Diesel in Europe. Peter Duncan General Manager Market Research Johnson Matthey PLC. Market Research

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1 Diesel in Europe Peter Duncan General Manager Johnson Matthey PLC 1

2 Overview The emissions debate The facts Technology options for latest phases of emissions legislation Future power trains Implications for pgm demand Summary 2

3 Overview The emissions debate The facts Technology options for latest phases of emissions legislation Future power trains Implications for pgm demand Summary 3

4 The emissions debate: the bad press Paris mayor announces plans to ban diesel cars from French capital by 2020 The Guardian, December 2014 Diesel tests reveal toxic truth The Sunday Times, May 2015 Junk all diesel cars: They're a health hazard, so scrap them and pay owners 2,000 Boris tells MPs. The Daily Mail, September 2014 Freddie Starr ate my hamster The Sun, March

5 The emissions debate: the industry fights back The allegations against diesel cars made in recent months threaten to misguide policy making and undermine public confidence in diesel. It s time to put the record straight. Mike Hawes, SMMT Chief Executive, March 2015 If you look at gasoline cars, there are also a few myths that should be addressed and the first one is that the new fuel efficient gasoline engines are not as clean as they are being presented. Marc Grynberg, CEO Umicore, February 2015 So in a year of COP21 where we are going to discuss about how we fix the global warming, how can we pinpoint diesel as diesel is the number one tool we have to achieve the 95 grams of C02 emissions by 2020? Carlos Tavares, Chairman Peugeot SA, February 2015 Diesel engines have never been more important than they are today. This technology is key to achieving fleet CO 2 emission targets in Europe especially, it is indispensable to that goal, Dr. Rolf Bulander, chairman of the Mobility Solutions business sector, Bosch 5

6 Overview The emissions debate The facts Technology options for latest phases of emissions legislation Future power trains Implications for pgm demand Summary 6

7 The facts NOx emissions limit from diesel vehicles under Euro 6b slightly higher than gasoline vehicles (80mg/km vs 60mg/km). Particulate number (PN) emissions limit from diesel vehicles under Euro 6b an order of magnitude lower than gasoline vehicles (6.0 x vs 6.0 x ). Real world emissions from diesel vehicles at Euro6b probably are worse than the test, but that s what Euro 6c is all about Diesel vehicles are an essential tool to meet European CO 2 emissions legislation. 7

8 Euro 6b to Euro 6c: real world testing Euro 6b 2014/15 Euro 6c 2017/18 Move to new test cycle (WLTC) Inclusion of RDE test (PEMs) 8

9 Greenhouse gas legislation EC Regulation No. 443/2009 EU: 130g CO 2 /km by 2012; 95g CO 2 /km by 2020 Huge fines on car manufacturers for failure to meet targets: from 2019, an excess emissions premium of 95 will be applied for every gram over the specified emissions target. This is multiplied by the number of vehicles produced in that year by the relevant OEM. 9

10 Overview The emissions debate The facts Technology options for latest phases of emissions legislation Future power trains Implications for pgm demand Summary 10

11 Overview of catalyst components TWC = Three Way Catalyst Largely PdRh GPF Gasoline Particulate Filter Largely PdRh DOC = Diesel Oxidation Catalyst Largely PtPd, alloy varies by region SCR = Selective Catalytic Reduction No pgm content (V, Cu, or Fe based), but needs high pgm loaded DOC upstream SCRF = Selective Catalytic Reduction Filter No pgm content ASC = Ammonia Slip Catalyst Very low pgm loading, low volume CSF = Catalytic Soot Filter Largely PtPd LNT = Lean NOx Trap PtPdRh content, high volume 11

12 Euro 6b and 6c technology Gasoline vehicles Euro 5 TWC Euro 6c TWC + GPF 12

13 Euro 6b and 6c technology Diesel vehicles Euro 2, 3, 4 basis SCR CSF Euro 5 basis LNT CSF CSF SCR Euro 6b series LNT At Euro 6c the complexity of systems will increase substantially LNT CSF SCRF LNT- CSF SCRF 13

14 Euro 6c technology options Diesel vehicles CSF For vehicles with very low engine out NOx LNT CSF Some smaller vehicles with low/med engine out NOx CSF SCR For some light commercial vehicles as prefer underfloor SCR LNT CSF SCRF No urea tank required Ammonia generated over the LNT LNT LNT- CSF Some extra LNT functionality on the filter SCRF 14

