The objectives of this study was to follow-up on a previously conducted analysis (The Role of Petroleum Based and Alternative Transport Fuels in Reducing Emissions in the APEC Region – Energy Working Group Project EWG04/99) which had examined motor fuel quality enhancements necessary to improve air quality in Asia Pacific Economic Cooperation (APEC) member economies. Virtually every major city in the Asian region has a serious air pollution problem; indeed, 13 of the most 15 polluted cities in the world are located in Asia. Moreover, the WHO estimates that 4% to 8% of all deaths in the Asia-Pacific region are caused by air pollution.

The 1999 APEC air quality study referenced above did not delve into the costs associated with tightening fuel specifications. This study was subsequently commissioned by APEC to gain an appreciation of the supply impacts that several specification scenarios are likely to have on the region over the coming 10-year period. In essence, it was felt that a more rounded picture of benefits versus costs would ultimately be required before decisions about future air quality requirements and fuel specifications could be made. To accomplish this objective, this study endeavors to evaluate the motor fuel supply impacts of various specification changes (that could be implemented over the coming decade) on the individual refining sectors of the various APEC member economies. Furthermore, individual member economy motor fuel supply impacts are aggregated into an overall APEC region motor fuel supply outlook (i.e., excess or shortfall) for each of the fuel specification scenarios. Lastly, estimates of the type and magnitude of refining capacity expansion (and associated investment) required by each APEC member economy refining sector to rebalance motor fuel supply with expected demand are developed for each of the specification scenarios and time frames examined.

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