5
Energy and Fuels

Energy is playing a key role in the rapid development of China. Industrialization and growth of the country’s gross domestic product (GDP) depend heavily on the availability of affordable and reliable energy. The transportation sector is dependent on such energy as well. As incomes rise people generally seem to travel farther (Schafer, 1998). With the recent rise in per capita income in China, more people are able to afford cars and want the personal benefits that automobile ownership provides. As the automobile fleet grows, the demand for the fuels it needs and the supporting supply and distribution infrastructure for those fuels also will increase (see Chapters 3 and 4).

As shown in Table 5-1, today the Chinese use much less energy per capita than citizens of the member countries of the Organisation for Economic Co-operation and Development, or OECD (U.S. DOE, 1999). The average Chinese citizen, at 0.6 ton of oil equivalent (TOE)1 per capita per year, uses about 8 percent of the energy consumed by the average U.S. citizen and about 15 percent of the energy used by the average citizen of Japan or Germany. The high U.S. energy consumption is linked in part to the greater use of energy in the United States for transportation, which is linked in turn to lower population density. Globally, an average of 1.4 TOE per capita per year is consumed. The challenge, then, is how to pro-

1  

One ton of oil equivalent equals 40 million Btus (MBtu), 7.35 barrels (bbl) of oil equivalent, 0.96 kiloliters (kl) of oil equivalent, 11.8 megawatt hours (MWh), and 4.26 x 1010 joules (J).



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Personal Cars and China 5 Energy and Fuels Energy is playing a key role in the rapid development of China. Industrialization and growth of the country’s gross domestic product (GDP) depend heavily on the availability of affordable and reliable energy. The transportation sector is dependent on such energy as well. As incomes rise people generally seem to travel farther (Schafer, 1998). With the recent rise in per capita income in China, more people are able to afford cars and want the personal benefits that automobile ownership provides. As the automobile fleet grows, the demand for the fuels it needs and the supporting supply and distribution infrastructure for those fuels also will increase (see Chapters 3 and 4). As shown in Table 5-1, today the Chinese use much less energy per capita than citizens of the member countries of the Organisation for Economic Co-operation and Development, or OECD (U.S. DOE, 1999). The average Chinese citizen, at 0.6 ton of oil equivalent (TOE)1 per capita per year, uses about 8 percent of the energy consumed by the average U.S. citizen and about 15 percent of the energy used by the average citizen of Japan or Germany. The high U.S. energy consumption is linked in part to the greater use of energy in the United States for transportation, which is linked in turn to lower population density. Globally, an average of 1.4 TOE per capita per year is consumed. The challenge, then, is how to pro- 1   One ton of oil equivalent equals 40 million Btus (MBtu), 7.35 barrels (bbl) of oil equivalent, 0.96 kiloliters (kl) of oil equivalent, 11.8 megawatt hours (MWh), and 4.26 x 1010 joules (J).

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Personal Cars and China TABLE 5-1 Average per Capita Energy Use for Selected Countries, 1999 (tons of oil equivalent [TOE] per person per year) Country TOE/Person/Year Country TOE/Person/Year United States 8.0 Mexico 1.2 Canada 7.3 Brazil 0.7 Norway 5.5 China 0.6 Russia 4.2 India 0.3 Japan 4.0 Africa 0.14 Germany 4.0 Bangladesh 0.08 World average = 1.4 TOE/person/year   SOURCE: U.S. DOE (1999). vide a source of inexpensive energy to the developing countries as they seek to become more developed and yet remain mindful of concerns about excessive dependency on oil imports and the need to limit global greenhouse gas (GHG) emissions. From a strategic point of view, a shortage of domestic oil is a barrier to the development of an automotive industry. Motor vehicles in China consume 85 percent of the country’s gasoline output and 42 percent of its diesel output. In 1995 China’s demand for oil was 3.0 million barrels per day (mbd) or 147 million metric tons (MMT) per year, growing to 4.5 mbd (220 MMT) in 2000, and projected to reach 5.2 mbd (250 MMT) by 2005 (Chen, 2001). In 2000 imports of petroleum were 70 MMT, and an annual increase in imports of at least 10 MMT per year is anticipated in the short term. According to predictions, by 2010 China will need 270–310 MMT of crude oil per year (Yang et al., 1997). Unfortunately, the domestic supply will reach just 165–200 MMT per year, and the deficit of 105–110 MMT must be imported. The rapid growth in the vehicle sector is the primary force driving China’s rapid shift from being a net petroleum-exporting country to a net importer. This shift not only creates concerns about China’s energy security and balance of payments, but also increasingly strains China’s refinery sector, which traditionally has been largely able to provide the country’s own refined product needs, using a refining network set up for indigenous heavy, sweet crudes (Histon, 2001). A particular concern is the high sulfur content of imported crude oil compared with that of domestic crude. Because the Chinese refineries were built to process the relatively low-sulfur domestic crude, the available hydrodesulfurization capacity is limited. The quality of fuels is inextricably linked to the regulations for vehicle emissions performance. China has decided to follow the pollution control

