When you're hurtling down that autobahn at 130 mph (208 km/h), there's not much time to ponder the intricacies of automotive propulsion. You just know you're hauling and that concentration is advisable.

But in the Volkswagen AG Golf GTI TDI 150, you're compelled to divert your attention from the road long enough to smile at this car's terrible little secret: It's powered by a diesel.

A high-performance diesel.

It's this simple: The 4-cyl. Golf TDI 150 blows away a lot of sporting cars, propelled by the most satisfying aspect of engine performance — torque. More torque — 231 lb.-ft. (313 Nm), to be exact — than is available from high-line V-6s from BMW AG or Jaguar. Diesels have torque in spades.

Or put it like this: If the inevitable goal of the future is increased efficiency, which way would you rather have 40 mpg (5.9 L/100 km)? In a spaciously packaged 4-cyl. diesel-powered sedan that goes from 0-to-62 mph (100-km/h) in 8.5 seconds and has the sort of torque output that V-8s are hard-pressed to equal, or in a hybrid-electrical-vehicle (HEV) that tops out at 90 mph (144 km/h), grazes its way to 60 mph (96 km/h) in around 13 seconds and can barely torque its way off the assembly line, much less haul a couple of Jet-skis?

No wonder, then, that in fuel-economy conscious Europe, nobody sees much need for expensive, complex — and underper-forming — HEVs. New-age diesels like VW's amazing TDI 150 are rewriting the rules of engagement. Diesel power stormed from a modest 14% of European new-car sales in 1990 to 33% last year. And they're expected to grab 50% market share by 2010. That's all thanks to fiendishly effective new-technology improvements to the diesel.

Contrast this with the typical American's freshest diesel memory: the 1978 Oldsmobile Delta 88 Royale. Its diesel — the first-ever passenger vehicle V-8 diesel, a hastily and unconvincingly “dieselized” version of GM's longstanding 350-cubic inch gasoline engine — developed just 125 hp from its gargantuan 5.7L of displacement. VW's bombastic 1.9L TDI 150 makes 25 hp more than the much-maligned late-'70s GM diesel that was exactly three times the TDI's size.

Forget performance: some of those GM diesel cars are still huffing to get to 60 mph. What about fuel economy? In the '70s, diesels didn't exactly put GM on the Friends of the Earth list: in the 4,000-lb. (1,810-kg) Delta 88, the diesel managed a piddling 21 mpg (11.2L/100 km). In the 3,000-lb. (1,360-kg) Golf, the TDI earns a combined 53 mpg (4.4L/100 km).

That should tell you something about how far diesels have advanced, technically, in the last two decades. That also should tell you something about the difficulty of changing perceptions of the diesel for the typical U.S. customer, who for all intents and purposes hasn't been exposed to a passenger-vehicle diesel for the last two decades — and the diesels he or she does see are in commercial trucks that, as they struggle to accelerate, leave that black-particle mushroom cloud to descend on his windshield.

Europe's breakneck embrace of new-technology diesels has caused a schism between the U.S. and European product plans — and left the U.S. automakers flatfooted in fulfilling the explosive European demand.

More vexing still, new-age diesels would at once appear to be a blessing for the U.S., where intensifying environmental and energy supply pressures are causing political and economic tension for industry and consumers alike. But conflicting fiscal interests, negative consumer perceptions and environmental regulations have entwined in a Gordian knot strangling diesel's prospects for meaningful U.S. penetration.

General Motors Corp, for one, appears ready for a fight. Perhaps still smarting from its disastrously costly effort ($350 million that GM put into the EV1 program) to meet one-time California zero-emissions vehicle (ZEV) regulations, GM is openly promoting its activities with the Diesel Technology Forum, a surprisingly straight-talking coalition of diesel-promoting industrial, technical and market interests. In an outstanding report (one that, in all honesty, could have served as the template for this story), issued just as WAW went to press, the Forum expertly summarizes the current state of diesel affairs.

The highly readable “Demand for Diesels: The European Experience — Harnessing Diesel Innovation for Passenger Vehicle Fuel Efficiency and Emissions Objectives,” (downloadable at www.die-selforum.org) the Forum states:

“Even in this age of globalization, the light-duty diesel markets in the United States and Europe remain a world apart. European policymakers have recognized the environmental advantages of diesel, and have allowed new diesel vehicles to prove themselves as efficient, quiet and powerful alternatives. In America, growth in the market share of light-duty diesels would vastly reduce fuel consumption, foreign oil imports and greenhouse-gas emissions.”

