Low Sulfur Heating Oil in the 

Northeast States: 

An Overview of Benefits, Costs 

and Implementation Issues 

Prepared by: 

NESCAUM 

101 Merrimac Street, 10th Floor 

Boston, MA 02114

 

December 2005 
ii 

Acknowledgements 

NESCAUM gratefully acknowledges the financial support for this report provided by the 

Massachusetts Executive Office of Environmental Affairs. 

This report was developed by staff at NESCAUM and engineering consultant John Batey 

of the Energy Research Center. NESCAUM is an association of the air pollution control 

agencies from Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New 

York, Rhode Island and Vermont. 

Thanks also go out to the following state staff that reviewed and commented on drafts of 

this report: 

Tracy Babbidge, CT Department of Environmental Protection 

David Barnes, NY Department of Environmental Conservation 

David Cash, MA Executive Office of Environmental Affairs 

Anne Gobin, CT Department of Environmental Protection 

Glenn Keith, MA Department of Environmental Protection 

Barbara Kwetz, MA Department of Environmental Protection 

Ray Papalski, NJ Department of Environmental Protection 

Disclaimer: 

This document does not necessarily reflect the opinions of the Massachusetts Executive 

Office of Environmental Affairs. 
iii 

TABLE OF CONTENTS 

Executive Summary............................................................................................................ v 

1. Introduction and Background .................................................................................. 1-1 

1.1. Introduction...................................................................................................... 1-1 

1.2. Background...................................................................................................... 1-2 

1.3. Public Health and Environmental Impacts ...................................................... 1-2 

1.3.1. Particulate Matter..................................................................................... 1-3 

1.3.2. Oxides of Nitrogen................................................................................... 1-3 

1.3.3. Sulfur Dioxide.......................................................................................... 1-3 

1.3.4. Mercury.................................................................................................... 1-4 

1.4. Proposed Northeast Low Sulfur Heating Oil Initiative.................................... 1-4 

1.5. Current Fuel Sulfur Content of Heating Oil .................................................... 1-5

1.6. Fuel Sulfur Requirements in Other Countries ................................................. 1-6 

1.7. Past Advances in Oil Heat Emissions Performance ........................................ 1-6 

2. Emission Reduction Potentials of Low Sulfur Heating Oil and Biofuels................ 2-1 

2.1. Low Sulfur (500 ppm) Home Heating Oil....................................................... 2-1 

2.1.1. Sulfur Dioxide Emissions ........................................................................ 2-1 

2.1.2. Nitrogen Oxide Reductions: .................................................................... 2-2 

2.1.3. Particulate Matter (PM) Reductions: ....................................................... 2-3 

2.2. Low Sulfur (500 ppm) Heating Oil Blended with Biofuels............................. 2-4 

2.2.1. Sulfur Dioxide Reductions....................................................................... 2-4 

2.2.2. Nitrogen Oxide Reductions: .................................................................... 2-4 

2.2.3. Particulate Matter Reductions:................................................................. 2-5 

2.2.4. Mercury Reductions................................................................................. 2-5 

2.2.5. Greenhouse Gas Emission Reductions: ................................................... 2-6 

3. Cost-Benefit Analyses of Low Sulfur Home Heating Oil ....................................... 3-1 

3.1. Reduced Maintenance Costs............................................................................ 3-2 

3.2. Added Cost for Lower Sulfur Heating Oil and Historic Fuel Prices ............... 3-4 

3.3. Net Cost Savings with Lower Sulfur Fuel Oil................................................. 3-5 

3.4. Environmental and Health Benefits................................................................. 3-6 

4. Other Benefits of Low Sulfur Heating Oil............................................................... 4-1 

4.1. Improved Efficiency ........................................................................................ 4-1 

4.2. Opportunity to Utilize Advanced Equipment .................................................. 4-1 

4.3. Harmonizing with Worldwide Standards......................................................... 4-2 

5. Overview of Supply and Distribution of Heating Oil in the Northeast ................... 5-1 

6. Conclusions.............................................................................................................. 6-1 

7. References................................................................................................................ 7-1 
iv 

TABLES 

Table ES-1: Emission Benefits of Low Sulfur Heating Oil and Biodiesel Blends............ v 

Table 1-1: State Sulfur Limits for Heating Oil ............................................................... 1-5 

Table 2-1: Air Emission Rates for Home Oil Burners.................................................... 2-1 

Table 5-1: US Distillate Fuel Oil Supply (Thousand Barrels per Day).......................... 5-1 

Table 5-2: Source of Annual Distillate Fuel Oil Supplies on the East Coast (%) .......... 5-2 

Table 5-3: Peak Distillate Fuel Oil Imports (%)............................................................. 5-2 

FIGURES

Figure 1-1: #2 Fuel Oil Sulfur Content Percentage ......................................................... 1-5 

Figure 1-2: U.S. Annual Residential Fuel Oil Use ......................................................... 1-7 

Figure 1-3: Reductions in Oil Burner PM Emissions ..................................................... 1-8 

Figure 2-1: Relationship of Fuel Sulfur Content to SO2 Emissions ............................... 2-2 

Figure 2-2: Nitrogen Oxide Emission Reductions with Lower Sulfur Heating Oil ....... 2-3 

Figure 2-3: Effect of fuel sulfur on PM2.5 and PM10 emissions...................................... 2-3

Figure 2-4: Nitric Oxide Emissions for Low Sulfur / Biofuel Blend ............................. 2-5 

Figure 2-5: Global Warming Potentials of Various Energy Sources.............................. 2-7 

Figure 3-1: Boiler Fouling for Varying Fuel Oil Sulfur Contents................................. 3-1 

Figure 3-2: Measured Boiler Deposits – Normal and Low Sulfur Fuel Oil ................... 3-2 

Figure 3-3: Vacuum Cost Savings per 1000 Houses ...................................................... 3-3 

Figure 3-4: Home Heating Oil and Nat Gas Prices......................................................... 3-4 

Figure 3-5: Net Cost savings per 1,000 Houses Using Low Sulfur Oil.......................... 3-5 
v 

Executive Summary 

The Northeast states are considering adopting a regionally consistent low sulfur 

standard for heating oil to reduce air pollution from this source. This White Paper 

evaluates the benefits, costs and implementation issues associated with reducing sulfur in 

#2 distillate heating oil from its current average of 2,000 to 3,000 parts per million (ppm) 

to 500 ppm. The states’ long-term goal is to bring the sulfur content of heating oil into 

line with the future highway and nonroad ultra-low sulfur diesel fuel requirement of 15 

ppm. 

Heating oil burners emit particulate matter (PM), oxides of nitrogen (NOx), sulfur 

dioxide (SO2), mercury (Hg), carbon dioxide (CO2) and other pollutants. Collectively, 

these pollutants have direct health impacts, contribute to the formation of ozone and fine 

particulate matter, cause regional haze, contribute to acid deposition and nitrification of 

water bodies, add to the global mercury pool and contribute to the build up of greenhouse 

gasses in the atmosphere. The combustion of heating oil is a significant source of SO2

emissions in the region – second only to electric power plants. The burning of heating oil 

also produces approximately 10 percent of total CO2 emissions in the Northeast. 

As shown in Table ES-1, reducing the sulfur content of heating oil from 2,500 

ppm to 500 ppm lowers SO2 emissions by 75 percent, PM emissions by 80 percent, NOx

emissions by 10 percent, and CO2 emissions by 1 to 2 percent. Other benefits associated 

with lowering the sulfur content of heating oil include heating system efficiency 

improvements, the opportunity to develop and market advanced high efficiency boiler 

and furnace technologies, and harmonizing with European and Canadian fuel standards. 

Table ES-1: Emission Benefits of Low Sulfur Heating Oil and Biodiesel Blends 

(% reduction compared to 2,500 ppm sulfur fuel) 

Pollutant Reduction with 500 ppm 

Sulfur Heating Oil 

Reduction with 500 ppm 

Sulfur Heating 

Oil/Biodiesel Blend (80/20) 

SO2 75 % 84 % 

PM 80 % >80 %1 

NOx 10 % 20 % 

Hg n/a 20 %2 

CO2 1 % - 2% 17-18 % 

1

 Additional PM reductions are expected with biodiesel blends, but no known test data 

exists to substantiate this assumption. 

2

 Value based on the assumption that biodiesel contains no mercury. No known test data 

exist to substantiate this assumption 

These benefits can be achieved at an overall savings to heating oil marketers and 

consumers. The incremental cost of low sulfur (500 ppm) heating oil compared to the 

higher sulfur product varies over time, but historically has averaged about 1.5 cents per 

gallon. Lower sulfur heating oil is cleaner burning and emits less particulate matter 

which reduces the rate of fouling of heating equipment and can permit longer time 
vi 

intervals between vacuum cleanings, if existing service practices are converted from 

annual to “as needed” cleaning. The potential savings for oil heated homes due to 

reduced maintenance costs is on the order of hundreds of million of dollars a year on a 

national basis. The cleaning cost savings generated by using lower sulfur fuel oil is two 

to three times higher than the added fuel cost based on historic price differences between 

heating oil and highway diesel. 

