Heavy Duty Diesel

Global Market Trends

© 2011 The Lubrizol Corporation

Heavy Duty Diesel Global Market
Major HD Lubricant Drivers
2010 2013+

….Changing emissions legislation

….Complexity

….Increased fuel economy requirements

….Globalization
….Durability under severe operating conditions

03-01-10 © 2011 The Lubrizol Corporation HD131-2

 Heavy Duty Diesel Global Market
Global Emissions Requirements

US07 2007 EU4 2006

US10 2010 EU5 2009 Hong Kong EU4 2006
Larger Cities EU4 2008-10
China EU3 2007 EU4 2011
EU4 2009
EU4 2006/08 NST 2004/05
NLT 2005/07
US04 2008
pNLT 2009/10
EU04 2008
EU4 2011 US04 2007
EU4 2011
EU4 2006
EU4 2009

Large Cities
EU4 2007 EU4 2010/12 EU4/US04 2008
EU5/US07/JPN NLT 2011

Source: Volvo

01-01-10 © 2011 The Lubrizol Corporation HD131-31

 Heavy Duty Diesel Global Market
Tighter Emission Regulations Drive New Engine Designs
0.14

0.12 US 2002/2004
PM, g/kW-hr; ESC test

0.1
Euro III
0.08 (2000)

0.06
Euro V
0.04 Japan 2005 (2008)
Euro IV
0.02 (2005)
Japan
0 2009
US 2010 0 1 2 3 4 5 6
Euro VI
NOx, g/kW-hr; ESC test
(2013)
04-01-10 © 2011 The Lubrizol Corporation HD131-7
 Diesel Emissions
Impact on Heavy Duty Diesel Engine Design
• Emissions legislation is leading new engine designs and
aftertreatment systems
ENGINE DESIGN
Particulates

CG-4
Turbochargers &
CH-4 Intercoolers

CI-4
Fuel changes EURO I
CI-4 plus
De-NOx CAT EURO 2
Retarded injection, piston design changes
SCR EGR
EURO 3
API CJ-4 OXICAT
CRT/ EURO 4
ACEA E6/E9
DPF
JASO DH-2 AFTERTREATMENT NOx
04-14-11 © 2011 The Lubrizol Corporation HD142-38
 Diesel Emissions
US OEM AT System Response to EPA 2010
Heavy Duty Medium Duty
EGR DPF SCR EGR DPF SCR
Caterpillar √ √ ? √ √ ?
Cummins √ √ √ √ √ √
Freightliner (Mercedes) √ √ √ √ √ √
Navistar / MAN √ √ X √ √ X
Paccar √ √ √ √ √ √
Volvo √ √ √ √ √ √
Duramax √ √ √ √ √ √
Hino √ √ √ √ √ √
Isuzu √ √ √ √ √ √

07-23-10 © 2011 The Lubrizol Corporation HD142-5

 Heavy Duty Diesel Global Market
Engine Oil Specification Changes
PC-11 planned for 2015 or later.
LUBRICANT SPECIFICATIONS

Industry reviewed demands for EPA 2010 and determined no need to update CJ-4

PC-11? North American

CI-4 (PC-9) CI-4 PLUS CJ-4 (PC-10)
Diesel

European
ACEA 99 ACEA 02 ACEA 04 ACEA 06 ACEA 08 ACEA 10 PCMO
and Diesel

JASO DH-1 Japanese Diesel

JASO DH-1
DH-2/DL-1-2005

1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 I 2013TIMELINE
EMISSION REGULATIONS

Japan 2000 Japan 2004 Japan 2010?

EURO III EURO IV EURO V

EURO VI?

USA 2000 USA 2007 USA 2010?

04-19-11 © 2011 The Lubrizol Corporation HD131-49
 Diesel Emissions
Impact on Engine Oils
• The use of advanced after-treatment systems has
resulted in a fundamental change in the formulation of
engine oils
• New vehicle manufacture (OEM) specifications and
ACEA Oil Sequences contain significant restrictions in
the levels of:
– Sulphated Ash
– Phosphorus
– Sulfur
that may be present in the engine oil
• This has resulted in the development of a new
generation of high performance lower SAPS engine oils

06-01-10 © 2011 The Lubrizol Corporation HD142-6

 API Diesel Performance Categories
North American Demand by API Performance
CF/CF-2
5%
CH-4
11%

CJ-4
51%

CI-4, CI-4 Plus

33%

Estimated 1.4 million metric tons HDDEO demand

Note: Includes USA and Canada

04-19-11 © 2011 The Lubrizol Corporation HD106-9

 API Performance Category CJ-4
The Transition to CJ-4
• Lubrizol estimates 50% of the North American HDDEO
market has transitioned to API CJ-4
• Conversion levels are greatest among the largest oil
marketers
– Conversion rates range from 55% to 90% for the largest players
– Marketers with higher off- highway business positions are
towards lower end of the conversion range
• Many small regional suppliers still have CI-4 Plus as
their top quality tier

04-19-11 © 2011 The Lubrizol Corporation HD103-38

 API Performance Category “CJ-4”
Putting the Conversion to CJ-4 in Perspective
• The population of Class 8 HD trucks is estimated at
3.6 Million according to Ward’s Auto
• Number of new Class 8 trucks equipped with 07
compliant hardware at YE 2009 was ~ 380,000
• This implies ~11% of the HD trucks on the road at
beginning of 2010 actually require API CJ-4 lubricants
– In view of this a 46% conversion is remarkable!

