UNITED STATES ENVIRONMENTAL PROTECTION AGENCY NATIONAL VEHICLE AND FUEL EMISSIONS LABORATORY

2565 PLYMOUTH ROAD ANN ARBOR, MI 48105

- 2498

OFFICE OF AIR AND RADIATION Memorandum Date: June 14 , 2013 From: Jeff Herzog, Assessme nt and Standards Divisions,

Office of Transportation and Air Quality To: Docket # EPA

- HQ

- OAR

- 2011

- 0135 Subject: Meeting with the California Air Resources Board on June 4, 2013 On J une 4, 201 3, staff f

rom the Office of Transportation and Air Quality (OTAQ) met with staff from the California Air Resources Board (CARB) to discuss a range of fuel related issues including aspects of the Tier 3 proposed rule. The agenda for the meeting and the pre sentation sl ides on the Tier 3 proposal are attached

. The following people participated in person at CARB’s facility in Sacramento : CARB: Jim Aguila, Michael Benjamin, Adrian Cayabyen, Susie Chung,

Aubrey Gonzalez, Jim Guthrie, Jack Kitanski, Alex ander Mitchel, Jim Peterson, Jose Saldana, Katrina Sideco, Manisha Singh, Floyd Vergara, and Mike Waugh EPA : Paul Argyropoulos, and Paul Machiele The following people participa te d by phone: CARB: Oliver Chang, Judson Cohan, and Paul Rieger EPA: Aro n Butler, Jeff Herzog, Zoltan Jung, Joe Sopata , Tia Sutton, and

Lester Wyborny

Attach ments: M eeting agenda, EPA presentation materialsARB/US EPA Fuels Meeting T uesday June 4 , 2013 8:30 am

– 5:00 pm Pacific Time Conference Room 4 50, 1001 I St, Sacramento

A GENDA I. Introductions II. Meeting overview A. ARB

– Jim Peterson, Jim Aguila B. Overview of issues re future fuels

– EPA: Paul Machiele III. Overview of ARB and EPA fuels organization structure s A. ARB

– Jim Peterson, Jim Aguila B. EPA

– Paul Machiele IV. RFS/LCFS A. EPA RFS update

– Paul Machiele, Dave Korotney 1. Annual volumes rule 2. Blendwall V. Gasoline A. EPA Tier 3 gasoline sulfur rulemaking

– EPA: Paul Machiele 1. California experience moving industry to 10 ppm

– ARB : Adrian Cayabyab B. EPA future fuel quality evaluations

– EPA: Paul Machiele 1. Aromatics 2. ARB evaluation of PM Index and fuel aromatics content

– ARB: Oliver Chang VI. Fuel and Emission Measurement A. ARB MLD board hearing update January 25, 2013

– ARB: Michael Benjamin, Paul Rieger, Jud Cohan 1. Gasoline

– Test method updates 2. Diesel

– Test method updates 3. Rulemaking documents located at http://www.arb.ca.gov/regact/2013/diesel2013/diesel2013.htm B. EPA performance based fuel parameter test method approach

– EPA: Joe Sopata C. Summary of March 4 ARB
- US EPA Fuels Team meeting

– ARB: Oliver Chang 1. Initiate routine ARB

– US EPA dialogue on emissions measurements VII. Certification FuelA. ARB Certification fuels updated in LEV III March 22, 2012

– ARB: Adrian

Cayabyab , Manisha Singh , Paul Hughes 1. LEV III cert fuel a. Ethanol substituted for MTBE b. Other minor tweaks to octane, T50, T90, sulfur, RVP, arom atics, benzene, and multi
- substituted alkyl aromatics 2. Flexible fuel vehicle evaporative emission cert fuel is now LEV III cert fuel, no longer a blend of E85 (per 13 CCR 2292.4) and LEV II cert fuel such that the final blend is 10 vol% ( ± 1.0 vol%) ethanol

– Jim P eterson , Jim A guila B. EPA certification test fuel

– EPA: Paul Machiele, Jeff Herzog 1. E85 test fuel specifications a. No longer 10 psi E10 for Evap b. 6 RVP

– or higher? 2. N on - R oad certification test fuel 3. Premium fuel and E30 4. Potential future GHG and FE correc tions VIII. Diesel A. ARB Diesel regulatory amendments scheduled for board hearing on September 26, 2013 (concurrent with biodiesel)

– ARB: Jim Guthrie, Manisha Singh 1. Sulfur content

– delete all references to obsolete 500 ppm sulfur standard 2. Aromatics content

– amend to accommodate and mitigate biodiesel blends up to 20 vol% 3. Variances

– add new section on variances similar to section on variances in gasoline regulations 4. Restrictions on blending diesel fuel with other materials IX. ARB Multimedia Assessment A. Overview o f the MME process

– ARB: Aubrey Gonzalez, Jim Aguila B. Multimedia Guidance document C. Current and on
- going evaluations 1. Butamax 2. Renewable diesel/biodiesel 3. E85 4. DME D. Future evaluations 1. CNG X. Alternative FuelsA. EPA CNG and LPG fuel specifications