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Personal Cars and China TABLE 5-2 European Union Fuel Specification Limits Petrol/Gasoline 2000 2005 Diesel 2000 2005 RVP summer kPa, max. 60 — Cetane number, min. 51 — Aromatics, % by vol. max. 42 35 Density 15oC kg/m3, max. 845 — Benzene, % by vol. max. 1 — Distillation 95% by vol. oC, max. 360 — Olefins, % by vol. max. 18 — Polyaromatics, % by vol. max. 11 — Oxygen, % by mass max. 2.7 — Sulfur, ppm max. 350 50 Sulfur, ppm 150 50       NOTE: Dashes signify that no changes to existing levels have yet been issued for implementation in 2005. RVP = Reid Vapor Pressure; kPa = kilopascals (1 atmosphere of pressure equals about 100 kPa); kg/m3 = kilograms per cubic meter; ppm = parts per million. SOURCE: Directive 98/70/EC of the European Parliament and of the Council of 13 October 1998, amending Council Directive 93/12/EEC. strategies of the European Union (EU), and so, as noted in Chapters 4 and 7, will upgrade its fuel quality, including further reductions in sulfur, to meet those emissions standards. Table 5-2 shows the fuel specification standards that are now in effect in the EU and that will be required for fuels sold in 2005. After an extensive consultation process, the European Union Commission initially proposed requiring the introduction of gasoline and diesel fuels with less sulfur than 10 parts per million (ppm) or 0.001 percent by mass as early as 2005, with a complete shift to these low-sulfur fuels by 2011.2 Because lower sulfur levels in gasoline and diesel fuel are preconditions for the introduction of advanced vehicle technologies that are able to comply with future European Emission Standard III 2   In November 2001 the European Parliament, in its first reading, called for a complete conversion to fuels with a maximum sulfur content of 10 ppm (0.001 percent by mass) by 2008, and in December the Council of Ministers decided on a “common position” of complete conversion by 2009. The issue has now gone back to the Parliament for its second reading.

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Personal Cars and China (Euro III) and Euro IV standards, China will have to substantially upgrade its refineries. (A more extensive discussion of the environmental implications of fuel quality is presented in Chapter 7.) In addition, the fuel efficiency of most Chinese cars today is poorer than that of cars of comparable weight and size in the industrialized countries. Unless fuel economy is improved in the future, even greater strains will be placed on the refinery sector. As noted in Chapter 3, China is anticipating at a minimum a threefold increase in its vehicle fleet, not including motorcycles, between 2002 and 2020. The automobile fleet in particular is expected to increase by a factor of between four and five within the same time period. Based on the vehicle characteristics in the tenth five-year plan, it is estimated that total fuel consumption will more than double by 2020 despite a gradual improvement in gasoline vehicle fuel efficiency and an increase in the use of more efficient diesel technology. Table 5-3 reveals the effects of both moderate and more aggressive attention to vehicle fuel economy over the period 2000–2015. Year 2000 is used as the base case. Case 1 assumes that starting in 2005 the fuel economy of all new gasoline-fueled cars and light trucks improves by 2 percent a year. Building on this, case 2 assumes that starting in model year 2010, a small fraction of highly efficient cars and light trucks, increasing by 5 percent a year, achieves fuel consumption of 80 miles per gallon (mpg). As illustrated, these fuel economy standards would start to reduce the growth in fuel consumption but would need several more years to have their full impact. Although the vehicles in the Chinese fleet today may be somewhat less efficient than those in the same size range in the U.S. fleet, the real inefficiency lies in the fuel wasted because of urban congestion. Such TABLE 5-3 Influences of Vehicle Efficiency Improvements on Future Fuel Consumption in China Assumptions 2000 2005 2010 2015 2020 Base case: Year 2000 trends continue 1.00 1.48 2.18 3.29 4.97 Case 1: Fuel economy of fleet improves at rate of 2% per year 1.00 1.47 2.14 3.13 4.49 Case 2: Same as above case, but with further addition of 80 mpg cars to the fleet at a rate of 5% of new cars per year 1.00 1.47 2.14 2.98 3.97 NOTE: Table shows ratio of fuel consumed in future to fuel consumed in 2000 for China’s light-duty vehicle fleet. Light-duty vehicles include light-duty trucks, light vans, and a variety of jeeps, lighter than 3.5 tons. SOURCE: Calculations by Michael P. Walsh.

