1. 2007 Program Update for ATA/TMC John Campbell 10 June 2003

2. Topics 2007 Emissions Approach 2007 Emissions Approach 2007 Program Objectives & Timeline 2007 Program Objectives & Timeline Aftertreatment Technology Options and Installation Aftertreatment Technology Options and Installation Projected Capital Costs Projected Capital Costs Summary Summary

3. ACERT™ Is The Foundation for 2007/2010 1998 Engine Add: –Split Inj –Oxicat 10/02 Bridge Add: –Adv Combustion –NOx AT –Diesel Part. Filter 2007 ACERT 10/03 ACERT Add: –VVA –Series Turbo –Adv Comb –NOx Aftertreatment 2010 ACERT Cat's Technology Strategy & Approach –Build Upon 03 ACERT™ –Continue to Enhance Engine Performance While Incrementally Introducing Advanced Aftertreatment –Investigate Multiple NOx Aftertreatment Technologies –Provide Best Value To Customer and Optimum Technology to Truck OEMs

4. 2007 Program Objectives 2003 Focus 2003 Focus –Develop and Demonstrate Systems to Achieve 2007 Emissions –Maximize Reliability & Fuel Economy –Minimize Product Cost & Development Cost (for OEM & Cat) –Develop Solutions for Heavy Duty and Midrange –Performance and Durability in Engine Test Cell –Vehicle Integration Studies with Truck OEMs Deliver Customer Value

5. 2007 Timeline & Critical Dates 20032004200520062007 2002 2007 NTI 2007 Platform NPI 2007 Production Sellable Customer Truck Target OEM Specs 2008200920102011 DemoTruck ProductionOEM NPI 2012 Truck OEM Demos of 07 Emissions Technology (Multiple Paths) 2001 2007 Research 2007 Field Demos NTI = New Technology Introduction ProgramNPI = New Product Introduction Program Technology Selection

6. PM Reduction Technologies and Activities

7. Wall Flow Filter Technology Soot Collects on Inlet Walls Cell Plugs Exhaust Inlet (Soot, CO, HC, NOx) Clean Exhaust Out (CO2, H2O) Filter Substrate Diesel Particulate Filter (DPF) Collects Soot Oxidizes / Burns Soot Wall Flow Ceramic Filter Over 50,000 in Service

8. Best Value Solution will be if Engine Can be Tailored for Thermal Management Temperature Is Key to Filter Regeneration Optimum is 350°C (660°F) Optimum is 350°C (660°F) –Below 300°C (570°F) too Slow »Low Temperature –Above 400°C (750°F) even Slower »NO 2 Generation Limits Reaction -0.10 -0.08 -0.06 -0.04 -0.02 0.00 0.02 0.04 0.06 0.08 0.10 100200300400500 Temp (°C) Soot Collected - Soot Burned (g/hp-hr) <0 Yes Regen >0 No Regen Need To Be In This Region

9. Temperatures Vary With Application and Duty Cycle Frequency % Time Above Temp Cold Route Only 10% of Time Above 250°C Temp (°C) Frequency % Time Above Temp Hot Route Over 60% of Time Above 250°C Temp (°C) Exhaust Temperatures vary with: Power Installation Application Ambient Conditions

10. NOx Reduction Technologies and Options

11. NOx Reduction Options 2003 ACERT™ Engine Aftertreatment NOx Technology OptionsEngine NOx Technology NOx Adsorber Urea SCR DeNOx Catalyst Advanced Diesel Combustion Engine-Out NOx Measures Can Reduce Size / Cost of Aftertreatment Aftertreatment Options Need to Be Evaluated for Maturity and Cost Combination of Engine-Out and Aftertreatment May Provide Best Value Path T C T C T C T C Particulate Filter NOx AT

12. Engine Measures for NOx Reduction Caterpillar Continues To Expand The Envelope On Engine-Out Performance ACERT™ Has Further Potential to: –Reduce NOx & PM Emissions –Improve Fuel Consumption and Heat Rejection Advanced Combustion

