MTBE:

Relevance in Todays World

April 23, 2013
Doha, Qatar
Middle East MTBE Workshop
CLEAN FUEL, CLEAN AIR
Working closely with fuel policymakers,
regulators and stakeholders in the fuel industry,
ACFA promotes and advances the use of
cleaner automotive fuels based on principles of
sound science, cost efficiency and
sustainability of the environment.
Who is ACFA?
MTBE has NEVER been classified as toxic or
carcinogenic by any regulatory body anywhere
in the world.
MTBE Facts
3
MTBE Facts
1. The European Union conducted a 3-year MTBE risk
assessment based on 20+ years of European MTBE
usage and research.
Conclusion:
MTBE is a safe and beneficial gasoline component
When used and handled properly, MTBE is not expected to have any
harmful impact on human health and the environment.
Potential to cause odour and taste problems in water, need to consider
a risk reduction strategy for groundwater and drinking water
Proposals mainly dealing with the construction and operation of
petrol underground storage and distribution facilities at service
stations
4
MTBE Facts
2. WHO reviewed the impact of MTBE use on public
drinking water.
Conclusions:
MTBE is non-genotoxic
Insufficient data to reach any conclusions about its potential
to cause human cancer
Did not see any reason to restrict the use of MTBE in gasoline
5
All these reputable bodies have found no
sufficiently compelling reason to classify MTBE as a
possible cancer-causing agent for humans:
6
The Clean Air Act Amendments of 1990 (in the
US) established the Reformulated Gasoline
(RFG) program, which included an oxygenate
mandate.
The requirement for oxygenates could be met with
either ethanol or MTBE
MTBE captured approx. 85% of the oxygenate
market.
MTBE was a product approved and mandated by the
federal government.
California found MTBE in groundwater and
drinking water supplies in 2000/2001, and
moved to ban the use of MTBE in 2003.
Let us go back to where it all started
7
The Energy Policy Act of 2005 removed the oxygenate
mandate for RFG and instead established the
Renewable Fuel Standard, requiring ethanol content in
gasoline.
Once the oxygenate mandate expired, refiners stopped
blending MTBE in the U.S. for liability concerns.
In considering the Energy Policy Act, the Congress
REJECTED an amendment calling for a federal ban on
the use of MTBE.
While a number of states maintain MTBE bans on their
books, there is NO federal ban on the use of MTBE.
In fact, there is still MTBE production in the U.S. for
export markets in Mexico, Venezuela and Europe.
The facts of MTBE in the USA
8
The Initial Problem: Public Perception versus
Reality
Lack of focus on true problem: leaking gasoline tanks
Overestimation of risk to water resources
Overreaction to odor/taste thresholds
Convergence of political influence of powerful lobbies
The Result: Adverse public reaction particularly
in California & Northeast
Incorrectly framed issue as a choice between clean
air and clean water
MTBE became a convenient scapegoat
The U.S. Experience:
Sound Science vs. Political Science
9
According to statistics compiled by the U.S.A.
Oxygenate Fuels Association, the introduction
of MTBE in gasoline has resulted in the
reduction of common air pollutants.
20-25% less carbon monoxide
20-30% less benzene
5% less nitrogen oxides
15% less evaporative emissions
30% less particulate matter
10-15% less unburned hydrocarbons
US Experience: MTBE Reduce Air Pollutants
10
THE RELEVANCE OF MTBE
1990s: Middle East and Asia/Pacific.
The main driving force in Middle East was
the need of MTBE for lost octane from
lead phase out and as high sulphur levels
are gradually reduced in gasoline.
In Asia/Pacific the main driving force was
the real necessity of clean air through
cleaner fuels legislation.
MTBE begun to be commonly imported in
Taiwan, Thailand, and largely produced
and consumed in Saudi Arabia, South
Korea, Singapore and Malaysia.
Clean Gasoline
12
Most Immediate: Cutting Vehicle Emissions
13
13 in 15 of the worlds most
polluted cities are in Asia.
Emission Standards (New Light Duty Vehicles)
Notes:
*The level of adoption vary by country but most are based on the Euro emission standards
Italics under discussion; a gasoline; b diesel; c Entire country; d Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Bangalore, Lucknow, Kanpur, Agra, Surat, Ahmedabad, Pune and Sholapur;
Other cities in India are in Euro 2; e Beijing [Euro 1 (Jan 1999); Euro 2 (Aug 2002); Euro 3 (2005); Euro 4 (1 Mar 2008); Euro 5 (2012)], Shanghai [Euro 1 (2000); Euro 2 (Mar 2003); Euro 3 (2007);
Euro 4 (2010)] and Guangzhou [Euro 1 (Jan 2000); Euro 2 (Jul 2004); Euro 3 (Sep-Oct 2006); Euro 4 (2010)]; f Equivalent to Euro 4 emissions standards; g for gasoline vehicles only
Source: CAI-Asia. September 2012. Emission standards for new light-duty vehicles
Gasoline Specifications (Asia)
15
As at Target
Markets Sep 2011 2012-2014
Bangladesh Pre Euro Pre Euro
Brunei Pre Euro Euro II
Burma Pre Euro Pre Euro
Cambodia Pre Euro na
Nepal Pre Euro Pre Euro
Pakistan Pre Euro Pre Euro
Sri Lanka Pre Euro Euro II
Indonesia Euro II Euro II
Malaysia Euro 2M Euro 4M
Philippines Euro II Euro IV
Thailand Euro II Euro IV
Laos Euro II Euro II
Vietnam Euro II Euro IV
India (national) Euro II Euro II
India (cities) Euro IV Euro IV
China (national) Euro IV Euro IV
Hong Kong Euro IV Euro IV
Taiwan Euro IV Euro V
Japan Euro V Euro V
S. Korea Euro V Euro V
Octane replacement due to fuel
quality improvements (lead phase-
out, reduction in sulphur, benzene,
aromatics, olefins).
Expanding vehicle fleet and
growing gasoline demand.
Vehicle technology advances need
cleaner fuels to meet the stricter
emissions standards and to operate
as designed.
Increase in minimum octane grade.
Growing demand for higher grade
gasoline.
Market is octane-short (especially
clean octane.)
Octane Trends 2007-2020
16
Benefits of MTBE
Overnight improvement in air quality
Vapor pressure improver
Gasoline pool volume extender
Excellent blending octane value
Refinery blending flexibility
Economic/cost effectiveness advantages
Avoids heavy capital investment
Lower operating costs
Fully compatible with transport/handling systems
Improves vehicle performance (such as drivability & cold
starting)
Readily available world-wide and locally produced
17
MTBE: Impact on Emissions
Source: Hart Downstream Energy Services, 2003
18
The octane number improvement with MTBE in
general depends on the base gasoline.
Clear octane numbers for MTBE are relatively
high and therefore MTBE is used widely to
improve the octane rating for gasoline.
MTBE Enhances Octane
19
MTBE Lowers RVP of Gasoline
Source: Hart Energy 20
$0
$2
$4
$6
$8
$10
$12
$14
$16
B
i
l
l
i
o
n

