3. Efficiency Benefits, Past Experience, and Current Market Issues

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This chapter provides a brief description of the inherent efficiency benefits associated with diesel engines relative to competing technologies and a historical perspective of the light-duty diesel vehicle market in the United States compared with the relative success realized in European markets. Consumer misconceptions and legacy perceptions of diesel vehicle quality, carried over from the 1980s, have limited their current market acceptance in light-duty vehicle offerings.²² This, coupled with manufacturers’ concerns about the costs associated with the EPA’s stringent Tier 2 emissions standards and the difficulty of meeting them, have deterred diesel product offerings in the light-duty vehicle market.²³ In addition, incremental costs for diesel vehicles, consumer preferences, and competition from other advanced technologies could potentially limit the U.S. market penetration of diesel vehicles.

Efficiency Benefits

Diesel engines offer significant fuel economy gains over conventional spark-ignited engines. Depending on vehicle size and duty requirements, vehicles with diesel engines typically achieve 20 percent to 40 percent better fuel economy than their conventional gasoline counterparts of comparable size and performance.²⁴

Diesel vehicles are inherently more efficient for two reasons:

• First, diesel engines operate at higher compression ratios than gasoline-powered engines, creating higher in-cylinder temperatures and more complete combustion and providing higher thermal efficiency. Diesel engines take air into the engine cylinders, compress it to very high compression ratios (up to 20:1) that cause the air to reach a high temperature, and then directly inject diesel fuel into the highly compressed high-temperature air, spontaneously igniting the fuel. This process differs from a gasoline engine, where a mixture of gasoline and air is drawn into the engine cylinder through an intake, compressed at a lower compression ratio and lower temperature than diesel, and ignited with a spark. Because the higher in-cylinder temperature of diesel engines burns fuel more easily, and because highly compressed air allows more of the closely packed fuel molecules to combust, diesel engines can burn less fuel than gasoline engines to complete the combustion event.

• Second, diesel fuel has a higher volumetric energy content than gasoline. The heat content for diesel is 138,700 Btu per gallon, compared with 125,000 Btu per gallon for gasoline, meaning that diesel fuel has a higher energy density than gasoline per gallon.²⁵ A higher energy density means that less diesel fuel needs to be combusted relative to gasoline to achieve the same energy output. Together, a diesel engine’s greater thermal efficiency and the higher energy density of the fuel provide a decided fuel economy advantage over conventional spark-ignited gasoline engines.

Diesel engines are also more fuel-efficient than spark-ignited FFV engines. Flex-fuel engines are unique because they can run on gasoline, alcohol-based fuel (typically, E85), or any mixture of gasoline and alcohol-based fuel. When an FFV is operated using only gasoline, the diesel vehicle outperforms it in terms of fuel economy by the same 20 to 40 percent and for the same reasons that a diesel engine is more fuel-efficient than a gasoline engine. If a vehicle with a flex-fuel engine uses E85, fuel economy will actually decrease, because the heat content of ethanol is only 84,600 Btu per gallon, lower than the heat content of either diesel fuel or gasoline.²⁶ For an FFV using E85, fuel economy is reduced by about 15 percent from a similar gasoline-powered vehicle and by 40 to 65 percent from a diesel vehicle.²⁷ If a flex-fuel engine incorporates technologies such as forced-air induction and variable compression ratio, it can take advantage of the fuel properties of E85, and its fuel efficiency can be increased by up to 18 percent on a Btu equivalent basis. Depending on relative fuel prices, the increase in fuel economy could make the FFV competitive with diesel vehicles.²⁸

EPA fuel economy tests indicate that diesel vehicles have lower adjusted fuel economy than similar HEVs but generally achieve higher performance ratings for characteristics such as torque. In the compact car size class, Volkswagen’s 2009 Turbocharged Diesel Jetta achieves an EPA-adjusted 34 miles per gallon, as compared with a listed fuel economy of 46 miles per gallon for a 2009 Toyota Prius. In the mid-size class, a Mercedes Benz E320 Bluetech diesel achieves 26 miles per gallon, compared with 34 miles per gallon for a similarly sized Nissan Altima Hybrid.