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Personal Cars and China congestion may increase if the urban road infrastructure does not keep pace with the growth in the number of vehicles. The overall implication of this analysis is that improvements in vehicle efficiency will help reduce fuel demand as the Chinese car fleet expands over the coming decades, but even these improvements will not offset the increased use of petroleum. Smaller vehicles with lower average fuel consumption may reduce fuel consumption, but to succeed such vehicles will have to be attractive to Chinese customers. CHINA’S FUEL INDUSTRY Chinese crude oils have less naphtha, the feedstock for the catalytic reforming process, than most foreign crudes. Therefore, one feature of the Chinese petroleum refining industry is that its catalytic cracking capacity is much greater than its capacities for catalytic reforming and catalytic hydrotreating. The principal characteristics of Chinese gasoline are a high olefin and sulfur content; likewise, Chinese diesel fuel has a high sulfur content. Because environmental protection regulations have become stricter in recent years in China, the quality of Chinese fuels has improved markedly; the olefin content of gasoline and the sulfur content of diesel fuel have fallen. New, higher-quality gasoline and diesel fuel specifications are forthcoming. More broadly, China’s petroleum industry is becoming more open to foreign participation, and China’s accession to the World Trade Organization (WTO) will spur further changes. The China National Petroleum Corporation (CNPC), which produces about 64 percent of China’s crude, had signed more than $1 billion (RMB8.3 billion) in contracts with foreign countries by 1997, and these and more recent partnerships are accelerating domestic exploration and resulting in significant additions to reserves. However, because importation will require further contractual obligations, the CNPC has signed contracts of crude exploitation with countries such as Iraq, Kazakhstan, Sudan, Peru, and Venezuela. Petroleum Refining Industry CNPC and the China Petroleum and Chemical Corporation (SINOPEC) were established after a reorganization of the Chinese petroleum industry in 1998. Subsidiaries of both companies undertake crude oil exploration and production, as well as refining. China has a petroleum processing capacity of 250 MMT annually, which places it fourth in the world, after the United States, the former Soviet Union, and Japan. In 2000 China processed 202 MMT of crude oils, producing 41 MMT of gasoline and 70 MMT of diesel fuel, which met the current domestic demand.

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Personal Cars and China FIGURE 5-1 China’s annual crude oil production, consumption, and imports, 1991–2000. SOURCE: Chen (2001). SINOPEC’s crude oil runs account for 52 percent of the national total. Figure 5-1 shows the production, consumption, and importation rates for crude oil from 1991 to 2000. Figure 5-2 indicates that China’s production of diesel oil, and its growth rate, is higher than that for gasoline. From 1991 to 2000 the consumption of diesel fuel increased rapidly because of the higher numbers of light- and medium-duty diesel trucks and diesel agricultural vehicles and equipment. FIGURE 5-2 China’s production of gasoline and diesel fuel, 1991–2000. SOURCE: Ruan (2001).

