December 2 2012 Steve Higley Manager Outreach American Fuel amp Petrochemical Manufacturers Washington DC Impending Regulations Costs and Consequences Regulatory Train Wreck A blizzard of stationary source regulations threatens US refining and petrochemical operations Americ ID: 245091
Download Presentation The PPT/PDF document "Energy Producing States Coalition" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
Energy Producing States CoalitionDecember 2, 2012Steve HigleyManager, OutreachAmerican Fuel & Petrochemical ManufacturersWashington, DC
Impending Regulations:
Costs and ConsequencesSlide2
Regulatory “Train Wreck”A blizzard of stationary source regulations threatens U.S. refining and petrochemical operations, American jobs, and our nation’s economy. Regulations of major concern include:Renewable Fuels Standard (RFS)Low-Carbon Fuel Standard (LCFS)Tier 3 Gasoline Standards2013 Ozone NAAQS revisions
Greenhouse Gas Regulations
Some are conflicting; some will be impossible to meet; all will have significant consequences.Slide3
Federal Renewable Fuels Standard (RFS2):Requires 36 billions of biofuels to be blended into the fuel supply by 2022Mandated volumes divided into 4 major categories:Total renewable fuelsAdvanced biofuelsBiomass-based dieselCellulosic biofuel
Renewable Fuels StandardSlide4
Two large barriers make it difficult to meet RFS2:1. The amount of ethanol that can be blended into gasolineCurrent law caps ethanol in gasoline at 10%Addition of greater volumes of ethanol will be difficult without:increasing the blending limit for standard vehicles, or expanding the use of E85 in flex-fuel vehiclesEPA granted “partial waivers” to allow E15 (gasoline with 15% ethanol) use only
in vehicles MY2001 and newer
Legal challenge lost on standing, but some judges in opinion concurred EPA action was illegal
Feasibility of the RFS2 Slide5
Two large barriers make it difficult to meet RFS2:2. The types of biofuels required under the standardNearly all of the ethanol sold in the U.S. is made from cornHowever, RFS requires increasing amounts of “advanced biofuels” (i.e. not made from corn starch)For 2012, EPA reduced the EISA requirement of 500 million gallons of cellulosic biofuels to about 9 million gallons
Actual 2012 production to date: 20,000 gallons
Feasibility of the RFS2Slide6
Acts as a cap-and-trade program for fuelsSeeks to reduce carbon intensity (CI) of fuel pool through fuel switchingGoal of program is to replace traditional fuels (gasoline, diesel) with “low-carbon” fuels (i.e. cellulosic, electricity, hydrogen)California implementing LCFS as part of AB3210% CI reduction over 10 yearsOther states pursuing LCFS programs: OR, WA, 11 Northeast/Mid-Atlantic StatesEPA believes it has authority under CAA for national LCFS program through regulation
Low-Carbon Fuel StandardSlide7
CEA report (SAIC modeling) on Northeast regional LCFS:Increase in consumer gasoline costs of 112%Loss of 147,000 jobs in Northeast region$27 billion decline in regional GDP$28.8 billion decline in disposable household incomeCharles River Associates study on national LCFS program:Increase in consumer gasoline/diesel costs of up to 170%$1,400 – $2,400 decline in annual household purchasing power
$410 – $750 billion decline in U.S. GDP
Net loss of 2.3 – 4.5 million American jobs
Low-Carbon Fuel StandardSlide8
“Tier 3” Gasoline RegsInitiative announced by President Obama in May 2010EPA proposal expected in 2012 or early 2013Final rule in 2013Perhaps effective in 2016, in time for MY 2017 Will include gasoline sulfur reduction; could also include gasoline RVP reductionsUnder Tier 2, sulfur already reduced 90%
Independent study: 9 – 25 cent per gallon cost increase, 4 to 6 potential refinery closuresSlide9
January 7, 2010: EPA published proposal to tighten ozone NAAQSSet primary standard between 60 and 70 parts per billion (ppb) over eight hoursNo new science evaluatedSeptember 2, 2011: President Obama announced Ozone NAAQS reconsideration would be withdrawnRegularly scheduled 5-year reconsideration of the ozone standard (mandated by CAA) will occur in 2013Ozone NAAQSSlide10
Sept. 2010 Manufacturers Alliance (MAPI) study examined impacts of a 60 ppb ozone NAAQS:Annual attainment cost of $1 trillion+ from 2020-2030Reduction in GDP of $676.8 billion (3.6%) in 20207.3 million jobs lost by 2020“The net result would likely be another inducement for companies to move operations offshore”Ozone NAAQSSlide11Slide12
EPA issuing GHG regulations for large stationary sourcesTitle V; PSD permits for sources > 100,000 TPY (new facilities) or > 75,000 TPY (major modifications)GHG New Source Performance Standards (NSPS) for utilities, refineriesRegulations for refineries anticipated 2013; unsure what they will look likeRegardless of what they look like, will conflict with other regulations already discussedNSPS will trigger GHG regulation for existing sourcesGHG RegulationsSlide13