U.S. EPA eyes non-road 15-PPM ULSD mandate as early as 2008

Diesel Fuel News, Nov 25, 2002 by Jack Peckham

U.S. EPA's small business office is circulating a memorandum that outlines possible non-road diesel fuel and emissions limits--with one option calling for a 15-ppm sulfur limit for non-road ultra-low sulfur diesel (ULSD) as early as mid-2008.

If this option ("1-step program," see p2) eventually emerges in EPA's formal "notice of proposed rulemaking" on non-road diesel planned for early 2003, then refiners would have barely two years between the mid-2006 deadline for highway ULSD and a new mid-2008 deadline for non-road ULSD. Marine and locomotive face a 500-ppm sulfur limit.

Under the "2-step program" option, most refiners first would produce a 500-ppm sulfur diesel for non-road, marine and locomotive in mid-2007 (down from about 3,500-ppm sulfur today), then convert to 15-ppm ULSD for all diesel (marine/locomotive excepted) in mid-2010.

"Small" refiners would be given extra time to meet the lower-sulfur non-road diesel standards under either option--mid-2012 under "1-step option," and mid-2010 under "2-step option." One version of "2-step" option would also allow "small" refiners to continue selling 500-ppm sulfur fuel for non-road (including marine and locomotive) until mid-2014, when only marine/locomotive would remain as outlets for 500-ppm sulfur fuel.

Even with a ULSD mandate, "we do not plan to propose new emission standards for the engines used in locomotives and in marine applications in this rule," EPA's new memo says.

In written comments we obtained, an ad-hoc coalition of small refiners tells EPA they prefer the "1-step" option "on the condition that small refiner (only) marine and locomotive fuels are allowed to meet a 500-ppm standard for as long as market demand continues." This small-refiner coalition includes Gary-Williams Energy, American Refining, Calcasieu Refining, Calumet, Countrymark, Holly, Placid, U.S. Oil, Western Refining and the Western Independent Refiners Association.

EPA figures that the "1-step" option would cost small refiners 7 cents/gallon, and bigger refiners 5.3 c/gal., to desulfurize non-road fuel to 15-ppm sulfur. The "2-step" option would cost small refiners 7.3 c/gal. and larger refiners 5.1 c/gal., EPA figures. "The slightly higher costs for small refiners under the 2-step approach compared with the 1-step approach likely reflect that for some small refiners it is less efficient to desulfurize in two steps," EPA says. Costs could rise if locomotive/marine diesel fuel desulfurization dates or limits change.

The upcoming rule will specify "Tier 4" emissions standards for non-road engines except marine/locomotive--and these limits will require ULSD in order to achieve nitrogen oxides (NOx) and particulate matter (PM) reductions "on the same order as in the highway diesel rule," the EPA memo says.

"EPA believes that for 70-horsepower (50 kW) and above, highway engine technology could be readily transferred to nonroad diesel engines . . . Given an appropriate time frame, the PM and NOx technology envisioned for use on engines over 175 hp (130 kW) could reasonably be applied to nonroad diesel applications below and potentially well below 175 hp...

"EPA also is considering an option of basing NOx/PM standards for lower horsepower limits on levels that could be achieved without aftertreatment. EPA's initial technical judgment is that approximately 25 hp appears to be a power level below which engine control technology costs as a percentage of equipment cost could effectively prohibit cost increases typically associated with aftertreatment technology . . .Thus, EPA is considering delaying aftertreatment control for certain of the smaller engines, and not setting aftertreatment control for the smallest engines, under 25 hp, pending further study of the feasibility."

Under "Approach 1" emissions limits options, engines larger than 175 hp would start with Tier 4 PM limits in 2009 and then Tier 4 NOx limits in 2011. Engines of less than 175 hp would face Tier 4 PM limits in 2010 and Tier 4 NOx limits in 2012.

"Approach 2" would apply less-severe "Tier 3" limits on engines up to 70 hp starting in 2008, then "Tier 3" or "Tier 4" limits in 2013. Bigger engines (70-175 hp) would face Tier 4 limits in 2012, and engines over 175 hp would face Tier 4 in 2011.

"Approach 3" would delay Tier 4 limits until 2012 for engines 70-175 hp, or until 2011 for over-175-hp engines.

"Approach 4" would impose Tier 3 PM limits on engines up to 70-hp in 2008, "Tier 4" on 70-175-hp engines in 2012, and Tier 4 on >175-hp engines in 2011.

"We are also considering whether it would be appropriate to have a different desulfurization schedule for locomotive and marine diesel fuels, since these engines would not be subject to new emission standards under this rule and thus would not have sulfur-sensitive emission controls," EPA's memo says. "However, sulfur reductions in fuel used in existing locomotive and marine engines can have significant health benefits even before new standards are implemented" because of "sulfate PM [reduction] benefits."

"We are also considering how a credit trading program might be structured under the 2-step approach," EPA says. "Such a program might allow refiners to generate credits for producing 15-pm fuel earlier than required, while other refiners might be able to use those credits to delay desulfurization investments for some period of time," including small refiners.