Assessment of Clean Gasoline in 

the Northeast and Mid-Atlantic 

States 

White Paper 

Prepared by 

Northeast States for Coordinated Air Use Management

(NESCAUM) 

89 South Street, Suite 602 

Boston, MA 02111 

www.nescaum.org

November 21, 2011 
Members of Northeast States for Coordinated Air Use Management 

Arthur Marin, Executive Director 

Northeast States for Coordinated Air Use Management

Anne Gobin, Bureau Chief 

Connecticut Department of Energy & Environmental Protection, Bureau of Air Management 

Melanie Loyzim, Bureau Director 

Maine Department of Environmental Protection, Bureau of Air Quality 

Nancy L. Seidman, Deputy Assistant Commissioner 

Massachusetts Department of Environmental Protection, Bureau of Waste Prevention 

Robert Scott, Director 

New Hampshire Department of Environmental Services, Air Resources Division 

William O’Sullivan, Director 

New Jersey Department of Environmental Protection, Office of Air Quality Management 

David Shaw, Director 

New York Department of Environmental Conservation, Division of Air Resources 

Douglas L. McVay, Chief 

Rhode Island Department of Environmental Management, Office of Air Resources 

Richard A. Valentinetti, Director 

Vermont Department of Environmental Conservation, Air Pollution Control Division 
ii

Assessment of Clean Gasoline in 

the Northeast and Mid-Atlantic 

States 

White Paper 

Prepared by 

NESCAUM 

November 21, 2011
iii

ASSESSMENT OF CLEAN GASOLINE IN THE 

NORTHEAST AND MID-ATLANTIC STATES 

Principal Contributors

Arthur Marin, NESCAUM Executive Director 

Leiran Biton 

Andrew Dick 

Paul Miller 

Laura Shields 

Eric Skelton 

Matt Solomon 
iv

About NESCAUM 

NESCAUM is a 501(c)(3) nonprofit association of air quality agencies in the Northeast. 

NESCAUM’s Board of Directors consists of the air directors of the six New England 

states (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and 

Vermont), New Jersey, and New York. Its purpose is to provide scientific, technical, 

analytical, and policy support to the air quality and climate programs of the eight 

Northeast states. A fundamental component of NESCAUM’s efforts is to assist its 

member states in implementing national environmental programs required under the 

Clean Air Act and other federal legislation. 

Acknowledgments 

NESCAUM gratefully acknowledges the funding support provided for this study by the 

Energy Foundation, the International Council on Clean Transportation (ICCT), and the 

Mid-Atlantic/Northeast Visibility Union (MANE-VU). 

NESCAUM thanks staff from the state air quality agencies in the Northeast for providing 

helpful comments and input for this report. 

Printed: November 2011 
v

TABLE OF CONTENTS 

About NESCAUM............................................................................................................. iv 

Acknowledgments.............................................................................................................. iv 

Executive Summary........................................................................................................... ix 

ES-1. Overview........................................................................................................... ix 

ES-2. Public Health and Environmental Need for Reducing NOx Emissions from 

Light-duty Vehicles ..................................................................................................... ix 

ES-3. Contribution of Cars and Light Trucks to NOx Emissions in MidAtlantic/Northeast States .............................................................................................. x 

ES-4. Emission Reductions from 10 ppm Gasoline Sulfur Standard .......................... x 

ES-5. Cost-effectiveness of 10 ppm Gasoline Sulfur Standard ................................. xii 

ES-6. Economic Impact of a 10 ppm Gasoline Sulfur Standard...............................xiii 

ES-7. Conclusion ...................................................................................................... xiv 

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

2. Background Context .................................................................................................. 2-1 

2.1. Overview of Benefits ....................................................................................... 2-1 

2.2. State Authority under the Clean Air Act.......................................................... 2-1 

2.3. Current State Efforts ........................................................................................ 2-2 

3. Public Health and Environmental Need..................................................................... 3-1 

3.1. Adverse Impacts of NOx Emissions................................................................ 3-1 

3.1.1. Ozone ....................................................................................................... 3-1 

3.1.2. Particulate Matter..................................................................................... 3-4 

3.2. Adverse Environmental Impacts of NOx Emissions....................................... 3-5 

3.2.1. Acid Deposition ....................................................................................... 3-5 

3.2.2. Coastal Marine Eutrophication ................................................................ 3-5 

3.2.3. Visibility Impairment............................................................................... 3-6 

4. Mobile Source Emissions Impacts............................................................................. 4-1 

4.1. Contribution of Cars and Light Trucks to NOx Emissions in MidAtlantic/Northeast States ........................................................................................... 4-1 

4.2. Contribution of Source Sectors to Ozone Nonattainment................................ 4-1 

4.3. Emission Reductions from 10 ppm Gasoline Sulfur Standard ........................ 4-4 

5. Impact of Predicted Pollution Reductions on Public Health ..................................... 5-1 

5.1. Baseline for Estimating Health Benefits of Low Sulfur Gasoline................... 5-1 

5.2. Methods for Estimating Air Quality Impacts of Low Sulfur Gasoline in the 

OTR ..................................................................................................................... 5-3 

5.3. Estimated Health Benefits of Low Sulfur Gasoline in OTR............................ 5-4 

6. Cost and Benefits of Tier 3 / Gasoline Sulfur Program............................................. 6-1 

6.1. USEPA Cost Estimates for Lower Sulfur Gasoline......................................... 6-1 

6.2. ICCT Cost Estimates........................................................................................ 6-1 

6.3. Cost-Effectiveness ........................................................................................... 6-1 

6.4. Relative Emission Reduction Potential and Cost-effectiveness of Low Sulfur 

Gasoline ..................................................................................................................... 6-2 
vi

7. Projecting the Cost of Environmental Regulations.................................................... 7-1 

7.1. Previous National Fuel Sulfur Regulations...................................................... 7-1 

7.1.1. “Tier 2” Gasoline Sulfur Regulation (2000)............................................ 7-1 

7.1.2. Highway Diesel Ultra-Low Sulfur Regulation (2001)............................. 7-1 

7.1.3. Non-Road Diesel Ultra-Low Sulfur Regulation (2004)........................... 7-1 

7.2. Regulatory Flexibilities Offered to Refiners.................................................... 7-2 

7.3. Concerns Raised by Petroleum Refining/Marketing Industry during 

Rulemakings .............................................................................................................. 7-2 

7.4. Actual Impact on Numbers and Capacities of Refineries................................ 7-5 

7.5. Refinery Operating Costs and the Price of Gasoline ....................................... 7-6 

7.6. How Refiners Are Meeting the Low Sulfur Fuel Rules .................................. 7-7 

7.7. Effect of Low Sulfur Fuel Rules on Product Supply ....................................... 7-7 

8. Conclusion ................................................................................................................. 8-1 

Appendix A: Tables of Avoided Incidences and Monetized Health Benefits in OTR 

Jurisdictions from Introduction of 10 ppm Low Sulfur Gasoline....................... A-1 
vii

FIGURES 

Figure 3-1. Modes of Air Pollution Transport into and within the OTR......................... 3-2 

Figure 3-2. Projected Nonattainment & Maintenance Counties for 0.075 ppm ozone 

NAAQS in 2014 after CSAPR Implementation.................................................... 3-3 

Figure 3-3. Projected Nonattainment & Maintenance Counties for Hypothetical 0.070 

ppm ozone NAAQS in 2014 after CSAPR Implementation................................. 3-4 

Figure 3-4. Coastal Marine Eutrophication Conditions and Trends in Middle Atlantic 

Region. .................................................................................................................. 3-6 

Figure 3-5. Winter Pollution Haze Layer over Boston, MA on January 14, 2010. ......... 3-7 

Figure 3-6. Comparison of a clear day on February 22, 2008 (left) and a hazy polluted 

day on August 17, 2009 (right) in Acadia National Park, ME.............................. 3-7 

Figure 4-1. 2015 Average Contribution (%) by State/Sector to Exceedance-level Ozone in 

the New York City Nonattainment Area............................................................... 4-2

Figure 4-2. 2015 Average Contribution (%) by State/Sector to Exceedance-level Ozone in 

the Philadelphia Nonattainment Area. .................................................................. 4-3 

Figure 4-3. 2015 Average Contribution (%) by State/Sector to Exceedance-level Ozone in 

the Baltimore Nonattainment Area. ...................................................................... 4-4 

Figure 7-1. Components of U.S. Gasoline Prices. ........................................................... 7-6 

TABLES 

Table ES-1. Relative Source Contributions of NOx Emissions in the OTR, 2007 ............ x 

Table ES-2. On-road Gasoline Vehicle Emissions and Estimated Reductions Based on 

MOVES Estimates for 2017 .................................................................................. xi 

Table ES-3. Estimated Annual Monetized Health Benefits 

Due to Low Sulfur Gasoline in OTR .................................................................... xii 

Table ES-4. Estimated Cost-Effectiveness of Tier 3 

Low Sulfur Gasoline Requirements..................................................................... xiii 

Table ES-5. Comparison of Estimated Low Sulfur Gasoline Program Costs and 

Monetized Health Benefits for the Mid-Atlantic and Northeast Region ............. xiii 

Table 3-1. Adverse Public Health and Environmental Impacts of NOx in the OTR....... 3-1 

Table 4-1. Relative Source Contributions of NOx Emissions in the OTR, 2007. ........... 4-1 

Table 4-2. On-road Gasoline Vehicle Emissions and Estimated Reductions Based on 

MOVES Estimates for 2017. ................................................................................ 4-6 

Table 4-3. Regional Gasoline Vehicle Emissions and Estimated Reductions Based on 

MOVES Estimates for 2017. ................................................................................ 4-7 

Table 4-4. Comparison of NOx Reductions from CSAPR and 10 ppm S Gasoline in OTR.

............................................................................................................................... 4-8 

Table 5-1. Estimated Annual Monetized Health Benefits in 2018 Due to Low Sulfur 

Gasoline in OTR. .................................................................................................. 5-5 

Table 6-1. Estimated Cost-Effectiveness of NOx Reductions from Low Sulfur Gasoline 

Requirements......................................................................................................... 6-2 

Table 6-2. Emission Reductions and Cost-effectiveness of Existing and Potential NOx 

Control Measures. ................................................................................................. 6-3 
viii

Table 6-3. Comparison of Estimated Low Sulfur Gasoline Program Costs and Monetized 

Health Benefits for the Mid-Atlantic and Northeast Region. ............................... 6-4 

Table 7-1. Price Impact Estimates on Low Sulfur Fuels (cents per gallon). ................... 7-5

Table A-1. Summary of 2018 Monetized Health Benefits from Reduced Ozone During 

Ozone Season Due to Low Sulfur Gasoline in OTR Jurisdictions ..................... A-2 

Table A-2. Summary of the 2018 Annual Number and Monetized Value of Avoided 

Incidences from Reduced PM2.5 Due to Low Sulfur Gasoline in OTR 

Jurisdictions ........................................................................................................ A-3 

Table A-3. Summary of Avoided Incidences During Ozone Season in 2018 from 

Reduced Ozone Due to Low Sulfur Gasoline in OTR Jurisdictions .................. A-4 

Table A-4. Summary of 2018 Annual Avoided Incidences from Reduced PM2.5 Due to 

Low Sulfur Gasoline in OTR Jurisdictions......................................................... A-5 

Table A-5. Monetized Value in 2018 of Annual Avoided Morbidity and Mortality from 

Reduced PM2.5 Due to Low Sulfur Gasoline in OTR Jurisdictions [Millions of 

2006$] ................................................................................................................. A-8 
ix

Executive Summary 

ES-1. Overview 

This White Paper summarizes the results of an assessment by the Northeast States 

for Coordinated Air Use Management (NESCAUM) of the need for, and the costs and 

benefits associated with, lowering gasoline sulfur content to an average of 10 parts per 

million (ppm) as part of the U.S. Environmental Protection Agency’s (USEPA’s) Tier 3 

rulemaking for cars and light-duty trucks. This rule is expected to be proposed in late 

2011 or early 2012 and finalized in 2012. This report is intended to inform state 

environmental officials in the Northeast and Mid-Atlantic about the public health and 

environmental benefits of lower sulfur gasoline in the region and cost of achieving them. 

Lowering the sulfur content of gasoline allows pollution control equipment on 

cars and trucks to operate more effectively and can significantly reduce oxides of 

nitrogen (NOx) and other emissions from gasoline-powered vehicles. The emission 

reductions from the in-use fleet would be achieved concurrent with the introduction of 

the cleaner fuel, without the need for fleet turnover. The combined reductions from the 

Tier 3 vehicle emission standards and fuel sulfur requirements could be a significant 

component in the reduction of ambient levels of air pollutants known to have adverse 

public health and environmental impacts. Similar gasoline sulfur requirements are 

currently in place in California, Europe, and Japan. 

ES-2. Public Health and Environmental Need for Reducing NOx 

Emissions from Light-duty Vehicles 

NOx emissions contribute to a number of adverse public health and 

environmental outcomes within the Ozone Transport Region (OTR), which extends from 

northern Virginia to Maine along the Eastern Seaboard. NOx is the most important 

contributor to elevated regional ozone concentrations and an important precursor to fine 

particulate matter (PM2.5) formation. These two pollutants are responsible for tens of 

thousands of premature deaths, hospital admissions, and lost work and school days in the 

U.S. annually. NOx is also a key factor in a number of environmental problems that 

affect the Northeast and Mid-Atlantic region, including acid rain, coastal marine 

eutrophication, and regional haze. 

During severe ozone and fine particulate matter events, the geographic scale of 

the problem can extend beyond the OTR’s borders and include over 200,000 square miles 

across the eastern United States. Local and regional sources as well as air pollution 

transported hundreds of miles from distant sources outside the OTR contribute to 

elevated ozone and fine particle concentrations in the region. 

National and regional NOx controls, including those for motor vehicles, have 

proven to be extremely effective in lowering ambient levels of ozone in the eastern U.S. 

NOx emissions and ambient ozone concentrations in the OTR have dropped significantly 

since 1997, along with the frequency and magnitude of exceedances of the health-based 

national ambient air quality standard (NAAQS) for ozone. However, even with the 

projected benefits associated with the USEPA’s Cross-State Air Pollution Rule, many of 
x

the most populous areas of the OTR are predicted to be nonattainment for the current 

0.075 ppm ozone NAAQS in 2015. Attaining the standard in these areas will require 

significant additional NOx reductions within the OTR and in upwind areas that contribute 

to the pollution burden in the region. The Clean Air Scientific Advisory Committee 

(CASAC) has recommended that the ozone NAAQS be lowered to within a range of 

0.060 to 0.070 ppm, which would create a further need for NOx reductions to better 

protect public health. Reductions not achieved through the Tier 3 program and other 

federal measures would have to come from additional controls on local sources. 

