Moving AwayDepartment of the Environment

Moving Away …From Stage II Vapor Recovery

2014 Stage II Regulations Stakeholder Meeting – June 16, 2014

Topics Covered• Background• Current Thinking on• Current Thinking on

Regulation– Three Options

• One option that includes Electric Vehicle (EV) investment in a more mandatory way

• One option that has EVs as a voluntary option

• One option that has the EV pconcepts totally separate from the regulation

• Discussion• Discussion• Next Steps/Schedule

Background• On July 8, 2011 EPA issued guidance that

allows states to eliminate Stage II Vapor Recovery programs when on-board vaporRecovery programs when on board vapor recovery is in “widespread use”• Widespread use occurs when the extra

emission reductions from Stage II become minimal because the “onboard” systems are in … widespread use

• States required to perform analyses:• To determine the timing for widespread use• To calculate the emission reduction losses

associated with the elimination of Stage II andand

• To identify measures to make up that loss• MDE has been holding stakeholder

meetings since spring of 2012 to work outmeetings since spring of 2012 to work out issues with the repeal of Stage II

Challenges• Maryland records the highest ozone

levels anywhere in the East• Only area in the East required to find

additional emission reductions and to submit an updated Clean Air Act (CAA)submit an updated Clean Air Act (CAA) Plan in June of 2015

• Maryland is also in the Ozone Transport R i (OTR)Region (OTR)– Under the CAA, states in the OTR are subject

to extra emission reduction requirements when they move away from Stage II

• Because of this, moving away from Stage II will be more challenging inStage II will be more challenging in Maryland than in any other state east of the Mississippi

Background – When?• MDE performed the required

analyses and shared that yanalyses with stakeholders• The analyses was the primary

topic at the February 20, 2014 Stakeholder meeting

It concludes:• It concludes:• Maryland can move away

from Stage II in 2019 or 2020from Stage II in 2019 or 2020.• Maryland will still see about a

0.17 ton per day loss of VOC p ybenefits because of the elimination of Stage II in 2020

How We Got to …C C

• MDE has heard from many

…the Current Regulatory Concepts

owners/operators that moving ahead with the elimination of Stage II earlier than 2019/2020 isStage II earlier than 2019/2020 is very important• Many business decision impacted

E i t d h ld• Equipment upgrades on hold

• After listening to these concerns, MDE agrees …g• We need to see if we can find a

way to move away from Stage II more quicklyq y

The EV Charging Concept• MDE is very interested in doing

what we can to expedite the i t d ti f l t i hi lintroduction of electric vehicles into Maryland.• We see electric vehicles as an

absolutely critical element of what we need to do to address our key air pollution and climate change problems

• After talking with EPA and the environmental advocacy e o e ta ad ocacycommunity• We believe the EV component of

the regulation is a way to movethe regulation is a way to move forward with the repeal of Stage II immediately

Three Options• There are pros and cons with

each option• Option 1 Include the EV Charging• Option 1 – Include the EV Charging

concept as a very flexible, low-cost requirement for just the largest owner groups so that everyone canowner groups so that everyone can decommission immediately

• Option 2 – Make the EV Charging element an alternative that sourceselement an alternative that sources may opt in to• As an incentive for immediate

decommissioningdecommissioning• Option 3 – Work out a separate

agreement on EV Charging and move ahead with a simple regulationmove ahead with a simple regulation that provides for immediate decommissioning

Option 1 – The MDE 1/24/14 Proposal• Asked largest owners to

invest into a small number of EV Ch i St ti tEV Charging Stations … to allow all service stations in the State to decommission immediately without a mandate for new technologies

• Major concern over the• Major concern over the “mandatory” nature of the EV Charging requirement

• Did provide a huge break to small businesses

• Also avoided a mandate on• Also avoided a mandate on new technologies

MDE Concept – Option 1 Basics

• All stations may decommission immediately• Owners with greater than 30 Million gallons g g

throughput and more than 8 station locations would install a small number of EV Charging Stations by 20202020

• No mandate for new technologies• Install when owners/operators choose to do so

Option 1 EV Charging Requirement

• There are 16 owners with greater than 30 Million

How many owners and sources would be covered

There are 16 owners with greater than 30 Million gallons throughput and more than 8 station locations

• These systems range from a high of about 160 t ti t l f b t 10 t tistations to a low of about 10 stations

EV Charging – Option 1• Larger owners would need to install the following

number of charging stations. • MDE still hoping to get comment on the

reasonableness of these numbers

# of stations in owners Maryland

# of Fast Charging Stations

# of Charging Stations need by

New Total # of Stations if early

network needed by 2020 to opt in

2017 (an early investment incentive)

incentive option is chosen

8 49 2 1 18-49 2 1 150-100 5 3 3101 11 6 8101+ 11 6 8

*Stations installed at third party locations and not on Owner’s t li ibl t t t d i tproperty are eligible to count towards requirement.

