Technical and economic analysis of the transition to ultra-low sulfur fuels in Brazil, China, India, and Mexico

Advanced emission control technologies in engines and vehicles require clean fuels, especially ultra-low sulfur gasoline (ULSG) and diesel fuel (ULSD). In the past decade, many countries with developed economies, including the United States, Canada, Western Europe and Japan, have made a transition to ultra-low sulfur fuels (ULSF), in particular ULSG and ULSD. For example, in 2006, the U.S. implemented gasoline and diesel sulfur standards of 30 ppm (average) and 15 ppm (cap), respectively. These countries also have adopted tighter standards on gasoline volatility, aromatics content and benzene content, and on diesel fuel aromatics content and cetane number.

Emerging market countries, including Brazil, China, India and Mexico (BCIM), have also reduced sulfur content in their fuels, but not yet to ultra-low sulfur levels (<50 ppm) throughout those countries. For example, the current national diesel sulfur standard in India is 350 ppm, with 50 ppm required in major cities. India and the other countries cited above have developed plans to further strengthen sulfur standards for gasoline and diesel. These programs are at various stages of implementation, some have been delayed, and national implementation of ULSF in BCIM countries is not yet on the horizon.

Production of ULSF requires both capital investment and additional direct operating cost. In most instances the capital charges constitute a far greater portion of the total ULSF cost.

Against this background, the ICCT commissioned a study of refining capability requirements, corresponding capital investment requirements and per-liter refining costs (in US dollars) to transition to ULSG and ULSD, as well as to achieve certain other improvements in gasoline and diesel fuel quality in India, Mexico, Brazil and China.

This report is the final work product of that study.