EPA Finalizes Tier 3 Emission & Fuel Standards

SIGMA, API, PMAA say benefits "negligible," will increase costs of delivering energy

EPA Tier 3

WASHINGTON -- The U.S. Environmental Protection Agency (EPA) has finalized Tier 3 emission standards designed to reduce air pollution from passenger cars and trucks. Starting in 2017, Tier 3 sets new vehicle emissions standards and lowers the sulfur content of gasoline, considering the vehicle and its fuel as an integrated system.

The vehicle standards reduce tailpipe and evaporative emissions from passenger cars, light-duty trucks, medium-duty passenger vehicles and some heavy-duty vehicles, the agency said.

The gasoline sulfur standard will make emission control systems more effective for both existing and new vehicles, it added, and will enable more stringent vehicle emissions standards since removing sulfur allows the vehicle's catalyst to work more efficiently.

The Tier 3 standards are closely coordinated with California's LEV III stan­dards as well as with the EPA's and California's programs for greenhouse gas (GHG) emissions from light-duty vehicles.

The EPA also said that it is setting these Tier 3 standards to address public health issues.

The Tier 3 program continues the successful transition that began with EPA's Tier 2 program, finalized in 2000, in which EPA treated vehicles and fuels as a system to reduce both gasoline sulfur and vehicle emissions.

According to the Society of Independent Gasoline Marketers of America (SIGMA), "the new regulations were the subject of years of conflict between automakers, which generally support cleaner fuels that lower their costs, and the oil industry, which will bear billions of dollars in extra costs. Because of these extra costs, which could ultimately lead to higher prices at the pump, SIGMA has opposed the rule. Environmentalists have supported the rule as an effective means to reduce smog, and say it could be one of President Obama's most lasting environmental initiatives."

The American Petroleum Institute (API) said, "EPA's new Tier 3 rule requiring the last bits of sulfur to be removed from gasoline will unnecessarily raise costs and actually increase CO2 emissions at U.S. refineries because of the energy-intensive hydro treating equipment needed to meet the new standard."

"This rule's biggest impact is to increase the cost of delivering energy to Americans, making it a threat to consumers, jobs and the economy," said API downstream group director Bob Greco. "But it will provide negligible, if any, environmental benefits. In fact, air quality would continue to improve with the existing standard and without additional costs."

The new rule could require $10 billion in capital costs, said API, citing a study by Baker & O'Brien. The annual compliance cost is $2.4 billion, equating to a potential cost increase of between six cents and nine cents per gallon of gasoline produced."

"Besides the enormous costs and negligible environmental benefit, we are also concerned about the timeline of EPA's new rule," Greco said. "The rushed timeframe leaves little opportunity for refiners to design, engineer, permit, construct, start up and integrate the new machinery required. This accelerated implementation only adds costs and potentially limits our industry's ability to supply gasoline to consumers."

The Petroleum Marketers Association of America (PMAA) said, "the regulation will not require infrastructure changes at the distributor or retail level, and the lower sulfur content is compatible with all gasoline powered cars and trucks; however, the supply bottlenecks and increased gasoline price burden on consumers are a concern."

The EPA said that the final standards are based on input from a broad range of groups, including state and local governments, auto manufacturers, emissions control suppliers, refiners, fuel distributors and others in the petroleum industry, renewable fuels providers, health and environmental organizations, consumer groups, labor groups and private citizens.

"These standards are a win for public health, a win for our environment, and a win for our pocketbooks," said EPA Administrator Gina McCarthy. "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."

Click here to view the EPA's Tier 3 webpage.