4.2. Refueling Emission Regulations for Light Duty Vehicles and Trucks and Heavy Duty Vehicles
The Final Regulatory Impact Analysis: Refueling Emission Regulations for Light-Duty Vehicles and Trucks and Heavy Duty Vehicles
deals with the issue of onboard refueling vapor recovery (ORVR) systems. These systems capture the volatile organic compounds (VOCs) released from gasoline during refueling of vehicles. Three sets of regulations already exist to control refueling emissions and the proposed regulation interacts with them. Stage II controls on gasoline dispensers are required in nearly all non-attainment areas. Enhanced evaporative emission controls are required on new vehicles. Finally, there are restrictions on the volatility of gasoline. The document acknowledges these pre-existing regulations and considers permutations with respect to Stage II controls as alternatives. Additionally, ORVR controls are analyzed separately for different classes of vehicles: light-duty vehicles (LDVs), commonly known as cars; light-duty trucks (LDTs); and heavy-duty trucks (HDTs).
The document presents policy alternatives, recognizing that there is substitutability between ORVR controls and Stage II controls:
Resolution of the question as to the appropriateness of ORVR requirements in LDTs and HDVs therefore depends on the relative cost effectiveness of two alternatives: 1) restriction of ORVR requirements to light duty vehicles, with retention of Stage II in nonattainment areas solely for the purpose of controlling LDT and HDV emissions, versus 2) implementation of ORVR in all vehicle classes, with possible phase-out of Stage II. (p. 1-3)
Although there is some substitutability with respect to gasoline volatility, no alternatives are considered in that dimension.
One substantial chapter of the document is devoted to computation of compliance costs. As noted, enhanced evaporative vapor recovery systems were a requirement before ORVR was undertaken. In fact, the document projects that a single integrated system will be used:
The cost analysis assumes that ORVR systems will be integrated with the enhanced evaporative emission controls expected as a result of the recent regulations establishing new evaporative emission standards and test procedures (58 FR 16002, March 24, 1993). (p. 5-1)
An implication for imputing the joint cost to the two control systems is then drawn:
[The cost analysis] further assumes that the enhanced evaporative emission controls will be in place on vehicles prior to the phase-in of ORVR control systems. Therefore, only those costs of onboard control which are incremental to enhanced evaporative emission control are included in this analysis. The costs of enhanced evaporative emission control were estimated in the Regulatory Impact Analysis (RIA) which accompanied that rulemaking. Final Regulatory Analysis and Summary and Analysis of Comments – Control of Vehicle Evaporative Emissions,” U.S. EPA, February 1993, (docket A-89-18, item V-B-1). (pp. 5-1, 5-2)
In fact, fairly minor modifications will upgrade an enhanced evaporative emission control system to a combined system; many of the components require no change. Hence, the cost estimate ranges from $6.36 for LDVs to $25.72 for the heaviest trucks.
The emissions reduction benefits rests on an estimate of uncontrolled emissions. An equation, known as the ATL equation, is presented that predicts the uncontrolled emissions in grams per gallon of dispensed gasoline as a function of three arguments. The equation is:
The description claims that,
Average values can be used [for the arguments] in estimating baseline emissions due to the linearity of the ATL equation. (p. 4-10)
However, the equation is non-linear. Inserting average values for the arguments will not give an average value for the function. The introduced distortion is unclear.
The ORVR controls are estimated to reduce emissions 92% in all areas and 97% in non-attainment areas. The reduction in emissions is 2.42 grams per gallon of gasoline dispensed in all areas and 1.19 g/gal in non-attainment areas assuming continuation of Stage II.
Most of the economic analysis is cost-effectiveness but there is some benefit-cost analysis, too. Numerous cross-sections are offered. As examples, the document finds that ORVR controls on all vehicles produces a cost per ton abated of $202 nationally if Stage II controls remain in place. If they are discontinued in 2010, when ORVR controls have largely subsumed the abatement function, then the cost per ton drops to $97 [because of the avoided costs of Stage II]. Final Regulatory Impact Analysis: Refueling Emission Regulations for Light Duty Vehicles and Trucks and Heavy Duty Vehicles, U.S. EPA, January 1994, p. 7-9. These figures are very low when compared with other abatement programs:
… the cost effectiveness of the [onboard diagnostics] program for the control of hydrocarbons is estimated to be $1,974 per ton. The cost per ton of VOC reduction for the enhanced I/M [inspection and maintenance] program, based on the biennial high-tech program, is $500. If the high-tech I/M program was performed on an annual basis, the cost effectiveness would increase to $1,300 per ton. For evaporative controls, the overall cost effectiveness is estimated to be $170 per Mg [megagram] when fuel consumption credits are considered. The estimated cost per ton for the control of non-methane hydrocarbons in the Clean Fuel Fleet Program is over $8,000. (p. 7-12)
There is a discussion of the economic benefits of reducing refueling emissions. Ibid., pp. 7-22 through 7-27. It is summarized as follows:
As was discussed above, EPA expects that the use of onboard controls will have a positive economic impact by reducing VOCs, thus preventing the formation of ozone and decreasing vegetation damage, agricultural losses, ecosystem effects, and damage to non-biological materials. Health benefits are expected, as well. (p. 7-27)
The benefits are not monetized by category, however. Rather, a benefit sub-total of $500 per Mega-gram (one metric ton) ton is used in a benefit-cost calculation:
If the benefits of VOC control are valued at $500 per Mg, as was done in the NPRM, the benefit-cost ratio can be estimated … Using the average annual costs and benefits, … the benefit-cost ratio exceeds 1.0 for all cases.
These values are conservative, since they do not ascribe a monetary value to the health benefits. Furthermore, a benefit value of only $500 per Mg was used. In contrast, API suggested values ranging from $750 per ton in attainment areas to $7500 in extreme nonattainment areas. Using any value in this range would greatly increase the benefit-cost ratio. (pp. 7-28 to 7-29)
Although the document displays benefit-cost ratios for various cases corresponding to the policy alternatives, it is simple to compute net benefits. Ibid., Table 7.18, p. 7-27, displays ratios as well as costs and benefits for the various cases. There are twelve such cases but the two most interesting cover all areas of the United States for all vehicle types. These cases would appear to give total national benefits. One case assumes Stage II present throughout the analysis period. The other assumes Stage II discontinued in 2010. Their respective net-benefits are calculated at $111.4 million and $184.4 million annually. Their benefit-cost ratios are 4.9 and 109, respectively. It should be emphasized that these values derive from the $500 per Mg benefit figure which may be very low.