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V. High Sulfur Diesel Fee

Introduction

Authorized in Senate Bill 5 during the 77th Texas Legislature in 2001, the Texas Emissions Reduction Plan (TERP) provided grants and other incentives for improving air quality throughout the state. A major component of TERP involves cleaning up diesel engines in heavy-duty trucks. Pollution emitted by diesel engines contributes greatly to our nation's continuing air quality problems.

In the U.S., diesel engines:

  • produce 26 percent of nitrogen oxide (NOx) from all on-road sources

  • produce 20 percent of NOx from all sources

  • produce 66 percent of particulate pollution from on-road sources

  • produce 26 percent of particulate pollution from all fuel combustion sources.

Even with the stringent diesel truck engine standards that take effect in 2004, these engines will continue to emit large amounts NOx and particulate matter (PM). Both of these components contribute to serious public health problems in the United States, especially in urban areas.25

However, the cleanup of diesel engines was delayed after 75 percent of TERP funding was cut from the program as a result of lawsuits challenging the constitutionality of some of the TERP provisions. With TERP funding stalled, Texas should consider other alternatives to fund these environmental improvements.

State Rep. Warren Chisum, R-Pampa, has proposed a $5 to $10 per vehicle emission impact fee to help raise state revenues for TERP funding. One problem with this proposal is that while the proposed fee also would apply to off-road diesel fueled vehicles, collection of that fee on these unregistered vehicles would be totally dependent on voluntary participation by their owners. And in Texas, voluntary payment of state fees and taxes has a notoriously poor record.

One alternative to Rep. Chisum's proposal would be to institute an additional fee on the use of diesel fuels with a high sulfur content. Under such a plan, those using diesel fuels with a high sulfur content would contribute to funding TERP and cleaning up diesel motors. Currently, off-road diesel companies pay only 20 percent of the cleanup efforts.

In the coming years, Texas will be required to meet new state and national sulfur standards for diesel fuels. (Higher sulfur levels not only result in more emissions, but also limit the kinds of pollution controls that can be installed on engines.) The maximum sulfur content of diesel fuels used in on-road vehicles must be reduced from 500 ppm to 15 ppm statewide, beginning June 1, 2006. The maximum sulfur content for non-road equipment must be reduced to 15 ppm in 110

counties will cost

in Central and East Texas. The about five-cents per gallon.

petroleum industry claims that producing low-sulfur fuels Until those new standards take effect, the state might

consider

introducing

a

fee

at

the

wholesale

level

of

production

for

high-sulfur

diesel

fuel.

Low-sulfur

25 Pope, C. Arden III, Burnett, Richard T., Thun, Michael J., Calle, Eugenia E., Krewski, Daniel, Ito, Kazuhiko, Thurston, George D., Lung Cancer, Cardiopulmonary Mortality, and Long-term Exposure to Fine Particulate Air Pollution, JAMA, March 6, 2002. EPA sets average annual limits on fine particulate matter at 15 micrograms per cubic meter. The study found that, for every 10-microgram increase, the number of lung cancer deaths increased 8 percent, and all heart and lung-related deaths increased by 6 percent. 500,000 people in over 100 cities participated.

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