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Biodiesel, NOx and the value of environmental “prices”

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VW’s clean TDI technology could let biodiesel users avoid any increase in NOx emissions.

This weekend I was checking out my friend Dave’s new VW Jetta, emblazoned with biodiesel stickers, as he told me how switching to biodiesel had lowered his carbon emissions 80%. (Biodiesel is based on biogenic carbon — the carbon emitted when you drive was absorbed by soybeans earlier in the season.)

I decided to push him a bit on the environmental bona fides of the car. “What about the NOx emissions? They’re a lot higher, you know.” Diesel, bio or not, burns at a higher temperature than gasoline and therefore causes more smog-forming oxides of nitrogen (NOx) emissions.

This is a common ding against diesel, and I immediately felt bad about repeating it. An 80% reduction in carbon emissions is nothing to scoff at. NOx and carbon emissions are pretty much impossible to compare, so wasn’t I just flinging mud?

Well, there is one way to compare carbon and NOx. Markets exist for credits in both pollutants, and theoretically we can use the respective price signals as an indication of their relative environmental costs. With this in mind, I sat down and calculated what Dave would have to pay for both his CO2 and NOx emissions (amazing what a new CEO will free you up to do in your spare time).

The results (Excel) show that given prices for carbon ($10/ton) and NOx ($2,500/ton), Dave’s use of biodiesel lowers his total environmental cost to $18.27/year, about 50% of a gasoline Jetta and just 4% more than a Prius. In short, compared to a gasoline Jetta, the savings in carbon emissions ($30.31) more than outweigh the $11.78 he suffers as a result of higher NOx emissions.

Did I mention my friend had to buy this car used and out-of-state to skirt the California restrictions on diesels? For car geeks, this situation does look to be getting better. VW plans to test its “Clean TDI” technology in 2008 that will meet Tier 2 Bin 5 standards. In English, this means the emissions will meet “middle of the road” car standards and be available for sale in all 50 states. If Dave trades up for the new Jetta with this technology, his total environmental impact would be $7.68 — just 44% of the Prius.

For policy wonks, this example is a microcosm of many policy issues related to auto emissions. For example, Europe has already decided to encourage diesel passenger cars. In 2005, diesel made up 50% of new car registrations in Europe. Clearly that decision is based on a similar weighing of environmental goods (carbon reductions, biofuel use, energy conservation) and bads (NOx). It’ll be interesting to see how traditionally diesel-hating states like California adapt to diesel cars that both meet lower emissions targets and are more amenable to a biofuel strategy that can reduce CO2 in the near term (compared to ethanol).

One question to TerraPass readers with biodiesel cars: would you buy a TerraPass with a blend of small amounts of carbon offsets and the appropriate NOx credits? You’d have to submit your own DOT based testing data on NOx, as no comprehensive data set exists for these emissions. We’d source and retire from the US NOx market. Let us know what you think in the comments.

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