That's not all. The report concludes: “Despite these (diesel) advantages, and despite the regulatory path taken in Europe, American policymakers have created a regulatory structure that greatly impedes the widespread use of diesel vehicles. Consequently, Americans may be denied the performance, fuel economy and environmental benefits of advanced diesel technology.”

Although that may not be the makings of a full-blown conspiracy, most interests in the auto industry — in the U.S. and abroad — are beginning to wonder aloud if we, and the Bush Administration, do indeed have our priorities in order. In one breath we speak of the need to protect the environment, reduce dependence on foreign oil and cut our energy use in general, yet we embrace regulations that effectively kibosh the technology that may best serve those conflicting endeavors.

The bulk of this story, presented in a “module” form that we hope allows the reader to focus on the key points, attempts to explain why.

In researching this story, WAW interviewed dozens of sources, most of whom have intimate knowledge of the market. Most, although not all, were anxious to speak on the record, often with startling candidness. As much as possible, we attempt to let their quotes tell the story. Decide for yourself where the “spin” begins and ends.

Most of those interviewed agree on one thing, however: With all things considered — including customer-pleasing performance — if the U.S. ignores high-technology diesels in favor of its current fascination with HEV technology, we probably aren't backing the right horse.

TECHNOLOGY

Europe's Age of Diesel Enlightenment is attributable to what many say is history's most rapid advance of new technology for the internal combustion engine.

And it has been a genuine renaissance for a handful of parts producers. Previously saddled with a low-tech repuation, today's diesels flaunt the best technology money can buy. At the heart of that technology are fuel- and intake-system suppliers.

The big winners: suppliers with advanced fuel-delivery technology: Robert Bosch GmbH, Siemens AG, Delphi Automotive Systems Corp. and Denso Corp.

Then there are the turbocharger suppliers, namely Garrett Engine Boosting Systems and BorgWarner Turbo Systems, which in 1998 purchased the well-established European turbo-charging system division of Kuhnle, Kopp and Kausch. They're sitting pretty because every new diesel uses a turbocharger. Sometimes two.

Diesel's abrupt technical transformation started in the late '90s with the adoption of two critical technical innovations: direct injection (DI) of fuel into each cylinder and “common-rail” fueling systems.

Direct injection markedly increases the thermal efficiency of the diesel, which, well more than a century after its invention, has yet to be matched by any mainstream internal combustion engine.

DI also provides the ability to “shape” the combustion event — delivering, again, a vast improvement, this time for noise, vibration and harshness (NVH) and emissions. With DI, a tiny amount of fuel can be injected prior to the “main” combustion event. This procedure softens the powerful combustion light-off that gives diesels their high torque output — and until now, their signature “clatter.” The pre-injection mellows the bang, making a diesel that sounds a lot less like a rolling 55-gallon drum with boulders inside. This so-called “pilot” injection also reduces the production of certain pollutants, including that pesky NOx.

With a tidying-up post-combustion injection, particulates and other emissions are dampened.

Injectors, then, have become crucial. Siemens, Delphi and Bosch all are ramping production of sophisticated new injectors that can handle today's sky-high fuel pressure, and inject infinitesimal fuel droplets so quickly that upcoming diesels may at times employ as many as five distinct injections for each cylinder's combustion “event.”

If you don't think that's serious business, consider the business itself. Siemens, for example, recently launched its piezohydraulic injectors — units that improve vastly on the precision and speed available from today's typical hydraulic/solenoid injectors. In less than 18 months, the supplier is going from ground-zero to production of 2.5 million injectors annually.

Precision-injection, in fact, is so crucial that Delphi's injectors are individually matched to each engine control unit. Each injector's performance “signature” is recorded during manufacture, then programmed into the engine's electronic control unit (ECU). As the injectors age or encounter other performance-deteriorating conditions, the ECU measures their responses to the originally recorded performance — and then can adjust each injector “on the fly” to maintain optimum engine performance.

By the 1980s, DI was commonplace in commercial diesels, but it took longer to fortify control electronics and overcome other technical challenges to adapt to the higher speed ranges expected of passenger-vehicle diesel.

Common-rail fueling systems, a much more recent innovation, have enabled a new order of diesel control. Previously, with primary fuel pumps delivering fuel to each cylinder, engine operation — and the efficiency of the combustion process — often was highly dependent on engine speed. That made for lousy performance and lousy emissions.

