State-owned oil companies in firing line over Beijing's pollution

The search for culprits behind the rancid haze enveloping Beijing has turned the spotlight on the mainland's two largest oil companies and their resistance to tougher fuel standards.

Bureaucratic fighting between the environment ministry on the one hand and China National Petroleum Corp (CNPC) and Sinopec Group on the other has thwarted stricter emission standards for diesel trucks and buses - a main cause of air pollution blanketing dozens of cities.

To be sure, many sources contribute to air pollution levels that hit records last month, but analysts say the oil companies' foot-dragging and disregard of environmental regulations underscore a critical challenge facing a toothless ministry in its mission to curb air pollution.

With widespread and rising public anger changing the political calculus, it also poses a broader question of whether the incoming administration led by Communist Party chief Xi Jinping will stand up to powerful vested interests where state-owned enterprises have long held control in the quest for economic growth at all costs.

"I think the Communist Party's new government should weaken CNPC and Sinopec," said Wang Yukai, a professor from the National School of Administration. "These interest groups have too much power."

Delays in implementing stricter emission standards are rooted in money - chiefly, who should pay for refining cleaner fuels. By some estimates, vehicle emissions contribute as much as a quarter of the most dangerous particles in Beijing's air.

To supply cleaner diesel, the oil firms must invest tens of billions of yuan to remove the sulphur content, said Xiaoyi Mu, a senior lecturer in energy economics at the University of Dundee in Scotland.

PetroChina, the listed arm of CNPC, said in a statement that all automotive diesel produced by PetroChina in 2012 met existing emissions standards.

It added PetroChina would "push forward upgrading of fuel quality, and supply clean, good quality and diversified products".

Sinopec did not respond to phone calls seeking comment.

Sinopec chairman Fu Chengyu, quoted by state news agency Xinhua last week, acknowledged that China's refineries are one of the main parties that should bear responsibility for air pollution. Even so, he added that was not because fuel failed to meet standards but rather because fuel standards were not sufficient.

With media focusing on a deterioration of the air quality in Beijing at the start of 2013 - 21 days in January recorded "heavily polluted" levels or worse - urban residents are increasingly impatient with the political wrangling.

"The air pollution is terrible," said Beijing resident Zhang Shuqing on a recent very polluted day. "They need to sort it out, the department responsible needs to sort out the environment."

The environment ministry, however, faces formidable odds in the face of complex bureaucracy and weak enforcement of laws.

At least 10 government entities such as the powerful National Development and Reform Commission and the Ministry of Industry and Information Technology shape policies that affect the environment.

In 2008, the government promoted the State Environmental Protection Administration to a full ministry in an attempt to give it more weight in the greater fight against pollution.

Yet the ministry still lacks the authority to force big state-owned enterprises and local governments to toe the line. The ministry did not respond to a request for comment.

"Even a powerful environment minister is of no use," Ding Yan, deputy director of the Vehicle Emissions Control Centre, said. "You need the highest leaders like Xi Jinping and Li Keqiang to really value the work of the environment ministry."