Feds slash sulfur limit in gasoline

HOUSTON — The Obama administration imposed new limits on the amount of sulfur in gasoline on Monday, overruling the objections of refiners and oil companies who said the new ceiling would be too low and drop too fast.

Under the Environmental Protection Agency’s so-called Tier 3 rule, refiners will have until 2017 to comply with the strict new 10-parts-per-million cap. The new limit is one-third the current sulfur threshold and 97 percent less than an earlier limit phased out in 2004.

The EPA rule, which appeared little changed from a draft proposal released last year, also establishes new mandates for automotive tailpipe emissions that track California limits coming online in 2017, a move that makes it easier for U.S. automakers to sell the same car in all 50 states. Those tailpipe standards would be phased in between model years 2017 and 2025.

“These standards are a win for public health, a win for our environment, and a win for our pocketbooks,” EPA Administrator Gina McCarthy said. “By working with the auto industry, health groups, and other stakeholders, we’re continuing to build on the Obama administration’s broader clean fuels and vehicles efforts that cut carbon pollution, clean the air we breathe and save families money at the pump.”

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Clean Air Watch President Frank O’Donnell cheered the rule as “the most significant move to protect public health that the EPA will make this year.”

The American Lung Association stressed that the vehicle and gasoline changes will translate into cleaner air, saving up to 2,000 lives, preventing 19,000 asthma attacks and allowing people to avoid nearly 300,000 missed days of work and school each year by 2030.

Oil industry costs

But the oil industry said the strict sulfur standard is both unwarranted and costly, forcing refiners to make some $10 billion in investments in energy-intensive hydrotreaters and other equipment to strip more sulfur out of gasoline, in addition to another $2.4 billion in estimated annual compliance costs.

American Petroleum Institute Downstream Group Director Bob Greco said refiners will struggle to meet the 2017 deadline for making the changes.

“The rushed timeframe leaves little opportunity for refiners to design, engineer, permit, construct, start up and integrate the new machinery required,” Greco said. “This accelerated implementation only adds costs and potentially limits our industry’s ability to supply gasoline to consumers.”

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About 30 small refiners would have until 2020 to comply with the mandates under the final rule.

McCarthy highlighted other efforts to give more flexibility to refiners, including a credit averaging, banking and trading program.

The measure also will retain the existing 80-parts-per-million cap on sulfur in each gallon of gasoline, even as the average per-refinery limit drops to 10 million parts per million.

But Charles Drevna, head of the American Fuel and Petrochemical Manufacturers, said those steps don’t go far enough.

“Giving a few more trading credits over time is a good thing, but that’s like giving somebody an aspirin for the flu,” he said. And the entire industry needs more time to comply — not just the smallest refiners, Drevna added.

A penny per gallon

A Baker & O’Brien Inc. analysis conducted for the oil industry concluded that manufacturing costs could jump by up to 9 cents per gallon.

That’s much higher than the government’s prediction that the sulfur standards would translate to less than a penny per gallon of gasoline once the standards are fully in place. McCarthy said the earlier industry calculations were higher because they did not take into account the final rule’s flexibilities.

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“Cleaner gasoline will provide immediate health benefits at a bargain,” said Harold Wimmer, CEO of the American Lung Association, stressing that “these changes start as soon as the cleaner fuel is available for us to pump into our cars.”

The price of new cars also would climb by about $72 in 2025, under the new emission standards, EPA calculated. Ultimately, though, the agency said that every dollar spent to meet the standards will provide up to $13 in health benefits.

Cleaner engines

Automakers say the gasoline formulation change would allow them to build cleaner combustion engines, giving them new avenues to meet environmental mandates. Lower sulfur fuel allows catalytic convertors to work more efficiently, causing fewer tailpipe emissions. The end result is fewer smog-forming pollutants such as nitrogen oxides.

Some state and local governments have said the Tier 3 mandates are essential for them to meet existing air standards — as well as tighter ozone requirements being mulled by EPA. Right now, in areas with heavy traffic, local governments are largely limited to focusing on manufacturing plants, industrial facilities and other stationary sources of pollution, even though curbing vehicle pollution would yield bigger gains.

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“We know of no other air pollution control strategy that can clean the air as cost effectively,” said George Aburn Jr., co-president of the National Association of Clean Air Agencies.

McCarthy cast the changes as an “environmental justice issue.”

“Communities that live near major roadways often live, work and play right near that roadway,” she said, “and they are disproportionately harmed by that pollution.”

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