As estimated by the EPA at one end and the American Petroleum Institute (API) at the other, there is an immense difference in the increased cost of fuel that will result from the Agency’s newly proposed Tier 3 fuel standards for passenger cars, light-duty trucks, medium-duty passenger vehicles, and some heavy-duty vehicles.  

According to the EPA, the proposed fuel standards, which mainly require reduced sulfur content, will cost on average less than 1 cent per gallon.  But the API cites a study by Baker & O’Brien, an energy consulting firm, that sees a per-gallon cost increase of up to 9 cents per gallon and up to 25 cents a gallon if the Agency adds a vapor pressure reduction requirement as part of a separate rulemaking.  And, the estimates cited by the API do not even consider the expected hikes in fuel costs associated with federal ethanol mandates.

Automakers see advantages

Those initial reactions to EPA’s proposal will likely set the tone of the debate between the Agency and its supporters and the petroleum sector in the coming months leading up to a final action.  There appears to be less opposition from automakers that, under the second part of the proposal, will be required to manufacture vehicles that comply with stringent emissions standards for NOx, VOCs, direct PM, CO, and air toxics.  In fact, vehicle manufacturers appear to view the proposal as an economic advantage since it seeks to match federal emissions standards to those of California’s low emission vehicle (LEV III) program, which was made final in 2012.  Specifically, the proposal seeks to apply the same standards in all 50 states.

“Eliminating differing timelines, regulatory procedures, and test methods at the federal and state levels will help reduce emissions and avoid extra costs to consumers,” stated the Alliance of Automobile Manufacturers after the EPA announced the proposal.  The proposal also somewhat simplifies regulations for auto companies by aligning compliance dates for the proposed emissions standards with those of the greenhouse gas (GHG) emissions standards for light-duty vehicles, which the EPA recently wrote into a final rule.  Both the GHG standards and the proposed standards would be phased in between 2017 and 2025. 

Many states regard the federal Tier 3 proposal as essential in their efforts to bring areas into attainment with the National Ambient Air Quality Standards (NAAQS) since the contribution of transportation to air pollution appears to be on the rise.  According to the EPA, by 2014, in many nonattainment areas, cars and light trucks will contribute 30 percent to 45 percent of total NOx emissions, 20 percent to 25 percent of total VOC emissions, and 5 percent to 10 percent of total direct PM-2.5 emissions.

Proposed requirements

The Tier 3 proposal includes the following highlights:

• By January 1, 2017, lower the annual average sulfur content of gasoline to no more than 10 parts per million (ppm).  The current federal limit for average sulfur content is 30 ppm.  In addition to California, the EPA notes that agencies in Europe and Japan have already imposed gasoline sulfur caps of 10 ppm. 
• Phase in an 80 percent average annual reduction compared with today’s standards for nonmethane organic gases and NOx (NMOG+NOx) tailpipe standards for light-duty vehicles and a 70 percent reduction in per-vehicle PM emissions.
• For heavy-duty vehicles, phase in a 60 percent reduction in both fleet average NMOG+NOx and per-vehicle PM standards. 
• Extend the regulatory useful life period during which the standards apply from 120,000 miles to 150,000 miles. 
• Require a 50 percent reduction in vehicle evaporative emissions limits for all light-duty and on-road gasoline-powered heavy-duty vehicles.  Evaporative emissions are nontailpipe emissions from the engine and fuel system. 
• Either maintain the current 80 ppm refinery gate and 95 ppm downstream sulfur caps or lower them to 50 and 65 ppm, respectively.
• Update the federal emissions test fuel to better match today’s in-use gasoline and also to be forward-looking with respect to future ethanol and sulfur content.  Current requirements specify an emissions test fuel with no ethanol for emissions testing. 

Small business

Also, the proposal includes flexible compliance options for some Tier 3 standards and vehicle classes.  These include credit for early compliance, the ability to offset some higher-emitting vehicles with extra-clean models, and a hardship provision that allows small manufacturers more time to meet the tailpipe and evaporative emissions standards. 

Click here for EPA’s Tier 3 proposal and related information.