Biofuels, including soy-based biodiesel, contain negligible amounts of sulfur and 

nitrogen and can be blended with low sulfur heating oil to further reduce air emissions, 

improve the environmental attractiveness of home heating oil and extend supplies with 

renewable domestic feedstocks. Low sulfur (500 ppm) heating oil blended with a 20 

percent soy-based biodiesel can reduce SO2 emissions by 84 percent, PM emissions by 

greater than 80 percent, NOx emissions by 20 percent, mercury emissions by 20 percent 

and carbon dioxide emissions by approximately 16 percent compared to 2,500 ppm sulfur 

heating oil. 

The region’s heating oil comes from Gulf Coast refiners, Northeast refiners, and 

foreign sources. Imports provide about a 20 percent of demand on an annual average 

basis, but can rise significantly during periods of peak usage. The continued availability 

of adequate home heating oil through domestic sources and imports is an important 

consideration as states assess implementation issues associated with a low sulfur oil 

heating oil initiative. This White Paper discusses a variety of steps that should be taken 

to ensure that a low sulfur heating oil program in the Northeast would not adversely 

affect supply and cost during periods of peak demand. Potential solutions include: (1) 

increasing stocks of lower sulfur fuel oil; (2) increasing imports from countries with 

lower sulfur standards; (3) permitting seasonal averaging of sulfur levels; (4) blending of 

lower sulfur diesel with higher sulfur imports; and (5) introducing greater amounts of 

domestic biofuels into the market. 

The analysis summarized in this White Paper supports the Northeast states’ 

conclusion that significant reductions in SO2, NOx, and PM emissions can be achieved 

by mandating lower sulfur heating oil. Importantly, these reductions can achieved with 

an expected cost savings to the consumer. Adding the public health and environmental 

benefits associated with lower sulfur fuel increases the favorable cost-benefit ratio of a 

regional 500 pm sulfur heating fuel program. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 1-1

1. INTRODUCTION AND BACKGROUND 

1.1. Introduction 

The combustion of heating oil containing sulfur levels on the order of 2,500 parts 

per million (ppm) contributes to ambient concentrations of fine particles found in the 

Northeast. These particles have adverse health and environmental impacts. The 

Northeastern U.S. is one of the world’s largest markets for heating oil. In the eight state 

NESCAUM region (CT, ME, MA, NH, HJ, NY, RI and VT), approximately 4 billion 

gallons of heating oil are burned annually in residential furnaces and approximately 1 

billion gallons are burned in commercial furnaces. Heating oil represents 54 percent of 

total demand for #2 distillate oil in the Northeast, compared to 38 percent for highway 

diesel. 

Due to the high level of sulfur currently found in heating oil, its combustion is a 

significant source of sulfur dioxide (SO2) emissions in the region – second only to 

electric power plants. Regionally, the burning of high sulfur heating oil generates 

approximately 100,000 tons of SO2 annually – an amount equivalent to the emissions 

from two average sized coal-burning power plants. Oil heating is also a source of 

particulate matter (PM), oxides of nitrogen (NOx) and carbon monoxide (CO). While 

data are limited and uncertain, residential heating with fuel oil is estimated to produce 

almost 25 percent of mercury emissions in the six New England states. The burning of 

heating oil also produces approximately 10 percent of total CO2 emissions in the region 

and is estimated to represent as much as 17 percent of Connecticut’s CO2 inventory. 

To address this concern, the Northeast states are considering adopting regionally 

consistent standards to cap the sulfur content of heating oil at 500 parts per million, by no 

later than 2010. The states’ long-term goal is to limit the sulfur content of heating oil to 

levels consistent with future ultra-low sulfur diesel standards for highway and nonroad 

fuels (15 ppm). However, more research and development is needed to prevent the 

undesired impacts on home heating equipment that have been experienced in Europe with 

ultra-low sulfur fuel including damage to oil burner air tubes in blue flame oil burners. 

This analysis is intended to help states better understand the benefits and costs 

associated with the proposed regional low sulfur heating oil initiative. While this 

analysis is preliminary in nature, it provides state regulators with additional information 

as they consider appropriate next steps. 

This White Paper includes six sections. Section 1 provides background 

information on the oil heat market, the environmental and public health impacts 

associated with emissions from this source, and a summary of the proposed Northeast 

low sulfur heating oil initiative. Section 2 summarizes the emission reduction potential 

of lowering the sulfur content of heating oil and evaluates the potential benefits of adding 

biodiesel to heating oil. Section 3 summarizes the findings of the cost-benefit analysis 

undertaken for low sulfur heating oil. Section 4 discusses other benefits of this proposed 

initiative. Section 5 provides a brief overview of supply and distribution issues for the 

Northeast heating oil market. Section 6 presents conclusions. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 1-2

1.2. Background 

Lowering the sulfur content in heating oil will significantly reduce the threats to 

public health and sensitive ecosystems posed by SO2 emissions in the Northeast. 

Emissions of NOx, which contribute to a number of public health and environmental 

problems in the Northeast, will also decrease with lower sulfur heating oil. The use of 

cleaner fuel has the potential to improve furnace efficiency by reducing fouling rates of 

boiler and furnace heat exchangers and other components. Further, the availability of 

low sulfur heating oil will enable the introduction of highly efficient condensing furnace 

technology. Both outcomes will lower emissions of CO2 and other pollutants from this 

source sector by reducing fuel use. 

The region’s heating oil comes from Gulf Coast refiners, Northeast refiners, and 

foreign sources. Imports provide about a 20 percent of demand on an annual average 

basis, but can rise significantly during periods of peak usage. The ability to bring in 

offshore product is important to heating oil availability and price stability. European 

supplies range from 13 percent on an annual average to 23 percent during January and 

February, with Russia supplying as much as 18 percent of the region’s total demand 

during peak periods, based on recent reports. 

Oil heat industry representatives have expressed concern that offshore suppliers 

will not have sufficient low sulfur product available for the North American market in the 

near to mid-term which will undermine the delicate supply balance that now exists. 

Industry representatives suggest that it will take a broader international shift toward low 

sulfur heating oil to drive offshore refiners to invest in de-sulfurization technology for 

this portion of the product stream. Europe, a major market for heating oil, will require 

low sulfur (1000 ppm) product beginning in 2008 and Canada is committed to a similar 

requirement. To minimize supply concerns, the Northeast states are considering an 

annual averaging compliance program that would allow higher sulfur product into the 

market during peak demand periods, if necessary. Further, as discussed in this paper, the 

blending of biodiesel into heating oil provides an additional stream of clean and 

renewable domestic feedstock to increase the supply of fuel for space heating. However, 

biofuels supplies are currently rather limited. 

1.3. Public Health and Environmental Impacts 

The Northeast states are faced with developing state implementation plans (SIPs) 

to demonstrate compliance with the new 8-hour ozone and fine particulate matter national 

ambient air quality standards. The states must also submit plans that include strategies 

for protecting visibility in national parks and wilderness areas. After three decades of 

controlling air pollution, the challenges of achieving sufficient additional emission 

reductions to attain these new standards are substantial. 

Heating oil burners emit significant levels of SOX, NOx, PM, and mercury. These 

burners also emit CO2, a greenhouse gas that contributes to global warming. 

Collectively, these pollutants have direct health impacts, contribute to the formation of 

ozone and fine particulate matter, cause regional haze, contribute to acid deposition and 

nitrification of water bodies, add to the global mercury pool and contribute to the buildup 

of greenhouse gases in the atmosphere. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 1-3

1.3.1. Particulate Matter 

Both solid particles and condensable liquid droplets are generated from most 

combustion sources including heating oil burners. Most of the particulate matter emitted 

by combustion sources is classified as fine PM with diameters less than 2.5 microns 

(PM2.5). Primary particulates include unburned carbonaceous materials (soot) that are 

directly emitted into the air. Secondary particulates, such as sulfates, are formed after 

sulfur dioxide is emitted into the air from combustion sources burning sulfur-containing 

fuels. Particulate matter less than 10 microns in size (PM10) is linked to a number of 

adverse health outcomes including asthma, bronchitis, cardiac arrhythmia, and heart 

attacks (reference 9). Sulfates are also the primary cause of regional haze and acid 

deposition in the Northeast. 

Direct PM emissions from residential and small commercial oil burners in the 

form of soot have decreased by approximately 95 percent over the past three decades (as 

will be discussed later in this section). Sulfates that condense in the outdoor air after 

being emitted by oil heating equipment are now the predominate form of PM associated 

with emissions from heating oil burners. Reducing the sulfur content of the fuel can 

lower sulfate emissions. 

1.3.2. Oxides of Nitrogen 

NOx is emitted during all types of fuel combustion. Nitrogen dioxide (NO2) and 

the secondary oxidants that are formed in the atmosphere contribute to numerous adverse 

health outcomes. NO2 causes respiratory distress, respiratory infection, and irreversible 

lung damage. These are exacerbated by the secondary oxidants that are produced 

including ozone and fine particulate matter. In addition these oxidants contribute to the 

formation of acid rain and regional haze. 

