Diesel Retrofit Technology

            An Analysis of the Cost-Effectiveness
            of Reducing Particulate Matter and
            Nitrogen Oxides Emissions from
            Heavy-Duty Nonroad Diesel Engines
            Through Retrofits

&EPA
United States
Environmental Protection
Agency

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                        Diesel Retrofit Technology

                  An Analysis  of the Cost-Effectiveness
                   of Reducing Particulate Matter and
                     Nitrogen Oxides Emissions from
                  Heavy-Duty Nonroad Diesel Engines
                               Through Retrofits
                              Office of Transportation and Air Quality
                              U.S. Environmental Protection Agency
v>EPA
                 NOTICE

                 This technical report does not necessarily represent final EPA decisions or
                 positions. It is intended to present technical analysis of issues using data that are
                 currently available. The purpose in the release of such reports is to facilitate the ex-
                 change of technical information and to inform the public of technical developments.
                 This document was reviewed by several external individuals in a peer review pro-
                 cess. The results of that review process are available upon request.
United States                                       EPA420-R-07-005
Environmental Protection                                 ..   .,
Agency                                          MaY2007

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                         Executive Summary

The Environmental Protection Agency's (EPA) National Clean Diesel Campaign
(NCDC) is a comprehensive initiative to reduce pollution from diesel engines
throughout the country, including vehicles on highways, city streets, construction
sites, and ports. The NCDC comprises both regulatory programs to address new
engines and innovative programs to address the millions of diesel engines
already in use. On the regulatory side, EPA is successfully implementing
emissions standards for engines in the 2007 Heavy-Duty Highway Engine Rule
and the Tier 4 Nonroad Rule and developing new emission requirements for
locomotives and marine diesel engines, including large commercial marine
engines. On the innovative side, EPA is addressing engines that are already in
use by promoting a variety of innovative emission reduction strategies such  as
retrofitting, repairing, replacing and repowering engines, reducing idling, and
switching to cleaner fuels. The innovative programs are accomplished in
partnership with state and local governments, environmental groups and industry.

The emissions standards for new engines will reduce both highway and nonroad
engine emissions by roughly 90%. However, these emission reductions occur
over a long period of time as new engines are phased into the fleet. Retrofitting
diesel engines currently in use will allow significant and immediate emission
reductions from diesel engines that would not otherwise be addressed.

The purpose of this technical analysis is to evaluate the cost effectiveness of
retrofitting existing heavy-duty diesel nonroad engines to reduce particulate
matter (PM) and nitrogen oxides (NOx). (The cost effectiveness of the regulatory
measures EPA has implemented is addressed by the rulemakings.) Analysts in
EPA's Office of Transportation and Air Quality (OTAQ) evaluated the costs and
emissions benefits of retrofitting nonroad equipment such as
tractors/loaders/backhoes, excavators, cranes, generator sets, agricultural
tractors, crawler tractors/dozers and off-highway trucks with diesel oxidation
catalysts (DOCs) and catalyzed diesel particulate filters (CDPFs), two of the most
common PM emissions reduction technologies for diesel engines as well as with
selective catalytic reduction (SCR) systems and engine upgrade kits for NOx
reduction.

The methodology used to perform these calculations is the same as those
outlined in the U.S. EPA Technical  Report: Diesel Retrofit Technology: An
Analysis of the Cost-Effectiveness of Reducing Particulate Matter Emissions from
Heavy-Duty Diesel Engines Through Retrofits  EPA420-S-06-002 March 2006.

For these nonroad engines, EPA relied primarily on data from the
NONROAD2005 model to determine the cost-effectiveness of installing DOCs,
CDPFs, SCR systems, and engine upgrade kits. These data covered factors such
as hours of operation, vehicle/equipment useful life, emission rates and retrofit

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technology effectiveness. EPA also consulted with technology and engine
manufacturers regarding retrofit technology cost effectiveness and applicability.

EPA calculated that the cost effectiveness for both diesel oxidation catalyst and
catalyzed diesel particulate filter retrofits ranged from $18,700 to $87,600 per ton
of PM reduced. In addition, EPA calculated the cost effectiveness for both
selective catalytic reduction systems and engine upgrade kits ranging from
$1,900 to $19,000 per ton of NOx reduced.

The results can be compared to similar estimates for other EPA programs
targeted at reducing diesel particulate matter. For example, EPA estimates  that
the cost effectiveness of retrofitting school buses and class 6-8b trucks ranges
from $11,100 to $69,900 per ton of PM  reduced.  In addition, EPA estimates that
the cost effectiveness of the Urban Bus Retrofit and Rebuild program is $31,500
per ton of PM reduced, the 2007 Heavy-Duty Highway diesel emission standards
is $14,200 per ton, and the Nonroad Tier 4 emission standards is $11,200 per
ton.

The results can also be compared to similar estimates for those same programs
targeted at reducing nitrogen oxides.  For example, EPA estimates that the cost
effectiveness of the 2007 Heavy-Duty Highway emissions standards is $2,100
per ton of NOx reduced and the Nonroad Tier 4 emission standards is $1,000 per
ton.

The findings from this study indicate that retrofits can be a cost effective way to
reduce air pollution and health impacts associated with diesel emissions.

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                             Table of Contents

I. INTRODUCTION	1
      A. NATIONAL CLEAN DIESEL CAMPAIGN	1
      B. STUDY OBJECTIVE AND METHODS  	2

II. RETROFIT EFFECTIVENESS FACTORS	3
      A. EQUIPMENT ACTIVITY ANALYSIS	3
      B. EQUIPMENT SURVIVAL RATE/SCRAPPAGE ANALYSIS 	4
      C. EMISSION RATES ANALYSIS	4
      D. EFFECTIVENESS OF RETROFIT TECHNOLOGIES	5
           1.  Background on Retrofit Technology Verification	5
           2.  Technology Effectiveness Analysis	5
      E. COSTS	6
           1.  Background	6
           2.  Cost Analysis	6
           3.  Operating Costs	7
      F. ESTIMATING LIFETIME EMISSION REDUCTIONS	7
           1.  Background	7
           2.  Emission Reduction Analysis	8

III. RESULTS	8

IV. CONCLUSION	9

APPENDICES	11
Appendix A- PM  Cost Per Ton Estimates with DOC and CDPF	11
Appendix B - NOx Cost Per Ton Estimates with Upgrade Kit and SCR	14

REFERENCES	17
                                    in

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I. INTRODUCTION

I.A. NATIONAL CLEAN DIESEL
CAMPAIGN

The Environmental Protection Agency's
(EPA's) National Clean Diesel Campaign
(NCDC) is a comprehensive initiative to
reduce pollution from diesel engines. EPA's
Office of Transportation and Air Quality
(OTAQ) manages the NCDC, which
comprises both regulatory programs to
address new engines and innovative
programs to address the millions of diesel
engines already in use.

