The Energy Ministry has settled on implementing a nationwide plan to upgrade environmental standards for diesel to Euro 5 by 2023, in line with the National Environmental Board's schedule, to curb toxic dust levels.
The decision followed discussions among six oil refiners in Thailand that found 2023 to be the most practical deadline to implement the new standard for local diesel distribution.
Energy analysts say the Euro 5 upgrade will require 14 billion baht in expenditure per refinery and may increase retail prices by 40 satang per litre.
The move follows a recent announcement to provide biodiesel B20 to large diesel-powered trucks and buses for transport operators nationwide.
The latest decision does not cover benzene fuels.
Both diesel and benzene must meet the Euro 4 standard, with diesel consumption of 63-65 million litres a day and benzene at 22 million litres.
Energy Minister Siri Jirapongphan said the decision on diesel was made to tackle toxic PM2.5 dust that has been plaguing central provinces, one of the major causes of which is CO2 emissions from vehicles.
"Implementation of Euro 5 was set for 2025 previously, but we are pushing it forward, which also meets the deadlines for Japan and Hong Kong," Mr Siri said.
Under the Euro 5 diesel standard, the permitted sulphur level will decline to 10 parts per million (PPM) from 50 PPM under Euro 4.
Euro 5 diesel is available at some stations such as PTT and Bangchak under premium diesel categories.
Only two oil refiners have upgraded to Euro 5: PTT Global Chemical Plc and Bangchak Corporation Plc. Together they can refine 500 million litres of Euro 5 diesel a month, falling short of total demand of 2 billion litres per month.
In 2012, Thailand adopted Euro 4 standards for both oil and vehicles, resulting in the retail price for diesel rising by 26 satang per litre.
Mr Siri said energy policymakers are considering new measures to encourage other oil refineries to implement the plan, such as reducing refining costs by cutting reserve volumes of crude oil to 1-2% of total sales from 6%.
The measure would trim the inventory costs for oil refiners.
Mr Siri said all parties in the energy industry will aggressively promote the B20 consumption to be available widespread at all petrol stations.
Two SET-listed oil traders, Susco and PTG Energy, are ready to participate in the B20 programme, joining Bangchak Corporation and PTT.
Policymakers are also considering extending the duration of a five-baht gap in retail prices. B20 is five baht cheaper than B7, but the subsidy will end this month, narrowing the gap to three baht.