Atmospheric sources of nitrogen can be key contributors to acidification of forest 

soils and fresh water ecosystems in the eastern United States. Atmospheric deposition of 

nitrogen also plays an important role in degraded water quality in economically important 

marine estuaries of the Eastern Seaboard due to excess nutrient loads. In addition, NOx 

emissions are transformed in the atmosphere to form nitrates that contribute to hazy 

views of urban skylines as well as scenic vistas in protected national parks and wilderness 

areas, especially during winter months. 

ES-3. Contribution of Cars and Light Trucks to NOx Emissions in MidAtlantic/Northeast States 

Gasoline-powered cars and light-duty trucks emitted about 29 percent of all NOx 

in the Mid-Atlantic/Northeast region in 2007 (Table ES-1). Air quality modeling 

suggests motor vehicles (gasoline and diesel) operating within and outside the OTR are 

the most significant contributors to ozone concentrations on days that exceed the NAAQS 

in the largest nonattainment areas in the region, which speaks to the importance of further 

lowering NOx emissions from motor vehicles in the OTR and in adjacent regions. 

Table ES-1. Relative Source Contributions of NOx Emissions in the OTR, 2007. 

Source NOx Emissions (%)

HIGHWAY VEHICLES 52

ON-ROAD GASOLINE LIGHT-DUTY 

VEHICLES 29

ON-ROAD DIESEL VEHICLES 22

OFF-HIGHWAY 13

FUEL COMB. ELEC. UTIL. 13

FUEL COMB. RESIDENTIAL 5

OTHER INDUSTRIAL PROCESSES 4

FUEL COMB. INDUSTRIAL 2 

OTHER MISCELLANEOUS (sum of source sectors 

contributing <1.7% each to total NOx) 11

Source: MANE-VU 2007 Inventory provided by the Mid-Atlantic Regional Air 

Management Association (November 2011). Note that this table covers all 

jurisdictions of the OTR except Virginia. 

ES-4. Emission Reductions from 10 ppm Gasoline Sulfur Standard 

A l0 ppm sulfur gasoline standard would reduce NOx emissions by approximately 

25 percent from the existing fleet of gasoline-powered vehicles. The estimated per state 
xi

and aggregate regional reduction benefits for gasoline-powered on-road vehicles are 

presented in Table ES-2. Based on the preliminary regional mobile source inventory for 

2017, as calculated by NESCAUM with the USEPA’s MOVES model, a 10 ppm average 

gasoline sulfur requirement could reduce NOx emissions in the OTR by over 51,000 tons 

per year, or 141 tons per day. 

As shown in Table ES-2, the low sulfur gasoline component of the Tier 3 program 

would reduce NOx emissions by more than 60,000 tons per year in eight Midwest states 

and almost 65,000 tons per year in 10 southeastern states that abut the OTR. These 

reductions will benefit air quality in the OTR by: (1) lowering the “ozone reservoir” that 

forms in the eastern U.S., (2) reducing the amount of low-level NOx emissions and 

pollutants derived from NOx (e.g., nitrates) that are transported into the OTR, and 

(3) ensuring that vehicles registered in other states but operating in the OTR emit less 

NOx. 

As indicated in Table ES-2, light-duty vehicles in the three regions are predicted 

to emit over 1,100,000 tons of NOx in 2017 absent the low sulfur gasoline standard. A 

10 ppm average sulfur gasoline requirement could reduce NOx emission from this sector 

by nearly 180,000 tons per year, or almost 500 tons per day in the eastern U.S. 

Table ES-2. On-road Gasoline Vehicle Emissions and Estimated Reductions 

Based on MOVES Estimates for 2017. 

Est. NOx Reductions from 10 ppm S 

State/DC/Region 

2017 Gasoline 

On-road Base 

NOx (tpy) (tpy) (tpd) 

Connecticut 20,700 -3,100 -8 

Delaware 5,400 -800 -2 

District of Columbia 2,000 -300 -1 

Maine 10,000 -1,500 -4 

Maryland 32,600 -5,000 -14 

Massachusetts 35,100 -5,300 -15 

New Hampshire 8,400 -1,300 -4 

New Jersey 44,300 -6,700 -18 

New York 88,600 -13,500 -37 

Pennsylvania 70,500 -10,700 -29 

Rhode Island 5,600 -900 -2 

Vermont 5,000 -800 -2 

Virginia OTR Counties 11,300 -1,700 -5 

OTR Total 339,500 -51,600 -141 

Midwest States Total1 402,300 -61,000 -167 

Southeast States Total2 427,800 -64,900 -178 

3 Region Total 1,169,600 -177,500 -486 

 

1

 IL, IN, IA, MI, MN, MO, OH, WI. 

2

 AL, FL, GA, KY, MS, NC, SC, TN, VA (not including counties in OTR), WV. 
xii

NESCAUM used the USEPA’s Environmental Benefits Modeling and Analysis 

Program (BenMAP)3 to estimate the annual number of avoided adverse health events 

(e.g., emergency room visits) and their monetized value within the OTR that would be 

associated with the implementation of a federal low sulfur gasoline program. Table ES-3 

shows BenMAP estimates of avoided health impacts in the OTR in 2018 in the range of 

$234 million to $1.2 billion (in 2006$). The central value of this range is approximately 

$710 million. The health benefits valuation is dominated by avoided premature 

mortality, which ranges between 29 and 158 incidents in the OTR. Most of the 

mortalities avoided are due to lower ozone levels resulting from reduced NOx emissions 

by on-road gasoline vehicles. Modeled health benefits from PM2.5 reductions associated 

with lower sulfur gasoline are more modest due to the small relative contribution of 

gasoline combustion to total emissions of sulfur dioxide, which leads to secondary PM2.5 

formation. The values presented in this paper are derived from a conservative approach 

and demonstrate that there will be immediate and significant health benefits in the OTR 

from lowering sulfur in gasoline for the on-road vehicle fleet in 2018. This assessment 

does not account for the monetary benefits associated with environmental improvements 

that would accrue from reduced nitrogen emissions related to the low sulfur gasoline 

program. 

Table ES-3. Estimated Annual Monetized Health Benefits 

Due to Low Sulfur Gasoline in OTR. 

 Value [Millions of 2006$] 

 Ozone PM2.5 Total 

Morbidity $19.5 $3.9 $23.4 

Mortality $196 - $877 $15 - $285 $210 - $1,162 

Total Avoided Health Incidence $215 - $896 $19 - $289 $234 - $1,186 

Note: Monetized benefits include all of Virginia. 

ES-5. Cost-effectiveness of 10 ppm Gasoline Sulfur Standard 

Cost estimates for 10 ppm sulfur gasoline derived from two studies and emission 

reduction estimates from MOVES runs conducted by NESCAUM were used to assess the 

costs-effectiveness of NOx reductions from the Tier 3 low sulfur gasoline program. To 

capture the range of potential cost-effectiveness values, cost estimates from the USEPA’s 

Mobile Source Air Toxics (MSAT) notice of proposed rulemaking and a recent study 

sponsored by the International Council on Clean Transportation (ICCT) were used to 

calculate the potential cost per ton of NOx reduced. 

 

3

 USEPA. 2010. Environmental Benefits Mapping and Analysis Program (BenMAP), BenMAP 4.0.35, US 

Version (September 2010). Available at http://www.epa.gov/air/benmap/download.html. 
xiii

Table ES-4. Estimated Cost-Effectiveness of Tier 3 

Low Sulfur Gasoline Requirements

Cost 

Cost-Effectiveness 

($/ton NOx)

0.5 cents/gal (USEPA MSAT) $2,500 

0.8 cents/gal (ICCT) $4,000 

1.4 cents/gal (ICCT) $7,000 

As shown in Table ES-4, the cost-effectiveness of lower sulfur gasoline is 

estimated at $2,500 per ton NOx reduced, based on the USEPA MSAT cost estimate of 

0.5 cents per gallon. The ICCT-sponsored study provides a conservative cost estimate of 

1.4 cents per gallon, which translates to a cost-effectiveness of around $7,000 per ton in 

the OTR. The ICCT also provides a sensitivity case cost estimate of 0.8 cents per gallon 

that accounts for refineries capable of producing 10 ppm sulfur gasoline at lower capital 

expenditure and assumes a lower target return on investment (7 percent instead of 

10 percent). Using the sensitivity case cost of 0.8 cents per gallon, the estimated costeffectiveness of the overall program is $4,000 per ton of NOx reduced. The costeffectiveness of low sulfur gasoline compares favorably to a number of other emission 

reduction strategies that are already in place or are being considered in the OTR. Many 

of the most cost-effective NOx reduction measures have already been implemented. 

Based on the total NOx reductions estimated for the OTR and all of Virginia 

resulting from 10 ppm low sulfur gasoline, the total program cost in 2017 for this region 

would be in the range of $143 – $400 million (Table ES-5) using the USEPA MSAT and 

ICCT gasoline cost range of 0.5 – 1.4 cents per gallon. This compares favorably to the 

total monetized program health benefits in 2017 derived from BenMAP, which are in the 

range of $234 – $1,186 million. The estimated monetized benefits are based on public 

health benefits solely from lowering exposure to ozone and sulfate PM2.5, and do not 

include benefits from lowering other pollutants or benefits to the environment, such as 

decreases in acid rain and eutrophication. 

Table ES-5. Comparison of Estimated Low Sulfur Gasoline Program Costs and 

Monetized Health Benefits for the Mid-Atlantic and Northeast Region. 

Total Low Sulfur Program Costs Monetized Health Benefits 

$143 – $400 million $234 – $1,186 million 

Note: Total costs and benefits estimates are for the OTR plus all of Virginia. 

ES-6. Economic Impact of a 10 ppm Gasoline Sulfur Standard 

The expected 10 ppm sulfur gasoline proposal would represent the latest in a 

series of regulatory initiatives to remove sulfur from transportation fuels. The USEPA 
xiv

previously established a 30 ppm sulfur standard for gasoline as part of the Tier 2 motor 

vehicle rulemaking (2000), a 15 ppm sulfur limit for highway diesel (2001), and a 

15 ppm sulfur limit for non-road diesel (2004). Additionally, many states in the OTR 

have already or are in the process of establishing low sulfur standards for distillate oil 

used for heating. To comply with these rules, U.S. refiners have invested significant 

capital to add and enhance desulfurization capacity. 

During past low sulfur fuel rulemakings, refiners raised a set of consistent 

concerns: (1) the requirements went too far, too fast; (2) they would result in fewer 

operating refineries; (3) they would lead to fuel shortages; and (4) the refining costs 

would be excessively high. The final rules provided for regulatory flexibility, which 

along with industrial innovation to meet the new requirements, resulted in manageable 

implementation of the rules. In retrospect, both USEPA and industry estimates of the 

predicted costs for complying with federal fuel sulfur standards were found to be 

typically higher than actual costs as refiners found innovative and less costly ways to 

achieve these standards. Original estimates of the cost of lowering sulfur in 

transportation fuels were principally based on the assumption that refiners would 

continue to deploy traditional conventional technology to achieve compliance. In actual 

practice, refiners opted for a combination of technology and facility efficiency 

improvements to cost-effectively remove sulfur. 

In addition, early compliance was widespread as refiners generated a surplus of 

credits under the rules with the flexibility provided by the averaging, banking, and 

trading programs. The USEPA built considerable regulatory flexibilities into the fuels 

standards to ease the regulatory burden on refiners, including: (1) providing several years 

of lead time for all refiners to add or enhance desulfurization capabilities; (2) averaging, 

banking, and trading programs to encourage early compliance where possible and provide 

means for extending compliance dates where needed; (3) provisions for smaller and 

geographically isolated refiners to further extend compliance deadlines and credit 

generation opportunities; (4) opportunities for refiners to integrate their desulfurization 

infrastructure planning processes across all three fuels programs; (5) interim sulfur limits 

to allow refiners to phase their operations into compliance with the final standards; and 

(6) various hardship waiver provisions to provide a means to address unexpected 

circumstances. 

ES-7. Conclusion 

The results of this analysis indicate that lowering the sulfur content of gasoline to 

an average of 10 ppm would cost-effectively reduce NOx emissions from cars and light 

trucks. Low sulfur gasoline could be one of the most significant strategies available to 

address ground-level ozone pollution in the OTR. The projected NOx reductions 

associated with the Tier 3 / low sulfur gasoline proposal would also help mitigate fine 

particle concentrations, acid rain, waterbody eutrophication, and regional haze – all 

significant challenges in the Northeast and Mid-Atlantic region. 

A key advantage to lowering sulfur in gasoline is that the emission reductions will 

occur immediately and come from all gasoline vehicles equipped with catalytic 

converters, regardless of the vehicle’s model year. As a federal requirement, the low 

sulfur gasoline rule would result in very significant NOx reductions across the entire 
xv

domain in the eastern U.S., thus diminishing the adverse public health and environmental 

outcomes in the OTR related to NOx emissions. 

Given the stringency of existing state controls in the OTR, federal constraints on 

state regulation of motor vehicle fuels, and the fact that the OTR is significantly affected 

by pollution transport from sources outside the region, national emission control 

measures for light-duty vehicles are critical to achieving further improvements in air 

quality. Without the mobile source and other federal measures, emission reductions will 

have to be accomplished by further controlling local sources in the OTR in order to 

compensate for the foregone national measures. While local controls remain necessary, 

some of the additional measures will be above and beyond what otherwise would be 

needed, and at greater cost. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 1-1

1. INTRODUCTION 

The U.S. Environmental Protection Agency (USEPA) is scheduled to propose 

new emission standards for model year 2014 and later light-duty motor vehicles in early 

2012 (Tier 3 standards). The Tier 3 proposal is expected to include a 10 parts per million 

(ppm) limit on the average fuel sulfur content of gasoline. Similar sulfur requirements 

are currently in place in California, Europe and Japan. Lowering gasoline sulfur content 

allows pollution control equipment on cars and trucks to operate more effectively and can 

significantly reduce nitrogen oxides (NOx) and other emissions from all gasolinepowered vehicles. Unlike vehicle emission standards that require the fleet to “turnover” 

before the full emission benefits are realized, fuel quality programs provide reductions 

concurrent with the introduction of the cleaner fuel. NOx emissions are important 

contributors to ozone and fine particle pollution, which pose a significant public health 

threat in the Northeast and Mid-Atlantic region. These emissions also contribute to 

regional environmental problems including acid rain, eutrophication of waterbodies, and 

regional haze. 

