7San Joaquin Valley I d AIRPOLLUTION CONTROL DISTRICT HEhrThI' AIRLlVlNK

GOVERNUYBBOARD

TonyBarba, Chair Supervisor.Kinp County

J. StevenWorthley, Vice Chair DATE: December 16, 2010 Supervisor.Tulere County

Judith6. Caw TO: SJVUAPCD Governing Board Supervisor,Fresnri County

RoanDominki FROM: Seyed Sad redin, Executive Supervisor.Medera County project Coordinator: Samir Sheikh Hwrv JayFornan, Ph.D. ' Appointedby Governor RE: APPROVAL OF PROJECT SELECTIONS AND

AnnJohnston ADDITIONAL FUNDING FOR THE DISTRICT'S Mayor,City ol Stockton TECHNOLOGY ADVANCEMENT PROGRAM (TAP)

MikeLane Councilmember,City of Visalii RECOMMENDATIONS: AandyMiller Councihnember,City of Taft 1. Approve the selected projects from the District's Technology WllliamO'Brien Advancement Program's (TAP) Request for Proposals and Supervisor,Slenislaus County authorize the Executive DirectorIAPCO, on behalf of your Board, LeroyOrnellas to execute agreements with the Board Chair's signature for the Supervisor,Sen Joaquin County following projects: JohnG. Tellss,M.D. Appointedby Governor a. $1 51,499 for Engine, Fuels, and Emissions Engineering, ChrisVlerrr Incorporated's proposal to demonstrate a engine Councilmember,City of Cwes selective catalytic reduction (SCR) system.

HubWalsh Supervisor.Merced County b. $300,000 for Tenneco Automotive Operating Company Inc's proposal to demonstrate a hydrocarbon Lean NOx Catalyst RaymondA. Watson Supervisor,Kern County (HC LNC) System for diesel engines.

Vacant SmallCity Representative, Kings County c. $258,000 for Terex Corporation's proposal for demonstration of a plug-in hybrid wheel loader in a dairy application.

SeyedSadredin ExecutiveDirsctor d. $140,000 for City of Fresno's proposal to purchase one new Air PollutionControl Officer and retrofit one existing side loading refuse truck with hydraulic hybrid system. NorthernRqion Office 4800Enterprise Way Modesto,CA 95388-8718 e. $250,000 for Solar Storage Company's proposal to 12091557-6400 (209)557-6475 FAX demonstrate their Distributed, On-Demand Solar (DODS)

CentralRegion Office thermal system on an irrigation pump. lOQ0East Gettpburg Avenue Fresno,CA 93726-0244 (559)230-8000 FAX (559) 230.6061 f. $100,501 funding for FlexEnergyls proposal to demonstrate their Flex Powerstation for ultra-low NOx emissions utilizing SouthernRegion existing landfill gas currently being flared. 34946 FlyaverCourt Eakersfiekl,CA 93300-9725 (661) 392-SO0FAX (661 ) 392-5585 SJVUAPCD Governing Board APPROVE PROJECT SELECTIONS AND ADDITIONAL FUNDING FOR THE TECHNOLOGY ADVANCEMENT PROGRAM December 16, 2010

2. Authorize the Executive DirectorIAPCO, on behalf of your Board, to select projects identified in this Request for Proposals if one or more of the above projects is unable to accept the funding offered, or to reallocate funding to future competitive selections.

3. Accept United States Enviro~ime~italProtection Agency funds in the amount of $400,000 for technology advancement projects, and approve the attached Budget Resolution to amend the 2010-1 1 District Budget to appropriate $400,000 in unanticipated revenue.

4. Allocate $1,400,000 for the next Technology Advancement Program Request for Proposal to solicit additional demonstration projects for advanced emission reduction technologies.

BACKGROUND:

Despite major reductions in emissions and corresponding improvements in air quality, San Joaquin Valley continues to face difficult challenges in meeting the federal ambient air quality standards. As an extreme non-attainment area for ozone, the District's 2007 Ozone Plan contains a "black box" that represents necessary reductions in emissions for which a technology has not yet been identified. At the same time, the United States Environmental Protection Agency (EPA) is in the process of promulgating tougher ambient air quality standards. It is virtually impossible for the San Joaquin Valley to attain the new standards for ozone and particulates without significant advancements in low-emission technologies for mobile and stationary sources.

