Emissions: Government Warming

Engine and equipment manufacturers learned long ago that there's little stability in the politically charged arena of emissions — and the U.S. Supreme Court re-emphasized that in March.

In a 5 to 4 decision, the court ruled that the federal Environmental Protection Agency (EPA) should give carbon dioxide emissions the same consideration it gives more obvious pollutants, including nitrogen oxides (NOx), carbon monoxide, hydrocarbons and particulates. The decision is significant because it could adversely impact the future of various biofuels, usher in a new round of emission standards and significantly increase the clout of state regulators.

The decision concludes a lawsuit filed by environmental groups and state regulators demanding federal regulations restricting carbon dioxide emissions from vehicles and power plants. It overturns a 2 to 1 decision by the U.S. Court of Appeals of the District of Columbia, which backed the EPA.

The justices rejected EPA's claim that the Clean Air Act did not give it the authority to regulate carbon dioxide emissions, which are considered by many scientists to be a significant cause of global warming. Instead, the court ruled the EPA "has offered no reasoned explanation" for not doing something about the greenhouse gas.

Given the almost insurmountable task of proving that carbon dioxide does not contribute to global warming, it's very likely EPA will add carbon dioxide to its list of regulated pollutants, which will have a significant impact on both the on-highway and off-highway markets.

Some potential benefits for diesel

Carbon dioxide regulations aren't necessarily a bad thing for diesel-fueled engines. Although any emission regulation means engine and equipment manufacturers will have to spend millions to research and defend their findings, diesel engines are environmentally friendly when it comes to greenhouse gases.

Even the California Air Resources Board (CARB), no friend to the diesel industry, concludes: "diesel compression-ignition engines, with higher compression ratios, turbocharging and lean air-fuel ratios, provide significant carbon dioxide reductions compared with conventional gasoline engines."

Carbon dioxide emissions are directly related to fuel efficiency. The more fuel burned, the higher the carbon dioxide output. Because diesel-fueled engines are about 30% more fuel-efficient than gasoline engines, they emit 30% less carbon dioxide. Diesel also stacks up better than natural gas, LPG and other alternative fuels considered environmentally friendly. Like gasoline, these "clean" fuels are less energy efficient than diesel, which means they generate more carbon dioxide.

Carbon dioxide is also emitted during the refining process used to create fuels. This is especially troublesome for the corn-based ethanol boom now driving the economies of many agricultural communities. Ethanol is not only an inefficient fuel in terms of its power output, but the refining process needed to create ethanol consumes a significant amount of energy, which generates carbon dioxide.

Forcing a new generation of biofuels

The refining issue will become increasingly significant as regulators add new regulatory tools to their war on global warming. Both the European Commission and CARB are close to adopting regulations that will require fuel suppliers to reduce carbon dioxide emissions caused by the production, transportation and use of their fuels by 1% per year between 2011 and 2020. It is currently believed that achieving this significant a reduction will only be possible if refiners scrap corn-based ethanol in favor of "second-generation" biofuels made from woody material and grasses.

The Supreme Court's ruling is also expected to increase the clout of state regulators in the battle over highway emissions.

Until now, the federal government has been the prime arbiter of air quality and emission standards, while states have had a secondary role. By siding with the 12 states that filed the lawsuit, the EPA has opened the door for additional litigation.