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Personal Cars and China TABLE 5-4 China’s Refining Capacities Refining Process Capacity (thousand metric tons per year) Percent Distillation 249,450 100.0 Catalytic reforming 14,877 6.0 Catalytic cracking 87,655 35.1 Catalytic hydrocracking 12,920 5.2 Hydrorefining of residue 5,200 2.1 Hydrotreating 35,105 14.1 NOTE: The percentages shown are based on distillation capacity. SOURCE: Data collected by Qiu Yansheng, Research Institute of Petroleum Processing. China’s high catalytic cracking capacity constitutes 35 percent of its total distillation capacity (see Table 5-4). Table 5-4 also reveals that China has a smaller catalytic reforming capacity (6 percent) than that of the United States (18.7 percent ) because of the lower levels of naphtha in its domestic crude. Furthermore, China’s catalytic hydrocracking and catalytic hydrotreating capacities are not sufficient. As a result, at the moment China’s refining industry has a limited ability to supply advanced gasoline and diesel fuel components. As noted earlier, this industry is geared to handle the quality of Chinese crude, most of which is heavy, low-sulfur, and waxy, and therefore refiners lack the capacity to process high-sulfur crude. At present, China has about 50 refineries with crude oil input capacities of greater than 1 MMT per year and an average capacity of 4.76 MMT per year. About 70 additional refineries have a capacity of less than 1 MMT per year. Growing concerns in China about the environmental impacts of rising oil consumption have led to investments in new refining technologies and the revision of product specifications. Among the earliest policy targets was eliminating the 66 and 70 MON (Motor Octane Number) specifications for gasoline, raising the new minimum to 90 RON (Research Octane Number), and eliminating alkyl-lead additives for octane enhancement through the increased use of alkylates, reformate, and methyl tertiary-butyl ether (MTBE) and other oxygenates in gasoline blending. New unleaded specifications for 93 and 95 octane (RON) gasoline were added as well. Methyl cyclopentadienyl manganese tricarbonyl (MMT) is used as an octane enhancer by about 50 percent of China’s refineries, but it is probably not a good solution because of its cost, heavy

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Personal Cars and China TABLE 5-5 Consumption Patterns for Diesel Fuels in China, 1995–2000 (percent by mass) Consumer 1995 1997 2000 Agriculture 26.2 23.4 21.8 Fisheries 11.9 11.4 10.9 Transportation 48.1 50.0 57.1 Highways 29.8 34.4 41.8 Railways 10.3 8.8 8.5 Marine 8.0 6.8 6.8 Electricity 6.9 9.5 5.1 Others 6.9 5.7 5.1 Total 100 100 100   SOURCE: Data collected by Qiu Yansheng, Research Institute of Petroleum Processing. metal content, and adverse effect on hydrocarbon emissions from catalyst-controlled cars (Owen and Coley, 1995). The Chinese industry is using MMT as a transitional measure and expects to eliminate its use in the future. In China, almost all gasoline is used in road transportation, but only half of diesel fuels (Table 5-5). A survey of Chinese gasolines in 1999 revealed their high olefin and sulfur content. Olefins in gasoline cause deposits in the intake system and fuel injectors of gasoline engines and an increase in the photochemical reaction activity of engine exhaust gas. Sulfur compounds poison the catalysts of the exhaust gas emissions control systems. Recently, several measures have been adopted in Chinese refineries to improve gasoline quality, including adding innovative catalytic cracking technology, increasing catalytic reforming capacity, and installing hydrodesulfurization facilities. Gasoline Specifications Gasoline specifications are driven by emissions standards. Gasoline additives aimed at improving performance have a somewhat checkered history. Lead has been used since the 1920s as an octane enhancer, but it was later found to cause severe health problems and to poison catalysts. It has since been phased out, although some is still used in developing coun-

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Personal Cars and China TABLE 5-6 Unleaded Petrol Specification for Motor Vehicles, July 2000 (GB 17930-1999) Item Limit     Research Octane Number min. 90 93 95 Antiknock index min. 85 88 90 Lead, g/liter max. 0.005     Sulfur, ppm max. 1,000     Benzene, % by vol. max. 2.5     Aromatics, % by vol. max. 40     Olefins, % by vol. max. 35     NOTE: ppm = parts per million. SOURCE: China State Bureau of Quality and Technical Supervision (1999). tries. More recently, MTBE was a required component of reformulated gasoline in the United States, but it was shown to contaminate groundwater. The debate continues over whether oxygenate additives to gasoline significantly improve emissions performance, and ethanol is being evaluated as a possible substitute in China. The costs of improved fuels to the consumer (before taxes) will not be materially different from the present ones, adjusted for inflation, because the oil industry has been creative in finding technologies to produce cleaner fuels at little or no additional cost. However, new large capital investments may be needed for the Chinese oil industry. Some special grade of higher-purity gasoline designed for fuel cell vehicles fitted with gasoline reformers may appear, but it need not be radically different from the cleaner gasoline that will evolve for use in cars with internal combustion engines. Fuel prices at the pump, on the other hand, may be influenced in the future by tax policies, market manipulations, or other exogenous factors, so they may be more variable. Fuel production costs, however, are an important factor in examining the competitive introduction of alternative fuels. In recent years, environmental protection has received considerable attention in China, especially in the mega cities of Beijing, Shanghai, and Guangzhou. The resulting more stringent regulations for engine emissions will have a strong impact on the fuel industry. The significant difference between the new specifications of July 2000 and the original ones is the regulatory limitation of olefin and aromatic contents. Although the maximum allowable limits of olefin and sulfur content are still higher than those for U.S. gasoline, the standards represent major progress given the current status of the Chinese petroleum refining industry. Table 5-6 gives

