Presentation on theme: "Energy Producing States Coalition December 2, 2012 Steve Higley Manager, Outreach American Fuel & Petrochemical Manufacturers Washington, DC Impending."— Presentation transcript:
Energy Producing States Coalition December 2, 2012 Steve Higley Manager, Outreach American Fuel & Petrochemical Manufacturers Washington, DC Impending Regulations: Costs and Consequences
Page 2 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 Standards 2013 Ozone NAAQS revisions Greenhouse Gas Regulations Some are conflicting; some will be impossible to meet; all will have significant consequences.
Page 3 Federal Renewable Fuels Standard (RFS2): Requires 36 billions of biofuels to be blended into the fuel supply by 2022 Mandated volumes divided into 4 major categories: Total renewable fuels Advanced biofuels Biomass-based diesel Cellulosic biofuel
Page 4 Two large barriers make it difficult to meet RFS2: 1. The amount of ethanol that can be blended into gasoline Current 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 vehicles EPA 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
Page 5 Two large barriers make it difficult to meet RFS2: 2. The types of biofuels required under the standard Nearly all of the ethanol sold in the U.S. is made from corn However, 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
Page 6 Acts as a cap-and-trade program for fuels Seeks to reduce carbon intensity (CI) of fuel pool through fuel switching Goal of program is to replace traditional fuels (gasoline, diesel) with “low-carbon” fuels (i.e. cellulosic, electricity, hydrogen) California implementing LCFS as part of AB32 10% CI reduction over 10 years Other states pursuing LCFS programs: OR, WA, 11 Northeast/Mid-Atlantic States EPA believes it has authority under CAA for national LCFS program through regulation
Page 7 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 income Charles 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
Page 8 Initiative announced by President Obama in May 2010 EPA proposal expected in 2012 or early 2013 Final rule in 2013 Perhaps effective in 2016, in time for MY 2017 Will include gasoline sulfur reduction; could also include gasoline RVP reductions Under Tier 2, sulfur already reduced 90% Independent study: 9 – 25 cent per gallon cost increase, 4 to 6 potential refinery closures
Page 9 January 7, 2010: EPA published proposal to tighten ozone NAAQS Set primary standard between 60 and 70 parts per billion (ppb) over eight hours No new science evaluated September 2, 2011: President Obama announced Ozone NAAQS reconsideration would be withdrawn Regularly scheduled 5-year reconsideration of the ozone standard (mandated by CAA) will occur in 2013
Page 10 Sept. 2010 Manufacturers Alliance (MAPI) study examined impacts of a 60 ppb ozone NAAQS: Annual attainment cost of $1 trillion+ from 2020-2030 Reduction in GDP of $676.8 billion (3.6%) in 2020 7.3 million jobs lost by 2020 “The net result would likely be another inducement for companies to move operations offshore”
Page 12 EPA issuing GHG regulations for large stationary sources Title V; PSD permits for sources > 100,000 TPY (new facilities) or > 75,000 TPY (major modifications) GHG New Source Performance Standards (NSPS) for utilities, refineries Regulations for refineries anticipated 2013; unsure what they will look like Regardless of what they look like, will conflict with other regulations already discussed NSPS will trigger GHG regulation for existing sources
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