Diesel's European future safe as drivers go green

FRANKFURT, May 30 Reuters published this feature today.

One rainy day in mid-April drivers on the road to Hamburg may have been distracted by an unusual capsule-shaped car cruising up the German motorway.

The driver was Ferdinand Piech, outgoing chief executive of Europe's biggest car maker, Volkswagen AG, on the way to his last official engagement.

The car was a prototype which uses one litre of diesel fuel every 100 km (62 miles), making it about six times more efficient than many new European cars.

"I wouldn't have been here any quicker in a Bugatti with that traffic jam," Piech said on arrival.

By abandoning the traditional luxury limousine, Piech was drawing attention to the growing importance of environmentally friendly cars -- for both VW and the broader auto industry.

European car makers are investing heavily in green technology to safeguard their long-term survival amid concerns that fossil fuels will run out and as government pressure mounts to develop vehicles that damage the environment less.

The possibilities range from raising the efficiency of existing engines to finding lighter materials and alternative fuels to making electric cars that run on hydrogen.

Most European companies are still trying to improve the traditional engine and its diesel applications.

"There is plenty of life still left in the traditional engine -- we have spent over 100 years on it so far and it is a reliable model," said a spokesman for BMW, which is working on an internal combustion engine run on hydrogen.

European consumers have embraced diesel engines, which emit 20-30 percent less carbon dioxide than petrol engines, more wholeheartedly than the Japanese, where firms have concentrated on making gasoline engines more efficient.

The U.S. government's cheap fuel policy has given the big American car makers little incentive to change.

DIESEL OPTIONS

Rising fuel tax and official agreements have influenced developments in western Europe, where diesel engines now account for about 36 percent of the new car market, according to the forecasting group JD Power-LMC, which expects that to rise to about 50 percent by 2005-6.

"In Europe, car makers have agreed to lower their carbon dioxide emissions and the biggest building block for that is diesel -- I don't see that changing," said JD Power analyst Al Bedwell.

European auto makers agreed in 1998 to cut emissions of carbon dioxide, a greenhouse gas contributing to climate change, by more than 25 percent by 2008 to 140 grams per km for new cars.

The importance of diesel engines in Europe is demonstrated by the fortunes of General Motors, which lost market share in the region in the late 1990s when it failed to embrace diesel.

GM and Japanese car makers are gradually catching up, but VW and PSA Peugeot-Citroen are widely reckoned to be ahead of the game, with the most advanced technology.

Direct injection and common rail technology, which injects fuel directly into the combustion chamber at ultra high pressure with electronic control, have boosted diesel's performance.

However, some experts warn that high emission levels of oxides of nitrogen and particles detrimental to air quality may hurt diesel's long-term prospects, especially with stringent new European Commission regulations on exhaust emissions coming into effect in 2005.

"Although it looks like a safe bet for the next few years, diesel has some potential problems, so few companies are putting all their resources into it," said one industry source.

RADICAL OPTIONS

Companies are thus looking at more radical solutions.

Fuel cell technology, which uses hydrogen to create electricity, is an option which supporters say is twice as efficient as internal combustion engines.

DaimlerChrysler, seen by experts as a leader in fuel cells, expects its first passenger cars to enter the market in 2004.

It has developed five versions of its New Electric Car (NECAR). The drive system on its first attempt in 1994, a "laboratory on wheels", took up the entire cargo capacity of a Mercedes MB100 van. It now fits into the base of an A-Class.

"There are 800 million engines in the world. By 2030 there will be 1.6 billion and if we could get 10 percent of that it would be good," said Johannes Ebner of DaimlerChrysler's fuel cell project in Nabern, near Stuttgart.

However, long-distance driving at speed is impossible and no one has yet found a viable storage system for hydrogen.

"I am not convinced fuel cell technology will be the knight in shining armour riding over the horizon," said Peter Welles, a research fellow at Cardiff University's Automotive Centre.

DaimlerChrysler, in partnership with Canada's Ballard Power Systems Inc, does not expect to see any profits from the millions of euros it has invested for at least 15 years.

Hybrid vehicles, which combine an electric motor and an internal combustion engine, are more suited to the Japanese market with its "stop-start" driving pattern, industry analysts say.

Toyota's Prius hybrid is sold in Europe but analysts doubt it will catch on, not least due to a lack of servicing facilities.

"It is still too esoteric here -- the hybrid route would need government backing to take off in Europe," said Welles.

By Madeline Chambers, European Auto Correspondent