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Personal Cars and China China’s newest gasoline specification, GB 17930-1999 (China State Bureau of Quality and Technical Supervision, 1999). And Chinese gasoline quality will continue to improve; the next goal is to reduce sulfur content to 200 ppm. The total amount of olefins and aromatics in the gasoline pool are limited to 60 percent by volume maximum, and the limit of olefin content is 35 percent by volume maximum. These changes are included in SINOPEC’s gasoline specification for city automobiles, Q/SHR 007-2000. New gasoline specifications will be implemented in 2003. It is noteworthy that SINOPEC has a reference specification for exported unleaded gasoline that currently meets or exceeds the new domestic gasoline specifications. As the Chinese refining industry moves toward world standards, the complications introduced by having to produce different fuels to meet different quality specifications (other than those changes needed to maintain good performance under regional and seasonal climate variations) should gradually disappear. Diesel Fuel Chinese diesel fuels contain a small portion of hydrotreated components, which results in high sulfur content. Table 5-7 reveals that the sulfur content of Chinese diesel fuels increased between 1995 and 1997 because of an increase in imported sour crude oils. The sulfur content then decreased after 1997, when catalytic hydrotreating operations were improved. Although there is general agreement that lower sulfur will reduce particulate emissions, it is not yet clear whether changes in other properties can substantially reduce harmful emissions from current heavy-duty diesel engines. However, revised fuel specifications would be important in new diesel engine designs using exhaust gas aftertreatment, or in light-duty diesel engines for passenger cars. Modifications to reduce emissions to very low levels may reduce the relative efficiency advantage TABLE 5-7 Sulfur Content of Chinese Diesel Fuels (parts per million) Sulfur Content 1995 1996 1997 1998 Minimum 300 300 300 300 Maximum 3,300 3,500 3,700 3,500 NOTE: Average sulfur content of refinery’s diesel fuel pool. SOURCE: Calculations by Qiu Yansheng, Research Institute of Petroleum Processing.

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Personal Cars and China of the diesel engine over a spark ignition internal combustion engine. Fuel costs will not be changed significantly, but a large increase in diesel demand will require some modifications to existing refineries and their operations. SINOPEC distributes diesel fuel in cities on the mainland, including the broad suburban areas. The diesel fuel grade depends on the specific contract between the users and the fuel suppliers. Some cities are requiring specifications that exceed the national standards. In principle, CNPC will follow SINOPEC in updating the performance of domestic fuels to meet the needs of the marketplace, with the advantage of having the lowest-sulfur crude oil source. Diesel Fuel Specifications The original state specification of diesel fuel, GB 252-1994, was replaced by GB 252-2000 in January 2002 (China State Bureau of Quality and Technical Supervision, 1994, 2000). GB 252-1994 covers three grades of diesel—regular, premium and super—based on sulfur content (see Table 5-8). The maximum sulfur contents of the three grades of diesel fuels are 10,000, 5,000, and 2,000 parts per million (ppm), respectively. The minimum cetane number limit is 45, except for the diesel fuels made from naphthenic or paraffin-naphthenic crude oils, as well as the diesel fuels containing catalytic cracking components, which have a minimum cetane number limit of 40. GB 252-2000 includes one grade with a maximum sulfur content of 2,000 ppm. The minimum cetane number limit is 45, except for the diesel fuels made from naphthenic or paraffin-naphthenic crude oils, which have a minimum cetane number limit of 40. These specifications imply that the cetane number of the diesel fuels containing catalytic cracking components has a minimum limit of 45 rather than 40. In 2000 SINOPEC issued a city diesel fuel specification, Q/SHR 008-2000. In this industrial specification, the maximum sulfur content limit is 300 ppm, and the minimum cetane number limit is 50 without exception. The further development of diesel fuel specifications will focus on reducing maximum sulfur content to 50 ppm, which is the level needed to introduce Euro IV and Euro V emissions limits.3 Indeed, China has a short-term schedule for improvements in diesel fuel (see Table 5-9). As the Chinese economy develops, the demand for petroleum products will grow dramatically, and the shortage of crude oil will grow as 3   As noted earlier, efforts are under way to lower this level to 10 ppm to enable some of the advanced aftertreatment technologies required to achieve the European standards.