The penalty for the higher fuel economy in hybrid vehicles is often decreased vehicle performance. Torque, directly related to a vehicle’s acceleration and towing capacity, is rated at 400 foot-pounds in the Mercedes E320, compared with 320 foot-pounds for the Altima. When the Prius and Jetta are compared, the hybrid does not suffer any performance penalty, because both have similar torque.²⁹

When choosing a diesel or HEV, consumers may be forced to balance improved fuel economy against their desired performance needs. Additionally, on-road driving experience seems to indicate that, under some circumstances, diesel vehicles can outperform hybrids in actual fuel economy achieved. For example, in a recent 600-mile European road test from London to Geneva, a diesel-powered mid-sized BMW 520d actually outperformed the fuel economy of a gasoline-hybrid Toyota Prius, with the BMW diesel averaging 41.9 miles per gallon and the hybrid Prius, despite being 500 pounds lighter, averaging only 40.1 miles per gallon.³⁰ Thus, diesel vehicles may actually exceed the fuel economy of hybrids in real-world driving situations.

U.S. and European Light-Duty Diesel Experience

Light-duty diesel vehicles have been offered in the U.S. market for several decades. In the late 1970s and early 1980s, several manufactures offered diesel engines as optional equipment in their cars and light trucks to meet consumer demand for fuel economy improvement and to help them comply with corporate average fuel economy (CAFE) standards. After several new diesel vehicles were introduced in the late 1970s, diesel vehicle sales increased rapidly, and sales peaked in 1981 at 5.5 percent of new light-duty vehicle sales, coinciding with the peak in the share of car sales at 6.1 percent (Figure 3.1). The following year, the light truck diesel sales share peaked at 8.5 percent. By 1985 General Motors, Ford, Mercedes Benz, Volkswagen, Audi, Nissan, Volvo, Peugeot, and BMW were offering diesel engines in their product lines.

Due to poor vehicle performance, fuel quality problems, declining fuel prices, and severe reliability problems associated with the Oldsmobile diesels, however, consumers quickly lost interest in diesel cars, and by 1988 new diesel car sales had declined to only 0.2 percent of new car sales, and only Mercedes Benz and Volkswagen continued to offer diesel vehicles. Diesel car sales never recovered and have accounted for less than 1 percent of new car sales since 1988.³¹ Although new diesel light truck sales also declined rapidly between 1982 and 1988, the diesel engines offered in light trucks were reliable. They continue to be favored by a niche market and have accounted for, on average, about 4 percent of new light truck sales per year over the past 20 years.³² In contrast to the United States, diesel engines are widely used in light-duty vehicles in Western Europe. Over the past decade, diesel sales in Western Europe have climbed from 28.4 percent of total light-duty vehicle sales to 52.2 percent (Figure 3.2). Belgium, France, and Spain have enacted policies that aggressively promote light-duty diesel vehicles. As a result, sales shares in those countries currently exceed 70 percent, whereas in the United States the diesel share of new light-duty vehicle sales has declined from 2.9 percent to just 1.8 percent, with a vast majority of the sales being light-duty trucks rather than passenger vehicles. Appendix D provides the percent share of diesel vehicle sales for various Western European countries and the United States from 1999 to 2007.

There are three principal reasons for the success of diesel vehicles during the past 20 years in the Western European light-duty vehicle fleet compared to the United States: higher retail fuel prices on average, favorable tax policies, and less stringent emissions standards. First, prices across all grades of gasoline and diesel transportation fuels are higher in Europe than in the United States (Figure 3.3). Higher retail prices for both gasoline and diesel cause European consumers to seek out vehicles with high fuel economy ratings, often favoring diesel over gasoline engines because diesels offer substantial fuel economy advantages (20 to 40 percent) over their gasoline counterparts of similar power.³³ The most common type of gasoline used at the pump in Western Europe is 95 RON, equivalent to 91 octane premium-grade gasoline in the United States.

