With 20 to 40 percent greater fuel efficiency than traditional gasoline engines, can clean diesel technology compete in the transportation market? During today's OnPoint, Allen Schaeffer, executive director of the Diesel Technology Forum, calls on Congress to extend funding for the Diesel Emissions Reduction Act and explains the impact a loss of federal assistance could have on his industry. Schaeffer also discusses diesel's role as part of the United States' broader energy portfolio.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Allen Schaeffer, executive director of the Diesel Technology Forum. Allen, thanks for joining me today.
Allen Schaeffer: Thanks for having us.
Monica Trauzzi: Allen, we've seen a 25 percent jump in registrations for clean diesel vehicles from 2010 to 2012. How do you account for the big jump? What's moving the market?
Allen Schaeffer: Yeah, really two things are happening, here. First of all, consumers are seeing this new generation of clean diesel cars, and they're really liking it, so they're starting to buy more models are getting into the hands of consumers. The second thing is that we're actually seeing more choices become available for consumers. Ten years ago, there were only a few model choices. Today, we have over 20 choices available for consumers, and that's expected to almost double in the next couple of years as manufacturers work to meet the new Corporate Average Fuel Economy standards. More choices for consumers are even going to grow that number further.
Monica Trauzzi: This is not our parents' diesel. I mean, how has the technology changed over the last 10 years?
Allen Schaeffer: Yeah, a fundamental transformation. We're talking, the technology today is what we like to call good, clean fun. Diesel has great performance that people like. It retains about 30 percent fuel efficiency advantage over gasoline, and it doesn't force you to sacrifice sort of how you drive and what you want to accomplish. Some of these new diesel cars are quite incredible. They have fuel tanks you can get a range of 800 miles on a single tank of fuel. The new generation of diesel gives consumers efficiency, performance, and long-term value, all the things that we think people are looking for.
Monica Trauzzi: It's expensive, though. It's an expensive up-front cost, so what are some of the challenges that you're encountering in terms of marketing the technology to consumers?
Allen Schaeffer: Sure. The premium on diesel cars is anywhere from $1,000 to $2,000 over a baseline comparable vehicle, but in the long run, consumers get that back in terms of fuel savings and higher resale values at the end of the day. Plus, they have a technology that's proven, that's been around for quite a while. I know we've heard people be concerned about whether hybrids or electric vehicles might be some kind of fad that five, 10 years from now may not be anywhere, but diesel has been around for over 100 years. Now that we've really perfected the technology, virtually eliminated emissions, retained all the efficiency advantages, we think that the room for diesel to grow is really just quite substantial.
Monica Trauzzi: Let's talk about emissions. In the background of this news is an intense discussion on Capitol Hill about the funding for diesel emissions reduction programs. One would imagine that this jump in sales that you've seen would also lead to a jump in profits, so why does the industry continue to need assistance from the government? Right now it's at $20 million for fiscal year 2013, why the need for this money?
Allen Schaeffer: Sure. What we're talking about is the Diesel Emissions Reduction Act, and this is a program that was established in 2005 and it was really designed to help bring some of these new, advanced clean diesel technologies and emissions control systems and other things to some of the existing equipment that still had high value in our economy every day. We're talking only about commercial vehicles, construction equipment, marine and port stuff, this is not passenger cars. These investments have enabled hundreds of small businesses across the country to be able to upgrade their technology, preserving the value of that for years to come. The program has seen about $470,000,000 since it was enacted in 2008 to 2010; that time frame. Those funds have gone to upgrade over 50,000 different types of equipment around the country. Huge savings in terms of CO2, 2.3 million tons of CO2 saved.
Monica Trauzzi: But you just talked about how advanced the current technology is, why, then, the need for the funding, and where do you see the technology going? Where are you going to apply this money if you are granted it for fiscal year 2014?
Allen Schaeffer: Yeah. These funds go to small businesses, local contractors, construction companies, trucking companies, who have technology that could benefit from an emissions upgrade. It may be a few years old, but some of the new technology we have can be put in place and make those vehicles and equipment much cleaner than they probably were to begin with. These funds provide an incentive, and each dollar that the government has invested has been leveraged into $2 or $3 in actual use. Unlike a lot of the other energy and environmental programs that we've heard about in the news lately, this program actually works, and it's proven to have a lot of benefits for the country.
Monica Trauzzi: If the funding is not extended, does that mean that the Diesel Emissions Reductions Act is dead, or is it still alive but just with a reduced level of funding?
Allen Schaeffer: This is a voluntary, incentive based program, so the more dollars that flow to it, the greater the benefits can be. The 70 percent reduction that we've proposed in this year's administrations budget, this program will go on, even if it's funded at a lower level, because the states and local governments really see value in it. It's delivered real benefits. That's going to be increasingly important as we work towards meeting ozone and PM standards that are going to be coming into effect in the not too distant future. One of the things that's curious to us is that there's a lot of discussion about the administration's climate policy and reducing emission of black carbon and particulates have been identified as a priority, yet this program has been slashed by 70 percent. In the meantime, we're seeing funding of international programs that are similar of 47 times the amount that's contributed to DERA. You sort of feel like we're investing more in reducing emissions in other parts of the world, maybe not as much at home. I think there's a question about that, and folks are interested.
Monica Trauzzi: Do you think this is making, this action is making a broader statement about how the administration views diesel overall in terms of what role it should be playing in our energy policy?
Allen Schaeffer: Absolutely not. I think diesel today is really the lifeblood of our global economic and commerce system today. Even though we're hearing a lot of talk about other fuels and technology, diesel remains the prime mover of goods and services around the country. I think what it really, the statement is really more about politics and trying to present an administration and EPA budget that might have substantial reductions, because they know this program has huge bipartisan support on Capitol Hill, and we're hoping that comes into action and restores the program funding to its original level.
Monica Trauzzi: We talk a lot about picking winners and losers here on the show. Do you think that that's what the administration is doing with this move?
Allen Schaeffer: I don't think so. I think there's been a lot of priority placed on the National Clean Diesel Campaign. They know the benefits that it delivers. Those benefits are going to be increasingly important in the future, so it doesn't seem like it would make sense that you'd want to cut a program like this, that has delivered such significant benefits. We're hoping that Congress looks at that and really sees the benefits and restores the funding.
Monica Trauzzi: All right. We'll end it right there. Thank you for coming on the show. Nice to see you.
Allen Schaeffer: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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