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ATTACHMENT 2

Information Item

Date: January 15, 2008

To: Mayor and City Council

From: Elaine Polachek, Director of Community Maintenance

Subject: Reduced-Emissions Policy for Vehicle Purchases

Introduction

This report provides Council information on the City’s Reduced-Emissions Policy for Vehicle Purchases and the types of alternative fuels used by the City. The goals of the policy are to reduce emissions, reduce our use of fuels and to make the most sustainable fuel choices available that are economically practical.

Background

There is no perfect fuel choice for vehicles. and have major negative consequences to environmental and public health, but both have become the overwhelmingly predominant fuels of choice in spite of their drawbacks. Environmental damage is caused at every step of the process to find, produce, transport, refine and use petroleum-based fuels. Increased global use of petroleum fuels and the increasing dependence of the United States on imported petroleum supplies pose significant national security issues. In addition, emissions from the of petroleum fuels is one of the major sources of man-made .

Petroleum fuels are therefore not sustainable. The City of Santa Monica strives to 1 continue and expand its policies and programs to reduce gasoline and diesel use and

switch to less harmful reduced-emission fuels.

With the support of the Council, City staff and the community, Santa Monica has

become one of the world's leaders in successfully incorporating vehicles

and reduced-emission vehicles into its daily operations. On 12/07/93 the City Council

approved the “Reduced-Emissions Fuels Policy for Vehicle Purchases.” Council adopted the Sustainable City Plan in 1994 which called for 70% of the City’s vehicles to be alternatively fuelled by 2010. Approximately 84% of the City's municipal fleet currently operates on alternative fuel and advanced reduced-emission technology.

Reduced-emission technologies currently in use include , biodiesel, , gasoline-electric hybrids, plug-in hybrid, gas and hydrogen . A majority of the Big Blue (BBB) fleet is currently using Liquified Natural Gas (LNG) and the remaining diesel are using a 20% biodiesel blend. Santa Monica has shown that alternative fuels and reduced-emissions technologies work in almost any application.

Discussion

Fuel Definitions and Technologies

Santa Monica utilizes a broad range of alternative fuels and reduced-emissions

technologies in its fleet. The following is a list of each of the technologies and fuels

available along with pros and cons of each, related costs and usage within the fleet.

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Reduced-Emissions

For the purposes of this policy, the term "reduced-emissions" means equipment

technology or a fuel that achieves a greater emissions reduction than the standard

commercially available options. Reduced-emissions options include advanced

technology gasoline or diesel engines, hybrids, electric, exhaust treatment systems and

fuels such as natural gas, hydrogen, biodiesel, propane and . Some equipment

may incorporate more than one technology or fuel to obtain its goal.

Alternative Fuel

South Coast Air Quality Management District (SCAQMD or AQMD) defines an

alternative fueled vehicle as a vehicle or engine that is not powered by gasoline or

diesel fuel and emits emissions at least equivalent to or lower than an Ultra-Low

Emission Vehicle (ULEV), and has been certified by the California Air Resources Board

(CARB). Alternative fuel can include compressed or liquefied natural gas, propane, , electricity, fuel cells, or other advanced technologies that do not rely on

gasoline or diesel fuel.

Advanced Technology

Advanced technology describes emission reduction methods that are not currently

employed on most gasoline or diesel engines. An advanced technology employed

today may become the standard in the future. Examples are hybrids, plug-in hybrids,

exhaust treatment systems and could include additives or electronic controls.

3 Pro- Early access to technology helps prove or disprove it. Usually there is success or valuable knowledge gained.

Con- There is a risk with that they don't work as well as planned or that they may not be supported in the future.

Cost- Demonstration projects typically cover unscheduled costs. There may be minor administrative or repair time that is not covered. Commercially available advanced technology will cost slightly more than standard technology.

Usage – The City uses many different technologies which are described below.

Unleaded Gasoline

Gasoline is the most common vehicle fuel by far in our society and is still the most common fuel used in the City’s vehicles.

