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PROPOSAL:

Execute Contract to Continue Cost-Share Development of Enhanced Efficiency Natural Gas Engines

SYNOPSIS:

In February 1997, working in parallel with the U.S. Department of Energy (DOE) and the Gas Research Institute (GRI), the AQMD entered into a sole-source contract for $400,000 with the Trucking Research Institute (TRI) to solicit bids for and manage projects with three principal original equipment manufacturers (OEMs) for the development of enhanced efficiency natural gas engines. Project progress was satisfactory and $50,000 was expended; however, key personnel at TRI managing this program have left the company. This proposal would utilize the balance of funds and initiate management of the project by GRI. The total cost of this project is $1.2 million. Total AQMD funding for this contract will not exceed $350,000.

COMMITTEE:

Technology, April 24, 1998, Recommended for Approval

RECOMMENDED ACTION:

Authorize the Chairman to execute a contract with GRI to manage projects with three original equipment manufacturers for the development of enhanced efficiency natural gas engines, in an amount not to exceed $350,000.

Barry R. Wallerstein, D.Env.
Acting Executive Officer

Background

Heavy-duty, diesel-fueled trucks contribute significantly to the Basin’s emissions inventory. In recognition of the contribution of heavy-duty truck emissions to the inventory, and the fact that trucks from out-of-state are significant contributors to the emissions inventory, the ARB and the U.S. EPA entered into an agreement with the major heavy-duty engine manufacturers to set a national NOx standard of 2.0 g/bhp-hr in 2002. The SIP seeks to reduce these levels further to 1.0 g/bhp-hr. Furthermore, diesel exhaust is considered a potential or a probable human carcinogen by several health agencies, including the National Institute of Occupational Safety and Health and the International Agency for Research on Cancer. The California Office of Environmental Health and Hazard Assessment (OEHHA) and the Air Resources Board have initiated the process of identifying diesel exhaust as a Toxic Air Contaminant. Although there is considerable ongoing debate regarding the magnitude of risk, there is consensus that diesel exhaust is a potential carcinogen and that it is a major contributor to ambient PM levels which have also been linked to premature mortality. Thus, irrespective of whether or not it is designated as a Toxic Air Contaminant, reducing diesel exhaust emissions will significantly reduce health effects (either in the form of cancer or otherwise) to all Southern Californians. Recognizing these facts, the AQMD Governing Board adopted an initiative to expedite the reduction of diesel exhaust in the Basin.

The AQMD and others have supported development and demonstration of natural gas engine technology. Current generation natural gas engines can achieve emissions at 2.0 g/bhp-hr or below; however, there is a significant performance penalty to achieving these levels.

In 1997, the AQMD, in cooperation with DOE and GRI, entered into a program to achieve significant energy efficiency enhancements in heavy-duty natural gas engines, while retaining low-emission qualities. Each of the agencies contributed $400,000 to this effort. The program was initially managed and coordinated through the American Trucking Association’s Trucking Research Institute (TRI). TRI issued a solicitation to the engine OEMs, managed the selection process, and negotiated contracts with Cummins, John Deere, and Mack. The sponsors’ $1.2 million was earmarked to fund these three contracts, which were directed to near-term prototype engine development for enhanced efficiency that can be completed in two years or less. In addition, DOE, through the National Renewable Energy Laboratory (NREL), directly supported the staff of TRI performing the management of this project. In early 1998, the key personnel on this project left employment at TRI. Subsequently, DOE asked GRI to assume management of the program. GRI has accepted this role.

Proposal

Staff proposes to transfer management for the enhanced high efficiency natural gas engine program from TRI to GRI. GRI will enter into contracts with Cummins, John Deere, and Mack to continue the engine development projects as previously contracted by TRI. GRI will provide quarterly progress reports, and attend project site meetings as necessary. At the completion of the near-term engine development program, the project sponsors will assess the feasibility of proceeding with longer-term, advanced engine development.

Benefits to AQMD

The proposed project addresses technologies included in the October 1996 and September 1997 update of the Technology Advancement Plan under Project 97M1-3, "Advanced Heavy-Duty Truck Development and Demonstration."

The use of alternative clean fuels in mobile sources is a key attainment strategy in the AQMP. Although there are no direct emissions benefits to be realized during this engine development program, increased efficiency of natural gas engines will enhance their market attractiveness, and the realization of emissions reductions from use of the engines. The goal of this program is to increase efficiency while retaining the low demonstrated emissions of heavy-duty natural gas engines.

There is increasing concern regarding adverse public health impacts of diesel exhaust, which include both ambient particulate matter (PM) effects and increased cancer risk. Diesel exhaust is known to contribute significantly to ambient fine particulate pollution levels, which in turn have both mortality and morbidity impacts. This is a major reason why the EPA promulgated a PM 2.5 standard. Air agencies in California will be required to seek further emission reductions of both NOx and PM in order to attain the new standard.

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: Other circumstances exist which in the determination of the Executive Officer require such waiver in the best interests of the AQMD. Specifically, these circumstances are: B.2.(1), projects involving cost sharing by multiple sponsors.

GRI provides equal cost share to the project and, therefore, maintains an interest in ensuring the successful outcome of the project. GRI is a non-profit organization whose members include utilities, fuel producers, and others in the natural gas industry. GRI supports a variety of research, development and demonstration efforts supporting the development and commercialization of natural gas engines and vehicles, and is the only such organization representing the entire natural gas industry.

Resource Impacts

Total cost of this project is $1,200,000. The breakdown of the cosponsors and support is as follows:

Under the existing contract with TRI, $50,000 in AQMD funding was expended; therefore, the proposed contract with GRI will not exceed $350,000. Sufficient funds are available in the FY 1997-98 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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