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Philadelphia Diesel Difference Meeting Bill Boyce Cummins Westport Inc.

Philadelphia Diesel Difference Meeting Bill Boyce Cummins Westport Inc. Cummins Westport A Cummins JV Company. CWI is a 50:50 joint venture company based in Vancouver, BC Cummins Inc. - w orld’s largest builder of commercial diesels,

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Philadelphia Diesel Difference Meeting Bill Boyce Cummins Westport Inc.

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  1. Philadelphia Diesel Difference MeetingBill Boyce Cummins Westport Inc.

  2. Cummins WestportA Cummins JV Company • CWI is a 50:50 joint venture company based in Vancouver, BC • Cummins Inc. - world’s largest builder of commercial diesels, • Westport Innovations Inc. - world leader in gaseous fuel engine technology • CWI offers 6 to 9 litre alternative fuel automotive engines. (CNG, LNG, LPG) • Engines are manufactured by Cummins. • Local parts and service support through Cummins Distributor network.

  3. Cummins Inc. • More than 75 years –Leader in American diesel manufacturing • World’s largest builder of commercial diesels • Designs, manufactures, distributes, and services • electric power generation systems, engines, and related technologies, including fuel systems, controls, air handling, filtration, and emissions solutions. • Headquartered in Columbus, Indiana (USA), • more than 550 company-owned and independent distributor locations in 160 countries and territories. With 28,000 employees worldwide • Cummins reported sales of $11 billion in 2006 • Cummins product development & manufacturing alliances include: • Case, New Holland, IVECO, Komatsu,Westport,and Scania.

  4. Westport Innovations Inc. • Recognized as the world leader in gaseous fuel engine technology • Originated from research at UBC in early 1990’s • Public company on TSE, formed in 1995 • 170 people at Westport (including Cummins Westport, Westport Europe and Westport Germany) • State-of-the-art facilities inVancouver, Canada: 7,400 m2 (78,000 ft2) of laboratory and office space • Brought Gas expertise Technology Innovation and Application Award

  5. Why Natural Gas Engines for Buses & Trucks? Emissions Leadership • ISL G is the only Urban Bus and Truck engine that met 2010 EPA Emissions at launch in 2007 • Greenhouse gas advantages Emerging Economic Benefits • Continuous reliability improvement • ISL G Improved Efficiency • Greatest benefits in high fuel use applications • Energy Security • Reduced reliance on imported oil • Lower fuel costs • Pathway to hydrogen

  6. U.S. Emissions Standards Continue to Change!

  7. Why Diesel?

  8. Cummins original marketing plan…

  9. Simpler Cleaner Fuel Complex Hydro Carbon Simplest Hydro Carbon Natural Gas (methane) has highest hydrogen-to-carbon ratio of any hydrocarbon

  10. What is changing? • Higher vehicle pricing to meet 2007 EPA requirements • Higher cost of Ultra Low Sulfur diesel fuel • Additional costs to meet 2010 EPA requirements? • The shifting economics of diesel operation

  11. Diesel ULSD Active Diesel Particulate Filters CEGR (ISC/ISL) NOx Adsorber or SCR SCR more efficient but a liquid that will be regulated and taxed Crank Case Ventilation (CV) ’07 Lube Oil Will require new, low ash oil New Oil Filters = Phase In 1.2 NOx + 0.01 PM (Avg.) in 2007 0.2 NOx + 0.01 PM in 2010 Natural Gas No change- CNG or LNG capable Replace Oxicat with Three Way Catalyst Add- CEGR (ISL G) No NOx adsorber required No CV required–reduced maintenance vs. LBSI No Change- Low Ash Oil in use today CES20074 Fleetguard Filter = No Phase In 0.2 NOx + 0.01 PM in 2007 Diesel / NG Pathways 2007 to 2010

  12. What are your alternatives? • Get out your checkbook • Manage better • Keep increasing costs to a minimum • Change vehicle specifications • Maximize vehicle specs for fuel economy • Consider other alternatives

  13. Fuels Biofuels (non-biodiesel ester) Biodiesel Di-Methyl Ether (DME) Ethanol Methanol Gas to liquid Coal to liquid Water/diesel emulsions Ethanol/diesel emulsions Natural Gas (CNG / LNG) Propane Hydrogen Hythane (NG + H) Criteria Availability Efficiency Emissions Infrastructure Price Safety Alternative Fuel Options

  14. Alternative Fuel Properties CharacteristicsDiesel Biodiesel MeOHEtOHNGLPG Structure C18H36 C1 8H35O2 CH3OH C2H5OH CH4 C3H8 Cetane No. 40+ 40+ 10 10 -- 5 Octane No. -- -- 95 95 120 95 Energy (LHV) btu/gal(x1000) 128 119 57 76 85(LNG) 84 btu/cu. ft 1000(CNG) Energy Storage 1 1.1 2.3 1.7 1.7 (LNG) 1.6 (relative vol.) 3.7 (CNG)

  15. Volume and Range Comparison Diesel Tank Space per 100 mi Range Per 100 Gallons Tank Space 650 mi 15 Gal. LNG 380 mi 26 Gal. CNG 170 mi * Estimate based on 6.5 mpg diesel, and same efficiency for NG vehicle 58 Gal.