On March 18, 201 0, your Board approved the District's Technology Advancement Program, a strategic and comprehensive program to identify, solicit, and support technology advancement opportunities. The program's primary goal is to advance technology and accelerate the deployment of innovative clean air technologies that can bring about emission reductions as rapidly as practicable. With that approval, your Board allocated $900,000 for the first Technology Advancement Program request for proposals (RFP). To that end, District staff issued a competitive RFP on June 3, 2010. An additional $300,000 in previously appropriated funding for innovative clean diesel projects was identified, making $1.2 million available to fund projects identified by this RFP.

DISCUSSION:

In response to the Technology Advancement Program's RFP the District received proposals for twelve projects. The proposals included multiple projects from each of the three technology focus areas identified for the program; renewable energy, waste to energy, and mobile sources. SJVUAPCD Governing Board APPROVE PROJECT SELECTIONS AND ADDITIONAL FUNDING FOR THE TECHNOLOGY ADVANCEMENT PROGRAM December 16. 2010

The projects were scored in five weighted categories, with a maximum possible of 100 points. Of the twelve proposals received three were deemed ineligible for failing to meet the terms of the RFP. The remaining nine were each ranked by a District scoring committee.

Scoring Categories

Relevance to Plans (30 points)-This category includes an assessment of the benefit provided by a proposed technology in assisting the Valley corr~plywith federal air quality standards, particularly for ozone and particulates. Important factors include the size of the source category that might benefit from the technology, and the potential emission control effectiveness of the technology. Another consideration includes the potential for the source category potentially benefitting from the proposed technology to significantly grow, and thus require the need for additional emissions reductions.

Co-Benefits (20 Points)-This category includes an assessment of other emissions benefits provided by a proposed technology, in addition to those that assist the Valley in complying with federal air quality standards assessed under Relevance to Plans. -This includes toxic air contaminants, green house gases, and nuisance emissions. Cases where a proposed technology could cause other emissions increases would be assessed unfavorably in this category.

Technology Cost-effectiveness (20 points)-This category includes an assessment of the expected cost-effectiveness of a proposed technology, including the economic viability of a proposed tech~iologyupon commercialization. Information used to make this assessment includes the projected cost of the technology, and the expected control effectiveness of the technology. Final scores in the category were influenced by how well information was justified through supporting documentation.

Funding Requested and Leveraging (20 points)-This category includes an assessment of the value a proposed project contains in terms of requested funding, the percentage of the total project cost that represents, and the amount of non-District funding and other resources being brought into the project. Final scores in this category were influenced by how well funding and leveraging commitments were justified through supporting documentation.

National Significance (10 points)-This category includes an assessment of the applicability of a proposed technology in meeting national needs. The technology transfer potential of a project is considered in this category as it expands the potential impact of a technology on a national scale. National significant was a key scoring factor for this RFP due to funding from federal EPA. SJVUAPCD Governing Board APPROVE PROJECT SELECTIONS AND ADDITIONAL FUNDING FOR THE TECHNOLOGY ADVANCEMENT PROGRAM December 16, 2010

The scoring process resulted in the following ranking and recommendation to fund the top six projects at the levels indicated in the table below:

Recom- Percentage of Percentage of Average mended Total Project Requested Company Score Funding 1 Cost Funding Engine, Fuel, and Emissions Engineering, Incorporated 73.25 $151,499 6% 100% - Tenneco 64.50 $300.000 16% 100% Terex 64.00 $258.000 35% 100% City of Fresno 58.75 $140.000 37% 100% Solar Storage Company 57.75 $250,000 19% 50% FlexEnergy 48.75 $100,501 5% 34%

Oorja Protonics 45.50 $0 - - Technologies Inc 33.75 $0 - - Go Go Green World. Inc. 10.50 $0 - -

Your Board's approval of this item will enable Staff to finalize contracts with the applicants. Two of the proposed projects are recommended for funding at a lower level than is requested in their proposals.

Proposal Summaries

Engine, Fuel, and Emissions Engineering, Inc. (EF&EE) Rancho Cordova, CA Waste to Energy Technology Focus Area

EF&EE Proposes to demonstrate an advanced compact SCR device on a biogas powered engine to be installed at Joseph Gallo Farms in Atwater, CA. This innovative next step in SCR technology is expected to reduce emissions from biogas power generation systems to ultra low-NOx levels. The proposed system will include advanced monitoring and reductant metering equipment to prevent ammonia slip, and reduce or eliminate the need for an ammonia slip catalyst. The slip catalyst has been the primary source of NOx in their system as installed previously. The system with advanced metering is expected to reduce NOx emissions further than the current implementations of ,the technology.

