Clean Diesel

ContentClean diesel 3The global challenge faced by the automotive industry 3

Clean diesel in the USA 4 Clean diesel – comparison with other powertrain concepts 4

Clean diesel – the technology 5

Clean diesel – economy and ecology 7

Clean diesel – market experience 9

Diesel from a regulatory perspective 10 Conclusion 12

Imprint 12

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Clean dieselThe automotive industry is one of the most innovative sectors in Germany. With invest-ments worth about 19 billion Euros in 2008, it was responsible for more than one-third of all research and development spending in the German manufacturing industry. More than 91,000 employees work in research and development at the industrial Centres of Excellence with continual improvement of the state of the art in sustainable automotive mobility in their minds.

Based on our three-fold strategy encompassing the concepts, namely

Reduce – increase the efficiency of the automobile by reducing fuel consumption•

Replenish – increase the proportion of alternative fuels•

Replace – with the ultimate goal of electro-mobility and hydrogen technology,•we want to provide sustainable, individual and affordable mobility even for future generations.

Crude oil is a finite resource that is becoming scarcer and more expensive day by day. The peaks in crude oil prices in 2008 clearly showed us the need for careful exploitation of the existing resources. Increasing engine efficiency assumes one of the topmost priorities, as every percentage increase in efficiency reduces the dependency on oil, conserves resources and contributes to climate protection.

This improvement of the efficiency not only has a geo-strategic impact, but also offers significant economic benefits. In particular, at times of soaring oil prices, customers are not only extremely concerned about the maintenance costs of their cars but also make use of every opportunity to cut down on running expenses. Clean diesel technology can significantly help in this regard.

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The global challenge faced by the automotive industry

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The automotive industry is continuing to strive forward for increasing the efficiency of petrol and diesel engines, as well as hybrid engines. These existing powertrain concepts will continue to be in demand on the mid-term market. At the same time, the German automotive industry is developing alternative powertrains for use in battery-powered electric vehicles and hydrogen-powered vehicles with the long-term objective of minimising CO2 emissions and counteracting the use of finite resources.

The industry is consciously aiming for long-term synergism of numerous powertrain concepts to effectively reduce CO2 emissions in the transportation sector and sustain our energy supply. An engine concept customised to individual usage profile should be available to the customer.

The scope for improvement of efficiency according to the different concepts and their predefined uses can be described and classified as follows:

The efficiency of petrol engines can be increased by downsizing and turbo •charging, as well as through power and heat management, for instance. This concept offers a good price/performance ratio in comparison with other technologies, especially in case of small-sized vehicles.

In principle, clean diesel engines offer the same potential as petrol engines in •decreasing fuel consumption. nevertheless, the even higher efficiency of the diesel makes this powertrain technology particularly worthwhile for customers who tend to go on long and medium journeys (high annual mileage). This is where clean diesel shows its strengths: low fuel consumption and optimum range – the benefit increases with the size of the vehicle.

Clean diesel in the USA Clean diesel – comparison with other powertrain concepts

Time Time Time

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Comparison of Powertrain Concepts

Source: General Motors Company

Mild hybrid with a petrol engine

Cleandiesel engine

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hybrid engines combine combustion and electric engines and, in particular allow •high savings in inner-city stop-start operation; thanks to the use of the electric powertrain system while the combustion engine is switched off. On longer journeys they offer lower efficiency in comparison with diesel vehicles as the electric engine components are hardly used and the weight of the two powertrains including the battery also plays a significant role.

Battery-powered electric vehicles and hydrogen-powered vehicles represent zero-•emission travel in the long term. Electric powertrains will be able to demonstrate their strengths primarily in urban areas and small vehicle designs.

Clean diesel thus suits the usage patterns of many American customers, as it allows considerably higher ranges and makes a significant contribution to climate protection and energy security.

Modern diesel powertrains have developed to reach the status of high performance, fuel-efficient, sophisticated and, above all, clean engines. As a result of the emissions legislation, exhaust emissions from diesel engines have been reduced by up to 98 percent since the start of the nineties. And the industry is committed to follow this course: clean diesel is now a unique, clean and fuel-efficient powertrain technology; thanks to its superior performance and large ranges.

Clean diesel engines with the latest emissions control technologies achieve the BIn 5 and UlEV emissions standards and are thus, on par with petrol engines. Thanks to their low level of emissions, clean diesel vehicles are used even in the US state of California, which has the strictest emissions limits worldwide. This new generation of diesel engine is possible, thanks to a whole range of innovative measures related to the engine, such as Piezo Common Rail injection at up to 2,000 bars, optimised turbocharging and exhaust-gas recirculation for reducing untreated emissions. In combination with the particulate filter, this means that the diesel engine is now virtually soot-free. last but not the least, nitrogen oxide emissions are also reduced by up to 90 percent, thanks to a special after-treatment method. The below figure shows the achieved reductions in emissions.

Outstanding proof of these technological advantages is the fact that the Green Car of the Year award has now been presented to a clean diesel model for the fourth year in a row.

