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National Energy Policy: Crude Oil and Refined Petroleum Products.
Subcommittee on Energy and Air Quality
Mr. Richard Kassal
I. Introduction Mr. Chairman and members of the Committee, thank you for the opportunity to testify today. At NRDC,[1] we believe strongly that the nation needs a balanced energy policy that meets a series of equally important energy, public health protection and environmental quality goals. Towards that end, I will limit my oral comments to a discussion of the Environmental Protection Agency's recent step to insure that America's future freight needs are met in a way that minimizes environmental and public health impacts, and that ensures that diesel fuel supplies remain adequate and protected from price and/or supply spikes.[2] Other issues-including power plant emissions, new source review, and our response to President Bush's reversal on carbon dioxide-are summarized in NRDC's March 21, 2001 testimony before the Senate Subcommittee on Clean Air, Wetlands, Private Property and Nuclear Safety, attached hereto and incorporated herein as Attachment 1; environmental issues related to natural gas exploration, development and production from submerged federal lands on the Outer Continental Shelf (OCS) are summarized in NRDC's March 15, 2001 testimony before the House Subcommittee on Energy and Mineral Resources, attached hereto and incorporated herein as Attachment 2.
II. Background: Energy Policy in the 21st Century At the dawn of a new century, America finds itself once again grappling with a chronic problem-how to provide enough energy for its growing population and its growing economy. The United States has 5 percent of the world's population, but consumes nearly a quarter of the world's energy supply. We use energy to heat our homes and our businesses, power our computers and telephone systems, run our automobiles and aircraft, drive our manufacturing plants and hospitals, and deliver every good we use. In short, we have constructed an economy and a way of life that depends on the ready availability of energy.
Two distinct visions of an energy policy for the United States have emerged to meet these demands. One vision focuses chiefly on extracting as much energy as possible, mostly in fossil fuel form (oil, coal and natural gas), in hopes that supply can catch up with demand. The alternative vision, however, calls for encouraging innovation and new technology to meet our energy needs in an environmentally responsible manner. This vision emphasizes efficient use of energy, places priority on using energy resources that are least damaging to our environment, and strives to minimize the environmental and public health harms of the extractive resources we consume. It promotes economic growth and American industrial competitiveness. This energy path would not force consumers to make sacrifices. Instead it relies on improved technologies that will eliminate waste while increasing productivity and comfort. NRDC believes that U.S. energy policy must follow this alternative path. America can and must rely on the application of technological advances already in place and readily available as a way to reduce consumption and/or minimize environmental and public health impacts. Such an approach will decrease America's reliance on foreign sources of energy in the near- and long-term, protect the environment and the public's health, provide for America's energy needs, and buffer the economy against short-term swings in the market. NRDC's recently published report, A Responsible Energy Policy for the 21st Century examines these issues in detail. The executive summary is attached hereto and incorporated herein as Attachment 3. III. Cleaner trucks are critical to ensuring clean, reliable goods movement in the 21st Century Diesel trucks provide the backbone of America's freight movement, yet diesel pollution has been one of America's enduring pollution problems-with impacts that are far greater than the size of the vehicle population would suggest. Diesel trucks comprise roughly 7 percent of the nation's vehicles, but their impact is far greater. More than 40 percent of the nation's transportation energy use comes from the nation's diesel trucks and buses, equivalent to more than 5,000,000 barrels of crude oil per day.[3] More than half of the particulate matter found in some urban areas come from diesel tailpipes-soot particles that have been linked to increased asthma attacks, cancer and even premature death. Roughly one-third of the transportation-related smog- and acid rain-causing nitrogen oxides come from diesel tailpipes. Recently, EPA Administrator Christine T. Whitman reaffirmed the agency's commitment to cleaning up these trucks-thereby helping to assure them a responsible place in America's energy future. This commitment came in the form of a complex, thorough rule making that will bring about the most significant improvement in the environmental performance of the nation's vehicles since the removal of lead from gasoline two decades ago. EPA's Diesel Rule was supported by more than 75,000 Americans who provided written comments to EPA, and by an extremely diverse