1 “The experience of India on producing cleaner fuels” by Dr. AA Gupta - IndianOil & NS Murthy - Reliance Industries Ltd. 23 rd May 2006 Regional Workshop, ADB, Manila Developing Fuel Quality Roadmaps in Asia

2 Clean Fuels Initiatives - India 1.Glimpse of Oil Sector in India 2.Indian Clean Air Programme 3.Clean Fuels – Experiences 4.Clean Fuels - Redefined 5.Road Ahead

3 Glimpse of Oil Sector in India

4 HPCL Vizag BRPL Haldia Barauni Panipat Mathura RIL, JN HPCL,BBY Digboi Guwahati NRL BPCL, BBY KRL CPCL, Chennai CPCL, CB MRPL, ONGC Vadodara ONGC, Hz Operating Refineries in India 18 operating refineries & 6 more coming up.

5 Indian Refineries Of the refining capacity of 126MMTPA, IOC & RIL share nearly 60%.

6 Fuel logistics Scenario in India Surplus / (Deficit) – Y 2003/04 Diesel MMTPA. Gasoline MMTPA. LPG - (2.18) MMTPA Kerosene - Nil (after stopping import by parallel Mkt) ATF MMTPA Gasoline & Diesel remain surplus for next 10 years while LPG & Natural Gas continue to be deficit. Surplus Gasoline and Diesel push quality competitiveness. Source: Petrofed

7 Indian Clean Air Programme

8 Air Quality Standards in India  In Indian context CO pollution, Particulate (PM 10, PM 2.5 & PM 0. 1 ) and NOx (in select cities) are areas of concern. Internationally concerns are raised about ground level Ozone, Benzene & other air toxins such as 1,3 butadiene, aldehydes, alkenes, etc. Each nation devices & adopts a balanced approach for BAQ.

9 Ambient air quality – Factors involved – an integrated approach pays rich benefits for the cost spent Ambient air quality I & M practices Traffic Mgt & Road Maint. Point emission & Construction activities Product Quality Assurance Trans-border issues Tail pipe devices Enforce PUC Vehicle Tech & retiring Adulteration menace

10 Stakeholders in Auto Oil Program & AAQ Growing awareness in India for BAQ amongst key stakeholders Vehicle owners Transport sector NGO Academia Judiciary Agriculture sector such as sugar IP: GOI-MOP&NG, MOI,MOST, MOEF, CPCB, MOCA, BIS, ARAI, NEERI, IICT, etc. State Govts & PUC Implementing Departments OEMs & Garages Oil Companies For the health of common man on the kerb-side

11 I CAP – Mission Right combination of technology & fuel to combat auto emissions. 1.Conduct a scientific ambient air quality study in metros involving source identification, emission factors generation and apportionment thru modeling. 2.Provide a cost benefit solution for BAQ considering issues like ‘in use vehicles’, I&M practices, traffic mgt, product quality assurance, developments in Tail Pipe devices, etc. 3.Set road map starting with least cost but max returns.

12 Clean Fuels – Experiences

13 Worldwide – Diesel Quality Source - IFQC Despite WWFC effort, there is variance in approach to fuel quality

14 Diesel Quality – Stakeholders’ needs CN of 51 min is for high speed LCV running in Euro Autobahn. For heavy duty vehicles, NCWM (National Conference of Weights and Measures) specified 47CN Min. EMA recommended CN of 50min. Assessment of ‘Right Quality’ calls for a balanced approach. 1.Excellent Lubricity to enhance life of fuel pump & engine parts. 2.Very Good fuel stability with least deposit formation tendency. 3.Better fuel filter performance. 4.Min viscosity limit to minimize / eliminate drip from injector. 5.Best fuel economy, acceptable emissions. 6.Lowest sulphur for longevity of tail pipe devices. 7.Lowest delivered cost to consumers.

15 1.India spends 26$ Billion / yr on diesel alone. 2.With Bharat III (similar to Euro III) grade in 13 metros, India spends additionally ~ 150MM$/yr on account of control spec of T95% in BS III. Diesel Quality Change - India Cost of HSD Quality change - Did it provide the AQ benefits?

