August 29, 2006
Diesel Engines To Grow In Popularity?

GM has announced a new V8 turbo diesel that will fit in cars which currently use the GM small block V8 but will be 25% more fuel efficient. The engine is quiet enough to sound like a conventional gasoline engine and will meet all state and federal diesel engine emissions standards in 2010. The fuel efficient diesel will hit the market in 2010 or 2011.

Details are scanty, because GM is waiting to receive patents on some of the engine's technology, but Freese promised it would meet emissions requirements in all 50 states when it goes on sale. That's a significant accomplishment. The United States will have the most stringent limits on diesel emissions in the world in 2010.

GM is billing this engine as a premium diesel for use in Cadillacs and SUVs where the higher price for the diesel can be more easily justified.

GM promises the engine will use 25% less fuel than a comparable gasoline V8.

GM developed the engine to match or beat the world's finest diesels on power, fuel economy, sound and vibration. That makes it what Freese calls a premium diesel, like the ones that power most luxury sedans like the Audi A8, BMW 7-series and Mercedes-Benz S-class in Germany.

Diesels have not reached as wide a market in the US as they do in Europe in large part because diesels cost $1000 to $2000 more and the cheaper fuel in the US reduces the pay back for the more expensive diesel engines. Also, the diesels have been louder and smellier and their emissions have kept them out of cars in some states (most notably California). The higher cost of oil combined with technological innovations that lower noise and emissions might bring about a surge in diesel usage in the United States.

A reduction of allowed sulfur content of diesel fuels is making possible the use of emissions control technologies that reduce particulates emissions.

With these changes come a strengthened block and upgraded main bearings. All of these improvements will, however, require the use of new low-sulphur diesel, which is slated to hit fuel stations this fall. The new diesel is key to the particulate filters success, as it only contains 15 parts per million of sulphur, down from the current 550 parts per million. If our current diesel fuel were used, the engine wouldnt last long.

Quiet, low emissions, and high performance diesels for passenger cars will compete against gasoline hybrids as more fuel efficient alternatives to conventional gasoline cars. The most efficient liquid fuel burning car would use both a diesel engine and hybrid technology. But that pairing would combine the higher costs of diesels with the higher costs of hybrids. So I'm not sure we'll ever see hybrid diesel passenger cars in mass production.

Will the cost of hybrids fall far enough that by 2010 even very clean and quiet diesels won't be able to compete? If battery density increases enough then pluggable hybrids (i.e. hybrids that you can plug into an electric cord to recharge their batteries) might outcompete diesels due to the lower cost of electricity as a way to power an automobile.

Another competitive pressure for diesels is ethanol. Ethanol has a lower production cost than diesel fuel. If the production of ethanol scales up high enough then by 2010 ethanol (even adjusted for its lower energy density per gallon) might be so much cheaper than diesel fuel that a hybrid or conventional car powered by ethanol might cost less per mile traveled than a car powered by diesel.

Share |      Randall Parker, 2006 August 29 11:32 PM  Energy Transportation


Comments
PacRim Jim said at August 30, 2006 12:49 AM:

Diesel soot is much smaller than that of gasoline. When inhaled it goes deep into the lungs, which often cannot sweep it out. Over the years, this chronic irritant can damage the lungs, even resulting in cancer.

Simon said at August 30, 2006 6:44 AM:

I am surprised that ethanol is cheaper than diesel in the US. I wonder if your pricing includes the capital cost of converting the existing network of gasoline based services stations to ethanol. I'm also fairly certian that if these carmakers wanted to make diesels more popular, they wouldn't make them options for high-end autos

Simon

Dezakin said at August 30, 2006 12:35 PM:

Randall just went off the deep end a couple of weeks ago and assumed that since crude oil is expensive, diesel production cost is expensive.

It just aint so.

Bob Badour said at August 30, 2006 1:10 PM:

Dezakin,

The incremental cost of production is pretty-much irrelevant because the consumer pays for the producer's raw material costs, the producer's production costs and the producer's profit. Unless something drastic changes, the raw material costs are not going to go down much. China is not suddenly going to demand less energy. Saudi is not going to suddenly increase production capacity because there are limits to how fast one can suck the stuff out of the ground.