Particulate matter (PM), one of the primary
pollutants from diesel exhaust, is associated
with many different types of respiratory and
cardiovascular effects, and premature
mortality. EPA has determined that it is a
likely human carcinogen. Fine particles
(smaller than 2.5 micrometers), in particular,
are a significant health risk as they can
pass through the nose and throat and cause
lung damage. People with existing heart or
lung disease, asthma, or other respiratory
problems are most sensitive to the health
effects of fine particles as are children and
the elderly. Children  are more susceptible to
air pollution than healthy adults because
their respiratory systems are still developing
and they have a faster breathing rate. EPA
expects reductions in air pollution from
diesel engines to lower the incidence of
these health effects,  as well as contribute to
reductions in regional haze in our national
parks and cities, lost work days and
reduced worker productivity, and other
environmental and ecological impacts.

Nitrogen oxides (NOx), the main ingredient
of forming ground-level ozone, react with
Volatile Organic Compounds (VOC) in the
presence of heat and sunlight through
complex chemical reactions to produce air
pollution. NOx are emitted largely from
highway vehicles,  nonroad equipment,
power plants, and other sources of
combustion. Based  on a large number of
recent studies, EPA has identified several
key health effects caused when people are
exposed to levels of ozone found today in
many areas of the country. Short-term
exposures (1-3 hours) to high ambient
ozone concentrations have been linked to
increased hospital admissions and
emergency room visits for respiratory
problems. For example, studies conducted
in the northeastern U.S. and Canada show
that ozone air pollution is associated with
10-20 percent of all of the summertime
respiratory-related hospital admissions.
Repeated exposure to ozone can make
people more susceptible to respiratory
infection and lung inflammation and can
aggravate preexisting respiratory diseases,
such as asthma. Prolonged (6 to 8 hours),
repeated exposure to ozone can cause
inflammation of the lung, impairment of lung
defense mechanisms, and possibly
irreversible changes in lung structure, which
over time could lead to premature aging of
the lungs and/or chronic respiratory
illnesses such as emphysema and chronic
bronchitis.

New regulations from EPA require stringent
pollution controls on new highway and
nonroad diesel engines, including engines
operating in the freight, transit, construction,
agriculture, and mining sectors. The new
regulations will also reduce sulfur content in
diesel fuel by 97 percent. By combining
tough exhaust standards with cleaner fuel
requirements, these rules will cut emission
levels from  new engines by over 90 percent.
The new lower sulfur diesel fuel will
immediately result in reduced PM
emissions. New engines sold in the US after
2007 for highway use (and after 2008 for
nonroad use) must meet the more stringent
standards, but the effect of these cleaner
engines will be achieved  over time as the
existing fleet is gradually replaced. The
benefits of these new rules will not be fully
realized until the 2030 time frame. As a
result EPA is promoting a suite of innovative
programs to address emissions from the
existing fleet of diesel vehicles and

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equipment.
following types of nonroad equipment:
The NCDC innovative programs are
designed to address existing diesel vehicles
and equipment through emission reduction
strategies that can provide immediate air
quality and health benefits. These programs
focus on vehicles and equipment in the
school bus, construction, port, freight and
agricultural sectors. The NCDC works with
partners in state and local government,
industry, and environmental organizations to
promote a wide range of measures to
reduce diesel emissions including
retrofitting vehicles/equipment with new or
improved emission control equipment,
upgrading engines, replacing older engines
with newer/cleaner engines, and using
cleaner  fuels. Additionally, idle reduction is
an effective strategy provided within the
NCDC.  Eliminating unnecessary idling can
save fuel, prolong engine life, and reduce
emissions. It can also help reduce the noise
levels associated with construction and
freight movement. Unnecessary idling
occurs when trucks wait for extended
periods  of time to load or unload materials
or supplies, or when equipment is left on
when it  is not being used.  Managing
equipment operations and training workers
to reduce unnecessary idling is a relatively
easy way to lower operating costs and help
reduce the environmental  impact.

I.B. STUDY OBJECTIVE AND METHODS

Stakeholders  - including states that are
developing their plans to achieve the
National Ambient Air Quality Standards for
ozone and fine particles - are searching for
cost effective  ways to reduce emissions
from existing diesel engines in order to
improve air quality and protect public health.
The purpose of this study is to estimate the
cost effectiveness of retrofit strategies for
various  nonroad applications that reduce
emissions.

Retrofit  technologies offering PM and/or
NOx reductions were evaluated for the
1) off-highway trucks (250 horsepower (hp))
2) tractors/loaders/backhoes (150 hp)
3) excavators (250 hp)
4) cranes (250 hp)
5) generator sets (100 hp)
6) crawler tractors/dozers (250 hp), and
7) agricultural tractors (250 hp)

EPA chose these examples of nonroad
equipment for three reasons. First, a further
evaluation of the cost effectiveness of
retrofit technologies for nonroad equipment
was needed. Second, data generated from
EPA's grant projects provide the most
recent information for these types of
equipment. Finally, these nonroad
equipment exist in large numbers across the
country, thus ensuring that this cost
effectiveness analysis will be relevant to a
wide audience.

