If EPA mandates the technology, the cost could far outweigh the benefits, industry leaders warn
With the long and arduous process of catalyzing sterndrive engines in the rearview mirror, catalyzed outboards may be next.
Mercury Marine is testing catalytic converters for small and large outboards for the California Air Resources Board, or CARB, where many environmental regulations are born, in tandem with the marine industry. The Clean Air Act Amendments allow CARB to write regulations separate from the Environmental Protection Agency because of California’s pollution problems, but it must get a waiver from the EPA to enforce them.
If CARB and the EPA eventually require that outboards be catalyzed, many in the industry say the regulation would cause prices to skyrocket, particularly on small engines, with little payoff in emissions reduction.
“Let me tell you what’s coming. It’s more regulation than you can even imagine,” Brunswick Corp. CEO Dustan McCoy said at last fall’s Marine Dealer Conference & Expo. “The 3.0L MerCruiser sterndrive engine costs 32 to 38 percent more than it did because we had to catalyze those engines. I can sit in my office in Lake Forest, Ill., and see more emissions go by my window in one hour than sterndrives produce in a year.”
Sterndrive sales have dropped 50 percent since the advent of catalytic converters and have not seen as rapid a recovery as other segments, Mercury spokesman Steve Fleming says.
The testing process is in its early phases, and it’s too soon to tell whether or when the EPA will mandate catalyzed outboards, says Mark Riechers, the regulatory development director for Mercury Marine, which is owned by Brunswick. Riechers expects the picture to be clearer when the initial testing phases wrap up late this year.
Riechers says the change would bring a 70 percent reduction in overall emissions from larger outboards. “But keep in mind that’s a 70 percent reduction on a 4-stroke outboard that already was a 90 percent reduction from the old 2-stroke engines,” he says. “Regulators like to put things in percentages, when the actuality is the overall numbers might not be that extreme.”
Put into perspective, a 200-hp outboard in the conventional 2-stroke days emitted 150 grams of hydrocarbons per kilowatt-hour, Riechers says. Today’s 4-stroke engines emit only 15 to 25 grams per kilowatt-hour. “Now you’re talking about taking it down under 5 [grams per kilowatt-hour],” he says.
Cost-benefit ratio is one of the major considerations during the testing process, particularly in smaller, less expensive engines, because the cost of adding catalytic converters to those engines will be a larger percentage of the cost of making them. “There comes a point where the cost is way above where the benefit is,” Riechers says. “The costs are not insignificant. If any of this winds up being a product regulatory requirement, there’s going to have to be a lot more work done to make it a production-ready product, so there will be a cost associated after the fact.”
Before a true analysis can be made, a cost-benefit calculation must be done, Riechers says. “One of the things that you have to keep in mind with regulation is that if you drive up the cost of a new technology too far, people quit buying it, and then you get no benefit in the marketplace for a cleaner technology.”
Yamaha Marine president Ben Speciale referred to pending “four-star regulations on outboard motors” at the MDCE. Four-star is the rating CARB uses for its strictest level of emissions regulation. Currently, this standard is applied to sterndrives and inboards and can only be met with a catalytic converter and closed-loop fuel control.
Already, regulations such as those on evaporative emissions have caused huge increases in the overall cost of manufacturing engines, Speciale says. Significant price increases for regulation-driven changes are harder for consumers to swallow than performance-enhancing changes that they can see, such as the change from old 2-strokes to cleaner 4-strokes. “The next wave is worse because there is no consumer benefit,” Speciale says.
To be or not to be
Though some have referred to mandates for catalyzed outboards as a given in the near future, Riechers says it’s too soon to tell. “People are constantly asking me for a timeline on this, and I can’t answer,” he says. If anyone would have the answer, it’s Riechers. He has been a part of the research since its inception.
