South Coast Air Quality Management District
South Coast Air Quality Management District
BOARD MEETING DATE: June 15, 2001 AGENDA NO. 18
Approve Funding Process for PM10 Trap Retrofit on School Buses Using Mitigation Fees Collected under Rule 1309.1 - Priority Reserve
SYNOPSIS:
At the April Meeting, the Board directed staff to place a priority on retrofitting diesel-powered school buses with PM10 traps and report back to the Board within 60 days on the funding process to be followed. The proposed funding process considers potential funding availability, demand, and technical feasibility.
COMMITTEE:
Mobile Source and Stationary Source, May 25, 2001, Reviewed.
RECOMMENDED ACTION:
Barry R. Wallerstein, D.Env.
Executive Officer
Background
During the adoption of Rule 1195 – Clean On-Road School Buses, it was evident that emissions from the existing school bus fleet need to be reduced in addition to the need to purchase the cleanest school buses as required under Rule 1195. As such, Rule 1195 provided that school bus fleet operators who were not able to obtain financial assistance with the purchase of new alternative-fueled school buses could still purchase diesel-powered school buses. However, the new school buses must be equipped with particulate (PM10) control devices (or traps) and 15 percent of the existing school bus fleet must be retrofitted with PM10 traps if external funding was available. In addition, the Governing Board placed a high priority on having the existing school bus fleet retrofitted with PM10 traps as soon as possible.
As part of the amendment to Rule 1309.1 – Priority Reserve at its April 2001 meeting, the Governing Board, directed staff to place a high priority in the use of mitigation fees collected pursuant to paragraph (a)(4) of Rule 1309.1 on retrofitting existing diesel-powered school buses. In addition, staff was to report back to the Governing Board within 60 days on the funding process to be followed.
Technical Feasibility of Retrofitting School Buses
There are about 8,200 diesel-powered school buses operating in the South Coast Air Quality Management District today. Of the 8,200 school buses, about 4,500 are considered heavy-duty school buses and the remainder are considered medium-duty school buses. Based on recent technical evaluations of the types of school buses that could be retrofitted with PM10 traps, staff concluded that the current state-of-technology PM10 traps that use the ceramic filter technology work on a significant portion, but not all, 4-stroke diesel-powered school buses. (At this time, the ceramic filter traps have been demonstrated to work on newer 4-stroke diesel-powered school bus. However, further demonstration is needed on older 4-stroke school buses.) In addition, the ceramic filter traps do not work on older 2-stroke diesel-powered school buses. (There are about 1,000 2-stroke diesel-powered school buses operating in the AQMD.) However, control devices that only use oxidation catalysts to reduce particulate exhaust emissions have been shown to work on the 2-stroke engines. The particulate emission reduction is at most 30 percent with the use of the oxidation catalyst-only device compared to about 85 percent reduction associated with the use of the ceramic filter PM10 trap. To retrofit an existing heavy-duty diesel-powered school bus with the ceramic filter PM10 trap costs, including ancillary items, about $7,500. The oxidation catalyst-only control devices cost between $3,000 to $4,000 to deploy. Lastly, as part of the Statewide Lower-Emission School Bus Program, control devices that are verified to meet at least an 85 percent reduction in particulate exhaust emissions would be eligible in the Program.
Estimated Cost to Retrofit Existing Heavy-Duty Diesel-Powered School Buses
Based on the discussion above, it is estimated that the cost to retrofit the existing diesel-powered school buses would be about $30.25M. The $30.25M includes the costs associated with equipping about 3,500 4-stroke diesel-powered school buses with the ceramic filter PM10 traps at a cost of about $7,500 each and 1,000 2-stroke diesel-powered school buses with the oxidation catalyst-only control devices at a cost of about $4,000 each. However, staff recognizes that regardless of the type of traps deployed that some existing school buses cannot be retrofitted at this time due to the type of engine or the condition of the engine.
Potential Funds Available from the Priority Reserve
As part of the staff report to PAR 1309.1, staff provided an estimate of the amount of mitigation fees potentially collected under Rule 1309.1. The estimate provided ranged from about $19.4M to $48.6M. The lower end of the range represents the potential fees collected if the utility companies purchased all of the existing PM10 emission reduction credits held by other parties. However, this situation will not be likely since this will deplete all of the PM10 credits in the market. The more likely situation is that the companies will pay the mitigation fees directly, resulting in more than sufficient funds needed to retrofit the existing fleet of diesel-powered school buses. The mitigation fees would be collected over a three-year period and to-date, the AQMD has collected about $8.6M.