Pro - Gasoline is readily available anywhere and almost everyone is comfortable dispensing it. Improvements in other fuel technology can be used to improve gasoline technology.

Con - Environmental, health and national security issues.

Cost - Gasoline is used as a baseline to compare other fuels and technologies.

Usage – Gasoline vehicles are purchased when better options are not available.

Compressed Natural Gas (CNG)

CNG is the same gas that is piped to homes for heating and cooking but it is compressed to 3600 psi to provide more fuel storage in a smaller area. It is consistently the cleanest choice for meeting AQMD and CARB emissions standards. Most of the natural gas used for transportation is a by-product of the oil industry and is still flared-off in some areas as a waste product.

4 Pro - Clean, abundant and domestic. It can be produced sustainably from other waste streams. Systems have been around for more than a decade and are very reliable.

Con - CNG stations are available, but trips need to be planned to avoid running out of fuel. It takes more fuel storage space for the same gasoline or diesel range.

Cost - Incremental costs range from $4,000 at the automobile manufacturer level to $40,000 for heavy-duty truck conversions. Grant funding is available to help offset cost. Fuel cost is about 50% of gasoline.

Diesel

Diesel is the fuel most used by heavy duty trucks and in some countries is used in a

majority of passenger sedans. With recent laws requiring the cleaner Ultra Low

Diesel (ULSD) and engine improvements we will see more diesel powered vehicles in

California and the U.S. This will increase the interest in and use of biodiesel.

Pro- Diesel is readily available anywhere and almost everyone is comfortable dispensing it. Improvements in other fuel technology can be used to improve diesel technology.

Con - Environmental, health and national security issues.

Cost - Diesel is used as a baseline to compare other fuels and technologies.

Usage – All of our diesel equipment is operated on biodiesel, except stationary generators and Fire trucks.

Biodiesel

The first diesel engines ran on biodiesel which, like petroleum diesel, has more power

per gallon than most other fuels. Our biodiesel is made from soy, but it can be made

from just about any oil including mustard, palm, canola, animal , and waste

. Biodiesel is usually referred to as B20 or B99, etc. The B stands for

5 biodiesel and the number is the percentage of biodiesel in the blend. B20 is 20% bio

and 80% petroleum, etc. For this reason the best use of biodiesel would be B99 or

B100, eliminating petroleum altogether.

Pro - Biodiesel is a non-toxic, domestically that is biodegradable and sustainable. It dramatically reduces emissions compared to petroleum diesel, except for Nitrogen Oxide (NOx). There are methods to control the increased NOx emissions that should soon be available commercially.

Con - NOx emission increases are the reason CARB and AQMD do not recognize biodiesel as an alternative fuel. They will not accept any increase in NOx emissions as a trade-off for other emission reductions. The use of biodiesel in older vehicles may cause premature failure of some rubber parts, primarily in pre-1997 engines. Manufacturers are reluctant to warranty the use of biodiesel because of the many home-brewers and small producers that lack quality controls. Controls and testing are necessary to ensure the fuel is high quality and will not damage the engine or fuel system. This makes “home brewing” cost prohibitive. Major fuel providers will stand behind their product, just like petroleum fuel providers, greatly reducing warranty concerns.

Cost - Blended biodiesel is eligible for a tax credit of 1 cent per percent. B20 gets a $0.20 per gallon credit and B99 gets $0.99 per gallon. The blenders pass this credit on to the City and the effective cost of biodiesel is about the same as diesel. B100 is not blended and is not eligible for the blender’s credit. There are no conversion costs associated with the use of biodiesel other than possibly cleaning tanks and changing filters.

Usage - Fleet began using B20 in February 2005 and currently is using B50 in all diesel equipment including medium and heavy duty trucks and off-road equipment like , loaders, portable generators and air compressors. If there are no major issues, we plan to move to B99 around June 2008.

To address the NOx issue, we conducted extensive emissions tests in a lab on one of our medium-duty recycle trucks with different fuel blends. The tests showed the expected decreases in all emissions, except NOx, while operating B20 and B100. NOx had a 3% decrease with B20, which is statistically insignificant. With B100 NOx

6 increased 9% over ultra-low sulfur diesel. These results are consistent with tests done

by National Lab (NREL).

