Working Paper

Policy measures to finance the transition to lower sulfur motor fuels


Provides an overview of international experiences related to financing motor fuel desulfurization by introducing fiscal and other policy measures from Japan, Hong Kong, the United Kingdom, Germany, and the United States. Policies showcased include tax differentials at the pump, tax incentives or subsidies for refiners, and regulatory mandates with flexibility.

Among the paper’s conclusions:

  • To accelerate the supply of low sulfur fuel, governments may choose to implement regulatory mandates (setting lower sulfur standards) and leave it to the market to determine the cost burden that will be passed on to consumers. Compliance flexibilities, such as credit trading, can help alleviate any hardship that approach may entail.
  • Governments can also use various policy tools to reduce the financial burden on refiners. Setting differentiated tax rates on lower sulfur fuels compared to higher sulfur fuels, providing tax reductions/credits to refiners that provide lower sulfur fuels, and directly subsidizing the supply of lower sulfur fuels are all common financial measures and have showed success in encouraging early and rapid adoption of lower sulfur fuel in various countries and regions.
  • Fiscal incentives are almost always combined with regulatory mandates on fuel quality, with the regulation serving as a “backstop.”
  • Fiscal incentives can stimulate rapid transition to lower sulfur fuels, even ahead of the regulatory schedule. But whatever the fiscal incentive chosen, it must manifest in a price differential at the pump that favors the lower sulfur fuel, as consumers will not make the shift if the cleaner fuel is not competitively priced.



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  • 为了加快引入低硫燃料,政府可以通过法规监管(制定低硫燃料标准)的手段,发挥市场机制,让消费者来承担增加的成本。为了缓解炼油企业难以达标和小型炼油厂改造资金不足的问题,政府可以考虑采取弹性管理政策,比如允许达标指标交易或适当推迟小型企业执行新标准的时间;
  • 政府可以通过多种政策手段来缓解炼油企业的成本压力。比如相比高硫燃料来说,可对低硫燃料实行差别化税收;对炼制低硫燃料的企业减少税负或提供融资服务;直接对低硫燃料供应进行补贴;
  • 对消费者的鼓励政策:可以考虑在加油环节对低硫油进行减税,同时对高硫油加税;
  • 财税激励与燃油标准是相辅相成的。制订合理的财税优惠幅度不但能促进向低硫燃油市场的快速过渡,甚至能引导石化企业提前达到燃料硫含量标准。