Transcript provided their perspectives on these issues

Energy Producing States Coalition
December 2, 2012
Steve Higley
Manager, Outreach
American Fuel & Petrochemical Manufacturers
Washington, DC
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.
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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
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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
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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
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• 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
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CEA report (SAIC modeling) on Northeast regional LCFS:
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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:
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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
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• 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
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• 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 9
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”
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• 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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