Feasibility, Benefits and Widespread Use of Natural Gas in Transit Today

CTA-CalACT

Monterey Fall Conference

Nov 6, 2008

Natural Gas Use in Today’s Transit Fleets

• Nationally more than 11,000 natural gas buses in service at 132 transit agencies

• Over the past decade, 20+% of new bus orders year to year have been for natural gas buses

• In CA nearly half, or 39 of 79 transit districts are on the alt fuel path, operating natural gas buses in their fleet in order to comply with the ARB transit rule.

Signs of the TimesSigns of the Times

Market Drivers for Alt Fuels and AFVsMarket Drivers for Alt Fuels and AFVs• AQ Goals, NAAQS and EPA Vehicle Emissions Requirements

– Clean Air Act and Amendments drive local/regional governments to reduce criteria emissions (NOx, PM, etc)

– EPA and CARB vehicle/engine emissions requirements and their impact on OEMs’ product offerings, vehicle performance and fuel economy

1998 Stds1998 Stds

2002/2004 Stds2002/2004 Stds

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0.0 1.0 2.0 3.0 4.0 5.0NOx (g/bhp-hr)

PM

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2010 Std (.20 g/hp-hr NOx)

2007 “Compromise” Std

1.2 g/hp-hr NOX +NMHC

•Fuel economy and performance trade-offs for diesel to achieve 2004 and 2007 emissions benchmarks

•Complex exhaust after-treatment technologies are expensive and maintenance intensive

•2010 NOx target will require SCR with urea for most diesels…$$$!

Market Drivers for Alt Fuels and AFVsMarket Drivers for Alt Fuels and AFVs

• The Environmental, Economic and Political Realities of Global Warming and Greenhouse Gases– Issue is quickly gaining traction internationally and here– California Adopts Low-Carbon Fuel Standard– Additional states are likely to follow as they have done

with vehicle emissions standards (11 states have adopted CARB, several more considering adoption)

Market Drivers for NGVsMarket Drivers for NGVs

• Global Energy Demand/Supply Crunch and the Impact at the Fuel Pump– US = 5% of pop., 25% of oil use, 65+% of oil is imported,

most for transportation

– Expanding Asian economies are putting upward pressure on world energy prices (especially oil)

– Global demand growth is outpacing new discoveries

– Existing refining capacity is at or near peak and new capacity is lengthy process

– Diesel fuel down from peaks approaching $5 gallon , gasoline is finally dropping from peaks over $4.50, where will they go?

Most Agree that We need to Diversify America’s Transportation Fuel Portfolio

• Electricity– All-electric, Hybrids, PHEVs

• Bio-diesel (B100) and blends• Ethanol

– E85 , Oxidant additive to gasoline (e.g. E10 gasoline)

• Propane• Natural Gas

– CNG and LNG

• Hydrogen – Internal combustion engines (H/CNG blends like Hythane)– Fuel cells (eventually)

The Compelling Case for Natural Gas Vehicles The Compelling Case for Natural Gas Vehicles in Public and Private Transit/Shuttle in Public and Private Transit/Shuttle

ApplicationsApplications

• Natural gas is an inherently clean fuel– Natural gas is mostly methane: one carbon atom– (Diesel – C14H30; Gasoline – C8H18; Propane – C3H8)– Far less NOx, soot and greenhouse gases than petroleum fuels

• Natural gas is very safe– Lighter than air… dissipates when released– High ignition temperature: 1000-1100F– Limited range of air/fuel combustion ratio (5-15%)– Colorless, odorless, non-toxic substance– Doesn’t leak into groundwater – Comprehensive fuel tank, vehicle and station design/mfg

codes & standards

About Natural GasAbout Natural Gas

Methane Molecule

• NGVs are proven and reliable (7.5 million+ NGVs worldwide)

– 110,000 on US roads, MD an HD fleets are best application:

• NGVs are quiet– HD NGVs are 80-90% lower db level than comparable diesel

• NGV life-cycle costs are lower– Fuel costs are far lower! Cost ratio of natural gas MCF to BBL oil

was 6-1, now 13-1, gap is growing!! About $1.70-2.05/GGE

– Maintenance costs are =/< than gasoline or diesel vehicles

– Life-cycle cost advantage improves with new federal tax credits

Benefits of NGVsBenefits of NGVs

NGVs Are a “Good Fit” for Many Fleet ApplicationsNGVs Are a “Good Fit” for Many Fleet Applications • Local/State Government

– All Depts.

