Tier 3 Final Rule

Analysis Results

Briefing for Interagency Reviewers

February 5, 2014

1
Overvie

w

 Changes to baseline  Vehicle costs  Fuel costs  Emissions impacts  Air quality impacts  Benefits  Schedule and next steps

2
Changes to Baseline since NPRM

 Accounted for LEV III in California and Section 177 states

 Tier 3 sulfur control still applies to Section 177 states

 No fuel changes modeled for California

 Tier 3 vehicle leak standard provides emission reductions nationwide

 This is the only Tier 3 emissions benefit in California

 Affects both emissions and cost analysis

 Included LD GHG 2017 and HD GHG rules

 Both rules are included in reference and control cases

 Projected vehicle fleet is the 2017-2025 GHG fleet

 Total fuel volumes in baseline reduced due to LD GHG 2017 

 Updated renewable fuels volumes and blends

 NPRM assumed full RFS ethanol volumes with E10 and E15

 FRM analyses are based on AEO 2013, which assumes:

 Renewable fuel volumes are much less than full RFS

 Mix of E10, E15 and E85 

 Using 2011 dollars (FRM) rather than 2010 dollars (NPRM)

3
 FRM analysis reflects LEV III, LD GHG 2017 and HD GHG

 Accounts for LEV III in Section 177 states and California

 NPRM only accounted for California

 Uses 2017-2025 GHG projected fleet

 Tier 3 final costs do not include research and some development costs

associated with LEV III

 Vehicle cost analysis updates

 Improved methodology used to project catalyst loading costs, based on 

comments received in the NPRM

 Updated technology penetration rates for several technologies

 Secondary air injection, optimized thermal management

 Other specific changes in technology/hardware costs

 Use of passive hydrocarbon adsorbers instead of active

 Improvements to evap hardware costs based on other technology changes

 Addition of engine calibration costs based on other technology changes

 Used most recent (MY2013) certification emission test data

Vehicle Cost Analysis Updates

4
Vehicle Costs – Tier 3 FRM

Model

Year

All Tier 3

Vehicles

2017 $28

2018 $58

2019 $61

2020 $65

2021 $68

2022 $71

2023 $71

2024 $71

2025 $72

Model

Year

All Tier 3

Vehicles

2017 $28

2018 $58

2019 $61

2020 $65

2021 $68

2022 $71

2023 $71

2024 $71

2025 $72

$/Vehicle

Exhaust & Evaporative Controls

2011 dollars

$/Year in 2030

All Vehicle Program Costs*

2011 dollars

* Exhaust, evaporative, operating, facilities

Calendar 

Year

$Millions

Change 

from

NPRM

2030 $761 -63%

Calendar 

Year

$Millions

Change 

from

NPRM

2030 $761 -63%

63% lower costs in 2030 due to:

- Lower $/vehicle ($130 down to $72)

- Smaller fleet—FRM excludes California &

other LEV III states (36% of fleet)

while NPRM excluded California only.

5
Refinery Modeling and Fuel Cost Updates 

 FRM analysis reflects AEO 2013 fuel supply,

including reduced fuel volumes due to LD GHG 2017 

and changes to renewable fuels

 Refinery-by-refinery model also updated for the FRM

 Used new data for refinery throughput volumes that provides

greater certainty on refinery operations

 Calibrated refinery FCC volumes based on FCC undercutting, 

propylene and aromatics sales, etc.

 Adjusted to actual starting sulfur level by refinery (NPRM 

assumed 30 ppm)

 Obtained additional vendor data

 Applied less conservative criteria treating other streams (e.g., 

butane, LSR)

 Increased capital cost offsite and contingency factors

6
Refinery Modeling and Fuel Cost Updates 

 FRM projects nationwide trading instead of just

intracompany, as assumed in the NPRM

 Majority of credits are being traded between

companies, not within

7

2012 Sulfur Credit Transactions

Vintage of Credit Total 2012 2011 2010 2009 2008 2007

Billion Credits 590 13 60 56 39 189 233

% of All 2012 Credit

Transactions

2 10 9 7 32 39

% Intercompany 56 28 59 31 16 60 66
Tier 3 Fuel Costs

NPRM FRM %Change

Cost (c/gal) 0.89 0.65 -27%

2030 Annual Cost $B 1.320 0.696 -47%*

Capital Cost $B 2.203 2.025 -8%

# Grassroots Units 16 1

# Revamps 67 62

Changes in the Refinery Cost Model Impact on 

Cost

National credit trading instead of intracompany credit trading

Removed Butane Treating 

Reduced LSR Hydrotreating

Added propylene production and FCC naphtha downgrading

Increased capital cost offsite factor and contingency factor

Various other updates and tweaks due to comments/peer review

8

* Also reflects lower fuel consumption for FRM (AEO2013) vs NPRM (AEO2011)
Tier 3 Fuel Costs

9
Tier 3 Sulfur Levels

10
Emissions/AQ/Benefits Analysis Updates

 LEV III, LD GHG 2017 and HD GHG included in both reference and 

control cases

 First analysis year is 2018

 Improved modeling of onroad emissions with MOVES

 Improved representation of local fuel properties and upstream

impacts

 New air quality modeling platform

 2007 instead of 2005 base year

 CMAQ updates: CMAQ v 5.0.1 (NPRM used v 4.7.1)

 Benefits analysis updated to be consistent with final PM NAAQS 

methodology

11
Tier 3 Impacts

12

2018 2030

Reduction 

(US Tons)

% reduction in 

onroad

inventory

Reduction 

(US Tons)

% reduction in 

onroad

inventory

NOx -264,000 -10% -329,000 -25%

VOC -47,500 -3% -168,000 -16%

PM2.5 -130 -0.1% -7,890 -16%

Benzene -1,920 -6% -4,760 -26%

• Lower NOx, VOC, and PM2.5 emissions lead to

• Moderate to large ozone decreases across the country

• Small to moderate PM decreases across the country 
13

AQ Impacts in 2018 - Ozone
14

AQ Impacts in 2030 - Ozone
15

AQ Impacts in 2018 – Annual PM2.5
16

AQ Impacts in 2030 – Annual PM2.5
17

Benefits in 2030

 Ozone and PM-related Premature Mortality Avoided: 

 PM: 660 to 1,500 avoided (Krewski et al., 2009 & Lepeule et al., 2012)

 Ozone: 110 to 500 avoided (based on range of six studies)

 Total: 770 to 2,000 premature deaths

 Total Monetized Benefits

 $7.4 to $19 Billion (3% DR); $6.7 to $18 Billion (7% DR)

 Total Costs

 $1.5 Billion

 Benefit-to-Cost Ratio

 4.5 to 12.7
18

Benefits in 2018

 Impacts in 2018 primarily due to the effects of sulfur on the

existing (pre-Tier 3) fleet

 Ozone and PM-related Premature Mortality Avoided: 

 PM: 180 to 400 avoided (Krewski et al., 2009 & Lepeule et al., 2012)

 Ozone: 45 to 210 avoided (based on range of six studies)

 Total: 225 to 610 premature deaths

 Total Monetized Benefits

 $2.1 to $5.6 Billion (3% DR); $1.9 to $5.3 Billion (7% DR)

 Total Costs

 $1.4 Billion
Next Steps

 EPA requesting 30-day OMB review

 Clearance Feb. 24

Deliberative-- Do not cite or quote 19