Also, in July 2006 we contracted with the AQMD to test a Selective Catalytic Reduction

Converter with urea injection (SCR) to mitigate NOx emissions on heavy duty trucks

using ULSD, B20 and B100. This project is more than 75% complete and has shown to

be an effective way to reduce NOx with biodiesel.

Fleet will continue to use biodiesel where better alternatives are not available.

The BBB began using B20 in October 2006 in all of its diesel powered buses.

Expensive particulate traps must be added to all diesel buses and warranties may be affected by the use of biodiesel, especially in higher blends.

Liquefied Natural Gas (LNG)

LNG is natural gas that is super-cooled to a liquid. This is done at a plant and the fuel is

trucked in like gasoline and diesel. The fuel is identical to CNG when it gets to the

engine with the same emission benefits.

Pro - LNG is clean, abundant and usually domestic. The size of tanks needed is about the same as that for diesel, so trucks can have a longer range.

Con - LNG requires special training and safety precautions to handle.

7 Cost - Conversion cost is comparable to CNG or a little more. Fuel cost is slightly more than CNG, but much less than diesel.

Usage – Most of our buses operate on LNG and new buses will continue to be LNG in compliance with AQMD Rule 1192.

Electric Vehicles

Electric vehicles have an for propulsion and are zero emission vehicles.

They are plugged into electrical receptacles which can be installed in just about any

location if not already available.

Pro - Studies have shown that even when using coal or other dirty stationary power sources the overall emissions are much less with electric vehicles. Because the City purchases clean, renewable electricity there is no doubt that this should be our first choice to power our vehicles and equipment.

Con - They are not available in many applications. Battery technology is just now improving.

Cost - Initial vehicle cost is usually more, but lifetime costs, including fuel and maintenance costs, are equal or less. Production vehicles should be even more cost effective.

Usage - Fleet has been able to lease full-speed all electric RAV4s from Toyota. These are 2001 – 2003 model year, but still operate flawlessly. We have two full-speed Phoenix Motorcars pick-ups on order and expect delivery in March 2008. Advanced technology Neighborhood Electric Vehicles (NEVs) have recently been purchased for use in Promenade Maintenance are being evaluated by other divisions. The biggest drawback to these vehicles is the law limits them to 25 mph.

Hybrid Vehicles

A uses two or more power sources for propulsion. There are a number of

different technologies that are hybrids, but usually the term refers to the gasoline hybrid

. These typically use a smaller than normal gasoline engine and an

8 electric motor for propulsion. The most popular of these are the Toyota Prius, Honda

Insight and Ford Escape. Hybrids are now available to consumers from many different

manufacturers.

Pro - Increases fuel economy and reduces emissions.

Con - Almost all still use gasoline and they are not yet available in heavy-duty applications where they would have the most impact. Some add horsepower instead of fuel economy.

Cost - May not have a 100% return on investment over standard gasoline engines if intangibles, like health, are not calculated.

Usage - Hybrids are used for applications where there is no suitable . We have Toyota Prius, Honda Insight and Ford Escape hybrids in our fleet and all have been very reliable.

Plug-In Hybrid Electric Vehicles (PHEV)

These are hybrid electric vehicles with a larger battery pack and the capability to charge

the batteries from grid power (a regular receptacle). The vehicle is also modified so that

the electric motor is the sole source of propulsion until a higher speed is reached,

usually about 35 mph. If it is not plugged in the gas engine will charge the batteries. A good application for this is heavy-duty trucks that stop and go.

Pro - This reduces the use of the gas engine and is effectively an electric vehicle at low speeds, but still has the capability to drive the same distance of a standard vehicle.

Con - This is emerging technology and is not yet available to the consumer.

Cost - Currently 30% or more of vehicle cost. Original Equipment Manufacturer (OEM) systems would be much less.

