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Setting Canadian Standards for Sulphur in Heavy and
Light Fuel Oils
Discussion Paper on Meeting the Commitments of the
Notice of Intent on Cleaner Vehicles, Engines and Fuels
Fuels Division, Oil, Gas and Energy Branch, Environment Canada
February 2003
 Download the report in Adobe PDF format (267 KB).
Table of Content (TOC)
Executive Summary
1. Introduction
Consultation
to date on setting Canadian sulphur levels
2. Background
2.1 Description of fuels
2.2. Sulphur levels in fuel oils in Canada
2.3 Production, imports, exports and use
of fuel oils in Canada
3. Existing Regulations Controlling
Sulphur Levels in HFO and LFO
3.1 Canada
3.2 United States
3.3 European Union
Objective and Benefits
of EU Directive
4. Emissions Resulting from the Combustion
of Fuel Oils
4.1.1 Inventory of SOx, PM2.5 and PM10 Emissions
Resulting from the Combustion of Fuel Oils
4.1.2 Background
and Methodology
4.1.3 Overview of
Sulphur Oxide Emissions from the Combustion of Fuel Oils
4.1.4 SOx Emissions
from HFO
4.2 Effects of Fuel Oils Sulphur Levels
on Emissions
4.2.1 Literature
review
4.2.2 CANMET's test
results
5. Environmental and Health Effects of Reducing
Sulphur in Fuel Oils
5.1 Impact of SO2 emissions reductions on
acidification and particulate emissions
5.2 Health and environmental effects from
emissions reduction
6. Potential Costs of Implementing
European-style
Sulphur Levels
7. Potential Price Differential Between
Low and High Sulphur Fuel Oils
Potential for fuel
switching
8. Other Considerations
8.1 Provincial SO2 plans and actions
8.2 Pollution Prevention and Pollution Control
8.3 Potential for dumping in Canada of high
sulphur fuel oils
8.4 Links with Other Federal Initiatives
9. Path Forward or Potential Instruments
for Canada
9.1 Overview
9.2 Economic instruments
9.2.1Tradable Permits
9.2.2Example 1 -
US Sulphur Dioxide Trading Program
9.2.3 Sulphur Taxes
9.2.4 Example 2
- Tax Differential in Italy
9.2.5Example 3 -
Sulphur Content Tax in Sweden
9.2.6 Example 4
- Sulphur Content or Product Tax in Denmark
9.3 Potential Combinations or Hybrid Instruments
9.4 Fuel Quality Regulations
10. Questions for Stakeholders
11. Next Steps
Workshop
Appendices
Appendix 1 List of background reports
Appendix 2 Federal Notice of intent
on cleaner vehicles, engines and fuels (February 2001)
Appendix 3 Production, imports, exports
and use of light and heavy fuel oils in Canada from 1985 to year
2001
Appendix 4 Consumption of Low Sulphur
and Regular Heavy Fuel Oils in the United States by PAD Districts
Appendix 5 End Use of Fuel Oils
by Sector
Appendix 6 Example of Regulatory
Text for Setting Requirements for Sulphur in Fuel Oils
LIST OF FIGURES
Figure 2.1 2001 National Trend of
Sulphur Content in Heavy Fuel Oil
Figure 2.2 2001 National Trend of
Sulphur Content in Light Fuel Oil
Figure 2.3 Canadian Consumption of
Fuel Oils for year 2001(in million m3)
Figure 2.4 Historical Data from 1985
to year 2001 on production imports and exports of heavy oil in Canada
Figure 2.5 Historical Data from 1985
to year 2001 on production imports and exports of light oil in Canada
Figure 3.1 Sulphur Limits for Heavy
Oil in Northeastern States
Figure 4.1 1995 Canadian Estimated
Annual SOx Emissions from HFO Use by Province
Figure 4.2 1995 Canadian Estimated
Annual SOx Emissions from LFO Use by Province
Figure 4.3 Sectoral Contributions
to Eastern SOx Inventory from HFO Use
Figure 4.4 Sectoral Contributions
to Eastern SOx Inventory from LFO Use
Figure 7.1 Historical Price Difference
Between Regular HFO and Low Sulphur HFO in US Northeastern States
LIST OF TABLES
Table 2.1 Sulphur level in heavy
fuel oil used in canada in year 2001
Table 2.2 Sulphur level in light
fuel oil used in canada in year 2001
Table 2.3 Distribution of Sulphur
in liquid Fuels in 2001
Table 3.1 Summary of Regulations
for Sulphur in Heavy Fuel Oil in Various Countries
Table 3.2 Summary of Regulations
for Sulphur in Light Fuel Oil in Various Countries