This White Paper summarizes the results of an assessment by the Northeast States 

for Coordinated Air Use Management (NESCAUM) of the need for, and the costs and 

benefits associated with, lowering gasoline sulfur content to 10 ppm as part of the 

USEPA’s Tier 3 rulemaking. It is intended to inform state environmental officials in the 

Northeast and Mid-Atlantic region about the public health and environmental benefits of 

lower sulfur gasoline. This analysis focuses on the Ozone Transport Region (OTR) that 

extends from northern Virginia to Maine,4

 but evaluates the potential benefits that might 

be realized in the region as a result of Tier 3 NOx reductions in adjacent regions that 

affect air quality in the OTR. This paper provides information on: (1) the public health 

and environmental need for reducing light-duty vehicle NOx emissions in the OTR; (2) 

the impact that lower sulfur gasoline would have on emission inventories, air quality, and 

public health; (3) the estimated cost-effectiveness of this strategy; (4) the relative benefits 

and cost of this measure compared to other possible NOx control strategies; and 

(5) insight about the potential economic impacts of this program based on previous 

environmental fuel quality regulations.

 

4

 The OTR includes Connecticut, Delaware, the District of Columbia, Maine, Maryland, Massachusetts, 

New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and the northern Virginia 

counties in the DC metropolitan area. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 2-1

2. BACKGROUND CONTEXT 

The USEPA committed to proposing Tier 3 standards in 2008 to help states meet 

the National Ambient Air Quality Standard (NAAQS) for ozone and is late in delivering 

the much needed reductions from the light-duty vehicle sector, which is the largest source 

of ozone-forming pollutants in the OTR. The Tier 3 program would: (1) ensure less 

polluting cars to help the states meet the 0.075 ppm ozone health standard; and (2) 

mitigate any adverse impacts on air quality from the implementation of the “Renewable 

Fuel Standard 2” (RFS-2).5 

The California Air Resources Board (CARB) is also preparing a proposal for new 

light-duty motor vehicle standards (LEV III), with the goal of harmonizing with the 

Tier 3 federal standards. Both CARB and the USEPA are considering stringent fleet 

average tailpipe standards for NOx, volatile organic compounds (VOCs), and particulate 

matter (PM), as well as near-zero evaporative emissions. As part of the proposed Tier 3 

rulemaking, the USEPA is also expected to set an average sulfur content requirement of 

10 ppm for gasoline. Federal standards currently require gasoline suppliers to meet an 

average sulfur standard of 30 ppm and cap the maximum sulfur content at 80 ppm. 

California already caps sulfur at 30 ppm, and the average sulfur content of gasoline in 

that state is about 9 ppm. The European Union and Japan allow a maximum of 10 ppm 

sulfur in gasoline.6

2.1. Overview of Benefits 

The low sulfur gasoline standard is expected to reduce NOx emissions by 

approximately 25 percent from the existing fleet of light-duty vehicles by enabling 

catalytic converters to operate more effectively.7 The emission reductions from the inuse fleet would be achieved upon introduction of the cleaner fuel, without the need for 

fleet turnover. The combined reductions from the new vehicle emission standards and 

fuel sulfur requirements could be a significant component in the reduction of ambient 

levels of air pollutants known to have adverse public health and environmental impacts. 

Reductions not achieved through this and other federal measures would have to come 

from additional controls on local sources in the region. 

2.2. State Authority under the Clean Air Act 

The Clean Air Act (CAA) limits state authority to regulate emissions from motor 

vehicles and fuels. The CAA preempts state and local governments from adopting or 

enforcing emission standards for new motor vehicles. However, California can receive a 

 

5

 The Energy Independence and Security Act of 2007 (EISA) requires the USEPA to revise the Renewable 

Fuel Standard program to incorporate greater amounts of renewable fuels into transportation fuels. The 

USEPA expects that the increased renewable fuel content of RFS-2 will result in higher emissions of NOx, 

hydrocarbons, ethanol, and acetaldehyde. [USEPA. 2009. Fuels and Fuel Additives: EPA Proposes New 

Regulations for the National Renewable Fuel Standard Program for 2010 and Beyond, USEPA, EPA-420-

F-09-023 (May 2009). Available at http://www.epa.gov/oms/renewablefuels/420f09023.htm (accessed 

September 2, 2011).] 

6

 Ober, J.A. 2003. “Sulfur,” in U.S. Geological Survey Minerals Yearbook – 2003, United States Geological 

Survey. Available at http://minerals.usgs.gov/minerals/pubs/commodity/sulfur/sulfumyb03.pdf. 

7

 See discussion in Section 4.3. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 2-2

waiver of preemption from the USEPA for its emission standards and enforcement 

procedures. Section 177 of the CAA allows other states to adopt the California vehicle 

standards in lieu of the federal standards. Ten Northeast and Mid-Atlantic states and the 

District of Columbia have adopted California’s low emission vehicle standards. 

Section 211(c) of the CAA limits states, except for California, from further regulating 

constituents of gasoline, including sulfur, that are already regulated by the federal 

government. Therefore, states in the OTR must rely on federal action on gasoline sulfur 

content to further reduce NOx from the existing fleet of cars and light trucks. 

2.3. Current State Efforts 

Individually, the states in the OTR are implementing some of the most health 

protective air pollution control programs in the nation. Collectively, they have 

implemented a host of regional NOx, VOC, and sulfur dioxide (SO2) control measures, 

including the first regional cap and trade program for NOx, adoption of the California 

low emission vehicle standards, and consumer products and architectural coatings 

standards to reduce VOCs. These initiatives, combined with federal measures, including 

the Federal Motor Vehicle Emission Control program, have led to important air quality 

and public health improvements in the OTR. Given the stringency of existing state 

controls, federal constraints on state regulation of motor vehicle fuels, and the fact that 

the OTR is significantly affected by pollution transport from sources outside the region, 

national control measures for light-duty vehicles are critical to achieving further 

improvements in air quality.
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 3-1

3. PUBLIC HEALTH AND ENVIRONMENTAL NEED 

The OTR, home to over 62 million people, is subject to episodes of poor air 

quality resulting from ground-level ozone and fine particle pollution. During severe 

events, the scale of the problem can extend beyond the OTR’s borders and include over 

200,000 square miles across the eastern United States. Local and regional sources as well 

as air pollution transported hundreds of miles from distant sources outside the OTR 

contribute to elevated ozone and fine particle concentrations in the region. 

This section summarizes the air quality challenge facing the OTR, with a focus on 

ozone. It describes the contribution of light-duty vehicles to the NOx emission 

inventories in the Northeast and Mid-Atlantic states. 

3.1. Adverse Impacts of NOx Emissions 

As indicated in Table 3-1, NOx emissions contribute to a number of adverse 

public health and environmental outcomes. NOx is the most important contributor to 

regional ozone concentrations and an important precursor to fine particulate matter 

formation. These two pollutants are responsible for tens of thousands of premature 

deaths, hospital admissions, and lost work and school days in the U.S. annually. NOx is 

also a key factor in a number of environmental problems that affect the Northeast and 

Mid-Atlantic region. 

Table 3-1. Adverse Public Health and Environmental Impacts of NOx in the OTR. 

Ozone and PM2.5 

• Reduces lung function, aggravates asthma and other chronic lung diseases 

• Can cause permanent lung damage from repeated exposures 

• Contributes to premature death 

Acid Deposition 

• Damages forests 

• Damages aquatic ecosystems, e.g., Adirondacks and Great Northern Woods 

• Erodes manmade structures 

Coastal Marine Eutrophication 

• Depletes oxygen in the water, which suffocates fish and other aquatic life in 

bays and estuaries, e.g., Chesapeake Bay and Long Island Sound 

Visibility Impairment 

• Contributes to regional haze that mars vistas and views in urban and 

wilderness areas 

3.1.1. Ozone 

Ozone remains a persistent regional pollution problem in parts of the OTR during 

warm weather months. The evolution of severe ozone episodes in the OTR often begins 

with the passage of a large high pressure area from the Midwest to the middle or southern 

Atlantic states. As depicted in Figure 3-1, there are three primary pollution transport 

mechanisms that affect air quality in the OTR: long-range, mid-level, and near-surface. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 3-2

One transport mechanism that can play a key role in moving pollution long distances 

along the Eastern Seaboard is the “nocturnal low level jet” (NLLJ). The NLLJ is a 

regional-scale phenomenon of higher wind speeds a few hundred meters above the 

surface, just above the stable night-time (nocturnal) boundary layer. The jet has been 

observed just before or during ozone events and can convey air pollution several hundred 

miles overnight from the southwest to the northeast, directly in line with the major 

population centers of the Northeast Corridor.8

During severe ozone episodes associated with high pressure systems, multiple 

transport features are embedded within a large ozone reservoir arriving from source 

regions to the south and west of the OTR. A severe ozone episode can contain elements 

of long-range air pollution transport from outside the OTR, regional scale transport 

within the OTR, and local transport along coastal shores due to bay, lake, and sea 

breezes. 

3 Types of Transport Contribute to 

Ozone Problem

• Westerly, local and southerly/night-time low level jet (NLLJ) transport converge on the 

Mid-Atlantic area.

• Sea and bay breezes act as a barrier or wall and funnel ozone and other air pollutants 

up the Northeast Corridor.

• On bad air days, 60-100 ppb of ozone comes into the OTR as a result of transport

• Need comprehensive, strong federal measures to meet attainment

Figure 3-1. Modes of Air Pollution Transport into and within the OTR. 

Collectively, NOx emissions and ambient ozone concentrations in the OTR have 

dropped significantly since 1997, along with the frequency and magnitude of ozone 

exceedances of the health-based ozone national ambient air quality standard (NAAQS).9 

Despite this demonstrated progress, Figure 3-2 shows that even with the projected 

benefits associated with the USEPA’s Cross-State Air Pollution Rule (CSAPR), many of 

 

8

 Philbrick, C.S., W. Ryan, R. Clark, P. Hopke, and S. McDow. 2003. Processes controlling urban air 

pollution in the Northeast: Summer 2002. Final Report for the Pennsylvania Department of Environmental 

Protection (July 25, 2003). 

9

 NESCAUM. 2010. The Nature of the Ozone Air Quality Problem in the Ozone Transport Region: A 

Conceptual Description, prepared for the Ozone Transport Commission by NESCAUM, Boston, MA 

(August 2010). Available at 

http://www.nescaum.org/documents/2010_o3_conceptual_model_final_revised_20100810.pdf/. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 3-3

the most populous areas of the OTR will continue to violate the current 0.075 ppm ozone 

NAAQS (8-hour average).10 Attaining the standard in these areas will require significant 

additional NOx reductions within the OTR and in upwind areas. Federal measures such 

as the Tier 3/low sulfur gasoline program will significantly reduce NOx emission and 

help states achieve the requisite reductions. 

Based on CAMx modeling results for CSAPR [USEPA, Air Quality 

Modeling Final Rule Technical Support Document, June 2011, 

http://www.epa.gov/airtransport/pdfs/AQModeling.pdf]. 

Figure 3-2. Projected Nonattainment & Maintenance Counties for 0.075 ppm ozone 

NAAQS in 2014 after CSAPR Implementation.

Looking toward the future, additional NOx reductions will be critical to ozone 

attainment in a broader swath of the OTR if the USEPA were to adopt a more health 

protective ozone NAAQS in the range recommended by the USEPA’s Clean Air 

Scientific Advisory Committee (CASAC). Figure 3-3 shows the predicted expansion of 

 

10 Note that the figure only highlights counties that have ozone monitors located within them that are 

projected to be nonattainment or maintenance areas for the ozone standard. Additional counties within the 

same metropolitan areas will also be affected by high ozone pollution. 

 Maintenance

 Nonattainment

2014 Post-CSAPR 

Ozone NAAQS = 0.075 ppm 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 3-4

nonattainment areas in the OTR based on a more stringent ozone NAAQS of 0.070 ppm 

(8-hour average), which is at the upper end of CASAC’s previously recommended range 

of 0.060 – 0.070 ppm. 

Based on CAMx modeling results for CSAPR [USEPA, Air Quality 

Modeling Final Rule Technical Support Document, June 2011, 

http://www.epa.gov/airtransport/pdfs/AQModeling.pdf]. 

Figure 3-3. Projected Nonattainment & Maintenance Counties for Hypothetical 

0.070 ppm ozone NAAQS in 2014 after CSAPR Implementation.

3.1.2. Particulate Matter 

Scientific evidence has established a solid link between cardiac and respiratory 

health risks and transient exposure to ambient fine particle pollution that is capable of 

penetrating deep into the lungs.11 Exceedances of the fine particle NAAQS can occur at 

any time of the year, with some of the highest levels often reached in the winter. There 

are important differences in the chemical species responsible for high fine particle levels 

during summer and winter in the OTR. Regional fine particle formation in the eastern 

 

11 USEPA. 2005. Review of the National Ambient Air Quality Standards for Particulate Matter: Policy 

Assessment of Scientific and Technical Information, USEPA OAQPS Staff Paper, EPA-452/R-05-005a, 

(December 2005). 

 Maintenance

 Nonattainment

2014 Post-CSAPR 

Ozone NAAQS = 0.070 ppm 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 3-5

United States is primarily due to SO2, but NOx is also important because of its influence 

on the chemical equilibrium between sulfate and nitrate pollution during winter when 

nitrates can be a relatively greater contributor to urban PM2.5 levels. 

3.2. Adverse Environmental Impacts of NOx Emissions 

3.2.1. Acid Deposition 

Atmospheric sources of nitrogen are a primary contributor to acidification of 

forest soils and fresh water ecosystems in the Northeast and Mid-Atlantic region. 

