Shanghai tightens up vehicle emissions standards

By Sun Zhe

Oil prices in Shanghai will increase beginning next month to meet new emission standards that are on par with the EU's Euro IV and stricter than current US levels.

Shanghai will become the second city in China to impose the State IV standards, coming three years after Beijing.

"Shanghai is trying to clean up its air for the World Expo next year, as Beijing did for the Olympics," said Chen Qing, an analyst with Shandong-based Zhuochuang Info, an oil industry consultancy.

The oil that is up to standards will soon be available at Sinopec and PetroChina stations as the two State-owned oil giants have well-coordinated distribution systems. But the privately-owned stations, which account for over one seventh of the city's pumps, will continue to sell the more polluting 90-octane or 93-octane gas for some time at cheaper prices [than Sinopec and PetroChina], Chen said.

The new gas will have about 90 percent less sulfur, a major pollutant, thus contributing to air quality improvement.

The regulations are to go into effect November 1, ousting 90-octane from Shanghai. Currently, 93-octane is 5.90 yuan ($0.86) per liter, but an increase of 0.30 yuan ($0.044) or five percent is expected as new standards will raise the costs of oil refinement, Chen predicted.

The new standard will make operations more difficult for local auto brands in the Shanghai market, said Zhong Shi, a Beijing-based independent auto industry analyst.

"Joint-venture auto brands have long been prepared for the new regulations because they already have advanced technology, but the domestic brands still need to catch up," said Zhong.

But the State IV standard won't go nationwide any time soon, said Shangguan Zhoudong, a Beijing-based independent auto analyst.

Few refineries will be able to meet the new standards at least in the short term, Shangguan added.

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