BOARD MEETING DATE: July 11, 2003
AGENDA NO. 4

Execute Contract to Cosponsor Demonstration Program to Convert Ten Gasoline-Fueled, Sport Utility Vehicles to CNG-Fueled, ULEVs

SYNOPSIS:

As part of the overall efforts to expand the deployment of alternative fueled vehicles in the South Coast Air Basin, the AQMD has supported the demonstration and deployment of alternative fueled engines technologies for various vehicle applications. The sport utility vehicle (SUV) is one vehicle type where alternative fueled engine technology has not been widely applied. AQMD staff is proposing to demonstrate the viability of converting gasoline-fueled SUVs to run on natural gas. Evo Transportation, Inc. with funding assistance from the AQMD and buy-down incentives from General Motors will develop a highly visible, small-scale chartered limousine fleet of ten SUVs converted to run on CNG. Staff recommends AQMD’s participation in this contract, with cofunding of $100,000. Total cost of this project is estimated at $450,000.

COMMITTEE:

Technology, June 27, 2003, Recommended for Approval

RECOMMENDED ACTION:

Authorize the Chairman to execute a contract with Evo Transportation, Inc. to convert ten gasoline-fueled, full-length sport utility vehicles to compressed natural gas (CNG) vehicles in an amount not to exceed $100,000 from the Clean Fuels Fund.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Over the course of the last decade, natural gas has emerged as a leading low-emission alternative fuel technology for both stationary and mobile source applications. Based on the most recent emission inventory and toxic air pollution studies, mobile sources are the predominant contributor to ozone and fine particulate precursor emissions and the public’s exposure to toxic air contaminants in Southern California. As a result, AQMD has aggressively pursued emission reductions from the mobile source sector.

The request proposes funding a technology demonstration and public outreach program to demonstrate the commercial viability of converting gasoline-fueled SUVs to natural-gas powered, ultra low emission (ULEV) SUVs, and exhibit these vehicles via limousine applications.

Proposal

The proposal is to co-fund a clean-fuels demonstration project that will promote the viability of alternative-fueled vehicles through a highly visible medium, and facilitate a public outreach of low-emission technologies. The medium recommended is a transport chartered party (TCP) company which sees itself as an environmentally focused pioneer in the upscale, SUV-class limousine industry, and provides service to high profile clientele. Staff recommends that funding be provided in two phases. The AQMD would provide co-funding for the conversion of five SUVs in each phase, with funding for the second phase contingent upon successful implementation of the first phase. The AQMD’s contribution to this project would primarily fund the cost of the retrofit conversion equipment.

Limousines are a highly visible industry in Southern California, and draw significant public attention. As such, limousines could serve as a leader in demonstrating the viability of natural gas-fueled vehicles and the natural gas vehicle program. The SUV class of limousine service is gaining increased popularity, especially in the entertainment industry, and with younger clientele. On the part of the industry, this demonstration program could also serve to counter publicity the SUV class continues to receive due to their low fuel economy and high emission output.

Evo Transportation Corporation (Evo) is a Los Angeles-based limousine service company which began operation in February 2002 and became incorporated in September 2002. Evo launched its operation with two gasoline converted, natural gas powered SUVs on March 23, 2003 to coincide with the Academy Awards presentations, and is marketing itself as an environmentally-based corporation that "runs on clean, domestic, readily available fuel." Evo’s marketing objective is to build a customer base of influential companies and trend-setting individuals, specifically major motion picture studios, television studios, record label companies, production companies, entertainment and media agencies, management companies, and influential executives and entertainment VIPs. In addition, Evo is engaging various progressive companies as business partners, e.g. Jet Blue Airlines, and entertainment industry-based environmental groups like Earth Communications Office (www.oneearth.org), Environmental Media Association (www.ema-online.org), and the Center for Energy Efficiency and Renewable Technologies (www.ceert.org).

Evo indicated that it shares a common objective with the AQMD: to advance the awareness, use, development, and expansion of clean fuel vehicles in Southern California. This project would facilitate public outreach of low-emission technologies in the airport transportation sector as well as introduce ultra low-emission (ULEV) natural gas vehicle technology in an application where natural gas vehicles are not currently utilized. Specifically, the project will demonstrate the viability of CNG retrofit technology on a conventionally fueled, full-length, heavy-duty, 6.0 liter powered SUV. The demonstration program would complement current AQMP efforts to promote technologies that could lead to significant further air pollution benefits in the mobile source sector. Evo will use a variety of advertising methods to increase the awareness and importance of reducing ground transportation emissions, educate its clientele and the public about the viability of clean fuels, and help improve public perception of natural gas-powered vehicles.

Evo approached AQMD staff with a proposal to convert ten full-length GMC 2500 SUVs from gasoline-fueled engines into, customized, CNG-powered limousines. The conversion system will use retrofit technology developed by Baytech Corporation that is CARB certified as ULEV (Test Group 3BYTT06.0218). The company’s mechanical and technical staff have been trained and certified by Baytech Corporation technicians on the installation, operation and maintenance of the CNG retrofit conversion of the GMC 2500 Yukon XL. Evo has already converted one of these vehicles to a CNG-powered limousine which it showcases to prospective clients in Southern California, including record label companies, movie studios, TV production companies and agencies, VIPs and celebrities (this vehicle was recently on display at the National Clean Cities Conference in Palm Springs).

Benefits to AQMD

Natural gas has emerged as a leading low-emission alternative fuel technology in both stationary and mobile applications. This project would complement existing efforts in promoting natural gas technology, as well as facilitate a public outreach effort to businesses which fall both inside and outside the scope of AQMD fleet rules. In addition, this project would demonstrate the commercial viability and visibility of retrofit technology in this very important element of the transportation sector.

Sole Source Justification

Evo Transportation, Inc. qualifies as a sole source for this project under Section VIII, Part 2(c) of the SCAQMD Procurement Policy and Procedures. Part 2(c) reads as follows:

The desired services are available only from the sole-source based upon one or more of the following reasons:

(1) The unique experience and capabilities of the proposed
      contractor or contractor team;
(2) The project involves the use of proprietary technology;
(3) The contractor has ownership of key assets required for project
      performance.

Evo is unique in the experience and capabilities required for this project. Specifically, Evo is currently the only transport chartered party (TCP) company in Southern California which operates full-size, heavy-duty, CNG-fueled SUVs, and is fully trained by the OEM to install and maintain the CNG conversion equipment required in this demonstration project and on other vehicles.

Resource Impacts

The total cost for this project is estimated at $450,000 and would result in ten CNG-powered vehicles. The amount of AQMD co-funding shall not exceed $100,000 or 22% of the total project cost. Although this ratio is relatively low compared to other cost-sharing projects, significant benefits are expected from the success of this demonstration project.

The cost-sharing for the ten vehicles is summarized in the table below.
 

Sufficient funds are available from the Clean Fuels Fund, established as a special revenue fund resulting 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 sources to support projects to increase the utilization of clean fuels, 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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