Usage - Fleet operates one plug-in hybrid Prius as a demonstration and is considering a demonstration project with a plug-in electric refuse truck powered by a CNG engine.

9 Bi-Fuel

Bi-fuel vehicles run on two different fuels at different times. We have some pick-ups that run on gasoline or CNG, with the flip of a switch.

Pro - Helps overcome the reluctance to using CNG and could increase range.

Con - Usually the engine is not optimized for either fuel and is not as efficient or reliable as it could be on just one fuel.

Cost - About the same as a regular CNG vehicle.

Usage - Fleet operates 5 bi-fuel pick-ups that run on gasoline or CNG and two lifts that can run on propane or battery power.

Dual-Fuel

Dual-fuel vehicles burn two fuels at the same time. Usually these are heavy-duty diesel engines that use a small percentage of diesel fuel to start the combustion process without spark plugs.

Pro - CNG is used for the bulk of power and provides much cleaner emissions.

Con - These systems have been higher maintenance and are only available in limited applications.

Cost - Initial cost is similar to CNG, but higher maintenance costs.

Usage - Fleet operates 3 dual-fuel transfer tractors.

Blended Fuels

Blended fuels use two fuels to optimize power, MPG and/or emissions. Both ethanol and biodiesel are blended fuels. Propane or hydrogen can be blended with diesel at the air intake. Hydrogen (H2) and CNG are blended to create H/CNG.

10 Pro - H2 can be blended with CNG to increase the range of H2 or further reduce the emissions of an older CNG vehicle.

Con - Initial infrastructure and engine calibration cost are high for H/CNG.

Cost - H/CNG fuel cost is a little more than CNG as only about 20% is H2.

Usage - Currently the only blended fuel in use is biodiesel. A project is being considered that will use H/CNG.

Ethanol

Ethanol is a renewable resource that has lower tailpipe emissions than gasoline. It can

be blended with any amount of gasoline and is currently used in California in place of

MTBE. The typical blend is or 85% ethanol. The reason for this is that the flame of

ethanol is invisible without mixing it with gasoline. Since 1993 some automakers have

been making flexible fuel vehicles capable of using ethanol in any mixture with gasoline.

Pro - Over 250,000 California vehicle owners own this alternative fuel vehicle.

Con - Stations are very limited in California. There is one public ethanol station in San Diego and soon to be one in Brentwood. Manufacturers get credited for building alternative fuel engines even though the fuel is never used in the .

Cost - Vehicle cost is inexpensive at the manufacturer level, about $100 more per car. Fuel cost is about 20 cents per gallon more than gasoline and fuel economy is about 10% less.

Usage - The are no ethanol stations within the City of Santa Monica. If and when one becomes available our ethanol capable vehicles can use this fuel.

Liquid Propane Gas (LPG)

LPG is the most commonly used alternative fuel in the United States. It is a ,

but there are enough domestic supplies to displace a lot of imported oil. Propane has

11 been popular for decades as a fuel for BBQs, refrigerators and stoves in RVs and

indoor forklifts. Because of this it is readily available.

Pro - LPG is cleaner and cheaper than gasoline or diesel and available in almost all areas.

Con - LPG is not quite as clean as natural gas and is only available as a conversion on a few light and medium duty applications.

Cost - LPG is about half the cost of gasoline. Conversion costs are low, $2,000 - $4,000.

Usage - Fleet operates 9 sweepers and 3 forklifts on propane.

Hydrogen (H2)

H2 is the most abundant element on the planet and is the fuel many are hoping will

solve our long-term energy problem.

Pro - H2 produces almost zero emissions in an internal combustion engine (ICE) and zero emissions in a fuel cell (FC). FCs are electric vehicles and many developments in FC vehicles can be applied to electric vehicles.

Con - H2 will not be ready for the consumer market for years or decades, but this does not mean we should ignore it. There is great promise with H2 and the technology development can be used with other fuels.

Cost - The cost of the fuel, the fuel cell and on-board storage must be overcome. Until then H2 should be used in demonstration projects to gain experience and improve technology.

