Volkswagen has advertised its TDI Clean Diesel engines for years as having fewer emissions and better fuel economy compared to gas engines. Many people purchased Volkswagens with the TDI Clean Diesel engine because of the company’s advertisements. Recently the truth about these “clean diesels” was revealed, and some TDI owners and the United States government are not happy.
In September of 2015, Volkswagen’s “clean diesel” scandal was exposed when the United States Environmental Protection Agency (EPA) issued the automaker a notice of violation of the Clean Air Act. The EPA found that newer models of the TDI engines were equipped with software to cheat emission testing. This software made it so the emission-controlling equipment in the TDI Clean Diesel engines only worked when it sensed the car was being tested for emissions. This equipment was deactivated during normal driving conditions. The software resulted in “clean diesels” emitting almost 40 times the amount of nitrogen oxide (NOx) allowed by the Clean Air Act. These “clean diesels” have heavily polluted the air with harmful NOx emissions, which can cause respiratory diseases such as emphysema, bronchitis, and asthma.
The “clean diesel” scandal is a prime example of negative externalities. Negative externalities are costs suffered by a third party who is not involved in the production or consumption of a good. In this case, the TDI Clean Diesel engines are the good that is being produced by Volkswagen and consumed by those individuals driving vehicles with those engines. The third party is those individuals who inhale the air polluted with NOx emissions. The costs suffered by the third party include, but are not limited to, respiratory illnesses, hospitalizations, and premature deaths associated with the inhalation of NOx emissions.