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10/06/06 Clean Diesel Has Arrived
The change to ultra-low-sulfur diesel has begun. Beginning June 1st 80% of the diesel produced by U.S. refiners and importers is required to be ULSD. (Note - refiners and importers are allowed to average their production between June 1 and the end of the year in order to arrive at the 80% figure.) By October 1st retailers that sell ULSD must insure that it meets the Environmental Protection Administration, EPA, specifications of no more than 15 parts per million, ppm, sulfur content. By December 1 2010 the only diesel that will be sold in the U.S. will be ULSD. And starting in the 2007 model year, newly manufactured diesel trucks will be designed to run on ULSD exclusively.
The switch to ULSD from the current blend of low sulfur diesel, LSD, which has up to 500 ppm sulfur concentration, is the most significant change to U.S. fuel standards since leaded gasoline was replaced by unleaded in the 1970s. As was the case in the 1970s, the change to ULSD requires design changes to current engines and pollution control systems. Ultra-low-sulfur-diesel, when used with the cleaner burning, redesigned 2007 diesel engines is expected to significantly reduce emissions and increase air quality. In particular, the EPA says that ULSD will greatly reduce nitrous oxide and particulate emissions.
Since 2001 the refining, automotive, and pipeline industries have been coordinating their plans to make the switch to ULSD as painless as possible. The refining industry has spent more than $8 billion to upgrade plants in order to be able to meet the technical challenges of producing ULSD. The pipeline industry has invested more than $300 million to prepare for ULSD.
The EPA is optimistic that the transition to ULSD will go smoothly. However some in the trucking and retail fuel distribution sectors have raised concerns about both supplies and availability of uncontaminated ULSD. These concerns focus on distribution rather than refinery capacity. ULSD is easily contaminated by contact with other refinery products that have higher sulfur concentrations. Richard Moskowitz, regulatory affairs council for the American Trucking Association acknowledges the problem; “We know refiners know how to make it…we are less confident of the ability of the distribution system to convey it to all parts of the country without risk of contamination.”
Refined ULSD will flow through the same complex distribution system of pipelines and fuel terminals that is used to transfer high-sulfur products like gasoline, jet-fuel, kerosene and home-heating oil. Since all of these products flow one after the other through the same pipelines, there is a potential for the ULSD to be contaminated by coming into contact with the residue of a higher sulfur product. While the use of such “contaminated” ULSD would have no effect in pre-2007 diesel truck engines, it could cause significant damage to post-2007 engines and their pollution control systems.
Refiners are building in a cushion that they hope will minimize the contamination potential for their ULSD. They are assuming that there will be some level of contamination during distribution so they are producing ULSD at 8 to 10 ppm to allow for an increase during transit or storage. Still, retailers are worried because they can face fines of up to $32,500 per day for each violation if a pump labeled as ULSD does not meet the 15 ppm EPA standard during a spot check.
For the transportation industry the phase-in of ULSD will impose additional costs both in terms of fuel, and more significantly in capital investment when replacing trucks. 2007 diesel truck models that comply with the EPA emissions regulations and are equipped with the new anti-pollution systems will cost up to $10,000 per vehicle more than their pre-2007 counterparts. This cost differential has spurred truck sales this year, as many motor carriers have chosen to upgrade their fleets prior to the 2007 models coming online.
ULSD itself is expected to retail for .02 to .05 cents per gallon more than the current low-sulfur-diesel. Additionally, the process of reducing the sulfur content of diesel makes ULSD about 5% less efficient than LSD, which translates into a 5% increase in fuel consumption for the average diesel truck.
The EPA views the change to ULSD as one of the most significant achievements of the agency in its 36 year history. “In terms of the cost–benefit ratio, this regulation ranks up there among the top actions that the agency has taken in its history,” said agency spokesman John Millett.
A press release issued by the EPA on June 1st the day the ULSD regulations began taking effect, comments on the agency’s expectations for the new rules. “When fully implemented, today’s action will not only enhance environmental protection, but will also prevent 8,300 premature deaths and tens of thousands of cases of respiratory ailments such as bronchitis and asthma.” |
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