Over the coming months, the noose is set to tighten. 'For diesel fuel [supply] pipelines, refiners are expected to pump at levels of below 10 ppm to compensate for the contamination from high-sulphur products that already exist in the system,' says a recent US-based Energy Information Administration (EIA) report. 'Diesel meeting the new specifications will be required at terminals by 15 July and at retail stations and wholesalers by 1 September.'

Some relief has been provided, however. Under a temporary compliance' option,

20 per cent of the diesel fuel produced in the US may continue to meet the current 500-ppm level until May 2010. But the remaining 80 per cent of ultra-low sulphur diesel (ULSD) must comply with the new specifications.

These are defining moments for the American refining sector, characterised by the ongoing heated debate over permissible sulphur dioxide (SO2) and nitrogen oxide (NOx) levels. The 1980s furore over acid rain provoked Washington to pass the 1990 Clean Air Amendment Act. The law was intended to reduce greenhouse gas

emissions through a system of contrived market incentives, based on 'permits to pollute'. A decade later, the 2003 Clear Skies Act was issued to further reduce SO2, NOx and mercury emission by 67-73 per cent. The ultimate target is total gas emission of 8.95 million tonnes by 2010 half of what it was in the 1980s.

Europe has introduced similar measures. The EU introduced a permit to pollute programme to meet targets set by the Kyoto agreement. Under the emission trading system (ETS), 13,000 factories and power stations could emit carbon and other related gases only if they had a permit. From 2007, SO2 emission levels of no more than 10 ppm have been set for producers of automobile diesel. This compares with about 10,000 ppm in the 1970s and 2,000-5,000 ppm a decade later.

Technological improvements have come in handy for refinery operators. With ULSD demand set to increase manifold, several US and European refiners are either modifying their existing hydrotreaters or adopting new blending techniques.

Along with a cleaner and whiter product slate, the cost of production has also decreased significantly. Industry leader BP claims to have reduced the cost of hydrotreatment by 40 per cent. 'In just a few years, diesel hydro-sulphurisation within BP has moved from a dull and static' technology to one that is sleek, fast-moving and intriguing, with a large and positive impact on the profitability of our refining business,' BP says in a recent report.

Europe and the US may have set new emission levels, but in the Middle East, Asia and the Far East a different scenario emerges. 'Analysis over the past several years indicates China now leads the world in sulphur pollution levels,' said a report issued by UK-based Centre for Air Pollution Impact, Trends & Analysis (Arcapita). In 1997, total SO2 emission was 23.5 million tonnes, of which industrial polluters contributed 79 per cent. 'In a broad sense, the big problem of the 1970s and 80s has now shifted more toward the East,' the report said.

Along with China, India has also

further added to the SO2 and NOx levels. '[Emission] levels of more than 900 ppm are a regular feature in our major metropolis,' says an official on India's Central Pollution Board. The situation is critical, given that of the 15 cities with the world's highest SO2 emission levels, six are in Asia. The prime reasons for this are the continued reliance on coal as the main feedstock and the lack of firm regulations.

Asian states will account for 2.3 million barrels a day or 42 per cent of the total ne