15 Euro 6c technology options (cont.) Diesel vehicles SCRF SCR/ ASC For vehicles with high engine out NOx SCRF ASC More compact close coupled system (space/cost saving) LNT SCRF ASC More compact close coupled system (space/cost saving) but with increased NOx functionality SCRF 15

16 Overview The emissions debate The facts Technology options for latest phases of emissions legislation Future power trains Implications for pgm demand Summary 16

17 Future powertrains diesel turbocharged gasoline engine LPG hybrid EREV, MHEV, FHEV,PHEV diesel and gasoline options lean burn gasoline engine fuel cell battery electric CNG 17

18 Forecast diesel share of light duty vehicle markets 70.0% 60.0% 50.0% 40.0% 30.0% 18.6% 20.0% 20.0% 10.0% 0.0% Source: LMC Automotive Q Europe China N.America India Japan Global 18

19 Hybrid Vehicle Definitions Global Hybrid and EV Forecast *** Second Half, 2014 Mild Hybrid Electric Vehicle IC and electric motor(s) working in parallel. Not able to drive under electric power alone. Electric assistance greater than 5kW, but less than 30kW. Typical figure is 10kW to 15kW. Full Hybrid Electric Vehicle IC and electric motor(s) working in parallel. Can be driven for short distances under electric power alone. Electric assistance greater than 30kW. Typical electric assistance ranges from 60kW to 165kW. Plug in Hybrid Electric Vehicle Full hybrid electric vehicle with larger battery pack which can be recharged from the electricity grid thereby enabling a longer electric only driving range. Extended Range Electric Vehicle IC and electric motor(s) working in series. A battery electric vehicle with an on board charger (usually IC engine+generator) for the battery pack to enable longer range than BEV. 19

20 Forecast production of hybrid vehicle by category 6,000,000 5,000, million units in 2021 = 4.8% of total LDV units units 4,000,000 3,000,000 eg Toyota Prius 2,000,000 eg Chevrolet Volt 1,000,000 eg Honda Accord 0 eg BMW i3 Source: LMC Automotive Global hybrid and electric vehicle forecast 2 nd half 2014 FHEV PHEV MHEV EREV TOTAL (Stop/starts not included) 20

21 Forecast production of BEV and FCEV 1,200,000 1,000,000 21k fuel cell vehicles in 2021, and 0.99 million BEV 25,000 20,000 BEV units 800, , , ,000 eg Tesla eg Toyota Mirai 15,000 10,000 5,000 FCEV units 0 0 Source: LMC Automotive Global hybrid and electric vehicle forecast 2 nd half 2014 BEV (lh axis) FCEV (rh axis) 21

22 Overview The emissions debate The facts Technology options for latest phases of emissions legislation Future power trains Implications for pgm demand Summary 22

23 Implications for pgm demand Direct injection turbocharged gasoline engines Better fuel efficiency, but higher HC and particulate emissions Catalyst is further from engine, so exhaust gas is cooler Overall result is more pgmin catalyst and possible need for particulate filter Lean burn gasoline engines 2014 units = 280k Better fuel efficiency, but higher NOx emissions Requires a lean NOx trap = more pgm BEV (battery electric) 2014 units = 150k; 2024 forecast units = 1.8m No pgm (source = LMC Automotive) Hybrid EV 2014 units = 2.3m; 2024 forecast units = 7.1m Frequent cold start (source = LMC Automotive) Efficiency or performance? Up to 15% higher pgm loading in catalyst FCEV (Fuel Cell) 2014 units = 340; 2024 forecast units = 96k Current ~30 to 80 grams Pt (source = LMC Automotive) DOE target loading of 12.5 grams by

24 Overview The emissions debate The facts Technology options for latest phases of emissions legislation Future power trains Implications for pgm demand Summary 24

25 Summary Emissions from all vehicles need to be controlled by appropriate legislation, and at Euro 6c the real world emissions from diesel cars will be similar to those from gasoline vehicles. Diesel vehicles are an essential tool to meet tightening greenhouse gas targets. New catalyst system designs will be increasingly complex, resulting in less certainty of future pgm loadings. New powertrains are unlikely to replace a substantial share of the existing ICE based market in the near term, but in most cases would require similar or higher pgm loadings. 25