– EPA: Paul Machiele , Jeff Herzog

B. ARB Alternative diesel fuel rule regulation scheduled for September 26, 2013

– ARB: Lex Mitchell, Jim Aguila 1. Overview

– White Paper 2. Renewable diesel 3. Biodiesel XI. E85 and Mid - Level Blends A. E85 and mid
- level ethanol: 1. ARB E85 r ulemaking scheduled for December 12, 2013

– ARB: Jim P eterson , Jim A guila a. Revise specifications inc. ethanol content, DVPE, sulfur b. Permit natural gasoline hydrocarbon blendstock in addition to CaRFG3 or CARBOB? c. All specifications

– Test method updates d. Upd ate to flexible fuel vehicle exhaust emission cert fuel which currently requires E85 (per 13 CCR 2292.4) in which the hydrocarbon blendstock is LEV II cert fuel , and the DVPE is adjusted to 8.0
- 8.5 psi 2. Upcoming EPA actions re E85 and mid
- level ethanol

– EP A: Paul Machiele, Jeff Herzog a. Specification for denatured fuel ethanol (DFE) b. Potential E85 in
- use specifications i. Sulfur, benzene, RVP, sub
- sim ii. Natural gasoline (NGL or refiner blendstock) and butane as E85 blendstocks? iii. Emissions testing? c. Potential E16
- 50 in
- use specifications i. Treat E16
- 50 as gasoline ii. Treat E16
- E50 as E85 d. Downstream blending and compliance provisions e. Fuel and fuel additives health effects testing

XII. Regulatory StreamliningA. Near Term

– EPA: Paul Machiele, Tia Sutton, Chris Brunner, & Jeff Herzog

1. Reduction in testing for complex model fuel 2. Downstream pentane blending 3. Alternative gasoline deposit control testing 4. Synchronize reporting deadlines B. Longer term comprehensive overhaul of fuel regulations

– EPA: Paul Machiele, Tia Sutton, Chri s Brunner, Jeff Herzog 1. Revise fuel program to look like the program we would create from scratch today 2. Harmonize and unify fuel programs 3. Fit program to slate of slate of fuels in marketplace now and in the future 4. Improve data collection 5. Eliminate redundancies, contradictions, ambiguity, and obsolete provisions 6. Reduce burden on regulated parties and EPA XIII. California Fuel Quality A. US EPA access to California f uel quality data

– EPA: Paul Machiele , ARB: Adrian Cayabyab XIV. FTC L abeling P rovisions for B iomass - B ased D iesel A. 60 CFR Part 306.5

– ARB: Lex Mitchell, Jim Aguila, Mike Waugh

# Tier 3 Proposal

EPA briefing for the California Air Resources Board, June 4, 2013

# What is Tier 3?

• Systems approach to reducing motor vehicle pollution: more stringent vehicle standards enabled by gasoline sulfur control

• Creates a harmonized vehicle program

– Coordinated with California LEV III and Light

- duty GHG standards finalized last year for model years (MY) 2017

- 2025

– Enables auto industry to produce and sell one vehicle nationwide
• Part of comprehensive approach to create cleaner, more efficient vehicles



## – Begins phasing in with model year 2017

– To allow coordinated compliance with LEV III and LD GHG

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# Harmonized Vehicle Program

• California finalized LEV III standards last year

– EPA issued a waiver under CAA in December 2012



# • The auto industry supports Tier 3 because they want to produce and sell one vehicle nationwide

• Tier 3 is harmonized with LEV III

– Would begin in 2017 to allow coordinated compliance with GHG and LEV III

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# Tier 3 Vehicle Standards

• Phase in between 2017 and 2025

• Tighter VOC and NOx tailpipe standards

– 80% reduction from today’s fleet average



## • Tighter PM tailpipe standard

– 70% reduction in per

- vehicle standard



## • Evaporative emissions standards

– Reduced fuel vapor emissions and improved system durability



## • Revised certification test fuel to better reflect in

- use gasoline expected in 2017

– Current certification test fuel has no ethanol



## • Regulatory streamlining/harmonization changes in 

## response to the President’s Regulatory Review initiative

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# Why Lower Sulfur Gasoline?

• Both Tier 3 and LEV III vehicle standards depend upon lower sulfur gasoline

– Sulfur at current levels degrades the performance of vehicle catalytic converters the primary emission control system on vehicles



### • Tier 3 vehicle standards not achievable without lower sulfur

• Lower sulfur also provides immediate reductions in NOx and VOC emissions from the existing fleet



### • California already has lower sulfur gasoline (as do Europe, Japan, S. Korea, and several other countries)

– Other states prohibited from controlling gasoline sulfur on their own



### • Enables some lower

- cost technologies for complying with vehicle greenhouse gas standards

4 of 10

# Tier 3 Fuel Standards

• Lower the average sulfur standard from 30 to 10 ppm starting January 1, 2017



# • Proposing to either maintain the current per

gallon sulfur caps (80 ppm at refinery gate, 95 ppm at retail) or lower them to 50 ppm and 65 

# ppm respectively

– Maintaining 15 ppm differential between refinery gate and downstream gates important to limit the impacts 

