DESPITE THE FACT that Canadian gasolines more than met the sulphur target, it had become clear by the mid-1990s that the sulphur content of gasoline would have to be dramatically reduced in order to meet the evolving requirements of automobile pollution-control technologies. It is this aspect of the issue, one feels, that is not broadly understood by the public.

At the heart of the issue is smog, which is the brownish haze that hangs over mainly urban areas in summer. Smog is formed when oxides of nitrogen (NOx) emitted from the combustion of hydrocarbon fuels react in the presence of sunlight with volatile organic compounds (VOCs), which are essentially unburned or evaporated fuels, to form ground-level ozone. It's the suspension of so-called particulates such as smoke, dust and sulphur dioxide in ground-level ozone that causes the respiratory and other problems of "smog days." Smog is the number 1 air quality concern in Canada and the United States.

In the mid-1970s, in response to rising concerns over air quality, especially smog in urban centres, the U.S. Environmental Protection Agency (EPA) began requiring automobiles to meet a series of progressively more stringent standards for exhaust or tailpipe emissions. Then in the mid-1990s it issued its so-called "Tier 2" standards, which would apply to 2004 and subsequent model-year vehicles. Under these standards, an automobile produced in 2004 or later will be permitted to emit only about 0.3 percent of the smog-generating compounds of a comparable new vehicle produced in, say, 1973.

As they set out to meet the Tier 2 standards, however, automobile manufacturers found that the catalytic converters needed for 2004 and later model-year vehicles would not function effectively with gasoline containing sulphur of, on average, more than 30 ppm. The sulphur would in effect poison the catalyst used in the converter.

It is important to recognize that sulphur in gasoline itself makes only a minor contribution to smog. In fact, studies by Environment Canada show that removing all the sulphur from gasoline today would reduce emissions of smog-generating compounds from the existing vehicle fleet by only about one percent.

With the automakers' concerns in mind, the EPA began discussions with U.S. refiners to determine a schedule to ensure that low-sulphur gasoline would be available when 2004 model-year vehicles reached consumers, essentially in mid to late 2003. Similar discussions also began in Europe and elsewhere, aimed at ensuring that 2004 and later model-year vehicles could meet planned emissions standards.

Around the world, with a relatively clear-cut reduction target and timetable in view, petroleum companies set about developing new, more efficient technologies to remove sulphur from crude oil – in other words, alternatives to hydrofining.

Imperial’s introduction of 30-ppm gasoline will coincide almost exactly with the time when 2004 model-year automobiles – those that need low-sulphur fuel to function effectively – will be available to customers

In 1996, Environment Canada launched a multi-stakeholder fact-finding process – involving governments, the petroleum and automotive industries, and environmental groups – aimed at establishing a Canadian national standard for sulphur levels in gasoline. Because of the North America-wide nature of both the automobile manufacturing and petroleum refining industries, Canadian refiners urged the federal government to align Canada's standards with those of the United States. They argued that to impose more stringent sulphur-in-gasoline standards in Canada, or an earlier timetable for the introduction of the new standards, would disadvantage Canadian refineries, which compete directly with their U.S. counterparts. For example, forcing Canadian refineries to lower sulphur levels earlier than their competitors would impose needless costs on both gasoline producers (refiners would be forced to invest in the existing hydrofining technology rather than being able to take advantage of the newer, much more efficient technologies under development to meet the requirements of 2004 model-year vehicles) and by extension their customers.

As it turned out, in the United States, the EPA eventually proclaimed regulations that would require gasolines in all states except California to have a sulphur content of no more than 30 ppm on average after January 1, 2005. The EPA regulations included a complex system of credits for earlier action by refiners, interim averaging and provisions allowing smaller refineries to take up to four years longer to meet the 30-ppm standard. This ruling seemed to recognize that new alternatives to hydrofining might not be as readily available to smaller refineries and that these refineries might also need more time to make the major investments required.

Canadian regulators, however, decided not to harmonize our initiatives totally with the EPA proposals and timetable. Instead, in 1999, Environment Canada announced regulations requiring Canadian refiners to reduce gasoline sulphur levels in two stages. The first, or interim, stage requires gasolines produced in Canada between July 1, 2002, and December 31, 2004, to contain an average of no more than 150 ppm of sulphur, with a maximum of 300 ppm for any "batch" produced after October 1, 2003. The second stage requires gasoline produced on or after January 1, 2005, to contain no more than 30 ppm of sulphur on average, with a batch maximum of 80 ppm.

After the new regulation was announced, Imperial said it would invest $500 million in its four refineries in order to meet the new requirements. "We have always agreed with the need for gasoline to have a sulphur content of 30 ppm by 2005," says Brian Fischer, Imperial's senior vice-president, products and chemicals division. "However, we took issue with the interim-stage requirement because it produced no discernible environmental benefit while potentially increasing costs to the industry and consumers."