Two most common diesel retrofit
technologies for PM  reductions, diesel
oxidation catalysts (DOCs) and catalyzed
diesel particulate filters (CDPFs), were
evaluated. CDPFs use either passive or
active regeneration systems to oxidize the
PM in the filters. In this report, a passive
filter is analyzed. Also, selective catalytic
reduction (SCR) systems and engine
upgrade kits for NOx reductions were
chosen. An SCR system may be combined
with a DOC or CDPF for further emissions
reductions. In this report, an SCR system
alone is analyzed.

For this analysis, EPA relied primarily on
data from the NONROAD20051  model to
determine the cost-effectiveness of DOCs,
CDPFs, SCR systems, and engine upgrade
kits. EPA also consulted additional data
sources where appropriate.

Annual equipment usage, equipment useful
life, engine emission rates2, retrofit
technology effectiveness, and technology
costs to calculate the cost-effectiveness of
these retrofit strategies were analyzed, in

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terms of $ per ton of PM and/or NOx
reduced. It is important to note that, in many
cases, heavy-duty nonroad diesel retrofit
strategies provide other emission benefits
such as reductions in hydrocarbons and
carbon monoxide. This study only evaluates
the cost-effectiveness of reducing PM from
DOCs and CDPFs as well as NOx from
SCR systems and engine upgrade kits.
The following section will detail our methods
for calculating the cost-effectiveness of PM
and NOx reductions from retrofits including
factors such as equipment activity, survival
rates, emissions factors, costs of
technologies, and emissions reductions
from retrofit technologies. In Section III the
results are presented and in Section IV the
summary remarks about the relative cost-
effectiveness of diesel retrofit technology for
heavy-duty nonroad engines are provided.

II. RETROFIT EFFECTIVENESS FACTORS

In order to estimate the relative cost
effectiveness of various PM and NOx retrofit
strategies, it is necessary to estimate a
number of factors, including:

      - equipment activity
      - equipment survival rates
      - emissions rates of equipment
      - effectiveness of DOCs, CDPFs,
        SCR systems and engine upgrade
        kits
      - costs of  retrofits

The following sections II.A - II.F outline our
methodologies for estimating each of these
factors.

II.A.  EQUIPMENT ACTIVITY ANALYSIS

One of the first steps in estimating emission
reductions from retrofit strategies is to
develop an estimate of annual equipment
activity. This requires identifying operating
hours and engine load for these nonroad
equipment. This information can then be
used to estimate  annual equipment
emissions and emission reductions from
retrofits.

The methodology for estimating emission
reductions from nonroad equipment is to
estimate annual and lifetime activity (use
patterns). This activity was estimated based
on data from the technical documentation
for the NONROAD inventory emissions
model (see
www.epa.gov/otaq/nonrdmdl.htm for a
description of the NONROAD model).
Nonroad engine activity is expressed in
terms of hours of operation  (annual and
lifetime) and load factors (average engine
operating power as a percentage of rated
engine power). The estimated annual hours
of operation and typical load factors (LF) are
listed in Table 1.

Table 1: Annual Hours of Operation and
Load  Factors
Equipment
Off-highway Trucks
Tractors/Loaders/
Backhoes
Excavators
Cranes
Generator Sets
Crawler Tractors/
Dozers
Agricultural Tractors
Hours
1,641
1,135
1,092
990
338
936
475
LF
0.59
0.21
0.59
0.43
0.43
0.59
0.59
                                              Crane carrying timber

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II.B.  EQUIPMENT SURVIVAL
RATE/SCRAPPAGE ANALYSIS

The scrappage rate describes the fraction of
vehicles/equipment (relative to the total
number originally sold) that are no longer in
the fleet from one year to the next. This
factor reflects vehicle/equipment loss
through accidents, deterioration, and export.
From a retrofit perspective, scrappage is a
necessary component of cost effectiveness
analysis because it dictates how long older
equipment will stay in service, and hence
the potential benefit which will accrue from a
retrofit at a certain point in time.

The NONROAD model has intrinsic
scrappage rates built into the model. These
rates are used to project the distribution of
nonroad equipment in a population by age.
The median life from the NONROAD model
is used to estimate the lifetime of the
nonroad equipment. This number is the
number of hours of rated engine operation
that the median example of a nonroad
diesel engine is expected to operate.
Dividing that number by the load factors in
Table 1 converts the median life from hours
of operation at rated power to hours  of
operation at typical operating power  levels
(i.e.,  it converts it to actual hours of
operation). The median life for  a 150 hp
diesel engine from the NONROAD model is
4,667 hours at rated power. Dividing this
number by the load factor of
tractors/loaders/backhoes in Table 1 (4,667
hours rated / 0.21) returns a median  life at
typical operating conditions of 22,224 hours.
Given annual operating hours of 1,135
hours, the expected lifetime for the median
150 hp tractors/loaders/backhoes can be
found as  19.6 years.

II.C.  EMISSION RATES ANALYSIS

The NONROAD engine model  uses
emission  rates for nonroad diesel engines
based on the emission standards, historic
engine certification data, and projections of
in-use deterioration of emissions over the
lifetime of the engine. Additionally, the
nonroad model includes a factor to correct
for observed differences in emissions
production between in-use operating cycles
and the steady-state emissions test results.
The projected in-use emissions rates are
therefore the product of the expected new
certification emissions level, the ratio of
transient emission rates to steady-state
emission rates, and projected deterioration
rates over time (i.e., as the equipment ages
EPA projects emissions will increase). The
result of this methodology is that new
(beginning of life) nonroad equipment is
estimated to have a lower emission rate
than the same equipment would after a
period of operation.

In order to simplify the analysis for PM, the
adjustment for transient emissions and
deterioration were combined into a single
static number of 1.5 (i.e., a 50% increase in
emissions over the certification levels)
which roughly approximates the combined
factors for an off-highway truck in the
nonroad model for PM reductions. This
approach may undercount the emissions
from a typical piece of nonroad equipment
making it less cost effective when compared
to the NONROAD model  where the
transient adjustment factor (TAP) ranges
from 1.23 to 1.97 and the deterioration
factor varies from  1.0 at 0 hours to 1.473 at
full useful life. Hence, the NONROAD model
adjustment would  range from  1.2 to 2.9 (1.0
X 1.23 to 1.473 X  1.97) over the range of
engines and through the equipment life.
However, the  use  of a simplified single
value of 1.5 is appropriate for this analysis
since the goal is to estimate a nominal ratio
of emission reductions and cost.