Nitrogen saturation results in a number of important changes in forest ecosystem 

functions, including: (1) increased acidification of soils and surface waters; (2) depletion 

of soil nutrients and the development of plant nutrient imbalances; and (3) forest decline 

and changes in species composition. More than 30 percent of the lakes in the 

Adirondacks and at least 10 percent of the lakes in New England are susceptible to the 

effects of acidic episodes that include long-term increases in mortality, emigration, and 

reproductive failure of fish, as well as short-term acute effects. Acidic episodes can 

occur at any time of the year but typically are most severe during spring snowmelt, when 

biological demand for nitrogen is low and saturated soils exhibit lower nitrogen 

retention.12

3.2.2. Coastal Marine Eutrophication 

Airborne nitrogen is an important contributor to eutrophication, the process by 

which a body of water acquires a high concentration of nutrients that promote excessive 

growth of algae. As the algae die and decompose, high levels of organic matter and 

decomposing organisms deplete the water of available oxygen, causing the death of other 

organisms, such as fish. Atmospheric nitrogen is a major contributor to eutrophication of 

key coastal resources in portions of the OTR, including Chesapeake Bay, Delaware 

inland bays, Barnegat Bay in New Jersey, and Long Island Sound (Figure 3-4).13

The Chesapeake Bay watershed is the largest estuary in the U.S. and stretches 

across more than 64,000 square miles, encompassing parts of six states — Delaware, 

Maryland, New York, Pennsylvania, Virginia and West Virginia — and the entire 

District of Columbia. Since the 1950s, the Bay has experienced a decline in water quality 

due to over-enrichment of unwanted nutrients such as phosphorus and nitrogen. The 

major contributors to nutrient discharge in the Bay are wastewater effluent, urban and 

agricultural runoff, and air deposition.14

 

12 Driscoll, C.T., G.B. Lawrence, A.J. Bulger, T.J. Butler, C.S. Cronan, C. Eagar, K.F. Lambert, G.E. 

Likens, J.L. Stoddard, and K.C. Weathers. 2001. Acidic deposition in the northeastern United States: 

Sources and inputs, ecosystem effects, and management strategies, BioScience 51, 180–198. 

13 Bricker, S.B., C.G. Clement, D.E. Pirhalla, S.P. Orlando, and D.R.G. Farrow. 1999. National Estuarine 

Eutrophication Assessment: Effects of Nutrient Enrichment in the Nation’s Estuaries, NOAA, National 

Ocean Service, Special Projects Office and the National Centers for Coastal Ocean Science. Silver Spring, 

MD: 71 pp. 

14 Maryland Department of the Environment, Chesapeake Bay Restoration, 

http://www.mde.state.md.us/programs/Water/Pages/water/bayrestoration.aspx (accessed September 1, 

2011). 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 3-6

Figure from Bricker, et al. (see footnote 13). 

Figure 3-4. Coastal Marine Eutrophication Conditions and Trends 

in Middle Atlantic Region.

3.2.3. Visibility Impairment 

Regional haze is a form of air pollution that obscures the views of city skylines 

(Figure 3-5) as well as “pristine” scenic vistas (). It is caused by fine particle air 

pollution and can cover hundreds of square miles in the East. Natural visibility 

conditions in the East are estimated at over 60 to 80 miles in most locations. Under 

current polluted conditions, average visibility ranges from 20 to 40 miles. On the worst 

days, regional haze can reduce visibility to just a few miles. 

Outdoor recreation is a multi-billion dollar industry in the U.S. and is of particular 

economic importance to communities near protected federal lands. Surveys indicate 

visitors have rated “clean, clear air” as among the most important features of national 

parks and have overwhelmingly ranked scenic views and clean air as “extremely” or 

“very” important. Studies have yielded estimates in the billions of dollars for the 

visibility benefits associated with substantial national pollution reductions.15 While 

 

15 NESCAUM. 2001. Regional Haze and Visibility in the Northeast and Mid-Atlantic States, NESCAUM, 

Boston, MA (January 31, 2001). Available at http://www.nescaum.org/documents/regional-haze-andvisibility-in-the-northeast-and-mid-atlantic-states/. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 3-7

sulfate, formed from SO2 emissions, is the most important particle constituent of regional 

haze, reductions in other local and distant pollutant emissions, including NOx, will be 

necessary to achieve the nation’s long-term goal of restoring pristine visibility conditions 

year-round in national parks and wilderness areas.16

 Photo from CAMNET: Realtime Air Pollution and Visibility Monitoring Network, www.hazecam.net. 

Figure 3-5. Winter Pollution Haze Layer over Boston, MA on January 14, 2010.

Photos from CAMNET: Realtime Air Pollution and Visibility Monitoring Network, www.hazecam.net. 

Figure 3-6. Comparison of a clear day on February 22, 2008 (left) and a hazy 

polluted day on August 17, 2009 (right) in Acadia National Park, ME.

 

16 In 1999, the USEPA promulgated the Regional Haze Rule in pursuit of the national visibility goal created 

by Congress in the Clean Air Act to ultimately restore natural visibility conditions in 156 national parks 

and wilderness areas across the country (called “Class I” areas). 

Clear Day 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 4-1

4. MOBILE SOURCE EMISSIONS IMPACTS 

This section explains the continued importance of addressing emissions from the 

on-road vehicle fleet in the OTR, and quantifies the expected emission reductions from 

the existing fleet associated with the introduction of 10 ppm sulfur gasoline. 

4.1. Contribution of Cars and Light Trucks to NOx Emissions in MidAtlantic/Northeast States 

As shown in Table 4-1, on-road gasoline-powered cars and light-duty trucks 

emitted about 29 percent of all NOx in the Mid-Atlantic/Northeast region in 2007. This 

sector is the largest source of NOx emissions in the region in 2007. 

Table 4-1. Relative Source Contributions of NOx Emissions in the OTR, 2007. 

Source NOx Emissions (%)

HIGHWAY VEHICLES 51.76

ON-ROAD GASOLINE LIGHT-DUTY 

VEHICLES 29.28

ON-ROAD DIESEL VEHICLES 22.48

OFF-HIGHWAY 13.39

FUEL COMB. ELEC. UTIL. 13.41

FUEL COMB. RESIDENTIAL 4.59

OTHER INDUSTRIAL PROCESSES 3.82

FUEL COMB. INDUSTRIAL 1.82 

OTHER MISCELLANEOUS (sum of source sectors 

contributing <1.7% each to total NOx) 11.21

Source: MANE-VU 2007 Inventory provided by the Mid-Atlantic Regional Air 

Management Association (November 2011). Note that this table covers all 

jurisdictions of the OTR except Virginia. 

4.2. Contribution of Source Sectors to Ozone Nonattainment 

The following figures show the predicted relative contributions of various source 

sectors to 2015 exceedance-level ozone concentrations in three large metropolitan areas 

within the OTR – New York City (Figure 4-1), Philadelphia (Figure 4-2), and Baltimore 

(Figure 4-3).17 These indicate the proportional contributions from various source sectors 

during periods of peak ozone concentrations. These charts assume super-regional 

controls on power plants based on the USEPA’s court-remanded Clean Air Interstate 

Rule (CAIR). Although CSAPR has now replaced CAIR, these figures provide a 

reasonable approximation of source contributions to these nonattainment areas under 

peak ozone conditions. These predictions do not include Tier 3 vehicle standards. Motor 

vehicles (gasoline and diesel) are the most significant contributors to elevated ozone 

concentrations in all three of these nonattainment areas. Modeling suggests that 

emissions from motor vehicles operating within and outside these nonattainment areas 

 

17 USEPA. 2005. Results of 2010/2015 Post-CAIR Ozone Source Apportionment Modeling (August 2005). 

Available at 

http://www.epa.gov/ttnnaaqs/ozone/o3imp8hr/documents/materials/CAIR_2010_2015_SA_summary_final.ppt. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 4-2

are responsible for approximately one-third of the ozone formed. This speaks to the 

importance of further lowering NOx emissions from the existing fleet of vehicles. 

Figure 4-1. 2015 Average Contribution (%) by State/Sector to Exceedance-level 

Ozone in the New York City Nonattainment Area. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 4-3

Figure 4-2. 2015 Average Contribution (%) by State/Sector to Exceedance-level 

Ozone in the Philadelphia Nonattainment Area.
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 4-4

Figure 4-3. 2015 Average Contribution (%) by State/Sector to Exceedance-level 

Ozone in the Baltimore Nonattainment Area. 

4.3. Emission Reductions from 10 ppm Gasoline Sulfur Standard 

Reducing the average sulfur content of gasoline from the current average of 30 

ppm to 10 ppm will provide significant and immediate emission reductions from the 

existing vehicle fleet. Sulfur in gasoline inhibits the effectiveness of the catalytic 

converters used to reduce NOx and other emissions from vehicles. When exposure to 

sulfur is minimized, the performance of these devices improves dramatically. Numerous 

studies have documented this effect. For example, Ball et al. (2011)18 compared NOx 

emissions from a late-model vehicle operating on two types of gasoline, one with 30 ppm 

and one with 3 ppm sulfur. They found that tailpipe NOx emissions were around 40 

 

18 Ball, D., D. Clark, and D. Moser. 2011. Effects of Fuel Sulfur on FTP NOx Emissions from a PZEV 4 

Cylinder Application, SAE Technical Paper 2011-01-0300, doi:10.4271/2011-01-0300. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 4-5

percent lower with the 3 ppm sulfur fuel.19 For additional analysis and discussion of the 

effect of fuel sulfur on catalyst performance, see MECA (2011).20

NESCAUM used the USEPA’s MOVES model21 to calculate baseline light-duty 

vehicle NOx emissions for the projection year 2017. NOx reduction estimates for the 

10 ppm sulfur gasoline component of the expected federal Tier 3 proposal were taken 

from a recent report by the National Association of Clean Air Agencies (NACAA).22

The estimated per state and aggregate regional reduction benefits for gasolinepowered on-road vehicles are presented in Table 4-2. Based on this preliminary regional 

inventory for 2017 calculated with MOVES, a 10 ppm average gasoline sulfur 

requirement could reduce NOx emissions in the OTR by over 51,000 tons per year, or 

141 tons per day. 

As shown in Table 4-2, the low sulfur gasoline component of the Tier 3 program 

would also significantly reduce NOx emissions in eight Midwest states, with fleetwide 

reductions of over 60,000 tons per year. Similar reductions are also projected for ten 

southeast states, with NOx reductions of almost 65,000 tons in 2017. These reductions 

will benefit air quality in the OTR by: (1) lowering the transported “ozone reservoir” that 

forms in the eastern U.S., (2) reducing the amount of low-level NOx emissions and 

pollutants derived from NOx (e.g., nitrates) that are transported into the OTR, and (3) 

ensuring that vehicles registered in other states but operating in the OTR emit less NOx. 

As indicated in Table 4-3, light-duty vehicles are predicted to emit over 1,100,000 

tons of NOx in 2017 absent the low sulfur gasoline standard. A 10 ppm average sulfur 

gasoline requirement could reduce NOx emission by nearly 180,000 tons per year, or 

almost 500 tons per day in the eastern U.S. 

 

19 Sensitivity to fuel sulfur will vary with catalyst design and placement, duty cycle, and other parameters. 

Less advanced catalyst formulations found on older cars and heavy-duty vehicles could exhibit lesser or 

greater NOx impacts compared to the advanced emission control system studied by Ball et al. 

20 Manufacturers of Emission Controls Association (MECA), 2011. Clean Air Facts: Cleaner Fuels for 

Cleaner Motor Vehicles. Available at http://meca.org/galleries/defaultfile/fuelsfact%200811%20FINAL.pdf. 

21 The MOtor Vehicle Emission Simulator (MOVES) model was developed by USEPA’s Office of 

Transportation and Air Quality to estimate emissions for mobile sources, including cars, trucks, and 

motorcycles. 

22 National Association of Clean Air Agencies (NACAA). 2011. Cleaner Cars, Cleaner Fuel, Cleaner 

Air: The Need for and Benefits of Tier 3 Vehicle and Fuel Regulations, NACAA, Washington, DC (October 

2011), p. 16 (citing M. Walsh). Available at 

http://www.4cleanair.org/documents/NACAATier3VehandFuelReport-EMBARGOED-Oct2011.pdf. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 4-6

Table 4-2. On-road Gasoline Vehicle Emissions and Estimated Reductions Based on 

MOVES Estimates for 2017. 

Ozone Transport Region 

Est. NOx Reductions from 10 ppm S 

State/DC 

2017 Gasoline 

On-road Base 

NOx (tpy) (tpy) (tpd) 

Connecticut 20,700 -3,100 -8 

Delaware 5,400 -800 -2 

District of Columbia 2,000 -300 -1 

Maine 10,000 -1,500 -4 

Maryland 32,600 -5,000 -14 

Massachusetts 35,100 -5,300 -15 

New Hampshire 8,400 -1,300 -4 

New Jersey 44,300 -6,700 -18 

New York 88,600 -13,500 -37 

Pennsylvania 70,500 -10,700 -29 

Rhode Island 5,600 -900 -2 

Vermont 5,000 -800 -2 

Virginia OTR Counties 11,300 -1,700 -5 

OTR Total 339,500 -51,600 -141 

Midwest States 

Est. NOx Reductions from 10 ppm S 

State 

2017 Gasoline 

On-road Base 

NOx (tpy) (tpy) (tpd) 

Illinois 70,300 -10,700 -29 

Indiana 48,900 -7,400 -20 

Iowa 20,500 -3,100 -8 

Michigan 67,200 -10,200 -28 

Minnesota 36,600 -5,600 -15 

Missouri 45,000 -6,800 -19 

Ohio 73,800 -11,200 -31 

Wisconsin 40,000 -6,000 -16 

Total 402,300 -61,000 -167 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 4-7

Southeast States 

Est. NOx Reductions from 10 ppm S 

State 

2017 Gasoline 

On-road Base 

NOx (tpy) (tpy) (tpd) 

Alabama 34,800 -5,300 -15 

Florida 95,600 -14,500 -40 

Georgia 64,000 -9,700 -27 

Kentucky 32,700 -5,000 -14 

Mississippi 23,100 -3,500 -10 

North Carolina 56,300 -8,500 -23 

South Carolina 27,900 -4,200 -12 

Tennessee 43,500 -6,600 -18 

Virginia23 36,900 -5,600 -15 

West Virginia 13,000 -2,000 -5 

Total 427,800 -64,900 -178 

Table 4-3. Regional Gasoline Vehicle Emissions and Estimated Reductions 

Based on MOVES Estimates for 2017. 

Est. NOx Reductions from 10 ppm S 

Region 

2017 Gasoline 

On-road Base 

NOx (tpy) 

(tpy) (tpd) 

Ozone Transport Region Total 339,500 -51,600 -141 

Midwest States Total 402,300 -61,000 -167 

Southeast States Total 427,800 -64,900 -178 

3 Region Total 1,169,600 -177,500 -486 

To provide additional context for the scale of NOx reductions possible from low 

sulfur gasoline, Table 4-4 shows that the reductions would be about three times greater 

than what will be achieved in the OTR in 2014 from the Cross-State Air Pollution Rule. 

 

23 The NOx emissions for Virginia in the table of southeast states do not include emissions from the VA 

counties in the OTR. That portion of VA’s gasoline vehicle NOx emissions appear in the Ozone Transport 

Region table. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 4-8

Table 4-4. Comparison of NOx Reductions from CSAPR and 

10 ppm S Gasoline in OTR. 