To meet the interim-stage requirement of 150 ppm on average, Imperial said that it would advance the timetable for completing the installation of new sulphur-reduction technology, enabling it to begin producing 30-ppm gasoline by the fall of 2003, some 15 months ahead of the government-mandated deadline of January 1, 2005.

Despite the facts that the regulation specifically allows for the averaging of sulphur content and that Imperial is investing $500 million in new equipment, some environmentalists have claimed that because the company continued to produce gasolines containing more than 150 ppm of sulphur after July 1, 2000, it was failing to comply fully with the law.

"I want to make it very clear that Imperial is complying and will comply fully with the new regulation," stresses Fischer. "The regulation is quite explicit. It allows averaging over the interim period to give refiners some flexibility in meeting the standard. The averaging provision recognizes the massive physical changes that have to be made to refineries. This is not something that can be done by turning a few valves. It is a huge undertaking, requiring the construction and installation of new plant equipment incorporating new technologies, the construction of pipelines and so forth, all of which must be done safely and responsibly. That takes time." Fischer points out that it also takes people – people who have expertise and experience, both company employees and outside engineering and construction contractors. With refineries all around the world working toward essentially the same deadline, the availability of both hardware and people is limited.

"Forcing refiners to produce gasoline with an absolute sulphur-content maximum of 150 ppm by mid-2002 and 30 ppm by the beginning of 2005 would have been akin to requiring a homeowner to purchase a new stove today and then throw it out and buy another one two years from now," Fischer points out. "The fact is, it would have been physically impossible to install new equipment and processes by July 1, 2002. The government eventually recognized this and drafted the regulations accordingly."

IMPERIAL PLANS TO MEET the standards using a combination of traditional and new technologies. At its refineries in Strathcona, Alta., and Dartmouth, N.S., it will use a proprietary new process, developed by the research and engineering arm of ExxonMobil Corporation. Known as Scanfining, it removes sulphur while minimizing octane loss. In addition, an existing hydrofiner at the Dartmouth refinery will be upgraded. About $140 million will be spent at Strathcona and about $80 million at Dartmouth.

Imperial operates two refineries in Ontario – at Sarnia and at Nanticoke – both of which are in the southwestern region of the province. To enable these refineries to meet the new standard, the company is building a 61-kilometre pipeline between the two, which will transport untreated gasoline components produced at Sarnia for processing through new and upgraded sulphur-removal facilities at Nanticoke.

Canada's refiners are tackling the sulphur-reduction challenge in different ways. Fischer notes that those refineries that process sweeter crude oils have an initial, although not necessarily long-term, advantage. "In Ontario, Imperial's sulphur levels will be higher than the industry average for about the first half of the interim period," he explains, "but much lower than the industry average in the second half as we install state-of-the-art technology."

In fact, by late 2003, Imperial's gasolines will have the lowest sulphur content in North America, with the exception of those produced in California. Moreover, the company's introduction of 30-ppm gasoline will coincide almost exactly with the time when 2004 model-year automobiles, which need low-sulphur fuel to function effectively, will be available to consumers. It is these vehicles, with their new technology, that will be responsible for the lower emissions – low-sulphur gasoline is simply what those vehicles require if they are to be effective in lowering emissions.

The new regulations, Fischer points out, were promulgated after long and thorough consultations between Environment Canada and interested groups, including environmental groups. "All parties were made fully aware of every provision at every stage of the consultative process," he says.

THE MOST CRITICAL QUESTION, of course, is what effect will dramatically reducing the sulphur content of gasoline have on the quality of the air we breathe in Canada.

"The real benefit from reducing sulphur levels in gasoline is that it will allow the new generation of emissions-control equipment to function effectively in further reducing emissions of compounds that contribute to smog, " explains Gilles Morel, a regulatory affairs adviser with Imperial's safety, health and environment department. "For this reason, the outlook is for greatly improved air quality, in spite of a projected increase in kilometres driven.

"Emissions-control systems in new vehicles today remove about 97 percent of smog-generating compounds versus their counterparts of the mid-1970s," Morel points out. "The new vehicle emissions-control systems, functioning effectively on low-sulphur fuels, will reduce emissions of NOx by 85 percent, and of VOCs by 75 percent.

"Of course, beyond 2005, as more and more older vehicles on the road are replaced by new, lower-emitting models, the overall improvement in air quality will become more and more pronounced," he adds. "And that doesn't even take into account possible further developments such as the advent of hybrid electric vehicles and, eventually, fuel-cell powered vehicles that could further reduce emissions. The link between emissions from gasoline-powered vehicles and air quality will effectively be broken."

The salient point in all this, notes Fischer, is that by the fall of 2003, as Imperial completes its $500-million program to upgrade and install new facilities at its refineries, the sulphur content of its gasolines will be among the lowest in the world.

Illustration: Luc Melanson