Where Did Those Numbers Come From?• MDE used private sector estimates

of reduced equipment costs from the elimination of Stage II to estimate 10elimination of Stage II to estimate 10 year cost savings to owners• Largest system could save up to about

$4 million over 10 years$4 million over 10 years

• The number of charging stations for each category in the table is based upon a maximum reinvestment of 10% of those savings

• Because of potential incentives• Because of potential incentives, partnerships, no mandate on new technologies and other flexibilities in

fthe draft regulation• MDE expects costs to actually be

significantly lower

New Technologies• Several new technologies, that are

not part of the Stage II program, are now … or soon to be … availableo o soo o be a a ab e

• Low permeation hoses are already approved and will be available in the market by late 2014market by late 2014

• Dripless nozzles are expected to be approved by late 2014 and available pp yin the market in early 2015

• Under Option 1, these new technologies would not be mandatedtechnologies would not be mandated• Operators may install when they

choose to do so• Most likely be installed by many

operators over time because of their potential cost savings

Pros and Cons – Option 1• Pros

• Addresses industry concerns over wanting to move away f St II i klfrom Stage II quickly• Allows all (both large and small) operations (new and existing

stations) to move forward without Stage II immediately• Provides a major break to small operations• Achieves significant environmental benefit because of EV

Charging requirementg g q• Cost of EV Charging is relatively small

• Especially if owners take advantage of incentives and partnership opportunitiesopportunities

• Cons• Large operations are required to shoulder the full

responsibility to help continue progress in cleaning up Maryland’s “worst-in-the-East” ozone problem

Option 2 – Voluntary EV Charging

• Allows owners who would like to go down the EVlike to go down the EV Charging path an opportunity to immediately decommission their system without asystem without a mandate for new technologiestechnologies

• Has a significant negative impact on small ownersimpact on small owners compared to Option 1

Option 2: A More “Voluntary” Approach• This approach is most

consistent with the “traditional” concepts for elimination ofconcepts for elimination of Stage II and EPA guidance

• Would allow all sources to decommission in 2019

• As an option, owners who wish to decommission Stage IIwish to decommission Stage II immediately could opt to install EV chargers at a small number of sites consistentnumber of sites … consistent with the size of their business• Still room to discuss, but

MDE current thinking on “small number of sites” is …

EV Charging – Voluntary Installations• Owners who opt in would need to install the

following number of charging stations • MDE still hoping to get comment on the

reasonableness of these numbers

# of stations in owners Maryland

# of Fast Charging Stations

# of Charging Stations need by

New Total # of Stations if early

network needed by 2020 to opt in

2017 (an early investment incentive)

incentive option is chosen

1 7 1 0 11-7 1 0 18-49 2 1 150-100 5 3 3101+ 11 6 8*Stations installed at third party locations and not on Owner’s property are eligible to count towards requirement.

New Technologies• Low permeation hoses and dripless nozzles are

either approved or very close to being approved in CaliforniaCalifornia

• Owners who opt in to the EV Charging option …• Would install these new technologies (for all of their new and g (

existing operations) when the owner chooses to do so• Owners who choose to not opt in to the EV Charging

conceptconcept• Would be required to install low permeation hoses and dripless

nozzles within 1 year of their approval in California

Pros and Cons – Option 2• Pros

• No one is mandated to invest in EV Ch i St tiEV Charging Stations

• Provides certain sources with flexibilityflexibility

• Cons• Significantly disadvantages g y g

small businesses who can not opt in to EV Charging

• Provides minimal• Provides minimal environmental benefit compared to Option 1

• Does not allow for early elimination of Stage II

Option 3 – A CompromiseSeparate Agreement on EV Charging

and a Simple Regulation

• An option proposed by service station representativesW k t t• Work out a separate, meaningful agreement on EV ChargingCharging

• Adopt a very simple, basic regulation that eliminates Stage II immediately and allows owners to move to new technologies at their own pacetechnologies at their own pace

Pros and Cons – Option 3• Pros

• No mention of EV Charging in the regulationregulation

• Provides even more flexibility in how and where to install EV Charging i f t tinfrastructure

• Achieves significant environmental benefits

• Eliminates Stage II immediately• Would not penalize small

businessesbusinesses• Cons

• Separate agreement on meaningful p g gEV Charging commitment may be difficult to negotiate

Regulation Adoption Schedule• MDE is ready to move ahead ASAP

and even use expedited rulemaking processp

• It is critical to reach an agreement• Assuming an agreement in the next 2

weeks and a desire to move quicklyweeks and a desire to move quickly• Advisory Council ASAP• Use expedited rulemaking process• Could be effective as early as late July or

August 2014• If there is no desire to expedite the

l kirulemaking process • The next normally scheduled Council

meeting is September 8, 2014N l ld k• Normal process would make requirements effective in the Spring or Summer of 2015

Comparing the 3 OptionsOption 1Large owners required to install EV chargers

Option 2Voluntary EV chargingSources choose to opt in

Option 3EV charging in a separate agreement

S d St II li i t d 2019 f t St II li i t dSpeed Stage II eliminatedImmediately

2019 for most …Immediately for owners who opt in to EV charging

Stage II eliminated immediately

EV Charging Required of large ownersNot required at small businesses

Only if opted into Per separate agreement

businesses

Small businesses Could eliminate Stage II immediately with minimal effort

Decommission in 2019 unless they choose to opt in to EV charging

Per separate agreement

p g g

New technologies Not required Required at stations of owners that choose to not opt in to EV charging

Not required

Environmental benefits

Significant Minimal Significant

Before We Move to Discussion• We would like to go over some of the

incentives and partnership opportunities linked to EV Charging infrastructure first

• MDE overview• MEA opportunities• Private sector initiatives• Then … move to discussion