## on transmix processors and gasoline additives

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# Fuel Flexibilities

• Proposing the superset of flexibilities that have proven successful in past EPA fuel programs

• Annual average standard with a sufficiently high per

- gallon cap

• Early credit program to phase in the sulfur standard from January 1, 

### 2014 through December 31, 2019

• Relief for small refiners and small volume refineries

– Delay of 3 years through December 31, 2019, consistent with the end of the early credit phase

- in for large refiners

– Total of 35 refineries representing a total of 10% of gasoline production



### • Economic and Technical Hardship provisions available to all refiners

– EPA has granted hardship relief to over a dozen refineries under past fuel regulations; many more for RFS

6 of 10

# Tier 3 Emissions Impacts

National Onroad Inventory Reductions

2017 2030 Tons Percent Tons Percent NO x 284,000 8 525,000 28 VOC 45, 000 3 226,000 23 PM 2.5 NA NA 7,500 10 CO 747,000 4 5,765,000 30 Benzene 1,625 4 8,581 36 Total air toxics 15,000 3 90,000 23

• Emission reductions will continue to grow beyond 2030 as more of the fleet continues to turn over to Tier 3 vehicles

7 of 10

# Summary of Tier 3 Costs and Benefits

• Fuel Sulfur Standard

– 0.89 cents per gallon

– $2.1 billion in capital costs over 6 year phase

- in period

– Based on a detailed, peer

- reviewed, refinery

- by

- refinery analysis



### • Vehicle Standards in 2025

– $130 per vehicle



### • Annual Cost in 2030

– Vehicle Program: $2.0 billion

– Fuel Program: $1.3 billion

– Total Program: $3.4 billion



### • Total Monetized Benefits in 2030

– 

### $8 to $23 Billion

8 of 10

# Other Aspects in the Tier 3 NPRM

• Use of gasoline additives would be required to not result in 

### exceedance of downstream sulfur cap as under Tier 2. Also proposed:

– No single additive could contribute more than 3 ppm to sulfur content of finished fuel

– Additive manufacturer must conduct quality control to ensure they 

### meet above 3 ppm requirement

– PTD must show maximum treatment rate



### • Proposing to accept “Top Tier” gasoline deposit control additive testing in place of BMW IVD and Chrysler PFID tests

– Would be required to meet “Top Tier” testing requirements that would be mirrored in our regulations



### • Proposing to allow downstream blending of pentane similar to existing provisions for butane blending



### • Regulatory streamlining (see “Nearer Term Regulatory Streamlining” section)

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# Tier 3 FRM Timing

• Comment period recently extended to July 1

• Targeting end of this year for signature



# • If the final rule slips much past the end of the year, we would need to reconsider the phase

in schedule for the Tier 3 vehicle and fuels 

# standards

• Also implications for the GHG rule

10 of 10

# Performance Based Analytical Test Method Approach (PBATMA)

EPA briefing for the California Air Resources Board, June 4, 2013

# What is Performance Based Analytical Test Method Approach (PBATMA)?

• PBATMA will be the fuels program’s implementation of a Performance Based Measurement System (PBMS)

• Objective: Establish criteria for qualifying alternative test methods, while ensuring quality results

• Ensures accurate, precise and quality data by:

– Establishing criteria for accuracy and precision for gasoline and diesel fuel analytical test methods

– Employing a Statistical Quality Control (SQC) program



## – Resulting in better data reported to EPA

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# Background

• Mid 1990’s

- EPA’s Environmental Monitoring Management Council (EMMC) Work Group started exploring Performance Based Measurement System (PBMS)

• OTAQ met with API/ASTM several times on an ongoing basis over the past 15 years to discuss and come to agreement on a PBMS approach

– Utilize existing industry tools developed by ASTM for qualification & statistical quality control criterion



### • 2005
– Implemented a performance based measurement qualification approach for the diesel sulfur program

– Since the start of the program, we have reviewed and approved about 800 testing applications for 15 ppm and 500 ppm diesel sulfur



### • Timing is right to expand PBMS to other fuel parameters

– Industry is supportive

– Harmonizes with ARB’s test method equivalency determination approach



### • PBATMA proposed in the Tier 3 rule

2 of 9

# Why are we doing PBATMA?

• Diesel sulfur fuel parameter already under PBMS process



## • For all other fuel parameters our regulations designate primary ASTM test methods with the allowance of certain alternative test methods

– Alternative test method results must be “adequately” correlated to the designated test method



## • If industry wishes to use a test method not referenced in our regulations, they petition us to allow the test method 

## via rulemaking

• Once PBATMA is established, time consuming test method petitions via rulemaking will no longer be necessary

3 of 9

# Benefits of PBATMA to EPA

• Regulations become streamlined by employing existing diesel sulfur qualification approach to absolute fuel properties measured in all our fuel programs

• No more Agency rules approving alternative test methods

– For example, SFC rule

– 3 additional methods pending if PBATMA is not implemented



### • Improves quality of data collected with no negative environmental impact to Agency fuels programs

• Encourages innovation and improvement of analytical test methods



### • Requires all laboratories making regulatory measurements to establish and maintain a SQC program on every instrument

