Requires a reduction in sulfur emissions for all heating oil used in non-attainment areas

Summary of specific provisions

Adds a new section 19-0325 to the Environmental Conservation Law to do the following:

(1) Require that 2 heating oil sold in New York State after 2014 contain a sulfur content that does not July 1, exceed 500 ppm.

(2) Instruct the Commissioner of DEC in collaboration with the Director of NYSERDA, to undertake a study to determine the need and cost-effectiveness of further reductions in the sulfur content of home heating oil and report to the Governor and the Legislature.

(3) Provide, the Governor with the authority to suspend the applicability of this legislation for a period of 14 days if he determines that there is not adequate supply of low sulfur heating oil due to extreme cold or a declared state of emergency in this or another state.

Justification

It is important that New York adopt a mandate to reduce the sulfur content of home heating oil. Currently, the sulfur content of most heating oil is anywhere from 2000 - 2500 ppm. A reduction to 500 ppm will reduce sulfur oxide emissions by 75-80 percent -- a level lower than the European Union specification, and among the lowest heating oil sulfur contents in the world. This translates to a reduction of over 13,000 tons a year and $12 million a year in Sulfur Oxide Emission Reduction Credits. Additionally, this bill would also bring about significant reductions in the sulfate residue that fouls furnace walls. A recent study by NYSERDA indicated that consumers could save up to $200 million per year by extending the interval between furnace cleanings made possible by switching to 500 ppm heating oil.

Most importantly, however, this bill brings about these important sulfur reductions in a manner that will not result in a potentially disastrous disruption in supply of this necessary and precious commodity.

U.S. East Coast and Gulf Coast refineries supply close to 80% of the New York and New Jersey heating oil market, with the remainder from Canada and the Virgin Islands. Other incremental traditional suppliers to the East Coast (Russian and Venezuela) have essentially abandoned this market with the implementation of Federal ultra low sulfur diesel standards. Currently, refineries are in the final stages of compliance

with the Federal EPA diesel sulfur reduction program for both on-road diesel engines and off-road diesel equipment. The Federal government provided five year's advance notice to refineries to rationally accommodate the necessary infrastructure investments and time-consuming transition involved in executing a major fuel quality change for the on-road and off-road sectors. Engineering evaluations show that installation of even more processing capacity to adopt a low sulfur standard for heating oil will take not less than four years. The federal permitting process alone will take almost two years.

Failure to provide sufficient lead time for the adoption of the new standard carries a significant risk for shortfalls in supply, even under the best of circumstances. A recent study estimated that the anticipated shortfall would result in an increase in the price of heating oil and diesel fuel by 20 to 30 cents a gallon -- costing New York consumers as much as $1 billion -- and that is assuming a mild winter. Consumers could pay up to 60 cents more for heating oil and diesel fuel during a winter cold snap.

This measure strikes the proper balance of setting New York on a timetable to reduce the sulfur content of home heating oil while assuring that supplies of both the heating oil and transportation diesel will be available during the transition, thereby protecting New York consumers from wild and unpredictable spikes in the cost of these necessary commodities.

Prior legislative history

New Bill.

Fiscal implications

Potential fiscal implications to State and local governments would be limited to any incremental costs associated with the commodity costs of low sulfur diesel utilized to heat their respective facilities beginning in the winter of 2014.

Effective date

This act shall take effect immediately.