Common-rail systems use a single high-pressure fuel pump to pressurize fuel in a tubelike “rail” to which each injector is connected. The fuel in the rail always is available at a constant high pressure, eliminating engine-speed-dependent delivery.

But the most promising advantage of common-rail technology is the ability to deliver extremely high fuel pressures on the order of 23,000 psi (1,600 bar) or more. This type of pressure means that in microseconds, astonishingly tiny fuel droplets can be injected; these droplets more effectively mix with the induction air, boosting power production and reducing emissions.

Only Volkswagen AG, Europe's diesel volume-sales leader, has resisted the common-rail development path, instead relying on its unique “unit injector” system that combines each injector with an integral fuel pump, energized by its own lobe on the camshaft. This system develops pressures of up to 29,300 psi (2,020 bar) — yielding the outlandish per-liter output of our cover car, the Golf GTI TDI 150 (and that's with just two valves per cylinder). But the system is thought by many to be lacking the NVH qualities of the best common-rail systems.

Several sources agree that before the advent of exponentially more powerful electronic control units that enabled sophisticated DI “mapping,” there was little to suggest diesels would, in just a few short years, emerge as the most advanced and driveable engines on the road.

Emissions remain an issue, but sources say that the same sort of technical advances that have changed diesel performance and NVH also can work miracles on tailpipe troubles (see “Emissions,” p.36).

Ironically, GM helped to launch the “modern” diesel age, combining DI and a multivalve configuration for the first time in its 2L Ecotec engine for the 1997 Opel Vectra. The Ecotec, without common-rail fueling, made a modest 82 hp, but was followed quickly by a 2.2L making 120 hp. Along with the Ecotec there are a few other high-tech 4-cyl. diesels sprouted in Europe touting peppery specific output previously unimaginable for diesels.

Still, they were 4-cyl. engines — and 4-cyl. engines often don't send the auto show crowds scrambling for the press kit, even if they have sent European consumers scrambling for their checkbooks.

The 1997 Frankfurt auto show changed all that.

In Frankfurt that year, the three major German automakers all showed that diesel was ready to wear the “performance” cape. Audi, BMW AG and Mercedes-Benz AG all unveiled hulking V-8, common-rail fed, DI turbodiesels.

It was apparent that diesels were approaching gasoline-engine levels of performance and NVH. Fuel economy advantages already were well-known.

Consider the Mercedes 4L V-8 turbodiesel: 250 hp and 413 lb.-ft. (560 Nm) of torque. It makes 22 lb.-ft. (30 Nm) more torque than the high-performance 5.5L gasoline V-8 fitted in the E55 AMG. An E-Class with the V-8 turbodiesel does 0-to-60 mph in 7 seconds, a second quicker than the 3.2L gasoline V-6 and with 22% better fuel economy.

BMW's 3.9L V-8, with a cooled-EGR system and twin Garrett-made electronically adjustable-vane turbos, does 245 hp and delivers its 413 lb.-ft. (560 Nm) at barely more than step-off, 1,750 to 2,500 rpm. The company insists noise levels are “comparable with gasoline engines from BMW.”

Performance combined with economy, even for premium cars. Is it any wonder diesel is the hottest automotive accoutrement in Europe?
— with Tom Murphy, Roger Schreffler, Peter Robinson and William Diem

They Said:

In the United States, customers do not have a good image of diesel engines, based on the historical perspective of older diesels. We are developing technologies to reduce emissions while retaining all of the environmental and customer benefits of diesel technology.
— Jacques Nasser, chief executive office, Ford Motor Co., in an internal memo to employees.

Diesel engines essentially are becoming more and more gasoline-transparent.
— Gary Rogers, president and chief executive office, FEV Engine Technology Inc.

I can't have real high confidence (in after-treatment technology) until we do a lot more development work. It's like gasoline engines at the dawn of 3-way catalyst introduction.
— Richard Baker, corporate specialist on combustion and team leader, Advanced Diesel Systems, Ford Motor Co. Research Labs

With higher (injection) pressures, you have smaller drops. If the drop size is as small as possible, you have a better chance to get the fuel to the oxygen.
— Michael Lutz, responsible for North American diesel systems, Siemens AG

EMISSIONS

Emissions issues are the Big Chill for diesel's U.S. prospects.

