Testimony of Dr. Loren Beard
Before the Subcommittee on Clean Air, Wetlands, Private Property and Nuclear Safety
of the Committee on Environment and Public Works
May 18, 1999

My name is Dr. Loren Beard and I am the Senior Manager of Materials and Fuels at DaimlerChrysler. I am here representing the Alliance of Automobile Manufacturers and its member companies regarding the nation's need for clean burning fuel. I want to thank the Members of the Subcommittee for inviting me here today to give the Auto Industry's perspective on the sulfur standard for gasoline contained in the proposed Tier Two standard for automobiles.

The auto industry agrees in principle with the clean air goals of the EPA's proposed rule governing the next round of new vehicle and fuel standards (Tier 2).

We agree that the American people, in all 50 states, want and deserve clean air. However, we are certain that we cannot meet these goals unless clean fuels are widely available to ensure the performance potential of new vehicle hardware is realized. If the nation is to achieve its clean air goals, it needs to apply all of the available tools, including some as yet unproven vehicle technology. We are committed to providing the cleanest running vehicles in the world. However, if exposed to the gasoline sulfur levels found in the U.S. market today, or even to the 30 ppm sulfur levels proposed by EPA, consumers will have wasted their investment in new technology, which will be rapidly, and irreversibly rendered ineffective. While we are committed to developing new, yet unproven vehicle technologies for clean air, we need a partner in the oil industry to apply proven, available, cost-effective technology to reduce sulfur in gasoline to 5 ppm max. We have arrived at a stage of automotive emissions control technology where every available resource must be applied.

EPA's proposed 30 ppm max. sulfur standard would reduce ozone precursors by 160% more than API's proposal. Going to a 5 ppm cap on sulfur would result in 250% more reductions than the API proposal. (Slide 1)

The rest of the world has recognized the serious problem of exhaust catalyst poisoning by sulfur, and has taken steps to reduce sulfur levels. The United States lags well behind the rest of the developed world, and even some nations in the developing world in controlling gasoline sulfur levels. (Slide 2)

As this slide shows (slide 3) the price of a gallon of gasoline is dominated by the cost of crude oil and taxes. The cost to the consumer for the sulfur reductions proposed by the auto industry will be small compared to the normal variations in gasoline retail prices in gasoline at the pump.

In the United Kingdom, Sweden and Finland, the governments offered small incentives to refiners for the early introduction of ultra-low sulfur gasoline and diesel fuel. Refiners rushed to take advantage of the incentives, and in the case of the U.K., virtually all fuel in the country moved to low sulfur in a period of about six months. Clearly, the cost of removing sulfur cannot have been higher than the small incentives offered, or refiners would not have moved so quickly, in fact, five years ahead of regulation. The rest of Europe is rapidly using this approach. If we do not move quickly to very low sulfur fuels, North America will become the natural dumping ground for high sulfur fuels, which will become economically non-viable in the rest of the developed world.

Sulfur is a known permanent poison to the platinum and palladium-based exhaust catalysts used in automotive emissions systems. Simply put, sulfur is the lead of the nineties.

With very stringent emissions standards, catalysts must operate at 98-99% efficiency for all driving cycles. As this slide (slide 4) shows, even the reduction in catalyst efficiency caused by an increase in gasoline sulfur from 5 ppm to 30 ppm can lead to a doubling in exhaust emissions. EPA has set the course with very low NOx standards in Tier 2, and NOx emissions are the most sensitive to fuel sulfur.

Some may argue that many U. S. states (mostly in the west) already enjoy clean air, and don't need low sulfur gasoline to protect their environment.

The auto industry has noted that the people in these states see clean air as a valuable asset. With its voluntary National Low Emissions Vehicle (NLEV) program, the auto industry has voluntarily agreed to provide the same clean-running vehicles to all fifty states that we currently sell in California. Commitments to even tighter national standards demand that sulfur-free gasoline be in place.

Under the new National Ambient Air Quality Standards (NAAQS) standards for ozone and particulate matter (PM), 43 U.S. states are projected to have areas which are not in compliance with national clean air goals. (slide 5) These states will be required under the Clean Air Act to take some action to reduce emissions. In addition to the new clean-running vehicles provided by the auto industry, these states will find that low sulfur gasoline is a cost-effective means of achieving these goals.

Aside from compliance with the ozone and PM standards, several of the remaining 7 states will be called upon to reduce regional haze under other Clean Air Act provisions. While power generation stations and natural sources are the prime sources of emissions that eventually result in haze. Taking the sulfur out of fuel will be a great benefit to states that must institute programs to reduce haze.

Through their Partnership for the Next Generation of Vehicles (PNGV), the U.S. auto industry is working together with the Federal Government to develop more fuel efficient vehicle technologies in part to help reduce the nation's reliance on imported oil and to address global climate issues.

New fuel-efficient technologies include direct-injection gasoline engines and gasoline-fueled fuel cells. Advanced technology vehicles are extremely sensitive to sulfur contamination. The failure to control sulfur in gasoline will inhibit the introduction of more fuel-efficient technologies, delaying the auto industry's efforts to reduce greenhouse gas emissions. In essence, reducing the level of sulfur in gasoline will not only benefit our environment now, but it will facilitate a transition to cleaner future technologies that will hero address

Local climate issues

In summary, sulfur is a poison that eventually renders emissions control equipment ineffective. The auto industry has committed through a proposal to EPA to work to reach extremely low emissions levels. To get there, we need to use all of the vehicle hardware tools available, some of which have not yet been invented. This includes a commitment from the oil refiners to step up to the challenge with very clean sulfur-free fuels, using available, proven, cost-effective refining technologies. With all the right tools in place, vehicle owners will use, and not waste, the investment they have made in emissions control hardware and all citizens will benefit from cleaner air.

This concludes my prepared statement. I would be happy to answer any questions that you may have.