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The Compelling Case For NGVs in Public and Private Fleets How LDCs Can Make the Most of the Opportunity

The Compelling Case For NGVs in Public and Private Fleets How LDCs Can Make the Most of the Opportunity. Jeff Clarke NGVAmerica West Palm Beach, FL – June 11, 2009. Market Driver for NGVs. Environmental advantages Lower criteria pollutants Lower greenhouse gas emissions Economical

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The Compelling Case For NGVs in Public and Private Fleets How LDCs Can Make the Most of the Opportunity

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  1. The Compelling Case For NGVsin Public and Private FleetsHow LDCs Can Make the Most of the Opportunity Jeff Clarke NGVAmerica West Palm Beach, FL – June 11, 2009

  2. Market Driver for NGVs • Environmental advantages • Lower criteria pollutants • Lower greenhouse gas emissions • Economical • Domestic fuel – addresses energy security • Governmental support

  3. 1998 Stds Market Driver for NGVsLower Emissions/Improvement in AQ • 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 • 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…$$$! 0.12 0.10 2002/2004 Stds 0.08 PM (g/bhp-hr) 0.06 2007 “Compromise” Std 1.2 g/hp-hr NOX +NMHC 0.04 0.02 0.00 0.0 1.0 2.0 3.0 4.0 5.0 NOx (g/bhp-hr) 2010 Std (.20 g/hp-hr NOx)

  4. Market Driver for NGVsLower Greenhouse Gases (GHG) • The Environmental, Economic and Political Realities of Global Warming and Greenhouse Gases • Issue is quickly gaining traction internationally and here in US • 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) • Obama Administration has signaled willingness to tackle GHG • Natural gas vehicles reduce greenhouse gases between 20-29% • For HDVs, about 20-23%; for LDVs, 26-29% • Depends on comparative vehicles and duty cycles

  5. Market Driver for NGVsEnergy Security and Economics • Global Energy Demand and the Impact at the Fuel Pump • US = 5% of population, 25% of oil use • 65% of all US oil is imported, 70% of our transportation needs. • Expanding economies , global demand growth is outpacing new discoveries • Existing refining capacity is at or near peak ; new capacity is lengthy process • Diesel was $5+ in many markets, gasoline was $4+ …higher prices will return! • Cost ratio of MCF to BBL was 6-1, now 11/12-1 (15-1 in Spring 08) • CNG Gasoline Gallon Equivalent (GGE) = $1.05-1.30 + fed/state taxes • Basis: $5.60MCF @ LDC’s city gate, $.10 LDC transportation fee, $.15kWh/GGE compression, $.25/GGE maintenance, $.35-.60/GGE capital equipment amortization LESS $.50/GGE FEDERAL EXCISE TAX CREDIT (even to excise tax exempts!) • Differential between gasoline and CNG was as high as $2.50 in Spring ‘08

  6. Diversifying America’sTransportation Fuel Portfolio • Many Alternative Fuels and Vehicles Needed • Electricity • All-electric • Hybrids, PHEVs • Bio-diesel (B100) and blends • Ethanol • E85 (limited production/distribution – majority is in midwest market) • Oxidant additive to gasoline (e.g. E10 gasoline – perhaps to be increased) • Propane • Natural Gas • CNG and LNG • Hydrogen • Internal combustion engines (H/CNG blends like Hythane) • Fuel cells (eventually)

  7. Benefits of NGVs • NGVs are proven and reliable • Nearly 10 million NGVs in use worldwide; ~110K operating on US roads • Fleets are best application: • 11,000+ transit buses (1 in 5 on order), nearly 4000 refuse trucks • 3000 +school buses, 15-17,000 MDVs in shuttle and wide variety of work truck applications, estimated 20,000 LDVs in fleets • Fleets are prime candidates (high fuel use, central fueling, local routes/operating areas) and generate initial throughput to build consumer market • 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! Maintenance costs are =/< than gas or diesel • Life-cycle cost advantage improves with new federal tax credits

  8. NGVs 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

  9. Available Natural Gas Engines and Vehicles[http://www.ngvamerica.org/pdfs/marketplace/MP.Analyses.NGVs-a.pdf] • IMPCO (GM) • - 3.5L , 3.9L Impala (bi-fuel) • - 4.8L G series vans (bi-fuel) • - 5.3L Tahoe, Avalanche, Suburban Suburban, Yukon, Yukon XL, pick-ups • - 6.0L pick-ups and G vans (bi-fuel) • NaturalDrive (GM) • - 3.5L, 3.9L Impala (dedicated) • 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 – 175-260hp(re-power Int’l DT466, MaxxForceDT) • Westport Innovations Inc • 15L “GX” – 400/450hp • Altech-Eco (Ford) • 2.0L Focus (bi-fuel and dedicated) • Expected to announce Fusion cert any day • American Honda • 1.8L Civic GX (dedicated) • BAF Technologies (Ford - dedicated) • 4.6L Crown Vic/Gr. Marquis/Town Car • 5.4L E250/350 vans; F150/250/350 p.u./SUVs • 6.8LE-450 cutaway • Baytech Corporation (GM) • 4.8L Vans, pick-ups (bi-fuel and dedicated) • 6.0L Vans, p.u, cutaways, W3500/4500 CF, Isuzu NPR/HD, Workhorse W42 (ded./bi-fuel) • 8.1L C4500-8500 Topkick; Workhorse W62 • FuelTek (Ford) • 5.4L E150/250/350 vans and E350 club wagon; F250/350 p.u. + C/C (bi-fuel)

