The Volkswagen Scandal 10 December 2015| Prepared by Iain MCGlinchy

What happened?

• According to the US EPA’s website:

• On September 18, 2015, EPA issued a Notice of Violation of the Clean Air Act to Volkswagen AG, Audi AG, and Volkswagen Group of America, Inc. alleging that model year 2009 – 2015 Volkswagen and Audi diesel cars equipped with 2.0 liter engines included software that circumvents EPA emissions standards for nitrogen oxides. This software is a

“defeat device” as defined by the Clean Air Act.

• On November 2, EPA issued a second Notice of Violation to Volkswagen AG, Audi AG and Volkswagen Group of America, Inc. This notice was also issued to Porsche AG and Porsche Cars North America. These five companies are collectively referred to as Volkswagen. The Notice of Violation alleges that Volkswagen developed and installed a

defeat device in certain light duty diesel vehicles equipped with 3.0 liter engines for model years 2014 through 2016 that increases emissions of nitrogen oxide up to nine times EPA’s standard.

What is a defeat device?

• In the US1 a defeat device is defined as: an auxiliary emission control device

(AECD) that reduces the effectiveness of the emission control system under

conditions which may reasonably be expected to be encountered in normal

vehicle operation and use.

• European legislation2 has a similar, but longer definition:

• ‘defeat device’ means any element of design which senses temperature,

vehicle speed, engine speed (RPM), transmission gear, manifold vacuum or

any other parameter for the purpose of activating, modulating, delaying or

deactivating the operation of any part of the emission control system, that

reduces the effectiveness of the emission control system under conditions

which may reasonably be expected to be encountered in normal vehicle

operation and use

1 http://www.gpo.gov/fdsys/pkg/CFR-2015-title40-vol19/xml/CFR-2015-title40-vol19-sec86-004-2.xml 2 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:171:0001:0016:EN:PDF

What happened?

• Although the legal case only broke in September 2015, the underlying research

was carried out in 2014 by a European NGO the International Council on Clean

Transportation1

► NB: Those with long and good memories might recall I

cited ICCT research last year about discrepancies between

real world emissions vs models

• ICCT’s earlier work had focussed on Euro-standard vehicles. According to

them, they thought, because US standards were higher, diesels sold in the US

would be cleaner than in Europe

• They tested a VW Passat, a VW Jetta and a BMW X5 sold in the US

• The BMW had very clean tailpipe emissions, but the Volkswagens did not

• The ICCT passed the data to the US EPA who commenced further

investigations

1 www.theicct.org

What happened

• As a result of ICCT’s report, the U.S. Environment Protection Agency opened an investigation into Volkswagen in May 2014

• Following discussions with the EPA, Volkswagen said it had identified the reasons for the higher emissions and proposed a fix. It recalled nearly 500,000 U.S. vehicles in December to implement a software patch.

• But investigations by both California and US Federal authorities could not show VW fix actually worked

• It is not clear from media comment what happened at the US EPA between July 2014 and September 2015 but in September 2015 the EPA (and California State Government) took legal action against Volkswagen

• Globally this scandal now affects around eleven million vehicles.

• Includes Volkswagen, Skoda, Audi and Seat brands that use the EA189 diesel engine in 1.2, 1.6 and 2l versions

• Legal action is being taken in many countries

http://www.bloomberg.com/news/articles/2015-09-19/volkswagen-emissions-cheating-found-by-curious-clean-air-group

What is happening in New Zealand

• In New Zealand Volkswagen, along with Audi and Skoda are all imported by

European Motor Distributors (EMD)

• EMD have said there are up to 7,700 vehicles affected but numbers vary

• EMD has said that once a solution is approved in Europe they will recall and

repair all vehicles

• While New Zealand law was likely to have been broken, the priority has been to

identify and ensure that the affected vehicles are repaired

• We are aware that a New Zealand law firm is planning to take private legal

action against Volkswagen

► This appears to relate to loss of value in the vehicles

Why – the diesel dilemma

• All diesel engine manufacturers have to make a trade off

► the higher the temperature, the lower the particulates, and higher the efficiency

(least fuel use) and power of the engine

• BUT

► the higher the temperature the

higher the NOx

• This is known as the diesel dilemma

Why?

• Most manufacturers have opted to treat exhaust gases to reduce NOx

• Most technologies that treat the exhaust stream to comply with Euro 5 add

costs, both to the manufacturer or to the owner (for purchase of AdBlue)

• Software may also reduce power output from the engine by preventing heavy

acceleration to avoid producing NOx

Why?

• It looks like VW decided to prioritise power (acceleration) over emissions

• This seems to have been to encourage US buyers to but diesel cars

• As opposed to diesel trucks

Wouldn’t emissions testing have found this?

• In the wake of the scandal, several people said this highlighted the need for in-

service emissions tests in New Zealand

• Unfortunately, if testing in-service did work, the ‘scandal’ would never have

occurred, or at least would have been detected years earlier.

• The problem for in-service testing is that it is virtually impossible to produce

NOx in a workshop environment.

• the engine must be placed under load to produce NOx

• We also have the problem that many vehicles are showing higher levels of NOx

on the road than in laboratory tests.

► which ones are using defeat devices and which are showing the flexibility in the test

regime?

But what about on-road testing?