This proposal was the highest ranking overall proposal. The new technology has a low cost relative to the anticipated emission reductions, resulting in good cost-effectiveness. Additionally the low project cost and the large amount of resource leveraging in the form of capital and the additional equipment invested in the balance of the digester project lend to a strong leveraging score. The proposed technology affects a potentially large inventory in the Valley, with statewide effort being made to increase the number of SJVUAPCD Governing Board APPROVE PROJECT SELECTIONS AND ADDITIONAL FUNDING FOR THE TECHNOLOGY ADVANCEMENT PROGRAM December 16, 2010 biogas projects, this leads to strong scores in the relevance to plans and co-benefit categories.

Tenneco Automotive Operating Company, Inc. Grass Lake, MI Mobile Sources Technology Focus Area

The project proposed by Tenneco is to demonstrate a hydrocarbon lean NOXcatalyst in off-road construction engines with an overall NOx conversion level greater than 70%. This new technology will enable effective NOx aftertreatment without requiring urea, and the associated infrastructure requirements, allowing for more rapid and widespread adoption. The proposed system will be capable of operating from or Diesel as a reductant precursor, rather than urea. Tenneco has licensed the catalyst technology from GE to utilize in this market segment. The technology has infrastructure and cold weather advantages over urea based systems. Funding will allow the demonstration of two systems in the Valley.

This technology is beneficial in addressing a significant segment of the Valley's emissions inventory, resulting in a very strong relevance to plans score. Low relative cost for the technology once commercialized results in highly competitive technology cost-effectiveness. Additionally, the proposal indicates a significant amount of leveraged funding providing a high score in the funding requested and leveraging category.

Terex Corporation Westport, CT Mobile Sources Technology Focus Area

The project proposed by Terex is to collaborate with US Hybrid and CALSTART to convert a Terex OEM wheel loader to plug-in hybrid operation, and identify fuel savings and emission reductions. Hybrid electric technology which has been available in the light-duty vehicle category in the past it is only recently being applied to the off-road segment. This technology will advance the transfer of this technology into this category, and serve to verify and quantify the emission reductions associated with the system. The wheel loader will be tested at Maddox Farms, a dairy located in Fresno County. The proposed hybridization includes electric-only operation, idle elimination, and provides power for electric attachments.

This proposal is also beneficial in addressing a significant segment of the inventory, with many opportunities for technology transfer giving this project a strong score in the relevance to plans category. With the fuel usage and associated green house gas reductions, this proposal also has a strong score in the co-benefits category. The expected fuel savings will reduce the cost of ownership for the technology resulting in good overall cost-effectiveness. SJ VUAPCD Governing Board APPROVE PROJECT SELECTIONS AND ADDITIONAL FUNDING FOR THE TECHNOLOGY ADVANCEMENT PROGRAM December 16, 2010

City of Fresno Fresno, CA Mobile Sources Technology Focus Area

The City of Fresno project proposes to retrofit parallel hydraulic hybrid drive trains onto one existing and one new liquefied powered refuse trucks. A successful demonstration of this system as a retrofit will provide the information necessary to develop an incentive program for the broader deployment of this retrofit technology to refuse fleets throughout the Valley. The hybrid system will be manufactured by Bosch- Rexroth, American LaFrance, who will play a key technical role, while Fresno Truck Center will perform the installation and maintenance. In addition to the fuel savings and emissions benefits, the key benefit of this technology is its ability to cost-effectively be retrofitted into an existing chassis, allowing a more rapid adoption of the technology compared to relying on fleet turnover.

This proposal provides good potential benefits in reducing emissions from medium heavy-duty mobile sources. Potential for significant fuel savings resulted in highly competitive co-benefits, and cost-effectiveness categories. In addition to the funding leveraged by this project, there is additional significant investment in utilizing the existing refuse fleet as a test bed for the technology. This project is a good fit for EPA funding identified through the West Coast Collaborative Innovations in Clean Diesel program funds previously appropriated for the advancement of hydraulic hybrid technology, and reductions in diesel emissions.

