Appendix B. Mobile Source Air Toxic Rule Interaction with MTBE Bans

The Mobile Source Air Toxics rule (MSAT)¹² would not be a major problem if MTBE were to remain a key component of RFG in the future. But MSAT, when combined with possible MTBE bans, has become an issue, and illustrates the interconnected nature of fuel quality decisions. MSAT, which went into effect January 2002, identified compounds to be considered as mobile source air toxics and established new toxic emission gasoline baselines for individual refineries using the baseline period 1998-2000. These baselines “maintain current levels of over-compliance with toxic emissions performance standards that apply to Federal reformulated gasoline (RFG) and antidumping standards that apply to conventional gasoline (CG).”¹³ Thus, the MSAT rule is also sometimes referred to as the “anti-backsliding” regulation. EPA notes in the rule that since an historically achieved baseline is being used, refiners are not required to install new equipment or use different technologies from those used during the baseline years, and therefore the program should have little cost. EPA’s assumption about program costs is valid when the future doesn’t change from history. But MTBE bans are changing the future from the past, and MTBE was a vital clean-gasoline component for many refiners during the baseline years.

MTBE bans create a disproportionate impact on some refineries that historically had used MTBE, had very low toxic baselines, and produced high fractions of reformulated gasoline compared to conventional. To understand the effect on different refineries, it is necessary to understand some features of the MTBE bans. MTBE has a high oxygen content, is relatively clean burning, and has high octane. MTBE is used mostly in reformulated gasoline (RFG), where the oxygen requirement of the Clean Air Act Amendments of 1990 and its clean burning properties made it a very attractive material. There are no easy substitutes for the volumes of MTBE being lost. Ethanol is one of the materials many refiners will use to replace the MTBE volumes being lost. But while ethanol has good octane characteristics and is relatively clean compared to many gasoline components, it has higher toxics emissions than MTBE (Appendix C).

Refiners needing to reduce toxics can do so by adding isomerization processes (which significantly reduce benzene content) and sulfur removal equipment (which reduces exhaust benzene). But some refiners using MTBE have already made refining changes to reduce sulfur and benzene in their gasoline. As a result, they have very clean toxic baselines, and can do little more to reduce toxics and counter the increases in toxic content when ethanol is used instead of MTBE. They will need to opt for reducing their production of RFG, incorporating their cleanest streams, and leaving the remaining material for use in conventional gasoline, if that product can absorb the material and not exceed anti-dumping and MSAT requirements.

The refiners with the largest problem seem to be some of those serving the East Coast that have very low RFG toxics baselines and that produce mostly RFG and little conventional gasoline. The percentage of conventional gasoline can be important because conventional gasoline would frequently have a higher toxic content than RFG and has little or no MTBE to be replaced. Some refiners may be able to produce more conventional gasoline by removing some of the problematic components from RFG to balance the ethanol toxic effects, placing them in the conventional pool. In the case where a refinery is producing 80 percent conventional and 20 percent RFG, it may be possible to remove some toxic material from the 20 percent RFG volume and move it to the 80 percent conventional volume without impacting conventional gasoline’s MSAT restriction. But when the refinery produces 80 percent RFG and 20 percent conventional gasoline, the small-volume conventional pool may not be able to absorb all the materials being removed from the 80 percent RFG pool without adversely affecting the quality of the conventional gasoline.

Some very clean refiners serving the East Coast have indicated that they may have to reduce the volumes of RFG they produce as a result of the MSAT restrictions in conjunction with the MTBE bans. The result of such reductions on the East Coast may be that “dirtier” refineries from the Gulf Coast or “dirtier” import sources will be filling in the volumes that the “cleaner” refineries on the East Coast are no longer producing.

Refineries in California producing California RFG (CaRFG) are exempt from the MSAT, and refineries in PADD 2 producing RFG were using ethanol when their baseline was established, so they should not be affected. At this time, it does not appear that the Gulf Coast refineries are being constrained to the same degree as those on the East Coast.

Notes and Sources