coalition of supporters that included the Alliance of Automobile Manufacturers, the California Trucking Association, International (formerly Navistar), Tosco, BP, the Manufacturers of Emission Controls Association, the American Lung Association, the U.S. Public Interest Research Group (USPIRG), the Union of Concerned Scientists, the Clean Air Network, the Clean Air Trust and others. Briefly, EPA's Diesel Rule will do the following: Starting in mid-2006, 97 percent of the sulfur in diesel fuel would be eliminated, in a four-year phase-in that provides substantial flexibility for refiners, special allowances to help small refiners, and significant flexibility for vehicle and engine manufacturers. With sulfur largely eliminated, drastic emissions reductions will be possible, using advanced emission controls that cannot be used with today's high-sulfur diesel fuel. Starting with the 2007 model year, soot particles from new diesel engines will be slashed by 90 percent. By the end of the decade, tailpipe emissions of smog-forming nitrogen oxides (NOx) would be cut by 95 percent. As a result, diesel vehicles will achieve gasoline-like emissions levels. These emission reductions will be huge-equivalent to removing the pollution from 13 million of today's 14 million trucks from the roads. When fully implemented, the Diesel Rule will result in the elimination of 2.6 million tons/year of NOx, 115,000 tons/year of non-methane hydrocarbons, and 109,000 tons/year of particulates. This will avoid 8,300 premature deaths, more than 23,000 cases of acute or chronic bronchitis, 360,000 asthma attacks and other avoidable health impacts annually.[4] There are three keys to the successful implementation of EPA's Diesel Rule. First, the desulfurization of today's high-sulfur diesel fuel is necessary to achieve the predicted health and emissions benefits. Just as a small amount of lead in gasoline disables automobile catalytic converters, even a small amount of diesel sulfur will disable the most promising emission controls for nitrogen oxides and will make the soot controls less effective. In other words, a smaller, compromised sulfur cut (as has been suggested by the oil industry) would render the EPA's proposed PM and NOx targets unachievable. Second, the Diesel Rule's substantial flexibility and lead-time will be critical to the success of the Diesel Rule. Various implementation options are available on a region-by-region basis to ensure that there is widespread, national availability and supply of the low-sulfur diesel fuel from the beginning of the program. However, these options are designed (e.g., a percentage of higher-sulfur fuel will be allowed from 2006-2009 in each regional petroleum district, intra-district trading will be allowed, etc.) to provide important implementation flexibility to small and other refiners who need it during the first four years of the program. This will provide the widespread fuel availability that is critical to every truck operator. Also, this approach (including a four-year phase-in of the NOx standard) will provide engine and vehicle manufacturers with adequate lead time to efficiently phase-in the exhaust emission control technology that will be used to achieve the health benefits of the new standards.[5] Third, although some individual firms will bear significant costs to upgrade old refining infrastructure, the costs are extremely reasonable to society as a whole. EPA estimates that the Diesel Rule will increase the cost of a new truck or bus by about one percent or less, and that diesel fuel costs might increase by five cents per gallon. Indeed, BP and Tosco have each announced that they will be selling 15 ppm diesel fuel next year at comparable cost, completely undercutting the excessive claims of other oil industry commenters. In sum, EPA estimates that the benefits outweigh the costs by sixteen to one.[6] It is worth noting that even these cost estimates are likely to be high-the past three decades of environmental regulations are filled with examples of air pollution regulations that did not cost nearly as much as industry advocates had previously estimated. IV. Further Details on the Health Threat of Diesel Emissions More than fifty studies show links between particulate matter generally and a wide range of health impacts, including increased asthma attacks and emergencies, endocrine disruption, [7] numerous cardiopulmonary ailments, cancer and premature death.[8] Nitrogen oxides contribute to ground-level ozone formation, acid deposition, nutrient pollution of waterways, and secondary (i.e., atmospheric) formation of particulate matter. While numerous studies have concluded that the particulate matter and nitrogen oxide emissions in diesel exhaust are harmful to human health, NRDC is increasingly concerned about the growing evidence that diesel particulates are associated with increased cancer risk. Diesel exhaust has long been considered to be at least a probable human carcinogen by the National Institute of Occupational Safety and Health (NIOSH) and the World Health Organization's International Agency for Research on Cancer (IARC). In the past two years, three actions by various government bodies moved the nation further along this path: In July, EPA staff reiterated its prior conclusion that diesel exhaust is a likely human carcinogen, based on compelling epidemiological studies.