On September 20, DaimlerChrysler VP of Regulatory Affairs Deborah Morrissett gave an address to the Washington Automotive Press Association on the subject of renewable fuels. She discussed the usual gamut of alternative fuels, including ethanol, biodiesel and hydrogen. However, the single biggest chunk of the speech covered diesel in its various aspects. She talked about the success of the Ram and Liberty CRD and the fact that both are already rated to run on B5. The Ram is currently being successfully field tested on B20 and the Liberty CRD and the upcoming Grand Cherokee CRD are and will be delivered from the factory with the tank filled with B5. DCX is doing a lot research on biodiesel both in terms of the vehicles and working with agricultural researchers on how to maximize the fuel output per acre of crops. There was also discussion of fuel cells and the fact that DCX currently has over 100 fuel cell vehicles on the road around the world including sprinter vans, buses and over 60 light-duty vehicles (including Mercedes A-classes). See the full text of the speech after the jump.

[Source: DaimlerChrysler Media Services]

Date: Sep 20, 2006

Deborah Morrissett, Renewable Fuels: Opportunities and Challenges, Washington, D.C.

Deborah Morrissett
Vice President – Regulatory Affairs, DaimlerChrysler
Washington Automotive Press Association
Prepared remarks as delivered by Deborah Morrissett


Good afternoon and thank you for coming today.

I want to talk to you today about the role of renewable fuels as part - and I emphasize PART - of a comprehensive approach to addressing the energy and environmental challenges of our transportation system.

The price of gas is coming down - and I'm sure we are all grateful for some relief from the higher prices that we've been paying at the pump recently. My last fillup was under $2.30 a gallon.

But the recent run-up in oil prices has left a lasting impression on the American public.

President Bush has described the challenge pretty clearly: "America is addicted to oil."

The President has been promoting renewable fuels as one way to begin reducing that dependency.

Tomorrow morning, the House Agriculture committee is expected to mark up a resolution supporting the "25 by 25" initiative to replace 25 percent of our energy with renewable sources by the year 2025. We hope Congress will pass that resolution before they depart next week.

Others agree with the president on the importance of renewable fuels, including our own President & CEO at Chrysler Group, Tom LaSorda, who describes renewable fuels as a "homegrown solution" to our energy, environmental and economic challenges.

The response to renewable fuels in the media has been interesting.

Basically, we're being accused of starving children so we can continue driving our big gas-guzzling SUVs.

The most common misconception in the reporting is the assumption that any one fuel or any single technology is going to make our oil addiction go away. Our transportation system is too diverse and Americans are too independent for that to happen.

The challenge before us is clear:

We currently import 13.7 million barrels of oil a day just to meet our own needs, and this figure is expected to rise to 15.6 million barrels by 2025 - and a lot of the increase will be due to growth in the number of drivers and the number of vehicle miles traveled.

Demand will continue to grow in emerging economies such as China and India.

The supply of petroleum is vulnerable to interruption from geopolitical unrest and "acts of God," such as hurricanes Katrina and Rita last year.

Greenhouse gas emissions and the potential for climate change are concerns.

Transportation clearly consumes more petroleum than any other sector of the market, so we have a responsibility to be part of the solution.

So, how much petroleum can bio-fuels replace?

According to our computer models, if we're able to fully deploy flexible fuel vehicles operating on E85, burn 10 percent ethanol in all conventional gasoline engines and achieve a biodiesel penetration rate of 20 percent, this would lead to a 36 percent reduction in U.S. demand for petroleum.

That equates to a reduction of 4.2 million barrels of petroleum per day.

Today, there are two major bio-fuels – bio-ethanol, manufactured from crops such as corn, sugar cane, and sugar beets and bio-diesel, made from vegetable oils, animal fats or used cooking oil.

The next generation of bio-fuels, such as cellulosic bio-ethanol, can be made from crops such as switch grass, poplar trees or forest waste. They produce a higher energy yield per acre and even further reduced greenhouse gas emissions.

Bio-fuels represent a huge, maybe the greatest, opportunity to reduce our consumption of petroleum. The upside on bio fuels is three-fold:

  • First, bio-fuels provide a secure, renewable means of energy derived from a number of diverse sources
  • Second, bio-fuels provide a number of environmental benefits. They reduce greenhouse gas emissions because the plants from which they're derived absorb carbon dioxide from the atmosphere. Bio-diesel reduces tailpipe emissions of particulates, carbon monoxide and hydrocarbons, compared with conventional diesel fuel
  • Third, bio-fuels support the agricultural economy by creating a new market for energy specific agricultural products
  • And let me add a fourth benefit: at a conference here in Washington two weeks ago, we heard some of the first evidence that biodiesel can have significant health benefits, primarily by reducing emissions of particulates. That is especially important in urban areas

Much of the public's interest today focuses on flex-fuel vehicles. The technology is here and the vehicles are in showrooms. Flex-fuel vehicles run on conventional gasoline or a blend of up to 85 percent bio-ethanol.

Ten percent of Chrysler Group vehicles produced during the past eight years are flex-fuel capable - more than any other company in the United States. We currently have 1.5 million ethanol-capable vehicles on the road.

In 2007, we'll produce 250,000 more E85 vehicles and in 2008 our current plan doubles our production commitment to 500,000 units. That's nearly 25 percent of our production. If all of these flex fuel vehicles operated on E85, the nation would conserve 250 million gallons of petroleum per year. This is roughly the amount of oil the U.S. imports from Libya each year.