Efficiency advances in residential oil heat equipment have included the 

introduction of flame retention oil burners that produce higher flame temperatures and 

enhanced heat transfer rates. These improvements have helped decrease PM emissions, 

however, the resultant elevated flame temperatures contribute to increased rates of nitric 

oxide production by oil burners (thermal NOx). On the positive side, the higher emission 

rates are offset by the improved efficiency and reduced fuel use. New oil burners are 

currently under development in the U.S. that lower nitrogen oxide emissions 

substantially. The use of lower sulfur home heating oil also lowers the emissions of 

nitrogen oxide by reducing the nitrogen content of the fuel that contributes to total NOx

emissions. 

1.3.3. Sulfur Dioxide 

SO2 is a criteria air pollutant produced in significant quantities by residential and 

commercial oil heat burners. Elevated levels of SO2 in the atmosphere can cause 

wheezing, breathing difficulty, and shortness of breath. Through its important role in fine 

particulate matter formation, SO2 also contributes to cardiovascular disease, respiratory 

illness, and impaired lung function especially in individuals with pulmonary diseases 

including asthma. Sulfur dioxide also contributes to acid rain and related crop and 

vegetation damage. Sulfates are the primary cause of regional haze in the Eastern U.S. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 1-4

Burning home heating oil with lower sulfur content directly reduces SO2 emissions and 

its negative impact on health and the environment. 

1.3.4. Mercury 

Mercury is a potent neurotoxin, particularly damaging to the fetus and young 

child. Greater than 84,000 newborns in the Northeast are at risk for irreversible 

neurological deficits from exposure to mercury. Emerging data also suggest a link 

between mercury exposure and increased risk of adverse cardiovascular effects. The 

Northeast is implementing a Mercury Action Plan that has reduced total in-region 

emissions by greater than 55 percent over the past five years. Much of this reduction has 

come from emission controls put on municipal waste combustors and medical waste 

incinerators. With emissions from these major stationary sources better controlled, the 

combustion of fuel oil in residential and commercial burners is now considered a major 

source of mercury emissions in the region. 

1.4. Proposed Northeast Low Sulfur Heating Oil Initiative 

The Northeast states are considering adopting consistent low sulfur heating oil 

requirements as part of the larger plan to address the region’s air pollution problems. The 

decision to pursue a consistent regional strategy is premised on the Northeast’s common 

airshed and the regional nature of the heating oil supply network. In order to achieve 

reductions in SO2 emissions from home oil burners, a regional low sulfur initiative is 

proposed for the states in the Northeast where oil is a predominant energy source. This 

initiative is summarized in a DRAFT Memorandum of Understanding for Regional Fuel

Sulfur Content Standards for Distillate Number 2 Heating Oil dated February 4, 2005 

(reference 7). The memorandum proposes a reduction in the sulfur content of distillate 

fuel oil used for space heating from the typical range of 2000 to 3000 part per million 

(ppm) down to 500 ppm, as now required for highway diesel fuel. The sulfur content of 

highway diesel will be lowered to 15 ppm beginning in 2006. 

Homeowners and fuel oil service companies will benefit from reduced fouling of 

boiler and furnace heat transfer surfaces that permits extended intervals between vacuum 

cleanings. This has the potential to substantially lower annual service costs for oil 

heating equipment. Nationwide, this translates to potential cleaning cost savings on the 

order of $200 million to $300 million a year; with much of this benefit accruing in the 

Northeast. As discussed in more detail in Section 3, the added cost for the cleaner fuel is 

expected to be more than offset by the savings resulting from reduced maintenance and 

improved burner efficiency. The oil heat industry also benefits when the environmental 

impact of heating oil is reduced since it makes this product more competitive with natural 

gas as clean energy source for space heating. 

As shown in Table 1-1 (reference 7), current sulfur requirements for home heating 

oil vary widely from state to state in the Northeast. The proposed limit on the sulfur 

content of distillate oil used for commercial and residential heating would establish a 

uniform standard across all states in the region at 500 parts per million. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 1-5

Table 1-1: State Sulfur Limits for Heating Oil 

State Sulfur Limit 

In percent 

Sulfur Limit 

In parts per million 

Connecticut 0.3 3000 

Maine 0.3 to 0.5 3000 to 5000 

Massachusetts 0.3 3000 

New Hampshire 0.4 4000 

New Jersey 0.2 to 0.3 2000 to 3000 

New York Upstate 1.0 to 1.5 10,000 to 15,000 

New York Downstate 0.2 to 0.37 2000 to 3700 

Rhode Island 0.5 5000 

Vermont 2.0 20,000 

1.5. Current Fuel Sulfur Content of Heating Oil 

According to sampling conducted over the past two decades, the average sulfur 

content of heating oil varies from year to year (see Figure 1-1). These data are reported 

in Heating Oils, 2003 published by Northrop Grumman Mission Systems (reference 8). 

Historically, the sulfur content of home heating oil was in the range of 0.25 percent or 

2500 ppm. After lower sulfur diesel (500 ppm) was introduced for highway use, the 

average sulfur content of home heating oil decreased. 

Figure 1-1: #2 Fuel Oil Sulfur Content Percentage 

(REF: NGMS – 231) 

0.00

0.05

0.10

0.15

0.20

0.25

0.30

1987 1992 1997 2002

YEAR

FUEL SULFUR CONTENT %

From 1987 to 1993, the average sulfur content of heating oil remained at 

approximately 0.25 percent. Between 1993 and 1999, the percentage of sulfur decreased 

steadily within the 1200 to 2000 ppm range. For the period 1999 to 2002, the average 

sulfur content has increased, returning to historic levels. From 2002 to 2003 the average 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 1-6

sulfur content was 0.22 percent. These results are based on relatively small sample sizes, 

however, and the actual average sulfur content of oil used in homes in the Northeast has 

not been accurately determined. 

1.6. Fuel Sulfur Requirements in Other Countries 

Lower sulfur heating oil is gaining acceptance around the world including in 

Canada and Europe. The sulfur content of distillate oil in EU countries will be limited to 

0.1 percent or 1000 ppm by January 1, 2008, based on Directive 1999/32/ EC (reference 

19). The average sulfur content of light heating oil in Canada from 1995 to 2001 was 

between 2000 ppm and 2700 ppm, with an average of 2010 ppm in 2001 (reference 19), 

which is similar to sulfur levels in the U.S. The Minister of Environment in Canada has 

indicated an intention to reduce sulfur levels in fuel oil to improve public health and the 

environment with the goal of matching the sulfur requirement set by the European Union 

(EU) for 2008. 

A presentation by the Institute for Wirtschaftliche Oelheizung, dated September 

17, 2003, listed the current fuel sulfur standards for Europe in percent: Austria 0.005 to 

0.1; Belgium 0.2 or less; France 0.2 or less; Germany 0.005 to 0.2; Great Britain 0.2 or 

less; Italy 0.2 or less; Sweden 0.1 or less; Switzerland 0.2 or less (reference 20). This 

presentation also showed a decreasing trend in sulfur content with Switzerland moving 

toward 50 ppm to 500 ppm sulfur, and Scandinavia, Germany, Austria and Belgium 

moving toward 50 ppm sulfur fuel limits. 

Switzerland has an allowable limit for sulfur content of 0.2 percent, but taxes fuel 

oil higher than 0.1 percent. Reportedly, most of the fuel sold had sulfur content of 0.1 

percent or lower. There are low sulfur fuels with 0.03 to 0.05 percent sulfur on the 

market in Europe and its use is reported to represent up to 20 percent of the fuel sold in 

Germany. 

1.7. Past Advances in Oil Heat Emissions Performance 

Important advances have occurred over the past three decades that have helped to 

reduce air emissions from residential oil heating equipment through the efforts of oil heat 

marketers and equipment manufacturers. These include voluntary energy conservation 

initiatives that have lowered fuel use and technology advances that have substantially 

lowered the emission rate for particulate matter from oil burners. 

Prior to 1973 and the first substantial oil price increases, oil heated homes 

typically consumed 1400 gallons of fuel annually. Efforts by the oil heat research 

program at Brookhaven National Laboratory and the oil heat equipment manufacturers 

resulted in the development of more efficient equipment that contributed to a decrease in 

oil consumption by the average house to less than 900 gallons a year. The plot that 

follows, based on data published by the Energy Information Administration (U.S. 

Department of Energy), shows a 40 percent reduction in fuel use from the mid 1970s to 

the present time. Between 1977 and 1992 residential annual fuel oil use decreased from 

1,994 to 865 trillion BTU. The number of oil heated homes fell by about 25 percent, and 

energy efficiency improvement is credited with lowering fuel use by approximately 40 

percent (references 1,2). The annual residential consumption of distillate fuel oil 

averaged 861 trillion BTU from 1995 through 1999. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 1-7

Figure 1-2: U.S. Annual Residential Fuel Oil Use 

In addition to energy conservation programs, the historical reduction in fuel oil 

use has been spurred by the development and use of new higher efficiency oil heating 

equipment. The flame retention oil burner, which increases fuel efficiency by about 15 

percent, was developed through industry-sponsored research and development efforts and 

began to dominate the market in the late 1970s (reference 3). The efficiency of new oilpowered boilers and furnaces also increased substantially from the late-1970s to the 

present with average annual fuel utilization efficiencies rising from less than 70 percent 

(estimated) to more than 85 percent. 