01-01-10 © 2011 The Lubrizol Corporation HD103-39

 Heavy Duty Diesel North American Market
The Cost of Higher MPG

Mean $ Improvement % CCPPR

Technology Capital Cost in Fuel Consumption $/%
Diesel Engine $23,000 20 1,150
Aerodynamics $12,000 11.5 1,043
Rolling Resistance $3,600 11 327
Transmission and Driveline $5,800 4 1,450
Hybrid (includes idle reduction) $25,000 10 2,500
Weight Reduction $13,500 1.25 10,800
Fuel Economy HDDO1 $80 1 $80
CCPPR=Capital Cost Per Percent Reduction
Capital cost of FE HDDO is assuming $10/gal incremental oil cost; 8gal sump size; 5 oil change/year; 10years vehicle life span
Source: Technologies and Approaches to reducing the fuel economy of Medium and Heavy Duty vehicles

HDDO could be the “low hanging fruit” to help achieve FE improvement

05-04-11 © 2011 The Lubrizol Corporation HD132-39

 Heavy Duty Diesel North American Market
Bench FE (WHTC) Measurement
4.3
Whilst the primary trend is around
4.1
viscosity, clearly at equivalent
viscosity there are significant other
3.9
formulating effects
ASTM D4683 HTHS (mPas)

3.7

3.5

3.3

R² = 0.8711
3.1

2.9
501LA WHTC

2.7

2.5
-0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40
Fuel Economy Improvement (%)

• As predicted, there is a good correlation with HTHS

• However, the formulation chemistry can also have a significant effect
04-19-11 © 2011 The Lubrizol Corporation HD132-40
 Diesel Emissions
Emissions vs. Fuel Economy
• Recent focus on reducing particulates and NOx
emissions has cost the industry in terms of fuel economy
• According to J.D. Power, fuel economy declined from
6.04 to 5.72mpg attributable directly to the emissions
control systems that were phased in during 2003 and
2004. It worsened further in 2007
• With emissions of NOx and PM being ratcheted down to
near zero, engine makers are in position to focus on
improving fuel economy
• Unlike emissions, fuel economy mandate has a tangible
benefit in reducing operating costs

04-19-11 © 2011 The Lubrizol Corporation HD142-39

 Heavy Duty Diesel North American Market
Fuel Economy Standards are on the Horizon
• EPA and NHTSA announced a first-ever program to reduce GHG
emissions and improve FE of MD and HD on-road vehicles
• Proposed emission standards for CO2 and fuel consumption
standards are tailored to each of the three main categories:
– Combination tractors
– HD pickup trucks and vans
– Vocational vehicles
• As the majority of these vehicles carry payloads of goods in addition
to passengers, two types of standard metrics are proposed:
– Pickups/Vans: g/mile (and gal/100 miles)
– Vocational vehicles/combination tractors: g/ton-mile (gal/1000 ton-mile)
• The standards would phase in from 2014 to 2017 and require
reduction in fuel consumption and CO2 emissions over the 2010
baselines

04-19-11 © 2011 The Lubrizol Corporation HD132-35

 Heavy Duty Diesel Global Market
Fuel Economy Impact on Engine Oils
• Delivering increased fuel efficiency has resulted in
– Increased use of synthetic base oils and lower viscosity grades
– Increased use of friction modifier technology
– New engine designs that require new engine oil technology

04-19-11 © 2011 The Lubrizol Corporation HD131-48

 Heavy Duty Diesel Global Market
Durability
• Market pressure to maintain or increase oil drain
intervals, but under an environment of increasing
operating conditions
– New engine designs
• Improved thermal stability due to higher engine temperatures
• Improved soot control due to higher EGR rates
– New after treatment systems and OBD regulations
• Lower SAPS to improve the durability of the after treatment systems
– New Applications
• Fuel economy – use of low viscosity lubricants
– Use of alternate fuels
• Proven performance with biodiesel

07-23-10 © 2011 The Lubrizol Corporation HD131-50

 Heavy Duty Diesel Global Market
Impact of Bio-diesel Usage on Engine Lubricant
• Biodiesel (FAMEs) can be made from vegetable oils or
animal fats
– Many sources of biodiesel, each with different properties
• Biodiesel exhibits different properties to mineral diesel
fuel (e.g., less thermally and oxidatively stable, lower
volatility)
• Legislation is driving the introduction of biodiesel
• Use of biodiesel is providing challenges to the
automotive, fuels and lubricants industries
• Interactions between biodiesel and engine oils can
occur

01-01-10 © 2011 The Lubrizol Corporation HD131-36

 Heavy Duty Diesel Global Market
Biodiesel and Fuel Dilution Biodiesel
ULSD
• Use of biodiesel can lead to increased
levels of fuel dilution in the sump
B5 from tank
• Vehicles using in-cylinder post
injection are prone to high levels of
fuel dilution
• Biodiesel tends to concentrate in the
sump due to lower volatility

ULSD / BIODIESEL LUBRICANT

OXIDATION
T A N In c *1 0 / K V In c .

100
ULSD
80
Biodiesel
Fuel
60 Biodiesel concentration from
Dilution
40 lower volatility in cylinder and
in sump (equivalent B30 or
20 higher)
0

TAN KV 100

04-19-11 © 2011 The Lubrizol Corporation HD131-35

 Heavy Duty Diesel Global Market
Summary – Lubricant Trends
• HD lubricant quality is being driven by emissions, fuel
economy and durability
• U.S. EPA has implemented the latest emission
regulation that results in near zero emissions for NOx
and PM
• The focus is now on reducing CO2 emissions and fuel
economy
– U.S. Truck Fuel Economy regulation will be implemented in 2014
• This will drive increased use of lower viscosity HDDO.
Need to ensure engine and aftertreatment system
durability while delivering fuel economy

04-19-11 © 2011 The Lubrizol Corporation HD131-32