Few have experienced more rapid success in China than the auto industry, which has doubled its volume sales in just the past four years.
But as anger simmers over the country’s air pollution, fingers are increasingly pointing at the millions of new cars clogging Chinese roads.
Following a weekend in which the country experienced some of its worst smog on record, the Ministry of Environmental Protection pledged Monday to reduce vehicle emissions, the source of about a quarter of China’s air pollution.
The regulator did not explain how it would implement the curbs, but experts have long noted that a major barrier to bluer skies is not necessarily cars, but cleaner fuel.
Chinese fuel standards allow for three times the amount of polluting sulfur as in the U.S., and five times as much as Europe.
Cleaner fuel simply isn’t sufficiently available, forcing the Ministry of Environmental Protection to have twice delayed implementation of new tailpipe emission standards.
“Fuel quality remains the bottleneck to more stringent vehicle emission standards in China,” said David Vance Wagner, senior researcher for the International Council on Clean Transportation.
The Ministry of Environmental Protection has no say over setting standards for fuel quality. Instead, standards rest on the cost analysis of Sinopec and the China National Petroleum Corp., or CNPC, the two state oil giants that control the energy market for vehicles.
Because oil prices are set by the central government to reduce price shocks, oil firms have little incentive to provide cleaner fuel that costs more to produce.
“Without pressure, it will be difficult to get the oil companies to change,” said Ma Jun, head of the Institute of Public and Environmental Affairs in Beijing. “They’re a very powerful monopoly.”
The oil producers are believed to be holding out for subsidies or tax breaks to implement a full upgrade of fuel – this despite Sinopec and CNPC posting the fifth- and sixth-highest revenues of any global company last year, according to CNNMoney.
The oil producers are already required to adhere to stricter rules in Beijing, which maintains fuel emission standards on par with Europe. Nevertheless, the capital’s air quality has not improved as much as planners would have liked, because of the high number of vehicles from outside the city, particularly trucks. That is one of the reasons why environmental advocates say a national standard is so important.
China, already the world’s largest auto market, is forecast to see vehicle sales climb 7 percent this year to 20.6 million units, according to the China Association of Automobile Manufacturers.
For leading American brands such as General Motors Co. and Ford Motor Co., growth is expected to be even higher. Meanwhile, Jaguar Land Rover recently announced that China had overtaken Britain as its top market.
The steady growth raises pressure on Chinese policymakers to tackle the brewing health crisis linked to air pollution. A study in the Lancet medical journal said vehicle emissions had become the fastest-growing cause of death in Asian cities.
Analysts say automakers are ready for new regulations. They’re just waiting for the gas to catch up.
“Carmakers, at least the global ones, are definitely prepared for any technical upgrades the government might demand,” said Michael Dunne, founder of Dunne & Co., an auto consultancy specializing in Asian markets. “The key problem has always been, and remains, fuel quality. Even the most advanced engines cannot produce clean exhaust when the fuel quality is second-rate.”