The increases in oil burner, boiler, and furnace efficiencies directly contributed to 

the 40 percent reduction in average annual fuel consumption. Annual emissions of air 

pollutants including PM, SOx, NOx, and CO2 have also decreased by 40 percent as a 

direct result of the reduction in annual fuel consumption in homes. In fact, calculations 

indicate that from 1977 to 1992, greenhouse gases from oil heat were lowered by 470 

million tons (reference 1). 

Particulate matter emissions from oil burners have been lowered by more than 95 

percent over the past three decades as a result of the development and deployment of the 

flame retention oil burner. In addition to increasing efficiency and lowering fuel use, the 

rate of PM emissions is much lower with the flame retention design. The plot that 

follows shows the reduction in the rate of PM emissions by oil burners over the past 30 

years (reference 4). 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 1-8

Figure 1-3: Reductions in Oil Burner PM Emissions 

The rate of filterable particulate emissions decreased by a factor of 20 from the 

1960s to the 1990s as oil burner design evolved and fuel-air mixing improved as a result 

of increased air supply pressure. Enhanced fuel-air mixing produces more complete 

combustion and lowers PM (smoke and soot) emissions. These substantial reductions in 

PM emissions from residential oil burners were recognized by the U.S. Environmental 

Protection Agency in the mid 1990s when the standard emissions factor for oil burners 

was lowered by a factor of seven to 0.003 pounds of PM per million BTU of fuel burned 

during cyclic operation (references 4, 5). Properly adjusted oil burners now produce 

particulate mater emissions that are similar to natural gas burners. 

While the oil heat industry has compiled an impressive record of energy 

conservation and lowered air emissions over the past several decades, the high sulfur 

content of the fuel used for space heating continues to represent a significant source of 

SO2. These emissions can be lowered dramatically through the introduction of lower 

sulfur heating oil as will be discussed in the next section. 

Given the nature of this source (i.e., millions of individual units), there are fewer 

options for reducing air pollution from residential and commercial heating units than 

large industrial source. Since traditional regulatory measures, such as the addition of 

emission control technology to existing facilities, are not practical for this sector, the use 

of cleaner fuel represents the best near-term option for controlling emissions from oil 

burners. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 2-1

2. EMISSION REDUCTION POTENTIALS OF LOW 

SULFUR HEATING OIL AND BIOFUELS 

This section summarizes the emission reduction potential associated with the use 

of lower sulfur home heating oil for SO2, NOx, PM and CO2. Additionally, the potential 

environmental benefits that could be achieved by blending biofuels into low sulfur 

heating oil are discussed. 

2.1. Low Sulfur (500 ppm) Home Heating Oil 

As described earlier, the introduction of lower sulfur heating oil can reduce 

emissions of several key air pollutants. Table 2-1 shows typical emission rates for 

residential oil burners using fuel with sulfur contents of 500 and 2500 parts per million, 

based on emission factors published by the U.S. Environmental Protection Agency 

(references 1,5). 

Table 2-1: Air Emission Rates for Home Oil Burners

Pollutant 

Emission Rate 

In lbs/MMBTU 

PM Total 0.012 

PM Condensable 0.0094 

PM Filterable 0.0030 

CO 0.036 

TOC / VOC (non methane) 0.0051 

NOx 0.13 

SOx 0.05% 0.05 

SOx 0.25% 0.26 

Reference: Oil Burner Emissions: AP-42 Sept 98 (Jan 2004) 

2.1.1. Sulfur Dioxide Emissions 

The SO2 emission rate for home heating oil with 0.25 percent (2500 ppm) sulfur 

is 0.26 pounds per Million BTU of fuel burned. Using oil containing 0.05 percent sulfur 

(500 ppm) lowers the sulfur oxide emissions to 0.05 pounds per million BTU. Figure 1-1 

indicates that typical sulfur contents of distillate fuel oil are currently in the 0.22 percent 

range. The graph in Figure 2-1 shows the change in SO2 emissions as the sulfur content 

of heating oil changes (reference 10). SO2 emissions from home oil burners are directly 

related to the sulfur content of the fuel. Reducing the sulfur content of heating oil from 

an average of 0.20 percent to 0.05 percent lowers the rate of sulfur oxide emissions by 75 

percent. If the fuel sulfur content is lowered by 80 percent, the sulfur dioxide emissions 

decrease by 80 percent. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 2-2

Figure 2-1: Relationship of Fuel Sulfur Content to SO2 Emissions 

0

50

100

150

200

250

300

350

0 1000 2000 3000 4000 5000 6000 7000

Fuel sulphur (ppm)

Flue gas SO2 (ppm)

2.1.2. Nitrogen Oxide Reductions: 

Figure 2-2 shows measured reductions in NOx emissions associated with using 

lower sulfur heating oil for several oil burner types (reference 11). The chart shows the 

measured reduction in nitrogen oxide emissions for three oil burner designs and three fuel 

sulfur contents. “FR-Std” refers to a standard flame retention oil burner, “FR-Hi Perf” is 

a new high performance flame retention oil burner, and “LowEmis” refers to a new 

generation of low NOx oil burners. The three test fuels were: standard fuel oil 

(nominally 2100 ppm S), low sulfur fuel at 250 ppm (LS), and an ultra low sulfur fuel oil 

(ULS) at 91 ppm. For each burner type, as the fuel sulfur content decreased, the NOx

emission rate also dropped. The standard flame retention oil burner produced 10 percent 

lower NOx emissions when the 500 ppm sulfur fuel was used in place of normal sulfur 

(2000 ppm) fuel. These tests clearly demonstrate that NOx emissions from residential 

heating systems decrease when low sulfur heating oil is burned. Further, these test data 

point to the additional NOx reductions that could be realized by reducing heating sulfur 

below 500 ppm. 

For a standard flame retention oil burner, the most common burner type now used 

in homes, the lower sulfur heating reduced NOx emissions by about 12 percent. 

However, the test fuel contained 250 ppm of sulfur, so the expected NOx reduction for a 

500 ppm fuel would be slightly less. The expected reduction in nitrogen oxide emissions 

from conventional flame retention oil burners is in the range of 10 percent when 

conventional heating oil (>2000 ppm sulfur) is replaced with 500 ppm sulfur oil. These 

reductions can be achieved by changing only the fuel properties, without any burner 

modifications. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 2-3

Figure 2-2: Nitrogen Oxide Emission Reductions with Lower Sulfur Heating Oil 

2.1.3. Particulate Matter (PM) Reductions: 

Figure 2-3 relates PM emissions (filterable and condensable) from home oil 

burners to fuel sulfur content (reference 10). The x-axis shows the fuel sulfur content of 

heating oil in parts per million and the y-axis shows the total loading in milligrams per 

cubic meter of exhaust for both PM10 and PM2.5. There is a linear relationship between 

total PM loading and fuel sulfur content: as the sulfur content of fuel decreases, the PM 

loading decreases proportionally. These data indicate that lowering the sulfur content of 

the fuel from 2500 ppm to 500 ppm reduces total PM emissions by a factor of five, and 

lowering the sulfur content from 2000 ppm to 500 ppm reduces PM emissions by a factor 

of four. PM emissions from oil burners using low sulfur heating oil approach the 

particulate emissions of natural gas burners which are widely recognized as one of the 

cleanest combustion sources. 

Figure 2-3: Effect of fuel sulfur on PM2.5 and PM10 emissions 

Reduction in NOx - Fuel Effects

Petroleum-based fuels

0%

20%

40%

60%

80%

100%

FR-Std. FR-Hi Perf. Low Emis.

Burner type

% of Std Fuel, Std F.R. 

burner

Std Fuel

LS fuel

ULS fuel

Baseline = 100%

 % of Std Fuel, Std F.R 

 Burner

0

5

10

15

20

25

30

0 1000 2000 3000 4000 5000 6000 7000

Fuel sulphur (ppm)

PM loading (mg/m3)

PM 2.5

PM 10
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 2-4

2.2. Low Sulfur (500 ppm) Heating Oil Blended with Biofuels 

Low sulfur heating oil can be blended with biofuels to further reduce air 

emissions, improve the environmental attractiveness of home heating oil and extend 

supplies with domestic feedstocks. Biofuels, including soy-based biodiesel, contain 

negligible amounts of sulfur and nitrogen and can further lower SO2 and NOx emissions 

from oilheat burners. In addition, smoke and soot emissions from biofuel blends are less 

than for petroleum-based distillate oil. Biodiesel is not known to contain mercury. 

Greenhouse gas emissions are also lowered as the feedstocks for biofuels are re-grown 

and sequester carbon from the air. 

Lower sulfur heating oil blended with biofuels represents a premium fuel with 

excellent combustion characteristics and lower air emission rates than conventional 

petroleum-based distillate heating oil. In fact, low sulfur (500 ppm) heating oil combined 

with a 20 percent soy-based biodiesel has comparable environmental characteristics to 

natural gas (reference 12). 

