Down to Gasoline Alley - Tier 3 Sulfur Requirements Closing in On Refiners

New “Tier 3” requirements to limit sulfur content in gasoline are set to take effect in just over two months — on January 2017. In March 2013, the Environmental Protection Agency (EPA) proposed to limit the sulfur content of gasoline produced or imported into the U.S. to no more than 10 parts per million (ppm) from the current “Tier 2” 30 ppm standard by January 1, 2017.   With these upcoming “Tier 3” requirements, refiners have been developing their strategies to meet the regulations and in some cases have already invested hundreds of millions of dollars in their facilities. Today, we look at the various approaches refiners can take for compliance and their impacts on the industry.

The RBN blogosphere last covered Tier 3 regs in June 2013, a couple of months after the EPA released the proposed requirements but prior to the full approval of the regulations (see The Tears of a Refiner – New Gasoline Sulfur Regulations).  In that blog, we recapped the history of EPA’s “Tier” program and considered the potential impact of Tier 3.  In summary, this program was kicked off by the Clean Air Act of 1990.  The regulations were introduced in stages (the Tiers) to progressively lower all sorts of emissions, including carbon monoxide (CO), nitrogen oxides (NOx), particulate matter (PM), formaldehyde (HCHO), and non-methane hydrocarbons (NMHC).  Tier 1 was implemented progressively between 1994 and 1997.  The Tier 2 program was a refinement proposed in 2000 and phased in by 2006 that included sulfur in the program.   The Tier 2 program treated both vehicles and fuels as a combined system, recognizing that reducing vehicle emissions of toxins required changes to fuel specifications as well as vehicle emission systems. More specifically, the fuel part of the Tier 2 program reduced the average sulfur content in gasoline by 90 percent from 300 ppm down to 30 ppm.   Now it is time for Tier 3, which cuts the permitted sulfur content in gasoline even further.

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What Tier 3 is and isn’t

Tier 3 is one of many regulations that the EPA has imposed on the motor fuel and automobile industries to reduce the impacts of motor vehicles on air quality and public health.   In today’s blog, we will not address the tailpipe emission portion of Tier 3 (all those compounds listed above), but instead will focus on the requirement that gasoline produced or imported in the U.S. meets a 10-ppm maximum sulfur specification by January 2017 on a company annual average basis.  The annual average provides some compliance flexibility to the refinery and therefore it does not necessarily mean that the gasoline consumers put in their cars has 10 ppm or less sulfur, or even that a specific gallon of gasoline produced at a refinery has 10 ppm sulfur (hooray for annual averaging).  The specifics of Tier 3 are outlined below, based on a recent EPA presentation:

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