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Venezuela Environmental Export Market Plan
Chapter 7
Air Pollution

Market Overview

The sources of air pollution in Venezuela are diverse. The major sources of air pollution are automobiles
(which still use leaded gasoline), industrial emissions, and unregulated agricultural burning. Venezuela's air pollution problems are mitigated somewhat by its geography, which provides a high level of natural wind circulation. Continued urban and industrial growth is prompting government action to more aggressively address air pollution issues.

Although in the recent past Caracas has suffered some of the worst air pollution in Latin America,
the city currently experiences contamination levels below maximum limits. This improvement is partly attributed to the fact that some major industries having relocated, and that the use of natural gas has increased, especially in public transportation vehicles. Although air quality is improving in Caracas, air pollution is still a problem in states with heavy industry. In Anzoategui State, companies produce metals, asphalt, and glass. Factories in Bolivar State, home to state-owned Corporación Venezolana de Guyana, release 5.4 million tons of atmospheric contaminants per year, of which 1.9 million tons are not controlled. Seventy-five percent is particulate matter, and the rest is made up of gases: carbon monoxide (19 percent),
hydrocarbons (2.8 percent), and nitrogen dioxide (2.7 percent).

Total 1998 investment for air pollution control equipment and services is estimated at $35 million. The market for air pollution monitoring and control equipment is estimated at $29 million. It is expected to increase by approximately 12 to 14 percent annually over the next three years. U.S. suppliers dominate this market. They are expected to export $20 million worth of equipment for air pollution control to Venezuela in 1998.

Institutional and Regulatory Issues

Venezuela only recently began to focus on improving its air quality. The principal federal agency that oversees air quality is the Ministry of Environment and Renewable Resources (MARNR). The MARNR has regional offices that help share the responsibility of registering and overseeing companies’ compliance with air quality standards. Standards and oversight are based on Decree 638-Norms for Air Quality and Pollution Control, established April 26, 1995. Articles 3, 7, and 8 refer to permissible limits in micrograms per cubic meter. These limits are used as a national parameter for air quality.

Air samples are taken daily in designated zones equipped with air monitoring stations. Permissible
limits are set for different types of contaminants, which include nitrogen dioxide, suspended solids, and lead in suspended solids. The government allows permissible limits to be exceeded on a certain percentage basis to allow for abnormalities in the data caused by events that occur near the monitoring stations. It is the average measurement of contaminants in the air samples that is compared to the government's limits. Table 6 gives the current contaminant limits set forth by the MARNR.

Table 6: Air Pollution Contaminants Limits


ContaminantsPermissible Limit (m/m 3 ) % Allowed to Exceed Maximum
Nitrogen Dioxide 100 50%
300 5%
Suspended Solids 75 50%
150 5%
2002%
260 0.5%
Source: MARNR.

Data for 1996 reveals that Venezuela's air pollution is significantly below permissible limits. In fact, most sample data falls in the first permissible limit category, e.g., nitrogen dioxide 100 (/m 3 ), with results for exceeding the permissible limits falling only in the single digits (see table 7).

Table 7: Norms for Air Quality and Pollution Control - Averages
Particles ug/m3Quality
<75Clean Air
75-200Moderately polluted air
201-300 Highly polluted air
>300Extremely highly polluted air
Source: MARNR.

Venezuela does not have an effective policy for limiting contaminants from vehicles. No numerically measured standards for vehicle emissions exist. Violations are recognized only when vehicle emissions are blatantly visible. It is the responsibility of local police to stop vehicles that violate this informal standard.

Enforcement of standards has not been vigorous. Stricter enforcement is expected in the near future as institutions gradually increase enforcement capability and public pressure builds for improved air quality.

Opportunities

Venezuela is embarking on a number of short- and medium-term initiatives that will positively affect air quality and create markets for U.S. companies. One of the most important short-term initiatives is improving air-quality monitoring networks as part of an effort to better define problem areas and to support enforcement efforts. In Caracas valley, the Air Quality Network Improvement and Enforcement Project will evaluate air quality and develop a quality control program for the existing air-quality monitoring network. This network consists of four stations that measure emissions of nitrogen dioxide, suspended solids, and lead in suspended solids. Currently, none of the station samples are close to exceeding the maximum permissible limits.

A feasibility study for this project has already been done. It was funded by the U.S. Trade and Development Agency and performed by Radian LLC. The study recommended four specific actions for the MARNR in dealing with air quality issues:
1. Continue inspection and control of air pollution sources.
2. Enlarge and upgrade the monitoring equipment network.
3. Formulate and initiate an integral program to control air pollution made up of all state agencies and organizations involved in the environmental arena. For example, the MARNR, the Ministries of Energy and Mines, Industry and Commerce, Health and Social Welfare, Transportation, and Communications.
4. Educate and inform the public on the current levels of air pollution to develop a consciousness of the problem.

The MARNR is in the process of reviewing the study. The ministry will most likely approve the Air Quality Network Improvement and Enforcement Project for international bids. Interested firms should seek financing with the Export-Import Bank of the United States. The Corporación Andina de Fomento (CAF) is potentially involved in the financing of the upgrade of air quality equipment as well.

Other locations with air monitoring stations in place include:

Anzoátegui State (Barcelona, Guanta, Puerto La Cruz)
Valencia (two)
San Cristobal (two)
Puerto Ordaz (one)
Lake Maracaibo area (six)

The United States dominated the air pollution monitoring equipment market in 1995. Its market share was 69.7 percent. Other suppliers were Germany, 9.7 percent; France, 9.1 percent; United Kingdom, 5.5 percent; and Japan, 4.3 percent (table 8).