2.2.1. Sulfur Dioxide Reductions 

Tests of sulfur dioxide emissions with a blend of 80 percent heating oil containing 

500 ppm sulfur and 20 percent soy-based biodiesel were conducted for the Massachusetts 

Oilheat Council at the New England Fuel Institute in 2003 (reference 13). Because the 

sulfur content of biofuels is near zero, adding 20 percent biodiesel lowers the fuel sulfur 

content of the final blend. The measured reduction in SO2 emissions was 84 percent 

compared to the normal sulfur distillate fuel used for these tests. Compared to a 2000 

ppm base fuel, an 80 percent reduction in SO2 emissions is expected for a blend of 80 

percent low sulfur (500 ppm) distillate fuel and 20 percent biofuel. This is greater than 

the 75 percent reduction expected when 500 ppm sulfur fuel oil replaces 2000 ppm sulfur 

fuel. 

2.2.2. Nitrogen Oxide Reductions: 

Nitrogen Oxide emissions are significantly lower for the 20 percent biofuel blend 

in 500 ppm fuel oil compared to the reductions achieved with lower sulfur fuel alone. In 

fact, typical measured NOx reductions for the biofuel blend were double those for the 500 

ppm sulfur heating oil. In one case, for a boiler with an atypically high combustion 

chamber temperature, the NOx levels did not decrease for the biofuel/low sulfur blend. 

The figure below shows the results of a typical test. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 2-5

Figure 2-4: Nitric Oxide Emissions for Low Sulfur / Biofuel Blend 

0.0

20.0

40.0

60.0

80.0

100.0

120.0

0 5 10 15

FLUE O2 PERCENT

NO ppm

Biodiesel

#2 Fuel Oil

Note: NO ppm (at 3% excess air) versus FLUE O2 %; Unit 13, 0.75 gph

Figure 2-4 shows measured flue gas emissions of Nitric Oxide (NO) as the burner 

excess air is varied and the flue gas oxygen content increases. These data are corrected to 

3 percent excess air. The biofuel/low sulfur oil blend emits much less NO than 

conventional higher sulfur home heating oil. These preliminary tests suggest that about 

one-half of the reduction is produced by the lower sulfur fuel oil and the other half is 

produced by the biofuel. The lower sulfur fuel oil and biofuel blends can substantially 

reduce NOx emissions without requiring burner or boiler modifications. 

2.2.3. Particulate Matter Reductions: 

Lower sulfur content in heating oil reduces PM emissions and biofuels can lower 

these emissions even further. Combustion test results showed that biofuel blends lower 

smoke emissions. In one test program, a burner was adjusted for zero smoke using the 

blend of biofuel and low sulfur oil. When the conventional (higher sulfur) home heating 

oil was used at the some burner air setting, the smoke level increased from zero to a 

number 3 on the Bacharach (ASTM 2156) scale. While these tests cannot measure actual 

PM loading, it is clear that the biofuel blend lowers smoke and soot emissions. 

2.2.4. Mercury Reductions 

While there is a paucity of data, it is expected that adding biodiesel to heating oil 

will reduce Hg emissions by an amount equivalent to the blend percentage. Soy-based 

biofuel is not known to contain mercury and therefore will dilute the mercury 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 2-6

concentration of the final fuel when blended with petroleum-based heating oil. 

Additional testing is needed to more accurately quantify the emission coming from 

residential and commercial oil heating and to verify the relationship between the addition 

of biodiesel and changes in mercury emissions from the combustion of the blended fuel. 

Further, the relationship between the sulfur and mercury content of distillate is not well 

understood. The Northeast states will begin a testing program in 2006 to measure both 

the sulfur and mercury content of heating oil and highway diesel in an effort to better 

quantify mercury content and the potential relationship between sulfur and mercury 

concentrations in distillate. 

2.2.5. Greenhouse Gas Emission Reductions: 

An additional benefit of biodiesel blends is that the biofuel component is regrown which removes carbon dioxide from the atmosphere. While some energy is 

required to re-grow and process the soy-based biodiesel, research indicates a net 

reduction in greenhouse gases of 80 percent for soy-based biofuels. This means that a 20 

percent soy biodiesel blend will lower carbon dioxide emissions by approximately 16 

percent. 

The chart in Figure 2-5 shows the net global warming impact potentials for a 

range of fuels including fuel oil with varying percentages of soy biodiesel. Values are in 

pounds per million BTU of fuel burned, and are based on emission factors published by 

the U.S. Environmental Protection Agency (reference 5). 

“Biod 100%” is heating oil consisting of 100 percent soy-based biodiesel fuel. 

The next three values shown are biodiesel fuels at 70 percent, 35 percent, and 20 percent 

respectively. “NG 1.4% Leak” is for natural gas including a gas leakage rate during 

transmission and distribution of 1.4 percent of throughput, and an average methane-toCO2 global warming ratio of 30. “NG 2% Leak” is for natural gas including a gas 

leakage rate of 2.0 percent of throughput. “Biod 10%” is heating oil consisting of 10 

percent biodiesel fuel. “NG 2.6% Leak” is for natural gas including a gas leakage rate of 

2.6 percent. “Number 2 oil” shows emissions for standard distillate heating oil used in 

homes. Coal emissions are higher because of the higher carbon-to-hydrogen ratio. 

Electric energy has the highest greenhouse gas emissions based on U.S. Department of 

Energy Publications showing total CO2 emissions and total energy generated. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 2-7

Figure 2-5: Global Warming Potentials of Various Energy Sources 

0

50

100

150

200

250

300

350

400

450

BIOD 100%

BIOD 70%BIOD 35%BIOD 20%

NG 1.4% Leak

NG 2% Leak

BIOD 10%

NG 2.6% Leak

#2 OIL

NG 3.5% Leak

COAL

ELECTRIC

Note: Equivalent CO2 Emissions Pounds Per Million BTU for Oil and Natural Gas (Ref: USEPA AP-42)

The lowest global warming potentials for all fuels are the biodiesel-heating oil 

blends. The 100 percent biodiesel blend (B100) produces the lowest global warming 

potential. The B20 blend is lower than all other sources including natural gas. For the 10 

percent biodiesel in petroleum-based heating oil, the total global warming potential is 

lower than for natural gas within the range of expected gas leakage rates. 

One important factor in comparing the climate impacts of natural gas and heating 

oil is methane leakage that occurs during natural gas transmission and distribution given 

the higher global warming potential of methane compared to carbon dioxide. Because 

biofuel are renewables, when blended with home heating oil, they reduce the global 

warming potential below that of natural gas. EQUIV. LBS PER MMBTU CO2
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 3-1

3. COST-BENEFIT ANALYSES OF LOW SULFUR HOME 

HEATING OIL 

Lower sulfur heating oil is cleaner burning and emits less particulate matter which 

reduces the rate of fouling of heating equipment and permits longer time intervals 

between vacuum cleanings. The potential costs savings for oil heated homes due to 

reduced maintenance is on the order of hundreds of million of dollars a year, most of 

which accrues in the Northeast and Mid-Atlantic states where oil is a dominant fuel for 

space heating. The added cost for the lower sulfur fuel is expected to be less than the 

savings produced by cleaner operation. 

Figure 3-1 shows the impact of various fuel oil sulfur contents on the rate of 

fouling depositions inside a residential cast iron boiler based on research conducted by 

Brookhaven National Laboratory. These photos clearly show that more boiler fouling 

occurs as the sulfur content of the fuel increases. The reduced rate of deposits with lower 

sulfur fuel oil lowers cleaning costs. 

Figure 3-1: Boiler Fouling for Varying Fuel Oil Sulfur Contents 

The lower sulfur fuel produces minimal boiler deposits as shown in the upper left 

photograph for the 0.04 percent sulfur fuel (reference 10). 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 3-2

3.1. Reduced Maintenance Costs 

Figure 3-2 summarizes the results of a comprehensive field study of the impacts 

of low sulfur fuel oil (0.05 percent) funded by the New York State Energy Research and 

Development Authority (NYSERDA). See Reference 10 for details of this multi-year 

study. Boiler deposits were collected and analyzed for houses burning normal sulfur and 

low sulfur heating oil. The results showed a significant reduction in boiler deposits for 

the low sulfur houses, consistent with the laboratory tests conducted by Brookhaven 

National Laboratory and in Canada on boiler deposition rates. 

Figure 3-2: Measured Boiler Deposits – Normal and Low Sulfur Fuel Oil 

0

0.05

0.1

0.15

0.2

0.25

0.3

Normal Sulfur Low Sulfur

(Without Heating Only Units)

Depositon Rate - Lbs per 1000 

Gallons

Boiler deposits were reduced by a factor of two by lowering the fuel sulfur 

content from 0.14 percent to 0.05 percent for the houses in the study. Larger reductions 

in boiler depositions are produced when the initial sulfur content is higher. These 

reduced deposits translate into much lower costs for vacuum cleaning by extending the 

service interval. When the existing heating oil sulfur content is 2000 to 2500 ppm and 

500 ppm sulfur fuel is substituted, the service interval can be extended by a factor of 

three or more (e.g., cleaning at three year intervals rather than annually). This produces 

substantial savings in service costs for oil-heated homes. 

