Ultra-low sulfur diesel (ULSD) is diesel fuel with substantially lowered sulfur contents. As of late 2006, most diesel fuel sold in the US and Canada is ULSD.
Moving to lower sulfur content will allow the application of newer emissions control technologies that will lower emissions of toxic gases from diesel engines. These new emissions standards will extend to some US states in 2007.
ULSD was proposed by the EPA as a new standard for the sulfur content in on-road diesel fuel sold in the US since late 2006, except for California and rural Alaska. This new regulation applies to all diesel fuel, diesel fuel additives and distillate fuels blended with diesel for on-road use, such as kerosene, however, it does not yet apply to train locomotives, marine, or off road uses. By December 1, 2010, all highway diesel will be ULSD.
The allowable sulfur content for ULSD (15 ppm) is much lower than the previous U.S. on-highway standard for low sulfur diesel (LSD, 500 ppm), which not only reduces emissions of sulfur compounds (blamed for acid rain), but also allows advanced emission control systems to be fitted that would otherwise be poisoned by these compounds. These systems can greatly reduce emissions of oxides of nitrogen and particulates.
Because this grade of fuel is comparable to European grades and engines will no longer have to be redesigned to cope with higher sulfur content and may use advanced emissions control systems which can be damaged by sulfur, the standard may increase the availability of diesel-fueled passenger cars in the U.S. European diesels are much more popular with buyers than those available in the U.S.
The refining process that removes the sulfur also reduces the aromatic content and density of the fuel, resulting in a minor decrease in the energy content, by about 1%. This decrease in energy content may result in reduced peak power and fuel economy. The reduction is only slight and will likely go unnoticed.
Other countries, including Canada, China, Russia and Sweden have mandated similar requirements.
More info can be found here:
http://www.epa.gov/cleandiesel/