Averaging Has Given Engine Makers Flexibility to Meet Emission Targets

By Jonathan S. Reiskin, Associate News Editor

This story appears in the June 30 print edition of Transport Topics. Click here to subscribe today.

Large-scale manufacturing of 550-horsepower, 13-liter diesel truck engines that can run for a million miles is such a complicated endeavor that, since 1990, the Environmental Protection Agency has given engine makers some short-term wiggle room on hitting emissions targets through its averaging, banking and trading program.

Original equipment manufacturers can earn emissions credits by beating the regulatory standard of the day, and then use those credits to help meet new, tighter standards when there is a regulatory change. In theory, a company  can even buy credits from one of its competitors, although an EPA official said that rarely happens.

“Everyone makes use of this, and it’s good for the environment. It helps get emissions-reducing engine models out more quickly,” Byron Bunker, director of EPA’s Heavy-Duty On-Road Center in Ann Arbor, Mich., said in an interview. The center is part of the agency’s Office of Transportation and Air Quality.

By offering an outline of the program’s details, he stressed a number of limitations placed on engine OEMs.

“You can only use credits after they’ve been banked. You can’t borrow into the future,” Bunker said, adding that “emissions credits are only for U.S.-directed sales and are restricted for like products.”

Therefore, although all major U.S.-based manufacturers have some form of global reach, they cannot earn credits by producing clean engines for use in China, India, Russia or Brazil. Furthermore, a highly diversified manufacturer such as Caterpillar Inc. or Cummins Inc. cannot use credits from construction equipment or power generation in on-highway truck engines.

The use of credits in complying with emission standards is allowed under the Clean Air Act and is similar in concept to corporate average fuel economy standards for cars, or CAFE, said Allen Schaeffer, executive director of the Diesel Technology Forum.

“The [credit] program allows manufacturers to better manage some production issues over time, and it puts cleaner engines on the street prior to when they have to be. It provides an important flexibility,” he said.

OEMs earn credits to the extent their engines can exceed the nitrogen oxide and particulate matter standards of the moment. Bunker said EPA considers the number of engines a company produces and their anticipated life cycle.

Averaging occurs when one engine model’s emissions — as measured in grams per brake-horsepower-hour — do not meet the standard but another model tests better than the standard. Bunker said a typical use for the averaging strategy would be if a high sales-volume engine more than meets its standard, and that subsidizes a low-volume niche product.

This process, he said, could go on for a longer period of time.

Banking is the other prevalent tactic but is usually for a limited period. Credits are banked in the present and used in the future. In this way, clean production in, say, 2007-2009, could subsidize models in 2010 and 2011 that do not quite meet the new standard.

Trading can take place between companies, but Bunker said that “almost never happens” because competitors usually do not want to help each other.

Looking back at the January 2007 regulatory change, Bunker said some OEMs used credits, others generated them and some engine models were neutral.

“It’s surprisingly diverse,” he said.