Sulfur in gasoline

Refiners in the U.S. soon will have to reduce concentrations of sulfur in gasoline under a rule due at any time from the U.S. Environmental Protection Agency. The rule will serve as an interesting gauge of environmental policy-making in the U.S.

No dispute rages over the need to cut the sulfur content of gasoline. The main questions are timing and scope: how quickly and over how many refiners and gasoline consumers to impose costs roughly estimated at 5-8¢/gal.

Tailpipe emissions

EPA last year linked the sulfur content decision to a ruling it must make on what the Clean Air Act Amendments of 1990 call Tier 2 standards for vehicle tailpipe emissions. The two issues are related. Automakers control tailpipe emissions of hydrocarbons, carbon monoxide, and nitrogen oxides with catalytic converters. Sulfur lowers the efficiency of converter catalysts.

To meet likely Tier 2 standards, automakers will have to raise the efficiencies of catalytic converters, which will amplify the harmful effect of sulfur in gasoline. For that reason, lowering fuel sulfur content while tightening tailpipe emissions makes sense.

The refining industry hasn't resisted a lowering of sulfur limits for gasoline. It has asked mainly that the requirement be phased in and that it apply in regions where it will make a significant difference in air quality.

Last year, industry associations proposed a sulfur reduction program oriented to those aims. Under the proposal, conventional gasoline sold east of the Mississippi River and in Missouri, Louisiana, and East Texas would contain no more than 150 ppm sulfur on average with a per-gallon cap of 300 ppm. The ceiling would fall in 2010 to 30 ppm on average with an 80 ppm per-gallon cap unless EPA, after studying the need, determined otherwise.

In most other parts of the U.S., the sulfur standard for conventional gasoline would be 300 ppm average with a per-gallon cap of 450 ppm. States covered by this standard could opt in to the tougher program if they demonstrated the need to do so.

According to the American Petroleum Institute, the sulfur content of U.S. conventional gasoline now averages 347 ppm. Nearly one fourth of conventional gasoline contains 500 ppm of sulfur or more.

The lower-sulfur gasoline proposed by the refining industry would become available the earlier of January 2004 or when the Tier 2 tailpipe emission rule took effect. EPA says the Tier 2 rule cannot take effect before 2004.

What the industry fears most is a sudden shift to the toughest standard-30-40 ppm average sulfur with a per-gallon cap of 80 ppm, applied nationwide-in 2004. Such a quick, broad move would require heavy and immediate investments at a time when refiners already are retooling to meet other environmental demands, including the second phase of reformulated gasoline. With California banning the popular oxygenate methyl tertiary butyl ether and profitability chronically low, a phased approach is especially critical.

Crash approach

And calibrating sulfur standards to regional air quality hurts nothing but the sense of regulatory convenience that makes a nationwide standard appeal to automakers, environmentalists, and political leaders wanting to share air-pollution woes. API cites research showing that the efficiency of catalytic converters swings quickly with gasoline sulfur content; a dose of high-sulfur fuel doesn't spoil the catalyst. And the national standard is naturally opposed by states with little air pollution, for which the toughest standards would raise cost for no gain.

The gasoline sulfur rule thus serves as a scorecard for EPA's flexibility and sense of perspective. A crash program to cut the sulfur content of gasoline could be the last financial straw for some refiners and create problems for gasoline supply. The air-quality differences between a crash, nationwide program and a phased, regional approach simply don't warrant taking the risk.