GASOLINE SULFUR AVERAGING, BANKING,

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GASOLINE SULFUR AVERAGING, BANKING, TRADING
(ABT)

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ABT PROGRAM

• Three Purposes
• additional incentives for early reduction
• encourage meeting 30 ppm early
• enhance overall feasibility and C/E
• ABT Provides
• within company flexibility (averaging)
• time flexibility (banking)
• cross-company flexibility (trading)

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MAJOR ELEMENTS

• Sulfur allotments, to be used against the
  corporate pool average standards
• Sulfur credits, to be used against the refinery
  average and GPA gasoline standards

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SULFUR ALLOTMENTS

• Designed for use in compliance with corporate
  pool average standards of 120 ppm in 2004 and 90
  ppm in 2005
• Provisions apply in various ways to large
  refiners and importers but not to small refiners.
• Different allotment generation programs for 2003
  and 2004/2005

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2003 SULFUR ALLOTMENT GENERATION

• Applies to individual refineries, not importers -
  must have established 97/98 baseline
• Must be below baseline and 60 ppm
• Number and type of allotments generated depends
  on measured average sulfur value for the refinery

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2003 ALLOTMENT CALCULATION

• Terminology
• SA - sulfur allotments
• Savg - measured average sulfur value
• Sbase - 97/98 sulfur baseline
• CR - sulfur credits
• V- volume of gasoline

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2003 ALLOTMENT CALCULATION

• SA (120-Savg)(V)
• if 30ltSavglt60. Then 20 discount (Type A)
• if Savg lt30, no discount (Type B)
• CR (Sbase-120)(V)

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2004/2005 SULFUR ALLOTMENT GENERATION

• Applies to domestic refiners and importers
• Trigger value is 120 ppm in 2004 and 90 ppm in
  2005
• Two cases apply, depending on the level of the
  standard and your measured average sulfur value
• No discounts

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2004/2005 SULFUR ALLOTMENT GENERATION

• Case 1
• Sa lt 30
• SA (std-30)(V) Type A
• SA (30-Sa)(V) Type B
• Case 2
• 30ltSavgltstd
• SA (std-Savg)(V)

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ALLOTMENT USE

• Sulfur allotments generated in 2003 /2004 can be
  used to meet the CAS in 2004
• Sulfur allotments generated in 2005 can be used
  to meet the CAS in 2005
• Sulfur allotments generated in 2003/2004 can be
  carried over to used in 2005 if discounted by 50

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ALLLOTMENT USE

• Allotments can be sold at any time, even before
  they are generated
• Allotments can be transferred only twice
• Small refiners and GPA gasoline may use
  allotments to meet refinery average standards

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ALLOTMENT USE

• Allotment use and transactions are under the
  control of the refiners/importers involved
• Allotment generation, transfer, and use must be
  tracked and reported to EPA, but EPA will not
  broker

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ALLOTMENT LIFE

• Allotments expire at the end of 2006
• Unused allotments may be converted to sulfur
  credits
• Converted allotments are subject to life and use
  restrictions of the credit program
• Type A treated as 2004 credits
• Type B treated as 2004 and later credits

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SULFUR CREDITS

• Designed for use against refinery average
  standard by allowing use of credits to get from a
  value below the cap down to the standard
• 2004 2005 2006
• refinery std n/a 30 30
• cap 300 300 80
• Similar applicability to GPA gasoline and small
  refiner standards/caps

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SULFUR CREDITS

• Generation can begin in 2000, use begins in 2004
  for small refiners/GPA and 2005 for other
  refiners/importers
• Program provisions vary for 2000-2003,
• 2004-2007, 2007
• Standards applicable to small refiners and
  producers/importers of GPA gasoline may decrease
  if they generate early credits

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CREDIT GENERATION 2000-2003

• Provisions
• applies to individual refineries, not importers
• must establish a 97/98 baseline
• achieve sulfur level gt10 below baseline
• independent of CG/RFG distinctions
• no oxygenate exclusion
• includes low sulfur gasoline produced for state
  programs
• no double counting of allotments/credits

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CREDIT GENERATION 2000-2003

• Calculation
• CR (Sbase-Savg)(V)
• no discounts apply
• cannot be converted to allotments

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CREDIT GENERATION 2004

• Provisions
• applies to domestic refiners and importers
• must be less than 30 ppm or applicable GPA/small
  refiner std
• Calculation
• CR (V)(STD-Savg)
• No discounts apply

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CREDIT USE

• Credit use and transactions are under the control
  of the refiners/importers involved
• Credit generation, transfer, and use must be
  tracked and reported to EPA, but EPA will not
  broker

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CREDIT USE

• Credits may be used by any refiner to meet
  refinery avg stds, GPA gasoline stds and small
  refiner stds
• Credit use begins in 2005 for refinery average
  standards and 2004 for GPA gasoline and small
  refiner standards
• Available credits must be used before seeking a
  deficit carry forward

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CREDIT LIFE

• Credits generated 2000-2003 expire at the end of
  2006 compliance year for refinery avg stds and
  GPA and 2007 compliance year for small refiners
• Credits generated 2004 and later expire five
  years after they are generated
• Credits may be transferred no more than twice.

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ABT Program Summary
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