3. TRANSPORTATION: Can diesel cars make a comeback? (ClimateWire, 06/22/2009)

Saqib Rahim, E&E reporter

As domestic auto companies plan their next move in the post-bailout world, some foreign automakers are betting on a technology that has long needed an image makeover in the United States: diesel engines.

Chemically, diesel fuel offers more energy than gasoline, which means it offers more miles per gallon and a potential reduction in fossil fuel use. Nevertheless, even as diesel sales have soared in Europe, gasoline has remained the dominant car fuel in the United States, thanks in part to a bad memory from the 1980s.

Now, some German auto companies are battling to promote diesel in a U.S. market that's showing intermittent interest in fuel-efficient cars.

Today, Audi will run a TV advertisement, post ads at gas pumps, and launch a Facebook page all centered on one message: Drive a diesel, and the country can get rid of 1.5 million barrels of oil.

The company still plans to rely on gasoline cars for the bulk of its revenue: An Audi spokesman said that in the long term, it expects clean-diesel models to make up only 15 percent of its sales volume. But the move, nevertheless, sets it apart in the U.S. market, where the auto companies' woes have given all alternative technologies a new lease on life.

The diesel campaign comes as Audi and its parent company, Volkswagen, release several "clean diesel" models this year. Audi's Q7, an SUV, is already in dealerships, and its A3 will come out this fall. Volkswagen's Jetta TDI raised eyebrows last fall when it beat several hybrid cars to win the "green car of the year" award at the Los Angeles auto show, reporting a fuel economy of up to 50 miles per gallon.

But the effort by the German carmakers also flows into a longer history.

Diesel cars started hitting U.S. showrooms in the late 1970s, as automakers responded to the Arab oil embargo and tightened fuel-economy standards. General Motors and Ford were among a field of automakers, including Peugeot, Volvo and Volkswagen, marketing the diesels as fuel-efficient, high-performance cars.

Consumers responded, bringing diesels' market share to a peak of 5.5 percent of new car sales in 1981.

Great hopes, then the wheels fell off

Then the wheels fell off -- almost literally. As the Energy Information Administration put it in a February report, "the cars were plagued by poor performance, fuel quality problems, declining fuel prices, and severe reliability problems." By the end of the decade, diesels had virtually disappeared.

None fared worse than GM's Oldsmobile. Experts said GM had designed these cars to run on a jury-rigged technology. "They tried to take some of their gasoline engines and just convert them essentially into diesel engines with higher pressure," said Dan Sperling, who directs the Institute of Transportation Studies at the University of California, Davis. "It was a lemon."

Jeff Breneman would know: His family owned one.

It was a white Oldsmobile station wagon, with the signature fake-wood stripe down its sides. It was slow, loud, and smoky -- and that's when it wasn't at the auto shop, Breneman remembers.

It made an impression on him -- and an entire generation of drivers. "Unfortunately, that's the image that too many Americans have of what diesel can be," he said.

The image might have stuck with him, too, if not for his work. Today, Breneman is executive director of the U.S. Coalition for Advanced Diesel Cars, an advocacy group for Bosch and BorgWarner, two companies that build many diesel engine parts.

He says today's diesel engines have spectacularly improved since his youth, dramatically reducing pollutants in order to meet standards in all 50 states, including the most stringent of them: California. Noise and soot are reduced.

Breneman thinks the vehicles should have automatic appeal in the United States, where customers often value torque and speed over fuel use. "Americans don't have to sacrifice power -- which is what Americans ultimately want -- to get the fuel economy they want or the power they deserve," he said.

But it remains unclear how Americans will vote with their dollars.

On the one hand, diesels should stand to gain from recently hiked fuel-efficiency standards. While hybrids remain too expensive for most consumers, and plug-in hybrids, or PHEVs, haven't hit the market yet, diesel cars and infrastructure are already available.

But diesels have never exceeded 1 percent of annual car sales, and it remains unclear whether they could become a major presence on U.S. roads.

A different market from Europe

They're already dominant in western Europe, where roughly half of new car sales are diesels. Governments have promoted diesel: High taxes at the pump have pushed drivers toward the more efficient fuel, and diesel cars also get tax breaks.

Fuel prices are lower in the United States, and diesel prices have behaved oddly in recent years. The United States' tough limits on non-carbon emissions -- like particles and nitrous oxide -- have helped keep diesel prices higher than gasoline. For the moment, a gallon of diesel costs roughly the same as gasoline. But in a country where short-term swings in fuel prices can affect car purchases, Audi and Volkswagen are bullish.

On the other hand, some question whether diesel cars -- for all their merits -- will actually catch on this time.

While diesel's U.S. backers haven't called it a long-term climate solution, they have promoted diesel as a transitional fuel to use until electric-drive cars gain commercial footing. Breneman said diesel technology deserves to be put on an equal footing with other low-carbon technologies in government policy, especially because the infrastructure is already there.

"It's not something in the future, like plug-in hybrids," he said. "They can't get there alone on plug-in hybrids, they're going to have to look at a whole portfolio ... that will help them achieve the CAFE [corporate average fuel economy] standards. And diesel should easily be a part of the mix."

Al Mannato, fuels issues manager at the American Petroleum Institute, isn't sure diesel will fit into the mix. He says U.S. refiners are used to making gasoline, and they have limited flexibility to switch to diesel quickly. Theoretically, a quick run-up in diesel cars would outrun refiners' abilities, leading to an uptick in diesel prices. But he doubted that this would happen, anyway.

"Could we tomorrow or next year, five years, put out significantly more diesel? No," he said. "But the vehicle fleet isn't going to change that way, either."

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