November 01, 2018

A Global Overview and Outlook of On-Road Diesel Quality, Vehicle Emissions and Fuel Efficiency

Stratas Advisors

This excerpt is from a report that is available to subscribers of Stratas Advisors’ Global Fuel Specifications service.

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The full report examines key developments in on-road diesel quality and vehicle emissions, including Stratas Advisors’ outlook for changes in diesel fuel quality and emission regulations. The report primarily focuses on issues surrounding sulfur, biodiesel, vehicle emissions and fuel efficiency. Although sulfur reduction remains the most dominant on-road diesel quality issue being addressed by governments and stakeholders globally, other properties such as cetane, density, lubricity, polyaromatics (PAH) and total aromatics are important in determining diesel quality.

Developing countries are in the process of lowering sulfur content in on-road diesel which is one of the pre-conditions for sales of cleaner diesel vehicles. Current maximum on-road diesel sulfur limits set worldwide still vary widely from 10 ppm to 10,000 ppm. However, the outlook is clear for sulfur reduction to 50 ppm, 15 ppm or 10 ppm within the next five years. Several developing countries are still struggling with funding and modernization of their local refineries resulting in delays of implementing lower sulfur limits for diesel fuel, which questions the initial timelines set for sulfur reduction. This is further discussed in two case studies on the Philippines and Southern Africa in the full report, where the successful implementation of 50 ppm sulfur diesel in the Philippines is likely to be backfired by the reintroduction of 500 ppm sulfur diesel due to inflation issues. On the other hand, the use and imports of 50 ppm sulfur diesel is likely to expand in Southern Africa due to pipeline expansions and wider distribution.

In addition, as demonstrated in a third case study on Brazil, higher blending biodiesel levels such as B15 are expected to have an impact on diesel engines and add costs to the industry.

In analyzing the trends in local, regional and global on-road diesel quality, Stratas Advisors compared the world’s top 10 on-road diesel markets (see table below). Saudi Arabia replaced Japan from last year’s report as the market with the 10th highest on-road diesel demand.

Top 10 On-Road Diesel Markets and Their Biodiesel Use

Rank No.

Country

2017 Demand*

(thousand b/d)

Biodiesel Blending Limit

Average Biodiesel Blend Level

HVO Use

(Y/N)

1

U.S.

2,704

B5

B4

Yes

2

China

2,212

B1

B0

No

3

India

1,137

B5

B0

No

4

Germany

723

B7

B7

Yes

5

Brazil

707

B10

B7

No

6

France

706

B8

B7

Yes

7

U.K.

504

B7

B3

No

8

Spain

466

B7

B3

Yes

9

Italy

456

B7

B7

Yes

10

Saudi Arabia

445

B0

B0

No

Note: * Volumes include biodiesel (as FAME, HVO, etc.) and GTL diesel where applicable.

Source: Stratas Advisors, September 2018

The full report also summarizes recent developments in emission standards and fuel efficiency for vehicles running on diesel, i.e., passenger cars (PC), light-duty vehicles (LDV) and heavy-duty vehicles (HDV). It is common knowledge that maximum benefits will be achieved when fuel quality requirements are implemented with stringent vehicle emissions regulations (which enable advanced emission-control technologies and would, in turn, help countries or regions achieve their air quality targets). This report shows governments in some countries have taken this systems approach, particularly with sulfur reduction. Others have not — or have not been able to do so in a coordinated time line — hampered by factors such as refinery-modernization costs, as noted in the companion report on gasoline, or high costs of importing diesel fuel of better quality. The full report includes a fourth case study looking at the challenges of diesel cars meeting the post-2020 CO2 emission targets in the EU.

 
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