• Airports– Terminal Buses, Hotel/Parking Shuttles,

Taxis, Door-to-Door

• Refuse– Collection/Transfer

• Transit– Buses, Maintenance, Supervisors

• School Districts– Buses, District personnel, Maint.

• “Short-Haul” Delivery– Food & Bev., Port-Rail, Linen Svc,

• Utilities– Gas/Electric/Water, Communications

Natural Gas Powered Engines and VehiclesNatural Gas Powered Engines and Vehicles

• American Honda –Civic GX

• BAF Technologies (Ford)– 4.6L (Crown Vic/Gr. Marquis/Town Car)

– 5.4L (E350 passenger and cargo vans; F150/250/350

– 6.8L (E-450 cutaway)

• Baytech Corporation (GM)– 6.0L L/M/HD (Pick-ups, vans, G3500/4500

cutaways, W3500/4500 CF, Isuzu NPR/NPR HD, Workhorse W42)

– 8.1L (HD pick-ups, C4500/5500/6500/7500/8500 Topkick;, Workhorse W62

• FuelTek (Ford)– 5.4L F250/350 bi-fuel

• IMPCO (GM)• 6.0L Bi-fuel pick-ups, vans

• Cummins Westport– 5.9L “B Gas Plus” – 195-230hp

(Shuttles, sweepers, work trucks)

– 8.9L “ISL-G” – 250-320hp (Refuse, bus and work trucks)

• Emission Solutions Inc.– 7.6L Phoenix NG – 175-265hp

(re-power for Int’l DT466: shuttles and trucks)

– 9.0L 300-330Hp engine certs are in process, due in 2008

• Westport Innovations Inc– 15L “ISX-Gas” – 400/450hp

Natural Gas Shuttle Bus/Trolley PlatformsNatural Gas Shuttle Bus/Trolley Platforms(StarTrans, Goshen, Krystal, Champion, Glaval, Starcraft, etc), (StarTrans, Goshen, Krystal, Champion, Glaval, Starcraft, etc),

• Chevy G3500 Series cutaways with 6.0L

• Chevy G4500 series cutaway with 6.0L

• Ford E450 series cutaways with 6.8L

• Chevy C4500/5500 series cutaway with 8.1L

• Int’l 3200/3300 series with DT 466 /MaxxForceDT (repowered with Phoenix 7.6L spark-ignited engine

• Freightliner Custom Chassis MB55

El Dorado NationalEl Dorado National• E-Z Rider II: 30’, 35’

– CWI 5.9L B Gas+/8.9L ISL-G

• Axess: 35’, 40’– CWI 8.9L ISL-G/5.9L B Gas+

• Escort RE/RE-A– CWI 5.9L B Gas+/ 8.9L ISL-G

• Passport: 29’, 34’– GM C5500 8.1L CNG retrofit

• Transmark RE– CWI 5.9L B Gas+/8.9L ISL-G

• XHF– CWI 5.9L B Gas+/ 8.9L ISL-G

Orion Bus/Daimler Commercial BusOrion Bus/Daimler Commercial Bus

• CNG-powered 32’ 35’ and 40’ buses featuring 2010-compliant Cummins Westport Inc. ISL-G 8.9L engine

• Fueling system (up to 8 CNG tanks – roof mounted)

Orion V

Orion VII Low Floor (due in 2010)

New FlyerNew Flyer

• CNG- and LNG-powered 30’, 35’ and 40’ Low-Floor buses

• All feature the 2010-compliant Cummins Westport Inc. ISL-G 8.9L engine; 250/280Hp options

• Fuel system configurations• C/L30LF: 4 CNG tanks or 3 LNG tanks

• C/L35LF: 5-6 CNG tanks or 3 LNG tanks

• C/L40LF: 6-7 CNG tanks, or 4 LNG tanks

C40LF

C30LF

L40LF

NABI/Optima/Blue Bird

• All of the above feature the 2010-compliant CWI ISL-G 8.9L engine

• 250, 260, 280, 300 and 300 Hp configurations (most are 280)

NABI Low Floor Bus (LFW); 31’, 35’ , 40’

NABI Metro 45C Composite Bus; 45’

NABI BRT40’, 42’, 60’, 65’

NABI Standard Floor Bus; 40’

Optima AH-28 Heritage Style Streetcar with CWI 5.9L B Gas+ engine; 230Hp

Blue Bird Ultra LF with CWI 5.9L B Gas+ engine; 230Hp

CNG Station Development andCNG Station Development andOwnership-Operations OptionsOwnership-Operations Options

• Station Location Options:– Offsite – use existing public access station

(development usually driven by anchor fleet)– Onsite - private access only– Onsite - with public access “outside the fence”

• Ownership & Operations Options:– Fleet owned & operated station– Fleet owned/leased station but contracted out

operations for a fee (usually on a GGE basis)– Outsource station O&O entirely via independent fuel

provider and contract gas price

CNG Station Design ConsiderationsCNG Station Design Considerations

• Station Type– Time-Fill, Fast-Fill, Combo Fill

• Station Size and Design Considerations– Number of vehicles per day

– Fueling pattern of vehicles

– Maximum daily flow

– Maximum hourly flow

– Available back-up fueling, redundancy?