The price comparisons in Figure 3.3 contrast European 95 RON fuel with premium gasoline in the United States to ensure price comparison between similar fuels. It should be noted, however, that 87 octane regular unleaded gasoline in the United States is cheaper and more commonly used than the premium grade, making it even more difficult for diesel vehicles to compete for consumer preference.³⁴ Appendix E provides pump price and tax information for gasoline and noncommercial diesel fuel in the United States and various Western European countries.

The second and more direct explanation for the relative success of light-duty diesel vehicles in Western Europe is that national governments have purposely used tax policy to favor expansion of the market for diesel vehicles. European governments have followed a pro-diesel course with the intent of using greater diesel fuel efficiency to reduce petroleum consumption.³⁵ Diesel engines also have garnered interest in the climate change debate, because the diesel engine’s greater fuel efficiency means less petroleum usage, which translates directly into a reduction in carbon dioxide emissions.³⁶

The differences between U.S. and Western European gasoline and diesel fuel taxes account for an average of 96 percent of the price difference between U.S. and European premium gasoline at the pump and 88 percent of the price difference between U.S. and Western European diesel fuel at the pump. Additionally, direct vehicle taxes and registration fees in Western Europe favor the purchase of small- and medium-class cars with diesel engines, which are subject to lower taxes in Western European countries than comparable cars with gasoline engines.³⁷

The third reason that diesel engines have been more successful in penetrating the Western European light-duty vehicle fleet is that European diesel vehicle emission standards are less rigorous than those in the United States. U.S. Tier 2 standards hold both gasoline and diesel engines to the same standards for emissions of NOx, carbon monoxide (CO), hydrocarbons (HC), and particulate matter (PM). Because diesel engines emit less CO and HC but relatively more NOx and PM, the U.S. standard inhibits the use of diesel engines, which require more technically challenging and expensive emission control technologies. Unlike the United States, Europe has separate gasoline and diesel vehicle standards, holding diesels to less stringent NOx and PM emission requirements (Figure 3.6). The European Union will strengthen NOx and PM standards starting in 2009, however, bringing them more in line with U.S. emissions standards. Previous European emissions standards, Euro 1 (1992) and Euro 2 (1996), regulated PM at 0.23 and 0.13 grams per mile, respectively, but did not regulate NOx emissions.

Impacts of Emissions Standards

To meet the U.S. Tier 2 NOx and PM emission requirements, diesel vehicles must be equipped with various emissions-reducing technologies. Over the past 25 years, emissions of NOx and PM from diesel vehicles have been reduced by 80 to 90 percent—impressive reductions that have been achieved almost entirely through engine design modifications.³⁸ Table 3.1 summarizes the various engine technologies and modifications.

Even with these engine modifications, however, several new technologies must now be added to diesel vehicles to reduce NOx and PM even further in order to meet the EPA’s latest and more stringent Tier 2 emission standards. Today, NOx and PM emissions reduction technology is focused primarily on treating vehicle exhaust. In addition, diesel fuel sulfur levels have been drastically lowered both to reduce emissions and, more importantly, to allow new exhaust treatment equipment to function properly. Several control technologies are being tested or employed in new light-duty diesel vehicles to address PM and NOx emissions.

Particulate Matter (PM)

Diesel Particulate Filter (DPF): DPFs are filters placed into the exhaust stream to trap PM emissions before they leave the tailpipe. DPFs typically are made out of cordierite, a ceramic-like material, or silicon. DPFs force exhaust gas to pass through a series of channels containing porous filters, in the process capturing PM while allowing the remaining exhaust to pass through. DPFs capture up to 90 percent of PM emissions from passing exhaust.³⁹ Accumulated PM must be removed from the DPF about every 300 miles in a process known as regeneration. Regeneration is done automatically by the vehicle by increasing exhaust temperature to 550 degrees Celsius, in the process burning off the PM into small amounts of CO2 and water.
Diesel Oxidation Catalyst (DOC): DOCs are muffler-like devices placed into the exhaust stream to reduce PM emissions. Internally, DOCs contain a honeycomb structure (substrate), which is covered with a precious metal catalytic material, typically either platinum or palladium. Exhaust gas is passed over the substrate, which causes PM to react chemically, or oxidize, with the catalytic material and break down into harmless gasses. DOCs can remove 20 to 50 percent of the PM in diesel exhaust.⁴⁰