Solar Storage Company Redwood City, CA Renewable Energy Technology Focus Area

The Solar Storage Company proposal is to demonstrate a renewable solar power generation system as an alternative option for remote diesel-powered agricultural irrigation pumping systems through the combination of a thermal solar concentration system with two reciprocating steam engines and a pressurized steam storage system. While many of the Valley's agricultural pumping engines have been electrified, there remain a number of installations which are not cost-effective to electrify due to their far proximity from, and lack of, electrical infrastructure. This technology provides an opportunity to virtually eliminate diesel combustion emissions utilizing renewable solar power for these remotely located agricultural irrigation systems. The proposed project will be installed in parallel to a diesel backup power system to operate the pump in cases where there is a need for emergency freeze protection occurring with two cloudy days in a row. The proposal indicates that the meteorological conditions that prevent the solar use for that case is rare and only accounts for 1% of the pumping time of a typical agricultural irrigation pump. As a result the project will result in a 99% reduction in errrissions including diesel particulates, NOx, and green house gasses. SJVUAPCD Governing Board APPROVE PROJECT SELECTIONS AND ADDITIONAL FUNDING FOR THE TECHNOLOGY ADVANCEMENT PROGRAM December 16, 2010

This project has good potential benefits for reducing criteria emissions, as well as significant co-benefits in its potential to reduce green house gases while expanding renewable energy options. While the applicability of the technology is focused on agricultural pumping engines, successful demonstration of the technology may prove a low cost thermal storage alternative for additional applications reducing the barrier to adoption of solar thermal technology. Additionally, significant resource leveraging provided a strong score in that category. A few challenges to examine through this demonstration project include the potential high capital cost and large required footprint.

FlexEnergy Inline, CA Waste to Energy Technology Focus Area

The proposed FlexEnergy project is for the demonstration of an ultra low NOx system capable of accepting low quality gas, including landfill, biogas, and stranded oilfield gas that is too dilute to utilize in current systems. The proposed system improves upon thermal oxidizer technology utilizing the heat generated in the system in a gas turbine for electricity generation. FlexEnergy anticipates the system having emissions of 1 to 0.5 ppm NOx at 15% 02, translating to 0.07 to 0.03 IbIMWh, meeting or exceeding the NOx standard for systems. There are several potential sites for this demonstration project, including a landfill in Fresno County, landfill in Kern County, and an oilfield in Kern County.

The technology was extremely competitive in the co-benefits category based on the technology potentially enabling digester technology, in addition to utilizing a variety of otherwise untenable fuel sources. The cost-effectiveness was hindered by high uncertainty on the costs of the technology, and there was a high degree of uncertainty in the leveraged resources identified in the proposal.

Other Proposals

In addition to these projects, there were three proposals not recommended for funding. While some of these projects had strong merits, not all of them could be selected with the current funding. The applicants will be encouraged to resubmit their projects for future funding opportunities, and District staff will work with the applicants to identify opportunities for enhancing project proposals. These projects were:

Oorja Protonics, 1nc.-Deployment of 80 high power direct methanol systems as on-board battery chargers for forklifts at two food warehouses

Hydrogen Technologies, 1nc.-Development of a feasibility study hoping to show the potential for an innovative zero emissions hydrogen fueled boiler that utilizes a pressurized chamber to combust hydrogen and oxygen in a nitrogen free environment eliminating NOx production SJVUAPCD Governing Board APPROVE PROJECT SELECTIONS AND ADDITIONAL FUNDING FOR THE TECHNOLOGY ADVANCEMENT PROGRAM December 16, 2010

Go Go Green World, 1nc.-Demonstration of an electrolysis based hydrogen fuel augmentation system.

Additional TAP Funding and Request for Proposals

The District has been working to identify additional funding for technology advancement through available grant and partnership opportunities. As part of this effort, the District has been working closely with EPA in developing the Clean Air Technology Initiative, an interagency partnership focused on the development of advanced emission reduction technologies. This partnership has resulted in an additional funding opportunity from EPA for the purpose of technology advancement in the amount of $400,000. Additionally, the District has available an additional $1 million of local funds in the 201 0- 11 Budget that may be used for technology advancement projects.