State/DC CSAPR NOx Reductions 

(tpy) 

Est. NOx Reductions from 10 ppm S 

(tpy)

Connecticut 6 -3,100 

Delaware 15 -800 

District of Columbia 0 -300 

Maine 0 -1,500 

Maryland -375 -5,000 

Massachusetts 41 -5,300 

New Hampshire -156 -1,300 

New Jersey -286 -6,700 

New York -1,160 -13,500 

Pennsylvania -15,110 -10,700 

Rhode Island 0 -900 

Vermont 0 -800 

Virginia OTR Counties -43 -1,700 

OTR Total -17,068 -51,600 

Note: Negative values are projected NOx reductions. Positive values are projected NOx increases.

Source for CSAPR NOx reductions in 2014: USEPA. 2011. Regulatory Impact Analysis for the Federal 

Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone in 27 States;

Correction of SIP Approvals for 22 States, Docket ID No. EPA-HQ-OAR-2009-0491, USEPA Office of 

Air and Radiation (June 2011), p. 57, Table 3-12,. Note that the CSAPR NOx reductions to do not include 

later technical revisions by the USEPA announced in October 2011. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 5-1

5. IMPACT OF PREDICTED POLLUTION REDUCTIONS 

ON PUBLIC HEALTH 

Using the results from the inventory analysis described in Section 4, NESCAUM 

evaluated the potential public health impacts in the OTR associated with the projected 

reduction in mobile source emissions from the proposed Tier 3/LEV III and low sulfur 

gasoline rules. 

A federal 10 ppm sulfur standard would reduce emissions from cars and light 

trucks in the OTR and in upwind states whose emissions contribute to air quality 

problems in the region. Ground-level emissions help produce the ozone “reservoir” 

formed upwind and outside the region that is carried into the OTR. Motor vehicles are 

also a major component of emissions within the region contributing to local air pollution 

problems and transported overnight along the Northeast Corridor by the nocturnal low 

level jet. 

5.1. Baseline for Estimating Health Benefits of Low Sulfur Gasoline 

NESCAUM used the USEPA’s Environmental Benefits Modeling and Analysis 

Program (BenMAP)24 to estimate the number of avoided adverse health events (e.g., 

premature mortality) and their monetized value within the OTR that would be associated 

with the implementation of a federal low sulfur gasoline program. BenMAP applies 

health impact functions that relate changes in pollutant concentrations with changes in the 

incidence of specific health endpoints. The program allows users to estimate the health 

and economic benefits of an air quality program while adequately describing the 

uncertainty and variability in the estimates. 

BenMAP uses a “damage-function” approach to estimate the benefits associated 

with air quality improvements. This method assigns values to changes in individual 

health endpoints (specific effects that can be associated with changes in air quality). 

Because NOx is a precursor to ozone and fine particle formation, BenMAP was run for 

both types of pollution. Lowering sulfur content in gasoline would also have an effect on 

sulfate fine particles, although highway vehicle emissions are a small contributor to total 

sulfate in the OTR (<1%).25

The air quality changes used as inputs to BenMAP in this exercise were 

extrapolated from a baseline using the results of previous air quality modeling done by 

NESCAUM of a future regional pollution control scenario in 2018.26 The 2018 future 

scenario incorporated “On the Books/On the Way” (OTB/OTW) control strategies and 

additional “Beyond on the Way” (BOTW) control options that the Ozone Transport 

Commission (OTC) has considered for achieving regional ozone, particulate matter, and 

 

24 USEPA. 2010. Environmental Benefits Mapping and Analysis Program (BenMAP), BenMAP 4.0.35, US 

Version (September 2010). Available at http://www.epa.gov/air/benmap/download.html. 

25 USEPA. 2008 National Emissions Inventory, http://www.epa.gov/ttn/chief/net/2008inventory.html. 

26 NESCAUM. 2008. MANE-VU Modeling for Reasonable Progress Goals, prepared for MANE-VU by 

NESCAUM, Boston, MA (February 7, 2008). Available at http://www.nescaum.org/documents/modelingfor-reasonable-progress-final-021208.pdf/. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 5-2

visibility goals.27 This modeled air quality baseline accounts for emission control 

measures already in place as well as potential future control requirements that, while not 

final at the time of the modeling, may achieve additional pollution reductions by 2018. 

Some of the OTB/OTW measures assumed to be in place by 2018 within the OTR 

include: 

• Federal Clean Air Interstate Rule (predecessor of the Cross-State Air Pollution 

Rule); 

• Federal Tier 2 tailpipe standards (or CA LEV standards in OTR states that 

adopted the California motor vehicle program) and low sulfur gasoline (30 ppm); 

• Federal highway heavy-duty diesel engine standards / ultra-low sulfur diesel 

requirements; 

• Federal non-road diesel engine standards / ultra-low sulfur diesel rule; 

• OTR state low sulfur heating oil requirements; and 

• Various state laws, regulations, and enforcement measures in individual OTR 

states. 

For the BOTW measures, the OTC identified a number of source categories to 

consider for additional emission reductions. Individual OTR states and DC selected 

which of these sectors could be candidates in their jurisdictions for further emission 

controls, and these were included in the 2018 air quality modeling.28 The source 

categories identified by the OTC are: 

• Consumer Products 

• Portable Fuel Containers 

• Adhesives and Sealants Application 

• Diesel Engine Chip Reflash 

• Cutback and Emulsified Asphalt Paving 

• Asphalt Production Plants 

• Cement Kilns 

• Glass Furnaces 

• Industrial, Commercial, and Institutional (ICI) Boilers 

 

27 MARAMA. 2007. Development of Emission Projections for 2009, 2012, and 2018 for NonEGU Point, 

Area, and Nonroad Source in the MANE-VU Region, prepared for MANE-VU by MARAMA, Towson, 

MD (February 2007). Available at 

http://www.marama.org/visibility/Inventory%20Summary/MANEVU_Emission_Projections_TSD_022807

.pdf. 

28 Ozone Transport Commission. 2007. Identification and Evaluation of Candidate Control Measures, 

Final Technical Support Document, prepared by MACTEC Federal Programs, Inc. (Herndon, VA), 

February 28, 2007. Available at 

http://otcair.org/upload/Documents/Reports/OTC%20Control%20Measures%20TSD%20070228%20Final

%20SB.pdf. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 5-3

• Regional Fuels (extending reformulated gasoline to OTR counties that do not 

currently have it) 

• Electric Generating Units (beyond expected federal requirements) 

By including these measures in the 2018 future control scenario, the BenMAP 

results for a 10 ppm low sulfur gasoline requirement provide a conservative estimate of 

the health benefits above and beyond those to be garnered from measures already 

expected to be in place or that are under consideration by individual OTR jurisdictions 

for implementation by 2018. 

5.2. Methods for Estimating Air Quality Impacts of Low Sulfur 

Gasoline in the OTR 

NESCAUM developed a first-order estimate of the air quality impacts of reduced 

sulfur in gasoline by applying linear reduction factors to the 2018 air quality model 

results for ozone and sulfate PM2.5.29 These reduction factors were applied to model 

results at every grid cell and time-step. 

The reduction factor for ozone was developed based on an estimated 8 percent 

reduction in NOx emissions from all gasoline and diesel on-road mobile sources resulting 

from the introduction of low sulfur gasoline.30 The 2018 inventory year was used 

because it is the inventory year of the projected OTB/OTW and BOTW modeled 

reference case of ozone levels in the OTR.31 For the purpose of this analysis, the original 

2018 NOx emissions inventory was modified by replacing the mobile source NOx 

emissions estimated by the older MOBILE6 emissions inventory model with updated 

estimates from MOVES. Total on-road mobile source emissions (gasoline and diesel) are 

about 37 percent of all NOx emissions in the 2018 OTR inventory. On-road gasoline 

mobile source NOx emissions represent about 20 percent of the total inventory. While 

the NOx reduction is estimated to be about 8 percent relative to the total on-road mobile 

source sector, the NOx reductions accrue from only the gasoline portion of the total onroad fleet. 

The NOx-ozone response was derived from a study by Butler et al. of observed 

decreasing ozone trends occurring contemporaneously with historical NOx reductions in 

the eastern United States from 1997 to 2008.32 This study estimated about a 13 percent 

decrease in average maximum daily 8-hour ozone concentrations during the five month 

ozone season (May-September) resulting from a 32 percent decrease in annual total NOx 

 

29 NESCAUM used the Community Multi-scale Air Quality (CMAQ) model, which provided hourly 

modeled air pollutant levels over an eastern U.S. domain at a 12 km grid resolution. 

30 National Association of Clean Air Agencies (NACAA). 2011. Cleaner Cars, Cleaner Fuel, Cleaner 

Air: The Need for and Benefits of Tier 3 Vehicle and Fuel Regulations, NACAA, Washington, DC (October 

2011), p. 16 (citing M. Walsh). Available at 

http://www.4cleanair.org/documents/NACAATier3VehandFuelReport-EMBARGOED-Oct2011.pdf. 

31 MARAMA. 2007. MANE-VU Future Years Emissions Inventory. Available at 

http://www.marama.org/technical-center/emissions-inventory/2002-inventory-and-projections/mane-vufuture-year-emissions-inventory (accessed October 17, 2011). 

32 Butler, T.J., F.M. Vermeylen, M. Rury, G.E. Likens, B. Lee, G.E. Bowker, and L. McCluney. 2011. 

Response of ozone and nitrate to stationary source NOx emission reductions in the eastern USA, 

Atmospheric Environment, 45:1084-1094. doi:10.1016/j.atmosenv.2010.11.040. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 5-4

emissions in the eastern United States. This corresponds to about a 0.4 percent reduction 

in average daily maximum 8-hour ozone per 1 percent reduction in total NOx emissions. 

An estimated 8 percent reduction from an overall 37 percent on-road mobile 

source NOx share in the total NOx inventory, coupled with the 0.4 percent ozone 

reduction per 1 percent NOx reduction, results in an estimated overall 1.2 percent 

reduction in ozone associated with introducing 10 ppm sulfur gasoline. This 1.2 percent 

estimated ozone reduction in the 2018 modeled ozone concentrations is used as an input 

to BenMAP to generate the estimated health benefits. Ozone reductions are estimated 

only for the May through September ozone season and do not consider reductions below 

an assumed 30 ppb natural ozone background.33

NESCAUM applied a similar methodology in developing the PM2.5 reduction 

factor. NESCAUM multiplied the sulfur-content reduction (from 30 to 10 ppb in 

gasoline, or 67 percent) by the contribution of gasoline-powered vehicles to total sulfur 

dioxide emissions in OTC states, or 0.41 percent (EPA 2011), and then by the SO2-

PM2.5 response factor. The response factor is 8 percent in the winter (October through 

April) and 50 percent in the summer (Tsimpidi et al. 2007).34 Therefore, the reduction 

factor for PM2.5 was 0.02 percent in the winter and 0.14 percent in the summer. We do 

not estimate nitrate PM2.5 reductions, which could be relatively important in winter 

when nitrate PM2.5 is more stable at lower ambient air temperatures. Competition with 

relatively abundant sulfate, however, makes estimates difficult in our approach. 

Additional air quality modeling could better quantify the potential impact. 

5.3. Estimated Health Benefits of Low Sulfur Gasoline in OTR 

By using the first-order estimate of air quality reductions in the OTR from 10 ppm 

low sulfur gasoline, BenMAP provided an estimate of avoided health impacts in the OTR 

in 2018 in the range of $234 million to $1.2 billion (in 2006$) annually. The central 

value of this range is approximately $710 million. Table 5-1 summarizes the BenMAP 

monetized health benefits for ozone and PM2.5 for morbidity and mortality health 

endpoints within the OTR. Appendix A provides a breakdown of these benefits for each 

jurisdiction in the OTR. The health benefits valuation is dominated by avoided 

premature mortality, which ranges between 29 and 158 incidents in the OTR. Most of 

the mortalities avoided are due to lower ozone levels resulting from reduced NOx 

emissions by on-road gasoline vehicles. Health impacts from PM2.5 reductions are more 

modest due to the small relative contribution of gasoline combustion to total emissions of 

SO2, which limits secondary PM2.5 formation. 

These values represent first-order estimates of the expected immediate health 

benefits of 10 ppm low sulfur gasoline in the OTR, and are based on a broad range of 

incidences from health impact studies. Therefore, the resulting health benefits are 

 

33 USEPA. 2007. Staff Paper. Review of the National Ambient Air Quality Standards for Ozone: Policy 

Assessment of Scientific and Technical Information, OAQPS Staff Paper, USEPA Office of Air Quality 

Planning and Standards, Research Triangle Park, North Carolina, EPA-452/R-07-007 (July 2007). 

34 Tsimpidi A.P., V.A. Karydis, and S.N. Pandis. 2007. Response of Inorganic Fine Particulate Matter to 

Emission Changes of Sulfur Dioxide and Ammonia: The Eastern United States as a Case Study, Journal of 

the Air & Waste Management Association, 57:1489-1498. DOI:10.3155/1047-3289.57.12.1489. Table 1 

(p. 1493). 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 5-5

presented as a broad range as well. Specifically modeling a Tier 3 / low sulfur gasoline 

program rather than using the first-order linear reduction method applied here would 

provide refined estimates of expected pollutant reductions, avoided morbidity and 

mortality incidences, and geographic distribution of benefits. Notwithstanding the 

potential for more refined modeling, the values presented in this paper suggest that there 

will be immediate and significant health benefits in the OTR from lowering sulfur in 

gasoline for the on-road vehicle fleet in 2018, and the value of those health benefits may 

be much greater than the program costs. This assessment does not account for the 

monetary benefits associated with environmental improvements that would accrue from 

reduced nitrogen emissions related to the low sulfur gasoline program. 

Table 5-1. Estimated Annual Monetized Health Benefits in 2018 

Due to Low Sulfur Gasoline in OTR. 

 Value [Millions of 2006$] 

 Ozone PM2.5 Total 

Morbidity $19.5 $3.9 $23.4 

Mortality $196 – $877 $15 – $285 $210 – $1,162 

Total Monetized Health Benefits $215 – $896 $19 – $289 $234 – $1,186 

Note: Monetized benefits include all of Virginia. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 6-1

6. COST AND BENEFITS OF TIER 3 / GASOLINE SULFUR 

PROGRAM 

Cost estimates for 10 ppm sulfur gasoline derived from two different studies and 

emission reduction estimates from MOVES runs conducted by NESCAUM were used to 

assess the costs-effectiveness of NOx reductions from the Tier 3 low sulfur gasoline 

program. The cost estimates in cents per gallon come from the USEPA’s Mobile Source 

Air Toxics (MSAT) proposed rule and a recent study sponsored by the International 

Council on Clean Transportation (ICCT). 