Clean diesel – the technology

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Clean Diesel Emissions reductions since 1991in percent

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HC+NOx CO

Source: Robert Bosch GmbH

Clean Diesel1991 Diesel

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Green Car in 2007, 2008, 2009 and 2010World Green Car in 2007, Green Car of the Year in 2008, 2009, 2010

Green Car in 2007, 2008, 2009 and 2010World Green Car in 2007, Green Car of the Year in 2008, 2009, 2010

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Clean diesel engines demonstrate 20-25 % higher efficiency in comparison with modern petrol engines, thus facilitating significantly larger ranges. This implies that the diesel engine makes a higher contribution to the achievement of fuel economy objectives, which in turn leads to significantly fewer trips by the customer to the petrol station. Depending on their average annual mileage, this effect is already reflected in significantly lower fuel costs for many clean diesel customers in the USA. This goes hand in hand with ecological benefits - every mile covered by a diesel vehicle cuts down emissions.

This is not everything about the role-model economy of the diesel engine. The diesel engine can do even more. It offers additional potential for further reducing the dependency on oil and cutting down on CO2 when operated with biofuels.For this reason, we are increasingly focusing on alternative fuels and sustainably produced biofuels and advocate binding compliance with international sustainability criteria for biofuels.

We are currently seeing first generation biofuels – in particular biodiesel. This has an average CO2 reduction potential of around 50 % in comparison with fossil diesel. The disadvantage lies in the fact that, due to its chemical properties, it is only compatible in limited quantities with the current vehicle population and thus, can only be blended with diesel in limited quantities.

For this reason, the German automotive industry is actively promoting the introduction of new, top-quality alternative fuels. The focus is currently on hydrogenated plant oils and second generation synthetic fuels, such as BTl (biomass to liquid) and GTl (gas to liquid). These new fuels can be used both as a blend as well as in their pure form, and there is no limit to their scope of application. BTl even offers a CO2 reduction poten-tial of more than 90 percent. Furthermore, these fuels have a low aromatic content and a high cetane number. This results in significantly lower particulate emissions and can even increase engine efficiency.

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Clean diesel – economy and ecology

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EmissionsFuel consumptionSpecific power

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Premise: Mid size car, 1,400 kg, 100 kW

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Increase in efficiency of the clean dieselThe Clean Diesel offers high potential for further innovation

Source: Robert Bosch GmbH

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The German automotive industry has successfully reduced the average fuel consump-tion of passenger vehicles manufactured and distributed in Germany by more than 40 percent since 1978. Voluntary commitments that have consistently been successfully put into practice have helped to achieve this reduction in fuel consumption. In spite of increasing mileages, fuel consumption in Germany continues to decrease. This could be attributed to an ever increasing proportion of diesel models in all newly registered vehicles. The proportion of diesel vehicles in all new cars sold in Germany in 1995 was just 14.6 %, whereas it had increased to 47.7 % by 2007. The same is true in Europe - the proportion of diesel vehicles in Western Europe is now 53.3 %.

This success story of the diesel engine can continue in the USA. Starting with Model Year 2007, German OEMs have now introduced a total of 11 clean diesel models in the US market. In brief, it is clear that the customers, who are now turning to clean diesel engines are able to appreciate their outstanding characteristics: maximum efficiency with optimum cleanness, combined with excellent performance and torque values. In particular, the high torque development at low rpm in modern clean diesel engines results in a superior, relaxed and comfortable driving experience with equally high mileage per gallon.

Clean diesel - market experience

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Newly registered passenger vehicles in GermanyProportion of petrol and diesel in percentage

Source: VDA

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Further knowledge obtained during the rollout of clean diesel can be summarised as follows:

Cost of Ownership (CoO) is a logical deciding factor and a clear priority for •customers who choose to purchase a clean diesel model;

Based on data from new vehicle ownership surveys including all manufacturers •(the new Vehicle Experience Study - nVES), customers who purchased clean diesel vehicles were interested in a vehicle with advantages that could be practically proven (e.g. mileage, fuel economy, CoO, etc.);

The state-subsidised incorporation of vehicles with clean diesel engines for •particularly environmentally-friendly vehicles by means of tax concessions has led to a significant increase in the proportion of diesel engines in privately owned vehicles;

Demand for clean diesel vehicles is determined to a large extent by cost factors. •The higher purchase price for a clean diesel in comparison with a petrol model (although still lower than the cost of a hybrid vehicle) must ultimately pay off for the customers with regards to the above-mentioned cost factors (e.g. additional cost of a clean diesel engine vs. fuel savings, taxation, etc.).

The German automotive industry is therefore convinced that the demand for diesel would continue to increase in the long term even in the USA. however, as the above analyses show, this does require competition-free conditions for benefiting from the excellent CoO and CO2 advantages of clean diesel engines. Similar taxation of the different fuels and the above-mentioned state-subsidised incorporation of clean diesel engines should be considered as conducive conditions.

On the basis of competition-free conditions, clean diesel represents a convincing alternative to existing powertrain technologies with respect to the usage patterns of many US customers. Besides the clear price advantage in comparison to the hybrid concept, it offers a much greater chance for market penetration and thus, a signifi-cantly wider basis for the associated savings.

