Diesel Sulfur Panel Draws Controversy

A new panel convened by the Bush administration is revisiting Clean Air Act standards that limit the amount of sulfur — a naturally occurring chemical that contributes to smog — in diesel fuel.

The diesel rule, approved in the last days of the Clinton administration by the U.S. Environmental Protection Agency (EPA), Washington, D.C., states that diesel sulfur must be cut from the current 350 parts per million (ppm) to 15 ppm in the next five years.

The panel, which includes automakers, oil refiners, environmental groups and other experts who will examine a current rule requiring a 20-fold reduction in diesel sulfur by 2006, is drawing more controversy to the president's already disputed energy agenda.

While some environmental organizations applaud the rule, the oil industry sees it as costly and drastic. The auto industry has made continued efforts to offer cleaner diesel technology, but oil refiners contend that the reductions would require multi-billion-dollar technological upgrades. Refiners have argued that many companies will be forced out of business if they cannot afford the upgrades, possibly leading to fuel shortages and higher fuel costs for consumers.

“It's going to be very expensive and thus uneconomic for some refineries to [reduce diesel sulfur],” says Edward Murphy, director of downstream activities for the American Petroleum Institute, Washington, D.C. “Our concern is that those refineries are not going to make those investments, and the supply — the amount of diesel fuel supplied to market — will be adversely affected. We are likely to see a reduction in the amount of diesel supply as a result of the rule.”

But some environmental groups are countering that this is just the latest in a string of EPA initiatives designed to weaken existing environmental rules. The panel is a “sop to the oil industry,” says Frank O'Donnell, executive director for the Clean Air Trust, Washington, D.C. “It gives them another forum to oppose the rule, drag it out and argue that it should be changed.”

The Clean Air Trust argues that several new lower-cost methods have been developed to remove sulfur from diesel fuel. For example, a new process by SulphCo Inc., Reno, Nev., could remove the sulfur for 2.5 cents per gallon — “half of the cost estimated by the EPA and far below the even higher costs projected by the doomsday-sayers in the oil industry,” O'Donnell says.

The waste hauling industry may be affected by this review, especially if complying with diesel sulfur regulations raises fuel prices. “This is only the tip of the iceberg for diesel,” says one waste industry insider, who also points to possible controls on particulate matter and air pollution that are expected to come down the pike.

Some waste industry giants already are taking a proactive step to running on cleaner fuels. In May, Waste Management Inc., Houston, won a Clean Cities National Partner Award from the U.S. Department of Energy (DOE), Washington, D.C., for switching from diesel to liquefied natural gas-powered garbage trucks in El Cajon, Calif. The air emission credits the company gained through the reductions were purchased by PG&E Corp., San Francisco, to build a power plant outside of San Diego.

Although no specific date has been set, the panel likely will convene early next year.