The Diesel Debate - The challenge for the construction equipment industry

06 December, 2017

First published in the November 2017 issue of Quarry Management

Faced with increasingly stringent environmental legislation, the construction equipment industry has retained its faith in the trusty diesel engine – and for good reason, according to KGP managing director and Construction Equipment Association (CEA) consultant Alex Woodrow

As an independent consultant with more than 20 years in the automotive and related industries, there has never been a dull moment, with a constant ebb and flow of technology, mergers and acquisitions, and other challenges to face. One of the consistent factors over the last two decades, however, has been the continuing pressure on OEMs in all segments – light vehicle, commercial vehicle and non-road mobile machinery – to reduce emissions and fuel consumption.

Working for stakeholders throughout the industry with focus on powertrain- and emissions-related technologies, KGP are very much in favour of an environmentally friendly automotive industry and related sectors, from powered two-wheelers, passenger cars, light commercial vehicles, heavy commercial vehicles, buses, construction equipment, agricultural vehicles, and material handlers. In many of these segments all electric or hybrid is practical and cost-effective, and will lead to improved air quality. However, the future is not all electric, at least not yet, but nor is it all internal combustion engine – each fuel has its place. For industrial segments, where end-users are focused on productivity, ‘clean’ diesel should, and will, remain the dominant fuel for the foreseeable future.

It should be said too, however, that these diesels are not the diesels that emit black smoke and high levels of NOx, which is invisible until it forms smog with other pollutants, nor are they the ‘clean’ diesels that were heavily promoted by a number of passenger car manufacturers, whose actions will have negative consequences for the broader industry for some time to come. These are cleaner diesels that produce considerably less than 10% of pre-regulated diesels’ noxious emissions in machines that, on average, are at least 15% improved in terms of fuel efficiency, working in an industry where optimizing operating costs means the difference between making a profit and staying in business or losing money and disappearing. In essence, they are a productivity tool and can make a positive contribution at all levels of the economy.

So, why stick with the view that diesel is the fuel for construction equipment, and what have the OEMs done to reduce their environmental impact?

First and foremost, research and development spend, even during the most severe recession, was between 2% and 4% of revenues. Across the commercial vehicle and non-road mobile machinery segments this equated to around $10 billion per year, of which half, on average, was spent on emissions and powertrain improvement, totalling around $50 billion over the past 10 years. On top of that, a similar amount has been spent on capital investment in plant.

Secondly, the energy density of diesel is much higher than any other fuel – for the majority of equipment, electric would be impractical. Equally, gasoline would be impractical and unsafe on many job sites. Not only would equipment need refuelling a lot more frequently, increasing cost and reducing productivity, direct-injection gasolines would also require the adoption of gasoline particulate filters to clean up the PM2.5 particulates that a modern diesel tailpipe already has regulated through its particulate filter and which will come as standard with Stage V. For a typical working shift, an all-electric mid-range excavator would need a battery at least five times as big as a typical Tesla S model, costing more than $100,000.

Also, on a practical level, and for a number of reasons, it does not make sense to compare light vehicle and industrial vehicles in the same way:

In the light vehicle segment the top 20 manufacturing groups accounted for 90% of the global 92 million units produced in 2016 – on average, 4.6 million each. A further 30 accounted for the remaining 10 million units, or 330,000 each. In comparison, in the commercial vehicle segment the top 20 accounted for 82% of the 3.1 million units, whilst another 66 accounted for the remainder – 128,000 and 8,000 each respectively. In the construction segment, however, an estimated 628,000 units were shared across the top 20, or 31,000 each, whilst another 100+ accounted for the remaining 134,000, or just 1,300 units each
While the majority of the top 10 construction segment OEMs have their own engines, many do not. In the top 20 less than 40% are supplied in house, for various reasons
Product variety is also several orders of magnitude greater. It is not due to competition that volumes are so low, just that many construction machines are specialist items of equipment.

Thus, to some extent, it is the volume equation that made it easier for passenger OEMs to ‘game’ the rules. In the non-road segment, where there is a much greater crossover of engines between OEMs, it would be a lot harder to cheat the system.

Hybrids and alternative fuels will come, but in low volumes initially. The above does not preclude development of electric and hybrid solutions. KGP’s own detailed assessment of the equipment population, considering load factors, fuel consumption and annual hours, suggests that, in Europe, the below 56kW segment uses around 15% of the total fuel but accounts for almost 40% of the machine population. Already, much of this segment is looking to hybrid and electric so economies of scale are improving, and technology is assisting in this. However, in the larger machines, above 56kW, this is not the case. As machines have become more expensive, mainly due to emissions control, so the rental segment has grown. Across the top machine types in Europe rental is estimated to have a greater than 70% share.

In the lightest segment, where emissions are not regulated until Stage V, KGP expect to see a lot more electric models. In many cases, where these are used indoors, this makes sense. With either an umbilical or a power unit, the power requirements mean that the infrastructure for charging is not extensive. In the higher-power segments, however, the power requirements increase significantly. In the light segment, there is also a crossover between light vehicle systems and non-road electric and hybrid systems, which will allow more cost-effective electrification. In the heavier segments, the volumes will be much lower and so there will be limited opportunities.

So, what else can be done?

Machines have become cleaner in terms of absolute emissions limits and will improve further under Stage V
Efficiency has improved so that total kWh has fallen, further reducing emissions, and these competitive trends will continue
Technology continues to improve and as OEMs get through emissions compliance there will be a focus on Total Cost of Ownership
Operators are becoming smarter, job sites are now better designed and corporate sustainability is driving end-users to specify cleaner machines
Low-emissions zones and public procurement is driving end-users towards cleaner machines
A well maintained and serviced machine is a more productive machine – telematics will show when machines are not working to their optimum level, and will also indicate tampering or lack of compliance
OEMs and their dealers are more actively engaged with their customers to specify and supply the right machine for the job, and to not over-specify a machine.

If technology trends follow the commercial vehicle segment there will continue to be improvements through the Stage V time period. Many OEMs that did not have a diesel particulate filter (DPF) for Stage IV but remain within the limits will be able to benefit from the trade-off between fuel consumption, NOx generation and particulate matter (PM) levels, to use higher levels of exhaust gas recirculation (EGR) and reduce emissions further. At the same time, KGP expect the initial PEMS (particulate emissions measurement system) tests to show that machines are clean across the whole duty cycle and offer similar compliance levels to those of Euro VI trucks, which will continue to show improvements in emissions and fuel consumption. Those Euro VI trucks that have been tested were the first generation. Second- and third-generation trucks offer additional fuel-consumption benefits whilst meeting stricter compliance requirements under Euro VI part B and C, and a similar pattern is expected in the construction equipment segment.

About the author

Alex Woodrow joined Knibb, Gormezano and Partners (KGP) immediately after graduating in Manufacturing Engineering and Economics from the University of Birmingham in 1994. He gained an MSc from Loughborough University in Automotive Systems Engineering in 2008 and took over as managing director of KGP in 2010. During his 23 years at KGP he has worked on hundreds of projects related to materials and powertrain trends in the global automotive industry, focusing on the commercial vehicle, non-road mobile machinery segment and the evolution of emissions legislation and aftertreatment. In partnership with Off-Highway Research, KGP publish the Global Non-Road Engine and Aftertreatment Forecast and with Integer Research, the Emissions Control in Non-Road Mobile Machinery (NRMM) Markets.