PROPOSAL:

Execute Contract to Cost-Share Development and Pre-Commercial Demonstration of Caterpillar C-12 Natural Gas Engine

SYNOPSIS:

Natural gas, heavy-duty engines produce less than one-half the emissions of their diesel counterparts, and several natural gas engines are certified by the ARB as low-emission engines. However, while on-highway diesel engines are offered at 400-500 horsepower, the highest horsepower natural gas engine commercially available produces 350 HP. This lower horsepower is inadequate for many over-the-road applications. DOE’s National Renewable Energy Laboratory (NREL) proposes that the AQMD join in a project supporting Clean Air Partners efforts to bring a 425 HP Caterpillar C-12 natural gas engine to market. Total project cost is approximately $2,170,692. AQMD cost-share will not exceed $500,000.

COMMITTEE:

Technology, July 17, 1998, Recommended for Approval

RECOMMENDED ACTION:

Authorize the Chairman to execute a contract with Clean Air Partners to co-sponsor development and demonstration of the Caterpillar C-12 natural gas engine, in an amount not to exceed $500,000.

Barry Wallerstein, D.Env.
Acting Executive Officer

Background

The AQMP identifies the use of clean alternative fuels in mobile sources as a key attainment strategy. The AQMD Board has established a policy of reducing diesel exhaust emissions in the Basin, from both air quality and toxics considerations. Natural gas heavy-duty engines exhibit one-half or less the emissions of their diesel counterparts. Several heavy-duty engine manufacturers currently offer natural gas engines, but the use of these products is limited by their higher cost and lower thermal efficiency compared to modern diesel engines. Natural gas is not used in many trucking applications due to the lack of availability of high-horsepower natural gas engines. While the diesel truck engine product line includes 400-500 HP engines, the highest horsepower natural gas engine commercially available produces 350 HP.

In an effort to bring high-efficiency alternative fuel trucks to commercialization, the

U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) released a Request for Proposals to develop and demonstrate natural gas truck technologies with higher efficiency, lower cost, and higher horsepower rating than currently available products. NREL requested that the AQMD participate in the selection process for this RFP.

Proposal

Three proposals were received in response to NREL RFP No. RCI-8-18055, as detailed later in this letter. The proposal received from Clean Air Partners requested support in developing and supporting the pre-commercial demonstration of their dual-fuel technology for the Caterpillar C-12 engine. Total project cost is $2,170,692. Funding requested from NREL and AQMD is $1,032,788; $532,788 will be funded by NREL, and AQMD is requested to provide $500,000.

The proposed project will be performed by Clean Air Partners (CAP), in partnership with Caterpillar Engine Company (CAT) and Power Systems Associates (PSA). CAT offers on-highway diesel engines ranging from 175 HP to over 600 HP for heavy-duty trucks. Current product plans and development funding supports three natural gas engines, ranging from 190 HP and 520 lb-ft torque to 410 HP and 1250 lb-ft torque. The CAT C-10 natural gas engine, rated at 350 HP and 1050 lb-ft torque, was certified by ARB as a low-emission engine with NOx emissions of 2.5 g/bhp-hr.

Although the Caterpillar C-10 engine at 350 HP, and the Cummins L-10 at 325 HP, are capable of meeting the needs of segments of the class 7 and 8 truck engine market, these engines are not capable of meeting the needs of many class 8 heavy-duty truck fleets, particularly over-the-road fleets. In order to satisfy most of the heavy-duty truck market, natural gas engines must match the characteristics of the diesel engines they replace. It appears that most over-the-road truck companies want a minimum of 400 HP and 1400 lb-ft torque. Retention of diesel-like torque is a unique characteristic of the dual fuel natural gas engines from CAT.

CAP proposes to complete development and conduct the pre-commercial demonstration of the CAT C-12 engine with 425 HP and 1450 lb-ft torque, with the goal of full commercialization at the end of the demonstration period. The demonstration fleet of five trucks will be placed with Jack B. Kelley Trucking (JBK), operating in the Basin. The pre-commercial demonstration is a vital step to full commercialization because it provides the manufacturer with real-world operating experience in order to upgrade the engine to a commercial product. The following are the expected tasks and funding source for the program:

Benefits to AQMD

The proposed project addresses technologies included in the September 1997 update of the Technology Advancement Plan under Project 97M1-1, "Advanced Heavy-Duty Engine Component Development and Demonstration." The project supports several 1997 AQMP On-Road Mobile Sources Control Measures, including M4, "Heavy-Duty Diesel Vehicles; Early Introduction of Low-NOx Engines" and M5, "Heavy-Duty Diesel Vehicles; Additional NOx Reductions in California." Certification of low-emission vehicles and engines, and their integration into the Basin’s transportation sector, is a high priority under the AQMP. Alternative fuel heavy-duty engines have exhibited their ability to produce significantly lower emissions than their diesel-fueled counterparts.

