1. VIABILITY OF UREA INFRASTRUCTURE FOR SCR SYSTEMS U.S. Environmental Protection Agency Clean Diesel Engine Implementation Workshop CHICAGO, ILLINOIS August 6-7, 2003 Michael D. Jackson Scott Fable Shyam Venkatesh TIAX, LLC 1601 S. De Anza Blvd, Suite 100 Cupertino, California 95014-5363 408.517.1550

2. 1 D5197 7642 SCR Urea Implementation Summary Urea can be distributed at prices comparable to the price of diesel –Focus urea distribution to the large public and private diesel retailers serving the Class 7 & 8 trucks sector and consuming nearly 97 percent of the diesel –The current world and domestic production capacity of urea is sufficient to cover the increased demand from mobile SCR urea –Cost to retail urea is reasonable for the largest retailers and is less than the price of diesel –There is a small segment in terms of diesel consumption (3%) that will see urea at prices around $3/gallon –SCR urea is very competitive with NOx adsorber in the early years (2007) and markedly cheaper in later years (2015) –For SCR urea to be implemented successfully, all stakeholders must work in a concerted manner

3. 2 D5197 7642 2002 On-Road Diesel Consumption: 35 billion gal Light-Heavy Class 6 19,501 - 26,000 lb L 2.9% MR LR CF SC P O 1.1% CF SC P O CF SC P O L 6.9% MR LR CF SC P O CF SC P O CF SC P O L 3.7% MR LR CF SC P O CF SC P O CF SC P O L 50% MR 14.9% LR 19.7% CF 14.3% SC 4.5% P 31.2% O CF 5.6% SC 1.3% P 8.1% O CF 3.7% SC 1.1% P 14.9% O Medium Class 3-5 10,001 - 19,500 lb Light Class 1-2 < 10,000 lb Heavy Class 7&8 > 26,001 lb  23.6%  6.9%  54.2% L - Local; < 200 miles MR - Medium Range; 200 - 500 miles LR - Long Range; > 500 miles CF - Central company-owned fueling station; Fleet Stations SC - Single contract fueling facility located off site; Cardlocks P - Public fueling station; Truck stops and conventional retail stations O - Other fueling habit 85 % of all diesel consumed 85 % of all diesel consumed SCR Urea Implementation Diesel Consumption

4. 3 D5197 7642 Profiles of Fueling Stations Serving the Class 7 & 8 Truck Market Station Size (Monthly Diesel Consumption) # of Public & Private Stations Diesel Consumption SCR Urea Implementation Fueling Station Profiles Large (2,000,000 — 1,000,000 gal/month) Medium (200,000 – 80,000 gal/month) Small (<80,000 gal/month) >25,0003% 2,20077% 3,50020%

5. 4 D5197 7642 Projected Annual Urea Consumption SCR Urea Implementation Projected Annual Urea Consumption 2007 Total Diesel Consumption ~43 Billion Gal 2015 Total Diesel Consumption ~57 Billion Gal 0 200 400 600 800 1,000 1,200 200720082009201020112012201320142015 Calendar Year Urea Consumption (million gallons of urea 32.5%wt solution) High NO x engine out Low NO x engine out Urea consumption if SCR- urea implemented starting with MY2010 Urea consumption if SCR- urea implemented starting with MY2007

6. 5 D5197 7642 World & Domestic Urea Supply vs. Demand SCR Urea Implementation Urea Supply vs. Demand MM Tons/Yr * -- Corresponds to 250 - 1,100 MMgal of 32.2% Aqueous urea Domestic demand includes stationary side SCR usage

7. 6 D5197 7642 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 01000020000300004000050000 Urea Throughput, gal/month Cost, $/gal SCR Urea Implementation Retail Urea Cost Retail Urea Cost by Diesel Station Throughput

8. 7 D5197 7642 Retail Urea Cost by Diesel Station Throughput SCR Urea Implementation Retail Urea Cost

9. 8 D5197 7642 Range of Urea Prices for Various Scenarios SCR Urea Implementation Retail Urea Price

10. 9 D5197 7642 20102015 Cost Comparison Parameters for Line- haul Application 2007 Assumptions: $1.55/gal diesel 1 million miles over vehicle life High EGR used on alternative systems for MY2007-09 and on all vehicles for MY2010+ Maintenance costs same for all systems SCR-Urea Implementation Strategies SCR Urea-NOx Adsorber Break-Even Analysis

11. 10 D5197 7642 Breakeven Urea Prices for Various Scenarios SCR Urea Implementation Price of Urea Compared to Competing NOx Technologies Breakeven Urea Price $4.91-$6.89 Breakeven Urea Price $2.51

12. 11 D5197 7642 All stakeholders must move in a concerted manner SCR Urea Implementation Stakeholders Truck Operators - key stakeholders since aggregate fueling habits almost evenly distributed between public fueling facilities and private central fueling facilities. Will require installing a urea dispensing facility in their central fleet refueling facilities and need to leverage infrastructure at public facilities. Will require assurance from truck and engine manufacturers on the availability of urea and SCR systems before investing in vehicles or infrastructure. Urea Retailers - primary retailers of diesel to the Class 7 & 8 truck market. The large truck stops and central fleet fueling facilities are best early adopters. Will require strong signals from customer (truck operators) to carry infrastructure. Urea Distributors - these are likely to be existing diesel distributors, ag urea distributors and new entrants. Are key to coordinating supply and demand and will require early strong signals from upstream and downstream members in the value chain to make investments. Systems Providers - vendors of urea distribution, storage, and dispensing equipment. Existing players servicing the petroleum industry are well situated to handle urea. Some niche urea systems developers already exist in Europe. Engine & Truck Manufacturers - providers of SCR technology. Must initiate strong signals to all downstream members in the value chain on impending this emerging technology.

13. 12 D5197 7642 SCR Urea Implementation Thank you for you attention Acknowledgements TIAX would like to acknowledge the Engine Manufacturers Association and the National Renewable Energy Labs for making this study possible Further Published References: “Development of a Urea Infrastructure to Support MY2007+ Heavy-duty Emission Requirements,” TIAX report to NREL, Contract # ADZ-3-33020-01, May 2003 “ Selective Catalytic Reduction Urea Infrastructure Study,” Arthur D. Little report to NREL, Contract No. DE-AC36-99-GO10337 Contact Michael D. Jackson - jackson.michael@tiax.biz