The reduced boiler and furnace fouling rates achieved by using lower sulfur fuel 

oil translate directly into lower vacuum-cleaning costs for fuel oil companies and 

homeowners. The chart that follows summarizes expected savings for a range of hourly 

service rates and for varying initial fuel oil sulfur percentages (reference 10). 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 3-3

Figure 3-3: Vacuum Cost Savings per 1000 Houses 

Per 1000 Customers

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

0.10 0.15 0.20 0.25 0.30 0.35 0.40

ORIGINAL SULFUR CONTENT OF FUEL OIL (%)

$ SAVED EACH YEAR 

$100.4 per Hour 

$94.9 per Hour

$89.3 per Hour

$83.7 per Hour

$78.1 per Hour

$72.5 per Hour

$67.0 per Hour

$61.4 per Hour

$55.8 per Hour

$50.2 per Hour

$44.6 PER Hour

Note: The cost savings in dollars per year, by using 0.05% Sulfur Fuel Oil per 1,000 customers 

For example, at a median hourly service cost of $72.50 and an initial fuel sulfur 

content of 0.25 percent (2500 ppm), the expected reduction in vacuum cleaning costs is 

$29,000 a year per 1000 houses. If the hourly service rates are higher, the annual savings 

are also higher. The service rates shown here are for illustrative purposes, actual costs 

may be higher than the maximum values or lower than the minimum values shown on the 

graph. 

The potential vacuum-cleaning cost savings for the U.S., for a starting fuel sulfur 

content of 0.20 percent, ranges from approximately $200 million a year to $390 million a 

year for service costs of $50 to $100 per hour. Therefore, if all oil heated homes 

switched to 500 ppm sulfur heating oil, more than $200 million a year could be saved, 

which would significantly lower the overall operating costs of fuel oil marketers 

(reference 10). Given the dominant share of the U.S. heating oil market represented by 

the Northeast states, a large percentage of the projected national benefits would accrue in 

the region. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 3-4

3.2. Added Cost for Lower Sulfur Heating Oil and Historic Fuel Prices 

The incremental cost of low sulfur (500 ppm) home heating oil compared to the 

higher sulfur product varies over time. Fuel oil prices reported in the Weekly Petroleum 

Status Report published by the U.S. Department of Energy (reference 15) were used to 

compare New York Harbor spot market prices of # 2 heating oil and # 2 diesel (low 

sulfur). From January 2003 through March 2004, the price of the low sulfur diesel 

ranged from $ 0.0022 per gallon to $ 0.0378 per gallon higher than the price of the higher 

sulfur heating oil. The average price increment for the lower sulfur product was 1.6 cents 

per gallon for the 15 month period examined. 

Data collected by the Oilheat Manufacturers Association, which tracks fuel oil 

and natural gas prices, shows that the retail price of home heating oil has cycled up and 

down over the past twenty years (reference 16). Figure 3-4 shows dollar per gallon 

equivalent prices for heating oil and natural gas between 1982 and 2004. 

Figure 3-4: Home Heating Oil and Nat Gas Prices 

(CT, ME, MA, NH, RI, VT, DE, MD, NJ, NY, PA, DC, VA)

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

1982

1984

1986

1988

1990

1992

1994

1996

1998

200020022004

$ PER GALLON OR EQUIVALENT

Nat Gas

Home Heating Oil

Residential oil prices have increased and decreased over this period. From 1984 

to 1988 oil prices fell about 27 percent, and then increased from 1984 to 1991 by about 

the same amount. This represents a cyclical change of more than 25 percent. From 2001 

to 2002 average oil prices increased by more than 50 percent, and then decreased for the 

next two years. 

The added cost of low sulfur heating oil is on the order of 1.6 cents per gallon; 

representing approximately 1 percent of the average oil price. The incremental cost of 

low sulfur heating oil is much smaller than historical oil price fluctuations. Therefore, 

the added cost for lower sulfur heating oil is expected to have a minimal overall 

economic impact on home heating oil consumers. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 3-5

3.3. Net Cost Savings with Lower Sulfur Fuel Oil 

The chart in Figure 3-5 presents the net cost savings of lower sulfur heating oil 

including the effect of added fuel costs (reference 10). The net savings are shown for a 

range of added fuel costs and for various hourly service rates. For an added cost of low 

sulfur home heating oil of 1.5 cents per gallon, and for an hourly service rate of $78 per 

hour, the net cost savings by reduced vacuum cleaning intervals is $18,000 or about $18 

per customer. This chart can be used to estimate the net savings associated with the use 

of lower sulfur home heating oil for a range of fuel and maintenance costs. 

Figure 3-5: Net Cost savings per 1,000 Houses Using Low Sulfur Oil 

For: 0.25% S (initial) and 865 Gal per Year 

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

0.00000.00250.00500.00750.01000.01250.01500.0175

ADDED FUEL COST - $ PER GALLON

CLEANING SAVINGS - $ PER 1000 CUSTOMERS

$100 per hour

$89 per hour

$78 per hour

$67 per hour

$56 per hour

$45 per hour

The cleaning cost savings generated by using lower sulfur fuel oil are greater than 

the added cost of the fuel. The NYSERDA study indicates that the expected savings in 

vacuum cleaning costs is approximately two to three times higher than the added fuel cost 

for service rates of $75 to $100 per hour. Other reductions in service costs, in addition to 

the vacuum cleaning cost savings, were also observed during NYSERDA’s multi-year 

field demonstration of low sulfur home heating oil (reference 10). This further improves 

the benefit to cost ratio for lower sulfur fuel oil. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 3-6

3.4. Environmental and Health Benefits 

In addition to the cost savings that would accrue to oil heat marketers and 

consumers due to reduced maintenance, substantial public health and environmental 

benefits would be realized through the introduction of low sulfur heating oil. According 

to the NYSERDA study referenced earlier, the potential reductions in SO2 emissions by 

using 500 ppm sulfur oil to replace 2000 ppm sulfur is approximately 60,000 tons per 

year nationwide. These emission reductions occur primarily in the Northeast where a 

majority of the home heating oil is consumed. In New York State alone, the projected 

SO2 reductions associated with the shift to low sulfur home heating oil is about 13,000 

tons per year (reference 10). 

In summary, this section suggests that lower sulfur fuel oil and lower 

sulfur/biofuel blends can provide important public health and environmental benefits in a 

very cost-effective manner. In fact, the cost savings due to reduced need for heating 

system cleaning and maintenance alone more than offset the incremental cost of the 

lower sulfur fuel. When the public health and environmental benefits are added to the 

equation, a 500 ppm sulfur heating oil program represents one of the most cost-effective 

air pollution control strategies available to the Northeast states. The next section 

discusses other benefits associated with the introduction of lower sulfur heating oil. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 4-1

4. OTHER BENEFITS OF LOW SULFUR HEATING OIL 

Additional benefits derived from the use of heating oil with lower sulfur content 

include efficiency improvements, the opportunity to develop and market advanced boiler 

and furnace technologies, and harmonizing with European and Canadian fuel standards. 

4.1. Improved Efficiency 

Lower sulfur fuel oil produces less fouling of the heat transfer surfaces inside 

boilers and furnaces as discussed earlier. This helps improve the long-term efficiency of 

the boiler or furnace by maintaining high heat transfer rates from the hot flame gases to 

the boiler water or furnace warm air. Research conducted by Brookhaven National 

Laboratory indicates that the drop in heating equipment efficiency is on the order of one 

or two percent each year, with higher decreases in some cases. After the heating unit is 

cleaned, the thermal efficiency returns to the higher levels. Therefore, using lower sulfur 

home heating oil can improve the efficiency of oil heating equipment on the order of one 

to two percent. 

The added benefits of improved efficiency are two-fold. First, heating costs are 

reduced, as less fuel is required to supply the required heating demand. Second, the 

emissions of all pollutants are reduced, as less fuel is consumed by more efficient boilers 

and furnaces. On an individual basis this is a small increment. However, when applied 

to the more than 10 million home heating systems in the U.S., the reductions in fuel use 

and air emissions are meaningful. 

4.2. Opportunity to Utilize Advanced Equipment 

Part of the energy loss from heating equipment is in the form of water vapor in the 

exhaust gases. Each pound of water vapor removes 970 BTUs, which represents about 

6.5 percent of the energy content of the fuel oil. Brookhaven National Laboratory 

conducted research in the 1980’s on developing “condensing” furnaces and boilers that 

operate at very low exhaust temperatures that permit some of the water vapor heat loss to 

be recovered. One problem with heating oil is that the fuel sulfur content increases the 

acidity of the condensed water vapor. This requires measures to protect the heat transfer 

surfaces from acid attack and damage. Recently, the National Oilheat Research Alliance 

funded the development of oil-powered condensing heating equipment and the 

availability of lower sulfur heating oil will support expanded use of this new technology. 

The use of lower (500 ppm) and eventually ultra low sulfur (15 ppm) heating oil 

offers the opportunity to improve boiler and furnace designs to include flue gas 

condensation and increase efficiencies into the mid to upper 90 percent range. This is 

comparable to the highest efficiencies now available from natural gas-powered 

equipment. 