[9] We expect the Clean Air Scientific Advisory Committee to finalize its work on this document at its October meeting. In August 1998, the California Air Resources Board (CARB) formally declared diesel particulate exhaust to be a toxic air contaminant.[10] And in December 1998, the National Toxicology Program advisory board recommended that diesel exhaust particulates be listed as "reasonably anticipated to be a human carcinogen" in the ninth edition of the Congressionally-mandated Report on Carcinogens.[11] Diesel's link to cancer results in thousands of avoidable cancers nationwide. The association of the nation's state, territorial and local air pollution officials estimates that current levels of diesel pollution result in over 125,000 potential lifetime cancers nationwide, based on their extrapolation of the MATES-II study.[12] NRDC is also especially concerned about the growing incidence of asthma in our nation, as well as the association between diesel particulate matter and asthma attacks. A recent study estimated that asthma cases would double by 2020, hitting one out of every five American families. [13] Nobody knows what causes asthma, but numerous studies have found associations between pollution (i.e., both ozone and particulate levels) and acute respiratory symptoms, including asthma attacks and hospitalizations.[14] V. Why the Oil Industry Counter-Proposal Didn't Work Throughout the comment period, various oil industry representatives suggested a counter-proposal of 50 ppm. NRDC continues to view this approach as completely unworkable. At a sulfur level of 50 ppm, PM traps are likely to suffer high failure rates, leaving oxidation catalysts that yield only a 20 percent PM reduction[15] as the most likely PM after-treatment technology. While some PM traps (including the most promising continuously regenerating traps) can operate at 50 ppm, trap clogging and failure is a serious problem at this level, due to the formation of sulfate PM. Fuel economy also suffers, as a result of increased regeneration needs. As a result, it would be difficult-if not impossible-for engine, aftertreatment and/or vehicle manufacturers and/or sellers to warrant such a trap for the full useful life of the vehicle, and fuel economy-sensitive vehicle users might not welcome the technology. Consequently, if EPA had adopted a 50 ppm sulfur cap, manufacturers and sellers would be likely to opt for the less effective oxidation catalyst, rendering the proposed 0.01 g/bhp-hr PM standard unachievable. Likewise, under a higher-sulfur approach, engine manufacturers and vehicle sellers would likely opt for selective catalytic reduction (SCR) as their preferred NOx after-treatment because it is less sulfur-sensitive than NOx adsorbers and other NOx after-treatment technologies that are in development. NOx adsorber efficiencies are dramatically reduced when sulfur contacts the NOx storage bed. Perhaps for this reason, the Manufacturers of Emission Controls Association has testified that industry efforts to develop an effective NOx adsorber would cease if EPA had chosen a 50 ppm cap.[16] While SCR seems capable of significant emission reductions, it also requires the development of a nationwide urea infrastructure that would cost billions of dollars to install, operate and maintain. As with oxidation catalysts, it seems unlikely that the NOx standard would be achievable with an SCR-only strategy.[17] It is worth reiterating that the oil industry's preferred 50 ppm sulfur limit would have had a negative effect on the fuel economy of the nation's trucks and buses-hardly an issue for the industry that sells the fuel. For example, NOx adsorbers are expected to consume diesel fuel as they cleanse themselves of stored sulfates. As noted above, PM trap regeneration is inhibited by diesel fuel's sulfur-leading to increased PM loading, increased exhaust backpressure, and decreased fuel economy.[18] In other words, the higher the sulfur cap, the lower the fuel economy. Conclusion With a new century, a new President and a new Congress, our nation stands at a historic moment, and we face a historic opportunity to develop an energy policy that can meet many critical needs. Innovative technologies and policies allow us to finally move away from an energy policy that is focused primarily on increasing supply, and towards an energy policy that meets our energy needs while simultaneously meeting our environmental and public health needs. Further, we finally have the technology to clean up many of our most polluting energy sources. The Diesel Rule is just one example of such a case. At NRDC, we are excited about the possibilities for the alternative path discussed at the outset of this testimony. We look forward to working with the Committee and all interested parties towards such a successful energy policy for the nation. Thank you again for the opportunity to testify today. For further information, please do not hesitate to contact Richard Kassel at (212) 727-4454 or at <rkassel@nrdc.org>.
