Cleaner Diesel Has Arrived: Low-Sulphur Fuel Requirement Begins
By Aaron Bragman
New regulations that mandate low-sulphur diesel fuel came into effect on 15 October, and are expected to generate a wave of new diesel-powered vehicles in the next few years.
The government mandate to supply low-sulphur diesel fuel nationwide took effect yesterday (15 October). The new diesel features nearly 97% less sulphur, or a maximum of 15 parts per million (ppm), as opposed to the previous allowable levels of 500 ppm. The new fuel will immediately result in a 10% reduction in diesel emissions from any conventional diesel engine, but exciting things are expected in one to two years, when vehicle makers start to capitalise on the new fuel by introducing super-clean diesel technology to the market. The new fuel will be introduced in stages, with 80-90% of all diesel fuel available as of 15 October to be low-sulphur and 100% of all fuel required to be low-sulphur by 2010.
Global Insight Perspective
Significance: Low-sulphur diesel fuel will now power America's fleet of diesel trucks, busses, and passenger cars. This is a result of a government mandate that will be completed by 2010.
Implications: A 10% reduction in emissions is possible with no modifications to a conventional diesel engine, but there is the possibility of a 95% reduction in vehicles equipped with emissions control equipment. Diesel engines will be able to meet stringent 50-state emissions requirements by 2008, allowing for the proliferation of the powertrain in wider-scale use.
Outlook: Many automakers are preparing a big push for diesel, with most of the attention coming from European companies (the notable exception being Honda). With the perfect application for a high-torque, high-efficiency engine, the U.S. light truck and SUV market would make an excellent entry point for diesel's return to the United States, a point not lost on the domestic manufacturers, which are preparing light-duty truck diesels for 2009.
The arrival of low-sulphur diesel is being hailed by environmentalist groups as a significant advancement which will yield demonstrable health benefits and cost savings in the long term. Sulphur in diesel is viewed much the way that lead in petrol (gasoline) was viewed, it is a serious inhibitor to effective pollution control devices. "Diesel is the invisible force that moves the American economy, but until now it has also been a big polluter," said Richard Kassel, head of the U.S. National Resource Defense Council's clean fuels and vehicles project. "Combining the new fuel with cleaner and more energy-efficient engines will mean healthier air and reduce our dependence on oil." The NRDC estimates that 18 million tonnes of freight is shipped using diesel trucks in the United States daily, and roughly 500,000 diesel buses shuttle 14 million people. The U.S. Environmental Protection Agency (EPA) claims that the reductions in pollution resulting from the advent of low-sulphur diesel could result in US$150 billion in annual healthcare and welfare-related savings, with the potential for as many as 20,000 fewer pollution-related deaths each year.
Opening the Floodgates
The exciting part for auto enthusiasts of the arrival of low-sulphur diesel is likely to be the spate of new vehicles that are coming which feature high-tech clean diesel engines. Diesel engines are typically 20-40% more efficient than their petrol counterparts, returning superior fuel economy. Mercedes-Benz will be first with the introduction of the E320 diesel, featuring DaimlerChrysler (DCX)'s Bluetec diesel technology. The vehicle will be available next week in 45 states, with a 50-state version to follow in 2008. Volkswagen (VW), which had to drop its diesel models for the 2007 model year due to emissions regulations changes, will be renewing its TDI models in 2008 with 50-state legal vehicles. VW was the largest retailer of diesel vehicles in the United States, and the only one to provide mass-market non-luxury offerings. Honda has announced that it will supply a passenger car with a diesel engine as well.
The biggest difference will be seen in light truck applications, where until now, diesels were only available in super-duty pick-ups and vans. These vehicles were mostly for commercial users and small-business operators, but both General Motors (GM) and Ford have announced that they will feature light-duty diesel engines in truck applications by 2009. DCX, which saw some success with the limited introduction of the Jeep Liberty diesel, will offer a Grand Cherokee in 2007 with the Bluetec diesel system.
Outlook and Implications
There has been a longstanding sentiment among the media in the United States that Americans do not like diesels due to poor experiences with them in the 1970s and 1980s, due to the noise, soot, poor performance and awful reliability of the diesel engines from that period. It is often for this reason that diesels are cited as being responsible for 0.2% of all new vehicles sold in the United States, a figure far below that of Western Europe, where over half of all vehicles sold are diesel-powered. But one cannot discuss the preferences of the American consumer for diesel without also considering the availability of the motor on the U.S. market. Until very recently, the only automaker offering passenger cars with diesel engines was VW, which sold limited numbers of high-mileage sedans and coupés with the TDI powertrain. Petrol was cheap enough that no market pressure was present to require exploration of alternative fuels, and to attempt to regulate fuel usage through taxation efforts to this day amounts to political suicide in the United States.
That changed with the price spikes in petrol over the last year, as Americans abandon large trucks and inefficient sports-utility vehicles (SUVs) and seek out alternative forms of transportation. A confluence of significant events is currently under way that may make diesels a more common sight on American roads: petrol price spikes are fresh in consumers' minds, alternative fuels and powertrains are gaining in popularity and availability, and emissions regulations have been formalised for the next several years, setting goals and allowing for automakers to finally invest in long-term diesel technologies.
Where diesel engines make the most sense in terms of the U.S. market, is in light trucks and SUVs. The combination of outstanding torque and above-average fuel economy is perfectly suited to the vehicle types that were until this year extremely popular with American consumers, providing them with the big vehicles that have traditionally been so popular. With Ford and GM reportedly developing these engines for introduction by 2009, the formula for a resurgence of big vehicles with efficient engines does not seem to be unrealistic.
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