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October 10, 2008

Can fleets afford Green Diesel investments?

Analysis of: Are emissions-reducing strategies working? | fleetowner.com
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Analysis By:
Jeff Moser
President, West Branch LLC
Implications: The EPA and individual states have offered some subsidies to retrofit older diesel engines with emission reducing technologies.  Newer engines [2007 - 2010 models] are factory equipped with advanced emission control systems but the majority of the existing US fleet still has older, dirtier engines.  Faced with significant costs to retrofit each engine the industry is reluctant to commit to this investment in the face of crippling fuel costs and a soft economy.

Analysis:

Several proven technologies, including catalysts and particulate filters, are available to clean up emissions from older diesel engines.  The cost can range from $2K - $10K per engine or more for the most advanced designs.

A recent study, "Compliance costs, regulation and environmental performance: Controlling truck emissions in the U.S.,”  [by the University of California at Berkeley and the Australian National University,]  states that smaller fleets cannot afford to invest in the best available diesel emissions technologies voluntarily, while forcing the issue with legislation could put them out of business.

California has led the fight for mandated diesel retrofits for even small fleets with only a few engines in operation.  Industry groups including trucking and off-highway operators are opposing this on economic grounds and may take it to the courts.  The US EPA encourages diesel retrofit projects with grants and subsidies but has not moved toward widespread mandated retrofits.

Some older equipment may have  lower resale value than the cost to retrofit, leaving operators with a choice of  repowering or replacing the equipment instead of retrofitting. New trucks and off-road machines can easily cost into the 6 figures, making these options even more expensive.  If California operators merely sell or move their older equipment to users in other states the net environmental benefit is negated.

A dramatic increase in Federal and state subsidies would be required to realize a significant reduction in pollution from the vast numbers of older diesel engines in operation.  Left to themselves fleet operators may simply be financially incapable of supporting this investment.


Other Analyses of the Same Source Article:
Trucking Is Becoming Greener - But It’s More Than Just About Emissions Mandates
October 13, 2008, Author: Jay Thompson, President and General Manager, Transportation Business Associates

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