In 2006, the U.S. the Environmental Protection Agency (EPA) has reduced the allowable sulfur content of diesel fuel from 500 parts per million (ppm) to 15 ppm. The European Union is drafting legislation that will mandate a limit of 10 ppm. Under the definitions contained in the 1992 Energy Policy Act, GTL fuels derived from natural gas have been defined as alternative fuels.

Compliance with this new legislation will add to refining costs, raising diesel fuel prices. In addition, refineries are faced with the challenge that crude oil is generally getting heavier, making it harder and more expensive to raise to the new stringent standards. It is highly unlikely that these improvements in fuel quality can be achieved without using a technique such as blending zero sulfur GTL diesels into the current crude based product mix.

Another environmental issue is the regulatory pressure to reduce the volume of flared gas, which has serious environmental consequences. Historically, to fulfill the ever-increasing global demand for oil, enormous quantities of co-produced gas were flared as a waste byproduct. Carbon dioxide (CO2) emissions from flaring have high global warming potential and contribute to climate change. Flaring also has harmful effects on human health and the ecosystems near flaring sites. Restrictions on flaring have been enforced by levying fines and additional taxes. As a result, large supplies of gas at lower prices have emerged.

Responding to environmental and economic pressures, gas re-injection was used to curtail flaring. However in many oil and gas fields, this practice could only be used for a limited period before oil production was seriously affected. It is estimated that approximately 15.5 (tcf) or 439 billion cubic meters (bcm) of stranded gas is flared, vented, or re-injected each year.