Because of their superior fuel economy, diesels emit less hydrocarbons (HC), carbon monoxide (CO) and, most importantly, less carbon dioxide (CO2) than do spark-ignition (SI) gasoline engines. The output of these pollutants effectively is directly proportional to the amount of fuel used by a particular engine.

But so-called “lean-burn” engines — such as today's sophisticated compression-ignition (CI) diesels — emit more oxides of nitrogen (NOx) and particulate matter (PM) as a function of their unique combustion process. Common three-way catalytic converters used for SI engines can't cope with these higher concentrations.

That's where the trouble starts. Europe has aligned its near-term emissions-reduction strategy along the lines of the infamous Kyoto Protocol; its initial emphasis addresses a serious reduction of CO2. Upcoming 2005 Euro IV emissions regulations thus favor the CO2-friendly diesel. The European Community, says the industry's Diesel Technology Forum, has targeted aggressive reduction of CO2, while Euro IV's PM emissions standards also are relatively assertive to reflect the fact that PM emissions-reduction technology is rapidly advancing. With regard to the tougher nut of NOx, the Forum says European emissions standards “have ratcheted down more slowly to reflect the technological limitations in achieving those types of reductions.”

Upcoming U.S. and California emissions standards, conversely, have delivered diesels a knockout punch — before the match is started. Federal Environmental Protection Agency (EPA) Tier II and California's LEV2 insist upon drastic — some say unattainable — cuts in, you guessed it, NOx and PM emissions (see charts). Also, when the standards are fully phased in, light-duty trucks and SUVs are required to meet the same limits as passenger cars, eliminating current loopholes that permit trucks and SUVs to emit more. This is troublesome in that heavier light vehicles will have an even tougher time meeting the tough new standards because engines typically have to work commensurately harder to move increased weight.

Regulators say the new standards are crucial to assure future clean air. Most automakers insist they can't pen diesels into U.S. future-product plans because these orders-of-magnitude NOx and PM reductions simply aren't possible with today's technical understanding and low-quality diesel fuel (see “Fuel” p.40). And they add: If and when the technology is viable, it's gonna cost. Cost big.

But the supplier industry firmly believes in its ability to cost-effectively perfect the same diesel-cleaning technology that enabled, says the Diesel Technology Forum, an 83% reduction in PM and a 63% cut in NOx for heavy duty diesels since 1988.

In a 1998 interview, Bosch officials predicted that by 2004, particulate emissions will match the microscopic dust that comes off tires in the course of normal wear.

PSA Peugeot Citroen has in production for the 607 HDI a silicon carbide honeycomb filter that accumulates particulate matter for between 200 and 300 miles (480 km), then the accumulated particulates are oxidized by injecting a small amount of fuel and a rare-earth-derived additive called Eolys to superheat the exhaust and burn off the particulates. The Eolys tank holds 1.3 gallons (5L) and requires refilling every 50,000 miles (80,000 km) or so. It is claimed to eliminate 95% of particulate emissions.

Volkswagen AG is working on a novel “engine-based” approach leveraging complex chemical and catalytic reactions to achieve the near-zero particulate emissions. And supplier and automaker R&D operations are running full-tilt to perfect prototype NOx-reduction technology like Toyota's promising Diesel Particulate-NOx Reduction (DPNR) catalyst, which also employs advanced chemical/catalytic processes to scrub out the last vestiges of diesel emissions nastiness.

As yet, though, there is no system that can scrub it all — and do it reliably for the 100,000 or 150,000 miles (162,000 to 240,000 km) required by the pending emissions regulations. And sources admit that current after-treatment strategies could add hundreds of dollars in cost to a diesel “system.”

Bottom line: Automakers want to get diesels started in the U.S. and say the standards have to be “relaxed,” at least until emissions-reduction technology and fuel-quality improvements can make possible such severe reductions. Moreover, automakers have seen past regulatory intransigence wither under the unremitting glare of market reality and political changing-of-the-wind. Remember California's original 1998 Zero Emissions Vehicle mandate? Said to be non-negotiable, it eventually evaporated, along with the $350 million that GM alone put into its electric vehicle program.

Ironically, the big-league industry/government coalition charged with creating the 80-mpg (3L/100 km) “family sedan of the future” — the Partnership for a New Generation of Vehicles (PNGV) — has said that diesel-engined hybrids are the most viable way to achieve that high-mileage brass ring. Hundreds of millions of industry and government funds have gone into PNGV research — and yet the very government that helps to support PNGV has drafted emissions mandates that discount the potential of new-age diesels.