• Jeff Bluett is going to talk about the latest results

from his work on road-side testing using remote

sensing. This detects vehicles while moving

• In theory it could be used to detect excess NOx.

• However, this work shows no appreciable difference

between NO (note not NOx) and the emissions

standards until Euro 6

• The good news from this chart is that Euro 6 does

appear to lower NO

Has this happened before?

YES

• In 1998 the US EPA sued all the major diesel engine manufactures in the US for failing to meet emissions standards on roads (Caterpillar, Inc., Cummins Engine Company, Detroit Diesel Corporation, Mack Trucks, Inc., Navistar International Transportation Corporation, Renault Vehicules Industriels, s.a., and the Volvo Truck Corporation)

• To quote from the US Justice Department:

► … the company's engine software controls the timing of fuel injection into the combustion chamber, causing the engine to emit excessive amounts of NOx while the truck is running on the open road. However, the company's engine software is designed in such a way so that these emission levels do not show up on the federal test. Changing the timing of fuel injection can increase fuel economy, but at the expense of much higher emissions of NOx.

• The EPA successfully sued for $1 billion!

http://www.justice.gov/archive/opa/pr/1998/June/281.html

Has this happened before?

1ORBITAL (2005). NISE 2—Contract 2 Drive Cycle and Short Test Development, Department of the Environment and Heritage, Canberra, September 2005.

• In Australia a 2005 report commissioned by the Australian Federal Government1 found:

► “Both the Ford Falcon (EA through AU-II) and Holden Commodore (VS and VT) models were seen to transition lean in the “freeway” phase once vehicle speed had stabilised. The transition results in improved fuel consumption to the detriment of NOx emissions.”

• No action was taken

• In 2015 in response to the Volkswagen scandal the Australian Competition and Consumer Commission (ACCC) has said it will investigate taking action against Volkswagen

• “This enforcement investigation is a priority for the ACCC. We are very concerned about the potential consumer and competition detriment from this alleged conduct,” ACCC Chairman Rod Sims said.

• “… using defeat devices is specifically prohibited under the Australian Design Rules, which are picked up as Australian Consumer Law (ACL) mandatory safety standards.”

What can we do in response in NZ?

• In New Zealand we are planning a review of the need for further emissions

standards for both new and used vehicles

• We have been waiting for Australia to make an announcement, which is still

expected before Christmas, as to the timing of new standards there

• Jeff Bluett’s remote sensing work gives us some confidence that requiring

Euro 6 would lead to improvements in air quality although over a long time

frame

What can we do about it internationally?

• The scandal has focussed attention on the issue that NOx limits (and also CO2 emission reductions) are not being seen in the real world

• It is clear that the test methods used in Europe, and to a lesser extent in the US, are open to ‘gaming’ where manufacturers are using poorly defined test procedures to improve the outcomes of the tests

• A new test cycle that more closely resembles on road use is clearly desirable

• There is already a proposal known as “Real Driving Emissions (RDE)” to implement a new test procedure

BUT

• EU car manufacturers have to meet legislated CO2 reduction targets (95g CO2/km by 2021) and this is based in the old NEDC test

• If the cycle is changed manufacturers may face high(er) costs to comply

• New test was to be introduced in 2017, but now looks like 2019, or later

New drive cycle (Real Driving Emissions (RDE))

http://www.theicct.org/sites/default/files/publications/ICCT_WLTP_EffectEU_20141029.pdf

New RDE

or World Harmonized Light Vehicle Test Procedure (WLTP)

Existing NEDC

Defeat device vs tampering

• In New Zealand we have been discussing tampering with Vehicle Exhaust Emissions equipment

• This is different to fitting a defeat device, even if effect might be the same

• EU legislation defines tampering:

• Tampering means inactivation, adjustment or modification of the vehicle emissions control or propulsion system, including any software or other logical control elements of those systems, that has the effect, whether intended or not, of worsening the emissions performance of the vehicle;

• Effectively, a ‘defeat device’ is installed by the

manufacturer to ‘defeat’ the certification tests.

Tampering is done by the owner after the vehicle

enters service

• Ministry plans to hold a workshop in 2016 to discuss what we can do about tampering

Divergence in fuel efficiency

• There is a new MOT report on fuel use of vehicles on our roads

• We found that a small number of petrol vehicles are more fuel efficient than would be expected from the type approval numbers, but most are not

• There is some correlation between real-world and type approval fuel efficiency values

Real-world fuel efficiency of light vehicles in New Zealand Haobo Wang, Iain McGlinchy, Stuart Badger and Sarah Wheaton http://atrf.info/papers/2015/files/ATRF2015_Resubmission_9.pdf

0

4

8

12

16

20

24

0 4 8 12 16 20 24

FC_NEDC

FC

_U

NIV

EH

Fuel consumption (drive cycle) l/100km F

ue

l co

nsu

mption (

rea

l w

orld

) l/1

00

km

Y = 0.81X + 2.78; R2 = 0.55

Light petrol vehicles: Divergence in fuel economy

►The trend is clear for NZ light petrol – the divergence in fuel efficiency of newer vehicles is greater for recent years)

% difference (Mean)

% difference (Median)

CC difference (Mean)

CC difference (Median)

Iain McGlinchy

Principal Adviser

Technology and Transport

Systems

Ministry of Transport

(04) 439 9295

i.mcglinchy@transport.govt.nz

www.transport.govt.nz