16 LCV – PM Vs Diesel grades Vs Technology Source - ARAI Technology plays a key role in abating vehicular emission.. Euro II 0.08 gm/km Euro III 0.05 gm/km Euro IV gm/km

17 Euro IV 0.03 gm/Kwh HCV – PM Vs Diesel grades Vs Technology Source - ARAI Technology plays a key role in abating vehicular emission.. Euro II 0.15 gm/km Euro III 0.10 gm/km Euro IV 0.02 gm/km

18 Diesel Effects on Emissions - Summary Heavy Duty (Euro 2 / 3) Fuel ChangeCO HCNOxPM Reduce Density Reduce Poly-aromatics Reduce T90/95 Reduce Sulphur 0/ 0 / implies conflicting results (dependent on engine technology) T95% has no impact on PM. However, it impacts diesel production. Source - Shell

19 Worldwide - Gasoline Quality ** Taiwan follows emission models to allow refiners to choose limits on olefins and aromatics. Japan does not have olefins or aromatics spec. and intends to meet emission norms with tail pipe & technology combination Despite WWFC effort, there is variance in approach to fuel quality.

20 Gasoline Quality – Stakeholders’ needs India mandated deposits control thru use of EPA regd additives. 1.Deposit Control (IVD, PFI, CCD, Carburetor rating, etc.) 2.Fuel Economy, better acceleration & Acceptable emissions. 3.Longer life of tail pipe cat. 4.Enhanced Engine / Component Life. 5.Lowest Delivered cost to consumers

21 Gasoline vehicles (2W) Emission test -HC No significant impact by Fuel. 2W technology near static till 2000.

22 Gasoline vehicles (2W) Emission test -CO No significant impact by Fuel. 2W technology near static till 2000.

23 Emission test – Cal. Fuel Economy Need to work on higher fuel efficiency vehicles to reduce GHG.

24 Gasoline Effects on Emission - Summary catalyst carsnon catalyst cars Fuel Change HC Exhaust. Evapn CONOxBenzene Add oxygenate Reduce aromatics Reduce Olefins ReduceSulphur Reduce RVP Source: Shell

25 Clean Fuels - Redefined

26 Clean Fuels - Redefined 1.Voice of stakeholders 2.Lessons learnt 3.Technological advancements 4.Product / Market segmentation approach

27 Vehicle Owners / Engine Operators Mostly unorganized barring STUs, Fleet operators, etc. Issues are:- Cost of fuel and mileage sole concerns No serious attention to vehicular emission - in-use vehicles. Depend ‘next door garages’ for I & M needs. Perception on fuel adulteration is high though reducing. Restrained mobility arising from two fuel policy in India. There is “Quality overkill’ in some sectors. Oil companies on most occasions address all these issues

28 OEMs ‘One Nation One Fuel’ and or ensure right fuel to sustain mobility The issues are: - Engine warranty Vs ‘Right fuel’ availability / Adulteration No firm vehicle retiring policy Auto Garages – Consistency in Quality Output Mismatch in auto fuel quality, which is neither on European nor Japanese model. Reliability of tail pipe devices & synergy thereof with engine technology to combat auto emission.

29 Oil Companies Forums like I CAP, BIS and SIAM / Petrofed to lead the nation The issues are: - Mounting fuel bill and the need to innovate and supply ‘right fuels’ for appropriate end applications. Wrath of unpleasant intervention by judicial and other lobbies – In the process put on reactive mode. Tamper proof system of delivery to Retails and ability to demonstrate at forecourt. Lopsided subsidies in fuels failing to reflect true cost to nation.

30 Vehicle technology impact is substantial than fuel quality. Lessons Learnt - Factors on AAQ Future Scenario Modeling - NZ IPIECA study % reduction in mobile emissions VEHICLES ONLYFUELS ONLYTRAFFIC MANAGEMENT VEHICLES & FUELS PMNOxCOVOC 0

31 Effect of Sulphur change – Diesel vehicles StudyVehicle Technology Sulfur Range (ppm) Emissions Reduction, % (high to low sulfur) HighLowHCCONOx AQIRPTier EPEFEStage (52*) 9 (43*) 10 (20*) AAMA/AIAM LEV & ULEV * Reduction achieved during hot EUDC (extra-urban) portion of test.