However, NOx TAP ranges from 0.95 to
1.10 and the deterioration factor varies from
1.0 at 0 hours to 1.024 at full useful life.
With the limited range in value for each
factor, a NOx deterioration factor of one and
the individual TAP were applied for this
analysis.

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EPA has developed a retrofit modeling
function within the National Mobile Inventory
Model (NMIM) that fully incorporates the
features of the NONROAD model and will
allow states and local authorities to more
accurately estimate the potential for
emission reductions through retrofits.

II.D.  EFFECTIVENESS OF RETROFIT
TECHNOLOGIES

II.D.1.  Background on Retrofit Technology
Verification

The NCDC innovative programs encourage
air quality agencies and owners of fleets of
diesel powered vehicles and equipment to
implement clean diesel strategies such as
installing new or enhanced emission control
technology and using cleaner fuels. To help
these organizations make informed
decisions regarding which retrofit
technologies are appropriate for their fleets
and what emission reductions can be
expected, EPA created the Retrofit
Technology Verification Program. This
process evaluates the emission reduction
performance of retrofit technologies,
including their durability, and identifies
engine operating criteria and conditions that
must exist for these technologies to achieve
those reductions.
DOC on construction equipment
Under this program, companies can apply
for EPA verification of the effectiveness of
their emission control technology. The
verification protocol requires the same tests
as defined by the Code of Federal
Regulations (CFR) for new engine family
certification before sale in the U.S. The
protocol tests the stand-alone engine, and
then the engine with the emission control
technology. Both new and aged
technologies must be tested. The emission
reduction percentage that EPA verifies will
reflect the performance of the new and used
technologies. Once a technology is verified,
the company receives an official EPA
verification letter, and the technology is
listed on EPA's web site as a verified
technology. There is no restriction on who
may apply for verification. To date, EPA has
verified nearly 30 technologies from
different emission control technology
companies.

The measures that EPA verifies can be very
general - for example, an emission control
technology company may receive
verification for a diesel oxidation catalyst
(DOC) technology that can reduce
particulate matter from any uncontrolled or
Tier 1 nonroad diesel engine by 20 percent -
or the verification can be specific to an
engine model made over specific model
years. While retrofit technologies are the
most common clean diesel strategy verified
by EPA, there is a wide range of measures
that can reduce diesel emissions. For
example, the replacement of older engines
or equipment may be more beneficial or a
necessary condition for using retrofit
technologies.

II.D.2. Technology Effectiveness Analysis

EPA's List of Verified Technologies
provided the retrofit technology applications
and emission reduction information for this
study. The verified PM emission reduction
figures for DOCs and CDPFs were applied
for nonroad engines. The NOx emission
reductions associated with upgrading a Tier
0 (unregulated) engine to Tier 1 and a Tier 1
engine to Tier 2 emission levels were
estimated. Finally, NOx emission reductions
from SCR systems were also estimated

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based on existing technical reports.
However, exhaust temperature
requirements of SCR systems may limit the
applicability of this technology in the legacy
fleet.

The estimated reduction in PM:
1) from adding a DOC to a nonroad engine
and changing to < 500 ppm sulfur fuel is
20%
2) from adding a CDPF to a nonroad engine
and changing to ultra low sulfur diesel
(ULSD) fuel is 90%

The estimated reduction in NOx:
1) from adding an SCR system to a nonroad
engine is 70%
2) from adding an engine upgrade kit to a
Tier 0 (unregulated) engine or to a Tier 1
nonroad engine is 40%

One requirement of the verification process
is that applicants must test their systems
after they have been installed for a period of
time. The manufacturer must begin in-use
testing after they have sold a certain
number of units of the verified technology.
EPA must approve the manufacturer's
sampling plan to gather units to be tested.
The manufacturer must test units aged in
the field to a minimum fraction of the
designated durability testing period in two
different phases. Manufacturers are given
wide latitude in the type of emissions testing
equipment they use, although test cycles
are well defined. The manufacturer must
test at least four units in each phase.
Individual failures lead to additional testing
or possible removal from the Verified
Technology List. This part of the verification
process is still in its early stage and, as
such, EPA is just now receiving preliminary
results from in-use testing from retrofit
technology manufacturers. As EPA
receives these additional in-use test results,
they will be examined to ensure these
verified technologies are performing
properly in the field.

The reduction of other criteria air pollutants
by retrofit technology should also be
recognized. A DOC, CDPF, SCR system or
engine upgrade kit may reduce hydrocarbon
and carbon monoxide emissions on the
order of 20 to 90 percent.

I I.E.  COSTS

II.E.1.  Background

Several sources of information are available
on the current price of retrofit technologies.
These include a December 2000 survey3
and an April 2006 report4 by the
Manufacturers of Emission Controls
Association (MECA), and current price
information for grant recipients under the
NCDC's funding assistance programs.
These sources give ranges for CDPF prices
of $3,000 to $10,000 depending on size,
expected product sales volumes, and
configuration (i.e., in-line or muffler
replacement). Similarly, these sources
suggest DOCs will range in price from $425
to $2,000 depending on size, sales volume
and configuration. These sources also
suggest SCR systems  range from $12,000
to $20,000. While the high end of the
ranges is reflective of current prices for PM
and NOx retrofit technologies applied to
nonroad equipment, future retrofit costs are
likely to drop substantially as a result of the
Heavy-Duty  Highway 2007 and the Nonroad
Tier 4 emission regulations.

II.E.2.  Cost Analysis

EPA has estimated the production cost for
DOCs and CDPFs for nonroad engines in
the Nonroad Tier 4 rule-making.5 The
analysis in that rule-making was based on
preliminary data available to EPA regarding
the actual manufacturing  costs for CDPF
and DOC technologies.

Based on the Nonroad Tier 4 Regulatory
Impact Analysis (RIA),  the CDPF costs
ranged from $178 to $6,405  and DOC from
$105 to $734 depending on the horsepower
and average engine displacement.

