VIABILITY OF UREA INFRASTRUCTURE FOR SCR SYSTEMS

TMC SUMMIT CONFERENCE PHOENIX, AZ June 10, 2003 Michael D. Jackson Scott Fable Shyam Venkatesh TIAX, LLC 1601 S. De Anza Blvd, Suite 100 Cupertino, California 95014-5363 408.517.1550

SCR Urea Implementation

Summary

•

Urea can be distributed at prices comparable to the price of diesel

–

The current world and domestic production capacity of urea is sufficient to cover the increased demand from mobile SCR urea

–

Focus urea distribution to the large public and private diesel retailers serving the Class 7 & 8 trucks sector and consuming nearly 97 percent of the diesel

–

Cost to retail urea is reasonable for these retailers and is less than the price of diesel

–

There is a small segment in terms of diesel consumption (3%) that will see urea at prices around $3/gallon

–

SCR urea is very competitive with NOx adsorber in the early years (2007) and markedly cheaper in later years (2015)

–

For SCR urea to be implemented successfully, all stakeholders must work in a concerted manner

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SCR Urea Implementation

Diesel Consumption

2002 On-Road Diesel Consumption: 35 billion gal Light Class 1-2 < 10,000 lb Medium Class 3-5 10,001 - 19,500 lb Light-Heavy Class 6 19,501 - 26,000 lb Heavy Class 7&8 > 26,001 lb 85 % of all diesel consumed

L 2.9% CF SC P MR CF SC P LR CF SC P L 6.9% CF SC P MR O 1.1% O O O O L - Local; < 200 miles MR - Medium Range; 200 - 500 miles LR - Long Range; > 500 miles CF - Central company-owned fueling station; Fleet Stations CF SC P LR CF SC P O L 3.7% CF SC P O MR CF SC P O LR CF SC P O L 50% CF 14.3% SC 4.5% P 31.2% O MR 14.9% CF 5.6% SC 1.3% P 8.1% O LR 19.7% CF 3.7% S =

23.6%

SC 1.1% S =

6.9%

P 14.9% S =

54.2%

O SC - Single contract fueling facility located off site; Cardlocks P - Public fueling station; Truck stops and conventional retail stations O - Other fueling habit D5197 7642 2

SCR Urea Implementation

Fueling Station Profiles

Profiles of Fueling Stations Serving the Class 7 & 8 Truck Market Station Size (Monthly Diesel Consumption) Large

(2,000,000 — 1,000,000 gal/month)

Medium

(200,000 – 80,000 gal/month)

Small

(<80,000 gal/month)

# of Public & Private Stations

2,200 3,500 >25,000

Diesel Consumption

77% 20% 3% D5197 7642 3

SCR Urea Implementation

Projected Annual Urea Consumption

Projected Annual Urea Consumption

1,200 High NOx engine out 1,000 800 600 400 Low NOx engine out 200 2007 2008

2007 Total Diesel Consumption ~43 Billion Gal

2009 2010 2011 2012 Calendar Year 2013 2014 2015

2015 Total Diesel Consumption ~57 Billion Gal

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SCR Urea Implementation

Urea Supply vs. Demand

World & Domestic Urea Supply vs. Demand MM Tons/Yr

World

Demand Production Capacity 100 110 133 +

Domestic

Demand 9-10 Production 6 Capacity 10 – 17 SCR Urea Demand * 0.4 – 1.6

* -- Corresponds to 250 - 1,100 MMgal of 32.2% Aqueous urea Domestic demand includes stationary side SCR usage D5197 7642 5

SCR Urea Implementation

Retail Urea Cost

Average cost to retail SCR-urea as a function of retail-facility throughput 4.00

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0.00

0 10000 20000 30000 Urea Throughput, gal/month 40000 50000

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SCR Urea Implementation

Retail Urea Cost

Retail Urea Cost By Diesel Station Throughput

4.50

4.00

3.50

3.00

2.50

2007 2015 Fleetguard price for 55 gallon drum, June 2002 2.00

1.50

Current average diesel price in U.S.

1.00

0.50

0.00

A 1 million gallons of diesel per month

Fraction of Class 7-8 diesel throughput in U.S.:

65% B 1 million gallons of diesel per month 12% C 200,000 gallons of diesel per month 20% D 80,000 gallons of diesel per month 3% D5197 7642 7

SCR-Urea Implementation Strategies

NOx Adsorber Break-Even Point

Break-even point rises with NOx adsorber capital cost and diesel price

For this set of assumptions, the break-even price is equal to diesel

Break-even SCR-urea Price

cost of NOx adsorber is zero.

Assumes

: 1 million miles, 6 mpg, 1 million miles, 6.5 mpg, 18:1 urea to diesel ratio 20:1 urea to diesel ratio $1.90 (2,000 ) (1,200 ) (400) 400 1,200

Incremental NOx Adsorber Cost ($)

$1.75

Diesel Price ($/gallon)

$1.60 $1.45 2,000 $2.00 -$2.25 $1.75 -$2.00 $1.50 -$1.75 $1.25 -$1.50 $1.00 -$1.25 $0.75 -$1.00 $0.50 -$0.75 D5197 7642 8

SCR Urea Implementation

SCR vs. NOx Adsorber

SCR vs NOx Adsorber Life-Cycle Cost Comparison NOx Adsorber Fuel Penalty Truck Fuel Economy Installed Equipment Price Differential Diesel to Urea Consumption Ratio Break-even or allowable price of urea 5% 7.5 mpg 0% 18:1 $1.69/gal 2% 6 mpg 0% 82:1 $2.46/gal

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SCR Urea Implementation

Stakeholders

All stakeholders must move in a concerted manner

• • • • •

Truck Operators

- key stakeholders since aggregate fueling habits almost evenly distributed between public fueling facilities and private central fueling facilities. Will require installing a urea dispensing facility in their central fleet refueling facilities and need to leverage infrastructure at public facilities. Will require assurance from truck and engine manufacturers on the availability of urea and SCR systems before investing in vehicles or infrastructure.

Urea Retailers

- primary retailers of diesel to the Class 7 & 8 truck market. The large truck stops and central fleet fueling facilities are best early adopters. Will require strong signals from customer (truck operators) to carry infrastructure.

Urea Distributors

- these are likely to be existing diesel distributors, ag urea distributors and new entrants. Are key to coordinating supply and demand and will require early strong signals from upstream and downstream members in the value chain to make investments.

Systems Providers

- vendors of urea distribution, storage, and dispensing equipment. Existing players servicing the petroleum industry are well situated to handle urea. Some niche urea systems developers already exist in Europe.

Engine & Truck Manufacturers

- providers of SCR technology. Must initiate strong signals to all downstream members in the value chain on impending this emerging technology.

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SCR Urea Implementation

Stakeholders

Thank you for you attention

Acknowledgements

TIAX would like to acknowledge the Engine Manufacturers Association and the National Renewable Energy Labs for making this study possible

Further Published References:

• “

Development of a Urea Infrastructure to Support MY2007+ Heavy-duty Emission Requirements,”

TIAX report to NREL, Contract # ADZ-3-33020-01, May 2003 • “

Selective Catalytic Reduction Urea Infrastructure Study,”

report to NREL, Contract No. DE-AC36-99-GO10337 Arthur D. Little

Contact Michael D. Jackson - [email protected]

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