Mercury Marine asked to participate in testing because California and the EPA had used an outside research firm to help write regulations for inboard and sterndrive engines, Riechers says. “It was a good organization, but they did not have marine engine experience, and, quite frankly, they stumbled,” he says. “So we went to California when they were starting to talk about this issue on outboards and said, ‘Let us do the proof of concept because … we’ve been building outboards since 1939. I think we’ve learned a few things over the years.’ ”
If the EPA does consider adopting a regulation, there are still hurdles. For example, reviews by federal agencies such as the Small Business Administration and the Office of Management and Budget will have to occur prior to any mandates. “This isn’t something where you finish the project and someone comes in and writes the regulation. There are many more steps involved,” Riechers says.
Clean Air Act
The Clean Air Act Amendments of 1990, which shaped the emissions laws that have emerged during the past decade, were signed by President George H.W. Bush. It took a bit longer to reach the marine industry because the EPA first tackled engines that were creating the bulk of the emissions, such as cars, trucks and buses.
However, the law also gave the EPA and California the authority to regulate every engine category. So after some of the bigger hurdles were cleared, the agency began homing in on smaller engines, such as motorcycles, boats, and even lawnmowers and snow blowers. “If you bring down the emission levels of some of the big sources, when you start looking at emissions inventories, some of the smaller categories start rising up on the priority list,” Riechers says.
One of the things the Clean Air Act Amendments also did was require the EPA to work closely with affected industries instead of ruling with an all-encompassing approach. “So it expanded to a lot of new categories, but there was some good in it, too,” Riechers says. “We’re not always going to agree on things, but it’s definitely a better approach when we can sit down and discuss rationally and share information and share data.”
When Riechers reaches out to boatbuilders and other OEMs in his ongoing effort to persuade other industry players to participate so they have a voice in the process, people often ask: “Can we repeal the Clean Air Act Amendments?”
“If I could find a congressman to take that on, I’d happily talk to him,” Riechers says with a rueful laugh. “But no, I don’t think any congressman’s going to open that door. What we can try to do is manage what’s going on as a result of the Clean Air Act Amendments.”
The law and the EPA have done a lot of good for the environment and all outdoor recreational industries, Riechers believes. That is a point John McKnight, a lobbyist for the National Marine Manufacturers Association, often echoes. Environmental controls are here to stay, and although his job is to help mitigate their effects on the industry, builders should get used to the idea that regulations are a part of doing business in 2013.
Many companies believe that environmental regulation needs to provide a framework for industries to support consumers with sustainable products made with sustainable processes. “We’re not getting pounded right now as much as a lot of industries are,” McKnight says. “Emissions limits in some sectors are getting totally bashed. We’re kind of quiet now.”
Riechers agrees. “The whole thing gets down to that whole cost-to-benefit equation,” he says. “How much money do you want to spend to reduce how much emission? That’s what it all comes down to. We all want clean air.”
If agencies decide they want to require catalytic converters on outboards, boatbuilders as well as engine builders should get involved because not only will the engines cost more, they will weigh more, too, Riechers says.
Industry on board
Boat companies know their markets better than the engine companies do, Riechers says. That’s why they should participate in the process should the regulation occur so they have a chance to influence the way it is written. “In the past, companies have had a tendency to not pay attention to the development of regulations and then act like they’re surprised when they actually go into effect,” he says. “If boat companies can come to the table and say, ‘Hey, this is an issue for this part of the market,’ it may help influence how the regulation is written. So I’m a big believer in getting anybody that’s involved in the entire supply chain to the table if you can.”
Lack of participation has been a frustration for Riechers and many others who have participated in the testing process on regulatory initiatives such as evaporative emissions mandates. For now, Riechers’ message to builders is: “Pay attention to this, and when we get through this project make sure you communicate with the NMMA if you want to be involved.
“But I would certainly love to have them involved in any development of regulations because it does affect them,” he adds. “It might not affect them this year or next year, but three four years down the line it will. It’s too easy to push this stuff off and say, ‘I can deal with that later.’ Later has a bad tendency to come up and bite you.”