Historically, condensing oil furnaces have been available. However, design and 

maintenance problems associated with the use of higher sulfur heating oil limited 

widespread use of condensing oil equipment. The availability of lower sulfur oil can 

lower equipment and service costs and permit expanded use of higher efficiency warm air 

oil furnaces and hot water boilers. This is an important option for oil heat consumers as 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 4-2

both oil and natural gas prices continue to rise. Higher efficiency equipment can help 

assure that oil heat remains an economically viable option for residential consumers to 

maintain a mix of fuels needed for energy diversity. The use of this higher efficiency 

equipment will reduce the emissions of all air pollutants, including CO2, as less fuel is 

needed to produce the same heat output. Market demand for condensing furnaces is 

likely to increase as prices for heating oil rise. 

4.3. Harmonizing with Worldwide Standards 

Clearly, the trend in Europe, Canada and elsewhere is toward lower sulfur heating 

oil. Home heating oil sulfur contents are being lowered to 0.1 percent or 1000 ppm in the 

near-term with a target of 500 ppm to 50 ppm in many European countries and other 

nations around the world as reviewed earlier. The U.S. can keep pace with these changes 

and encourage fuel refiners and suppliers toward lower sulfur products by joining with 

other nations in requiring lower sulfur oil. Joining forces with other major fuel users 

around the world will help to move sulfur standards to lower levels so that the many 

benefits of the lower sulfur product that are summarized in this report can be realized as 

soon as possible. Reducing the number of products transported and stored around the 

world by harmonizing sulfur limits is the most expeditious way to achieve the goal of 

lower sulfur fuel oil. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 5-1

5. OVERVIEW OF SUPPLY AND DISTRIBUTION OF 

HEATING OIL IN THE NORTHEAST 

The continued availability of adequate supplies of heating oil from domestic 

sources and imports is an important consideration in assessing the costs and benefits of 

establishing low sulfur standards. This section presents a brief overview of some key 

issues and potential strategies that will enable the use of lower sulfur home heating oil in 

the U.S. in the near-term without significant supply disruptions or price spikes. 

In April 2005, total petroleum use in the U.S. was 20.4 million barrels per day 

(MMBPD) of which 13.2 MMBPD was from imports (reference 21). Imports accounted 

for approximately 65 percent or almost two-thirds of the total petroleum products in the 

U.S. supplied for domestic uses. In contrast, the percentage of distillate fuel imported 

into the U.S. is much smaller. Table 5-1 is based on data related to distillate fuel oil 

supply from reference 21. 

Table 5-1: US Distillate Fuel Oil Supply (Thousand Barrels per Day) 

Year 

Refiner 

Output Imports % Imports 

2002 3,592 267 7.4 

2003 3,707 333 9.0 

2004 3,819 320 8.4 

2005 3,627 384 10.5 (Jan to April 2005) 

Distillate fuel use in the U.S. is less than 20 percent of total petroleum use. The 

percentage of distillate fuel oil imported to U.S. from 2002 to 2005 ranged from 7.4 to 

10.5 percent. This does not include exports of distillate fuel oil that ranged from 87 to 

112 thousand barrels per day, or changes in stocks. The percentage of imported fuel is 

considerably higher in the Northeast where the majority of the nation’s heating oil is 

consumed, especially during periods of peak demand.

Nationally, residential distillate fuel oil consumption is only a small percentage of 

total U.S. distillate use, ranging from 10.7 to 11.4 percent of the total from 1999 to 2003 

(reference 22). Residential consumption represents less than two percent of total U.S. 

petroleum use. Highway diesel fuel consumption is five times higher than that of 

residential distillate, ranging from 55.5 to 58 percent of total U.S. distillate demand for 

the same time period. However, the situation in the Northeast is dramatically different 

where heating oil represents 54 percent of total demand for #2 distillate oil, compared to 

38 percent for highway diesel. 

Distillate fuel oil is brought into the Northeast from a combination of sources that 

include a pipeline that runs from the Gulf States to New Jersey, refineries in New Jersey 

and Pennsylvania, imported fuel from Canada by trucks, and from other countries by 

tanker. Distillate imports come from three main sources: Canada, the Virgin Islands, and 

Venezuela with a combine volume of 196 thousand barrels per day for the peak year from 

2000 to 2003. These three countries provide about two-thirds of total distillate imports to 

the Northeast on an annual average basis (reference 23). 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 5-2

An important consideration regarding a requirement for lower sulfur heating oil is 

the availability of lower sulfur distillate fuel imports during times of peak fuel 

consumption, in January and February when the outdoor temperature is the coldest. A 

presentation by Allegro Energy Consulting on August 23, 2004 (reference 23) compared 

the annual percentage of imported distillate fuel oil (high sulfur) in the Northeast to the 

percentage of total demand met by domestic refiners. Table 5-2 summarizes this 

information. 

Table 5-2: Source of Annual Distillate Fuel Oil 

Supplies on the East Coast (%) 

Year 

East Coast 

Refineries 

Golf Coast 

Receipts Imports 

2000 39% 36% 24%

2001 33% 38% 29%

2002 37% 37% 26%

2003 34% 37% 29%

The annual percentage of high sulfur distillate oil imports used for heating ranged 

from 24 to 29 percent from 2000 to 2003. This is higher than the national average for all 

distillate fuel oil that ranged from 7.4 to 10.5 percent. The percentage of imports to the 

East Coast during the first quarter of the years 2000 to 2003 when the peak demand 

occurs are shown in Table 5-3 (Reference 23). 

Table 5-3: Peak Distillate Fuel Oil Imports (%) 

Year 

To East 

Coast 

2000 30% 

2001 41% 

2002 24% 

2003 39% 

These data indicate a significant year-to-year fluctuation in wintertime demand 

met by imports. In 2002, imports accounted for 24 percent of peak quarter demand, 

which is similar to the average annual East Coast values. By contrast, 41 percent of peak 

demand was met by imports in 2001. The peak volume of imported distillate fuel oil to 

the East Coast, approximately 400 thousand BPD, occurred during the first quarter of 

2001. It is important to note that distillate stocks were not available to meet the peak 

demand in 2001, as it was in subsequent years, which caused imports to increase. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 5-3

The Allegro presentation indicates that about two-thirds of distillate imports to the 

Northeast during the peak year come from Canada, the Virgin Islands, and Venezuela 

that supply 74, 71, and 51 thousand BPD of distillate fuel, respectively. The next largest 

suppliers of imported fuel have been: Europe at 31 TBPD; Russia at 28 TBPD; Africa at 

14 TBPD; and Asia, South America, Caribbean, Middle East, and Mexico for a total of 

27 TBPD. Concern has been expressed regarding the ability of offshore marketers to 

supply lower sulfur distillates fuel as needed to meet peak demand in the near-term. 

Russia and Africa are two historic suppliers that are not expected to lower sulfur content 

of their distillate fuels in the near-term. However, together, they supplied only about 14 

percent of imports during the peak year examined. It seems likely that other suppliers 

will be able to make up the difference. However, during episodic cold spells, the demand 

for imports can be significantly higher than the first quarter averages discussed above. 

Based on the concern expressed by industry representatives about potential nearterm adverse supply impacts associated with a low sulfur heating oil requirement, the 

Northeast states are assessing potential strategies for ensuring needed supplies during 

peak heating demand periods. These include: (1) increasing pre-season stocks of lower 

sulfur fuel oil; (2) increasing imports from countries with lower sulfur standards; (3) 

permitting seasonal averaging of sulfur levels; (4) blending of lower sulfur distillate with 

higher sulfur imports; and (5) introducing greater amounts of domestic biofuels into the 

market over time. 

The Irving presentation (reference 24) indicates that during peak heating demand, 

in the 2001 to 2004 period, heating oil stocks helped supply the needed fuel. Fuel stocks 

supplied approximately 200 thousand BPD for that time period. This limited the amount 

of imports during periods of peak demand between 2002 and 2004. The exception was in 

2001, when adequate distillate stocks were not available, and the peak demand for 

imports increased to about 400 thousand BPD. Therefore, building adequate stocks of 

distillate fuel at the start of the heating season is an important mechanism for lowering 

reliance on imports. 

Some sources of imported distillate oil may not be able to supply the lower sulfur 

fuel oil in the near-term, but other sources are expected to have low sulfur product 

available. For example, European countries are leading the way with 0.1percent sulfur 

oil required in 2008. Canada plans to meet the EU target, and other nations are also 

expected to meet the lower sulfur mandates. Small increases in imports from some of the 

larger suppliers who will produce reduced sulfur fuel can compensate for the countries 

that lag in sulfur reduction. 

Seasonal averaging would diminish supply constraints by allowing providers to 

bring in “non-specification” fuel during periods of peak demand as long as the higher 

sulfur gallons are offset by lower sulfur fuel over the course of the heating season. The 

objective is to have an average seasonal or yearly fuel delivery that meets the new sulfur 

limit. This provision permits flexibility when fuel supplies are tight and fuel marketers 

must rely more on imports to meet the heating demand. 