Oxides of Nitrogen (NOx)

Selective Catalytic Reduction (SCR): SCR uses both a catalytic surface and a reagent to reduce vehicle NOx emissions. First, a liquid reagent, typically urea, is sprayed into the exhaust stream before the gases reach the catalytic converter. Next, the urea mist and exhaust enter the catalyst chamber, where the mixture is chemically broken down by the catalytic material into nitrogen and water and passed out the tailpipe. Urea is important in this process because it allows the catalyst to react chemically with the vehicle’s exhaust. SCR is capable of reducing NOx emissions by up to 70 percent.⁴¹

Urea introduces an important complication: it must be refilled periodically. Currently, BMW, Mercedes-Benz, and Audi all use urea-based SCR technology in their diesel models, each employing a 6- to 8-gallon urea tank. If drivers fail to refill the tank, the vehicle will stop working. Manufacturers plan on making urea refill part of the vehicles’ scheduled maintenance, charging about $7.75 per half-gallon bottle. There is also a desire to create an infrastructure for consumers to fill their own urea tanks, perhaps purchasing the urea at refueling stations or auto parts stores.⁴² Manufacturers also plan on installing a urea warning light on the instrument panel that will alert the driver when the urea tank falls below 1 gallon of fluid. If the urea level gets critically low, a light will appear on the dashboard, indicating that the vehicle has 20 starts remaining.⁴³

Exhaust Gas Recirculation (EGR): EGR is a process in which some exhaust gas is recycled from the exhaust stream back to the engine’s air intake system. By combining oxygen-poor exhaust with fresh intake air, the oxygen level of air entering the vehicle’s combustion chamber is diluted. This reduction lowers the temperature of the combustion process, which reduces the amount of NOx emissions produced. Such EGR systems are able to reduce NOx emissions by up to 40 percent.⁴⁴

NOx Catalyst Technologies: There are two NOx catalyst technologies—lean NOx catalyst systems and NOx absorbers. The lean NOx catalyst is a system similar to both DOC and SCR. Lean NOx contains a substrate, which is covered with a catalytic material, and a liquid reagent, typically diesel fuel, introduced upstream to facilitate the oxidization of NOx in the substrate into harmless gases. Lean NOx differs from SCR in that it is unnecessary to introduce a second exogenous liquid (urea) to the vehicle. Lean NOx offers up to a 25-percent reduction in vehicle NOx emissions.⁴⁵ In an NOx absorber, NOx is captured by the catalyst, stored, and burned off periodically by high-temperature exhaust once the trap is saturated, similar to a DPF. NOx absorber technology is used in the 2009 Volkswagen Diesel.⁴⁶

Fuels

Ultra-Low-Sulfur Diesel Fuel: The most important characteristic of diesel fuel affecting emissions today is sulfur level. The sulfur level of diesel fuel is important for two reasons. First, sulfate, a sulfur-based PM, makes up a portion of total PM emitted by diesel vehicles. Roughly 1 to 2 percent of the sulfur in diesel fuel is converted to sulfate, meaning that any reduction in the sulfur content of diesel fuel will yield a corresponding reduction in PM.⁴⁷ Second, and more important, sulfur in the exhaust stream builds up on several of the vehicle’s emissions after-treatment systems, especially the substrate oxidization catalysts. At first the sulfur buildup merely reduces the capability of the technologies to reduce emissions, but when enough sulfur has built up, several of the exhaust treatment devices are rendered completely ineffective. Without the exhaust after-treatment technologies working together, diesel vehicles are unable to meet the EPA Tier 2 NOx and PM standards.