13. Aftertreatment Technology to Reduce NOx Emissions –Capable of Substantial NOx Reduction Current Development Work: –Integration of DeNOx With Engine Measures for NOx Reduction –System & Component Design –System Performance & Packaging –Catalyst Development –Catalyst Performance Evaluation Advanced DeNOx Catalyst DeNOx Benefits Simple Catalytic Converter No 2nd Fluid Required Drawbacks Lower NOx Reduction Capability Durability Unproven Fuel Penalty

14. Low NOx Emissions Technology –Based On Industrial Technology –Currently In-Production on Cat 3516 Stationary Engine –Potential Capability to Meet On-Highway NOx Emission Levels Reaction of NOx With Urea Current Development Work: –System & Component Design –System Performance & Packaging –Catalyst Durability Evaluation –Truck Demonstration Selective Catalyst Reduction (SCR) SCR Advantages Established Technology Fuel Consumption Benefit Drawbacks Urea Infrastructure Compliance Cat C-12 With SCR System Urea Tank Urea Heater Urea Pump Urea Injector ECM SCR Converter

15. Caterpillar SCR Experience 1970’s1980’s1990’s2000200120022003 Ammonia SCR Truck 3516 Ethanol DeNOx Aftertreatment Urea SCR Truck Demo 3500 SCR System Component Development –Catalyst –Injection System –Control System C-12 SCR Test Engine Demo’d NOx Red Electric Power Mobile Modular SCR SCR Test Evaluation On-Highway

16. Low NOx Emissions Technology –Stores NOx Between Regeneration Cycles Regeneration –NOx Reacts with Hydrocarbon (HC) Under Lean Exhaust Conditions –HC Provided by Rich Engine Cycle or In-Exhaust Injection of Fuel Current Development Work: –System & Component Design –Engine Management to Provide Rich / Hot Conditions for Regeneration –System Performance & Packaging –Engine Testing NOx Adsorber NOx Trap Benefits No 2nd Fluid Required Drawbacks Sulfur Intolerance High Precious Metal Content Regeneration Cat 3126 with NOx Adsorber System

17. Aftertreatment Installation Setback Distance Will Be Important Setback Distance Will Be Important Round Cans Are Rule Round Cans Are Rule Larger Diameter Single Can Preferable to Dual Exhaust Larger Diameter Single Can Preferable to Dual Exhaust Filter System Will Need to Be Serviceable Filter System Will Need to Be Serviceable

18. What was included in the EPA Cost Estimate? Fixed Costs + Variable Costs Change + Operating Cost Change = Cost Increase R&Dhardware cost increase $0.05 fuel premium Toolingassembly cost increaseCCV maintenance Certificationassociated mark-upsPM filter maintenance No fuel mileage change Lower engine maintenance due to 15 PPM fuel

19. EPA Cost Estimate Fixed Costs R&D R&D –Total engine industry R&D is $385 M. –Total industry PM treatment R&D is $87 M. –Total industry NOx treatment R&D is $133 M. –R&D is amortized over 5 years. –7% per annum is used for NPV calculations Tooling Tooling –Light heavy duty - $6 M –Medium heavy duty - $9 M –Heavy heavy duty - $10 M Certification Certification –$30,000 per family with all families requiring certification –Total industry cost is $5 M.

20. EPA Cost Estimate Variable Costs Incremental hardware costs (2007) Incremental hardware costs (2007) –NOx absorber $1080 MR $1650 HD –Catalyzed particulate filter $852 MR $1190 HD »Assumes the muffler is eliminated –Clean up catalyst (oxidation catalyst) $261 MR $338 –Closed crankcase system $42 MR $49 HD Incremental assembly costs (included in above dollars) Incremental assembly costs (included in above dollars) Associated markups (included in above dollars) Associated markups (included in above dollars) –1% warranty assumption –4% manufacturer carrying cost on extra inventory –3% dealer carrying cost on extra inventory

21. Summary Technical Decisions Must Be Made In 2003 Technical Decisions Must Be Made In 2003 Proven Technology Winner Is Not Confirmed Proven Technology Winner Is Not Confirmed Customer Demonstrations Required in 2005 Customer Demonstrations Required in 2005 Truck Installation Impact Being Investigated Truck Installation Impact Being Investigated Cost of Compliance Not Yet Confirmed Cost of Compliance Not Yet Confirmed