  16. What About Natural Gas ? • Cleaner burning than diesel • Abundant supply in North America • Engine efficiency improving over diesel • Renewable fuel – LFG to LNG • Can be less expensive to operate than diesel • Latest technology engines available

  17. Comparison of Diesel to LNG • LNG • 1 U.S. gallon weighs 3.4 lbs. • Heating value is 21,500 Btu per lb, and 73,000 Btu per gallon. • LNG is produced through a cryogenic process in which the gas is cooled to -258 degrees F. At that temperature point it becomes a liquid. • In the liquid state, the vehicle can carry more fuel than CNG in a smaller area. • Engine doesn’t know whether fuel is LNG or CNG, fuel enters engine as a gas. • Diesel • 1 U.S. gallon weighs 7.1 lbs. • Heating value is 18,250 Btu per lb and 129,575 Btu per gallon.

  18. Lighter than air Rises Doesn’t accumulate in low places Rich mixture burns off slowly Ignites at temperatures of approx. 600 C Non toxic Odorless-detection fragrance is added Evaporates quickly Heavier than air Descends Accumulates in low places Rich mixture explodes Gas and diesel vapors ignite at approx. 200 C Toxic, especially gasoline Strong inherentodor Evaporates slowly at room temperature Natural Gas is a Safe Fuel CNG Liquid fuels

  19. CWI Natural Gas Engines Reduce Urban Noise Communities notice the natural gas noise advantage. ONE Diesel engine idling is louder than TEN natural gas engines idling together Natural gas is 4.7 Natural gas is 6.1 decibels quieter at decibels quieter at peak torque and load peak torque and load 90.0 90.0 Decibels dB(A) Natural gas is 11.8 Natural gas is 12.2 decibels quieter at idle decibels quieter at idle 70.0 70.0 50.0 50.0 Low Idle, No Load Low Idle, No Load Peak Torque, Full Load Peak Torque, Full Load Engine Test Mode Engine Test Mode Diesel bus engine Diesel bus engine C Gas Plus C Gas Plus

  20. Alternative Fuel Challenges • Costs – Infrastructure and equipment • Performance • Emission reduction trade-offs • Infrastructure and fuel availability • Impact on engine component reliability

  21. The Global Market for Energy

  22. 22 Actual Projected 20 Air 18 Domestic Domestic Marine Marine 16 Production Production Heavy Vehicles 14 Millions of Barrels per Day 12 10 Light Trucks 8 Rail 6 Off Off - - road road 4 Cars 2 0 Year 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 Source: Transportation Energy Data Book: Edition 22, September 2002 and EIA Annual Energy Outlook 2003 , January 2003 U.S. Transportation Petroleum Use

  23. Natural Gas Fuel Costs Less • Diesel and natural gas prices follow a fairly predictable pattern in relation to crude oil prices with natural gas being less expensive than diesel fuel • When crude oil prices rise, natural gas prices tend to rise less than diesel prices do, widening the price gap • If anything, at today’s higher crude oil prices natural gas prices are less than this historical relationship $12.84 MMBTU = $77.04 Barrel $12.84 MMBTU = $1.83 DGE

  24. Price Comparison Plot Natural Gas price advantage grows as crude prices rise

  25. Conclusions • Both diesel and natural gas prices have trended upward with crude oil prices. • The diesel to CNG price gap is widening. AND • CNG to Diesel fuel economy gap is closing • These factors can improve CNG Vehicle Life Cycle Costs.

  26. Natural Gas Engine Technology for 2007

  27. Cummins Natural Gas History • Cummins has been developing natural gas fueled engines for heavy duty vehicle applications since the 1980’s and marketing them since the early 1990’s • Today over 17,000 engines have been produced powered by compressed and liquefied natural gas or propane (LPG)

  28. Introducing Next Generation 2007 Natural Gas Engine Technology • ISL G currently meets 2010 emissions standards ahead of schedule • 85% lower NOx than previous engines • 34% more torque at idle • Improved efficiency = improved fuel economy • No exhaust related maintenance costs

  29. Four Generations of Natural Gas Engines 2007 1998 C8.3G Mechanical 2001 C Gas Plus 2004 L Gas Plus • ISL G • Stoichiometric EGR combustion • Three Way Catalyst • First HD engine certified 2010 NOx and PM levels

  30. ISL G – Next Generation Natural Gas Engine • Stoichiometric Engine • Lowest emissions • 0.20 g/bhp-hr NOx • 0.01 g/bhp-hr PM • Higher efficiency • Target: 5% fuel economy improvement vs. CWI’s current products • Diesel-like reliability & durability • Improved performance - Higher clutch engagement torque

