ATTACHMENT 2 Information Item Date: January 15, 2008 To: Mayor and City Council From: Elaine Polachek, Director of Community Maintenance Subject: Reduced-Emissions Fuels Policy for Vehicle Purchases Introduction This report provides Council information on the City’s Reduced-Emissions Fuel 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 petroleum fuels and to make the most sustainable fuel choices available that are economically practical. Background There is no perfect fuel choice for vehicles. Gasoline and diesel fuel 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, carbon dioxide emissions from the combustion of petroleum fuels is one of the major sources of man-made greenhouse gas emissions. 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 alternative fuel 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 natural gas, biodiesel, propane, gasoline-electric hybrids, plug-in hybrid, hydrogen gas and hydrogen fuel cell. A majority of the Big Blue Bus (BBB) fleet is currently using Liquified Natural Gas (LNG) and the remaining diesel buses 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. 2 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 ethanol. 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, methanol, 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 Sulfur 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 fat, algae and waste cooking oil. 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 renewable resource 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 tractors, 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 Renewable Energy 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.