To put this program in context, this section also compares the potential emission 

reduction and cost-effectiveness of 10 ppm sulfur gasoline to other emission control 

options that states might consider to achieve the NAAQS and to strategies that have 

already been employed. 

6.1. USEPA Cost Estimates for Lower Sulfur Gasoline 

National cost estimates for lowering sulfur in gasoline to an average of 30 ppm 

for the 2000 Tier 2/Gasoline Sulfur Rule35

 were: 

• aggregate capital costs: $4.5 billion 

• average annual operating costs (over ‘lifetime’-2030): $1.8 billion 

• average per gallon costs (over ‘lifetime’-2030): 1.5 cents 

The USEPA’s MSAT rule proposal projected an average cost increase of 

0.5 cents per gallon for 10 ppm sulfur gasoline.36

6.2. ICCT Cost Estimates 

In 2011, the ICCT sponsored a study by MathPro to provide an estimate of the 

cost of lowering gasoline sulfur to an average of 10 ppm. The study concluded that 

complying with a national 10 ppm sulfur standard will cost 0.8 to 1.4 cents per gallon.37

6.3. Cost-Effectiveness

To bound the range of potential cost-effectiveness of a 10 ppm sulfur standard, 

the cost estimates from the USEPA’s MSAT study and the ICCT-sponsored study were 

used to calculate the potential cost per ton of NOx reduced. To derive the dollar per ton 

of NOx reduced from the cents per gallon cost estimates, the volume of gasoline 

consumed in the OTR was derived from the MOVES 2017 results. Along with NOx 

emissions, the MOVES model can specify the energy consumed by vehicles as an output. 

 

35 USEPA. 1999. Regulatory Impact Analysis-Control of Air Pollution from New Motor Vehicles: Tier 2 

Motor Vehicle Emissions Standards and Gasoline Sulfur Control Requirements, Chapter V: Economic 

Impact, Table V-36. 

36 71 Fed. Reg. 15804. March 29, 2006. Control of Hazardous Air Pollutants From Mobile Sources; 

Proposed Rule, at p. 15904. Available at http://edocket.access.gpo.gov/2006/pdf/06-2315.pdf. 

37 International Council for Clean Transportation (ICCT). 2011. Refining Economics of a National Low 

Sulfur, Low RVP Gasoline Standard, prepared by MathPro Inc., West Bethesda, MD (October 25, 2011). 

Available at http://www.theicct.org/pubs/ICCT04_Tier3_Report_Final_v4_All.pdf. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 6-2

A fuel characteristics table in the MOVES database shows that a conversion factor of 

115,000 Btu per gallon can be used to convert the energy consumption output into 

gallons of gasoline. Table 6-1 displays potential cost-effectiveness derived from the 

USEPA MSAT and ICCT studies.38

Table 6-1. Estimated Cost-Effectiveness of NOx Reductions from Low Sulfur 

Gasoline Requirements. 

Cost 

Cost-Effectiveness 

($/ton NOx)

0.5 cents/gal (USEPA MSAT) $2,500 

0.8 cents/gal (ICCT) $4,000 

1.4 cents/gal (ICCT) $7,000 

As shown in Table 6-1, the cost-effectiveness of lower sulfur gasoline is 

estimated at $2,500 per ton NOx reduced, based on the USEPA MSAT cost estimate of 

0.5 cents per gallon. The ICCT-sponsored study provides a conservative cost estimate of 

1.4 cents per gallon from which NESCAUM estimates a cost-effectiveness of around 

$7,000 per ton in the OTR. The ICCT also provides a sensitivity case cost estimate of 

0.8 cents per gallon that accounts for refineries capable of producing 10 ppm sulfur 

gasoline at lower capital expenditure and assumes a lower target return on investment (7 

percent instead of 10 percent). From the sensitivity case cost of 0.8 cents per gallon, 

NESCAUM estimates the cost-effectiveness of the overall program to be $4,000 per ton 

of NOx reduced. 

6.4. Relative Emission Reduction Potential and Cost-effectiveness of 

Low Sulfur Gasoline 

Meeting federal air quality standards throughout the OTR and continuing the 

progress that has been achieved will require new emission reduction strategies. The 12 

states and Washington, DC that constitute the OTR are considering a portfolio of 

potential new or enhanced emission control measures to reduce ozone, with a focus on 

NOx controls. Table 6-2 presents estimated emission reductions for a number of 

potential NOx control measures along with their cost-effectiveness. For comparative 

purposes, the table also shows the cost-effectiveness of the Tier 2 regulation for lightduty vehicles and the heavy-duty highway vehicle rule. 

 

38 The previously cited 2011 NACAA report Cleaner Cars, Cleaner Fuel, Cleaner Air estimates a costeffectiveness of $3,300/ton using the ICCT 0.8 cents per gallon cost. NESCAUM’s derived cost may be 

higher due to differences in geographic scope – the NACAA estimate is based on a national fleet mix 

(outside of California), while NESCAUM’s is for the OTR only. In addition, there may be differences in 

the input assumptions used with MOVES to generate the total on-road NOx emissions given by NACAA 

and NESCAUM. This would lead to differences in projected NOx emissions reduced and gasoline volume 

consumed that would result in different cost-effectiveness estimates. The difference in cost-effectiveness 

estimates, however, does not affect overall conclusions from the comparison of the costs of low sulfur

gasoline with other NOx measures in Table 6-2, nor the comparison of total program costs to monetized 

health benefits shown in Table 6-3. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 6-3

The estimated 141 tons per day achievable from just the low sulfur gasoline 

provisions of the USEPA Tier 3 rulemaking suggests that this initiative has the potential 

to achieve greater reductions in the OTR than any of the possible regional strategies listed 

in the table. Further, even greater NOx reductions would occur in the neighboring 

regions from this federal measure, which will reduce the impacts of transported pollution 

into the OTR. 

Table 6-2. Emission Reductions and Cost-effectiveness of 

Existing and Potential NOx Control Measures. 

Source OTR Summer 

NOx Emission 

Reductions 

(tons/day)39

Cost-Effectiveness 

($/ton NOx) 

ICI Boilers (area & point sources)40 107.2 

$750 - $7,500 (Low NOx Burners) 

$1,300 - $3,700 (SNCR) 

$2,000 - $14,000 (SCR) 

Combustion Turbines – SCR $2,010 - $19,12041

Highway – Heavy-duty and Dieselfueled Vehicles / Engine Standards and 

Fuel Sulfur Controls 

 

$10,56141

Tier 2 Light-duty Vehicle Emissions and 

Gasoline Sulfur Controls 

 

$6,29741

Phase II RFG (extended to all of OTR) 4.8 $3,700 - $5,20039

Glass/Fiberglass Furnaces 37.3 $2,150 - $5,30039

10 ppm Sulfur Gasoline 14142 $2,500 - $7,000 

At an estimated $2,500 to $7,000 per ton NOx reduced, as suggested by the 

USEPA MSAT and ICCT studies, low sulfur gasoline compares favorably to a number of 

other emission reduction strategies, including the Tier 2 and heavy-duty diesel programs, 

in terms of cost-effectiveness. A large portion of the most cost-effective NOx reduction 

measures – those associated with power plants – have already been implemented or are 

expected to accrue with the implementation of CSAPR. 

 

39 Ozone Transport Commission. 2007. Identification and Evaluation of Candidate Control Measures, 

Final Technical Support Document, prepared by MACTEC Federal Programs, Inc., Herndon, VA 

(February 28, 2007). Available at 

http://otcair.org/upload/Documents/Reports/OTC%20Control%20Measures%20TSD%20070228%20Final

%20SB.pdf. 

40 Cost numbers from literature values tabulated by A. Bodnarik, ICI Boiler NOx & SO2 Control Cost 

Estimates, NH Dept. of Environmental Services, presented at OTC Committee Meeting, 

Modeling/Stationary & Area/Mobile Sources, Niagara Falls, NY (September 3, 2009). Available at 

http://otcair.org/upload/Documents/Meeting%20Materials/ICI%20Boiler%20Control%20Cost%20presenta

tion%20090309%20long%20version.pdf. 

41 USEPA. 2006. AirControlNET Version 4.1 Development Report, prepared by E.H. Pechan & Associates 

(Springfield, MA), Pechan Report No. 06.05.002/9011.002, May 2006. Available at 

http://www.epa.gov/ttn/ecas/models/DevelopmentReport.pdf. 

42 From 2017 MOVES results presented in this white paper. 
Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 6-4

The dollar per ton of NOx reduced estimates can be used to estimate a total 

program cost for the OTR, which compares well to the estimated total monetized health 

benefits presented in Section 5. Table 6-3 presents the comparison of estimated total 

program costs with its projected monetized health benefits. 

Table 6-3. Comparison of Estimated Low Sulfur Gasoline Program Costs and 

Monetized Health Benefits for the Mid-Atlantic and Northeast Region. 

Total Low Sulfur Program Costs Monetized Health Benefits 

$143 – $400 million $234 – $1,186 million 

Note: Total costs and benefits estimates are for the OTR plus all of Virginia. 

An estimated reduction in NOx emissions of 57,200 tons in 2017 from low sulfur 

gasoline would be achievable in the OTR and all of Virginia43 at a total program cost in 

the range of $143 – $400 million using the USEPA MSAT and ICCT cost estimates (0.5 

– 1.4 cents per gallon). Total monetized program health benefits in 2017 derived from 

BenMAP are in the range of $234 – $1,186 million, indicating that a program cost within 

the USEPA MATS – ICCT range is within or below the low end of the estimated health 

benefits range. The estimated monetized benefits are based on public health benefits 

solely from lowering exposure to ozone and sulfate PM2.5, and do not include benefits 

from lowering other pollutants or benefits to the environment, such as decreases in acid 

rain and eutrophication. 

This analysis shows that 10 ppm sulfur gasoline could be a very significant and 

cost-effective measure compared to other available NOx control options. The emission 

reductions will be realized immediately upon introduction of the clean gasoline. The 

benefits will accrue within the OTR and across the entire region of the eastern U. S. that 

contributes the pollution burden in the Northeast and Mid-Atlantic region. 

 

43 NOx reductions and gasoline consumption for all of Virginia are included in this comparison to have the 

same geographical coverage as the BenMAP monetized health benefits. 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 7-1

7. PROJECTING THE COST OF ENVIRONMENTAL 

REGULATIONS 

This section highlights past efforts to estimate the economic impact of 

environmental fuel quality regulations and compares predictions to actual experience. 

The focus in this section is on previous USEPA regulatory initiatives that mandated 

reductions in the sulfur content of gasoline and diesel fuel. Three major initiatives are 

summarized in Section 7.1. 

7.1. Previous National Fuel Sulfur Regulations 

7.1.1. “Tier 2” Gasoline Sulfur Regulation (2000) 

With the implementation of the Tier 2 program,44 interim gasoline sulfur 

standards were phased in, beginning in 2004. The final gasoline sulfur standards were set 

at a refinery average of 30 ppm with a per gallon cap at 80 ppm. The initial compliance 

year for large refineries was 2006. Small refiners were given extensions of up to two 

additional years (2007-2008) in certain circumstances. 

7.1.2. Highway Diesel Ultra-Low Sulfur Regulation (2001) 

A refiner sulfur limit of 15 ppm for diesel began on June 1, 2006, with full 

implementation completed by June 1, 2010.45 The regulation allowed for up to 

20 percent of the highway diesel fuel produced to exceed the 15 ppm sulfur cap through 

2009. An averaging, banking, and trading component made it possible for some refiners 

to continue exclusive production of 500 ppm sulfur diesel fuel throughout the interim 

compliance period. 

7.1.3. Non-Road Diesel Ultra-Low Sulfur Regulation (2004) 

Under the non-road diesel rule, fuel sulfur content was phased down in two 

steps.46 Beginning June 2007, refiners were subject to a 500 ppm limit and by June 2010, 

a 15 ppm limit. For the locomotive and marine diesel fuel markets, refiners were given 

an additional two years, to June 2012, before the refinery 15 ppm limit took effect. For 

compliance flexibility, the small refiner deadline for compliance with the 500 pm sulfur 

limit was June 2010, three years after the compliance deadline for larger refiners. 

Similarly, the small refiner deadline for compliance with the 15 ppm sulfur limit was 

June 2014, four years after the compliance deadline for larger refiners. 

 

44 65 Fed. Reg. 6698 ff. February 10, 2000. Tier 2 Motor Vehicle Emission Standards and Gasoline Sulfur 

Control Requirements; Final Rule.

45 66 Fed. Reg. 5002 ff. January 18, 2001. Control of Air Pollution from new Motor Vehicles: Heavy-Duty 

Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Control Requirements; Final Rule.

46 69 Fed. Reg. 38958 ff. June 29, 2004. Control of Emissions of Air Pollution From Non-Road Diesel 

Engines and Fuel; Final Rule.
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 7-2

7.2. Regulatory Flexibilities Offered to Refiners 

The USEPA built significant regulatory flexibilities into these fuel standards to 

ease the regulatory burden on refiners, including: (1) providing several years of lead time 

for all refiners to add or enhance desulfurization capabilities; (2) averaging, banking, and 

trading programs to encourage early compliance where possible and provide means for 

extending compliance dates where needed; (3) provisions for smaller and geographically 

isolated refiners to further extend compliance deadlines and credit generation 

opportunities; (4) opportunities for refiners to integrate their desulfurization infrastructure 

planning processes across all three fuels programs; (5) interim sulfur limits to allow 

refiners to phase their operations into compliance with the final standards; and (6) various 

hardship waiver provisions to provide a means to address unexpected circumstances. 

7.3. Concerns Raised by Petroleum Refining/Marketing Industry 

during Rulemakings 

Because of a common thread running through each of the rules (i.e., requirements 

for substantial desulfurization of major refined products), the petroleum refining and 

marketing industries raised several recurring concerns in their comments on each set of 

USEPA fuel sulfur rulemakings. The following inset paragraphs draw upon industry 

comments and testimony on the USEPA proposals to provide their perspective on the 

previous rulemakings. 