Table 4.1 Typical SO2 emissions from
various grades of heavy and light fuel oils
Table 5.1 Eastern Canadian land
area in exeedance of wet SO4 critical load for reference and fuel
oils emission scenarios
Table 5.2 Eastern Canadian land
area (in 1,000km 2) in exeedance of wet SO4 critical load for reference
and fuel oils emission scenarios for different thresholds
Table 7.1: Historical Monthly Price
Differences (CAN cents per litre) in US Northeastern States between
Regular Heavy Fuel Oil (>1% wt Sulphur) and Low Sulphur HFO (1%
wt. Sulphur or lower
Table 8.1 SO2 reduction targets
for Ontario, Quebec, New Brunswick and Nova Scotia
Executive Summary
As set out in the "Notice of Intent on Cleaner Vehicles, Engines
and Fuels" published in the Canada Gazette
(February 17,2001), Environment Canada is developing measures
to reduce the level of sulphur in fuel oils used in stationary facilities.
This Discussion Paper is intended to initiate and facilitate discussions
with stakeholders to determine the most appropriate approach. It
reviews existing international regulations controlling sulphur levels
in fuel oils, discusses analytical results from completed background
studies, assesses the potential reductions on acidic deposition
and emissions of sulphur dioxide and fine particulates as a result
of matching the limits set by the European Union, and explores options
for the development of appropriate complimentary measures to regulations,
such as economic instruments.
NEXT STEPS
Issues reviewed in this paper will be reviewed at a workshop to take
place in Atlantic Canada within a month after the release of this document.
The Discussion
Paper specifically sets out the following issues on which Environment
Canada is seeking the views of interested parties:
1. What should be the appropriate sulphur level
in Canadian fuel oils and what should be the timing for reducing
sulphur?
2. What liquid fuels should this initiative
address?
3. Are there any other (non-sulphur) parameters
that should be controlled in fuel oils?
4. Which of the following instruments
should be considered for use in Canada to reduce sulphur in fuel
oils?
- Tradable Permits
- Emission trading
- Product trading
- Sulphur Taxes
- Tax differential
- Product tax
- Sulphur emission taxv
- Fuel Quality Regulations
- Combination of Instruments
- Regulations and tax
- Regulations and emission trading
- Tax and emission trading
- other
5. Are there any combinations
of instruments that improve environmental effectiveness and/or lower
overall cost? (e.g., Could fiscal instruments be used to accelerate
the introduction of low sulphur fuel
oils in advance of any regulatory requirement?)
6. How should the instruments be designed to
maximize environmental benefits such as reduction in emissions of
sulphur dioxide, greenhouse gases, nitrogen oxides and other air
contaminants (metals, polycyclic aromatic hydrocarbons, etc.) while
ensuring that costs are maintained at a reasonable level?
7. Should any Canadian measures developed to
reduce the sulphur in fuel oils include the flexibility included
in the European Union's directive of allowing, for example, the
combustion of higher sulphur fuel oils in facilities equipped with
emission control technology? Should this option differ depending
on the industry sector involved?
8. Should measures also be developed to prohibit
facilities that currently use fuel oils from switching to higher
sulphur fuels or otherwise "dirtier" fuels? How would
such measures be structured and should they be incorporated in the
design of the measure that reduces sulphur in fuel oils?
In addition, specific questions on a potential design of a regulation
are set out in Appendix 6.
Following the workshop, interested parties will be requested to
provide written comments on the issues set out in this paper. Based
on this process, Environment Canada plans to develop an action plan
and path forward to reduce sulphur in Canadian fuel oils.
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