Cost-Benefit Analysis Case Study on Regulations to Lower the Level of Sulphur in Gasoline

The Canadian Regulatory Analysis Guide lays out the general methodology and analytical steps to perform a cost-benefit analysis of proposed regulatory changes. To make the Guonoide operational, this case study has been prepared following the analytical approach recommended by the Guide. The case study first identifies the alternative options and then a cost-benefit analysis is carried out to evaluate the alternatives and also a cost-benefit analysis is carried out to evaluation the alternatives. Reductions of sulphur in gasoline for all of the six alternative scenarios evaluated in this project, will generate a substantial amount of health benefits to Canadians, ranging from $1.8 billion to $2.7 billion in 2000 prices. The risk analysis also suggests that there is zero probability of getting a negative net economic benefit. The stakeholder analysis indicates that the Canadian refiners can pass a significant amount of costs forward to final consumers, hence, their competitiveness should not be significantly affected. The most stringent scenario 6 of lowering sulphur in gasoline to 30 ppm would generate net economic benefits of $2.4 billion in 2000 prices. It may not be the scenario with the largest amount of benefits. However, it is the scenario that will create a suitable regulatory environment.