By WAYNE MA
BEIJING -- China on Monday said consumers will need to bear
some of the costs of tighter fuel standards, opening the door
to higher prices at fuel pumps as the nation balances growing
public concern over the environment with worries about
The announcement comes after a number of episodes of severe
air pollution in recent months in Beijing and several other
places. The Beijing government also on Monday mapped out plans
to combat air pollution including limiting the number of motor
vehicles in the city to six million by 2017. In January this
year, the official Xinhua news agency said Beijing had
around 5.18 million vehicles.
The National Development and Reform Commission, China's top
economic planning agency, said higher costs to improve
nationwide fuel quality will be borne by both the refining industry and its consumers.
It didn't elaborate.
"Currently, the situation of the atmospheric environment in China is grim," the
NDRC said in a statement on its website.
Tiny particulate matter in the air has "harmed the health of
the population and has had an impact on society and harmonious
stability," it said.
Chinese refiners have resisted costly upgrades to raise fuel
standards due to Beijing's strict control over fuel prices,
which has made it difficult to pass on higher costs to
consumers. However, the Chinese government unveiled major
reforms to its fuel-pricing system this year, which has
improved bottom lines and made it easier for other
China, which has lagged Western countries in fuel standards,
plans to improve fuel quality over time using a similar roadmap
followed by the US and Europe. For example, one target is
to limit the concentration of sulfur in gasoline to 50 parts
per million (ppm) from 150 ppm before the end of this
year. The NDRC said China's two largest refining companies pegged the cost
of doing that at 290 yuan a metric ton, or about 13 US
cents/gal. It wasn't known how much of that cost would be
passed on to consumers. The average price of gasoline in China
is around $4.21/gal, according to consultancy ICIS C1
The NDRC said that because of rapid growth in car ownership
in China, vehicle emissions now account for between
20% and 30% of the country's overall emissions of PM 2.5-tiny particulate
matter harmful to human health.
Meanwhile, the NDRC said it wouldn't raise fuel prices
immediately but allow for a gradual transition over the next
few years, which will also be determined by local governments.
It also said it would temporarily subsidize grain farmers and
the forestry, fishery and transportation sectors to ease the
impact on consumers.
Dow Jones Newswires