Transcript Overview of the Tier 2/Gasoline Sulfur Final Rulemaking

GASOLINE SULFUR
AVERAGING, BANKING, &
TRADING (ABT)
ABT PROGRAM
 Three Purposes
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additional incentives for early reduction
encourage meeting 30 ppm early
enhance overall feasibility and C/E
 ABT Provides
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within company flexibility (averaging)
time flexibility (banking)
cross-company flexibility (trading)
MAJOR ELEMENTS
 Sulfur allotments, to be used against the
corporate pool average standards
 Sulfur credits, to be used against the
refinery average and GPA gasoline
standards
SULFUR ALLOTMENTS
 Designed for use in compliance with
corporate pool average standards of 120
ppm in 2004 and 90 ppm in 2005
 Provisions apply in various ways to large
refiners and importers but not to small
refiners.
 Different allotment generation programs for
2003 and 2004/2005
2003 SULFUR ALLOTMENT
GENERATION
 Applies to individual refineries, not
importers - must have established ‘97/98
baseline
 Must be below baseline and 60 ppm
 Number and type of allotments generated
depends on measured average sulfur value
for the refinery
2003 ALLOTMENT
CALCULATION
 Terminology
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SA - sulfur allotments
Savg - measured average sulfur value
Sbase - ‘97/’98 sulfur baseline
CR - sulfur credits
V- volume of gasoline
2003 ALLOTMENT
CALCULATION
 SA = (120-Savg)(V)
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if 30<Savg<60. Then 20% discount (Type A)
if Savg <30, no discount (Type B)
 CR = (Sbase-120)(V)
2004/2005 SULFUR
ALLOTMENT GENERATION
 Applies to domestic refiners and importers
 Trigger value is 120 ppm in 2004 and 90
ppm in 2005
 Two cases apply, depending on the level of
the standard and your measured average
sulfur value
 No discounts
2004/2005 SULFUR
ALLOTMENT GENERATION
 Case 1
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Sa < 30
SA = (std-30)(V) Type A
SA = (30-Sa)(V) Type B
 Case 2
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30<Savg<std
SA = (std-Savg)(V)
ALLOTMENT USE
 Sulfur allotments generated in 2003 /2004
can be used to meet the CAS in 2004
 Sulfur allotments generated in 2005 can be
used to meet the CAS in 2005
 Sulfur allotments generated in 2003/2004
can be carried over to used in 2005 if
discounted by 50%
ALLLOTMENT USE
 Allotments can be sold at any time, even
before they are generated
 Allotments can be transferred only twice
 Small refiners and GPA gasoline may use
allotments to meet refinery average
standards
ALLOTMENT USE
 Allotment use and transactions are under
the control of the refiners/importers
involved
 Allotment generation, transfer, and use must
be tracked and reported to EPA, but EPA
will not broker
ALLOTMENT LIFE
 Allotments expire at the end of 2006
 Unused allotments may be converted to
sulfur credits
 Converted allotments are subject to life and
use restrictions of the credit program
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Type A treated as 2004 credits
Type B treated as 2004 and later credits
SULFUR CREDITS
 Designed for use against refinery average
standard by allowing use of credits to get
from a value below the cap down to the
standard
2004
2005
2006
refinery std
n/a
30
30
cap
300*
300
80
 Similar applicability to GPA gasoline and
small refiner standards/caps
SULFUR CREDITS
 Generation can begin in 2000, use begins in
2004 for small refiners/GPA and 2005 for
other refiners/importers
 Program provisions vary for 2000-2003,
2004-2007, 2007+
 Standards applicable to small refiners and
producers/importers of GPA gasoline may
decrease if they generate early credits
CREDIT GENERATION
2000-2003
 Provisions
 applies to individual refineries, not importers
 must establish a ‘97/’98 baseline
 achieve sulfur level >10% below baseline
 independent of CG/RFG distinctions
 no oxygenate exclusion
 includes low sulfur gasoline produced for state
programs
 no double counting of allotments/credits
CREDIT GENERATION
2000-2003
 Calculation
CR = (Sbase-Savg)(V)
 no discounts apply
 cannot be converted to allotments
CREDIT GENERATION 2004+
 Provisions
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applies to domestic refiners and importers
must be less than 30 ppm or applicable
GPA/small refiner std
 Calculation
CR = (V)(STD-Savg)
 No discounts apply
CREDIT USE
 Credit use and transactions are under the
control of the refiners/importers involved
 Credit generation, transfer, and use must be
tracked and reported to EPA, but EPA will
not broker
CREDIT USE
 Credits may be used by any refiner to meet
refinery avg stds, GPA gasoline stds and
small refiner stds
 Credit use begins in 2005 for refinery
average standards and 2004 for GPA
gasoline and small refiner standards
 Available credits must be used before
seeking a deficit carry forward
CREDIT LIFE
 Credits generated 2000-2003 expire at the
end of 2006 compliance year for refinery
avg stds and GPA and 2007 compliance
year for small refiners
 Credits generated 2004 and later expire five
years after they are generated
 Credits may be transferred no more than
twice.
AB&T Program Summary
Credits
Generation
2000-03
Generation
2004+
Use
2004+
Allotments
Who: Refineries
How: By producing gasoline at least 10%
cleaner than their 1997-98 sulfur
baseline.
Refineries (2003 only)
By producing gasoline less than
60 ppm sulfur.
Who: Refineries, blenders, and importers
How: By producing gasoline cleaner than
the refinery average standard.
Refiners and importers
By producing gasoline cleaner
than the corporate average
standard.
Who: Refineries, blenders, and importers
How: To demonstrate compliance with
their refinery average standard.
Refiners and importers
To demonstrate compliance with
the corporate average standard.