Welcome JUNE 30, 2020

Forum Insights: Midwest

Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio, and Wisconsin

Announcements 2

THANK YOU FOR JOINING US!

LET’S TALK ABOUT IT. PLEASE SUBMIT YOUR

QUESTIONS AT ANY TIME VIA THE CHAT FEATURE. BE SURE TO SELECT KRISTEN

GIFFORD (HOST), EZRA FINKIN, OR ALLEN

SCHAEFFER (SPEAKERS) .

SLIDES AND RECORDED PRESENTATION WILL BE AVAILABLE ON THE DTF

WEBSITE ON WEDNESDAY, JULY 1. INSTRUCTIONS ON

ACCESSING THE SLIDES WILL BE EMAILED TO YOU.

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BACKGROUND NOISE.

PLEASE COMPLETE OUR SURVEY ABOUT TODAY’S

EVENT.

Today’s Speakers 3

Allen Schaeffer Executive Director

Ezra FinkinDirector - Policy & Outreach

Kristen GiffordDirector - Communications

About The Diesel Technology Forum

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Education

Research

Outreach

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EnergyEfficiencyEmissions

EnvironmentEconomics

Essential Uses

Legacy ProductsRenewable Fuels

Diesel & Other Technologies in the Clean Energy Future

DTF is a 501 ©(6) Not-For Profit Educational Association

Today’s Discussion

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Provide a basis for understanding economic, environmental and energy profiles around key sectors of the regional economy and the role of diesel technology in each of these sectors.

Identify and discuss key energy, environmental, climate and transportation issues in the region and issues surrounding the purchase and use of technology.

Discuss the future for all fuels and technologies in the region.

Introduction to Diesel Technology in the Region

WHY DIESEL

ECONOMIC IMPACTS

THE LATEST ADVANCEMENTS IN EMISSIONS CONTROL

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Diesel Powers Key Economic Sectors and Essential Public Services in the Region

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Diesel’s economic impact about the same as utility or IT sectors.

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Midwest Region Home to Key Heavy-Duty Engine and Truck Manufacturers & Suppliers, Boosting State Economies

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Why Diesel?

Most energy-efficient internal combustion engine

Proven - Continuous improvement over 100 years

Available - more than 2/3 of all fuel retailers have diesel; extensive service and parts network nationwide

Durable – > 1 M miles

Reliable – key to uptime requirements in trucking, construction, emergency back up power

Powerful - most energy density

Clean - now near-zero emissions

Renewable–fuel compatible existing and new engines

Diesel = Power Density & Efficiency11

The diesel engine is the most efficient means of converting potential energy from fuel into mechanical work.

Diesel is the Platform of Work12

Source: U.S. Energy Information Administration

New Diesel Technology = Near-Zero Emissions = Cleaner Fuel + Emissions Control System + Advanced Engine Combustion

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Factors that Contribute to Emissions from Diesel Engines

Condition of engines and equipment – following manufacturer-recommended maintenance, state emissions inspections (if appropriate) for visible smoke, other emissions, tampering enforcement.

Use of high-quality fuels; good fuel maintenance practices – petroleum diesel (ULSD) and biodiesel and renewable fuels and blends.

Use of diesel engines and equipment by truckers, contractors; minimizing idle time, respecting engine brake use (highway vehicles);

Uptake of new technology diesel engines in all sectors - newest generation is near zero emissions for particulate matter and nitrogen oxides, an ozone precursor; substantial benefits in lower criteria pollutants and lower GHG emissions.

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Regional Profiles in Energy and Environment

PROFILES

AIR QUALITY

ENERGY

ECONOMICS

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The full region is in attainment with EPA NAAQS for fine particles PM2.5, with emissions trending downward.

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https://www.epa.gov/air-trends/particulate-matter-pm25-trends

https://www.epa.gov/air-trends/ozone-trends

The region is close to attainment with EPA NAAQS for ozone however segments still exceed the standards on several days each year.

