Despite the objections of refiners, the US Environmental Protection Agency has issued a final rule that will require the industry to slash the sulfur content of gasoline from an average of 300 ppm (excluding California) to 30 ppm.
Beginning in 2004, refiners and importers can make or sell gasoline containing a range of sulfur levels, as long as all of their production is capped at 300 ppm and their corporate sulfur levels average 120 ppm during the calendar year (OGJ May 10, 1999, p. 32). In 2005, the refinery average will be set at 30 ppm, with a production cap of 300 ppm and a corporate average of 90 ppm. Both of the average standards can be met with the use of credits.
In 2006, refiners must meet a 30 ppm average sulfur level with a cap of 80 ppm.
In response to complaints from governors of Western US states, EPA gave refiners in the Rocky Mountain region and Alaska an extra year to meet the standard (OGJ, Nov. 29, 1999, p. 27). They will be allowed to meet a 150 ppm refinery average and a 300 ppm cap through 2006 but will have to meet the 30 ppm average and 80 ppm cap by 2007.
Small refiners (with less than 1,500 employees and less than 155,000 b/d of processing capacity company-wide) will face less-stringent, interim standards until 2008, when they must meet the final sulfur standards. If small refiners can demonstrate a severe economic hardship, they can apply for waivers lasting until 2010.
EPA included a provision, at the request of the refining industry, to permit waivers if accidents cause operational problems at plants. Refiners and importers of gasoline also can earn, bank, and trade sulfur credits for use in a later year or to sell to another refiner. EPA said that would lower costs for industry and clean air sooner.
The agency said the sulfur rule would cost under 2¢/gal, but the oil industry has put the cost at 5¢/gal.
EPA agreed with the auto industry's argument that gasoline sulfur reductions were needed because sulfur fouls catalytic converters, which remove pollutants from auto exhaust. EPA said the sulfur rule, plus one tightening auto emissions, addresses "tailpipe emissions and gasoline as a single system to achieve cleaner air in an efficient and cost-effective manner."
The agency said, when fully implemented in 2030, both the sulfur and auto emissions rule will reduce auto nitrogen oxides emissions (a key component of smog) by 74% and soot by 80%, equivalent to removing 164 million cars from the road.
President Bill Clinton announced the EPA rules. He said, "I thank the auto and the oil industries, the states, the environmental communities, the leading public health experts. The issues were not always easy, to put it mildly. But working together, we have, I am convinced, come to solutions that are best for our nation's health and for our nation's economy. We will continue to work together also-and this is very important-to create cleaner diesel fuel, our next big challenge in this area."
Reactions
The National Petrochemical & Refiners Association said the rule will require the refining industry "to make unprecedented investments in unproven technology to meet the rule's timing requirements.
"It then assumes that those unproven technologies will work without out a hitch to maintain the flow of gasoline to consumers without major upsets in supply or prices."
NPRA Pres. Urvan Sternfels said, "This final EPA rule imposes California's current state gasoline sulfur regulations on the entire US. It will require substantial refinery investments [of] $3-5 billion-roughly 3-5¢/gal, on average.
"We are concerned that extending these sulfur limits to the whole country could lead to supply and price instability nationwide, similar to that which California experienced earlier this year."
Sternfels said EPA rejected industry's proposal for regional sulfur levels matched to environmental needs and other suggestions that would have given refiners more time and flexibility to meet the standards.
The American Petroleum Institute said, "We support EPA's efforts to reduce emissions and recognize the industry's role in reducing the sulfur content of gasoline in order to continue the process of improving our nation's air quality.
"We will do everything possible to met EPA's deadline and continue to serve our customers. To do so, however, it is essential that we receive full cooperation from state, local, and federal authorities in obtaining the necessary permits for refinery modifications."