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Personal Cars and China TABLE 5-8 China’s Diesel Fuel Specifications   Diesel fuel specification GB 252-1994 Diesel fuel specification GB 252-2000 Brand number 10 0 −10 −20 −35 −50 10 5 0 –10 −20 −35 −50 Solidifying point,°C max. 10 0 −10 −20 −35 −50 10 5 0 −10 −20 −35 −50 CFPP,°C max. 12 4 − 5 −14 −29 −44 12 8 4 −5 −14 −29 −44 FP (PM),°C min. 65   60 45   55   45   Cetane number* min. max., 90% vol. recovered at max., 95% vol. recovered at max. 45   45   Distillation,°C: 50% vol. recovered at 300, 355,365 300, 355, 365 Density at 20°C, kg/m3 Report Report Viscosity at 20°C,mm2/s 3.0–8.0 2.5–8.0 1.8–7.0 3.0–8.0 2.5–8.0 1.8–7.0 Particulates Nil Nil Copper corrosion rating (50°C, 3 hr) max. 1 1 Ash, % by mass. max. 0.01 (super and premium); 0.02(regular) 0.01 Carbon residue on 10% distillation residue, % by mass. max. 0.3 (0.4 for some grades of regular) 0.3 Acidity, mg KOH/100 ml max. 10 (regular); 7 (premium); 5 (super) 7 Water, % by vol. max. Trace Trace Sulfur, ppm max. 10,000 (regular); 5,000 (premium); 2,000 (super) 2,000

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Personal Cars and China Sulfur of mercaptan, % by mass max. 0.01( super and premium); no requirement for regular   Color number max. 3.5 (super and premium); no requirement for regular 3.5 Iodine number, g I/100 g max. 6 (super); no requirement for premium or regular   Oxidation stability (insoluble), mg/100 ml max. 2.0 (premium); no requirement for super or regular 2.5 Existent gums, mg/100 ml max. 70 (regular); no requirement for super or premium   NOTE: Blanks indicate that no specification exists for these categories. CFPP = cold filter plugging point; FP (PM) = flash (Pensky-Martens test); KOH = potassium hydroxide; I = iodine; kg/m3 = kilograms per cubic meter; hr = hour; mm2/s = square millimeters per second; mg = milligram; ml = milliliter; g = gram. SOURCE: China State Bureau of Quality and Technical Supervision (1994, 2000).

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Personal Cars and China TABLE 5-9 Planned Sulfur Standards, China Timing Nationwide City 2001 Sulfur standard for light diesel fuels: 2,000 ppm (super); 5,000 ppm 500 ppm sulfur diesel fuel. (premium); 10,000 ppm (regular) SINOPEC provides cities with June 1, 2002 Sulfur standard for light diesel fuels: 2,000 ppm   End of 2003 or early 2004 Sulfur standard for city diesel fuel: 500 ppm SINOPEC will supply 300 ppm sulfur diesel fuel to metropolitan areas. NOTE: ppm = parts per million. SOURCE: Calculations by Qiu Yansheng, Research Institute of Petroleum Processing. well. As noted earlier, by 2010 about 100 MMT in crude oil will have to be imported annually to make up the shortage in the domestic supply. Meanwhile, China is improving the quality of gasoline and diesel fuel for meeting the more stringent requirements of environmental protection and the demands of the automotive industry. The main goals will be to reduce the olefin content of gasoline and the sulfur content of gasoline and diesel. ALTERNATIVE FUEL POSSIBILITIES FOR THE FUTURE China is already using some fuels other than gasoline and diesel in the transportation sector. Table 5-10 shows the shares of energy consumption by fuel source in China in 2000, both the total and for the transportation sector. China’s main energy sources are shown in Table 5-11. TABLE 5-10 Energy Consumption of China, 1997 and 2000   Coal Petroleum Natural Gas Electricity Total energy share, % (1997) 76.2 19.7 1.8 02.2 Total energy share, % (2000) 67.0 23.6 2.5 06.9a Transportation energy share, % (2000) 06.0 69.0b n.a. 25.0 a Hydropower. b Including natural gas. NOTE: n.a. = not applicable. SOURCES: Zhang (2001); Xinhua News Agency (2001).