Because of sulfur’s PM emissions and detrimental effect on exhaust after-treatment technology, EPA has mandated that diesel fuel sulfur levels must be reduced from 500 parts per million (ppm) to 15 ppm. Diesel fuel with a sulfur level of 15 ppm is known as ULSD. As of June 1, 2006, 80 percent of diesel fuel sold in the United States was required to be ULSD, and by December 2010 all diesel fuel sold must be ULSD.⁴⁸ The switch from low-sulfur diesel to ULSD is not without costs. Pump prices for ULSD in 2008 averaged about $0.10 per gallon above the price of low-sulfur diesel.⁴⁹

Current Market Issues

For U.S. consumers interested in purchasing a new light-duty diesel vehicle, there are few vehicles available for consideration. In the car market, Volkswagen offers diesel engines in its Jetta nameplate, Mercedes Benz offers a diesel engine in its E-Class sedan, and BMW offers a diesel in its 3 Series sedan. In the light truck segment of the market, General Motors, Ford, and Chrysler offer diesel engines in their heavy-duty pickup trucks and vans, and Mercedes Benz offers diesel engines in its R-Class, ML-Class, and GL-Class sport utility vehicles. Honda, Chrysler, and Toyota have canceled or delayed planned diesel product offerings, citing the high incremental cost of diesel fuel, costly emissions control equipment, and limited consumer interest as reasons for the decision.⁵⁰

Although diesel vehicles are more fuel-efficient than gasoline vehicles, the current price premium for diesel fuel in the U.S. is still clearly dissuasive in terms of switching to diesel. At retail prices for diesel and gasoline ($2.27 and $1.84 per gallon, respectively, as of January 26, 2009), the efficiency of the diesel vehicle would need to be at least 23 percent higher to justify operating a light-duty diesel vehicle.^51> In addition, the spread between diesel and gasoline prices is likely to get wider, as a result of the ramping up of domestic ethanol supply and growing imports of gasoline from Europe. American refiners, historically geared heavily toward gasoline, now find that demand for gasoline in the long term is likely to diminish. Europe, while using more crude to keep up with growing diesel demand, is awash in gasoline, and the United States continues to be Europe’s primary export market for excess gasoline.

Consumers also have to factor in the relatively high purchase cost of diesel vehicles relative to their gasoline-powered counterparts. Depending on the manufacturer, the incremental cost of a diesel vehicle ranges between $1,000 and $7,195, a wide range that reflects manufacturers’ pricing strategies and the cost of other included equipment. The average incremental cost for a Mercedes Benz diesel vehicle is $1,250; the average for a Volkswagen or BWM diesel is $4,225; and the average for a diesel-powered heavy pickup truck is $6,730. Offsetting some or all of these costs is the fact that diesel vehicles are also eligible for tax credits ranging from $900 to $1,800, depending on the vehicle.⁵² Mercedes Benz has priced its diesel vehicles so that their incremental cost is equal to the available tax credit.

In addition to the economic hurdles faced by diesel vehicles, consumers also associate problems with diesel vehicles from the 1980s with the advanced diesel vehicles offered today. A recent survey measuring willingness to purchase diesel vehicles indicated that fewer than 15 percent of consumers would consider diesel as an acceptable option for their next vehicle purchase. In contrast, 70 percent said they would consider a hybrid vehicle.⁵³ In another survey, which asked consumers why they would not consider a diesel vehicle, vehicle noise, smell or odor, price, maintenance cost, pollution, and cold start problems were cited by the respondents.⁵⁴ In addition to consumer opinions about diesel vehicles, 63 percent also considered the availability of diesel fuel to be a problem.⁵⁵ Although many of these perceptions are no longer accurate, they present a market issue that must be addressed before widespread consumer acceptance of diesel vehicles can be achieved.

Higher vehicle costs, coupled with higher prices for diesel fuel, constitute an economic disincentive for purchases of diesel vehicles. Thus, other attributes of diesel vehicles—such as durability, longevity, and power output—are likely to provide the justification for decisions to purchase diesel vehicles despite the additional expense. Consumers who have high travel requirements may choose diesel vehicles for their durability and longevity, and those who use their vehicles often for hauling or towing heavy loads may choose diesels for their superior power output.

Notes