  31. The Two Key Emission Technologies for 2007 ISL G Natural Gas Engines • Cooled Exhaust Gas Recirculation (CEGR) • Three Way Catalyst (TWC) Cummins Cummins Emissions Solutions Change to Stoichiometric Combustion Engine. Meet 2010 emission standards in a one step change No further aftertreatment is required

  32. Customer Experience-Diesel vs. NG Just Like Cell Phones, Natural Gas Engines have Continued to Improve *Must Have Fuel Price Differential to be lower

  33. Consider the Natural Gas Alternative • Things have changed since 1989 • Meeting 2010 emissions in 2007 • Natural gas as a lower cost alternative • Natural gas not for everyone

  34. Life Cycle Cost Drivers

  35. Natural Gas: Key Economic Drivers • Six fold increase in CWI reliability/durability since 2001 • CNG is closing maintenance cost gap • Basic service intervals same as diesel • Spark ignition will result in slightly higher scheduled maintenance costs • Fuel cost savings can be significant • CNG’s lower cost contributes to lower LCC • CWI Fuel economy gap closing • 17% in 2005 • 10% in 2007 • 7% in 2010

  36. Fuel Pricing Creates Economic Advantage Fuel price differential creates overwhelming benefit for NG Natural Gas Breakeven Price: $0.73 Less/DGE $0.93 Less/DGE $0.62 Less/DGE $100 USD Crude! Transit Refuse Truck $1,500/bus/yr $1,200/truck/yr $1,200/truck/yr 200 buses 50 Trucks 50 Trucks $7.2 M Capital $875K Capital $875K Capital 45,000 miles-3.5 mpg 15,000 miles-1.5 mpg 65,000 miles-6.5 mpg Every 10 cents Saved in Fuel price = thousands in savings

  37. Highway/Energy Bill Private Fleets Currently Using Diesel Fuel Highway Bill* Net Benefit $0.60 To Fleet CNG$ / DGE Own Infrastructure $0.60 To Fuel Provider CNG$ / DGE Don’t Own Infrastructure $0.68 To Fuel Provider or Fleet LNG $/ DGE All Infrastructure Oct 1, 2006 Energy Bill* $32,000 Vehicle Credit To Fleet $30,000 Infrastructure Credit To Fleet * CWI’s Interpretation Subject to IRS Rule Making

  38. Source - KFSN Fresno, CA    Friday, 21 March 2008 USA, FresnoThe Californian city of Fresno is celebrating it's investment decision of five years ago, when it switched some of it's fleet to natural gas. KFSN reports with the price of diesel fuel skyrocketing so far this year the city has been forced to pay out $400,000 dollars more to fuel its fleet than budgeted but, "we would have been $1.2 million over had we not switched to liquid natural gas (LNG)," said Joseph Oldham, Fresno Fleet Supervisor. "Now we've seen not only emissions benefits but cost savings by running alternative fuels."  Compared to the typical diesel garbage truck the city's 80 natural gas powered ones are not only cheaper to run they're quieter and don't pollute the air as much. By the Year 2010 Fresno plans to replace its' entire fleet of garbage trucks by ones that run on natural gas, on the way to even bigger savings down the road. Natural Gas Vehicles Ease Squeeze on City Budget

  39. Where are we now?

  40. ISL G Applications Truck Specialty Bus REFUSE

  41. OEM Availability August 2008

  42. Similar Maintenance Schedule Same Schedule as Diesel – Some Different Maintenance Items

  43. Warranty - Every Coverage • Base Warranty for Bus/Shuttle, School Bus and Truck are the same as diesel • Extended Coverage options are available for Truck and Bus Customers • 5 yr 200,000 mile or 300,000 mile - Transit • 4 yr / 5 yr 150,000 mile Vocational -Truck • 4yr / 5 yr 150,000 mile Turbocharger -Truck • 6 yr, 300,000 mile Major Component – All applications • All warranty programs administered per Cummins Standard Policies

  44. What is Next? • Think about what happens next with fleet fuels? • Think about using Natural Gas for the right applications? • Find the best alternative for your duty cycle?

  45. Biomethane • Using biomethane as a renewable fuel has significant greenhouse benefits: • During combustion, biomethane is converted to carbon dioxide (a 21 times greenhouse gas savings) • Biomethane is a renewable resource that displaces fossil fuel 100%. • The biomethane that is burned as fuel in place of fossil fuels produces less greenhouse gas than the fuel it replaced. • Cummins Westport approves the use of up to 100% biomethane that meets published natural gas fuel specifications per Cummins Application Engineering Bulletins

  46. Summary • Proven technology – Cummins support • Commercially available from OEM’s • Listing at www.cumminswestport.com • Lower emissions- tailpipe and community noise. • Lower total costs with natural gas • Lower Well to Wheel Greenhouse Gas • Biomethane low carbon option

  47. Thank You Bill Boyce East Coast Regional Sales and Marketing Manager Tel: 330-534-8352 Mobile: 330-720-9785 Email: bill.boyce@cummins.com www.cumminswestport.com

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