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Frequent Questions
- What is the Tier 2 Vehicle & Gasoline Sulfur Program?
- What are the Benefits and Costs of this Program?
- Are There Any Regulatory Flexibilities That Ease the Burden of the Program?
- How Does the Gasoline Sulfur Program Affect Gasoline Prices?
What is the Tier 2 Vehicle & Gasoline Sulfur Program?
The Tier 2 Vehicle and Gasoline Sulfur Program is a landmark program, begun in January 2004, that affects every new passenger vehicle and every gallon of gasoline sold in the U.S. By designing cleaner cars that run on cleaner fuels the result is much cleaner air. For the first time:
- SUVs, pickups, vans, and even the largest passenger vehicles are subject to the same national emission standards as cars
- vehicles and the fuels they use are treated as a system, so the cleaner vehicles will have the low-sulfur gasoline they need to even greater emission reductions
- new emission standards apply to all passenger vehicles, regardless of whether they run on gasoline, diesel fuel or alternative fuels.
This program, finalized in 1999, is the result of a collaborative effort by a wide range of stakeholders. EPA worked closely with auto companies, oil companies, states, public health and environmental organizations, and others to design a stringent, but balanced program that all key stakeholders could support.
What are the Benefits and Costs of this Program?
Vehicles meeting the Tier 2 emission standards are much cleaner – 77% to 95% cleaner, depending on the size of the vehicle – compared with model year 2003 and earlier. The new standards also reduce the sulfur content of gasoline by up to 90 percent. The significant health and environmental benefits of the program are estimated to total more than $25 billion at a cost to consumers of between only $70 to $250 per vehicle, and these large benefits are costing only about a penny a gallon today, and will still cost less than 2 cents per gallon when the program is fully phased in, in 2006.
EPA estimates that this program will prevent as many as 4,300 deaths, more than 10,000 cases of chronic and acute bronchitis, and tens of thousands of respiratory problems a year. As newer, cleaner cars enter the national fleet, the new tailpipe standards will significantly reduce emissions of nitrogen oxides from vehicles by about 74 percent – nearly 3 million tons – by 2030. In addition, the program will reduce the contribution of vehicles to serious public health and environmental problems, including volatile organic compounds, particulate matter, regional visibility problems, toxic air pollutants, and acid rain.
Are There Any Regulatory Flexibilities That Ease the Burden of the Program?
EPA designed several measures in the program that will ensure supply of low sulfur gasoline across the country while maintaining the environmental benefits of the program. These flexibilities include:
A market-based trading system which allows the oil industry to comply with the rules more cost-effectively. Under the averaging, banking, and trading program, companies have the flexibility to reduce costs by averaging sulfur levels among different refineries, between companies, and across time.
A geographic phase-in program, which provides a slightly higher interim sulfur standard for gasoline sold in parts of the Western U.S. This program recognizes that this area is dominated by small capacity, geographically-isolated refineries that would have a more difficult time competing for engineering and construction resources to modify their refineries to meet the standards.
A small refiner program, which gives small refiners more time to meet the standards, recognizing their financial challenges in raising capital for the sulfur investments.
A hardship provision, which allows refineries to apply on a case-by-case basis for additional time and flexibility to meet the sulfur standards, based on a showing of unique circumstances. Under this program, EPA has granted hardship waivers to seven refineries. While the environmental impact of these waivers is insignificant, this program has contributed to ensuring the supply of gasoline is not disrupted while these companies make the investments to achieve full compliance with the sulfur program.
How Does the Gasoline Sulfur Program Affect Gasoline Prices?
EPA estimates that the significant benefits of the Tier 2/gasoline sulfur program will come at a cost of about a penny a gallon today, and will still cost less than 2 cents per gallon for the refining industry to produce low sulfur gasoline when the program is fully phased in, in 2006. We have been monitoring very closely the transition to the low sulfur gasoline program, and believe that it has been – and will continue to be – a smooth one. This success is largely attributed to the fact that the program built-in a number of flexibilities (described above) to ease the economic burden on the oil industry. Several refiners have introduced cleaner gasoline even earlier than required.
Rising gasoline prices are driven by many factors, particularly the high price of crude oil and an increasing demand, and the low costs of the gasoline sulfur program are not a significant factor.
For further information or assistance regarding this Web page, please contact the ASD Information Line at (734) 214-4636 or email: asdinfo@epa.gov.