• Improves measurement quality of the entire fuels distribution system

• Correlation, if necessary, would be defined by regulatory criteria

• Provides compliance assurance “tools” for OECA during audits

4 of 9

# Benefits of PBATMA to Industry

• Industry supports PBATMA because it removes barriers for the approval of innovative analytical test methods by prescribing qualification criteria rather than specifying 

## alternative analytical test methods in regulations

• Reduces industry approval time for alternative analytical test methods



## • Allows laboratories to choose methods that meet their own/client’s needs

• Potential to reduce industry compliance costs

5 of 9

# Qualification Criteria:

2 Types of Test Methods

• VCSB

- Analytical test methods developed by Voluntary Consensus Standard Based Organizations (VCSB) Examples of VCSB:

– American Society for Testing and Materials (ASTM)

– International Standards Organization (ISO)



## • Non - VCSB
– analytical test methods that are not developed 

## by a voluntary consensus standard based organization Example of Non

- VCSB:

– Proprietary industry test methods



### – Methods pending before a VCSB

– Modifications to a VCSB test method

6 of 9

# Qualification Criteria:

2 Types of Fuel Parameters

• Absolute Fuel Parameters

– analytical test methods that may be qualified using gravimetric standards

– Sulfur in gasoline and sulfur in butane only

– Accuracy and Precision criterion tied to performance w/ 

### gravimetric standards



## • Method
- Defined Fuel Parameters

– fuel standards defined by designated analytical test methods where gravimetric standards are not always applicable

– Includes all fuel parameters other than sulfur

– Precision criteria tied to performance w/ gravimetric standards

– Accuracy criteria tied to performance of reference installations of the designated test method



### – Proposes use of ASTM D6708 to determine equivalency or need for a correction equation with use of alternative test methods

7 of 9

# Statistical Quality Control

• Statistical Quality Control (SQC) requirements for every laboratory, for every instrument

– Homogenize and improve measurement quality of entire fuel distribution system

– Consistent with diesel sulfur performance based 

# approach

– Requires certain aspects of existing ASTM SQC tools (ASTM D6299) depending on whether the 

# test method is VCSB or non

- VCSB

8 of 9

# Proposed Options for Implementing

PBATMA

• Option 1: Labs must qualify all test methods, including designated test methods (DTMs)

• Option 2: Labs must qualify only non

- VCSB test methods; VCSB methods would self



# qualify

– Preferred Agency option

9 of 9

# Gasoline and FFV Vehicle

Certification Test Fuel

EPA briefing for the California Air Resources Board, June 4, 2013

# Gasoline Certification Test Fuel

• Consolidation of all gasoline exhaust and evap emissions test fuels into “single” general test fuel

• Used for all on

- highway testing with exception of 

# cold (20 ° F

- higher RVP used) and high

- altitude testing (lower RVP used)

• Commercial gasoline would continue to be used 

# for service accumulation

• Intent is to be as consistent as possible with ARB’s LEV III approach

• In theory, should limit the number of test fuels that automakers need to manage

1 of 6

# Proposed Gasoline Certification Test

Fuel Specifications

• Ethanol: 14.6

– 15.0 vol%

• RVP: General 8.7

- 9.2 psi, Low

- Temp 11.2

- 11.8 psi, High Alt 7.6

- 8.0 psi

• Octane: 87.0

- 88.4

• Olefins: 4.5

– 11.5 vol %

• Total Aromatics: 19.5

- 24.5 vol %

– C6: 0.6

- 0.8 vol %

– C7: 4.4

- 5.5 vol %

– C8: 5.5

- 6.9 vol %

– C9: 5.0

- 6.2 vol %

– C10+: 4.0

- 5.0 vol %



### • T10: General 49

- 60C, Low

- Temp 43

- 54, High Alt 49

- 60

• T50: 77

- 88C

• T90: 154

- 166C



### • Final BP: 193

- 216C

• Sulfur: 8.0

– 11.0 ppm

2 of 6

# Consistency with ARB’s Gasoline Certification Test Fuel Specs

• EPA would accept testing on ARB’s E10 test fuel during phase

- in periods for the proposed tailpipe and evap standards, and would not perform or require in

- use exhaust or evap testing on E15 fuel



## • 9 psi for E15 intended to match ARB stringency

• Requested comment on need for multi

- substituted alkyl aromatics (MSAA) spec. similar to ARB

• This is something ARB may want to reconsider



## • “Other” specs (e.g., distillation residue) consistent with ASTM and ARB LEV III

• Fewer consistency issues if we move to an E10, 9 RVP 

## test fuel

3 of 6

# Gasoline Cert Fuel Main Issues for

Final Rule

• E15 or E10

– Likelihood of growth in E15 volumes

– Market trigger for moving from E10 to E15?