Randall Parker said at August 30, 2006 5:02 PM:

PacRim Jim,

The 2000 EPA Tier 2 emissions regulations (which are coming into effect) push diesel car particulate emissions down by about an order of magnitude. Here's from an EPA statement:

The program treats vehicles and fuels as a system, combining requirements for much lower emitting vehicles with requirements for much lower levels of sulfur in gasoline. While the Tier 2 program did not require similar changes for sulfur levels in diesel fuel, EPA has mandated the reduction of highway diesel fuel sulfur levels beginning in June 2006. A key component of the Tier 2 program is an emphasis on consistent emission standards regardless of fuel type. However, the Tier 2 program also gives some consideration to the fact that diesel vehicles must accomplish a much greater emission reduction from Tier 1 levels in which emissions from diesel-powered vehicles could be more than twice as high as gasoline vehicles for NOx and, in practice, were almost ten times higher for PM.

Diesels are now going to have to be as clean as gasoline engines. This new GM diesel is going to fit into Tier 2 Bin 5. That's an amazing improvement over current diesels and an even greater improvement over the diesels of past decades.

Simon,

What capital cost? Ethanol can get sold mixed in with gasoline.

Dezakin,

At the risk of repeating to state the obvious: American oil refiners can not buy any oil at Saudi Arabia's production cost. If they could then American oil companies would not be building billion dollar oil rigs for the Gulf of Mexico.

Again, you are in denial of the obvious. I'm nowhere near the "deep end".

Randall Parker said at August 30, 2006 7:37 PM:

In 1994 the Union of Concerned Scientists claimed that the energy cost of making cleaner (i.e. lower in sulfur) diesel makes it little more efficent than gasoline:

To meet the Tier 2 standards, low-sulfur diesel fuel will be required by federal law starting in mid-2006. Unfortunately, Department of Energy modeling shows this fuel to be more oil- and carbon-intensive than reformulated gasoline. Each gallon, for example, requires 25 percent more oil and emits 17 percent more heat-trapping gases than gasoline reformulated with MTBE (the formulation used in our report), and requires 17 percent more oil and emits 18 percent more heat-trapping gases than gasoline reformulated with ethanol. So, although diesel's higher energy content, along with efficient engines, allows cars meeting the Tier 2 standards to travel 30 to 40 percent farther than gasoline models, these fuel economy improvements do not provide equivalent reductions in oil use and heat-trapping emissions.

Anyone know if this is true? Could be the refiners have since developed more energy efficient ways to take sulfur out of diesel fuel.

Dezakin said at August 30, 2006 10:07 PM:

Perhaps I'm being insufficient in my explanation, but you're viewing commodity economies from the view of the refinery, as a mercantilist nation state consisting only of refineries and ethanol plants, rather than elements of a global economy.

The average cost of oil production is in the neighborhood of 15 dollars per barrel from exploration to pumping. Lifting costs are about 4.50 per barrel and finding costs for new oil average about 10.

http://www.eia.doe.gov/emeu/perfpro/ch3sec2.html
http://www.eia.doe.gov/emeu/perfpro/ch3sec3.html

Offshore finding costs are particularly expensive at 27 or so, but still profitable for the forseeable future.

This _isnt_ just saudi arabia. There is a reluctance in the oil industry to invest in projects that have a total cost that makes profit unlikely below 30 dollars per barrel because the feeling is still that much of oil price is due to speculation.

The cost of fuel is measured from well to the pump, and there is still room for expansion. Ethanol producers have to face the same calculus but enjoy an lower premium from a fuel that is just less valuable and not a perfect substitue, and the economics dont obviously scale as well, being dependant on waste, existing fields, low grain prices, and high oil prices.

This is if we're comparing costs today. Now when we speculate on future costs, demand for ethanol in global markets because of slow infrastructure transitions might well push the grain price high, the gas price might well drop because of surplus supply from non-conventional oil, or algal biodiesel investments. I suspect that ethanol will allways remain a niche fuel that receive much attention because of the historic political power of the farm lobby, and not least from the pure physical constraints that make major contributions to the global economy from ethanol challenging at best.

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