Tier 3 gasoline is part of the latest generation of jointly-issued vehicle emission and fuel standards developed by the EPA. Under Tier 3 (171.32 KB), the sulfur content of gasoline will be reduced from an average of 30 parts per million (ppm) down to 10 ppm to enable the more efficient operation of vehicle emission-control systems. The emissions reductions associated with Tier 3 fuel are substantial and apply not only to vehicles that meet the new Tier 3 vehicle standards but to older vehicles as well. The Wasatch Front Regional Council estimates that switching to Tier 3 fuels could reduce total mobile-source emissions by 9.5 percent of nitrogen oxides (NOx) and 3.7 percent of volatile organic compounds (VOCs).
For most refineries, the Tier 3 fuel requirements took effect on January 1, 2017, but the fuel standard grants Utah’s five refineries an extra three years to comply because they are considered “small volume” refiners (i.e., below 75,000 barrels per day) (171.37 KB).
Under the averaging, banking, and trading provisions of Tier 3 (171.37 KB), refiners can meet all or part of their 10 ppm requirement via credits generated through over-compliance at other facilities. For example, a refiner that produces a gallon of gasoline containing 7 ppm sulfur would generate 3 ppm-gallon sulfur credits that could be used for compliance elsewhere. This flexible compliance mechanism allows refinery operators to make sulfur-reducing equipment upgrades at the facilities where it makes the most economic sense while transferring credits to facilities where such upgrades might prove more costly. This flexibility could create a potential problem in Utah since most gasoline comes from local refineries. Absent further action, refineries in the state could theoretically choose to comply via credits rather than producing the lower sulfur fuel needed to achieve vehicle emissions reductions.
While federal law preempts Utah from establishing its own fuel standards, DAQ, Governor Herbert, and the state legislature have been working with local refineries on commitments to produce this low-sulfur fuel locally rather than using credits. One operator, Silver Eagle, is already producing Tier 3 gasoline. Of the remaining four refineries, Utah has received commitments from both Andeavor and Chevron to produce Tier 3 fuel locally. Both facilities anticipate having the fuel available in the Utah market by the January 1, 2020, compliance date for small-volume refiners. The remaining two refineries, Holly and Big West, continue to evaluate compliance options under the Tier 3 standard. DAQ will continue to work with these two facilities to address low-sulfur fuel levels in the state.