## Ja nuar y 17 , 2014 Brief ing for D an Ute ch

1 Agency Deliber ative - do not quote or cite

# Ov er vie w  

## Backgr ound onT ier

3 Ve hicle a nd F uel Standar ds  

## Ma jor Issues f ro m P ublicCo mment  

## Benef its a nd C osts

2

Agency Deliber ative - do not quote or cite

# Tier 3 Pr ogr am R ec ap  

### Sy st ems a ppr oach: mor e string ent vehicle s tandar ds e nabled by gasoline s ulfur

co ntr ol  Sulfur i nt erfer esw ithc atalyst

f unction  Further

re ductionsin gasoline s ulfur a re needed to allo w ve hiclesto re achthe Tier 3 standar ds  Sulfur r eduction achiev eslar ge emission reductionsf ro m the in - use f

leet 

###  

### Harmonized ve hicle p ro gr am  Coor dinat ed withCalifornia LE V III and GHG for

model ye ars(MY) 201 7 - 20 25  Br oadly

s upported by

a ut o industr y s o t hey

c an produc e and sell a s ingle f leet o f ve hiclesnation

wide 

###  

### Pa rt o f co mpr ehensi

ve appr oachto c re at e cleaner , mor e eff

icient ve hicles  Timing aligned withlight - duty g re enhouse g ass tandar dsfo r model ye ars201 7 - 20 25  Phase - in beginsw ithMY 201 7 for v ehiclesa nd CY

201 7 for fuels 3 Agency Deliber ative - do not quote or cite

# Tier 3: Air Quality and Public Health  

## Tier 3 standar ds w ould re duc e o zone, PM, and to xics  

## Immediat e healtha nd air q uality b enef its because o f the immediat e re ductions f ro m l owe r s ulfur

g asoline  

## Will help a tt aina nd maintaino zone a nd PM NAA QS  

### Pr ov ides co st - effective national re ductions that avo id mor e e xp ensive local co ntr ols 

###  

## Re duc es p ollutionn ear ro ads  

### Mo re than50 millionp eoplelive, wo rk, or go to s chool near major ro ads 4 Agency Deliber ative - do not quote or cite

# Public Commen ts  Proposal signed March 29, 2013  About 140 unique o rg anization co mments  About 3,800 citizen co mments(not p art o f massc ampaigns)  About 230,000 co mmentsfrom 25 unique m assc ampaigns  Auto industr y broadly s upporti ve  Comments stress the importanc e o f harmonizing with LE V III and fi nalizing ASAP  Needed to s upport

LE V III and LDGHG/CAFE product planning  Already

making decisions f

or MY2017  Enables some lo we r - co st t echnologies for

co mplying with ve hicle g re enhouse g as standards  States a nd en

vir onmentalists a lso s tr ess u rge nc y  No o ther

measures provide re ductions a s larg e o r a s q uickl y  Some oz one nonattainment a reas ha ve 2018 deadlines  Publichealth benef

its a re needed as s oon as possible  Oil industr y c onc erned about l ead time a nd questions t he need for lo we r sulfur Agency Deliber ative - do not quote or cite 5

# Lead Time  Centr al progr ammatici ssue for T ier 3 f inal rule  Weintend to f

inalize the201 7 start

d ate (as p roposed)  Auto industr y s upports this if r ule is f inal in early

2014  This p rov ides a mple lead time for o il industr y  Flexible early

c redit p rogram and nation

wide ave ra ging , banking , and tr ading provide u p to 6 ye ars o f lead time  Re fi ners can generate early c re dits e ve n w iththeir

e xisting units, and phase in in ve stments as needed  3 - ye ar d ela y for small ref

iners a nd small vo lume ref ineries  Te chnical and ec onomichar dship provisions as a f ailsafe  Fi nalizing tw o a dditional f lexibilities t o provide a dditional assur anc e  Carryove r o f “banked” credits fr omTier 2  Long er

d ef icit carr yforward inthe c ase o f a har dship  Weha ve s tr ong technical analysis to d efend thea ppropriateness o f the 201 7 start d ate a nd re but

o il industr y c laims 6 Agency Deliber ative - do not quote or cite

# Chang es fr om Pr oposal  

### Finalizing lar ge ly a s p ro posed  Wes ought

c omment

o n t he p er - gallons ulfur c ap (applies in additionto t he a nnual ave ra ge )  Weha ve d ecided to k eep thep er - gallonc ap a t its c urrent lev el, co nsistent

w ith oil industr y’ s s trong preferenc e  Wea re f

inalizing E10 as thevehicle ce rtif icationt est

f uel (we had proposed E15) 

###  

### Up dat ed co st, emissions , AQ, benef its a nal ys is  Up dated co st

a nalysis dr amatically

d ecreases vehicle a nd fuel co sts  Mo rer obust

e stimateo f co sts o f precious metal loadings inc atalysts, based onco mments  With updated ref

iner y modeling we no w model tr ading between co mpanies inst ead of

just w ithinco mpanies  Wea cco unt

f or a doptiono f LE V III by

California

a nd 12 other

s tates 7 Agency Deliber ative - do not quote or cite

# Bene fits of Tier 3

8 

### • To tal Ozonea nd PM - re lat ed Pr ematur e Mo rtality A vo ided: • 77 0 - 2,000 in2030 • Other PM - and oz one - re lat ed healthimpacts avo ided in2030: • Ho spital admissions a nd asthma - re lated ER visits: 2,200 • Asthma e xac er bations: 19,000 • Up per a nd lo we r re spir ator y s ymptoms in childr en: 30,000 • Lo st s chool da

ys, wo rk d ays, a nd minor re stricted acti

vity d ays : 1.4 million 

### • To tal M onetized Benef its in2030 • $7.4 t o $19 Billion(3% DR) • $6.7 t o $18 Billion(7% DR)

Agency Deliber ative - do not quote or cite

# Cos t Es tima te s
 

### Fu el Sulfur

Standar d  Le ss t han1 c/gal (0.65 ce nts) 

###  

### Ve hicle Standar ds  Aver ag e $72 per

ve hicle (in 2025, at

f ull phase - in) 

###  

### Annual C ost

in2030  $1.5 billion  $800 millionfor

ve hicleprogr am  $700 millionfor

fuel progr am 

###  

### To tal M onetized Benef its  **$7.4 to**  **$19** Billion( 3% DR); **$6.7 to**  **$18** Billion(7% DR) 

###  

### Benef it - to - Co st

R atio  **4.5 t o**  **12.7** 9 Agency Deliber ative - do not quote or cite

# Ne xt St eps  

## Submissiont o OMB int he last w eek o f Ja nuar y  

## EP A s ignatur e Fe bruar y 28

10

Agency Deliber ative - do not quote or cite