U
S
$
Base Case w/ MTBE
Flex Case- without MTBE
2003 Cases 2006 Cases 2012 Cases
APEC: Chinese Refining Capital Investment
21
APEC: Korean Capital Investment
Requirements Impact of MTBE
22
0
500
1000
1500
2000
2500
3000
2003 2006 2012
Million US $
With MTBE
Without MTBE
MTBE GROWTH OPPORTUNITIES
Asia and Middle East to boost MTBE demand
South and Central America and Africa
Scope for further penetration of MTBE, paving the
way for potential increase in demand in the future.
Growing gasoline markets in developing markets
Gasoline blending was the major consumer of MTBE
at global level, followed by solvents and chemical
reagent applications.
Improved gasoline quality requirements
Phase out of metallic octane boosters
Low biofuels penetration rate in developing nations
Global MTBE Demand Drivers
24
Growing emphasis on renewable fuels /
sustainability
Risk of reduction of gasoline consumption in general
MTBE may be edged out in gasoline pool as not
produced from renewable sources
Biofuels mandates in EU and USA.
Risks of declining gasoline consumption in
developed nations
FFV and alternative energy
Fuel economy improvement
Dieselization
Market maturity and aging demography
Groundwater concerns
Global MTBE Demand Constraints
25
Global MTBE Market Demand (2011 vs 2020)
26
Source: GBI report on
MTBE Global Markets to
2020, 2012
Demand share (tons)
Region
Year 2011
% of
total
Year 2020
% of
total
Forecast
Growth
Asia-Pacific
7,437,747 61% 13,738,018 68% 6,300,271
Middle East & Africa
2,435,501 20% 3,832,612 19% 1,397,111
Europe
1,644,630 14% 2,041,513 10% 396,883
South & Central America
545,624 5% 631,559 3% 85,935
North America
40,164 0% 9,766 0% -30,398
Global
12,103,666 20,253,468 8,149,802
In the report, Asia-Pacific refers to China, Taiwan, Thailand, South Korea,
Malaysia, Singapore and India only; Europe refers to Germany, Belgium, Italy,
Russia and the UK only; South and Central America refers to Mexico, Brazil and
Argentina only; the Middle East and Africa refers to Saudi Arabia and Iran only.
Regulatory impact on MTBE use in Asia
27
Legislation / Regulation Impact on MTBE use Markets
Clean Air Act Opportunity for MTBE to be used All
Lead phase-out Clean octane replacement
Almost all except Laos,
Myanmar, Cambodia and Sri
Lanka
Strict emissions
standards
Opportunity for MTBE to be used All
Ultra-low or low sulphur
requirements
MTBE widely used
China, Hong Kong, Taiwan,
South Korea
Limits on benzene,
aromatics and olefins
Opportunity for MTBE to be used All
No MTBE restrictions Opportunity for MTBE to be used All
Biofuels mandates Low to no MTBE usage Thailand, Philippines, Japan
High RON requirement Opportunity for MTBE to be used All
Tax subsidies on
gasoline alternatives
Competition for MTBE-blended
gasoline
Thailand, India, China
China: Asias fastest growing and largest MTBE market
28
0000
tonnes
China MTBE Consumption (2006-2011)
2006 2007 2008 2009 2010 2011
4.85
(yoy +4%)
Euro IV
(Gasoline)
29
MTBE has NEVER been classified as toxic or
carcinogenic by any regulatory body anywhere in the
world. Safe and beneficial gasoline component.
Responsible care is critical to the long term sustainability
of the MTBE industry
When used and handled properly, MTBE is not expected
to have any harmful impact on human health and the
environment.
Tighter vehicle emission standards and fuel quality
legislation will support MTBEs long term viability and
sustainability in the fuels landscape in the Middle East
and Asia.
Concluding Remarks
30
Thank You!
If you have any queries, please contact
Clarence Woo
clarence@acfa.org.sg
(65) 6430 6658