EPA-420-P-98-023
Nonroad Engine Growth Estimates
Report No. NR-008
March 6, 1998
Gary J. Dolce
Nonroad Emissions Modeling Team
Assessment and Modeling Division
EPA, Office of Mobile Sources
Purpose
Estimating accurate projections of future nonroad emissions inventories depends on
estimations of future emission factors and future activity levels. This report focuses on the
estimation of future activity levels. The purpose of this report is to document the proposed
methodology for estimating growth in activity levels in the EPA NONROAD emission inventory
model and to compare it to alternative methodologies.
Background
The emissions inventory for nonroad engines is a function of the emission factors and the
amount of work or activity levels of these engines. Projections of future nonroad engine
inventories must take into account expected changes in emission factors and activity levels.
Future changes in emission factors will primarily be the result of future regulations and are
discussed in separate reports (NR-009 and NR-010). Future changes in activity level will be the
result of complex interactions between human population growth, changes in national and local
economic factors, and changes in the markets for nonroad engines and the products they are used
to produce.
Historically, EPA has often used projections of economic indicators as surrogates for
growth in activity for the purpose of estimating future emissions for a wide variety of sources.
When applying this approach to nonroad equipment, the underlying assumption is that engine
usage is a constant proportion of earnings for a given sector. The most commonly used
compilation of economic indicators is provided by the Department of Commerce's Bureau of
Economic Analysis (BEA). The most recent projections were published in July, 19951. BEA
provides economic indicators by state or as a national average for numbers of employees,
inflation adjusted national dollars of earnings, and inflation adjusted aggregate gross state
products (GSP) dollars of earnings. In the past, BEA growth forecasts for major sectors of the
economy (e.g., construction, farm, forestry, manufacturing, etc.) have been applied to all nonroad
equipment that might be used in that sector of the economy.
However, the use of economic indicators to predict growth in nonroad activity has some
drawbacks. Economic indicators may not be able to adequately predict the effects of substitution
of equipment for labor in the market. Also, economic models in recent years have tended to
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overestimate inflation rates. As a result of both of these factors, economic indicators may tend to
under-predict growth in nonroad equipment populations and activity. Evidence that this is
indeed the case can be found in an analysis done by E.H. Pechan and Associates2 which
compared BEA estimates of growth between 1990 and 1996 to estimates of actual 1990 and 1996
populations of nonroad equipment from the Power Systems Research (PSR) PartsLink database.
The Pechan analysis indicated that the projected 1996 population based on the BEA growth
estimate under-predicted the estimates of actual population developed by PSR in 1996 by 7.4%.
Overall, the total projected BEA growth from 1990 to 1996 was 9.3%, while PSR estimated that
actual nonroad equipment populations grew 18.1% over that same period.
There is a second drawback to using economic indicators that may be as important to
estimation of emissions projections as the under prediction problem. Because economic
indicators at best can only predict growth in broad sectors of the economy, they cannot be used to
identify market trends within sectors. For example, economic indicators would not predict
differential rates of growth of diesel equipment relative to gasoline equipment in nonroad
applications, or changes in the horsepower distribution within nonroad applications. Because
diesel and gasoline engines have very different emissions characteristics, the accurate prediction
of changes in the relative distribution of different types of engines is very important to the
accurate estimation of future emissions.
An alternative approach which would be able to factor in market trends would be to base
growth estimates on the historical trend in growth in nonroad equipment activity. Because total
activity is never directly measured, the historical trend in population must be used as a surrogate.
This seems reasonable given that capital costs of nonroad equipment are high compared to
operating costs, in general. As a result, owners of such equipment have a strong incentive to get
the most out of the equipment they own and a disincentive to purchase new equipment that will
not be fully utilized.
Although the use of historical population growth may have limitations, it is the only
approach that will allow estimation of the impact of market shifts on emission projections.
For these reasons, we propose to base growth projections in EPA's NONROAD emissions model
on a time series analysis of historical nonroad engine populations
Methodology
We analyzed historical engine population estimates for 1989 through 1996 taken from the
PSR PartsLink database, the same source used to determine 1996 baseline engine populations as
described in Report No. NR-006. The PSR database contains detailed information about each
engine family sold in the United States. This information could be used to segregate nonroad
engines for purposes of growth estimation at by several different factors, including market sector
(agricultural, construction, etc.), application type (farm tractors, combines, etc.), fuel type
(gasoline, diesel, etc.), and horsepower. As a result, one could in principle estimate separate
growth factors for each combination of application type and fuel type, in discrete horsepower
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categories. However, there are some limitations to this approach. In many cases, equipment
populations become small enough, when broken down by all of these factors, that even small
errors in the PSR database would result in large errors in growth estimation. In addition, the
number of individual growth rates would become unwieldy considering the number of different
application types, fuel types, and horsepower categories, as well as the fact that each state would
have its own unique set of growth factors.
