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Update on Federal and State Fuel Issues
for the
NOACA Air Quality Workshop
by
Bob Leidich
BP America Inc.
March 22, 2005
Cleveland, Ohio
Overview Federal Fuel Issues
- Tier II Gasoline Sulfur Rule - Highway and Non-Road Diesel Rules
- Key Fuel Provisions of Energy Bill
State Fuel Issues - State MTBE Bans - Current Gasoline Types
Impact of New Ozone National Ambient Air Quality Standard
Comparison of Federal RFG, 7.8 and 7.0 RVP clean fuel options
Tier 2 Gasoline Sulfur Rule
Refinery & Importer Gasoline Sulfur Standards
YearJanuary 1,
2004January 1,
2005January 1,
2006
Refinery Average, ppm 30 30
Corporate Pool Average, ppm
120 90Not
Applicable
Per Gallon Cap, ppm 300 300 80
U.S. Gasoline Sulfur Level
400
300
200
100
0
Conventional Phase II RFG
Average Sulfur Level, ppm
2000 2006
350
150
30
CARB
30 3015
Highway Diesel Rule
Beginning June 1, 2006, minimum 80% highway diesel production at 15 ppm maximum sulfur, and balance at 500 ppm maximum sulfur
Key dates: June 1, 2006 at refinery July 15, 2006 at terminals September 1, 2006 at retail
Beginning January 1, 2010, 100% highway diesel production at 15 ppm maximum sulfur
Non-Road Diesel Rule
Beginning June 1, 2007, agriculture, construction, locomotive and marine (NRLM) diesel fuel at 500 ppm max sulfur and min 40 cetane index or max 35 volume percent aromatic content
Beginning June 1, 2010, agriculture and construction diesel fuel at 15 ppm max sulfur
Beginning June 1, 2012, locomotive and marine diesel fuel at 15 ppm max sulfur
U.S. Diesel Fuel Sulfur Level
400
300
200
100
Highway Non-Road Part 89
Maximum or (Average) Sulfur Level, ppm
2012
Locomotive & Marine
20102007200620040
500
2350
151515 15
500500
(330)
(2350)
500
(2350) (2350) (2350)
15 15 15
Key Fuel Provisions of a Comprehensive Energy Bill
Renewable Fuels Standard is established requiring 5 billion gallons by 2012; includes credit banking and trading and no per gallon minimum
Two percent RFG oxygen requirement is repealed
Provisions for defective product liability protection included for both ethers and ethanol (prohibits lawsuits that say MTBE is a defective product)
National phase-out of MTBE with minimum 4 years lead time after enactment of legislation
States with MTBE Restrictions
1/1/04 0.5%
1/1/044/30/02
1/1/04 0.5%
6/1/03
7/1/050.5%
7/24/040.5%
7/24/040.5%
1/1/060.5%
7/1/050.5%
7/1/000.5%
7/1/000.33%
7/1/000.5%
7/13/001.0%
7/1/040.5%
12/31/030.6%
Dates represent effective date of MTBE ban
Percentages represent diminus levels
8/1/040.5%
Updated 8/4/04
Passed Legislation Ban Being Considered
1/1/07 0.5%
1/01/050.3%
1/1/07
Summer Gasoline Requirements in 2002
Pacific Ocean
Gas Spec LegendConventional
7.0 RVP, 150 ppm S
Southern RFG
7.8 RVP
Northern RFG
Northern RFG w/Ethanol
Oxy Fuel/Ethanol Mandate
CA CBG
7.0 RVP
Federal/CA RFG
7.2 RVP
California CBG 4.5%
Fed/California RFG 7.5%
Fed RFG South 9.5%
Fed RFG North w/EtOH 3.2%
Fed RFG North 7.8%
7.8 RVP CG 13.3%
9.0 RVP CG 49%
Minnesota EtOH Blend 2%
7.2 RVP CG 0.2%
7.0 RVP CG 1%
7.0 RVP, 150 ppm S 2%
Summer Gasoline Types and Market Share
Source: U.S. EPA Study of Unique Gasoline Fuel Blends, October 23, 2001
Classification of 8-Hour Ozone Nonattainment Areas
Updated: 10/5/04
Attainment
Basic - June 2009
Marginal - June 2007
Moderate - June 2010
Serious - June 2013
Severe - June 2021
Unclassifiable
Basic - Dec 2007
Moderate - Dec 2007
** **
**
* County has multiple classifications – severest classification is noted
177
106
86
6254
0
20
40
60
80
100
120
140
160
180
2002 2007 2010 2015 2020
VO
C E
mis
sio
n I
nve
nto
ry,
To
ns
Per
Su
mm
er D
ay
Impact of Federal Regulations on On-Road and Off-Road VOC Emissions for Southeast Michigan
Source: Air Improvement Resource Inc. Final Report, 2/23/05 for SEMCOG, Auto Alliance and API
115
93
106
86
100
82
0
50
100
150
9.0 RVP 7.8 RVP 7.0 RVP
2007
2010
VO
C E
mis
sio
n I
nve
nto
ry,
To
ns
Per
Su
mm
er D
ayImpact of Different RVPs on VOC Inventories in Southeast Michigan
Source: Air Improvement Resource Inc. Final Report, 2/23/05 for SEMCOG, Auto Alliance and API
10.19.4
14.2
12.9
10
7.5
0
2
4
6
8
10
12
14
16
RFGw/Ethanol
RFG w/oEthanol
7.0 RVP w/oEthanol
Complex Model
Predictive Model
VO
C B
enef
it,
To
ns
Per
Su
mm
er D
ay
Net VOC Benefits in 2007 for Southeast Michigan Area
Source: Air Improvement Resource Inc. Final Report, 2/23/05 for SEMCOG, Auto Alliance and API
463
279
211
114
71
0
50
100
150
200
250
300
350
400
450
500
2002 2007 2010 2015 2020
NO
x E
mis
sio
n I
nve
nto
ry,
To
ns
Per
Su
mm
er D
ay
Impact of Federal Regulations on On-Road and Off-Road NOx Emissions for Southeast Michigan
Source: Air Improvement Resource Inc. Final Report, 2/23/05 for SEMCOG, Auto Alliance and API
2.7
-3.2
3.6
5.4
0.6
1.5
-4
-3
-2
-1
0
1
2
3
4
5
6
RFGw/Ethanol
RFG w/oEthanol
7.0 RVP w/oEthanol
Complex Model
Predictive Model
Exh
aust
NO
x B
enef
it,
To
ns
Per
Su
mm
er D
ay
Net NOx Benefits in 2007 for Southeast Michigan Area
Source: Air Improvement Resource Inc. Final Report, 2/23/05 for SEMCOG, Auto Alliance and API
Fuel Implementation Issues
Federal RFG 7.0 RVP
Timing, Years from 4 Years 1 - 3 YearsDate of Final Regulation
Refining Issues “Major” Capital “Moderate” Capital
Implementation Issues Basic Nonattainment State Compliance andAreas Cannot Opt-In Enforcement Programto RFG Required
Supply Issues “Significant” Impact “Moderate” Impact
Midwest Notional Refinery Average 1.7 – 6.2 0.6 – 3.0Incremental Cost, Cents Per Gallon (Preliminary) (Preliminary)
Summary
Federal regulations are providing significant reductions in VOC and NOx emissions
New 8-Hour Ozone Standard may require a clean fuel option in some Ohio nonattainment counties
Federal RFG, 7.8 and 7.0 RVP provide significant VOC emission reductions and minimal, if any NOx emission reductions
Low RVP options likely to be more cost effective than RFG and have less severe implementation issues