Usage - Fleet operates five H2 Prius with internal combustion engines in a demonstration project and one Honda FCX fuel cell car in a demonstration project.

12 Vehicle Purchasing and Maintenance Responsibilities

The City owns a wide assortment of vehicles and equipment. Historically, BBB and

Fleet Management have been primarily responsible for overseeing vehicle procurement

and maintenance. BBB purchases and maintains their own equipment and maintains

the Fire Department's vehicles. BBB is required to purchase alternative fuel vehicles to comply with the CARB’s "Fleet Rule for Transit Agencies" and AQMD Rule 1192.

Although the law allows non-bus vehicles to be gasoline or diesel fueled, the BBB will continue to purchase reduced-emissions fuel vehicles when available.

Fleet Management purchases and maintains the municipal fleet and the Police

Department fleet. There are several AQMD Fleet Rules that regulate emissions of equipment purchased for use in public fleets which, in effect, require the use of alternative fuel. For those purchases that are not regulated, Fleet will continue to purchase reduced-emissions fuel vehicles when available.

Large stationary generators and small engine equipment such as mowers, small generators and other non-driven equipment are managed by the using divisions, including Park Operations, Facilities Management and Water.

Emergency vehicles of the Fire Department and Police Department are exempt from

requirements of pollution control devices per California Vehicle Code 27156.2. The

Police and Fire Departments are encouraged to purchase reduced-emissions vehicles

for non-emergency applications.

13 Attachment 1 lists the number of vehicles by fuel type in each department.

Reduced-Emissions Fuels Decision Process

The decision of which fuel or technology to purchase depends on regulations, the type

of vehicle and performance requirements, the availability of the fuel or infrastructure,

equipment availability, reliability, costs, emissions and operational needs. For example,

diesel trucks can be purchased and run on biodiesel, but engine manufacturers have

not embraced biodiesel and recommend no more than 1%, 5% or at most 20%

biodiesel. This is still an 80% petroleum fuel. Also, NOx emissions are increased

above petroleum diesel baseline emissions. CNG is a reliable alternative that is

available for most applications and has better emissions. Another example would be

the purchase of electric vehicles. These are the cleanest of all options, but they are not available in most applications.

One more example is the Police Department fleet. For sworn employees, PD requires a longer range and higher speed than CNG vehicles currently provide. These vehicles are now ethanol capable from the factory and when ethanol is available will have very similar performance to gasoline. PD does use reduced-emissions vehicles for non- sworn applications like Parking Enforcement and Community Services.

14 Summary

Because Santa Monica has been an early adopter of technologies we have the advantage of having infrastructure in place for CNG, LNG, hydrogen, propane and electric vehicles. The City has made a sincere effort to purchase reduced-emissions vehicles wherever possible and has one of the highest percentages of reduced- emissions vehicles in any fleet. We will continue to work with regulatory and other agencies, manufacturers, vendors and the community to reduce our consumption of petroleum.

Prepared by: Renee Cowhig, Maintenance Manager Rick Sikes, Fleet Maintenance Superintendent

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Attachment 1 – Number of vehicles, by fuel type, in each department

BI/DUEL BIO- Number of DEPARTMENT CNG LNG Diesel ELECTRIC HYBRID HYDROGEN PROPANE SOLAR UNLEADED % Alt Fuel FUEL DIESEL Vehicles CABLE TV 22 0.0% CITY CLERK 11250.0% FINANCE 415100.0% CITY ATTORNEY 1 1 100.0% ISD 213100.0% PCD 51311222100.0% CCS 91121384.6% LIBRARY 11 0.0% EPWM 3 118 50 8 7 3 2 32 223 85.7% CM 6 97 31 18 6 10 35 203 82.8% Municipal Fleet 9 236 81 40 15 6 13 2 73 475 84.6% PD 40 6 1 1 225 273 17.6% BBB 999 992 2 12 223 94.6% Fire 17 31 48 35.4% City Total 9 285 186 43 17 6 14 2 341 1019 232.2%

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