# • 9 psi or 10 psi

– Staying at 9 psi ignores the fact that ~50% of gasoline is E10 at 10 psi with its associated evap emissions 

## increase

– Moving to 10 psi would be a major undertaking and impact the equivalency of ARB/EPA refueling and hot soak plus diurnal evap. emission test procedures

• Would ease exhaust emissions compliance

4 of 6

# FFV Vehicle Certification Test Fuel

• Proposed requirements mirror long

- standing historical practice

• Test parameters other than RVP and ethanol content are defined based on proposed composition of gasoline 

## certification test fuel

– Additional ethanol is blended into gasoline test fuel, or hydrocarbon blendstock used to produce gasoline certification test fuel to meet 80

- 83 vol% ethanol spec



### – Butane trimming allowed to meet 6.0 to 6.5 RVP spec



## • Parallel discussion in the T3 NPRM re provisions (e.g., natural gasoline blending) to allow in

- use E51

- 83 RVP to rise to 9 psi

– If pursued, we would likewise raise E51

- 83 cert fuel to 9 psi

5 of 6

# Other Certification Fuel Issues

• Nonroad and motorcycle

– No action at present



### • “Premium

- required vehicles”: Minimum 91 octane gasoline certification test fuel would be required

– Vehicles or engines considered to require premium if designed specifically for operation on high

- octane fuel and manufacturer requires the use of premium as part of warranty as indicated in owner’s manual



### • Dedicated E30 vehicles or FFVs optimized to run on E30 or higher ethanol

– Could petition EPA to approve higher octane, higher ethanol content test fuel

– Would be required to demonstrate that fuel would be used by the operator and would be readily available nationwide, vehicles would not operate appropriately on other available fuels, and fuel would result in equivalent emissions performance



### • Potential GHG & fuel economy corrections

– Subsequent action

– GHG: little or no impact of ethanol

– Fuel Economy: Issue is “R” factor

6 of 6

# CNG and LPG Specifications

EPA briefing for the California Air Resources Board, June 4, 2013

# CNG and LPG Specifications

• No current in

- use CNG and LPG fuel quality specifications

• No CNG vehicle certification test fuel specification 

# for sulfur

• LPG vehicle certification test fuel currently specifies maximum of 80 ppm sulfur

• Tier 3 rule requested comment on need to amend certification test specifications and introduce in

- use fuel quality specifications

• Odorant used in CNG and LPG can account for 10ppm sulfur or more in itself

1 of 1

# E51

- 83 and E16

- 50

EPA briefing for the California Air Resources Board, June 4, 2013

# The E51

- 83 Problem

• No specific regulations for in

- use E51

- 83 quality

• CAA 211(f) requires in

- use fuels to be subsim to vehicle cert fuel

– FFV cert fuel historically made from denatured ethanol and the gasoline used for certification testing with butane trimming. Thus, blendstocks used in E51

- 83 must be subsim to gasoline

– Regulatory requirements for FFV cert test fuel are proposed in Tier 3



### • 2006 guidance that RFG/RBOB must be used to make E51

- 83 in RFG areas

• These have been the only two levers to constrain the blendstocks used to make E51

- 83

– Prevent dumping of stuff like cheap waste solvents into E51

- 83



### • We have stated that there are no provisions to allow the use of natural gasoline in E51

- 83

– Nevertheless, some ethanol blenders are ignoring the guidance, leading to market uncertainty



### • Some refiners, terminals, blenders have been asking EPA to clarify standards for E51

- 83

1 of 16

# The E51

- 83 Problem (continued)



### • The fuel & fuel additive (F&FA) registration and health effects testing requirements under part 79 have so far only been applied to gasoline and 

### highway diesel fuel

• E51

- 83 is not considered gasoline, & therefore has not yet been subject to the F&FA registration and health effects testing under part 79

– Could designate as a transportation fuel in the future and require health effects testing



### • No deposit control regs for E51

- 83 other than for the gasoline portion

– Low additive concentration may be exacerbating, rather than helping deposits



### • In addition to providing insufficient assurance of E51

- 83 quality, the current situation is creating barriers to the expansion in E51

- 83

• E85 volatility has been too low for good vehicle startability/performance

– Likely leading to increased emissions and constraining manufacturer options in the context of LEVIII/Tier 3

– Allowing use of high

- volatility natural gasoline and butane could help to meet the minimum ASTM volatility requirements while maximizing ethanol content

– Use of cheap natural gasoline and butane could make E51

- 83 more economical, thereby furthering the goals of the RFS program

2 of 16

# Potential for Natural Gasoline and Butane Blending to Lower High

- Ethanol Blend Prices

• Push for E30 to optimize use of octane benefits from ethanol

• Opportunity to increase ethanol use and reduce fuel costs through use of low

octane / inexpensive natural gasoline as a blendstock

• Domestic natural gasoline supply expected to increase substantially with growth in natural gas and tight

- oil production

– U.S. NGL production projected to increase ~45% from 2012 to 2017 (3,250 Mb/d by 2017)

• Blending of natural gasoline and butane would help to meet minimum ASTM volatility specs while maximizing ethanol content of E51

- 83

– RVP of natural gasoline and butane substantially higher than RBOB/CBOB

• Price of natural gasoline & butane significantly less than RBOB/CBOB

– NG prices may fall as additional volumes are produced that do not have a clear home

• Much of the natural gasoline will be produced in the midwest coincident with ethanol production