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https://www.epa.gov/air-trends/particulate-matter-pm25-trends

https://www.epa.gov/air-trends/ozone-trends

Priority Air Quality Counties18

Counties Designated in Non-Attainment for NAAQS

National Emissions Source InventorySource: U.S. EPA

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Diesel Engines Contribute 24% of All NOx Emissions in the Great Lakes Region

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Diesel Trucks – 11%Diesel Off-Road Equipment – 7%Rail – 4%Marine Vessels – 2%

Total Diesel Contribution: 24%

https://www.epa.gov/air-emissions-inventories/2014-national-emissions-inventory-nei-data

… and Diesel Engines Contribute Just 4% of Fine Particle Emissions in the Great Lakes Region

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Diesel Trucks – 2%Diesel Off-Road Equipment – 2%Rail – negligibleMarine Vessels – negligible

Total Diesel Contribution: 4%

https://www.epa.gov/air-emissions-inventories/2014-national-emissions-inventory-nei-data

Fuels: Petroleum and Renewables

The Midwest region leads the nation in biodiesel production.

Diesel fuel consumption reflects demand for trucking, agriculture, industrial activity in the region.

State Biodiesel Plants

Biodiesel Pumps

Biodiesel Gallons Produced (millions)

Diesel Fuel Consumption Gallons (millions)

IL 6 22 184 2,208

IN 3 4 107 1,746

IA 10 11 445 1,111

KS 0 1 0 886

MI 2 9 18 1,274

MN 3 14 85 1,189

MO 10 1 252 1,396

NE 2 3 53 826

OH 1 13 71 2,164

WI 2 5 32 1,066

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Regional Issues & Considerations

GREENHOUSE GAS EMISSIONS AND CLIMATE CHANGE POLICIES

FURTHER PROGRESS ON CLEAN AIR ATTAINMENT --TRANSPORTATION EMISSIONS

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Climate Policies Are Top of Mind24

Policy Options to Address Climate & Clean Air Fleet Turnover, Repowers, and use of Renewable Fuels

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Low Carbon Transportation Fuels Vehicle & Equipment Replacement Programs

Tax Policy Changes Under Consideration in Congress

Accelerating truck turnover by suspending the Federal Excise Tax (12% ~ $18,000/unit) on trucks can help!

Big Climate Benefits From Diesel with Low Carbon Fuels

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Midwest Received $95 Million in Clean Air Grants

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National DERA Awards (2008-2018)

Illinois $22,742,217

Indiana $6,964,032

Iowa $1,690,000

Kansas $7,618,910

Michigan $7,618,910

Minnesota $9,917,203

Missouri $18,118,153

Nebraska $2,000,000

Ohio $12,558,866

Wisconsin $6,156,610

Replacing Old Trucks With New Generates Big Benefits, Now

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Replace an older generation pre-2010 Class 8 truck with a new diesel option today can…..• Eliminate 9.6 tons of C02• Save 960 gallons of fuel per year• Eliminate 2.3 tons of NOx emissions

Technology Cost = ~$150,000Federal Excise Tax on a new truck purchase = 12%

An additional $18,000 in the purchase price of a new truck.

A leading factor explaining longevity of assets in the trucking industry.

Insights on Personal Mobility and Goods Movement

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HEAVY-DUTY COMMERCIAL VEHICLES

LIGHT-DUTY CARS, VANS, PICKUP TRUCKS

Trucks come in many shapes and sizes… and most are powered today by diesel

Class 3-8 are classes of commercial trucks – 75% are diesel-powered

Class 8 trucks (aka “big rig” tractor trailer trucks) – 97% are diesel-powered

Class 1-2 are pickup trucks and other passenger vehicles

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40-49% of Heavy-Duty Diesel Trucks on the Road in the Region are the Newest Generation

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National average - 43% Midwest U.S. – 40-49%

EPA Region 7 – 49%

EPA Region 5 – 40%

In the Region, 27% to 56% of Transit and School Buses on the Road are Newest Generation of Diesel

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0% 10% 20% 30% 40% 50% 60%

IL

IN

IA

KS

MI

MN

MO

NE

OH

WI

Percentage of Transit & School Buses of Newest Generation of Diesel

School Buses Transit buses

National AveragesTransit Bus = 40%School Bus = 46%

You get more with diesel vehicles… more power, more miles to the gallon, better performance

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Nearly 50 diesel-powered choices for American consumers in 2020.

