BOARD MEETING DATE: April 5, 2002
AGENDA NO. 9

Recognize Funding from CARB and Execute Contracts for CARB’s Alternative Diesel Fuel Program

SYNOPSIS:

Pursuant to Assembly Bill 2061 (Lowenthal), CARB was allocated $500,000 to distribute to local air districts to pay for the incremental cost of alternative diesel fuel used in heavy-duty vehicles and equipment. These diesel-fuel-water emulsions can reduce NOx emissions by at least 10 percent and particulate matter emissions by at least 60 percent. Following a solicitation, CARB awarded the AQMD a grant in the amount of $177,100 for three alternative diesel fuel projects. Staff recommends executing contracts with Pacific Harbor Line ($8,100), General Petroleum ($69,000), and Maersk Pacific, Ltd. ($100,000).

COMMITTEE:

Technology, February 22, 2002, Recommended for Approval

RECOMMENDED ACTION:

1. Recognize $177,100 from the California Air Resources Board to the General Fund, and Appropriate that amount from the Undesignated Fund Balance to the Science & Technology Advancement FY 2001-02 Professional and Special Services Account.
   
    
2. Authorize the Chairman to execute a contract with Pacific Harbor Line to offset the incremental cost of alternative diesel fuel in an amount not to exceed $8,100 contingent upon receipt of grant.
   
    
3. Authorize the Chairman to execute a contract with General Petroleum to offset the incremental cost of alternative diesel fuel in an amount not to exceed $69,000 contingent upon receipt of grant.
   
    
4. Authorize the Chairman to execute a contract with Maersk Pacific, Ltd. to offset the incremental cost of alternative diesel fuel in an amount not to exceed $100,000 contingent upon receipt of grant.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Pursuant to Assembly Bill 2061 (Lowenthal), $500,000 was appropriated to CARB for allocation of grants to local air districts to subsidize the cost of alternative diesel fuel used in heavy-duty vehicles and equipment, marine vessels, locomotives, stationary agricultural irrigation pump engines, forklifts, and airport ground support equipment. CARB refers to this program as the Alternative Diesel Fuel Program. Through this program, CARB would provide air districts with funds to pay operators of qualifying projects the incremental cost of alternative diesel fuel over conventional diesel fuel. Alternative diesel fuels are currently being introduced into the market and have been formulated for use in existing diesel-powered vehicles and equipment, without hardware add-ons, engine modifications or replacements. For purposes of the Alternative Diesel Fuel Program, CARB defines alternative diesel fuel as an emulsified fuel that, when used in conventional diesel engines, reduces NOx emissions by at least 10 percent and particulate matter emissions by at least 15 percent. At this time, PuriNOx, manufactured by Lubrizol Corporation, is the only verified alternative diesel fuel. This fuel has been verified by CARB to reduce NOx emissions by 14 percent and particulate matter emissions by 62.9 percent.

CARB solicited and evaluated applications submitted by air districts to receive funding from the Alternative Diesel Fuel Program. The AQMD has been qualified to receive a grant award from CARB in the amount of $177,100 for three alternative diesel fuel (PuriNOx) projects. Upon acceptance of this grant award, the AQMD will be responsible for program administration, including monitoring the funded projects to ensure that the expected emission reductions occur and the vehicles and/or equipment are operated pursuant to the application. AQMD staff will also be responsible for submitting a report to CARB for each of the projects funded. The report shall include the incremental cost of the alternative diesel fuel and additional documentation concerning operability, maintenance, alternative diesel fuel consumption, and operating routes.

Proposal

Staff proposes to provide total funding of $177,100 to offset the incremental cost of alternative diesel fuel (PuriNOx) used by the following three projects:

1) Pacific Harbor Line - $8,100 for PuriNOx used over 1 year,
2) General Petroleum - $69,000 for PuriNOx used over 2 years, and
3) Maersk Pacific, Ltd. - $100,000 for PuriNOx used over 1 year.

The Pacific Harbor Line project will operate one (1) Switcher locomotive on PuriNOx fuel for a period of one year. The Switcher locomotive is manufactured by General Motors, and is equipped with a 1,200 HP engine. The estimated amount of PuriNOx fuel consumed by the Switcher locomotive will be approximately 32,400 gallons over the one-year period. The fuel storage/dispensing station for the Switcher locomotive will be on-site. The AQMD grant will pay up to 25 cents per gallon of PuriNOx fuel consumed by the locomotive over the one-year period not to exceed a total of $8,100. The emission reduction benefit associated with this project is estimated to be 0.54 tons of NOx emission reductions and 0.23 tons of particulate matter emission reductions.

The General Petroleum project will operate ten on-road heavy-duty vehicles on PuriNOx fuel for a period of two years. The vehicles include seven stake bed trucks, two tank wagons, and one box van. The estimated amount of PuriNOx fuel consumed by the ten vehicles will be approximately 276,000 gallons over the two-year period. The fuel storage/dispensing station for the vehicles will be on-site. The AQMD grant will pay up to 25 cents per gallon of PuriNOx fuel consumed by the ten vehicles over the two-year period not to exceed a total of $69,000. The emission reduction benefit associated with this project is estimated to be 3.29 tons of NOx emission reductions and 0.43 tons of particulate matter emission reductions over the two-year period.

The Maersk Pacific, Ltd. project will operate at least 50 off-road, heavy-duty vehicles and/or equipment on PuriNOx fuel for a period of one year. The PuriNOx fuel will be used in a variety of marine terminal equipment, such as utility tractors and other equipment used to handle cargo containers, at the Port of Long Beach and/or Port of Los Angeles. These vehicles and/or equipment are equipped with engines rated at between 195 to 620 HP. The estimated amount of PuriNOx fuel consumed by this project will be approximately 669,300 gallons over the one-year period. The fuel storage/dispensing station for the vehicles and/or equipment will be on-site. The AQMD grant will pay up to 25 cents per gallon of PuriNOx fuel consumed by the vehicle and/or equipment over the one-year period not to exceed a total of $100,000. The emission reduction benefit associated with this project is estimated to be 11.16 tons of NOx emission reductions and 4.79 tons of particulate matter emission reductions.

Benefits to AQMD

The successful implementation of this program will reduce NOx emissions by approximately 13.35 tons per year and particulate matter emissions by approximately 5.24 tons per year from on- and off-road heavy-duty vehicles and/or equipment. These projects will also produce concurrent toxic compounds emissions reductions, which is an additional benefit.

Resource Impacts

Total cost of the proposed projects is $177,100. The AQMD is expected to receive the funds from CARB in the amount of $177,100 to implement the program.

The funds received from CARB will be placed in the General Fund, and will be appropriated from the undesignated fund balance to the Science & Technology Advancement FY 2001-02 Professional and Special Services account for these projects.

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