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From the Wall Street Journal....

China May Delay on Emissions
State Agencies Disagree
Over Nation's Readiness
To Meet New Auto Rules
By SHAI OSTER and GORDON FAIRCLOUGH
June 21, 2007; Page A10

BEIJING -- China's economic planners say they want to delay nationwide enforcement of more-stringent auto-emissions standards, a decision that could mean greater levels of pollution in already-dirty skies as 24,000 new cars, trucks and buses hit Chinese roads each day.

The National Development and Reform Commission has in effect overruled the country's relatively weak environmental-protection agency, saying its July 1 deadline for tighter emission controls is impractical. The commission said enforcement of the new standard should instead be phased in over years.

DETOUR


• The Situation: China's economic planners wish to delay enforcement of tougher rules on auto emissions.
• The Background: Beijing says oil refiners can't produce enough low-sulfur gasoline to impose new standards by July 1, the deadline set by China's environmental-protection agency.
• What It Means: Postponement could lead to more pollution as 24,000 new cars, trucks and buses hit Chinese roads every day.China's State Environmental Protection Administration has set new standards for auto emissions that are essentially the same as the so-called Euro III rules imposed in the European Union seven years ago.

Those rules require improvements in car engines and exhaust systems, as well as the use of cleaner gasoline.

Lack of Low-Sulfur Gasoline

A commission official said oil refiners couldn't produce enough low-sulfur gasoline for the standards to be rolled out across the country by July 1. In most of China, emissions standards are equivalent to the lower Euro II standard, which allows dirtier fuel and was used in Europe from 1996 to 2000.

"We don't have enough good fuel, so imposing the new rules will have to go step by step with fuel supplies," a senior development-commission official said. He said the stricter regulations likely would be imposed first in big cities. Beijing, the capital, has already imposed the Euro III standard.

Casting confusion on what will happen, a spokesman for the environmental-protection agency said it plans to go ahead with enforcing its rules nationwide on July 1. The government's economic-planning and environmental arms are often at odds as Chinese leaders try to maintain the country's rapid growth.


International environmental experts say it is important for China to move quickly to tighten its auto-emission rules as the number of cars and trucks on the road grows quickly. China is the world's second-largest vehicle market, after the U.S., though it has far fewer cars per person than the U.S. or Europe.

This rapid rate of motorization has contributed to serious air pollution in Chinese cities, as well as to problems with congestion and rising greenhouse-gas emissions. But cars have also become an important symbol of the country's economic rise, and authorities have been loath to restrain their use.

Li Wanli, an official in the development commission's industrial-policy division, said recently that the environmental-protection agency's timetable was "harsh," and that Chinese oil companies "are still not able to supply sufficient fuel" that meets the new standard, known as National III.

However, officials at the two largest oil refiners, Sinopec Corp. and PetroChina Co., which together produce about 90% of China's gasoline, say they already have the capacity to make the cleaner fuel, and are prepared to roll it out as soon as the government tells them to. Sinopec spokesman Huang Wenshang said it would be "a piece of cake" to supply fuel that meets the National III standard nationwide.

Large car makers say that they are ready to meet the new standards, but that substandard fuel would render ineffective the improvements they have made in auto-emissions systems.

'Fully Prepared' for New Rules

An executive of Chang An Automobile Group, a state-controlled auto manufacturer in Chongqing, said his company is "fully prepared" to meet the new rules.

But he said some smaller vehicle makers had lobbied the government to postpone enforcement, because they feared they couldn't comply with the new standard.

The executive said phasing in the rule city by city would cause problems for car makers, as they might need to sell different vehicles in different locations. He also said using dirty fuel in cars with new-standard engines and exhausts could damage vehicles and raise maintenance costs.

Separately, PetroChina said that it is planning to try to raise as much as $6 billion -- by listing shares in a domestic stock exchange -- to fund refineries, overseas acquisitions and more oil drilling. Shares of PetroChina already trade in Hong Kong and New York.

--Ellen Zhu in Shanghai and Kersten Zhang in Beijing contributed to this article.

Write to Shai Oster at [email protected] and Gordon Fairclough at [email protected]

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