Regulators say if diesel can't make the grade, then go with something else.

They Said:

Don't expect anything (regarding changing California's LEV 2 standards). We're not going to relax them.

We're not out to pick on anybody. Diesels belong in the universe. The bottom line is, we need cleaner air in California, the number of vehicles here continuously grows, and we're not going to make an exception (for diesels).

They (automakers) fight these regulations. Then when they're making the cars they said they couldn't make, they brag about it in their advertising.
— Richard Varenchik, deputy communications director, California Air Resources Board (CARB)

I know that CARB, because of its diesel particulate (standards), almost seems targeted at killing the diesel. But I think we can get around that with good dialogue and a good look at the facts.
— John Sanderson, vice president and chief executive officer, Siemens Automotive

The technology to solve the NOx problem doesn't exist — at any fuel sulfur level.
— Edward Murphy, general manager, Downstream Industry Segment, American Petroleum Institute (API)

An efficient exhaust after-treatment with a particle filter and an additional de-NOx catalyst will be absolutely necessary (for diesels to meet upcoming emissions standards).

We do not have a solution. It's quite challenging. Even with the known efficiency of that (current technology) after-treatment, it's going to be very difficult.
— Klaus Krieger, senior vice president for Diesel Engineering, Robert Bosch GmbH

Right now, at least as it relates to U.S. emissions standards in 2004, the problem is NOx.
— Frank Briden, director of marketing and business development, Engelhard Corp.

We're not about trying to change the emissions standards. We're about trying to develop the technology to meet them.
— Robert Culver, executive director, Partnership for a New Generation of Vehicles (PNGV)

I really don't envision regulatory accommodation.

The particulates produced by diesels in Europe can't be a whole lot different. We have to look at why we have such philosophical differences.
— Gary Rogers, president and chief executive officer, FEV Engine Technology Inc.

California LEV2 emissions standards
(2004 phase-in)
In g/mi* Durab. LEV2 ULEV2 SULEV2 ZEV2
NMOG 50 k
120 k
0.075
0.090
0.040
0.055

0.010
0
0
CO 1) 50 k
120 k
3.4
4.2
1.7
2.1

1.0
0
0
NOx 50 k
120 k
0.05
0.07
0.05
0.07

0.02
0
0
PM 50 k
120 k

0.01

0.01

0.01
0
0
HCHO 50 k
120 k
0.015
0.018
0.008
0.011

0.004
0
0
*All in grams per mile (g/mi).
U.S. Federal Tier II emissions standards
(2004 phase-in)
Bin Bin 7 Bin 6 bin 5 Bin 4 bin 3 Bin 2
NMOG 50 k
120 k
0.100
0.125
0.075
0.090
0.075
0.090
0.075
0.090
0.070 0.055 0.010
CO 50 k
120 k
3.4
4.2
3.4
4.2
3.4
4.2
3.4
4.2
2.1 2.1 2.1
NOx 50 k
120 k
0.14
0.20
0.11
0.15
08
0.10
0.05
0.07
0.04 0.03 0.02
PM 120 k 0.02 0.02 0.02 0.01 0.01 0.01 0.01
HCHO 50 k
120 k
0.015
0.018
0.015
0.018
0.015
0.018
0.015
0.018
0.011 0.011 0.004
All in grams per mile (g/mi).
THE MARKET

Other stories here examine the technical reasons why Europe and the U.S. literally are an ocean apart regarding diesels. But what about the marketplace itself? Why isn't the rest of the world — particularly regions where gasoline is a valuable commodity — clamoring for diesels?

In Europe, suppliers and OEMs can't revise their market-penetration figures fast enough. The general consensus is that Europe-wide diesel penetration for light vehicles will approach or exceed 40% of the market in just a few more years, and likely account for 50% by 2010.

So it's no secret that everyone who sells in Europe is moving to make the diesel a cornerstone powertrain.

Meanwhile, city dwellers clad in facemasks in order to breathe safely are a common sight throughout Asia. Air pollution — which the World Health Organization says accounts for 4% to 8% of deaths on the continent — has become a tremendous problem from Bangkok to Beijing, and experts say toxic vehicle emissions are the primary contributor.