The early stage of the outboard project was completed a couple of years ago. The purpose was to establish whether engineers could make a closed-loop catalyst system work on a larger outboard, Riechers says. Engineers met the challenge using a 200-hp, 4-cylinder supercharged Mercury Verado, and CARB agreed to do a 50-50 cost share with Mercury on that program, Riechers says. “The bottom line was we made it work, but it did not include long-term durability testing,” he says. “That was outside of the scope of the project.”
Next, the engineers had to accomplish two things. First, they needed to do long-term durability testing on the big outboard using the same engine models and configurations as on the first project. Second, they quickly recognized that a closed-loop, fuel-injected, catalyst-equipped engine would not be a feasible approach for smaller outboards. “These are the engines that are predominantly either carbureted engines or very basic fuel-injected engines,” Riechers says. “They do not have the control systems that are capable of handling a lot of the kinds of things we did on the big outboards. So we originally were talking about those being two separate projects, and they wound up being rolled into one.”
One of the initial discussions with California was that the original timeline was probably “more aggressive than was realistic,” Riechers says. “We’re doing something that’s never been done before. At the end of the day, when you first propose this thing, you take your best shot at a timeline, and you hope you get close.”
To test durability, the engines must log 350 operating hours. Mercury and CARB are doing that for three engine families under 50 hp. “That covers a lot of engine families for the smaller outboards,” he says. “We think we know what will work, but we haven’t finished building and testing them yet.”
The cost-benefit ratio plays a potentially larger role in smaller outboards because cost increases attributable to emissions regulation would account for a larger percentage of the cost of building the engine. “One of the things I constantly remind California is that the goal of this project is to let the data tell the story, and they agree with that,” he says.
Riechers expects that smaller outboards will be handled differently than larger ones if a regulation is adopted. The EPA and California have regulations on small non-road engines, such as those for lawn and garden equipment. “When they wrote those regulations, they recognized that very small engines could not absorb the technology costs of bigger engines, so the requirements on those are somewhat less than what a big engine would be expected to do,” Riechers says.
Following that thinking, they are using less stringent technology on the small engines than the large ones. “I think what you’re going to be looking at is that bigger engines and the smaller engines are likely to be treated differently, but how that comes out at this stage is very hard to predict,” he says.
Competitors working together
Several times a year — at the Miami International Boat Show, the American Boating Congress and the International BoatBuilders’ Exhibition and Conference — engine companies work together on these issues. “Along with [NMMA’s] John McKnight, there are a handful of people in the engine companies that really do the bulk of the work on this stuff, and we’re all actually very good friends, even though we’re competitors, because we’re all fighting the same battle,” Riechers says.
Though they have to tread carefully so they don’t violate antitrust laws regarding market availability or pricing, they work together on future challenges. “You have to work together on things that are a mutual concern,” Riechers says. “You certainly can be competitive in the marketplace, but you need to be able to separate the two.”
Even at the dealer level, industry cooperation is effective. “At the end of the day, when you get through the regulatory issues, the sales and marketing people and dealership salespeople, they go out and battle each other and that’s what they’re supposed to do, but at a regulatory level we need to work together,” Riechers says.
American Boating Congress
At the same time, there is congressional oversight of everything the EPA does, Riechers says. “So if they see something that they think is going to harm their business, certainly, getting their congressmen involved is a good idea,” he says.
The NMMA sets up meetings with members of Congress and their staffs so the industry can have a voice, Riechers says. “It’s a great opportunity, but the only way you can take advantage of it is you’ve got to show up.”
“The best thing we can do as an industry is get to know your congressman and senator by name,” Speciale says.
“We’re relatively small if we come at Congress separately, but together we’re much bigger … and much more effective,” McCoy says.
Some builders and dealers think they can’t afford to attend the May event, Riechers says, “but if you get a bad regulation or bad rule, how much is that going to cost you? I think the era of putting your head in the sand in this industry needs to end. Everyone needs to get involved.”
This article originally appeared in the April 2013 issue.