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However, the Tier 4 RIA did not include the
costs for additional exhaust tubing,
datalogging and installation which could add
another $593 for a CDPF and $280 for a
DOC as described in the Diesel Retrofit
Technology report6. Based on the estimates
from this report, the Nonroad Tier 4 RIA,
and our current experience with nonroad
retrofit technology, a nominal average cost
is estimated. That typical cost is $1,000 per
DOC and $5,000 per CDPF retrofit
depending on the  horsepower and average
engine displacement.

EPA has consulted several sources of
information regarding cost estimates for
SCR systems and engine upgrade kits.
These sources of  information provide an
average cost of selective catalytic reduction
systems ranging from $10,000 to $20,000
per system depending on the size of the
engine, the sales volume, and other factors.
Given this range and the current cost of
SCR systems in existing programs, the cost
is estimated to be approximately $13,000
per unit. The cost  of the nonroad engine
upgrade kit is estimated to  be between
$2,000 and $4,000 per equipment. For this
analysis, the average estimated cost is
$3,000 per equipment.

Using today's nominal cost as a future cost
estimate is very conservative because of
the greater diversity and smaller retrofit fleet
sizes typical  of nonroad equipment.
Nonroad retrofits are expected to occur one
piece of equipment at a time, even in
relatively high volumes. These projections
represent the best estimate of the nominal
cost  for retrofitting equipment with diesel
engines with various displacements. In
practice, significant variability above and
below these price  estimates is expected due
to a wide range of other factors which were
not accounted for  in this analysis (e.g.,
retrofit fleet size, profit margin differences,
etc.). Nevertheless, these estimates
adequately reflect the nominal cost for
future PM and NOx retrofit  technologies.
II.E.3. Operating Costs

Operating costs related to the application of
the retrofit technologies are not accounted
for in this analysis. Operating costs could
include the differential cost for using 15 ppm
sulfur fuel, fuel economy impacts related to
increased exhaust backpressure, or
changes to maintenance practices related
to  the use of retrofit technologies. Any
premium for 15 ppm sulfur fuel in this
analysis has not been accounted for
because 15 ppm sulfur highway diesel fuel
is  now the predominant diesel fuel used in
highway applications. At the same time
nonroad engines are changing to fuel with
less than 500 ppm sulfur and then in 2010
will change to 15 ppm sulfur diesel fuel. A
change in fuel consumption related to the
use of retrofit technology was not accounted
for in this analysis because current data
from existing retrofits show no significant
difference in fuel economy for equipment
with and without these retrofit technologies.
In  practice, the impact of retrofit
technologies on fuel consumption is
strongly related to engine load and therefore
varies significantly depending upon the
vehicle/equipment application.

II.F. ESTIMATING LIFETIME EMISSION
REDUCTIONS

II.F.1. Background

In  order to compare the relative cost
effectiveness (i.e., tons of emissions
reduced per dollar spent) of retrofit
programs to other emission control
programs, it is necessary to estimate the
lifetime emissions reduction EPA projects
will occur with retrofit technology. In
concept, estimating the emission reductions
is  simple and can be viewed as the product
of the lifetime hours usage, the  baseline
emission rate for the equipment
(grams/horsepower-hour) and the emission
reduction potential of the retrofit technology
(e.g., 90% for CDPFs). In practice, the
estimate is more complicated since

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vehicle/equipment scrappage, variations in
hour usage as the equipment ages, and the
relative value of emission reductions
realized in the current year versus a future
time must be accounted for. Furthermore,
estimates of the lifetime emission reductions
for retrofit technologies must address the
age of the vehicle/equipment when the
retrofit is installed (i.e., retrofitting a one
year old piece of equipment would be
expected to result in a larger emission
reduction compared to a ten-year-old
equipment). These factors in our analysis
for the nominal case were accounted for,
but it should be recognized that factors  such
as annual hour usage can vary significantly
between different types of equipment.

II.F.2. Emission Reduction Analysis

To obtain emission reductions, the annual
and lifetime emissions for every piece of
nonroad equipment were first calculated. To
calculate annual emissions for nonroad
equipment, the TAP adjusted emission rates
on Tables 2-11 in Appendices A and B
were used to multiply horsepower and
annual usage. These annual figures can
then be brought back to a net present value
at a defined discount rate (3 percent) to give
a discounted lifetime emissions. This result
is shown in the fourth column of Tables 2 -
11. The lifetime emissions are the baseline
emissions which are then used to multiply
the reduction rate of each retrofit technology
to obtain lifetime emission reductions.
Because equipment retrofitted at different
ages will have different lifetime emission
reductions, estimates were made for
retrofits for various model years as if the
equipment were retrofitted in calendar year
2007. Hence, a 2006 model year equipment
retrofitted in model year 2007 would be one
year old, and a 2001 model year equipment
retrofitted in model year 2007 would be six
years old. Tables 2-11 organize the
equipment of different ages by column
designating both the model year of the
retrofitted equipment (e.g., 2001) and the
age of the equipment when retrofitted in
2007 (e.g., 6 years old).  Engine upgrade
kits are used to upgrade Tier 0
(unregulated) engines to Tier 1 emission
levels and Tier 1 to Tier 2.  The
implementation of Tier 3 standards
generally starts on model year 2006 for a
250 horsepower (hp)  nonroad engine and
2007 for 100 and 150 hp nonroad engines
with phase-in schedules. Therefore, the
analysis begins with model year 2006 as
described in Tables 2-11. Those lifetime
emission reductions calculated in this paper
in the previous section along with the cost
of each retrofit technology are used  to
obtain the cost per ton as shown in the fifth
and sixth columns of Tables 2-11.

III. RESULTS

Tables 12 and 13  summarize the range of
cost effectiveness figures estimated for the
selected retrofit cases in this paper.  As
noted previously, these  estimates represent
a nominal projection of the future cost per
ton of emission reduction. These cost
effectiveness estimates have not factored in
the co-benefits from reducing other
pollutants such as hydrocarbons. The cost
effectiveness of retrofit programs can vary
significantly depending on a number of
factors, including actual annual average
activity (i.e., annual operating hours for
nonroad).