Because of the magnitude of the problem, Asia's automakers have bypassed diesel engines as an intermediary solution and instead have focused on developing fuel cells and hybrid-powered vehicles. Japanese automakers are at the forefront of the advanced fuel technology movement, but most say it will take a decade or more to achieve any sort of volume penetration of hybrids or fuel-cell vehicles.

Like the U.S., Asia largely views the diesel engine as an environmental culprit. But thanks to the growth in diesel popularity throughout Europe, Japanese automakers quickly are becoming experts in diesel technology.

Toyota Motor Corp. recently developed a diesel powerplant for the Yaris subcompact, which quickly won the hearts of usually nationalistic European consumers. The 1.4L diesel engine is so well-developed (and well-received) that BMW AG reportedly is in final talks to use the engine in one of its subcompacts — most likely the new Mini, due out next year.

Honda Motor Co. Ltd., prideful of its engine-technology reputation but stubborn too long about developing its own diesels, finally is developing a 2L diesel engine for its Accord sedan, destined for Europe in 2003. Starting in November, European Civics will come with a 1.7L, Isuzu Motors Ltd.-developed diesel.

Mazda Motor Corp. is seeking to strengthen its European foothold through a new diesel engine for Europe-bound Capella and Familia midsize sedans and the MPV and Premacy minivans. The automaker reportedly plans to produce the engines at a rate of 100,000 units annually.

Nissan Motor Co. Ltd. plans to further capitalize on its relationship with parent-company Renualt SA by using its 1L diesel powerplants in the Micra small car, produced at Nissan's U.K. factory for the European market.

Many sources say there are two primary problems: first, after a scare in the summer of 2000, gasoline has returned to relatively cheap prices here, so nobody much gives a hoot about 30% or 40% better economy. Second U.S. consumers have not formed a favorable impression of diesels. Some blame it on the awful diesels of two decades past. Others don't believe experience from a generation ago can explain it all: They say that in addition to cheap fuel, the vast population of foul, gritty, low-tech commercial diesels ensures U.S. drivers would never consider one for their own personal transportation.

There are fuel infrastructure issues, too. Diesel fuel isn't as freely available as gasoline, and when it is available, often it's at a grubby location where the oily film covers the ground, the nozzle, the people.

Nonetheless, supporters say the market is increasingly sensitive to the threat of higher future energy costs. When there was a gasoline price-panic earlier this spring, Volkswagen AG immediately sold out its entire year's allotment of diesel-powered models.
— with Katherine Zachary

They Said:

Diesel represents a strong alternative if fuel consumption is really going to be a factor in the marketplace. If you really take a look at the ‘package’ deal, the passenger-car diesel represents an incredible value.
— Robert Last, director of marketing and information technology, FEV Engine Technology Inc.

Competition (in the areas of emissions, fuel economy and performance) will be the driver. As engineers, we always like to go for more efficiency.
— Otto Willenbockel, executive director of engines, General Motors Corp. Powertrain Division.

The U.S. light-duty segment will be penetrated by light trucks. All the manufacturers are working on the (diesel-powered) half-ton chassis.

The market is going to become more and more familiar with diesels.
— Lee Wilson, president and general manager, BorgWarner Turbo Systems

People want performance, and what they mean is torque. For torque, nothing is better than the new diesels.

If people drove a big car with a diesel, they'd be amazed at the performance. Look at how diesel installation for European luxury cars has skyrocketed. It's about performance with them — for people who buy luxury cars, good fuel economy is just a bonus.
— U.S OEM development engineer who asks not to be identified

There are some remnants of the perception of diesels from the '70s.

I think the fact that VW is selling with some success in the U.S. shows there are some modest but limited gains in that market.

I don't think very much of the public thinks of the diesel as a ‘fun’ vehicle. The race is on for performance.
— Richard Baker, corporate specialist on combustion and team leader, Advanced Diesel Systems, Ford Motor Co. Research Labs

If emissions standards were commonized with Europe, diesels still wouldn't be here because of low fuel prices.
— Gary Rogers, president and chief executive officer, FEV Engine Technology Inc.

FUEL

If diesel is to have any future at all, virtually all sectors are agreed that low-sulfur (actually, ultra-low sulfur) diesel fuel is a must.

Sulfur is a bad actor when it comes to just about any type of emissions after-treatment system, but particularly for the oxides of nitrogen (NOx) traps and particulate filters without which diesel will never survive.

