BOARD MEETING DATE: November 2, 2007
AGENDA NO. 3

RECOMMENDED ACTIONS:

Authorize the Chairman to execute a(n)

1. Contract with California Energy Commission (CEC) to receive funding in an amount of $500,000 to co-sponsor a project with Westport Power Inc., and recognize this funding, upon receipt, into the Clean Fuels Fund;
2. Agreement with the City of Los Angeles and City of Long Beach to receive funding in an amount of $250,000 each to co-sponsor a project with Westport Power Inc., and recognize this funding, upon receipt, into the Clean Fuels Fund;
3. Contract with Westport Power, Inc., to co-sponsor the development, demonstration, and certification of a 2010 compliant LNG heavy-duty truck in an amount not to exceed $2,250,000 from the Clean Fuels Fund.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

In November 2006, the Ports of Los Angeles (POLA) and Long Beach (POLB), in cooperation with the U.S. EPA, CARB, and AQMD, jointly adopted a 5-year Clean Air Action Plan (CAAP) establishing several control measures to reduce emissions from port-related operations. One such measure includes: (1) replacement of older frequent and semi-frequent container caller trucks with LNG trucks that meet or are cleaner than 1.2 g/bhp-hr NOx emissions; (2) retrofitting non-replaceable trucks with the most effective CARB-verified control devices and; (3) research, development, and demonstration activities to identify cleaner technologies for trucks and other port-related emissions sources. A portion of the container caller trucks can now be replaced with LNG heavy-duty trucks powered by Westport Power 1.2 g/bhp-hr NOx High Pressure Diesel Injection (HPDI) engines. The remaining replaceable container trucks can be replaced with LNG trucks powered by 0.8 g/bhp-hr NOx HPDI engine (awaiting EPA certification) or 0.6 g/bhp-hr NOx HPDI engines which are being proposed for development by Westport Power, Inc.

The need to produce commercially-viable fuel-efficient and cleaner than 0.8 g/bhp-hr NOx heavy-duty engines is not only driven by the control measures to replace older trucks serving POLA and POLB by the end of 2011, but has becomes more urgent as the compliance date approaches for 2010 federal emission standards of 0.2 g/bhp-hr NOx. As such, the AQMD is joining efforts with Westport Power, Inc., CEC, POLA, POLB, and Clean Energy to accelerate development, demonstration, and certification of the next generation HPDI natural gas engine to meet the 2010 NOx emissions standard as early as the first quarter of 2009.

Proposal

The proposed project is to develop, demonstrate, and certify an LNG HPDI engine used in Class 8 heavy-duty truck applications at or below 0.6 g/bhp-hr NOx and 0.01 g/bhp-hr PM in early 2008, and 0.2 g/bhp-hr NOx and 0.01 g/bhp-hr PM emissions in the first quarter of 2009.

Westport Power, Inc., is using a 1.2g/bhp-hr NOx 400 hp Cummins ISX HPDI engine as the baseline for their development, demonstration, and certification project, and proposes a two-phase strategy to achieve the federal 2010 heavy-duty NOx and PM emissions standards as early as the first quarter of 2009. The first phase involves using a high capacity exhaust gas recirculation (EGR) system, a variable turbo charger, high pressure natural gas injection, robust controls architecture, an oxidation catalyst, and a particulate filter trap to reduce NOx and PM emissions from the engine to 0.6 and 0.01 g/bhp-hr, respectively. The engine will then be tested for certification and deterioration factor in accordance with the EPA and CARB requirements and integrated into a chassis followed by in-field testing. In the second phase, the 0.6 g/bhp-hr NOx engine will be equipped with a selective catalytic reduction (SCR) system to further reduce NOx emissions to the 0.2 g/bhp-hr NOx target levels. The majority of the work includes selecting, verifying, integrating, and validating the SCR system with the HPDI engine on an LNG heavy-duty truck. The LNG truck will then be demonstrated in service for six (6) months to evaluate performance, reliability, and emissions-reduction potential of the engine with the aftertreatment technology.

This action is for AQMD to enter into an interagency agreement with CEC, POLA, and POLB to receive funding in an amount not to exceed $1,000,000, and recognize this funding, upon receipt, in the Clean Fuels Fund. In addition, this action is for AQMD to enter into an agreement with Westport Power Inc., to co-sponsor the development, demonstration, and certification of a 2010 compliant LNG heavy-duty truck in an amount not to exceed $2,250,000.

Sole Source Justification

Section VII.C.2 of the Policy for Clean Air Incentive Contracts identifies provisions under which a sole source award may be justified. This request for a sole source award is made under provision C.2.c.: the desired services are available from only the sole-source, and provision C.2.d.: Other circumstances exist which in the determination of the Executive Officer require such waiver in the best interest of the AQMD. This request for sole source award is made under provision C.2.c(3): the contractor has ownership of key assets required for project performance, and provision C.2.d(1): projects involving cost sharing by multiple sponsors.

Westport Power, Inc., designs, manufactures, and owns the HPDI technology, an important element for project performance. In addition, Westport Power, Inc. has considerable experience in developing, demonstrating, and testing engines and vehicles with emphasis on emissions, and alternative fuels and related technologies.

Westport Power, Inc., and its partners have secured cost sharing in an amount of $7,644,027.

Benefits to AQMD

The proposed project is included in the 2007 Technology Advancement Plan Update under the category, “Engine Technologies: Develop and Demonstrate Advanced Alternative Fuel Medium- and Heavy-Duty Engines and Vehicles.” The proposed project supports the development, demonstration, and certification of near commercial low-emission heavy-duty alternative fuel engine technology that could potentially reduce NOx and PM emissions from LNG vehicles to the 2010 heavy-duty engine exhaust standards of 0.2 and 0.01 g/bhp-hr, respectively.

Resource Impacts

The total cost for this project is estimated to be $9,894,027 of which AQMD cost shall not exceed $1,250,000 in addition to a total of $1,000,000 in co-funding to be received from CEC, POLA, and POLB. Westport Power, Inc. and Clean Energy will provide the remaining $7,644,027 in direct funding and in-kind contributions. The total estimated cost-share for this project is provided below:

Sufficient funds are available from the Clean Fuels Program 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.