Caterpillar to record $37 million in emission expenses in 2003

In its quarterly financial report filed last week with the Securities and Exchange Commission, Caterpillar said it expects to pay $37 million this year in expenses related to new emissions standards for highway truck and bus engines.

The money is being paid as part of an agreement with the Environmental Protection Agency, which allowed Cat to pay a fine for every engine sold after Oct. 1, 2002, that didn’t meet new Tier 2 emissions guidelines. The company began selling lower emissions “bridge” engines on the October date, but estimates it will have to pay about $2,500 per engine on 3,300 of the 33,800 nonconforming engines it will produce this year.

In 2000, EPA gave Cat and five other engine manufacturers just 14 months to come up with new lower-emissions engines. And while the other five manufacturers opted for some type of Exhaust Gas Recirculation technology (EGR) to meet the clean air standards, Cat took a different path with its Advanced Combustion Emissions Reduction Technology (ACERT), despite knowing it would not be ready for the Oct. 1 deadline.

Cat’s internal costs to develop ACERT technology came to nearly $2 billion, say company officials. But Cat decided to pursue ACERT rather than EGR since the ACERT technology, unlike EGR, would meet future off-road diesel emissions requirements without any modifications to deal with heat rejection or exhaust aftertreatment.