  10. Westport Innovations, Inc. • Westport GX (formerly referred to as ISX-G) • Based on Cummins ISX platform • 15L engine, 400-450 HP • High-Pressure Direct Injection (HPDI) technology: 5% diesel pilot fuel, 95% natural gas (LNG-fueled only at this point) • CARB certification @ .8NOx • Kenworth now offering GX in T800; Initial factory-built units are being built for Long Beach/LA Ports’ fleets (LNG) • Field test being conducted on 4 Peterbilt trucks in Wal*Mart fleet (OEM order available in summer 2009) Kenworth T800

  11. Cummins Westport Inc • 5.9L B Gas Plus (SING, lean burn w EGR) • 195-230 Hp; 1.8NOx • 8.9L ISL-G (SING, stoichiometric w cooled EGR) • 250-260-280-300-320 Hp; 0.2 NOX / .01 PM(Meets 2010 EPA emissions requirement NOW) • Primary/sole supplier to OEMs in • Refuse collection trucks (Crane Carrier, Autocar, ALF-Condor, Peterbilt and as of Spring 2009…Mack!) • Buses, shuttles, trolleys(NABI, New Flyer, Orion, Thomas, Blue Bird, variety of shuttle/trolley upfitters using Freightliner Custom Cassis MB55 chassis) • Sweepers(Elgin, Tymco, Schwarze, Allianz-Johnston) • Work /Vocational Trucks(Sterling L series transition to Freightliner M2, Freightliner Custom Chassis MT45/55 step-vans; Ottawa; Capacity yard hostlers)

  12. Emission Solutions Inc. • 7.6L NG Phoenix (S.I.N.G. engine) • Based on International’s DT466/MaxxForce DT block used in Int’l/Navistar trucks/ buses. • Repower older DT466 units with 175-260 Hp /460-760 ft-lb torque remanufactured • In-place retrofit of new MaxxForce DT with 300HP/900 ft-lb unit • EPA -/CARB- 2010 certified @ 2NOx / .01PM • Engine change-out/retrofit in 5-7 days • Food/beverage delivery, refuse trucks, school buses, utility/public works trucks • Anheuser Busch, Silver Eagle Dist., Manhattan Beer, Sysco Foods • Smithtown NY Dept of Environment • Kansas City Public Works • Tulsa Public Schools

  13. Baytech Corporation‘08/09 6.0/8.1L GM LDV, MDV and HDVs Chevy or GMC 2500HD, 3500 6L Cab & Chassis Chevy/GMC 1500,/2500HD 6L Silverado/Sierra Chevy/GMC 15/25/35 6L Express/Savana Van Chevy /GMC 3500/4500 6L Cab & Chassis Chevy/GMC 3500/4500 6L Van Cutaway W3500/Isuzu NPR 6L(shown w sweeper body) Workhorse Chassis 6.L W42/8.1 W62 step-van W4500/Isuzu NPR HD w 6.0L GM engine GMC C4500/5500 with 8.1L GM engine GMC C 6500/7500/8500 with 8.1L GM engine • All Baytech engine retrofit systems are CARB-certified, multi-port injection • Sales/Installation/Service is handled through Baytech-vetted-and-trained QSRs • OEM warranty remains intact – Baytech picks up CNG-related components

  14. BAF Technologies • 4.6L engine (CARB SULEV /EPA ULEV) for • MY ’08 and ‘09 Ford Crown Vic, Lincoln Town Car, Mercury Grand Marquis • 5.4L engine (CARB SULEV/EPA ULEV) for • Ford MY ‘08 E250 cargo/ passenger and E350 extended passenger/cargo van (2009 cert pending) • Ford MY ‘08 F150/250/350 pick-ups and F-series cab-chassis (2009 cert pending) • MY ‘08 and ‘09 Ford Excursion/Mercury Navigator SUV • 6.8L engine (CARB/EPA) for Ford • Ford ‘08 and ‘09 E450 cutaway • BAF multi-port injection Cal-Comp system exceeds performance of Ford’s previous CNG units • Sales/Installation/Service via BAF and/or QSRs • OEM warranty remains intact – BAF warranty on CNG

  15. IMPCO • Holds EPA certification for: • MY’08 3.5L and 3.9L Chevy bi-fuel Impala (2009 cert is pending) • MY’08 4.8L GM bi-fuel G series Express/Savana vans • MY’09 5.3L GM bi-fuel Sierra/Silverado pick-ups • MY’09 5.3L GM bi-fuel Tahoe, Suburban, Yukon/Yukon XL, Avalanche • MY’08 and ‘09 6.0L GM bi-fuel Sierra/Silverado pick-ups, cab-chasses • MY’08 and ‘09 6.0L GM bi-fuel G series Express/Savana vans • Still establishing installation/service network to include selected QSRs and (possibly) performance motor shop network.