Too Far – The very low sulfur limits as proposed are unnecessarily 

stringent and/or place too much of the burden on the fuels side of the 

equation for achieving the engine standards. The National Petrochemical 

and Refiners Association (NPRA) stated in testimony to the USEPA that a 

50 ppm cap on diesel sulfur would be sufficient to meet the emission 

reduction goals of the highway diesel program and, “unlike the...EPA 

proposal, this level of sulfur reduction is sustainable.”47 For the gasoline 

rulemaking, one commenter to the USEPA recommended a 150 ppm 

average with a 300 ppm maximum, stating that anything lower was not 

feasible for most refiners.48

Too Fast – The lead time is insufficient for refiners to secure financing, 

engineering design expertise, permit approvals, and construction resources 

in order to procure and install the additional desulfurization units 

necessary to meet the stringent limits. As one industry representative 

stated to the USEPA, “Competition among U.S., Canadian and European 

refiners, all trying to reduce sulfur in the same time frame, will be too 

intense to allow everyone access to the new technology, which probably 

will result in everyone scrambling for basically within a one-year time 

frame to achieve the proper place in the feud [sic] to be in compliance 

 

47 Testimony of Robert Slaughter, General Counsel, National Petrochemical and Refiners Association. 

USEPA Public Hearing on Proposed Heavy-duty Engine and Vehicle Standards and Highway Diesel Fuel 

Sulfur Control Requirements, New York City, NY (June 19, 2000). Hearing transcript available at 

http://www.epa.gov/otaq/regs/fuels/diesel/nyctrans.pdf. 

48 USEPA. 1999. Tier 2 Motor Vehicle Emission Standards & Gasoline Sulfur Control Requirements: 

Response to Comments, EPA 420-R-00-024 (December 1999), p. 14-2. 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 7-3

with the timetable which you’ve suggested.”49 In addition, the NPRA 

commented that virtually all of the necessary refinery modifications will 

trigger major New Source Review (NSR) due to increases in nitrogen 

oxides, volatile organic compounds, and particulate matter emissions, 

further complicating the permitting process.50

Fewer Refineries – The very stringent desulfurization requirements will 

force many smaller refineries either to close or to cease making one or 

more of the products subject to the standards. This especially will be the 

case among refineries in the Rocky Mountain States (“PADD IV”)51 that 

tend to be smaller, less technologically sophisticated, and less diverse in 

their product streams, compared to larger refineries. As one industry 

representative stated, “For some refiners, EPA’s proposed regulation will 

be the straw that broke the camel’s back. Facilities will close and jobs 

will be lost.”52 

Fuel Shortages – The closure of refineries, decisions by refiners not to 

produce low sulfur products, and delays in deployment of desulfurization 

technology will reduce the volume of product for sale. The NPRA stated 

that “more than 30 percent of the current supply of highway diesel could 

be lost” in the short term.53 Refiners that choose to remain in the low 

sulfur fuel markets will not have sufficient refining capacity to keep up 

with demand. Because demand will remain high, shortages will result. 

Applying supply and demand principles, prices for low sulfur gasoline and 

diesel will rise considerably. An oil company projected that the supply of 

gasoline would be reduced by 10 to 15 percent as a result of the standards 

and this would increase the cost of gasoline by 10 to 15 cents per gallon.54 

A representative of the Society of Independent Gasoline Marketers of 

America said that if the highway diesel sulfur regulation caused a 

10 percent reduction in supply, something he characterized as “not an 

unreasonable prediction,” then $2 per gallon diesel would become the 

 

49 Testimony of Urvan R. Sternfels, President, National Petrochemical & Refiners Association. USEPA 

Public Hearing on Proposed Tier 2 Motor Vehicle Emissions Standards and Gasoline Sulfur Control 

Requirements, Philadelphia, PA (June 9, 1999). Hearing transcript available at 

http://www.epa.gov/tier2/nprm/t2phila1.txt.

50 USEPA. 1999. Tier 2 Motor Vehicle Emission Standards and Gasoline Sulfur Control Requirements: 

Response to Comments, EPA 420-R-99-024 (December 1999), p. 20-17. 

51 The U.S. Department of Energy divides the United States into regional Petroleum Administration for 

Defense Districts (PADDs) for planning purposes. PADD IV covers the states of Colorado, Idaho, 

Montana, Utah, and Wyoming. 

52 Testimony of J. Louis Frank, President, Marathon Ashland Petroleum LLC. Clean Air Act: Sulfur in the 

Tier 2 Standards for Automobiles, U.S. Senate Committee on Environment and Public Works, 

Subcommittee on Clean Air, Wetlands, Private Property, and Nuclear Safety, 106th Congress, Senate 

Hearing 106-503, Washington, DC (May 18, 1999), p. 16. Available at http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=106_senate_hearings&docid=f:59385.pdf.

53 Testimony of Robert Slaughter, NPRA (footnote 47).

54 USEPA. 1999. Tier 2 Motor Vehicle Emission Standards and Gasoline Sulfur Control Requirements: 

Response to Comments, EPA 40-R-99-04 (December 1999), p. 14-3. 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 7-4

norm.55 At the time this comment was made, the U.S. average price of a 

gallon of diesel was $1.42. 

High Refining Costs – Conventional sulfur removal technology at the 

refinery is costly. New desulfurization technologies, purported by EPA to 

be more cost-effective, are unproven and/or would be unavailable within 

the required timeframe.56 Rather than risk capital on unproven 

technologies, refiners may choose to increase their conventional 

capabilities at a higher cost.57 While some refiners may be able to produce 

15 ppm diesel sulfur fuel, many others would be forced to limit or forego 

participation in the highway diesel market.58 The refining industry was 

viewed as very short on the financial capital necessary to comply with the 

series of new federal regulations mandating certain fuel characteristics, 

including low sulfur.59 The implication was the operating and capital 

costs for refineries that survived the regulatory onslaught would have a 

marked effect on industry-wide profitability. The NPRA characterized the 

economic impacts of the regulations in combination as a “crushing burden 

on refiners and fuel distributors.”60

Table 7-1 summarizes the USEPA and refining industry projections on the cost of 

a gallon of fuel, based on increased refining costs. As illustrated, the USEPA’s refining 

cost projections consistently were lower or at the low end of the range cited by the 

industry. Note that projected fuel price increases due to supply shortages would be in 

addition to the price impacts in Table 7-1. Using the benefit of hindsight, a retrospective 

analysis by the USEPA of the costs of fuel quality regulations after their implementation 

found that both the USEPA and the petroleum industry overestimated the costs of cleaner 

fuels prior to their introduction, with the USEPA estimates typically being closer to 

actual costs.61

 

55 Testimony of Michael Ports, on behalf of the Society of Independent Gasoline Marketers of America. 

Public Hearing: Proposal for Cleaner Heavy Duty Trucks and Buses and Cleaner Diesel Fuel, Atlanta, GA 

(June 22, 2000). Hearing transcript available at http://www.epa.gov/otaq/regs/fuels/diesel/atltrans.pdf. 

56 USEPA. 1999. Tier 2 Motor Vehicle Emission Standards and Gasoline Sulfur Control Requirements: 

Response to Comments, EPA 420-R-99-024 (December 1999), p. 16-4. 

57 Testimony of J. Louis Frank, President, Marathon Ashland Oil Company. USEPA Public Hearing on 

Proposed Tier 2 Motor Vehicle Emissions Standards and Gasoline Sulfur Control Requirements, 

Philadelphia, PA (June 9, 1999). Hearing transcript available at 

http://www.epa.gov/tier2/nprm/t2phila1.pdf. 

58 Testimony of Robert Slaughter, NPRA (footnote 47). 

59 National Petroleum Council. 2000. U.S. Petroleum Refining: Assuring the Adequacy and Affordability of 

Cleaner Fuels (June 2000). 

60 Testimony of Robert Slaughter, NPRA (footnote 47).

61 Anderson, J.F. and T. Sherwood. 2002. Comparison of EPA and Other Estimates of Mobile Source Rule 

Costs to Actual Price Changes, SAE Technical Paper 2002-01-1980. 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 7-5

Table 7-1. Price Impact Estimates on Low Sulfur Fuels (cents per gallon).

Fuel Type USEPA Estimate Industry Estimate 

Gasoline < 2 5 – 15 

Highway Diesel 4.5 – 5 4 – 13 

Non-Road Diesel 7 7 – 9 

7.4. Actual Impact on Numbers and Capacities of Refineries 

The low sulfur gasoline and diesel regulations have had little effect on the 

numbers or capacities of operable refineries nationally or in the Rocky Mountain States 

where refineries were deemed most at risk. Refinery operating capacities continued to 

increase as did the available supply of gasoline and diesel fuel. In 2003, the year before 

any of the new low sulfur fuel standards began to be phased-in, there were 149 operable 

U.S. refineries. Between 2004 and the beginning of 2011, the number of operable 

refineries ranged between 148 and 150, finally ending up at 148; a net reduction of one 

operable refinery.62,63 In the Rocky Mountain States (PADD IV), there was a net gain of 

one refinery (from 16 to 17) between 2000 and 2011. Refining activity in the U.S. 

increased over the same period. Desulfurization capacity increased by 40 percent from 

2000 to 2010, indicating that the refining industry responded positively to the regulatory 

challenge and succeeded in dramatically reducing the sulfur content of fuels. 

PADD IV refiners realized a modest increase in their share of U.S. distillation 

capacity, from 3.3 percent in 2000 to 3.5 percent in 2010. PADD IV refiners increased 

their desulfurization capacities by 55 percent from 2000 to 2010. This suggests that these 

refiners significantly upgraded their operations, choosing to stay in these markets rather 

than withdrawing. 

Refinery closures that have occurred in recent years appear to be due to capacity 

expansions at more efficient refineries and a drop in consumer demand during the 

prolonged economic recession. Refiners also expect that demand will not rise much after 

the economy recovers as a result of higher vehicle fuel economy standards and an 

increase in alternative fuel supplies, such as ethanol.64

 

62 U.S. Energy Information Administration (EIA). 2011. Workbook: U.S. Number of Operable Refineries as 

of January 1 (June 24, 2011). 

63 Operable refineries include those presently in operation and those that are idled but capable of returning 

to production within 30 days or, if down for repairs, within 90 days. Of the 148 operable refineries at the 

beginning of 2011, 11 were idled for unspecified reasons but not considered to be permanently shut down. 

64 New York Times. 2009. Chilly Climate for Oil Refiners (December 23, 2009). 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 7-6

7.5. Refinery Operating Costs and the Price of Gasoline 

As shown in Figure 7-1, refining is a relatively small percentage of the overall 

cost of gasoline. The price of crude oil is the primary determinant of gasoline prices. 

During the 12 year period covered in the graph, refining costs range from 3 percent to 23 

percent of the total price of gasoline and averaged 14 percent. Figure 7-1 suggests that 

the refining component increased as a portion of total gasoline costs during the initial 

ramp-up to meet the federal sulfur requirements, but quickly declined and leveled off at 

pre-regulatory levels. Note that refining represented 10 percent of total price of gasoline 

in both 2001 and 2011. 

Components of US Gas Prices

0.68 0.57 0.59 0.68 0.88

1.26

1.55 1.68

3.08

1.52

1.80

2.45

0.20

0.14 0.21

0.23

0.40

0.41

0.78 0.55

0.13

0.26

0.26

0.42

0.25

0.28 0.18

0.18

0.22

0.18

0.19 0.34

0.45

0.35

0.26

0.40

0.42

0.43 0.42

0.42

0.42

0.44

0.46 0.40

0.40

0.40

0.40

0.40

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

July July July July July July July July July July July June

Regular Gasonline Prices (cents per gallon)

Crude Oil Refining Distribution & Marketing Taxes

$1.55 $1.42 $1.40

$1.51

$1.91

$2.29

$2.98 $2.97

$4.06

$2.53

$2.72

$3.68

Source: EIA, http://www.eia.gov/oog/info/gdu/gaspump.html. 

Figure 7-1. Components of U.S. Gasoline Prices. 

It is difficult to separate out environmental compliance-related desulfurization 

costs from other operating costs. The U.S. Energy Information Administration (EIA) 

does not require a level of reporting detail that would make it easy to separate out such 

costs, and the refining industry has not added desulfurization capacity solely to meet the 

regulatory requirements. At least some, and likely a significant amount, of the 

investment in desulfurization improvements have been made for the dual purposes of 

environmental compliance and enhancing the ability to process increasingly heavier and 

more sour (i.e., higher sulfur) crude. The shift to heavier crudes, such as from oil sands, 

is to provide a more secure crude supply for refineries as conventional supplies of lighter 

crudes diminish.65

 

65 See, for example, (1) BP, Whiting Refinery Facility Fact Sheet, available at 

http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/bp_us_assets/downloads/a/ab

p_wwd_us_whiting_refining_fact_sheet_2012_june.pdf (accessed November 16, 2011); (2) BP, Toledo 

Refinery Facility Fact Sheet, available at 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 7-7

7.6. How Refiners Are Meeting the Low Sulfur Fuel Rules 

Early estimates of the cost of lowering sulfur in transportation fuels were 

principally based on the assumption that refiners would continue to deploy traditional 

conventional technology to achieve compliance. In actual practice, refiners opted for a 

combination of technology and facility efficiency improvements to cost-effectively 

remove the additional sulfur. In addition, refiners were able to generate a surplus of 

credits for compliance with the rules as a result of the flexibility provided by the 

averaging, banking, and trading programs.66,67 

Refiners also made a number of process improvements; some directly involving 

desulfurization technology and others that optimized energy consumption in various 

refinery processes. For example ConocoPhillips Petroleum developed an innovative 

sulfur removal technology known as “S Zorb.”68 These process improvements helped 

offset the cost of investment in new desulfurization equipment and reduced ongoing 

operating costs. In addition, these improvements reduced facility-wide emissions, 

allowing refiners to net out of major New Source Review (NSR) stationary source 

permitting that otherwise may have been required as a consequence of significant process 

modifications. The oil industry has historically used conservative (i.e., high) estimates of 

the predicted costs for complying with federal fuel sulfur standards, but has found 

innovative and less costly ways to achieve these standards. 

7.7. Effect of Low Sulfur Fuel Rules on Product Supply 

Predicted gasoline and diesel fuel supply shortages as a result of past USEPA fuel 

rulemakings have not occurred. The U.S. gasoline supply increased 9.3 percent, 

comparing the year 2000 to the year 2007. Over the same time period, the combined 

supply of 15 ppm sulfur and 500 ppm sulfur diesel fuel increased by 35.4 percent. The 

supply of 15 ppm sulfur diesel fuel increased almost 7,000 percent between 2004 and 

2008, as the regulations took effect and 15 ppm sulfur diesel fuel took its place as the 

standard highway fuel. As expected during this same timeframe, the supply of 500 ppm 

sulfur diesel fuel decreased by 92 percent as this fuel was relegated to the non-road 

market.69

 

http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/A/abp_wwd_us_h

usky_refining_fact_sheet_june_2011v1.pdf (accessed November 16, 2011). 