New options in popular SUV and pickup trucks

Diesel Popular with Midwest Drivers in Passenger Vehicles -Including Pickup Trucks & Vans

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Michigan ranks #3 for diesel passenger vehicles

Ohio ranks #9 for diesel pickup trucks

Illinois ranks #30 for diesel-powered vans

National Ranking

for:

Diesel Passenger

Vehicles

Diesel Pickup Trucks

Diesel-Powered

Vans

IL 12 15 30

IN 18 18 42

IA 28 28 50

KS 34 32 48

MI 3 13 49

MN 23 24 45

MO 13 11 46

NE 37 34 43

OH 10 9 44

WI 20 20 38

Economic Sectors Agriculture, Construction, Marine, Mining, Rail

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DIESEL THE TECHNOLOGY OF CHOICE

WIDE VARIETY OF EQUIPMENT TYPES

AVAILABILITY OF CLEAN TECHNOLOGY

POLICY OPTIONS TO INCENTIVIZE NEW CLEAN TECHNOLOGIES

Diesel Powers and Enormous Variety of Off-Road Equipment

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Off-Road Engines, Equipment Since 2014 Achieve Near-Zero Emissions

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“Tier 4” – 4th generation of EPA emissions standards, governing new engines and equipment

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Local Policies

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DIESEL THE TECHNOLOGY OF CHOICE

WIDE VARIETY OF EQUIPMENT TYPES

AVAILABILITY OF CLEAN TECHNOLOGY

POLICY OPTIONS TO INCENTIVIZE NEW CLEAN TECHNOLOGIES

Midwest is the Class I Freight Rail Epicenter of the Nation

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A Quarter of All U.S. Freight Terminates, Originates or Passes Through Chicago

Rail Emissions are a Concern to Local Communities

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https://www.chicagotribune.com/news/ct-xpm-2014-06-27-ct-railyard-diesel-pollution-met-20140627-story.html

Latest Generation of Near-Zero Emissions Diesel Technology Powers Locomotives

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Great Lakes Home to Many Maritime Gateways Relying on Diesel Technology

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2 16-cyclinder Caterpillar/EMD Tier 4 Engines Delivering 7,800 HP

Home of the 1,000 foot freighters….and many are of a very old vintage.

Midwest States are Home to Inland Waterways Powered by Diesel Technology

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Major Gateways Along the Upper Mississippi

Major Gateways Along the Ohio River

Major Gateways Along the Missouri River

New Marine Workboats and Ferries are Cleaner Too, With Unique Repowering Opportunities

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Fuel-Saving, Clean Air Benefits from Replacing Large, Older Engines

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Locomotives, Marine Vessels and Ferries are powered by large engines that are typically older.

Replacing them with new diesel options generates substantial benefits for operators and communities.

Hybridization is Here With Big Benefits47

Retire 8 Lake Erie Tugs Built Between 1897 and 1931 and replace with 4 Diesel-Hybrid Electric

“Ohio” = Twin Tier 3 MTU 1,000 HP propulsion enginesSingle John Deere 65kW genset coupled with hybrid systems for service power

Benefits Generated:32 tons of NOx emissions reduced353 tons of greenhouse gas emissions eliminated

Learn More:https://www.epa.gov/sites/production/files/2019-05/documents/ohio-ports-projects-2019-mcdi-mtg-19pp.pdf

$5.8 B Gordie Howe Bridge Will Be Built With Near-Zero Emissions Tier 4 Equipment

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City of Chicago Prohibits Older Higher Emitting Off-Road Equipment

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Prohibits equipment powered by Tier 1 and older engines from operating in city construction projects in excess of $2 million. Offers incentives for owners of older equipment to replace with newer models.

Learn More: https://www.chicago.gov/city/en/progs/env/clean-diesel.html

REMINDERSUBMIT YOUR QUESTIONS VIA THE CHAT FEATURE AT ANY TIME

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What is the Future for Diesel? Fewer Emissions & Greater Efficiency

Lower Emissions

EPA Cleaner Trucks Initiative –rulemaking to be finalized in early 2021; effective 2027 new truck NOx emissions will be lower than today’s 0.20; CARB pursuing separate rule.

New test procedures – focus on in use emissions, increased durability requirements, and other provisions (435,000 mi today)

Greater Efficiency

U.S. EPA, NHTSA GHG Rules Phase 1 & 2 in place vehicle fuel efficiency gains of up to 25% required

Implementation 2018-2027 for certain trailers and model years 2021-2027 for semi-trucks, large pickup trucks, vans, and all types and sizes of buses and work trucks. The final standards are expected to:

Lower CO2 emissions by approximately 1.1 billion metric tons

Save vehicle owners fuel costs of about $170 billion

Reduce oil consumption by up to two billion barrels over the lifetime of the vehicles sold under the program

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Trucks in the future will:

• BE POWERED BY A RANGE OF FUELS BASED ON A RANGE OF FACTORS; BEST FUEL/TECHNOLOGY FOR THE JOB, AVAILABLE IN THE AREA; ONE SIZE MAY NOT FIT ALL.