• We conducted a preliminary analysis of how natural gasoline and butane blending might help to reduce E51

- 83 & E30 prices

– Considered octane and distribution costs, but not potential additional natural gasoline & butane distribution infrastructure costs

3 of 16

## Preliminary Analysis of Potential Impacts on the Price of E51

- 83 & E30 from Natural Gasoline and Butane Blending

Blendstock RVP RON MON (R+M)/2 Million BTU / BBL BTU Blendstock /

BTU of CBOB NGL 12 73 72 72.5 4.69 93% EtOH 2.4 130 101.6 115.8 3.53 70% CBOB 9 96 86 83.8 5.02 100% RBOB 6 96 86 83.8 5.02 100% nButane 51.6 92.5 88 90.25 4.00 80% Blendstock Properties

4 of 16

## Preliminary Analysis of Potential Impacts on the Price of E51

- 83 & E30 from Natural Gasoline and Butane Blending (cont.)

Blendstock Wholesale $ / gallon Blendstock price

per gallon / CBOB price per gallon Blenstock price per

BTU / CBOB price per BTU NGL 2.13 73% 79% ETOH 2.52 83% 119% CBOB 2.90 100% 100% RBOB 2.98 103% 103% nButane 1.46 50% 63% Blendstock Wholesale Price

- Does not include additional NGL & butane distribution infrastructure capital costs

- Ethanol price is for Chicago

- NGL and butane prices are for Mt. Belview

- CBOB and RBOB prices are for Gulf Coast

- All prices are for early March 2013
5 of 16

## Preliminary Analysis of Potential Impacts on the Price of E51

- 83 & E30 from Natural Gasoline and Butane Blending (cont.)

Blend NGL % Butane % RVP Octane $ / gal BTU cost compared to E10 E10

- - 9 87 $2.92 100% E30 24.5%

- 9 90.6 $2.63 98% E51 49%

- 11.2 94.6 $2.33 95% E51 27%*

- 9 $2.50 E70 30%

- 9 102.8 $2.40 103% E80 18.8% 1.2% 9 107.4 $2.43 108% E85 12.3% 2.7% 9 109.8 $2.44 111%

Ethanol Blend Wholesale Price

* CBOB is remainder of HC blendstock

6 of 16

# E51

- 83 Discussion in the Tier 3 Rule

• Requested comment on new regulatory provisions to 

## ensure E51

- 83 quality while allowing use of natural gasoline, and butane/pentane as blendstocks

• Requested comment on removing requirement that gasoline portion contain a deposit control additive

– Would defer setting deposit control requirement for E51

- 83 until sufficient data is available



## • We are evaluating when it would be appropriate to 

## designate E51

- 83 as a transportation fuel and require health effects testing under the F&FA program

• Discussed need to ensure that all fossil fuel blendstocks used to make E51

- 83 incur an obligation under RFS

– Anticipate follow

- up action as part of RFS annual rules

7 of 16

# Two Options to Ensure E51

- 83 Quality

• Under Option 1, E51

- 83 producer would assume all 

## responsibilities of a refiner

– Provides the most flexibility re blendstocks used

– However, the per

- batch testing and other requirements would be impractical for most E51

- 83 blenders



## • Under Option 2, “E51

- 83 blender” would have minimal testing burden if they used only certified blendstocks

– Certified gasoline & BOBs (RFG/RBOB in RFG areas)

– Denatured ethanol that meets requirements proposed in T3 rule



### – Butane that meets existing requirements for downstream blending into gasoline

– Pentane that meets requirements similar to those for butane

– Natural gasoline that has been certified by producer for use in 

### E51

- 83

8 of 16

# Envisioned E51

- 83 Standards

• Under Option 1, the E51

- 83 refiner would be subject to

– 10 ppm sulfur average, 50 or 80 sulfur cap (depending 

## on what refinery

- gate cap is finalized in T3)

– 0.20 benzene cap

– C, H, N, O, S



## – Maximum RVP requirements for gasoline

– Minimum RVP requirements per ASTM



# • Compliance demonstrated on per

- batch basis via 

# testing

9 of 16

# Envisioned E51

- 83 Standards (continued)



### • Under Option 2, the E51

- 83 “blender” would comply by simply 

### blending compliant blendstocks (ethanol, denaturant, gasoline, natural gasoline, etc.)

• Would be subject to

– 65 or 95 downstream sulfur cap (depending on what is finalized in T3)



### – Anticipate that actual sulfur levels would typically be much lower and average at or below 10ppm



### • Compliance with sulfur cap and other chemical composition requirements could be demonstrated by retaining PTDs for certified blendstocks used and other quality control requirements that apply 

### to downstream parties

• Demonstration of compliance with envisioned RVP requirements an issue

– Evaluating the use of an RVP model in place of per

- batch testing

10 of 16

# Blendstock Requirements for E51

- 83 Blenders

- Denatured Fuel Ethanol

• Current sulfur cap for DFE is 30 ppm

• Tier 3 rule proposed

– 10 ppm sulfur cap

– Limiting denaturants to gasoline, BOBs, and natural gasoline

– Limiting denaturant concentration to max of 2.0 vol % (effectively 2.5% with rounding)

