Office of Transportation and Air Quality

EPA-420-F-14-007

March 2014

Tier 3 Gasoline Sulfur Standard’s 

Impact on Gasoline Refining

The U.S. Environmental Protection Agency (EPA) is finalizing 

a rule designed to reduce air pollution from passenger cars and 

trucks. Starting in 2017, Tier 3 sets new vehicle emissions standards 

and lowers the sulfur content of gasoline, considering the vehicle and 

its fuel as an integrated system. The vehicle standards reduce both 

tailpipe and evaporative emissions from passenger cars, light-duty 

trucks, medium-duty passenger vehicles, and some heavy-duty 

vehicles. The gasoline sulfur standard will make emission control 

systems more effective for both existing and new vehicles, and will 

enable more stringent vehicle emissions standards since removing 

sulfur allows the vehicle’s catalyst to work more efficiently. EPA is 

setting these Tier 3 standards to address public health issues that exist 

currently and are projected to continue in the future. EPA’s action 

was requested in a May 2010 Presidential memorandum.

Overview

The Tier 3 program’s gasoline sulfur reductions are critical to enabling manufacturers 

to comply across the fleet with the stringent vehicle standards. The gasoline sulfur 

standards will also achieve significant immediate benefits by reducing emissions from 

existing vehicles. Under the final Tier 3 program, federal gasoline will be required to 

meet an annual average standard of 10 parts per million (ppm) of sulfur by January 

1, 2017. EPA is also finalizing standards that maintain the current 80 ppm refinery 

gate and 95 ppm downstream cap. The Tier 3 fuel program includes a number of 

flexibilities such as a credit averaging, banking and trading (ABT) program that will 

allow refiners to spread out their investments over a 6 year period and provide for a 

seamless transition from the Tier 2 to the Tier 3 ABT program. EPA is also finalizing 

a three-year delay for small refiners and small volume refineries as well as other flexibilities for refiners such as deficit carry-forward and hardship provisions for extenuating 

circumstances. 

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Impacts On Fuel Price and Refiners Will Be Minimal

EPA estimates the costs of sulfur control would be less than a penny per gallon. Consequently, 

consumers are unlikely to notice a difference in fuel prices at the pump due to Tier 3, as its 

impact will be overwhelmed by other variability in the marketplace. 

To comply with the Tier 3 sulfur standards, refiners will take a range of actions depending on 

the current configuration of their refineries and their other market investment plans. Based on 

EPA’s peer-reviewed refinery-by-refinery analysis, of the 108 gasoline refineries impacted by Tier 

3, 40 are either already meeting the 10 ppm standard, or are expected to purchase credits to 

show compliance. Another 67 are able to comply with modifications to their existing equipment 

which can occur in 2 years’ time. Only 1 is projected to require the installation of a new gasoline 

hydrotreater which can be installed in 3 years. We anticipate that even those refineries that 

comply through the use of credits will make a variety of operating changes and/or low capital 

cost changes to lower their sulfur levels below their current Tier 2 levels to minimize their need 

for credits. 

Many variables determine the retail price of fuel. The primary factor is the price of crude oil on 

the global market, and other factors include weather, transportation, supply and demand, distribution and marketing costs. The prices paid by consumers at the pump reflect these costs, as well 

as profits or losses by the company. In recent years, due to lower crude oil and natural gas prices, 

U.S. refineries have been and continue to be experiencing very healthy margins on the fuels 

they produce. U.S. refineries are exporting greater quantities of diesel fuel and have started to 

export gasoline meaning that foreign markets may also be affecting domestic fuel prices. 

Table 1 illustrates the Energy Information Administration’s four main components of the retail 

price of a gallon of gasoline in terms of share of total price for December 2013. Gasoline sulfur 

control for Tier 3 would add just 0.2 percentage points to the refining component shown in 

Table 1.

Table 1

Regular Gas Cost by Percentage 

Cost Components Percent of Cost

Crude Oil Price 68% 

Taxes 13%

Distribution and Marketing Costs 10%

Refining Costs 9%

* Percentages are based on the price of regular gasoline in December 2013 ($3.28 per gallon)

The Agency’s evaluation of gasoline sulfur control costs has undergone independent peer review 

and is corroborated by two independent studies: a 2011 study conducted by Mathpro for the 

International Council on Clean Transportation and a 2012 study conducted by Navigant for the 

Emissions Control Technology Association. 
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EPA is Providing Flexibilities to Reduce Cost and Ease Compliance for 

Refineries

EPA is finalizing the proposed start date of January 1, 2017 for the fuel sulfur control program 

with a number of flexibilities that will, in effect, provide nearly 6 years of lead time for those 

refineries that may need it. These flexibilities include:

•	 A credit averaging, banking and trading (ABT) program that will allow refiners to 

spread out their investments from 2014 through 2019 and provide for a seamless transition from the Tier 2 ABT program to the Tier 3 ABT program, including the ability to 

carry over “banked” credits from Tier 2. 

•	 A delay in the start date for approximately 30 small refiners and small volume refineries 

until 2020.

•	 A 1-year deficit carryforward provision that allows an individual refinery that does not 

meet the 10 ppm standard in a given year to carry a deficit forward for 1 year if necessary, 

as long as they make up the deficit the following year.

•	 Hardship provisions that allow refiners to petition for compliance assistance on the basis 

of extreme hardship or extreme unforeseen circumstances.

Benefits of the Tier 3 Program Far Outweigh the Costs

EPA estimates that in 2030, the annual monetized health benefits of the Tier 3 standards will be 

between $6.7 and $19 billion.

By 2030, the Tier 3 standards will annually prevent:

•	 Between 770 and 2,000 premature deaths

•	 2,200 hospital admissions and asthma-related emergency room visits

•	 19,000 asthma exacerbations

•	 30,000 upper and lower respiratory symptoms in children

•	 1.4 million lost school days, work days and minor-restricted activities

Reductions in gasoline sulfur will achieve immediate emissions reductions and health benefits 

from the existing fleet, and in time to support states’ efforts to attain and maintain the existing 

health-based National Ambient Air Quality Standards (NAAQS). 

The gasoline sulfur standards, which take effect in 2017, will provide large immediate reductions 

in NOX emissions from existing gasoline vehicles and engines on the road today, and significantly reduce ambient concentrations of ozone. NOX emissions will be reduced by about 260,000 

tons, or about 10% of emissions from on-highway vehicles, in 2018 alone. 

EPA very carefully considered comments from stakeholders and the public regarding program 

lead time, and we believe that the final program addresses these concerns. 

•	 EPA received many comments from the states, NGOs, and private citizens expressing 

their desire that the Tier 3 vehicle and fuel standards begin in 2017 so the benefits can 

be realized as soon as possible. 
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•	 In addition, auto manufacturers have stressed the importance for the Tier 3 program to 

be closely aligned with the California LEV III program, including the timing of implementation, to avoid unnecessary burdens on their industry and to ensure certainty. 

Beginning the program in 2017 ensures a harmonized, 50-state vehicle program that is 

coordinated with the implementation of the California LEV III emission standards and 

the national GHG standards. 

•	 While most oil industry commenters requested 5 years of lead time, EPA is finalizing a 

number of flexibilities as part of Tier 3 that will, in effect, provide nearly 6 years of lead 

time for those refineries that may need it.

For More Information

You can access the final rule, regulations and related documents on EPA’s Office of Transportation and Air Quality (OTAQ) Web site at: 

www.epa.gov/otaq/tier3.htm

For more information on this rule, please contact the U.S. Environmental Protection Agency, 

Office of Transportation and Air Quality at: 

E-mail: otaq@epa.gov