Date
23 September 2017
LNG is not yet widely available in filling stations in the mainland. Photo: Bloomberg
LNG is not yet widely available in filling stations in the mainland. Photo: Bloomberg

Why timing is everything in fuel upgrade policy

China will ban sales of diesel that meets the lowest emission standards (China III), giving drivers a nudge toward liquefied natural gas (LNG) as a replacement.

Does that mean an imminent boom for LNG suppliers, equipment makers and refill stations? Maybe not.

Sure, retail customers such as motorists will be forced to upgrade to higher-quality fuel or switch to LNG but the big prize is industrial users.   

LNG has been catching on because it’s cheaper and cleaner than conventional fuel, but a hike in commercial prices has made it less attractive to big customers.  

Those thinking long-term may anticipate tougher emission standards when investing in new vehicles which could help widen the adoption of LNG.

But in the end, whether they will convert to LNG depends on how much cheaper it costs than conventional fuel.

There is talk of another natural gas price hike for industrial users, LNG factories being one of them, which means LNG will become more expensive and potential end-users already could be having second thoughts.

Meanwhile, the shift to China IV diesel may not be as smooth as planned. The cleaner diesel is not yet widely available in gas stations. Timely execution of the fuel upgrade policy is far from certain. That gives motorists a chance to use China III diesel longer than expected.

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RA

 

EJ Insight writer

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