[1] The Natural Resources Defense Council (NRDC) is a national, non-profit environmental advocacy organization. Founded in 1970, NRDC has over 400,000 members nationwide, and offices in Washington, DC, New York City, Los Angeles and San Francisco. [2] Control of Air Pollution from New Motor Vehicles: Heavy-Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Requirements, 66 Federal Register 5002 et seq. (January 18, 2001) (hereafter, the "Diesel Rule"). [3] Oak Ridge National Laboratory, U.S. Department of Energy, Transportation Energy Data Book, October 2000, p. 2-7. [4]Statement of EPA Administrator Christine T. Whitman, February 28, 2001. See also 66 Federal Register 5002 (January 18, 2001). [5] One other point is worth noting. By requiring that all highway diesel fuel produced by refiners or imported to begin meeting the new sulfur standard by April 1, 2006, and all highway diesel fuel at the terminal level begin meeting the new sulfur standard by May 1, 2006, EPA is providing adequate lead time to ensure that all highway diesel fuel users can buy the low-sulfur diesel fuel by June 1, 2006 and is providing a clear and useful road map to implementing the sulfur limits in a manner that avoids market disruptions that could occur if only a retail compliance date were provided. [6] See footnote 4. [7] Endocrine/Estrogen Letter, June 2, 2000, p. 6. Researchers at the Science University of Tokyo found testicular abnormalities in male mice that inhaled diesel exhaust. [8] NRDC, Exhausted by Diesel, Third edition, May 1999, pp. 5, 8. [9] U.S. EPA, Office of Research and Development, Health Assessment Document for Diesel Emissions, EPA/600/8-90/057E, July 2000, SAB Review Draft. [10] California Air Resources Board, Resolution 98-35 (listing of diesel particulate as a toxic air contaminant), adopted August 27, 1998. [11] See <http://www. dieselnet.com/news/9812ntp.html> [12] State and Territorial Air Pollution Program Administrators/Association of Local Air Pollution Control Officials (STAPPA/ALAPCO), Cancer Risk from Diesel Particulate: National and Metropolitan Area Estimates for the United States, March 2000. This report was based on calculations of cancer risk first published in South Coast Air Quality Management District, Multiple Air Toxics Exposure Study (MATES-II), Draft Final Report, November 1999. [13] Pew Environmental Health Commission, Attack Asthma: Why America Needs a Public Health Defense System to Battle Environmental Threats, May 2000. [14] Regarding ozone associations, see, e.g., Gilmour MI, "Interaction of air pollutants and pulmonary allergic responses in experimental animals," Toxicology 1995 Dec 28; 105(2-3): 335-42; regarding PM associations, see, e.g., Nel AE, Diaz-Sanchez D, Ng D, Hiura T, Saxon A, "Enhancement of allergic inflammation by the interaction of diesel exhaust particles and the immune system," J Allergy Clin Immunol 1998 Oct; 102 (4 Pt 1): 539-54. [15] Statement by EPA Office of Transportation and Air Quality (OTAQ) Director Margo T. Oge, June 19, 2000, at EPA' hearing on the Diesel Rule, pp. 53, 55. [16] Testimony of Bruce Bertelson, Manufacturers of Emissions Control Association, June 19, 2000, as reported in the transcript of EPA's New York hearing on the Diesel Rule, June 2000, p. 56. [17] EPA OTAQ Director Oge noted that EPA estimated that a 50 ppm sulfur limit would yield NOx reductions of 20 percent, presumably because of the perceived limits of SCR technology. See footnote 15 above. [18] Memorandum from former EPA Official Michael P. Walsh to Interested Parties, May 17, 2000, p. 10.
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