The results summarized in Table 12 can be
compared to similar estimates for other EPA
programs targeted at  reducing diesel
particulate matter. For example, the cost-
effectiveness of DOC and CDPF retrofits for
school bus and Class 6-8b trucks  range
from approximately $11,000 to $69,900
published in the Diesel Retrofit Technology
report in March 2006.6 In addition, retrofits
of diesel engines can  be as cost-effective
as recent EPA rule-makings to address
diesel particulate matter, such as the 2007
Heavy-Duty Highway  emissions standards
and the Nonroad Tier 4  emissions
standards which EPA estimates will  cost
$14,200 per ton of PM reduced and  $11,200

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per ton of PM reduced, respectively.

Table 12. Summary of Cost Effectiveness
for Various Diesel PM Retrofit Scenarios
Equipment
Off-
highway
Trucks
Tractors/
Loaders/
Backhoes
Excavators
Cranes
Generator
Sets
Retrofit
Technology
DOC
CDPF
DOC
CDPF
DOC
CDPF
DOC
CDPF
DOC
CDPF
Range of $/ton PM
Emission Reduced
$21,700
$24,200
$25,900
$28,800
$22,300
$24,800
$20,900
$23,300
$18,700
$20,800
$78,800
$87,600
$49,900
$55,400
$61,900
$68,800
$60,000
$66,700
$46,100
$51,300
Table 13. Summary of Cost Effectiveness
for Various Diesel NOx Retrofit Scenarios
Equipment
Tractors/
Loaders/
Backhoes
Excavators
Crawler
Tractors/
Dozers
Cranes
Agricultural
Tractors
Retrofit
Technology
Upgrade
Kit
SCR
Upgrade
Kit
SCR
Upgrade
Kit
SCR
Upgrade
Kit
SCR
Upgrade
Kit
SCR
Range of $/ton NOx
Emission Reduced
$2,600
$6,500
$2,300
$5,800
$2,200
$5,600
$2,100
$5,100
$1,900
$4,700
$4,900
$12,100
$6,600
$16,400
$6,600
$16,500
$6,100
$15,100
$7,700
$19,000
The results summarized in Table 13 can
also be compared to similar estimates for
other EPA programs targeted at reducing
diesel nitrogen oxides. For instance, the
cost effectiveness of the 2007 Heavy-Duty
Highway emissions standards is $2,100 per
ton of NOx reduced and the Nonroad Tier 4
emission standards is $1,000 per ton.
The results summarized in Tables 12 and
13 above and given in more detail in Tables
2 - 6 and 7-11, respectively, are
characterized by increasing cost per ton of
emission reduction for the retrofit of older
equipment in comparison to newer
equipment. This characteristic is to be
expected as older equipment will have a
shorter remaining  lifetime and hence lower
remaining emissions to be reduced prior to
equipment scrappage. In some cases, the
cost per ton of emission reductions
decreases with older equipment because of
older equipment's relatively high emissions
level. That is,  retrofitting an emission control
technology on an older engine that, due to
historically more lenient emissions
standards has higher emissions, may lead
to a larger emission reduction for the same
retrofit cost. This benefit from retrofitting
older dirtier equipment is offset by the
shorter remaining  life of the older
equipment.

IV. CONCLUSION

This analysis demonstrates that diesel
retrofit strategies can be a cost effective
way to reduce air pollution.  The
cost-effectiveness of DOC and CDPF
retrofits for nonroad equipment were
calculated ranging from approximately
$18,700 to $87,600 per ton of PM reduced.
The cost-effectiveness of SCR systems and
engine upgrade kits for nonroad equipment
were calculated ranging from approximately
$1,900 to $19,000 per ton of NOx reduced.
These estimates depend on a number of
factors such as equipment activity, survival
rates, emissions rates, effectiveness of
DOCs, CDPFs, SCR systems and engine
upgrade kits, and their costs.

It is important to note that, while the cost
effectiveness  estimates were based on
robust and recent  data sources, there is a
significant amount of variability in both the
costs and the emission reductions from
retrofit technologies in the field.  Also, the
analysis adequately represents the cost

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effectiveness of DOC, CDPF, SCR system,
and engine upgrade kit retrofits for nonroad
equipment, but the cost-effectiveness of
retrofits for specific engines and equipment
fleets may differ in certain situations.

EPA has developed  a module as part of the
National Mobile Inventory Model (NMIM)
that will allow users to predict the impact of
retrofitting their particular fleets. This new
module is able to generate national,
county-level, or fleet-specific mobile source
emissions inventories and then use these
inventories to estimate emission reductions
from retrofit technologies.
Contact:
Kuang Wei
Office of Transportation and Air Quality
U.S. Environmental Protection Agency
E-mail: wei.kuang@epa.gov
                                          10

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               Appendix A
PM Cost Per Ton Estimates with DOC and CDPF
Table 2. Tractors/Loaders/Backhoes PM Cost per Ton Estimates with DOC and CDPF
Age
[years]
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Model Year

2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
Emission Rate
(TAP adjusted)
[g/bhp-hr]
0.270
0.270
0.270
0.270
0.420
0.420
0.420
0.420
0.420
0.420
0.603
0.603
0.603
0.603
0.603
Discounted Life
Time Emissions
[tons]
0.150
0.144
0.137
0.131
0.193
0.182
0.171
0.160
0.148
0.136
0.177
0.159
0.140
0.120
0.100
DOC C/E
[$/ton]
$33,400
$34,800
$36,400
$38,200
$25,900
$27,400
$29,200
$31,300
$33,800
$36,800
$28,200
$31,500
$35,700
$41,500
$49,900
CDPF C/E
[$/ton]
$37,100
$38,700
$40,500
$42,500
$28,800
$30,500
$32,500
$34,800
$37,500
$40,900
$31,300
$35,000
$39,700
$46,200
$55,400
Table 3. Generator Sets PM Cost
Age
[years]
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Model Year