Through these funds, the District seeks to open a second corr~petitiverequest for proposals (RFP) for new projects in the first quarter of 201 1. Successful outreach during this past year in the course of launching the District's Technology Advancement Program considerably expanded awareness of the program with potential technology partners and other agencies. If approved by your Board, this upcoming funding opportunity will benefit from this successful outreach, with significant interest expected from potential partners.

FISCAL IMPACT:

Approval of the attached Budget Resolution will amend the 201 0-1 1 District Budget and appropriate $400,000 of additional EPA funding to be used for the purpose of funding technology advancement projects. Of the $400,000, EPA has provided administrative funds in the amount of $20,000 to offset the District's cost to administer the grant. The District currently has funding available for the additional $1,000,000 allocation for technology advancement projects through funds generated from District Rule 4320 (Advanced Emission Reduction Options) appropriated to "Community and Other Incentives." There is no additional impact to the 201 0-1 1 budget..

Attachment: Budget Resolution - (3 pages) BEFORE THE GOVERNING BOARD OF THE SAN JOAQUIN VALLEY UNIFIED AIR POLLU'TION CONTROL DIS'TRICT

N THE MATTER OF INCREASING THE RESOLLITION NO. 10-12-20 ?OlOlll DISTRICT BUDGET $400,000 =OR THE RECEIPT OF ADDITIONAL EPA =UNDS FOR TECHNOLOGY ADVANCMENT PROGRAM

WHEREAS, the San Joaquin Valley Unified Air Pollution Control District (District) s a duly constituted unified district, as provided in California Health and Safety Code sections 401 50 to 401 61, and; WHEREAS, the District is authorized by California Health and Safety Code ;ection 40702 to make and enforce all necessary and proper orders, rules and -egulations to accomplish the purpose of Division 26 of the Health and Safety Code, 3nd; WHEREAS, the District is authorized to participate in, and agrees to comply with the requirements of, ,the Environmental Protection Agency (EPA) additional funding for Technology Advancement Program, and; WHEREAS, the District has agreed to administer EPA funds in the amount of $400,000, and; WHEREAS, monies for these EPA funds were not reflected in the Appropriations and Estimated Revenues of the 201 011 1 District Budget, and; NOW, THEREFORE, IT IS ORDERED THAT the District's Director of Administrative Services is authorized to increase the 201 011 1 District Budget as follows: APPROPRIA-TIONS:

NON-OPERATING - INCENTIVE PROGRAMS EPA Incentive Programs - Federal 402-8576-350-1 00 TOTAL INCENTIVE PROGRAMS TOTAL APPROPRIATIONS

SJVUAPCD 1990 E. GETrYSBURG AVENUE FRESNO. CA 93726-0244 BE IT FURTHER RESOLVED 'THAT, the Director of Administrative Services is ordered to adjust the following: DISTRICT RESERVES:

FIB Reserve - EPA lncentive Programs 402-31 10-350-100

TOTAL RESERVES INCREASED $ 20,000

BE IT FURTHER RESOLVED THAT the estimated revenues for the 201011 1 District Budget be adjusted as follows: ES-I-IMATED REVENUES NON-OPERATING REVENUE

Federal - EPA lncentive Programs 402-4350-350-1 00

TOTAL NON-OPERATING REVENLIE

OPERATING REVENUE

Admin Fees - EPA lncentive Programs 100-4493-000-100

TOTAL OPERATING REVENLIE

TOTAL ESTIMATED REVENUES

Cindi ~ahm Director of Administrative Services

THE FOREGOING was passed and adopted by the following vote of the Governing Board of the SAN JOAQUIN VALLEY UNIFIED AIR POLLU-I-ION CONTROL DISTRICT this 16Ihday of December, 2010, to wit:

SJVUAPCD 1990 E. GETTYSDURG 2 AVENUE FRESNO, CA 93726-0244 ATTACHMENTA - BUDGET RESOLUTION AYES: Doninici, Case,Walsh, Watson, Lane, Miller, Forman, Worthley, O'Brien, Omellas, Johnston, Vierra, Barba NOES: None

ABSENT: Telles /I

SAN JOAQUIN VALLEY UNIFIED O%QLAIR OLLU-TION CONTROL DIS-TRICT Tony Barba, Chair Governing Board

Ierk to the Gover

3~ Michelle Franco

SJVUAPCD 1990 E. GETTVSIlURG 3 AVENUE ATTACHMENT BUDGET FRESNO. CA 93726-0244 A - RESOLUTION