Bio-ethanol is not without its challenges, however, which include:

  • Lower-concentration ethanol blends, such as E10 or 10 percent ethanol, present evaporative emission challenges
  • Due to the lower energy content, more fuel is needed to do the same work
  • Availability of E85 is limited due to a lack of a robust bio-ethanol infrastructure
  • Most production processes are not yet cost competitive with petroleum-based fuels in this country

For 2007, the Chrysler Group's E85 lineup includes 10 vehicles.

The challenge is to educate customers about the capabilities of their flex-fuel vehicles. Many consumers who own flex-fuel models - 70 percent according to a recent General Motors study - are not even aware that their vehicles can use either fuel.

So beginning this year, we're badging our flex-fuel vehicles and adding a bright yellow fuel cap to remind customers that their vehicle is flex fuel capable. And we're supporting our colleagues at GM in their "Live Green, Go Yellow" campaign to promote use of ethanol fuels.

Modern clean diesel technology can address our fuel economy, oil dependence and environmental issues, and biodiesel can help make modern clean diesel vehicles even better.

It's no secret that DaimlerChrysler is bullish on diesel. Diesel is an option available to us today to address our energy and environmental challenges.

  • An average of 30 percent better fuel economy
  • Up to 20 percent reduction in carbon dioxide
  • Plus it offers the performance, utility and durability - the value - that consumers want

It is not surprising J.D. Powers and Associates projects the light duty diesel market will grow dramatically over the next decade.

For the current 2007 model year, DaimlerChrysler is offering six new clean diesel vehicles in the U.S. If they sell as well as our first two diesel offerings - the Mercedes-Benz E320 and the Jeep Liberty CRD - we will take another step forward in re-establishing diesel in this market.

We're promoting use of biodiesel in our Chrysler Group products.

The Dodge Ram and Jeep Liberty CRD diesels are approved for operation on B5.

The Liberty is fueled at the factory and delivered to owners running on B5. That program will continue with launch of the Jeep Grand Cherokee CRD diesel early next year.

Biodiesel has many benefits.

  • It replaces petroleum-based diesel fuel
  • It's renewable
  • It's grown in the U.S., supporting the U.S. economy
  • It reduces tailpipe emissions
  • And it does not require modifications of current engines

As with ethanol, we have some challenges to address if biodiesel is to achieve its potential in reducing our reliance on petroleum.

The key to broad acceptance of biodiesel is the establishment of a national high quality B20 specification.

DaimlerChrysler is teaming with Detroit-based, non-profit Next Energy, biodiesel refiners, industry leading suppliers and local universities to conduct much needed research into a B20 biodiesel specification.

In order for us and others to produce, sell and warranty vehicles to run on biodiesel, a strong national B20 standard is critical. It must be developed to allow manufacturers to use B20 in all of their vehicles, including the millions of diesel vehicles already on the road, as well as those built in the future.

Today, DaimlerChrysler has Dodge Ram trucks in the field that are successfully operating on B20 fuel. This proves that B20 can, in fact, be used if proper quality specification and controls are in place.

The next step? Beginning with our 2007 Dodge Ram, we will endorse the use of military grade B20 fuel for use by our military, government and commercial fleet customers.

We think allowing our fleet customers to use fuel made to current military specifications will accelerate the development of a national B20 specification for general use.

DaimlerChrysler is partnering with EPA, the State of Michigan and Michigan State University on a Biodiesel Crop Project to research how agricultural products can be grown to maximize the yield of fuel per acre of land use.

Researchers are growing a variety of renewable crops - including soybeans, corn, sunflowers, canola and switch grass - on four different sites in Michigan and will compare the yields and quality of the fuels made from those different crops.

One of the sites is a former brownfield - a contaminated piece of land in a rural area about 45 minutes from our headquarters. The project is a model for returning once-contaminated sites to productive use and we are working with the U.S. EPA on this demonstration.

Another major challenge for diesel is emissions.

This graph shows the challenge of the new U.S. Tier 2 standards and the California LEV 2 requirements.

The larger yellow box represents current Federal standards.

This small red box is where we have to get to sell diesel vehicles in all 50 states.

Biodiesel can help. Here's an example of the impact of biodiesel on emissions compared with conventional diesel. This shows the reduction in emissions with 20 percent biodiesel fuel, compared with conventional #2 diesel fuel.

Another key development is BlueTec, an array for after-treatments that will enable diesel vehicles to meet the most stringent emissions standards in the world. Recently you heard from Simon Godwin from our Washington office on this technology.

So we believe the U.S. can significantly reduce its dependence on oil by increasing its use of alternative fuels.

But alternative fuels won't solve our problems alone. We'll need everything in our arsenal:

  • Continued improvement in the internal combustion engine, with technologies such as MDS or cylinder deactivation, which improves fuel economy up to 20 percent
  • Hybrids, such as the Orion diesel electric hybrid buses, which provide better fuel economy and greatly reduced emissions - 90 percent less particulate matter, 40 percent less NOx, and 30 percent fewer greenhouse gases, compared with conventional diesel buses
  • A two-mode hybrid system being developed with GM and BMW that "leap frogs" today's technology by improving fuel economy and performance at higher speeds, as well as city driving cycles. Our first product with that advanced technology will be the Dodge Durango hybrid in 2008
  • Electric vehicles, such as our GEM neighborhood EVs
  • And ultimately fuel cells

And speaking of fuel cells, we have a Sprinter fuel cell delivery van available today for those of you who are interested.

DaimlerChrysler has more than 100 fuel-cell vehicles on the road around the world for testing and development - more than any other manufacturer. These include:

  • 60 light duty fuel cell vehicles
  • Citaro fuel-cell buses
  • And Sprinter vans

This fleet of fuel cell vehicles has driven more than 2 million miles, providing us with invaluable, comprehensive on-road performance data.

Thank you for your time. We would be happy to take your questions.


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