Table 8: Air Pollution Monitoring Equipment (in US$ Millions)
1994 1995 1996 1997e 1998e Projected Growth
Import Market20232628.631.511%
Local Production000----
Export--------
Total Market202310-12%
Note: e = estimated.
Source: U.S. Department of Commerce.



U.S. companies should continue to maintain their lead in the air pollution market if they stay competitive
and domestic production does not expand to include more sophisticated equipment. Presently, only temperature and pressure measuring equipment is produced locally. A summary of best short-term prospects according the U.S. Department of Commerce and competitive foreign brands are illustrated in tables 9 and 10.

Table 9: Best Prospects for Sales and Services During 1997-1999 in the Air Pollution Sector

SIC Codes Description of Products
168537Electronic control boards
189025Thermometers, barometers, densimeters, and hydrometers
189026.10 Gas pressure meters
189027.10 Gas or smoke analyzers
189028Gas meters, parts and accessories; analyzers, air pollution monitoring vehicles, air sampling
systems. Services: Environmental audits, atmospheric emissions reduction, and training

Vehicle Fuel Conversions: Venezuela is one of the few countries in the world still using leaded gasoline. Recently, the Economic Cabinet approved the implementation of an unleaded gasoline program. Several advancements have been made in recent years in the use of oxygenated gasoline and the production of diesel fuel, both of which meet new quality standards set by the United States Clean Air Act. Petroleos de Venezuela (PDVSA) also developed programs in 1988 to reduce the amount of tetraethyl lead additives in gasoline. These programs have involved various ministries, such as the Ministries of Environment, Energy, Development, and Transportation.

The vehicle fuel conversion program also includes a total investment of more than $200 million to transform service stations throughout the country. The program is slated to span the years 1997 through 2006, with the deadline to introduce unleaded fuel in the domestic market being September 1999.

CASE STUDY: SERVICE STATIONS IN VENEZUELA
The 1,500 Venezuelan service stations sell an average of 8.4 million liters of gasoline each year. They are divided into three classes: fully-owned by PDVSA or one of its subsidiaries; PDVSA-equipped stations run by contractors, and privately owned gas stations, which can keep a percentage of the income from the sale of fuel and lubricating oils. Reform of a 1973 law that originally limited fuel sales to the state will soon allow service stations to be owned privately, or by franchise agreements, with only ceilings set on fuel prices, hence allowing free market competition. Privatization of oil company-owned gas stations, along with the need for more stations throughout Venezuela, will create opportunities for environmental technology firms. Older service stations, which tend to be located in more rural areas, are a risk for groundwater pollution, as storage tanks are kept beyond their useful lives. Renovations of old stations, as well as construction of new facilities, will require more up-to-date oil tanks and pollution prevention equipment.

Price controls on leaded gasoline have been a deterrent to switching to unleaded fuel and have delayed this planned transformation. By 2006, all vehicles will run on unleaded fuel, which will produce annual savings of $83 million because of its higher energy efficiency. The program also entails installation of catalytic converters ($120/unit) on vehicles. Newly produced vehicles will come with converters installed. All vehicles will have their current converters replaced, creating an opportunity for sales of these automotive products.

The last official vehicle count in Venezuela was conducted in 1992: an estimated 2.3 million vehicles. Sources at PDVSA estimate that this total has risen to 3.5 million vehicles today, of which 500,000 will need to have their catalytic converters replaced.

PDVSA is also campaigning for Venezuelans to switch from gasoline- to natural gas-powered vehicles. CORPOVEN, one of PDVSA’s three petroleum subsidiaries, is responsible for the promotion of this program and has already converted some of its own equipment to run on natural gas. Bus conversion to natural gas has also begun in urban areas.

PDVSA has aggressive plans for environmental compliance as part of its multibillion dollar investment program. The program will include a number of important air pollution reduction investments. The industry has 1,100 emission sources, 800 of which comply with the law. PDVSA controls gaseous emissions from point sources by means of treatment systems, such as gas desulfurization, wet scrubbers and cyclones, vapor recovery units, and incinerators. PDVSA is determined to keep up with international standards, as evidenced by its plan to comply with ISO 14000 standards. PDVSA has specific project opportunities in sulfur emission control and recuperation. The company also needs environmental equipment for fluid catalytic cracking processes.

Table 10: Competitive Imported Brands in Venezuelan Air Pollution Sector

Country Brand
United StatesBest Power Technology (uninterrupted power system) Radio Detection (partnership with England) Electric Power Engineering Teledyne Brown Engineering Analytical Instruments (oxygen, carbon dioxide, combustible, nitrogen meters) Bailey Graseby Nutch (medium flow sampler, control console, method 5 sampling) MIE (monitors) Rae Systems (detectors) TSI (contamination monitors, velometers, anometers) SKC (gas, dirt, vapor, smoke pump samples, tubes, audimeters, mercury detectors) Bacharach (carbon dioxide control)
JapanChidmadzu (instruments, meters, gases/oxygen/dioxide, chimney air control Tomen Corporation Toyomera Kasha (electrical transmission distributor) Sumitomo
GermanyDilo Armaturen (electrical transmission distributor) Hartmann & Braun (cement air control equipment) Drager
FranceChromota Sud (meters, air control instruments) Schneider (electrical apparatus)
EnglandRadio Detection (detection of leaks)
Sweden Hagner


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