Daimler’s Bernhard: Diesel is the alternative fuel

March 28, 2014

The wave of interest in natural gas for heavy-duty transportation is beginning to break, and the industry has begun to understand its limitations, the head of Daimler’s global truck and bus business said March 28. “I am convinced that a highly efficient diesel engine will remain the most important alternative in the United States,” said Dr. Wolfgang Bernhard in a speech to the annual Heavy Duty Manufacturers Assn. breakfast at the Mid-America Trucking Show in Louisville.

“We don’t see any long-haul applications [for natural gas] so far,” Bernhard told the HDMA attendees. “One of our suppliers put a 15L on hold because we don’t see the customers. I see a little bit of hesitancy. The hype is broken. There is more realism.”

The infrastructure challenge is daunting, Bernhard said. “We still have 200 times more diesel stations than natural gas stations, and engines must be up for the task of hauling long distances.”

In case anyone missed his point, when Bernhard was asked during the question-and-answer period what he sees as the best alternative fuel he quipped, “My alternative fuel is diesel because I don’t see any replacement for diesel in the long run.” He allowed, however, that if a viable alternative would develop it would be natural gas.

Turning to the broader issue of greenhouse gases and emissions, Bernhard noted that discussions over the next phase of regulations are beginning. “We need to make sure that we are following the full vehicle standard,” he said, referring to the idea that manufacturers are accountable for the fuel efficiency performance of the entire vehicle and not of, for example, the engine itself.

But the approach toward greenhouse gases should be broader still, Bernhard argued.  “We need better surfaces for the roads, better infrastructure, less congestion.” To date, truck manufacturers and suppliers and their customers have borne the burden of fighting climate change, he said. “We should ask the government to do something there.”

In further regulation of technology, the Environmental Protection Agency must remain mindful of the costs, Bernhard said. “If the EPA goes beyond the point where the customer is willing to pay for it, we are making a mistake. The customer’s payback for buying new technology needs to be around 18 months, he said. “We should push EPA to use this rule of thumb and make sure we aren’t doing stupid things.”

Concentrating new emissions efforts on CO2 reductions would benefit all sides since it translates into better fuel economy, Bernhard had said the night before at a press briefing. On the other hand, proposals under consideration by California’s Air Resource Board (CARB) to mandate further NOx reductions “would be disastrous from a cost standpoint” without delivering meaningful environmental benefits, he said.

Greenhouse gas (GHG) reduction standards for 2014 and 2017 “are very good examples of regulations that work well,” added Martin Daum, president and CEO of Daimler Trucks North America. “We’re hoping for something similar with the next phase - challenging but good for everyone,” he said at the press briefing.

As a global company in a global industry, however, Daimler believes EPA should not act alone. The industry needs common standards globally, Bernhard said. “Of course, this is always difficult because something has to give.” But the benefits would be great, he contended. “We could put the money to better use than drafting differing emission standards. We have much more in common than we have differences.”

Bernhard’s push for global efficiency goes beyond emissions, however, and should include more flexible trade agreements. “There are so many tariffs still lurking around from the 50s and 60s,” he said. “There is so much paperwork….It’s mindboggling. It’s not helping anyone; it’s just a lot of waste in the system.”

And beyond global emissions and trade rules, the industry would benefit from more efficient global supply chains, Bernhard said. Daimler wants its suppliers to be both long-term –70% of all purchases are based on contracts of three years or longer – and global.  “We want suppliers who are acting globally and supply locally,” he said, noting that local sourcing can be critical due to tariffs and other restrictions that reduce efficiency.

Bernhard hinted that suppliers would benefit from working more closely with Daimler than with its competitors. “If you have an idea, come see us first. It will see the light of day with us much easier and much sooner.”

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