– Metering/Data/Payment needs

– Amount of space available

– Funding available

Show Me the Money! Show Me the Money! A Review of Economics and How to Use OPM A Review of Economics and How to Use OPM

((other people’s moneyother people’s money))

Federal and State Tax Incentives and Grants for Vehicles, Stations and Fuel

AFV Tax CreditsAFV Tax Credits

• EPAct Sec. 1341 (codified at 26 USC 30B) includes tax credits for four new classes of motor vehicles:– Fuel Cell Vehicles– Hybrid Electric Vehicles– Lean Burn Engine Vehicles– Dedicated Alternative Fuel Vehicles

• Applies to vehicles placed in service after Jan. 1, 2006

• Prior to Jan. 1, 2006 some of these vehicles qualified for clean-fuel vehicle deduction per EPAct 1992 provisions. Electric vehicles qualified for a $1,000 tax credit through Dec. 31, 2006 per EPAct 1992 provisions

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AFV Tax CreditsAFV Tax Credits

• Tax credits go to the purchaser of the vehicle, including:– Businesses– Individuals

• If vehicle leased, the credit goes to the lessor, not the person or business leasing the vehicle

• Seller’s may take credit if vehicle sold to tax exempt entity:– Must disclose the full tentative value of the credit to customer

• Motor vehicles defined as 4 wheel vehicles manufactured primarily for use on public streets, roads, and highways

AFV Tax CreditAFV Tax Credit

• Alternative fuels that qualify:– CNG– LNG– LPG– Hydrogen– M-85 (methanol) or higher

VVehicle Purchase Tax Incentiveehicle Purchase Tax IncentiveIRS Form 8910IRS Form 8910

• A income tax credit to the buyer of a new, dedicated alternative fuel vehicle:

– 50 % of the incremental cost of the vehicle PLUS an additional 30% if the vehicle meets certain tighter emission standards

– Incremental cost cap based on four GVWR ranges

– Tax credit may be taken by seller if the buyer is a tax-exempt entity

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• Credits range from $2,500 to $32,000 depending on GVWR

– $2,500-$4,000 for vehicles under 8,500 lbs. (incremental cost cap : $5K) – $5,000-$8,000 for vehicles between 8,500-14,000 lbs. (icc: $10K)– $12,500-$20,000 for vehicles between 14,000-26,000 lbs. (icc: $25K)– $20,000-$32,000 for vehicles over 26,000 lbs. (icc: $40K)

• Credit is effective for vehicles placed in service after December 31, 2005 and currently set to expire on 12-31-10. (Note: Extensions of this credit are in various bills currently before Congress)

• “Conversions” qualify, if retrofit/re-power was done after 12/31/05

VVehicle Purchase Tax Incentiveehicle Purchase Tax Incentive

Motor Fuels Excise Tax CreditMotor Fuels Excise Tax Credit

• The Volumetric Excise Tax Credit for Alternative Fuels (VEETC) – JOBS Act of 2004 created VEETC for ethanol and biodiesel

– SAFETEA-LU (“Transportation”) Act of 2005 made CNG, LNG, LPG, and hydrogen eligible when those fuels are used in on-road vehicles (and some off-road vehicles, such as forklifts)

• A 50 cent motor fuels excise tax credit is paid to the seller:– Per GGE of CNG or per liquid gallon of LNG, LPG

• The credit is applied/paid to eligible recipients without regard to the amount of excise tax paid, if any (including tax exempts)

(continued)

• Provision also bumps up excise tax rate on CNG and LNG. – CNG excise tax increases from $.0607/GGE to $.183/GGE

– LNG excise tax increases from $.119/LNG gal to $.243/LNG gal

• Credit began October 1, 2006; Expiration extended till 12-31-09(Note: Legislation before Congress is expected to extend sunset date)

• Tax credit may be taken as excise tax credit, income tax credit, or direct payment, depending on circumstances