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Personal Cars and China TABLE 5-11 Chinese Energy Reserves   Petroleum Natural Gas Coal Proven recoverable reserve 3.3 billion metric tons (2000) 1.37 trillion cubic meters (2000) 114.5 billion metric tons (2000) Annual output 162 million metric tons (2000) 27.7 billion cubic meters (2000) 1,045 million metric tons (1999) Years at present rate 21 49 110 NOTE: “Years at present rate” assumes that the increased rate of energy resource use will match the increased rate of discovery. SOURCES: Radler (2000); Zhu and Song (2000); Chen (2001). Natural gas use rates are presently low, but major development of the natural gas infrastructure is under way to allow substitution of natural gas for coal, primarily for domestic uses and for power generation, in polluted urban areas. Natural gas is a clean fuel; nitrogen oxides (NOx) are the primary emission of concern. Its carbon emissions are about 25 percent lower than those for gasoline, but whether it has net GHG benefits depends on how much methane is leaked. Methane is a more powerful greenhouse gas than carbon dioxide (CO2) by about a factor of 20, averaged over a 100-year period, so a 1–2 percent leakage of methane can offset the lower carbon advantage of natural gas. High-pressure gas is less dense than gasoline and requires a pressurized cylindrical storage vessel, so fuel storage volume impinges to some extent on the space inside a vehicle. Liquefied natural gas (LNG), another alternative, involves liquid storage at about –160oC (–260oF) and a pressure just a little above atmospheric. LNG has a lower density than gasoline, requires about a 10 percent energy penalty for liquefaction, and must be stored in a sophisticated insulated container to minimize boil-off, so it is probably not as attractive an option as high-pressure gas storage for passenger vehicles. It is more attractive for fleet use where vehicles operate consistently from a central location. Natural gas is now being used in about 110,000 vehicles in twelve cities in China, and about two-thirds of these vehicles are fitted with dual-fuel capability. Although natural gas spark ignition engines still emit nitrogen oxides, they are cleaner than diesel engines when used in urban taxis and buses. It is likely that the use of natural gas for transportation will continue to expand, but it will remain a minor part of the total energy

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Personal Cars and China used in the transportation sector. Indeed, after 2010 China will likely have to import natural gas to meet the growth in its domestic demand, so that large-scale substitution of natural gas for petroleum in the transportation sector does not appear to be a suitable answer to China’s concerns about foreign oil dependence. However, natural gas is a clean fuel that has advantages for use in polluted urban areas. Liquefied petroleum gas (LPG), a mixture of propane and butane, is a byproduct of oil and gas production from refineries. It is a useful transportation fuel, but its availability is limited. Because biofuels are derived from solar energy, they are a dispersed energy source and consume a great deal of agricultural land (see Chapter 4). The Brazilian automobile fleet was fueled by biofuels for many years, but in light of current oil prices, dedicated ethanol vehicles have been largely abandoned. Biofuels are likely to continue to be a small part of the overall transportation energy mix, especially where they are used as additives or to fuel a small local vehicle fleet. Methanol, yet another alternative vehicle fuel in China, is being used in Shanxi Province in some commercial vehicles. There, the annual output of fuel methanol from coal is expected to reach 3.8 MMT by 2005. China’s coal-bed methane (CBM) resources are substantial. In fact, China may have up to a third of total worldwide CBM resources, estimated to be in the range of 85–262 trillion cubic meters (m3). Some CBM is recovered commercially in the United States. China’s chemical processing industry has already adopted coal gasification technology. Because conventional natural gas resources are scarce in China, 70 percent of its ammonia (NH3) production in 1990 was based on the gasification of some 37 MMT of coal. There is also great potential to tap the large reservoir of coal-bed methane—by using the carbon dioxide produced as a byproduct of the manufacture of ammonia from coal to stimulate the recovery of methane from deep, unmineable coal-bed formations. Long-term energy carrier choices that ultimately are of interest are either electricity or hydrogen. As discussed in Chapter 3, electricity is not a competitive energy source for personal vehicle transportation today because of the poor performance and high cost of batteries for onboard vehicle energy storage. Because electricity can be produced from coal, hydro-power, or nuclear power, it has the inherent potential to be a large-scale energy source in China for the transportation sector. If future technological developments lead to batteries that provide cost-efficient mobile energy storage, electric propulsion can offer a significant alternative for consideration. But even if this comes to pass, the GHG issues associated with the production of electricity from coal must be addressed. Hydrogen, an alternative energy carrier to electricity, has the advantage of being some-