• OPERATE IN A MORE EFFICIENT FREIGHT ECOSYSTEM - ALL POINTS IN THE GOODS MOVEMENT CHAIN

• INCREASINGLY UTILIZE AUTONOMOUS FEATURES, CONNECTED TECHNOLOGIES AND… HUMANS!

Diesel Technology will Continue to Dominate HD Truck Sector Beyond 2040

“Advancements in the diesel engine allow it toremain cost competitive to new technologies to 2040, but share will decrease over time.”

Use of low-carbon renewable biofuels can achieve additional GHG and other emissions reductions across the entire fleet of new and existing vehicles and equipment. No new infrastructure or vehicles required.

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Diesel Power Also Plays a Unique Role in Building the Renewable Energy Future

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Hybridization, integration with other sustainable energy sources and

expanded use of renewable fuels ensures diesel technology is a key player in a sustainable future

Hybridization based on duty cycle, downsize diesel engine, increase system efficiency with fuel savings and lower emissions.

Microgrids - renewables that you want with reliability that

you need.

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Energy Abundance

Clean

Energy

Future

DIESEL

Opportunities to Gain Additional Regional Clean Air and Climate Benefits

A boost in funding for the Diesel Emission Reduction Act will help equipment and heavy-duty vehicle owners replace older and higher emitting models with new cleaner options on a technology neutral basis.

Use of VW Environmental Mitigation Trust revenue may also provide significant benefits, but only if the most cost-effective technologies are prioritized.

National:

Truck & engine manufacturers are supporting U.S. EPA’s Cleaner Trucks Initiative rulemaking that will likely see a closer-to-zero tailpipe emissions standard for commercial vehicles, anticipated to begin in 2027.

Green Recovery: A temporary suspension of the 12% federal excise tax on truck purchases will go a long way to encourage truck fleets to replace older and higher emitting trucks with new equipment. This also provides a boost to manufacturers and their workforce and truck dealers that support local communities across the region.

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Summary

Diesel technology plays a key role in the Midwest economy.

Further reductions in emissions from new diesel engines and gains in efficiency are driven by customer demand and new and existing federal regulations for commercial trucks.

Off road engines and equipment are realizing fuel efficiency gains and emissions reductions through advancements in engine technology, more productive machine operations and connected jobsites and other innovative measures.

Opportunities exist to accelerate the turnover of the existing fleet to newer technology, and in some cases to modernize and upgrade existing engines to achieve dramatically lower emissions. Allocation of funding, prioritization of benefit timing play a role.

New diesel options in full size pick-up trucks and SUVs – most popular selling vehicles -- this year will be an important boost for consumers in fuel savings and performance.

Climate and clean air challenges are significant and diverse, and require many different fuels, technologies and solutions, and the newest generation of diesel is one of them.

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Q&A

PLEASE SUBMIT YOUR QUESTIONS VIA THE CHAT FEATURE. BE SURE TO

SELECT KRISTEN GIFFORD (HOST) ALLEN SCHAEFFER, EZRA FINKIN

(SPEAKERS) TO DIRECT YOUR QUESTIONS.

SLIDES AND RECORDED PRESENTATION WILL BE AVAILABLE ON DTF WEBSITE ON

THURSDAY, MAY 28 AND WILL ALSO BE EMAILED TO YOU.

SEND ANY FOLLOW UP QUESTIONS TO dtf@dieselforum.og

More Resources Available:dieselforum.org

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Future Insight Sessions – July/August 2020

Next up: Future of Diesel Part 1: Efficiency and Emissions –

Perspectives from industry leaders Bosch, Tenneco, Umicore

August 20 2-3:15pm ET

Future of Diesel: 2-part series, efficiency and emissions; fuels and hybridization

Regional Insight Events

• Southwest, Northeast, MidAtlantic, Southeast, California

Watch the DTF website and social media channels and email.

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Thank you for joining us!

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