We invite comment on whether or not we should move to that level of detail in the final
version of NONROAD. For the current version, we have chosen to segregate nonroad engines by
market sector and fuel type. Individual applications in the PSR database were assigned to broad
market sectors as shown in Appendix A of Report No. NR-006. For example, excavators,
graders, backhoes, dozers, etc. were all assigned to the Construction market sector (SCC category
2260002xxx). Total market sector populations, segregated by fuel type, were calculated for each
year from 1989 through 1996. An exponential curve was fit to each of these to determine the
growth rate over the period from 1989 to 1996. We also estimated the growth rate for the total of
all engines of all fuel types in each market sector for purposes of comparison with BEA
estimates.
Results
Table 1 compares projected annual growth rates from BEA with those derived from a
historical analysis of the PSR database (actual populations are given in the Appendix). With the
exception of the logging and recreational sectors, the PSR estimates are significantly higher than
the BEA estimates. The PSR database also indicates very large differences in growth rates for
different fuel types. In most cases, the rate of growth for diesel equipment is substantially higher
than that for gasoline equipment. In the industrial and light commercial categories LPG and
CNG engines also show higher than average rates of growth (categories with no growth rates for
LPG or CNG had populations that were either zero or negligible; i.e. less than 0.1% of the total
population for that category).
Table 1. Projected Average Annual Growth Rate Comparison
Sector
Airport Service
Construction
rarm
Industrial
.awn & Garden
.ight Commercial
-ogging
Railway
Recreational
BEA
5.5%
1 .0%
2.4%
1 .9%
1 .0%
1 .9%
7.4%
-0.9%
1 .0%
PSR
Total
8.2%
2.6%
2.8%
3.1%
2.7%
4.9%
5.2%
2.7%
0.9%
Diesel
9.4%
3.6%
3.2%
4.4%
9.6%
5.5%
-0.8%
5.1%
3.9%
Gasoline
1 .4%
0.3%
2.0%
-3.5%
2.6%
4.7%
5.9%
1 .3%
0.9%
LPG
4.1%
14.2%
CNG
-7.7%
5.1%
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It is obvious from the PSR data that a substantial shift from gasoline to diesel engines is
occurring in most of the market sectors. Given the high rates of growth for diesel engines in
most sectors compared to the overall sector growth rates, it is reasonable to ask whether or not
these growth rates due to market shifting are sustainable. However, there is a more basic
problem with the use of the fuel-specific growth rates for projecting future growth. In future
years, the sum of the all of the projected fuel-specific populations will be greater than the
projected total population using the total growth rate for the particular market sector. This is an
unreasonable result. The total growth in any market sector should be determined by the historical
total growth in that sector, not by market shifts occurring within the sector.
The best solution to this problem may be to use total market sector growth factors to
determine future total populations and to create a separate input (i.e., % share of diesel, gasoline,
LPG, and CNG engines) to predict changes in fuel market share. Although the current version of
the model can easily handle multiple growth rates, this solution would involve model coding
changes that we will not be able to complete before release of the Beta version of NONROAD,
and may not be able to complete in time for the final release of this version of NONROAD. As
an interim solution for the Beta release, we have two options on which we request comment.
The first option would be to only incorporate the total market sector growth factors in this
version of the model. Under this option, output from the Beta release of the model would not
reflect market shifts in fuel use.
The second option would be to scale the individual fuel-specific growth factors so that
projected total population when the individual fuel-specific populations are summed does not
exceed the projected total population. This option could be implemented as follows:
1. project total population using the total growth rate and fuel-specific populations using
fuel specific growth rates for each market sector out to 2020 (or some other projection
year).
2. sum the fuel-specific populations for each year and calculate the fraction of those
summed populations contributed by each fuel type.
3. multiply those fractions by the projected total population derived from the total growth
rate to determine projected populations by each fuel type scaled to the projected total
populations.
This option offers a relatively crude method for adjusting the projected fuel-specific populations,
and we invite comment on more appropriate statistical analyses that might be used instead of this
approach. However, under this option, Beta users would be able to see model results that do
reflect estimates of changes in fuel market share. Table 2 shows the original and scaled
population growth estimates by fuel type for each market sector.
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We invite comment on which of the two options to incorporate into the Beta release, but
caution that we may have to implement the first option in the Beta release due to time
constraints.