Fuel blending is another approach for meeting lower fuel sulfur standards. The 

ultra-low sulfur (ULS) or 15 ppm standard for highway use is approaching and diesel fuel 

with very low sulfur content will be widely available. If this lower sulfur product is 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 5-4

added to a higher sulfur stock, the average sulfur content drops rapidly. For example, a 

blend of 80 percent fuel with 500 ppm sulfur and 20 percent 15 ppm fuel produces an 

average sulfur content of 403 ppm. This fuel blending method can be used to comply 

with lower sulfur standards for heating oil. It is important to remember that in the U.S., 

diesel production and fuel use is approximately five times higher than home heating oil 

use. Therefore, if all home heating oil was blended with 20 percent ULS diesel, it would 

require only about 4 percent of the diesel supply. In reality, much less than 4 percent of 

the ULS diesel supply would be needed, given the other compliance methods available. 

The supply of imported fuel oil is strongly dependent on the fuel price 

differential. Historically, the volume of net imports increases as the price of heating oil 

increases on spot markets. After October 1989, the heating oil spot market price 

increased by 5 to 10 cents per gallon and the volume of imports doubled from less than 

250 to 500 thousand BPD. A similar increase in imports occurred after October 2002. 

Even increases of 5 cents per gallon have historically produced substantial increases in 

the rate of distillate fuel imports. Higher fuel oil prices for the lower sulfur product must 

be minimized so that the balance between oil, natural gas and other energy sources is not 

disrupted. The strong relationship between distillate import rates and changes in fuel 

prices suggests that imports could help offset temporary fuel shortages during times of 

peak demand. 

Many environmental, public health, and equipment service cost benefits are 

produced by using lower sulfur home heating oil. The use of lower sulfur distillate 

heating oil is gaining acceptance, with Europe, Canada and other nations leading the way, 

much as the U.S. led the way for lower sulfur diesel fuel. An immediate question is how 

much can the sulfur limits be lowered without disturbing normal fuel supplies around the 

world. The good news is that distillate heating oil in the U.S. represents a much smaller 

fraction of the barrel than diesel fuel use whose sulfur content has already been reduced 

to 500 ppm and is slated to go to 15 ppm beginning in 2006. The challenge is to develop 

a plan for implementing lower sulfur heating oil standards that will minimize supply 

problems in the Northeast especially during times of peak heating demand in January and 

February. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 6-1

6. CONCLUSIONS 

The Northeast states are in the process of developing long-term strategies to meet 

national ambient air quality standards and visibility goals and regional targets for 

mercury and greenhouse gas reductions. As part of the planning effort, a wide range of 

pollution control strategies are being evaluated. Residential and commercial space 

heating with fuel oil has been identified as an important source of emissions. Given the 

relative lack of regulation of this sector, the implementation of lower sulfur fuel standards 

appears to represent a cost-effective emission reduction option. 

The emissions from residential and commercial oil heating contribute to ozone 

and particulate matter formation, mercury deposition and the build up of greenhouse 

gasses in the atmosphere. Given the impracticality of applying source-by-source 

emission control technology, the best option for reducing emissions from fuel oil heaters 

is the introduction of cleaner-burning fuel. 

SO2 emission reductions of 75 percent can be achieved by lowering the sulfur 

content of heating oil from current levels to 500 ppm. A ten percent reduction in NOx

emissions from this source sector can also be achieved. The benefits of this approach are 

realized immediately upon introduction of the cleaner fuel and therefore can help states 

meet specific near to mid-term emission reduction targets. 

The Northeast states are also evaluating the merits of blending biofuels with lower 

sulfur heating oil to improve the emission characteristics and open up the market for 

domestically produced clean-burning renewable fuels. Blending twenty percent biodiesel 

with 80 percent 500 ppm sulfur #2 distillate further lowers SO2 and PM emissions 

compared to 500 ppm sulfur heating oil and doubles the NOx benefits. The addition of 

twenty percent soy-based biodiesel also lowers greenhouse gas emissions by almost 

twenty percent and through dilution, reduces average mercury concentrations in the 

emission stream. 

The significant emission reductions associated with the introduction of lower 

sulfur heating oil standards can be achieved in a cost-effective manner. The incremental 

cost of 500 ppm highway diesel fuel has averaged 1.5 cents per gallon more than heating 

oil over the past decade. Further, the use of lower sulfur heating oil reduces the fouling 

of heating oil equipment and consequently extends maintenance intervals. Assuming that 

maintenance is needed only every third year, rather than annually, the cleaning cost 

savings are projected to be two to three times greater than the added fuel cost. With the 

recent increase in fuel oil cost, the 1.5 cent per gallon increment is a smaller percentage 

of total heating oil cost. 

The volatile nature of heating supply and demand presents unique challenges to 

the fuel oil industry. The success of a low sulfur fuel oil program is predicated on 

meeting these challenges. The Northeast states are assessing a variety of business 

strategies and regulatory approaches that could be used to minimize any potential adverse 

supply and price impacts that could result from a regional 500 ppm sulfur standard for 

heating oil. Suppliers can increase pre-season reserves and look to increase imports from 

offshore refiners producing low sulfur product. Blending domestically produced 

biodiesel into heating oil offers opportunity to reduce imports, stabilize supplies and 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 6-2

minimize supply-related price spikes. Air quality regulators are also considering 

permitting seasonal averaging of sulfur content which would allow higher sulfur imports 

to be brought to the Northeast market during periods of peak demand. Over the course of 

the year, the higher sulfur fuel would have to be offset by heating oil with a sulfur content 

below the standard. 

The analysis summarized in this White Paper supports the Northeast states 

conclusion that significant reductions in SO2, NOx, PM and CO2 emissions can be 

achieved by mandating lower sulfur heating oil. Importantly, these reductions can 

achieved at an overall savings to the consumer. Adding the public health and 

environmental benefits of a lower sulfur fuel further substantiate the favorable costbenefit ratio of a regional 500 ppm sulfur heating fuel program. 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 7-1

7. REFERENCES 

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National Laboratory, Technical Update, Oilheat Manufacturers Association, John E. 

Batey, 2001. 

2. State Energy Data Report, US Department of Energy, Energy Information 

Administration, Publication DOE/EIA-0214(99), May 2001 

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Salzano, and A.L. Berlad, Brookhaven National Laboratory report 50853, January 

1978. 

4. Emissions Characteristics of Modern Oil Heating Equipment, R. Krajewski, 

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report 52249, July 1990. 

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Sources, US Environmental Protection Agency, Publication AP-42, Chapter 1.3, 

Fuel Oil Combustion, September 1998. 

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Oilheat Manufacturers Association, John E. Batey, April 2004. 

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Distillate No. 2 Heating Oil, Among the States of Maine, Massachusetts, New 

Hampshire, New Jersey, New York, Rhode Island and Vermont, DRAFT, February 

4, 2005. 

8. Heating Oils, Northrop Grumman Mission Systems, Cheryl L. Dickson, NGMS-221 

PPS 2003/4, August 2003. 

9. Latest Findings on National Air Quality – 2001 Status and Trends, US 

Environmental Protection Agency, Office of Air Quality Planning and Standards 

Emissions, Monitoring and Analysis Division, EPA 454/K-02-001, September 2002. 

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and Brookhaven National Laboratory, funded by the New York State Energy 

Research and Development Authority, Final Report, March 2005. 

11. Factors Affecting Oil Burner NOx Emissions, Victor J. Turk, PE, RW Beckett 

Corporation, Paper No. 01-10, presented at the Oil Heat Technology Conference, 

BNL 52670, August 2002 
Low Sulfur Heating Oil: An Overview of Benefits, Costs and Implementation Issues Page 7-2

12. Oilheat Air Emissions and the Advantages of Low Sulfur Fuel, a presentation to the 

New York State Department of Environmental Conservation by John Batey, May 30, 

2003. 

13. Combustion Testing of a Bio-Diesel Fuel Oil Blend in Residential Oil Burning 

Equipment, work funded by the Massachusetts Oilheat Council and National Oilheat 

Research Alliance, John E. Batey, July 2003. 

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Emissions in Connecticut, John E. Batey, submitted to the Residential, Commercial, 

and Industrial Working Group, Connecticut Climate Change Stakeholders Dialogue, 

October 2003. 

15. Weekly Petroleum Status Report, US Department of Energy, 2003-2004. 

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Products, Technical Update, Oilheat Manufacturers Association, John E. Batey, June 

2004. 

17. Sulfur Oxide Emissions Reduction Credits, Cantor Fitzgerald, Daily Emissions 

Trading Updates, 2002 to 2003. 

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Manufacturers Association, John E. Batey, Robert Hedden, 1995 

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Oils, Environment Canada, June 9, 2005. 

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Issues, IWO - Institut fur wirtschaftliche Oelheizung e.V., Aachen, September 17, 

2003. 

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Administration, May 2005. 

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Administration, 2003 

23. Global Sulfur Regulations and Heating Oil Availability, Allegro Energy Consulting, 

presented on August 23, 2004. 

24. Overview of Home Heating Oil Market, Irving Energy, presented April 1, 2005 at 

state/industry meeting Waltham, MA.