China to fast-track introduction of Phase 5 gasoline in major cities in 2015

China plans to fast-track the implementation of National Phase 5 emission standards for gasoline in several major cities and regions by end 2015, ahead of its 2018 national deadline, local media Wednesday quoted a senior official as saying.

The major cities and regions will include Beijing, Tianjin, Hebei province and cities in the Pearl River and Yangtze River deltas, the National Business Daily quoted the deputy director of the National Development and Reform Commission, Zhu Zhixin, as saying in a speech to the Chinese People's Political Consultative Conference in Beijing Tuesday.

"We would like to accelerate the oil product quality upgrading process in the major areas," Zhu was quoted as saying, adding that the cost of the upgrade would be borne jointly by the government, enterprises and consumers.

The move to fast-track the implementation of cleaner transport fuels is part of the government's efforts to combat serious air pollution in the country, market observers said.

"Air pollution in Beijing and the surrounding Hebei, Henan and Shandong provinces has reached very high levels, with the PM2.5 level [air quality gauge] seen surging past the US Embassy's maximum reading of 500 to nearly 900 some days, exerting much pressure on the government," one market source said.

China began implementing its Phase 4 emission standard for gasoline nationwide in January, with a deadline for Phase 4 gasoil to be adopted across the country by January 2015.

The country originally set a January 1, 2018, deadline for the Phase 5 standard to be implemented for both gasoline and diesel across the country.

However Beijing, Shanghai and eight cities in Jiangsu province began phasing in the supply of Phase 5 gasoline in 2013, market sources said.

China state-owned refineries were all said to have switched to supplying Phase 4 gasoline from January, but some independent refineries were said to be unable to meet the standard as they were operating outdated refining units, according to market sources in Shandong province.

To meet the Phase 5 requirement, state-owned refiner Sinopec plans to invest around Yuan 22.87 billion over 2013-2015 in emissions mitigation and environmental risk management, Platts reported earlier.

The NDRC last September said upgrading from Phase 3 standard gasoline and diesel to Phase 4 would raise prices by Yuan 290/mt ($47.34/mt) and Yuan 370/mt, respectively, while upgrading from Phase 4 to Phase 5 would add another Yuan 170/mt and Yuan 160/mt, respectively.

China's National Phase 5 emission standard is broadly equivalent to the Euro 5 emissions standard and caps the maximum sulfur content in gasoline and diesel at 10 ppm, while the Phase 4 standard caps the sulfur content in both products at 50 ppm. Under the Phase 3 standard, the sulfur content of gasoline and diesel are capped at 150 ppm and 350 ppm, respectively.