Table 2. Projected Average Annual Growth Rates with Fuel-Specific Growth Rates Scaled
to PSR Total Growth Rates
Sector
Airport Service
Construction
rarm
Industrial
.awn &
Garden
Light
Commercial
.ogging
Railway
Recreational
BEA
5.5%
1 .0%
2.4%
1 .9%
1 .0%
1 .9%
7.4%
-0.9%
1 .0%
PSR
Total
8.2%
2.6%
2.8%
3.1%
2.7%
4.9%
5.2%
2.7%
0.9%
Diesel
9.4%
3.6%
3.2%
4.4%
9.6%
5.5%
-0.8%
5.1%
3.9%
Scaled
Diesel
8.3%
3.3%
3.1%
3.6%
9.1%
5.3%
-1 .2%
4.5%
3.8%
Gasoline
1 .4%
0.3%
2.0%
-3.5%
2.6%
4.7%
5.9%
1 .3%
0.9%
Scaled
Gasoline
0.8%
0.0%
1 .9%
-4.3%
2.5%
4.6%
5.4%
0.8%
0.8%
LPG
4.1%
14.2%
Scaled
LPG
3.3%
13.2%
CNG
-7.7%
5.1%
Scaled
CNG
-8.1%
5.0%
1. "BEA Regional Projections to 2045: Vol. 1, States", U.S. Department of Commerce, Bureau
of Economic Analysis, July 1995, available on the World Wide Web at
www.bea.doc.gov/bea/arl .htm
2. "Comparison of Methods for Projecting Nonroad Equipment Activity Levels", E.H. Pechan
and Associates, Inc., Prepared for U.S. Environmental Protection Agency, Office of Mobile
Sources, Ann Arbor, MI, September 1997
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Appendix - Engine Populations by Year, Market Sector, and Fuel Type
Airport Service
Diesel
Gasoline
Total
1989
8,325
1,904
10,229
1990
9,516
1,699
11,215
1991
10,688
1,583
12,271
1992
11,800
1,548
13,348
1993
12,862
1,617
14,479
1994
13,962
1,701
15,663
1995
15,087
1,851
16,938
1996
16,199
2,042
18,241
Construction
Diesel
Gasoline
Total
1,445,011
746,147
2,191,176
1,515,056
750,523
2,265,603
1,563,077
744,661
2,307,767
1,614,190
740,852
2,355,077
1,671,812
740,747
2,412,600
1,740,599
746,487
2,487,185
1,810,301
757,411
2,567,862
1,869,003
766,264
2,635,454
Farm
Diesel
Gasoline
CNG
Total
2,624,347
1,200,445
17,457
3,842,504
2,764,773
1,231,311
16,355
4,012,671
2,881,337
1,258,131
15,526
4,155,212
2,992,660
1,282,338
14,671
4,289,868
3,051,566
1,306,827
13,609
4,372,171
3,114,436
1,332,163
12,449
4,459,200
3,270,810
1,355,539
11,255
4,637,746
3,302,604
1,382,342
10,050
4,695,124
Industrial
Diesel
Gasoline
LPG
Total
652,656
176,736
84,314
913,706
683,015
177,063
91,092
951,185
708,222
172,120
91,545
971,949
735,321
165,380
91,062
991,887
765,152
153,632
94,866
1,013,826
805,322
150,339
104,450
1,060,293
849,118
148,457
114,569
1,112,351
892,852
140,950
110,292
1,144,322
Lawn & Garden
Diesel
Gasoline
Total
327,626
98,583,888
98,911,514
365,587
102,100,138
102,465,725
398,010
104,940,288
105,338,298
437,044
107,515,906
107,952,950
483,345
109,594,695
110,078,040
532,684
112,415,996
112,948,680
587,132
115,937,367
116,524,499
645,149
119,490,009
120,135,158
Light Commercial
Diesel
Gasoline
LPG
CNG
Total
897,686
4,185,087
4,128
37,947
5,124,864
953,629
4,376,324
4,849
40,571
5,375,388
1,008,575
4,537,560
5,603
42,651
5,594,404
1 ,062,662
4,701,324
6,508
44,611
5,815,120
1,120,187
4,912,338
7,489
46,767
6,086,799
1,185,848
5,185,707
8,588
49,122
6,429,289
1,254,203
5,520,270
9,849
51,944
6,836,298
1,320,233
5,868,886
11,128
55,098
7,255,386
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Logging
Diesel
Gasoline
Total
1989
51,430
337,267
388,697
1990
50,381
366,182
416,563
1991
48,758
395,921
444,679
1992
47,261
427,873
475,134
1993
46,634
449,011
495,645
1994
47,149
471,027
518,176
1995
48,348
492,469
540,817
1996
49,032
511,778
560,810
Railway
Diesel
Gasoline
Total
5,686
10,508
16,194
6,117
11,285
17,402
6,511
11,730
18,241
6,856
11,898
18,754
7,199
11,900
19,099
7,537
1 1 ,840
19,377
7,867
11,863
19,730
8,175
11,816
19,991
Recreational
Diesel
Gasoline
Total
83,258
8,797,673
8,906,281
86,988
8,727,791
8,839,961
90,304
8,632,439
8,747,216
93,758
8,678,772
8,796,325
97,433
8,654,282
8,763,104
101,342
8,815,925
8,918,613
105,559
9,119,795
9,225,906
110,169
9,424,489
9,535,762
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