2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
Emission Rate
(TAF adjusted)
[g/bhp-hr]
0.360
0.360
0.360
0.360
0.705
0.705
0.705
0.705
0.705
0.705
1.080
1.080
1.080
1.080
1.080
per Ton Estimates with DOC and CDPF
Discounted Life
Time Emissions
[tons]
0.116
0.113
0.111
0.108
0.207
0.202
0.197
0.192
0.186
0.180
0.267
0.258
0.249
0.239
0.229
DOC C/E
[$/ton]
$43,300
$44,200
$45,100
$46,100
$24,100
$24,700
$25,400
$26,100
$26,900
$27,700
$18,700
$19,400
$20,100
$20,900
$21,900
CDPF C/E
[$/ton]
$48,100
$49,100
$50,100
$51,300
$26,800
$27,500
$28,200
$29,000
$29,800
$30,800
$20,800
$21,500
$22,300
$23,300
$24,300
                   11

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Table 4. Cranes PM Cost per Ton Estimates with DOC and CDPF
Age
[years]
1
2
3
4
5
6
7
8
9
Model Year

2006
2005
2004
2003
2002
2001
2000
1999
1998
Emission Rate
(TAP adjusted)
[g/bhp-hr]
0.225
0.197
0.197
0.197
0.378
0.378
0.378
0.378
0.378
Discounted Life
Time Emissions
[tons]
0.224
0.180
0.162
0.143
0.239
0.202
0.163
0.124
0.083
DOC C/E
[$/ton]
$22,300
$27,900
$30,900
$34,900
$20,900
$24,800
$30,600
$40,400
$60,000
CDPF C/E
[$/ton]
$24,800
$30,900
$34,300
$38,700
$23,300
$27,600
$34,000
$44,800
$66,700
Note: The median life for a 250 hp crane from the NONROAD model is 4,667 hours at rated
power. Dividing this number by the 0.43 load factor of crane (4,667 hours rated / 0.43) returns a
median life at typical operating conditions of 10,853 hours. Given annual operating hours of 990
hours, the expected lifetime for the median 250 hp crane can be found as 10.9 years. While this
represents the  expected median operating life, it should be recognized that significant variation
about this median can be expected in practice with many pieces of nonroad equipment being
used for periods well in excess of 10.9 years.
Table 5. Excavators PM Cost per Ton Estimates with DOC and CDPF
Age
[years]
1
2
3
4
5
6
Model Year

2006
2005
2004
2003
2002
2001
Emission Rate
(TAF adjusted)
[g/bhp-hr]
0.225
0.197
0.197
0.197
0.378
0.378
Discounted Life
Time Emissions
[tons]
0.224
0.168
0.138
0.107
0.143
0.081
DOC C/E
[$/ton]
$22,300
$29,800
$36,300
$46,900
$34,800
$61,900
CDPF C/E
[$/ton]
$24,800
$33,100
$40,400
$52,100
$38,700
$68,800
Note: The median life for a 250 hp excavator from the NONROAD model is 4,667 hours at rated
power. Dividing this number by the 0.59 load factor of excavator (4,667 hours rated / 0.59)
returns a median life at typical operating conditions of 7,910 hours. Given annual operating
hours of 1,092 hours, the expected lifetime for the median 250 hp excavator can be found as
7.2 years. While this represents the expected median operating life, it should be recognized that
significant variation about this median can be expected in practice with many pieces of nonroad
equipment being used for periods well in excess of 7.2 years.
                                          12

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Table 6. Off-highway Trucks PM Cost per Ton Estimates with DOC and CDPF
Age
[years]
1
2
3
4
5
6
7
8
9
Model Year

2006
2005
2004
2003
2002
2001
2000
1999
1998
Emission Rate
(TAP adjusted)
[g/bhp-hr]
0.225
0.197
0.197
0.197
0.378
0.378
0.378
0.378
0.378
Discounted Life
Time Emissions
[tons]
0.225
0.179
0.160
0.140
0.230
0.190
0.149
0.107
0.063
DOC C/E
[$/ton]
$22,200
$28,000
$31,300
$35,700
$21,700
$26,300
$33,500
$46,800
$78,800
CDPF C/E
[$/ton]
$24,700
$31,100
$34,800
$39,600
$24,200
$29,200
$37,300
$52,000
$87,600
Note: The median life for a 250 hp off-highway truck from the NONROAD model is 4,667 hours
at rated power. Dividing this number by the 0.59 load factor of off-highway trucks (4,667 hours
rated / 0.59) returns a median life at typical operating conditions of 7,910 hours. The NONROAD
model estimates operating hours of 1,641  hours for off-highway trucks. However, based on
program experience with the in-use fleet today, a conservative estimate of 760 hours was used.
Therefore, the expected lifetime for the truck can be found as 10.4 years. While this represents
the expected median operating life, it should be recognized that significant variation about this
median can be expected in practice with many pieces of nonroad equipment being used for
periods well in excess of 10.4 years.
                                          13

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                 Appendix B
NOx Cost Per Ton Estimates with Upgrade Kit and SCR
Table 7. Tractors/Loaders/Backhoes NOx Cost per Ton Estimates with Upgrade Kit and SCR
Age
[years]
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Model Year

2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
Emission Rates
(TAP adjusted)
[g/bhp-hr]
4.510
4.510
4.510
4.510
6.215
6.215
6.215
6.215
6.215
6.215
9.218
9.218
9.218
9.218
9.218
Discounted Life
Time Emissions
[tons]
2.502
2.399
2.293
2.185
2.856
2.697
2.533
2.365
2.191
2.012
2.710
2.429
2.139
1.840
1.532
Upgrade Kit
C/E
[$/ton]
$3,000
$3,100
$3,300
$3,400
$2,600
$2,800
$3,000
$3,200
$3,400
$3,700
$2,800
$3,100
$3,500
$4,100
$4,900
SCR C/E
[$/ton]
$7,400
$7,700
$8,100
$8,500
$6,500
$6,900
$7,300
$7,900
$8,500
$9,200
$6,900
$7,600
$8,700
$10,100
$12,100
Table 8. Agricultural Tractors NOx Cost per Ton Estimates with Upgrade Kit and SCR
Age
[years]
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Model Year