California already has some supply of low-sulfur diesel, but today's nationwide diesel fuel sulfur average is about 350 parts per million (ppm). Under provisions of Tier II, refiners must scrub 80% of the nation's diesel fuel to a 15 ppm standard by mid-2006.

On the face of it, that would seem okay. Except that both California LEV 2 and federal Tier II emissions standards begin for 2004 — so the low-sulfur fuel required by any Tier II- or LEV 2-compliant diesel-powered passenger vehicle won't be available for two years after the new emissions regulations take effect.

This past March, the auto industry began lobbying for an accelerated low-sulfur introduction. The Alliance of Automobile Manufacturers (AAM) petitioned the U.S. Court of Appeals to review the timeline for low-sulfur phase-in. “We believe that the EPA failed to go far enough with this regulation to help Tier II diesel vehicles meet their very stringent emissions standards and deadlines, as the agency promised when it promulgated the Tier II rule,” said AAM president and CEO Jo Cooper.

The oil industry, as you might surmise, has other ideas, and vigorously questions the requirement, which actually was adopted with heavy-duty and off-highway diesels in mind. It says the cost of converting its refineries offloads onto the oil industry much of the burden of reducing diesel-engine emissions, estimating the cost of diesel reduction will be upwards of $8 billion (a similar rule to cut gasoline sulfur is said to cost a similar $8 billion). Late last year in a well-publicized event, an independent U.S. refiner, Premcor USA, shuttered an Illinois facility because it said it could not afford to comply with the standards still five years in the future. Many smaller refiners are expected to follow a similar course.

Edward Murphy, general manager, Downstream Industry Segment, for the American Petroleum Institute, cautions that the rule will cause supply shortages and price spikes. He also says the mandate will cause unnatural pressure on already stretched refiners.

The National Petrochemical and Refiners Assn. (NPRA) earlier this year filed suit in the U.S. Court of Appeals for relief.

They Said:

It (fuel desulfurization) will cost more for the little guys (refiners) than the big guys.
— Robert Culver, executive director, Partnership for a New Generation of Vehicles (PNGV)

The technology to solve the NOx problem doesn't yet exist — at any sulfur level.

The average (per-gallon) cost isn't relevant. It's the incremental cost. Most refiners will decide whether or not to convert. Those who drop out will affect supply and you may see imports enter the market.

The question is, ‘Why do we need 80% of the fuel in 2006?’ The likely result is a train wreck.
— Edward Murphy, general manager, Downstream Industry Segment, American Petroleum Institute

COST

Ever heard a discussion in the auto industry that didn't, at the end of the day, come down to cost?

Although the ultimate issue always is, “What will it cost the customer?” suppliers are concerned that an increasingly competitive global vehicle market means OEMs, constantly on the cost-cutting prowl, may not forever be willing to pay reasonably for the advanced technology that has made diesels so good — and will be de rigeur to make diesels even better.

A few sources say it's simpler than that: Internally, OEMs have not generated enthusiasm for marketing diesels in the U.S. because they are too expensive, and without Europe's other market drivers — fuel prices and looming CO2 emissions regulations — U.S. customers absolutely would not pay the necessary “premium” over a gasoline engine.

Some sources, meanwhile, insist that's a handy excuse for profiteering on the pace of diesel's almost unprecedented market penetration. Diesels in Europe are as popular as reality television, and some suppliers charge that, considering the intense retail-price pressure in mature markets like the U.S. and Japan, automakers may be toying with the future of global diesel penetration by making diesel-hungry European customers pay more dearly than they should.

In the U.S., if other factors swing the diesel's way, the battle with hybrids for future high-mpg, low-emissions dominance may come down to which “system” is more expensive.

Doesn't it always?

They Said:

We only would have a chance if it (diesel technology) was price-competitive. It's not more expensive. There is only a little cost penalty.
— Michael Lutz, responsible for North American diesel systems, Siemens AG

There are real cost differences. The biggest cost is the fuel system. There's not any doubt the base cost is higher. All the emissions stuff will add cost, too, of course.
— Richard Baker, corporate specialist on combustion and team leader, Advanced Diesel Systems, Ford Motor Co. Research Labs

Frequently the industry vastly overestimates what it (diesel emissions-reduction) is going to cost. The technology is there — they (OEMs) can do it if they want to.
— Richard Varenchik, deputy communications director, California Air Resources Board (CARB)

Higher fuel costs support higher engine costs. It changes the equation from the demand side.
— Gary Rogers, president and chief executive officer, FEV Engine Technology Inc.