Other Funding Programs for the Retrofit of Existing School Buses
There is currently one major program providing funds to retrofit specifically existing school buses with PM10 trap, the Statewide Lower-Emission School Bus Program. The AQMD has been allocated $5.3M under the Lower-Emission School Bus Program to retrofit about 700 to 800 school buses. There are currently legislative proposals to continue the school bus program with a retrofit element. However, funding for these future programs is uncertain at this time.
Proposal
Staff has evaluated the potential funding availability, demand, and technical feasibility of retrofitting existing diesel-powered school buses and is proposing a process for such a retrofit program. Based on the amount of funding needed to retrofit the existing heavy-duty diesel-powered school buses, staff is recommending that mitigation fees collected over the next three years pursuant to paragraph (a)(4) of Rule 1309.1 be set aside. The maximum amount of funds to be set aside would be $25M if no other sources of funds were identified for retrofitting existing school buses. However, the maximum set-aside amount may be reduced as other funds are identified such that the total expenditure for school bus retrofits will be $25M. The $25M estimate assumes that existing funds of $5.3M from the Statewide Lower-Emission School Bus Program will be spent and the set-aside mitigation fees will complement existing or future school bus retrofit programs.
The initial round of applications for retrofitting school buses will be part of the Statewide Lower-Emission School Bus Program request for projects. The allocation of funds will be made on the same schedule as provided in the Lower-Emission School Bus Program. In addition, staff will follow a similar approach as approved by the Governing Board for the purchase of new school buses under the Statewide Lower-Emission School Bus Program, to award the funds for retrofitting existing school buses. The scoring approach will include additional criteria to place a priority on the use of CARB-verified control devices that meet the criteria of the School Bus Program and the age of the school bus. For those school buses that cannot be equipped with the ceramic filter PM10 traps, staff will evaluate the deployment of the oxidation catalyst-only control devices. This would allow for some immediate air quality benefits. If in the future, new technologies were developed for the older 4-stroke and 2-stroke engines, staff would consider upgrading those buses with the oxidation catalyst-only control devices to the newer technologies. Regardless, all control devices eligible for the retrofit funds must be verified by CARB before they are used for retrofitting purposes.
After the initial round of applications, the set-aside funds would be made available to school bus operators on an on-going basis or complement any future school bus retrofit program. This will allow school bus fleet operators to meet the requirements of Rule 1195 or allow school bus operators desiring to accelerate the retrofitting of the existing heavy-duty diesel-powered school buses the ability to do so.
In addition to fund awards, staff will develop a list of engine families eligible for trap retrofitting; review and evaluate the development of newer trap technologies applicable to those engines that cannot be equipped with the current trap technologies; and provide quarterly updates on the progress of the program to the Governing Board Mobile Source Committee.
Fiscal Impact
Staff estimates that up to $25M of mitigation fees collected over the next three years pursuant to paragraph (a)(4) of Rule 1309.1 be set aside to fund the PM10 trap retrofitting of existing heavy-duty diesel-powered school buses. In addition, there would be minor administrative costs associated with administering the program.
Resource Impacts
There are adequate resources to implement the retrofit program. The Statewide Lower-Emission School Bus Program is currently administered in the Technology Advancement Office. It is envisioned that the mitigation fee set-aside would complement the statewide school bus program. For future funding allocations, either the Fleet Rules Implementation Unit or Technology Advancement Office would administer the program.
Recommendation
Staff is requesting that up to $25M from the PM10 mitigation fees collected pursuant to paragraph (a)(4) of Rule 1309.1 be set aside. The total set-aside amount will be a function of future retrofit programs for school buses and funds collected under the Rule 1309.1 mitigation fee program. If additional funds were made available from other programs, then the amount of mitigation fees to be set-aside would be lowered by an equivalent amount maintaining a total of $25M. In addition, staff recommends that the proposed funding process for the PM10 trap retrofitting of existing diesel-powered school buses be approved.
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