2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
Emission Rates
(TAP adjusted)
[g/bhp-hr]
2.600
3.800
3.800
3.800
5.301
5.301
5.301
5.301
5.301
5.301
5.301
7.961
7.961
7.961
7.961
Discounted Life
Time Emissions
[tons]
2.477
3.436
3.246
3.050
3.973
3.683
3.385
3.077
2.760
2.434
2.098
2.631
2.096
1.544
0.976
Upgrade Kit
C/E
[$/ton]
$3,000
$2,200
$2,300
$2,500
$1,900
$2,000
$2,200
$2,400
$2,700
$3,100
$3,600
$2,900
$3,600
$4,900
$7,700
SCR C/E
[$/ton]
$7,500
$5,400
$5,700
$6,100
$4,700
$5,000
$5,500
$6,000
$6,700
$7,600
$8,900
$7,100
$8,900
$12,000
$19,000
                      14

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Table 9. Excavators NOx Cost per Ton Estimates with Upgrade Kit and SCR
Age
[years]
1
2
3
4
5
6
Model Year

2006
2005
2004
2003
2002
2001
Emission Rates
(TAP adjusted)
[g/bhp-hr]
2.600
3.800
3.800
3.800
5.301
5.301
Discounted Life
Time Emissions
[tons]
2.605
3.226
2.649
2.054
2.011
1.131
Upgrade Kit
C/E
[$/ton]
$2,900
$2,300
$2,800
$3,700
$3,700
$6,600
SCR C/E
[$/ton]
$7,200
$5,800
$7,000
$9,000
$9,200
$16,400
Note: The median life for a 250 hp excavator from the NONROAD model is 4,667 hours
at rated power. Dividing this number by the 0.59 load factor of excavator (4,667 hours
rated / 0.59) returns a median life at typical operating conditions of 7,910 hours. Given
annual operating hours of 1,092 hours, the expected lifetime for the median 250 hp
excavator can be found as 7.2 years. While this represents the expected median
operating life, it should be recognized that significant variation about this median can be
expected in practice with many pieces of nonroad equipment being used for periods well
in excess of 7.2 years.
Table 10. Crawler Tractors/Dozers NOx Cost per Ton Estimates with Upgrade Kit and SCR
Age
[years]
1
2
3
4
5
6
7
Model Year

2006
2005
2004
2003
2002
2001
2000
Emission Rates
(TAP adjusted)
[g/bhp-hr]
2.600
3.800
3.800
3.800
5.301
5.301
5.301
Discounted Life
Time Emissions
[tons]
2.605
3.344
2.866
2.374
2.606
1.878
1.128
Upgrade Kit
C/E
[$/ton]
$2,900
$2,200
$2,600
$3,200
$2,900
$4,000
$6,600
SCR C/E
[$/ton]
$7,100
$5,600
$6,500
$7,800
$7,100
$9,900
$16,500
Note: The median life for a 250 hp crawler tractor from the NONROAD model is 4,667
hours at rated power. Dividing this number by the 0.59 load factor of crawler tractor
(4,667 hours rated / 0.59) returns a median life at typical operating conditions of 7,910
hours. Given annual operating hours of 936 hours,  the expected lifetime for the median
250 hp crawler can be found as 8.5 years. While this represents the expected median
operating life, it should be recognized that significant variation about this median can be
expected in practice with many pieces of nonroad equipment being used for periods well
in excess of 8.5 years.
                                       15

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Table 11. Cranes NOx Cost per Ton Estimates with Upgrade Kit and SCR
Age
[years]
1
2
3
4
5
6
7
8
9
Model Year

2006
2005
2004
2003
2002
2001
2000
1999
1998
Emission Rates
(TAP adjusted)
[g/bhp-hr]
2.500
4.000
4.000
4.000
5.580
5.580
5.580
5.580
5.580
Discounted Life
Time Emissions
[tons]
2.492
3.637
3.278
2.907
3.523
2.975
2.410
1.828
1.229
Upgrade Kit
C/E
[$/ton]
$3,000
$2,100
$2,300
$2,600
$2,100
$2,500
$3,100
$4,100
$6,100
SCR C/E
[$/ton]
$7,500
$5,100
$5,700
$6,400
$5,300
$6,200
$7,700
$10,200
$15,100
Note: The median life for a 250 hp crane from the NONROAD model is 4,667 hours at
rated power. Dividing this number by the 0.43 load factor of crane (4,667 hours rated /
0.43) returns a median life at typical operating conditions of 10,853 hours. Given annual
operating hours of 990 hours, the expected lifetime for the median 250 hp crane can be
found as 10.9 years. While this represents the expected median operating life, it should
be recognized that significant variation about this median can be expected in practice
with  many pieces of nonroad equipment being used for periods well in excess of 10.9
years.
                                       16

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REFERENCES
1      Median Life, Annual Activity, and Load Factor Values for Nonroad Engine Emissions
Modeling, NR-005c (EPA420-P-04-005, April 2004), available at
www.epa.gov/otaq/nonrdmdl.htmWechrept

2      Exhaust and Crankcase Emission Factors for Nonroad Engine Modeling - Compression-
Ignition, NR-OOQc (EPA420-P-04-009, April 2004), available at
www.epa.gov/otaq/nonrdmdl.htmWechrept

3      MECA Independent Cost Survey for Emission Control Retrofit Technologies,
Manufacturers of Emission Control Association, Decembers, 2000 available on EPA's Retrofit
Website, www.epa.gov/oms/retrofit/documents/meca1 .pdf

4      Retrofitting Emission Controls on Diesel-Powered Vehicles, Manufacturers of Emission
Control Association, April, 2006 available on MECA's Retrofit Website,
www.meca.org/page.ww?name=Publications§ion=Resources

5      Nonroad Tier 4 Regulatory Impact Analysis (RIA), (EPA420-R-04-007, May 2004)
www.epa.gov/nonroad-diesel/2004fr.htm

6      Diesel Retrofit Technology: An Analysis of the Cost-Effectiveness of Reducing Particulate
Matter Emissions from Heavy-Duty Diesel Engines Through Retrofits, (EPA420-S-06-002, March
2006), available at www.epa.gov/cleandiesel/documents/420s06002.pdf
                                          17

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