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Personal Cars and China what easier to store than electrons in a battery. However, like electricity, hydrogen has to be produced from a primary energy source. The commercial source for hydrogen production today is natural gas. Limitations on the availability of natural gas will apply equally to its use to produce hydrogen as a transportation fuel. If it were economically available and if the infrastructure existed to make it geographically available, it would be the best fuel for fuel cell vehicles. Indeed, the development and promotion of fuel cell vehicles in China will depend on China’s source of hydrogen. One possibility is China’s huge reservoir of coal and coal-bed methane, if affordable hydrogen production can be accomplished with the minimal emission of greenhouse gases. According to Tables 5-10 and 5-11, coal is the dominant source of China’s energy supply, but it contributes only about 6 percent of total energy use in the transportation sector. The use of coal gasification to produce synthetic liquid fuels or hydrogen for transportation results in energy inefficiencies and the increased generation of greenhouse gases. Although large quantities of carbon dioxide are generated in the manufacture of hydrogen, CO2 emissions could be reduced drastically if CO2 sequestration technology becomes available. The world’s scientific community is increasingly confident that the sequestration of a significant fraction of global CO2 production from the use of fossil fuels over the next several centuries may be feasible, especially in light of new understanding of the potential for sequestration in geological reservoirs—that is, depleted oil and gas fields, deep saline aquifers, and deep beds of unmineable coal. However, these technologies are still in the early stages of development and are likely to involve significant added costs. REFERENCES Chen M. 2001. Demand for crude oil and supply in China. In Proceedings of 2001 Conference on Crude Oil Information. SINOPEC Crude Oil Information Center, Beijing (in Chinese). China State Bureau of Quality and Technical Supervision. 1994. Chinese Light Diesel Fuel Specification GB 252-1994 (in Chinese). ———. 1999. Chinese Unleaded Gasoline Specification GB 17930-1999 (in Chinese). ———. 2000. Chinese Light Diesel Fuel Specification GB 252-2000 (in Chinese). Histon, P. 2001. Analysis and Prediction of Clean Fuels in Asia. British Petroleum Technical Centre, Sunbury-on-Thames, UK. Owen, K., and T. Coley. 1995. Automotive Fuels Reference Book. 2d ed. Warrendale, Pa.: Society of Automotive Engineers. Radler, M. 2000. World crude and natural gas reserves rebound in 2000. Oil and Gas Journal 98(51):121–123. Ruan Y. 2001. Production status, problems and countermeasures of Chinese gasoline and diesel oil. Petroleum Products Application Research 19(6):10–14 (in Chinese).

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Personal Cars and China Schafer, A. 1998.The global demand for motorized mobility. Transportation Research A 32(6):455–477. Stell, J. 2000. Worldwide refining survey. Oil and Gas Journal 98(51):66–68. U.S. Department of Energy (DOE). 1999. International Energy Outlook. Energy Information Administration, DOE, Washington, D.C. Xinhua News Agency. 2001. China Petrochemical News. November 23 (in Chinese). Yang J., Song W., Wang L., and Wang J. 1997. Analysis for supply and demand of world crude resource and trend of China’s petroleum industry. In Proceedings of 15th World Petroleum Congress, Beijing, 1997 (in Chinese). Zhang L. 2001. On China’s energy security. International Petroleum Economics 9(3):10–14 (in Chinese). Zhu X. and Song W. 2000. Strategic significance of development of coal bed gas: Importance, necessity, and urgency. Chinese Energy (10):8–12 (in Chinese).