Volkswagon ignores NOx technical solution for profits

Here is an extract from an article on the Volkswagen mess by Alexander Noack, posted on the GREASEnergy web site.

The main point is that the technology to meet emissions standards and retain very good fuel mileage is known and available. But Volkswagon chose not to use it to save a couple of hundred buck per car in order to increase their profit margin.

From this short explanation you will understand easily that the first three mentioned emissions (HC, CO, particles) will simply work in the opposite way of the fourth emission (NOx). And this is more or less the bad news for the diesel engine engineers: the better your engine efficiency is, the higher the nitrogen oxide (NOx) emission – if we talk about the raw emissions.

The good news is that there is an existing technical solution for that used on the market for more than 5 years. After torturing the engines with high exhaust gas recirculation (EGR) rates over decades, there was introduced the selective catalytic reduction converter (SCR) technology, which may fix the nitrogen oxides emissions to very low levels below the limits. Diesel engines made a big step back to real low fuel consumption (decreasing by –minus 10-20%) by keeping the low nitrogen oxide (NOx) emission levels.

But why the Volkswagen engines didn’t show these good results at the International Council on Clean Transportation ICCT which conducted a real drive emission test (RDE). Technically it is definitely possible, but Volkswagen simply tried to reduce production cost of their units (roughly 150-300 USD/unit) by not using the SCR technology with an additional AdBlue (NH4 liquid) tank, which is necessary for a high level of nitrogen oxide reduction in the SCR units and is commonly found in many heavy vehicles, as well as other brands of passenger vehicles.

Instead of this they equipped some of their cars with the less efficient NOx-storage catalytic converter (NSC) and used a so called defeat device, which is software recognizing a set of criteria that indicates the vehicle is in a test procedure.

The good news – we ain’t got no debt. The economics of biodiesel today

The current economic environment has been devastating for many regional scale producers of biodiesel. Two basic facts:

Diesel prices across Wisconsin now average $2.54 per gallon for on road use.
– The cost of soybeans continues a pattern of volatile commodity pricing. From $.31 per pound earlier this year, the price has fallen to $.17 per pound. At 7.68 pounds per gallon, that means the cost of soybean oil alone almost equals the current retail price of diesel.

Here are some additional costs for biodiesel producers:
– Additional input costs (catalyst, alcohol)
– Production costs (labor, energy)
– Plant overhead (electrical, maintenance, insurance)
– Interest payments on loans

Bottom line, faced with very cheap petroleum diesel, regional scale biodiesel producers based on virgin oil as their feed stock find themselves in an noncompetitive situation.

There are only a few viable strategies for biodiesel producers:
– Build or engineer the plant to use less costly feedstocks (e.g. waste vegetable oil, corn oil as a byproduct of ethanol production). This assumes access to capital to upgrade existing facilities, and the availability and affordability of alternate feedstocks.
– Tap into large sums of money, either through investors with deep pockets, or through loans with banks or other financial institutions. Insulated by money, national scale producers can not only stay afloat, but acquire smaller, struggling producers to build efficiency of scale and reduce their costs. Mandated EPA blender credits provide volume to these large scale, national companies
– Temporarily close down your plant to reduce the hemorrhaging and wait for conditions to change

The combination of these factors is leading to a rapid consolidation of the biodiesel industry, with regional producers getting acquired and merged into larger operations. Some recent examples:
REG (Renewable Energy Group) acquires assets of bankrupt KiOR
REG acquires Imperium
Cenex Harvest States was buying Patriot Renewable Fuels

While impacted by the affect of these economic forces on its biodiesel production partners, Bring It Home Biofuels Co-op has no debts that it must repay, and no plant operation it has to operate at a loss to bring in that revenue. In times like these, not having physical assets and debt ensures survival.

We will continue to work at our mission to source biodiesel for our members. At this stage, our main approaches are to:
– Partner with regional scale producers with an operational and financial model capable of riding out this storm
– Collaborate with other local initiatives that have a shared mission and a complimentary business model.

More on this as we move forward.