Diesel power is also cost-effective. The few models of diesels available to American consumers today demonstrate that light-duty diesel vehicles cost individual consumers less than the money it (a diesel engine) saves them through reduced fuel costs.
— The Diesel Technology Forum, “Demand for Diesels: The European Experience” (July 2001)

VS. HYBRIDS

Until the Final Solution — hydrogen-fueled fuel-cell power — what's the best near-term powertrain “package?”

Europe already has voted for diesel. The U.S., with its present climate of low-cost gasoline and stifling upcoming emissions standards — regulations that surely can't be met without unproven (and likely expensive) after-treatment technology — has all but cast its lot with gasoline-powered hybrid electric vehicles (HEVs).

Yet if diesel emissions-reduction technology is not yet proven, HEV systems are not much farther along the evolutionary scale. There are but two production samples available to American consumers, and both have virtually empty durability portfolios.

Similarly important from a marketability standpoint are two non-cost issues: hybrid “packaging” and performance/driveability.

Today's hybrids hardly are ideal all-around vehicles. Honda Motor Co. Ltd.'s Insight is a tight and tingly 2-seater, lacking in comfort and cargo space. Toyota Motor Corp.'s Prius is a more viable everyday vehicle, but accelerates like a kid on a Razor scooter — with a towing capacity to match.

Sales of HEVs don't seem to stretch as far as their mileage. Early this year, Toyota was said to have sold about 50,000 Prius, worldwide. Honda has moved far fewer Insights.

Both companies say U.S. demand outstrips supply, yet critics wonder if either company really wants to sell the cars when their makers are subsidizing their retail prices to the tune of thousands of dollars for each vehicle sold. Also, home-market demand has tapered — even Japanese customers, whose urban driving is best suited to squeeze out maximum hybrid advantage, do not appear to be overwhelmed by fuel or emissions savings.

Finally, consider some hybrid experience to date. Magazine testers across the land (including WAW's) can attest to the fact that the “real world” fuel economy of hybrids proves them to be over-promisers and under-deliverers. The reality of U.S. driving conditions — far different from the low-speed Japanese urban drive cycles for which the two current-production HEVs were developed — suggests that hybrids don't cough up anything close to their “rated” fuel economy figures.

Perhaps the best example is a recent Automobile magazine cross-country test of the Insight and Prius HEVs and Volkswagen's Europe-only “3-Liter” Lupo — so-named because of its 3-cyl. diesel's 3L/100 km (80-mpg) fuel economy rating. The Lupo whipped both HEVs in performance, driveability and comfort evaluations. And guess what? After the fuel receipts were tallied at the end of Automobile's cross-country run, the diesel-powered Lupo easily bested the hybrids.

WAW's sources in Detroit say that although the Motor City's automakers have a better plan for hybrid technology — i.e. giving its customers vehicles they want: trucks and SUVs. Early testing of Detroit's trucky HEVs (set to hit the market around 2003) shows that only in full-go urban driving do they make their case. And an inside source says his employer's HEV has yet to achieve any of its performance targets.

Moreover, a couple of highbrow studies have splashed a certain cold-water reality into the face of hybrids. As shown by the accompanying graphs (p.41) an MIT study says that in 2020, diesels are likely to represent better cost-to-benefit and total energy use ratios than hybrids.

It appears that tax incentives (pending from a Bush Administration energy plan) may play an important role in whether hybrids get an extra advantage over diesels, apart from emissions, into the hearts of regulators and consumers.

They Said:

Hybrids will be very expensive. The problem is, hybridization adds mass.

I think diesel is a very smart alternative.
— Otto Willenbockel, executive director of engines, General Motors Corp. Powertrain Division

There may very well be an important market for a hybrid, but maybe as part of a whole range of products.

Emissions is the big problem (for diesels versus hybrids).
— Richard Baker, corporate specialist on combustion and team leader, Advanced Diesel Systems, Ford Motor Co. Research Labs

I have to believe hybrids will be much slower to take off (with consumers). The driveability just isn't what people are used to.

Diesel combustion should be the (technology) that wins. The bottom line is thermal efficiency.
— Lee Wilson, president and general manager, BorgWarner Turbo Systems

The average consumer would be elated to have a ‘green’ vehicle. The average consumer also doesn't want to give up any performance.
— Robert Last, director of marketing and technology, FEV Engine Technology Inc.