So the diesel automobile could become an increasingly frequent sight on the US roads as well. We believe that diesel models could realistically represent 13 % of all US vehicles in the long run. This clearly represents a growth potential for all manufacturers in the USA, but the clear advantages of the diesel for certain journey ranges need to be highlighted and competition-free conditions have to be maintained for the clean diesel engine.

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The success story of the diesel engine in Europe and the experiences in the US market demonstrate that technology-independent conditions that do not distort competition make a significant contribution to the market success of clean diesel technology and thus, increasing the CO2 reduction potential and guaranteeing energy security. The important points in this respect are:

Adjustment of fuel tax for diesel and petrolDemand for diesel vehicles is significantly determined by Cost of Ownership. higher investments in diesel technology leading to a higher purchase price must be justifi-able to the customer through lower usage costs. The success story of diesel in Europe is, on the one hand, due to the lower fuel consumption of diesel models and the fact that diesel also benefits from tax parity or an improved tax status in comparison with petrol. On the other hand, the superior drive concept has further promoted the success of diesel. Diesel costs more than petrol in the USA. This is partly due to the road maintenance tax of 6 cents per gallon on diesel, which is paid by commercial vehicles to finance the maintenance of road infrastructure. Against this backdrop, the levy of this tax exclusively on diesel should be reconsidered.

To promote diesel and thus, increase CO2 benefits and guarantee energy security, it is recommended that the road maintenance tax should be restructured and diesel and petrol should both be taxed equally. The road maintenance tax of 6 cents per gallon should be split between diesel and petrol. This would allow diesel to be as competitive as petrol and eliminate existing disadvantages for clean diesel vehicles.

Extending incentives for efficient vehiclesDemand for fuel-efficient vehicles is encouraged by granting tax concessions to them. Clean diesel vehicles also qualify for these tax concessions due to their high range and efficiency. The tax concessions partly meet the higher cost of purchasing diesel vehicles and stimulate demand for diesel engines. however, tax concessions are supposed to be phased out by the end of 2010.

In order to promote efficient technologies and thus, also diesel vehicles, unbiased technology-independent continuation of the tax concessions and appropriate adjust-ment of the amount of subsidisation are recommended.

The treatment of all vehicle powertrain concepts on a technology-independent and competition-free basis in current forum on regulations of incentives/penaltiesIncentives/penalties systems for vehicles are being discussed in California and other States. low fuel-consumption vehicles should receive tax relief and high fuel-con-sumption vehicles should be further taxed. Experiences from Europe – where 16 out of 27 EU Member States have CO2-based vehicle registration and/or annual tax – show that this kind of taxation has a controlling impact.It is essential for incentives/penalties regulation to be technology- and segment-independent and vehicle efficiency should be a priority. This sends a clear signal to both customers and manufacturers that investments in efficient technologies certainly pay off.

Diesel from a regulatory perspective

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An incentives/penalties system should

ensure that consumption is taxed objectively in accordance with the FE value •of a vehicle, and

not differentiate between powertrain technologies with regards to taxation. •

Only this kind of incentives/penalties system would not discriminate against any technology or segment and enable a shift towards the most efficient technology among all powertrain concepts.

Multiple loans for efficient vehicles in national greenhouse gas legislationnational greenhouse gas legislation proposes the so-called multipliers for particularly efficient technologies, i.e. such vehicles should be counted several times in the legal fulfilment of the standards. Until now, the proposal has primarily foreseen multipliers for BEVs, FCEVs and plug-ins.

In order to promote clean diesel vehicles, it is suggested that they should also be awarded a multiplier of up to 1.5 due to their high efficiency. This would provide essential incentives for the manufacturers to introduce clean diesel vehicles into the market.

Ongoing improvement in the quality of diesel fuelThe improved fuel quality in the USA has significantly contributed to the prolifera-tion of vehicles with a diesel powertrain. In particular, the nationwide availability of low-sulphur diesel in the USA since 2006 has enabled the use of the latest diesel technologies and efficient exhaust-gas treatment systems. The main focus is now on consistently high fuel quality across the whole nation.

D I E S E l F R O M A R EG U l ATO RY P E R S P ECT I V E

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The harmonisation of taxation for diesel and petrol along with the technology-inde-pendent subsidisation of low-emission powertrain systems create conditions that do not distort competition and thus, offer the opportunity for increased market success for diesel vehicles in the USA.

An increasing proportion of clean diesel vehicles not only results in a cost-efficient reduction in greenhouse gases, but also represents an additional means for guaran-teeing energy security, with regard to the fuel savings potential and the possibility of blending with biofuels.

ImprintPublisher German Association of the Automotive Industry VDA (Verband der Automobilindustrie e.V.)

Westendstr. 61 60325 Frankfurt am Main, Germany www.vda.de

Editor VDA Technical Department

Design & Printing dangerous. Berlin

Images Audi AG, BMW AG, Robert Bosch Gmbh, Daimler AG, General Motors Company, Volkswagen AG, VDA

Copyright Verband der Automobilindustrie e. V. (VDA) 2010

Conclusion

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