– Believe that proposed denaturant requirements would obviate the need for benzene, olefins, and aromatics specifications 

### (result in levels similar those under CARB’s requirements)

– Requested comment on whether it is appropriate to adopt specifications on denaturants similar to CARB’s (10 ppm max S, 0.06 v% Bz, 0.5 v% olefins, 1.7 v% aromatics)

11 of 16

# Blendstock Requirements for E51

- 83 Blenders

– Butane & Pentane

• Current sulfur cap for butane blended downstream of refiner is 30 ppm

• Tier 3 rule proposed a 10 ppm sulfur cap

• Proposed to maintain the other existing requirements

– Commercial grade butane: 95% pure, <=1.0 vol % olefins, <= 2.0 vol % aromatics, <=0.03 vol % benzene

– Non

- commercial grade butane: <=10.0 vol % olefins, <= 2.0 vol% aromatics, <= 0.03 vol % benzene



### – If non

- commercial grade butane is used, a quality assurance program is required that includes periodic sampling and testing of butane from each manufacturer



## • Tier 3 rule proposed to establish similar requirements for 

## downstream pentane blending

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# Blendstock Requirements for E51

- 83 Blenders

– Natural Gasoline

• Producer of natural gasoline for use as an E51

- 83 blendstock would be required to register and conduct per - batch tesing similar to requirements for gasoline refiner



## • Producer would demonstrate compliance with 10 ppm sulfur cap, 0.20 vol % benzene cap, CHNOS

• Requested comment on need for other specifications (e.g., olefins, aromatics) and need to limit production sources (e.g., no drip gas)

• Producer would list RVP on PTD to facilitate blender 

## compliance with RVP requirements through modeling

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# Path Forward to Address Outstanding Issues re Natural Gasoline

• Attempting to get DOE/NREL/ORNL to support study of (Details in Appendix #1):

– Natural gasoline production, markets, distribution, 

## prices

– In

- use natural gasoline quality

– Impacts of natural gasoline on FFV emissions



## – Development of RVP blending model to allow terminal blending without need for RVP testing



# • Seeking input from auto manufacturers, fuel producers, and other stakeholders

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# The E16

- 50 Problem

• EPA currently has no specific regulations for in

- use E16

- 50 quality



## • Under the F&FA registration program, the gasoline family includes fuels with at least 50% clear gasoline

– Thus, E16

- 50 is logically subject to gasoline standards



## • ~ 300 blender pumps and the number is growing

– Currently, such blenders should be treated as refiners but they are unaware

– Such blends are likely violating our standards on F&FA registration, RVP, detergents, other?



## • Given DOE/USDA support for blender pumps, it makes dealing with them difficult



## • EPA has been approached to approve a blender pump project

15 of 16

# E16

- 50 Discussion in the Tier 3 Rule

• Treat E16

- 50 as gasoline (as today), or amend regulations similar to 

### the approach for E51

- 83

• Treating as gasoline would likely make use of blender pumps unworkable

– Per

- batch gasoline quality requirements impractical



### – In non

- RFG areas, 1 psi waiver for <=E10 would mean that some E16

- 50 blends would exceed 9 psi



### • Treating as an alternative fuel could accommodate the use of blender pumps

– Would need to allow E16

- 50 blends to meet 10 psi

• Would need to continue to require that FFVs be certified using 10 psi fuel, so evap. emissions effect should be neutral



### – All blendstocks used need to be certified upstream

– Would defer the question of health effects testing under the F&FA 

### program for the time being

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# Nearer Term

Regulatory Streamlining

EPA briefing for the California Air Resources Board, June 4, 2013

# Nearer Term Reg Streamlining

• Some reg streamlining in Tier 3, other streamlining in the works for follow

- on technical amendments

• Correct inconsistencies and minor errors in the regulations



## • Clarifying vague or inconsistent language and removal/updating of some outdated provisions

• Remove or update outdated provisions



## • Decrease frequency and/or volume of reporting burden where data is no longer needed or is redundant with another fuels program



## • Improve consistency across our Part 80 fuels programs

1 of 2

# Reg Streamlining Provisions Proposed

in Tier 3 Rule

• Streamlining of Part 79 reporting dates and streamlining of annual report dates for all Part 80 fuels programs

– Quarterly reports due June 1 st (1/1

- 3/31), September 1 st (4/1

- 6/30), December 1 st (7/1

- 9/30), and March 31 st (10/1

- 12/31)

– All annual reports due March 31 st



### • Allowance for de minimis corrections to compliance reports (instead of complete resubmission) when minor errors are discovered

• Reductions in Complex Model testing

• Allowance for designation of alternative test labs

• Provisions related to gasoline detergents

• Sunsetting of diesel sulfur labels that are no longer needed

• Allowance for direct testing of benzene for blendstocks blended into previously certified gasoline (PCG)

• Clarification that refiners/importers may include oxygenate blended 

### downstream in annual average benzene calculations

2 of 2

# Appendix #1

Potential Analytical Plan re the use of Natural Gasoline as an E51

- 83 Blendstock

EPA briefing for the California Air Resources Board, June 4, 2013

# Natural Gasoline Market Characterization

• Characterize how domestic natural gasoline production volumes are projected to increase in the future.