32 Lessons Learnt - Gasoline Deposit Control Right MFA and not base gasoline quality helps to reduce deposits.

33 Briefly, as far as history of the EU gasoline olefins spec is concerned, the EPEFE study, basis for EU Auto/Oil 1, did not investigate olefins effects as, at the time, this was not considered to be of sufficient priority - the emphasis was on aromatics, E100 and sulphur. Auto industry, however insisted on its inclusion into the air quality modeling stage, the argument put forward was that higher olefins were linked to higher NOx and hence higher ozone. The data for this came from the earlier US Auto/Oil (AQIRP) programme and was questionable, being based predominantly from non-catalyst vehicles or ones fitted only with Oxycats (no three-way catalyst vehicles - thus different from all the EPEFE data). Despite all this, politics prevailed & EU ended up with an olefins spec. Olefins Spec – EU story

34 Cat devices reduce exhaust emission-NOx Tail pipe devices facilitate Euro II engine / vehicle technology with Euro II gasoline to comply with Euro III norms. Source: Mico

35 ‘Right Fuel’ Campaign Diesel Urgency to differentiate diesel for on road & off road applications. Source - Petrofed

36 Proposed Roadmap on Fuel Segmentation Oil companies could ensure control in supply chain to reach right product to appropriate market.

37 Clean Fuels Redefined In short, there is a need to harness technology advancements in tail pipe devices, segment the market to use appropriate fuels and ‘twig’ the fuels to create “win – win” situations in combating air quality issues.

38 Road Ahead

39 Diesel Fuel Quality - Proposed AttributesUnit CurrentBharat III To be for Metros Densitykg/cum – 860 ## T95% recoverydeg C370max360max370 ## Sulphurppm ^^ Cetane Number-48 min51 min48 min ## Adopt group average concept too. ^^ Encourage voluntary reduction by oil companies to help installation of tail pipe devices in older technology in-use vehicles.

40 Gasoline Fuel Quality - Proposed AttributeUnit CurrentEuro III To be for Metros  Sulphurppm m500/150150<50  Benzene % vol max 1 & 311  Aromatics%vol max no spec42No spec  Olefins%vol max no spec18 /21No spec  Ethanol %vol max 5 OptionalOptional Also, there is need to harmonize gasoline spec on BS II & BS III with respect to density & distillation. Mandate tail pipe devices thru retrofit in metros.

41 Forward path: Critically examine Japanese Model including FQMs for appropriate inputs. For Sustainable Mobility (safe and environment friendly transport solutions) right fuel availability across India is a must. Mandate installation of tail pipe devices on all in-use vehicles plying in hot spots. Segment fuels based on market needs and encourage retrofits in reducing exhaust emissions. Emphasis only on induction of fuel efficient vehicles from 2007.

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43 Emission Norms Emission norms for off road applications are different.

44 Vehicular Emission Euro Norms

45 Emission norms (2W) Figs in gm/KM Indian two wheeler emission norms tougher than Europe and it is possible only due to perhaps better technology and use of tail pipe catalyst devices.

46 India’s growth forecast India is a fast growing economy in the region

47 India’s Energy needs – A profile Oil to continue the dominant role to fulfill India’s energy need

48 Crude Oil Geographical Production Source Petrofed India imports Crude oil ~ 70+MMTPA, this will be 140MTPA by Figs MMTPA Total 33.38MMTPA

49 Natural Gas Recoverable Reserves Source Petrofed Figs TCF Total = TCF = 1163 MMTOE Considering R/P ratio of gas reserves, Oil dependence to continue

50 Vehicular Emission Norms: Road Map CoveragePassenger cars, LCV, and Heavy duty vehicles 2/3 wheelers Entire Country Bharat II – Euro III equivalent – Euro III equivalent* – preferably from but not later than Major Cities: (Delhi, Mumbai, Kolkata, Chennai, Pune, Hydrabad, Surat, Kanpur, Ahmedabad, Bangalore, Agra, Sholapur & Lucknow) Bharat II Euro III equivalent Euro IV Equivalent* – *The schedules would be reviewed in end 2006 No forward path given for in-use vehicles as well retiring policy

51 Cat devices reduce tail pipe emission - HC Tail pipe devices facilitate Euro II engine / vehicle technology with Euro II gasoline to comply with Euro III norms. Source: Mico

52 Cat devices reduce tail pipe emission - CO Tail pipe devices facilitate Euro II engine / vehicle technology with Euro II gasoline to comply with Euro IV norms. Source: Mico

53 Emission test –Total Aldehyde (2W) Aldehyde showed increase with Ethanol in blend.