66 USEPA. 2006. Summary and Analysis of the 2005 Highway and Nonroad Diesel Fuel Pre-Compliance 

Reports, EPA 420-R-06-012 (June 2006). 

67 USEPA. 2010. Summary and Analysis of the 2010 Nonroad Diesel Fuel Pre-Compliance Reports, EPA 

420-R-10-028 (December 2010). 

68 Vander Laan, J. 2004. S Zorb Gasoline Sulfur Removal Technology, Refining Processes 2004, pp.237-

249. Article reprint available at http://www.icheh.com/Files/Posts/Portal1/S-Zorb.pdf (accessed September 

26, 2011). 

69 U.S. Energy Information Administration (EIA). 2011. Petroleum and Other Liquids: Product Supplied, 

(release date July 28, 2011). Available at http://www.eia.gov/dnav/pet/pet_cons_psup_dc_nus_mbbl_a.htm

(accessed September 26, 2011). 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page 8-1

8. CONCLUSION 

The results of this analysis indicate that lowering the sulfur content of gasoline to 

an average of 10 ppm can cost-effectively reduce NOx emissions. Low sulfur gasoline 

could be one of the most significant strategies available to address ground-level ozone 

pollution in the OTR. The projected NOx reductions associated with the Tier 3 / low 

sulfur gasoline proposal would also help mitigate fine particle concentrations, acid rain, 

waterbody eutrophication, and regional haze; all significant challenges in the Northeast 

and Mid-Atlantic region. A key advantage to lowering sulfur in gasoline is that the 

emission reductions will occur immediately and come from all gasoline vehicles 

equipped with catalytic converters, regardless of the vehicle’s model year. As a federal 

requirement, the low sulfur gasoline rule would result in very significant NOx reductions 

across the eastern U.S., thus diminishing the adverse public health and environmental 

outcomes in the OTR related to NOx emissions. 

Given the stringency of existing state controls in the OTR, federal constraints on 

state regulation of motor vehicle fuels, and the fact that the OTR is significantly affected 

by pollution transport from sources outside the region, national emission control 

measures for light-duty vehicles are critical to achieving further improvements in air 

quality. Emission reductions not achieved through this and other federal measures would 

have to be accomplished by further controlling local sources in the OTR. 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page A-1

Appendix A:

Tables of Avoided Incidences and Monetized 

Health Benefits in OTR Jurisdictions 

from Introduction of 10 ppm 

Low Sulfur Gasoline 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page A-2

Appendix A: Tables of Avoided Incidences and Monetized 

Health Benefits in OTR Jurisdictions from Introduction of 

10 ppm Low Sulfur Gasoline 

Table A-1. Summary of 2018 Monetized Health Benefits from Reduced Ozone 

During Ozone Season Due to Low Sulfur Gasoline in OTR Jurisdictions.

State/DC 

Total Value 

of Avoided 

Respiratory 

Endpoints* 

[Millions of 

2006$] 

Mortality (Range 

of 6 Studies) 

[Millions of 

2006$] 

CT $0.95 $9.50 - $43.0

DE $0.31 $2.85 - $13.0

DC $0.14 $1.48 - $6.77

ME $0.26 $2.48 - $11.2

MD $2.08 $20.4 - $93.0

MA $1.54 $15.3 - $68.8

NH $0.26 $3.92 - $11.6

NJ $2.81 $28.8 - $129 

NY $4.15 $39.8 - $178 

PA $3.76 $43.3 - $196 

RI $0.31 $3.24 - $14.7

VT $0.09 $0.84 - $3.84

VA $2.86 $23.6 - $108 

OTR 

Total $19.5 $196 - $877 

Note: This table includes health benefits estimated for all of Virginia. 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States Page A-3

 Table A-2. Summary of the 2018 Annual Number and Monetized Value of Avoided 

Incidences from Reduced PM2.5 Due to 

Low Sulfur Gasoline in OTR Jurisdictions.

 OTR Total 

 Incidences 

Value [Millions of 

2006$] 

Mortality (Adults ages 30 and older) 2.6 - 38.6 14.6 - 285 

Mortality (Infants less than 1 year of age) 0.036 0.263 

Chronic Bronchitis (Adults aged 27 and older) 8.3 3.3 

Acute Bronchitis (Children, ages 8-12) 16.9 0.0012 

Acute Myocardial Infarctions (Adults ages 18 

and older) 3.3 0.350 

Hospital Admissions - Respiratory 0.0085 

Hospital Admissions, Chronic Lung 

Disease (Adults ages 65 and older) 0.14 - 0.22 

Hospital Admissions, Chronic Lung 

Disease (Adults ages 18 to 64) 0.087 

Hospital Admissions, Pneumonia 

(Adults ages 65 and older) 0.59 

Hospital Admissions, Asthma (Ages 

64 and younger) 0.32 

Hospital Admissions - Cardiovascular 0.0369 

Hospital Admissions, Ischemic Heart 

Disease (Adults ages 65 and older) 0.21 

Hospital Admissions, Dysrythmia 

(Adults ages 65 and older) 0.15 

Hospital Admissions, Congestive 

Heart Failure (Adults ages 65 and 

older) 

0.58 

Hospital Admissions, All 

Cardiovascular not including 

Myocardial Infarction (Adults ages 65 

and older) 

0.88 

Hospital Admissions, All 

Cardiovascular not including 

Myocardial Infarction (Adults ages 18 

to 64) 

0.45 

Emergency Room Visits, Asthma (Children 

17 years and younger) 3.0 0.0011 

Asthma Exacerbation Symptoms, Cough, 

Wheeze, Shortness of Breath (Asthmatic 

children, 6-18) 

48.0 0.0024 

Lower Respiratory Symptoms (Children ages 

7 to 14) 53.1 0.0010 

Upper Respiratory Symptoms (Children ages 

9 to 11) 40.1 0.0012 

Work Loss Days (Adults ages 18 to 64) 382 0.0638 

Acute Respiratory Symptoms, Minor 

Restricted Activity Days (Adults ages 18 to 

64) 

2274 0.135 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States 

Table A-3. Summary of Avoided Incidences During Ozone Season in 2018 from Reduced Ozon

Low Sulfur Gasoline in OTR Jurisdictions.

State/DC 

ER Visits, 

Asthma 

Hospital 

Admissions, All 

Respiratory 

Endpoints, >64 

Years and <2 

Years 

School Loss 

Days 

Loss of Income 

Due to 

Decreased 

Worker 

Productivity 

Minor 

Restricted 

Activity 

Days, 18-

64 

Morta

(Range 

Studi

CT 4.5 12.7 2,257 36,240 7,859 1.2 - 

DE 1.3 4.8 697 22,272 2,323 0.4 - 

DC 0.7 1.9 364 1,808 1,260 0.2 - 

ME 0.9 2.4 441 53,446 1,731 0.5 - 

MD 11.4 20.6 5,582 86,652 18,411 2.7 - 

MA 7.5 18.1 3,700 64,725 13,049 2.1 - 

NH 1.2 2.5 612 20,669 2,228 0.3 - 

NJ 16.3 33.0 7,297 88,708 24,333 3.9 - 

NY 29.2 45.8 10,559 173,258 36,522 5.4 - 

PA 17.1 51.1 8,496 234,759 29,512 5.8 - 

RI 1.5 3.7 700 18,655 2,591 0.4 - 

VT 0.3 0.8 160 17,301 651 0.1 - 

VA 12.3 43.3 6,684 156,678 220,243 3.2 - 

OTR Total 104.2 241 47,549 975,171 360,713 26.2 - 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States 

Table A-4. Summary of 2018 Annual Avoided Incidences from Reduced PM2.5 Due to 

Low Sulfur Gasoline in OTR Jurisdictions.

CT DE DC ME MD MA NH NJ NY PA 

Mortality (Adults ages 30 and older) 

0.17 - 

1.5 

0.044 

- 0.39 

0.002 

- 0.29 

0.06 - 

0.56 

0.78 - 

3.0 

0.16 - 

3.7 

0.04 - 

0.62 

0.2 - 

5.6 

0.38 - 

12.7 

0.4 - 

7.0 

Mortality (Infants less than 1 year of age) 0.001 0.001 0.001 0.000 0.004 0.002 0.000 0.005 0.013 0.006 Chronic Bronchitis (Adults aged 27 and older) 

0.3 0.1 0.1 0.1 0.6 0.8 0.1 1.2 3.0 1.2 

Acute Bronchitis (Children, ages 8-12) 0.6 0.2 0.1 0.1 1.4 1.6 0.3 2.5 6.2 2.4 Acute Myocardial Infarctions (Adults ages 18 and older) 

0.2 0.0 0.0 0.1 0.2 0.3 0.1 0.5 1.0 0.6 

Hospital Admissions - Respiratory 

Hospital Admissions, Chronic Lung Disease (Adults ages 65 and older) 

0.008 - 0.0051 0.0019 - 0.003 0.0012 - 0.0018 0.0019 - 0.003 0.0107 - 0.0168 0.0143 - 0.0224 0.0022 - 0.0034 0.0196 - 0.0307 0.0443 - 0.0695 0.0217 - 0.0341 

Hospital Admissions, Chronic Lung Disease (Adults ages 18 to 64) 

0.004 0.001 0.001 0.001 0.007 0.009 0.001 0.011 0.025 0.015 

Hospital Admissions, Pneumonia (Adults ages 65 and older) 

0.03 0.01 0.00 0.01 0.03 0.06 0.01 0.08 0.17 0.12 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States 

CT DE DC ME MD MA NH NJ NY PA 

Hospital Admissions, Asthma (Ages 64 and younger) 

0.01 0.00 0.00 0.00 0.02 0.02 0.00 0.04 0.15 0.04 

Hospital Admissions - Cardiovascular 

Hospital Admissions, Ischemic Heart Disease (Adults ages 65 and older) 

0.01 0.00 0.00 0.00 0.01 0.02 0.00 0.03 0.08 0.04 

Hospital Admissions, Dysrythmia (Adults ages 65 and older) 

0.01 0.00 0.00 0.00 0.01 0.01 0.00 0.02 0.05 0.03 

Hospital Admissions, Congestive Heart Failure (Adults ages 65 and older) 

0.02 0.01 0.00 0.01 0.04 0.06 0.01 0.09 0.19 0.10 

Hospital Admissions, All Cardiovascular not including Myocardial Infarction (Adults ages 65 and older) 

0.04 0.01 0.01 0.01 0.06 0.08 0.01 0.13 0.30 0.16 

Hospital Admissions, All Cardiovascular not including 

0.02 0.01 0.00 0.00 0.03 0.03 0.00 0.06 0.16 0.08 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States 

CT DE DC ME MD MA NH NJ NY PA 

Myocardial Infarction (Adults ages 18 to 64) 

Emergency Room Visits, Asthma (Children 17 years and younger) 

0.1 0.0 0.0 0.0 0.3 0.2 0.0 0.4 1.4 0.3 

Asthma Exacerbation Symptoms, Cough, Wheeze, Shortness of Breath (Asthmatic children, 6-18) 

1.7 0.5 0.3 0.5 3.9 4.5 0.7 7.2 17.7 6.8 

Lower Respiratory Symptoms (Children ages 7 to 14) 

1.9 0.5 0.4 0.6 4.3 5.0 0.8 8.0 19.5 7.6 

Upper Respiratory Symptoms (Children ages 9 to 11) 

1.4 0.4 0.3 0.4 3.3 3.7 0.6 6.0 14.7 5.7 

Work Loss Days (Adults ages 18 to 64) 14 4 3 4 29 37 6 56 142 53 Acute Respiratory Symptoms, Minor Restricted Activity Days (Adults ages 18 to 64) 

82 21 16 26 175 222 36 333 847 319 
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States 

 Table A-5. Monetized Value in 2018 of Annual Avoided Morbidity and Mortality from Reduced PM2.5 

Gasoline in OTR Jurisdictions [Millions of 2006$].

 CT DE DC ME MD MA NH NJ NY PA 

Mortality (Adults ages 30 and older) 

1.28 - 

11 

0.32 - 

2.9 

0.004 - 

2.1 

0.47 - 

4.1 

1.39 - 

22 

1.15 - 

27 

0.32 - 

4.6 

1.6 - 

41 

2.8 - 

94 

3.1 - 

52 

Mortality (Infants less than 1 year of age) 0.007 0.004 0.003 0.003 0.026 0.015 0.003 0.035 0.096 0.043 Chronic Bronchitis (Adults aged 27 and older) 0.12 0.03 0.02 0.04 0.25 0.32 0.05 0.47 1.20 0.48 Acute Bronchitis (Children, ages 8-12) 0.0000 0.0000 0.0000 0.0000 0.0001 0.0001 0.0000 0.0002 0.0004 0.000Acute Myocardial Infarctions (Adults ages 18 and older) 0.017 0.004 0.002 0.007 0.023 0.035 0.006 0.048 0.104 0.069 Hospital Admissions - Respiratory 0.0003 0.0001 0.0001 0.0001 0.0006 0.0008 0.0001 0.0012 0.0031 0.001Hospital Admissions - Cardiovascular 0.0016 0.0004 0.0003 0.0004 0.0026 0.0031 0.0004 0.0055 0.0128 0.006Emergency Room Visits, Asthma (Children 17 years and younger) 0.0000 0.0000 0.0000 0.0000 0.0001 0.0001 0.0000 0.0001 0.0005 0.000Asthma Exacerbation Symptoms, Cough, Wheeze, Shortness of Breath (Asthmatic children, 6-18) 0.0001 0.0000 0.0000 0.0000 0.0002 0.0002 0.0000 0.0004 0.0009 0.000Lower Respiratory Symptoms (Children ages 7 to 14) 0.0000 0.0000 0.0000 0.0000 0.0001 0.0001 0.0000 0.0001 0.0004 0.000Upper Respiratory Symptoms (Children ages 9 to 11) 0.0000 0.0000 0.0000 0.0000 0.0001 0.0001 0.0000 0.0002 0.0005 0.000Work Loss Days (Adults ages 18 to 64) 0.0025 0.0005 0.0005 0.0006 0.0051 0.0066 0.0009 0.0103 0.0238 0.007
 Assessment of Clean Gasoline in the Northeast and Mid-Atlantic States 

 CT DE DC ME MD MA NH NJ NY PA 

Acute Respiratory Symptoms, Minor Restricted Activity Days (Adults ages 18 to 64) 0.005 0.001 0.001 0.002 0.010 0.013 0.002 0.020 0.050 0.019