope represents the interest of 40 companies operating refineries in the EU. Members account for almost 100% of EU petroleum refining capacity and more than 75% of EU motor fuel retail sales. FuelsEurope, a division of the European Petroleum Refiners Association, is an international non-profit organisation based in Belgium.

“There is no silver bullet, no single technology, which will address the challenge of decarbonising the entire transport sector. While the deployment of electrification in light-duty road transport is progressing, renewable and low-carbon fuels represent a strategic and complementary solution,” he said.

Cooper underlined that the business case for investments in renewable fuels is more robust when the market is the combination of road, aviation, and maritime transport, and therefore the proposed alliance should include in its scope all three transport sectors.

Cooper also highlighted the use of low-carbon liquid fuels as transitional technology for cars and as a long term enduring solution for some trucks. Therefore there is a strategic reason to address needs in road transport with some low-carbon liquid fuels as well.

▪ BP reports 10% drop in overall emissions in 2020

According to a newswire published on NASDAQ, BP Plc's greenhouse gas emissions dropped 10% to around 374 million tonnes of carbon dioxide equivalent in 2020 from its oil fields to its clients' car exhausts, it said on Monday. BP includes emissions from the combustion of its products when its customers, for example motorists, use them - also known as Scope 3 emissions - but it excludes gases from oil products BP sells to customers but which it bought from other producers.

In contrast, BP's rival Royal Dutch Shell emitted 1.38 billion tonnes of planet-warming gases from the combustion of fuels it produces itself in addition to the oil products it sells but which are produced by other companies. BP runs around 20,000 retail fuel stations and its refined fuel sales fell over 11% to 5.3 million barrels per day last year as the coronavirus pandemic dampened demand. Shell owns 46,000 fuel retail stations, the world's biggest such portfolio.

European oil majors are planning to shift away from oil and gas to low-carbon energy, power trading and retail in order to reduce greenhouse gas emissions to net zero by mid-century, including the use of offsets for residual emissions.  

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