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Fabricio CardosoLead Analyst, EmissionsInteger Research, Ltd.
The Market Outlook forDiesel Exhaust Fluid
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The market outlook for Diesel Exhaust FluidFabricio Cardoso Lead Analyst, Emissions Control
Savannah, Nov 18 - 20, 20142014 Fertilizer Outlook & Technology Conference
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Source:
FROM AIR QUALITY STANDARDS TO DEF
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The relationship between air quality, emission standards and DEF
Health Environment
PM HC CO NOx
Air Quality Standards
Emission Standards CO2
Climate Change
Greenhouse gas/Fuel Economy
Standards
Source: IntegerPM – particulate matter, HC – hydrocarbons, CO – carbon monoxide, NOx – nitrogen oxide, CO2 – carbon dioxide
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NOx and PM levels have been dramatically reduced since the first standards
Source: Integer, EPA, NHTSA
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Demand driver: why ammonia/urea?
The combustion
trade-offInjection timing, Exhaust Gas Recirculation
NOx
High temperatures
SCR & alternativesAmmonia or urea reductant
Particulates / soot
Incomplete combustion
Filters
Expensive maintenance
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Several aftertreatment technologies are available to reduce NOx levels
Aftertreatment technologies to reduce NOx levels
Ceramic catalyst
(Vanadium, Iron, Copper)
NO, NO2(NOX) from combustion
AUS 32 (urea solution, 32.5 wt%)DEF
N2, H2O
Selective Catalytic Reduction (SCR)
Exhaust Gas Recirculation
EGRLean NOx Trap
LNT
Selective Catalytic Reduction
SCR
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The EPA has regulated heavy-duty diesel engine emissions since its inception in 1970, but GHG and fuel economy requirements have just been introduced
Source: Integer, EPA, NHTSA
1998 2002 2007 2010 2013 2014 2017 2020 2021 2025
Mandatory
Fleet-wide CO2 compliance
Voluntary
Phase 1 Phase 2EPA ‘98 EPA ‘04 EPA ’07 EPA ‘10
OEMs circumvent emission standards, EPA introduces strict test procedures and Not-To-Exceed limits
Truck-makers use EGR technology, fuel efficiency drops
Navistar adopts SCR, last OEM to do so.
SCR used by all but one truck OEM. Navistar uses high-flow EGR and credits.
Fleet-wide fuel economy legislation
NOx limit (g/bhp-hr)4.0 2.0 1.2 0.2
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If SCR requires ammonia, why urea?
• Ammonia is technically more suitable for use in every application
• However: storing, transporting, dispensing and using ammonia has challenges due to its pungent smell and safety‐related issues
• Urea is therefore used as an ammonia carrier. It must first be converted back to ammonia before it can be used to destroy NOx
• Other options were considered, including aqueous ammonia and ammonium formate and more recently solidly methods for storing ammonia. None have yet reached commercial acceptance.– Absorbed on a salt matrix: Amminex– As ammonium bicarbonte: Tenneco
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Urea fluid standardised globally
• 32.5% urea solution – allows freezing of vehicle tank• Names: AdBlue / Diesel Exhaust Fluid (DEF) / ARLA‐32
• ISO 22241 standard defines the quality requirements– biuret and formaldehyde limits mean that fertilizer urea cannot be used– water must be de‐ionised
• This standard was originally defined by truck industry in discussion with catalyst suppliers and urea producers, then adopted by non‐road equipment and car manufacturers.
• 40% urea solution for marine applications because tank freezing is not an issue
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VEHICLE, SCR AND DEF FORECAST
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While the majority of commercial vehicles in North America are equipped with a diesel engine, the share of diesel passenger cars and light-duty vehicles is still small compared to other regions
98.6%
95.7%
93.0% 7.0%
8.31.4%
8.94.3%
0.4 million vehiclesMDV/HDV
LDV
PC
diesel non-diesel
Source: Integer, WardsAuto, ACT
Million vehicles
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The commercial vehicle SCR fleet is expected to be six times bigger in 2025 compared to 2013
Source: Integer
7 50
30
0
40
0
2
1
320
6
5
4
10
20252020
6.1
2024202320222021
3.8
201920182017201620152014
1.4
2013
1.0
Class 4-7 fleetClass 8 fleet
Million vehicles %
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More than 11 million passenger cars and light-duty vehicles are forecast to be on the road in North America by 2025
Source: Integer
million vehicles
6.0
7.5
0.0
3.0
1.5
12.0
4.5
10.5
9.0
20212019
6.6
2023 20242017 20252018 202220202013
11.9
2014
1.4
2016
2.0
2015
SCR-equipped passenger carsSCR-equipped light-duty vehicles
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Our base-case scenario shows DEF consumption is expected to reach 1 billion gallons in North America by 2019
billion gallons of DEF
Source: Integer Research
3.0
1.5
0.5
1.0
0.5
2.0
0.00.0
2.5
1.5
1.0
2.0
2014
0.36
2013
0.23
2025
1.86
20242023202220212020
1.22
20192018201720162015
HDOff-highway
MDUREAPC
LD
Million tons of urea
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DEF MARKET, CURRENT AND OUTLOOK
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DEF logistics: It’s all about the water
• 67.5% of AdBlue/DEF is water• Supply chain options account for transport optimisation:
• End-user prices reflect supply chain requirements
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About 65% of total DEF consumption in 2013 originated from domestic urea production
Solutionizing & dilution plants13%
DEF imports
23%
64% Domestic urea production
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DEF production from urea plants in North America totalled 147 million gallons in 2013
Truck fleets
Truck stops
OEM dealers
Gas stations
Retailers
Domestic urea
production
Urea imports
Solutionizing& dilution
DEF import terminals
DEF distributors
DEF Concentrated urea solution Prilled urea AUS50
Key:
26 million gallons7 ktons
147 million gallons
29 million gallons
13 ktons
54 million gallons
230 million gallons
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Midwest, Gulf Coast and Canada have the highest shares of DEF coming from domestic urea plants
21%
58%
87%
69%59%
35%
74%64%
46%
45%
19%
13%
22% 41%
38%
17%
23%54%
34%23%
10%
27%
9% 13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
North America
Canada
PADD 5 (West Coast)
PADD 4 (Rocky
Mountains)
PADD 3 (Guld Coast)
PADD 2 (Midwest
)
PADD 1C
(Lower Atlantic)
PADD 1B
(Central Atlantic)
PADD 1A (New
England)
DEF Imports Domestic urea productionSolutionizing & dilution plants
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What to expect for 2020?
• Urea plants coming online – domestic DEF production will remain strong
• More efficient logistics – urea plants producing more concentrate solution and distributing to solutionizing & dilution plants across the country and closer to the main consumption markets
• Prilled urea imports – likely to maintain an important growth, specially in California, where the gap between supply and demand will increase
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Thank [email protected]
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