This program is expected to result in a low-NOx engine certification of 2.4 g/bhp-hr of the CAT C-12 natural gas engine. The pre-commercial, on-road demonstration will provide the operational experience and data necessary for full commercialization of the engine. Five class 8 trucks will be operated during the one-year pre-commercial demonstration period. These trucks are each expected to accumulate a minimum of 50,000 miles per year. NOx reductions during the one-year demonstration of five trucks are estimated at 1.5 tons. Several grocery companies located in the Basin have applied for funding assistance to the AB2766 Discretionary Funds Program, specifying the not-yet-available CAT C-12 natural gas engine for a total of 75 trucks. Over the expected seven-year life of these trucks, NOx emission reductions of at least 158 tons will be realized just for these 75 trucks.

Future penetration of this engine, and the corresponding potential emission reduction, into the heavy-duty truck segment is difficult to estimate at this time. Diesel-fueled heavy-duty vehicle do represent about 248 tons/day of NOx emissions in the Basin, a significant portion of the inventory. Full penetration of this and other clean alternative fuel heavy-duty engines could reduce these emissions by 50 percent.

Sole Source Justification

Section VIII(B)(2) of the Procurement Policy and Procedure identifies four major provisions under which a sole source award may be justified. This request for sole source award is made under provision B.2.d(1): the project involves cost-sharing by multiple sponsors. The proposed project is being awarded from a competitive procurement conducted by DOE/NREL, and will be cost-shared with that entity through separate contract mechanisms.

NREL RFP No. RCI-88-18055, "On-Road Development of High Efficiency Alternative Fuel Trucks," was released on March 31, 1998 to the major medium- and heavy-duty engine manufacturers in the United States. Proposals were due April 30, 1998. Three proposals were received in response to the RFP and all were determined to be responsive. The three proposers were:

• 149; Clean Air Partners

• Cummins Engine Company

• John Deere Engine Company

The scoring committee was composed of three representatives of NREL and a Technology Advancement Program Supervisor, AQMD. The proposals were technically ranked in the order mentioned above. Although it met the minimum requirements of the RFP, the John Deere proposal lacked the specificity necessary for funding at this time. NREL staff will continue to work with Deere staff to improve the proposal for possible future funding. NREL will fund the Cummins proposal in its entirety. NREL requested AQMD cost-share for the Clean Air Partners proposal ($1,032,788). AQMD staff has agreed to seek approval for AQMD funding of no more than $500,000; NREL will fund the remaining $532,788. Total project costs are $2,170,692.

Clean Air Partners (CAP) is a San Diego-based company developing alternative fuel engine fueling systems and associated components. CAP possesses proprietary intellectual property relating to spark ignition and compression ignition alternative fuel engines, fuel systems, fuel system components, and software control strategies. Caterpillar has entered into a product development and license agreement with CAP (and affiliate, BKM Inc.) relating to compression ignition dual fuel natural gas engines. Caterpillar, Power Systems Associates, BKM, and CAP have entered into a business venture together to develop, manufacture, market, and sell alternative fuel engines and conversion kits based on technology licensed from CAP which utilizes Caterpillar’s existing line of heavy-duty electronic diesel engines for on-highway vehicles.

Caterpillar, utilizing the Clean Air Partners technology is the only engine manufacturer exhibiting interest in developing and certifying a higher horsepower, higher torque natural gas engine at this time. Detroit Diesel Corporation is beginning development of a 400 HP natural gas engine, but commercialization plans are unknown. Cummins has focussed their attention on improving the performance of the current configuration of the L-10G, which will not exceed 375 HP. John Deere is developing engines in the 175-225 HP range. Mack offers a 375 HP engine for limited applications.

Resource Impacts

Following is the expected cost-share for the proposed development and demonstration program:

Cost to the AQMD for the proposed engine development and demonstration program will not exceed $500,000. Sufficient funds are available in the FY 1998-99 Budget from revenues received from the state-mandated Clean Fuels Program. The Clean Fuels Program, under Health and Safety Code Sections 40448.5 and 40512 and Vehicle Code Section 9250.11, establishes mechanisms to collect revenues from mobile and stationary sources to support projects to increase the utilization of clean fuels in both sectors, including the development of the necessary advanced enabling technologies. Funds collected from motor vehicles are restricted, by statute, to be used for projects and program activities related to mobile sources that support the objectives of the Clean Fuels Program.

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