How will Euro 5 diesel affect UAE end users?

James Morgan looks into the ramifications of the UAE roll-out of ULSD

The roll-out of Euro 5 diesel represents a positive step for the UAE.
The roll-out of Euro 5 diesel represents a positive step for the UAE.

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As ENOC officials and governmental stakeholders plan for the implementation of Euro 5 diesel in the Emirates, James Morgan asks whether UAE end users are ready to switch

In late August, high-ranking officials from Emirates National Oil Company (ENOC) met with governmental stakeholders to discuss the implementation of UAE Federal Cabinet decision number 37 of 2013.

You could be forgiven for assuming that ‘UAE Federal Cabinet decision number 37 of 2013’ would be a fairly dull topic for a news analysis piece, but don’t be put off by the official language.

This particular directive concerns the mandatory roll-out of Euro 5 diesel in the UAE. In short, it could set the tone for the future of commercial vehicles and machinery, not only in the Emirates, but across the wider Middle East.

The talks, which were led by ENOC Industrial Products Marketing (EIPM) at the oil company’s headquarters, were attended by representatives from the Emirates Authority for Standardization & Metrology (ESMA), the Dubai Department of Economic Development (DED), Dubai Civil Defence, Dubai Municipality, and Emarat.

Participants discussed the importance of the latest greener fuels standards, and emphasised the need to take concerted action to ensure the security of supply – and usage – of ultra-low-sulphur diesel (ULSD). During the meeting, attendees drew up a roadmap for collective action to promote and enforce ULSD usage in the UAE.

Speaking after the gathering, ENOC’s chief executive officer, Saeed Khoory, said: “We are thankful to all governmental agencies and our key stakeholders for their support in ensuring the implementation of the UAE Federal Cabinet decision number 37 for year 2013 regarding making the use of environment-friendly, ultra-low-sulphur diesel compulsory in the UAE.

“We have been working with the authorities to implement a mechanism to regulate the diesel market to limit irregularities and illegal activities. The use of low-standard diesel, often sourced from illegal vendors, not only impacts the economy negatively, but also leads to environmental degradation and health and safety hazards,” he added.

Here, Khoory cuts to the heart of the debate. There are two primary considerations at stake when it comes to ULSD: the environment and the economy.

With regards the former, there are clear benefits. The type of ULSD being rolled out – that which is compatible with Euro 5-compliant engines – precipitates fewer emissions than the high-sulphur diesel typically found on the Middle East market. No fossil fuel is clean, but Euro 5 diesel is better than its predecessor in terms of both public health and the planet in general.

It is true that ULSD offers slightly reduced fuel economy compared to conventional diesel (typically speaking, 1% to 2% lower). Even so, this isn’t sufficient to detract from the fuel’s emissions-related benefits. The ULSD that can now be found at ENOC’s flagship Dubai service stations, for instance, offers a sulphur content of just 10 parts per million (PPM). The dirty diesel typically sold across the Middle East region, meanwhile, contains up to 500 ppm.

Despite these benefits, it’s unwise to view ULSD as an environmental cure-all. Dr Richard Brown, senior product manager at MAN Middle East’s Truck Division, warns that low-sulphur fuel will only prove beneficial if introduced in conjunction with complementary legislation.

“I most certainly welcome the move towards higher-quality diesel,” he told PMV.

“However, the introduction of ULSD will not necessarily impact the local emission norm. The GCC’s emission norm is not comparable to the European standard; it hovers somewhere between Euro 1 and Euro 2. When it comes to a poorly maintained engine that has been running on conventional diesel for the past decade, ULSD isn’t going to have a huge effect on what comes out of the exhaust pipe,” he explained.

Essentially, Brown contends that in order for Euro 5 diesel to achieve its maximum environmental potential, it must be introduced in conjunction with vehicles and machines that are capable of delivering on its promises.
“Typically, the trucks operating on UAE roads are around Euro 2 or Euro 3,” he said.

“When you compare these vehicles to their Euro 5 or Euro 6 counterparts, there are massive differences in terms of emissions levels. The sulphur level in the diesel does not have a huge impact on the particle mass coming out of the exhaust,” Brown explained.

Despite this caveat, Brown was clear that this represents a positive step for the UAE. After all, the latest vehicles are incompatible with dirty diesel, so it would not be feasible to introduce Euro 5 technology prior to the roll-out of Euro 5 fuel. From an environmental perspective, this is certainly a step in the right direction.

The economic implications, however, might prove more difficult for UAE end users to swallow. Whichever way you look at it, ULSD costs more than conventional diesel. Indeed, since introducing the fuel in July of this year, ENOC has absorbed the additional costs in a bid to encourage its customers to make the switch.

“ENOC has always been at the forefront in promoting green technologies and services,” commented Khoory.

“As part of our corporate social responsibility commitment, [we are] absorbing the extra cost involved in distributing Euro 5 diesel to further popularise its use by motorists,” he explained.

No matter how sound the environmental arguments, persuading end users to pay extra for ULSD won’t be easy, especially when one considers the extent to which the local businesses have benefitted from low fuel prices historically.

According to Tanveer Haider, purchase manager at Bilal General Transport, subsidies will play a major role in bringing about a smooth transition.

“Bilal sources its low-sulphur fuel directly from Abu Dhabi National Oil Company (ADNOC),” he explained.

“For key account holders like us, ADNOC offers direct supply at subsidised rates, but this is not the case universally. I have noticed significant price differences between suppliers.

“Cleaner diesel is obviously a good thing for the environment, but it’s important for the entire industry to make the switch as one. Subsidies will play an important role in encouraging this change,” Haider told PMV.

Subsidies certainly represent a carrot for UAE fleet operators, but authorities are also willing to employ the stick if necessary. Last month an inspection campaign was launched to ensure that the diesel being used on UAE roads conforms to the latest federal standards.

“With 90% of the diesel used in the UAE going towards the transport sector, and its demand growing by at least 4% annually, it is important to take strong measures to ensure quality and environmental standards,” commented Khoory.

Fortunately, Brown told PMV that manufacturers such as MAN are well positioned to support the ULSD roll-out with the appropriate kit.

“If the UAE decided to implement engine-related legislation tomorrow, we could support it tomorrow; we could introduce models to fit the standards immediately,” he explained.

But would UAE end users be willing to upgrade in lieu of such legislation? Euro 5 fuel might be subsidised, but Euro 5 vehicles are not. Encouragingly, Haider says forward-thinking operators like Bilal can see past the initial costs.

“I would certainly consider purchasing Euro 5 trucks when they become available on the UAE market,” he revealed.
“They might be a little more expensive than the ones that we currently use, but they would be good for the environment – and for Bilal – in the longer term,” Haider concluded.

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