• What are the potential uses for the increased volume of natural gasoline? (refinery, heavy crude oil diluent, petrochemical, export, other)

• Where will natural gasoline be produced and what options are available to transport it to various markets?

– What additional transportation infrastructure will be needed?

• How might the ramp up in natural gasoline volume affect its price?

• To what extent would the use of natural gasoline as a blendstock in the manufacture of high

level ethanol blends be a good market choice?

• Given other competing end

- uses for natural gasoline, how much natural gasoline potentially might be available for use in high

- level ethanol blends?

• What additional fuel distribution infrastructure would be needed to facilitate the use of naturual gasoline in high

- level ethanol blends?

• How might the use of natural gasoline in high

- level ethanol blends tend to reduce the BTU

adjusted price of high

- level ethanol blends compared to E10?

• What are the issues associated with segregating an existing pool of natural gasoline that would be suitable for use in high

- level ethanol blends or performing additional processing to produce such a segregated pool that would meet necessary specifications for the downstream blending of high

- level ethanol blends?

– How might the sulfur and benzene standards we establish for such a segregated natural gasoline pool impact feasibility and cost? (e.g., 10 ppm sulfur cap, 0.6 benzene cap)

• Would volatility limits for high

- level ethanol blends of 9 psi need to limit the volatility of a segregated natural gasoline pool to allow for downstream blending?

1 of 4

# Natural Gasoline Quality Evaluation

• Characterize the chemical composition and physical properties of natural gasoline that might influence vehicle 

## emissions and performance, and how these fuel parameters vary depending on the source of natural gasoline

• Sample natural gasoline from the range of possible domestic sources

• Measure sulfur, benzene, aromatics (speciated?), chlorine, salts, metals, distillation, oxidation stability, wastes and 

## other contamination, other?

- How does quality vary depending on source? (well

- crude vs. natural gas, fractionator, processor, refinery, drip gas).



## - How does quality vary by season?

2 of 4

# Vehicle Emission and Performance Test Program

• Based on consideration of the results from the natural gasoline quality evaluation, conduct exhaust emission testing on a range of ethanol blends varying ethanol, natural gasoline, and conventional gasoline composition. It is presumed that emissions sensitivity will also provide and assessment of driveability impacts.

• Based on results of fuel survey, evaluate extent that certain fuel parameters in the natural gasoline test fuel blendstock need to be modified to reflect fuel standards that we might expect to finalize

– E.g., sulfur and benzene content in the test fuel blendstock should be limited to ensure that the concentration in the blended test fuel is no greater than might be seen in gasoline meeting the proposed Tier 3 specifications)

• Report test fuel characteristics: sulfur, benzene, distillation, aromatics, RON, MON, speciation, blend fraction

– Test at 75F and 20F

– Test for: NOx, NMOG, PM mass, CO2, methane, toxics, and full emissions speciation on a subset

– 10 FFV test vehicles of high volume to reflect range in in

- use FFV vehicles

– Ethanol blends of E10, E30, E51, E70, E83 made with two types of natural gasoline (trimmed with butane as necessary to the desired RVP) for 75F testing and one type of natural gasoline for 20F testing to compare to similar blends made with CBOB (not adjusted with butane)

– Target 9 RVP natural gasoline blends for 75F testing, 12 RVP natural gasoline blends for 20F testing (CBOB blends at whatever RVP results

– just measure and report)

– Compare test results from ethanol blend fuel containing natural gasoline to results obtained using ethanol blend fuels formulated using CBOB

– Evaluate whether testing other than for exhaust emissions is needed

• Evaporative emissions?

• Additional testing needed to address performance impacts? DI, V/L

• Are there unique concerns that need to be addressed with respect to potential phase separation of ethanol blends made with natural gasoline?

– Fuel injector deposit control test using bench rig

3 of 4

# RVP Modeling and Validation

• Develop model to allow E51

- 83 blenders to demonstrate compliance with RVP requirements for finished fuel in place of per

- batch RVP testing

- Assumes RVP of blend components is available to blender (natural gasoline, CBOB. RBOB, RFG, CG, butane, pentane, denatured 

# fuel ethanol)

• Validate results from model by RVP testing

• How many different samples of natural gasoline 

# would need to be used in testing?

4 of 4

# Appendix #2
Performance Based Analytical Test Method Approach 

### (PBATMA)

EPA briefing for the California Air Resources Board, June 4, 2013

# Example of Current Process: API Super Fluid Critical Chromatography (SFC) petition for olefins in gasoline

• API petitioned for allowance of SFC as an alternative test method in 2006 because:

- SFC has better reproducibility than current designated method



## - SFC is easy to operate

• After evaluating API’s petition, we agreed, and proposed the use of this method with a corresponding direct final 

## rule in 2008

• We received one negative comment and subsequently withdrew the direct final rule in 2009, and re

- proposed SFC in 2010 with no negative comments received



## • Approximately 3 years to complete a final rule to allow the use of SFC for olefins in gasoline

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