What is your opinion as to the likely impact of Article 7a of the Fuel Quality Directive?

Article 7a of the Fuel Quality Directive seeks to reduce greenhouse gases by 6% by allocating values to the source of crude under six options 0 – 5, where 0 = ‘as is’ and 5 = full crude differentiation

Tamara Earley, Greenergy
“The way that Article 7a will be interpreted is still under discussion and there are a number of different ideas on the table.  The devil will be in the detail, so at this stage the impact for refiners, importers, wholesalers and their customers is still unclear.

Like others in the industry, Greenergy wants to find a solution that minimises the administrative burden for the industry.   However that shouldn’t mean giving up on systems that are effective in reducing carbon emissions.  The Fuel Quality Directive is an important opportunity to begin to understand and reduce the carbon intensity of fossil fuel, and we believe it should be implemented in a way that challenges us to achieve its potential.”

Chris Hunt, UKPIA
“The Fuel Quality Directive was never intended as a greenhouse gas reduction mechanism – its objective was as stated in the title, to ensure fuel quality, hence any attempt to use it in this way is misplaced, misdirected and needlessly complex – downstream oil suppliers have no influence on upstream emissions.

Article 7a is a big, big issue for European importers and refiners which puts them at a disadvantage with their competitors in the rest of the world. Crude or product shuffling is likely to result, leading to higher GHG emissions on a global basis.

We can deal with option 0 because it sets EU wide default values and doesn’t require masses of verification. Option 1 would differentiate between conventional and non conventional sources.

On any scale, options 1-5 will bring significant increases in refinery and importer costs: An estimated additional 3p at the pump for biofuels blending under the Renewable Energy Directive with an estimated £300m cost to industry for monitoring and verification of options 1-5, without taking into account the abatement costs these options imply.”

James Spencer, Portland Price Protection
“It’s difficult to see how the new legislation will impact greenhouse emissions on a global basis as high carbon crudes will simply be sent to refineries outside of the EU. That being said, the EU has to stay true to its environmental targets and this sends a clear signal of intent.

“In terms of direct impact, costs may increase for EU refiners because they will be forced to buy sweet crudes, although it may well transpire that heavier crudes are discounted to take account of this, thus offsetting the increased legislative cost burden.”

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