Truck-and-engine maker Navistar International has said it will change its decade-long approach to pollution control in its diesel engines, mixing its practices with that of its competitors to meet 2010 federal emission standards.
"This announcement is not about going back, it's not about backing up, it's about going forward," Troy Clarke Navistar's president of Truck and Engine, said in a recent call with investors.
Navistar will use urea to further reduce smog-causing nitrogen oxide from its heavy duty diesel engines. The new engines, which Navistar said are also expected to meet 2014 and 2017 greenhouse gas standards, are expected to reach the market in early 2013.
The announcement follows a ruling by the U.S. Court of Appeals in June that could prevent the company from selling engines that do not comply with 2010 emission standards.
Navistar said it has shared its new technology, called In-Cylinder Technology Plus, with the U.S. Environmental Protection Agency and the California Air Resources Board.
Daniel C. Ustian, Navistar chairman, president and chief executive, said the move allows the company to control its own destiny.
The company's heavy-duty engines are used in school buses, commercial trucks and other vehicles over 33,000 pounds. In the last decade, the engine maker has spent approximately $700 million developing a technology known as Exhaust Gas Recirculation, or EGR.
Navistar's developed its EGR technology to comply with federal regulations that required a 95 percent drop in the emissions of nitrogen oxide from heavy-duty diesel engines by 2010. The new standard of 0.20 grams of nitrogen oxide per brake-horsepower hour was phased in between 2007 and 2010.
In 2001, the EPA estimated that heavy-duty trucks and buses accounted for about one-third of nitrogen oxides emissions. By reducing nitrogen oxide emissions and other diesel pollutants it expects to prevent 8,300 premature deaths, over 9,500 hospitalizations, and 1.5 million work days lost.
To meet the new standard, Navistar competitors developed products that covert nitrogen oxide into nitrogen, oxygen and water by injecting urea into the exhaust.
Navistar has been bullish about its technology, often stressing that its competitors' approach give customers an unnecessary headache by requiring them to purchase and maintain an additional fluid. But EGR only reduced emissions from 1.2 grams or more per brake horsepower-hour in 2009 to 0.5 grams in 2010 and to as-low-as 0.39 grams in 2011.
To sell its engines after the 2010 deadline, Navistar found a loophole in emission credits, which are set to run out this year. In January, the EPA issued an interim rule, allowing Navistar and other manufacturers to continue selling non-compliant engines as long as they paid a fine of $1,919 per engine. But the agency didn't notify other companies nor allowed them time to comment.
Mack Trucks, a unit of Volvo Group, units of Daimler AG and Cummins sued the EPA, arguing that the agency was giving preferential treatment to Navistar, that the fines were too low, and that the agency's decision would hurt their sales and prevent them from taking over Navistar's share of the market.
In its defense, the EPA said it had used the "good cause" exception in the Administrative Procedures Act. It needed to act quickly, it reasoned, because Navistar was quickly running out of credits, and without certified engines, Navistar would lay off thousands of employees and would lose billions in revenue, affecting customers and suppliers.
In June, the U.S. Court of Appeals sided with Navistar's competitors and vacated the EPA's interim rule, deciding that the agency didn't have a good cause to leave them in the dark. The interim rule, Judge Janice Rogers Brown wrote for the court, "does not remedy any real emergency at all, save the 'emergency' facing Navistar's bottom line."
Separately, more than 7,600 engines Navistar said it build in 2009 are under investigation. The EPA says Navistar completed assembly in 2010, which means that the engines don't meet the new emission standards and lack EPA certification.