Introduction of ULSD and Clean-Diesel Vehicles
On June 1, petroleum refineries were required to begin making ultra-low sulfur diesel (ULSD). The new fuel has a maximum sulfur content of 15 parts per million (ppm) compared with the previous standard of 500 ppm. ULSD will be available at retail terminals by October 15, 2006, and will be labeled as “S15.” This change has been planned for several years and coincides with new emissions regulations for 2007 model-year diesel vehicles. These 2007 vehicles, as well as newer heavy-duty diesel vehicles and some passenger vehicles, will be required by both the U.S. Environmental Protection Agency (EPA) and manufacturers to use the new ULSD. Older vehicles may also use ULSD without any expected problems. In 2010, all diesel fuel sold in the United States, including non-road diesel, will be required to be ULSD.
The removal of sulfur from diesel fuel is similar to the phasing-out of leaded gasoline that occurred in the 1970s. In addition to the environmental and health concerns of lead, its presence also prohibited the use of a catalytic converter. Similarly, sulfur in diesel fuel can prohibit the use of catalyst systems and particulate traps, and because sulfur occurs naturally in diesel, extra steps must be taken in the refinery process to remove it. These processes also remove some of the lubricity properties of the fuel, which must be compensated for by the addition of additives. Both of these steps add to the final cost, with the EPA estimating about five cents per gallon more and some in the refining industry estimating up to nine cents more per gallon. Additionally, the use of emission control systems enabled by ULSD can add more than $3,000 to the cost of a new heavy-duty truck.
When the ULSD requirements are fully implemented and clean-diesel vehicles have replaced all of the diesel vehicles currently in use (estimated to be in 2030), the EPA says that air pollution from diesel vehicles will be reduced by 90 percent from current levels. Other benefits will be immediate, as the EPA claims the use of ULSD results in a 10 percent reduction in air pollution when used in any diesel vehicle.
Although the new emission requirements for 2007 diesel vehicles have been known for several years, the auto manufacturers will have few diesel passenger cars ready in time. Chrysler has announced that it will not be producing the diesel-powered Jeep Liberty in 2007 because it does not meet the stricter emissions standards. Similarly, Volkswagen will not be selling diesel versions of the 2007 Jetta, Golf, or New Beetle in the United States. These Volkswagens (VWs) use the Turbocharged Direct Inject (TDI) system, which has mechanical direct-injection. Although it is rather sophisticated, it still cannot achieve the precise control of a common-rail system, which is probably what VW will use in 2008.
According to VW spokesperson Keith Price, the sole 2007 model diesel VW sold in America will be the Touareg, which has less stringent emissions standards because it is classified as a truck. To make up for the lack of diesel cars available in 2007, VW is producing ten thousand extra 2006 Passats, which will allow sales to carry over into 2007. VW is planning to return in 2008 with an all-new diesel Passat.
The absence of 2007 model-year diesels will come at a particularly bad time for VW, as diesels accounted for a record high of 22 percent of its sales this year, said another VW source, Steve Keyes. The increase in sales is attributed to VW marketing their fuel-efficient diesel vehicles as a way to save money on rising fuel costs. In the heavy-duty truck segment, the upcoming changes (and increased price) of the 2007 model-year vehicles has prompted a recent surge in vehicle sales. A similar situation may occur in 2009 before the second-part of the diesel regulations take effect in that segment.
The 2007 Mercedes E320 will be one of the first vehicles sold in the United States with clean-diesel technology, which Mercedes calls “Bluetec.” According to DaimlerChrysler, the Bluetec system features extremely precise engine control, three catalytic converters, and a particulate filter. One of the catalytic converters is a selective catalyst reduction (SCR) system, which will require a urea solution Mercedes calls “AdBlue.” The Adblue is consumed at such a slow rate that it can be refilled by the dealer during regularly-scheduled maintenance. In what many would consider to be a benefit of the DaimlerChrysler merger, the Bluetec technology will also be used in Chrysler vehicles, including the 2007 diesel Jeep Grand Cherokee.
If small, clean-diesel vehicles appear on the market, they could give gasoline-hybrids a run for their money. Fuel economy ratings of 40 miles per gallon are typical for diesels. Although diesel engines typically cost more than gasoline engines, the difference is not as high as the cost of a hybrid powertrain. According to the Energy Policy Act of 2005, tax incentives similar to those available for hybrids will be available for clean-diesel cars and trucks. The incentives range from $250 to $3,400 per vehicle and are based upon the fuel economy increases compared to the average fuel economy of 2002 vehicles in the same weight class. As with the hybrid tax credits, the incentives apply to the first sixty thousand vehicles sold by the manufacturer and are gradually reduced thereafter.
It is not yet clear what impact ULSD and clean-diesel vehicles will have on the biodiesel industry. One positive outcome is that most of the existing diesel engines have to be redesigned, and considerations for using biodiesel blends are being incorporated into these designs. This includes eliminating the use of materials that are incompatible with biodiesel, such as copper. It is expected that a two percent biodiesel blend (B2) will also be common in ULSD because it returns the lubricity properties that were removed in the sulfur-removal process. Additionally, the increased price of ULSD will make biodiesel slightly more competitive. Currently, a $1 per-gallon tax credit exists on B100 biodiesel, with the tax credit on blended biodiesel proportional to the amount of biodiesel in it. Because of this tax credit, biodiesel is already cheaper in some markets than standard diesel fuel.
The National Biodiesel Board cites one of the drawbacks of using biodiesel in a conventional diesel engine as it usually producing slightly more NOx than regular diesel fuel. The use of a catalyst system on clean-diesel vehicles will allow the NOx to be neutralized into nitrogen and water, thus negating the problem. This will address the concerns of using biodiesel in EPA non-attainment areas. Besides still burning cleaner than ULSD, biodiesel is a renewable fuel source, and ULSD is obviously not.
One downside of ULSD for the biodiesel industry is that consumers may perceive ULSD as being an environmentally friendly fuel, and not go to the trouble of trying to find a biodiesel pump or paying more if ULSD is cheaper. As it will take a few years for manufacturers to phase-in clean-diesel vehicles, the number of diesel-powered cars available on the market will have a short-term decrease. But, as the demand for biodiesel is currently greater than the supply, this should not have any effect on the biodiesel industry. Also, concerns about running high blends of biodiesel in an engine without the explicit consent of the manufacturer may be amplified by the more complex and expensive injector and catalyst systems.