Motor Fuels Excise Tax CreditMotor Fuels Excise Tax Credit

Fuel Station Tax CreditFuel Station Tax CreditIRS Form 8911IRS Form 8911

• Equal to 30% of cost of alt refueling equipment placed in service that year, up to $30,000

• Credit may be taken by seller if buyer is tax exempt entity (tax exempts should leverage this in negotiations)

• Credit is effective on equipment placed in service after December 31, 2005 and was recently extended til 12-31-10 (legislation to extend will be introduced in next Congress - 2009)

CNG Gasoline Gallon Equivalent (GGE) = $1.50-1.85One GGE = ~ 1.1DGE , so cost per DGE = $1.65-2.04(not including state or federal taxes)

Basis: • $7.55MCF @ city gate = $.95/GGE (1 GGE = 124,800 Btus)• $.15 Local gas company transportation fee• $.20 kWh/GGE compression (based on 1 kWh/GGE) • $.25/GGE maintenance of station • $.45-.80/GGE station equipment amortization (based on 10 yrs) LESS $.50/GGE FEDERAL EXCISE TAX CREDIT (even to excise tax exempts!)

Add state and federal tax if it appliesRetailer’s GGE rates will be higher because of shorter depreciation period, profit for risk assumed, etc

Example: Passenger van for LimoExample: Passenger van for Limo

• GVWR: >8500 lbs. but less than 14,000 lbs

– Ford E-350 passenger van

– Chevy/GMC 3500 passenger van

• MPG: 10/12 City/Hwy, 50K miles/year• Fuel Use: 9-12 gge/day; 4100-4500gge/yr • CNG Premium: $15,500

(before fed tax credit)

• Fed Tax Credit: $8000 (>8500#, <14000#)• Simple Payback: 1.1 -1.3 years

(based on $1.55/gge savings @ retail: $2.05/gge ($3.60 gas)

• Life-cycle cost advantage: $18-23K(depending on use and mpd, cost differential)

Life-Cycle Savings Example – Transit Bus (45K miles/year)Life-Cycle Savings Example – Transit Bus (45K miles/year)

  “Clean Diesel” Diesel-Electric CNG

Purchase Price (40’ Low-Floor Bus): $ 340,000 $ 495,000 $ 400,000

Net Cost after FTA funding @ 80/83/83% $ 68,000 $ 84,150 $ 68,000

Yearly DGE Use based on 4.0/5.0/3.6 mpg 11,250 9,000 12,500

Fuel Cost/DGE - Non-taxed: $ 3.80 $ 3.80 $ 2.05

Yearly Fuel Cost (before Federal Tax Credit): $ 42,750 $ 34,200 $ 25,625

Federal Fuel Tax Credit ($0.55/DGE ): $ - $ $ (6,875)

Fuel Savings/Yr Compared to Clean Diesel: $ - $ 8,550 $ 24,000

Fuel Savings/Yr Compared to D-E Hybrid: $ (8,550) $ - $ 15,450

Battery Replacement Cost over 12-yr life (?): $ - $ 30-60K? $ -

12-yr life-cycle cost (net purch. + fuel): $ 581,000 $ 525-555K $ 293,000

CNG Cost Assumptions:

DGE = 1.1 GGE; CNG price @ $2.05/DGE based on $9.00/Mcf ($1.24/DGE); $.15/DGE LDC delivery to meter; $.18/DGE compression cost; $.18/DGE station maintenance fund; $.30/DGE fuel station capital/equipment fund;

AFV and Fueling Infrastructure IncentivesAFV and Fueling Infrastructure Incentives

Federal Tax Incentives

Federal Grants:• DOT Congestion Mitigation & Air Quality (CMAQ) grant• DOE State Energy Program (Clean Cities) grants• EPA

– SEP/(“penalty fund”) project grants

– Diesel Emission Reduction Program grants

– Although referred to as “Nat’l Clean Diesel Campaign,” LPG and NGV projects qualify as do some biodiesel and hybrid technology projects

• FTA, VALE others

– State Grants: Work with Clean Cities and EPA Collaboratives

Questions?Questions?

Thank you for your time and interestThank you for your time and interest

For more information please contact:

Stephe Yborra

Director of Marketing & Communications

NGVAmerica

400 N. Capitol Street, NW - Suite 450Washington, DC 20001

Director of Market Analysis, Education and Communications

Clean Vehicle Education Foundation

6011 Fords Lake Court

Acworth, GA 30101

syborra@ngvamerica.org / syborra@cleanvehicle.org

(301) 829-2520