  16. FuelTek Conversion Corp. • Holds EPA certification for : • MY2008 5.4L bi-fuel Ford E150/250/350 passenger and cargo vans • MY2008 5.4L bi-fuel F250/350 pick-up trucks • MY2009 5.4L bi-fuel Ford certifications are pending • Installs systems at their corporate facility in Colorado AND is setting up QSRs in some markets, including several Ford dealers

  17. American Honda Civic GX“Cleanest Production Vehicle on Earth” • American-made in Greensburg, Indiana • Roomy, well appointed, natural gas version of Civic LX • 1.8L 4-cylinder engine; 8 GGE tank: 225-250 mile range • Great for sales reps, document and medical lab couriers, route/job supervisors, social service workers, code officials, parking enforcement, security/police (non-pursuit) • Growing consumer market where there is sufficient infrastructure (e.g., California, Long Island – NY, Denver, Dallas, Utah, lower Michigan)

  18. NaturalDrive2008 EPA-Certified Impala (2009 cert is pending) • 3.5 and 3.9 liter V-6 dedicated (LS, LT, LTZ, 9C3, 9C1 police/taxi models) • 212 hp, 190 foot-lb torque, • 10.4 ~ 13.0* gasoline gallon equivalent • MPG 19/30, 400* mi highway range • OEM-style engine control – reflash incorporates full OBD II function • Smog-fighting 0.009 g/mi NOx emissions * With extended range option

  19. Altech-Eco Corporation2008/09 EPA-Certified Bi-Fuel and Dedicated Ford Focus • 24/35mpg city/hwy • Standard 9.1 GGE fuel equivalent - 218-318 miles range • Sold through Altech-Eco-vetted-and-trained QSRs and select Ford dealers • EPA certification pending (soon) for bi-fuel and dedicated Ford Fusion

  20. Filler’ Up:Addressing the “Chicken & Egg” ConundrumNatural Gas Fuel Station Types Development, Ownership and Operations OptionsSizing/Design Considerations

  21. CNG Station Design/Cost Considerations • Myth: CNG stations cost $1 million • Station costs can range from $15K – $2.5 million • Anchor fleets (airports, refuse, transit) or ‘pooled loads’ create economies that eliminate chicken & egg challenge. Outside-the-fence access adds load. • Station Size and Design Considerations • What’s needed? Time-Fill, Fast-Fill, Combo Fill • Number of vehicles per day, vehicle fueling patterns, maximum daily flow, maximum hourly flow • Available back-up fueling or need for redundancy? • Dispensing/Metering/Data Capture/Payment needs? • Modular approach adds capacity as fleet grows

  22. CNG, LNG and L/CNG Station Options • Station Location Options: • Offsite – use existing public access station if available, convenient and of sufficient capacity. May be operated by LDC, another fleet or independent retailer. Initial development usually driven by ‘anchor’ fleet that justifies investment. • Onsite - private access only • Onsite - with public access “outside the fence” • Different ownership & operations options available depending on throughput, funding: • Fleet owned & operated station • Outsource station O&O entirely via independent fuel provider and contract gas price • Fleet owned/leased station but contracted out operations for a fee (usually on a GGE basis)

  23. NGV Tax Incentives and Grants for Vehicles, Stations and Fuel

  24. Fuel Station Tax CreditIRS Form 8911 • Equal to 50% of cost of alt refueling equipment placed in service that year, up to $50,000 (recently increased from 30%/$30K) • 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 expires on December 31, 2010 • New pending NATGAS Act legislation extends this 18 yrs.

  25. Vehicle Purchase Tax IncentiveIRS Form 8910 • A incometax credit to the buyerof a new, dedicated alternative fuel vehicle: • 50 % of the incremental cost of the vehicle PLUS an additional 30% if the vehicle exceeds standards • ALL certified natural gas work trucks meet this benchmark • Pending NAT GAS Act extends expiration and increases ICCs • Incremental cost cap (ICC) based on 4 GVWR ranges • Tax credit may be taken by seller if the buyer is a tax-exempt entity; leasing options (continued)

  26. Vehicle Purchase Tax Incentive • 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*) • “Conversions” qualify, if retrofit/re-power was done after 12/31/05 • Credit is effective for vehicles placed in service after December 31, 2005. (Currently set to expire on 12-31-10 but extensions of this credit are in NAT GAS Act and other bills currently pending before Congress) • *Pending NAT GAS Act legislation extends 80% to all dedicated NGVs and 50% to bi-fuel vehicles and increases ICCs by 100-150%

  27. Motor Fuels Excise Tax Credit • The Volumetric Excise Tax Credit for Alternative Fuels (VETC) • JOBS Act of 2004 created credit 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 • The credit is applied/paid to eligible recipients without regard to the amount of excise tax paid, if any (including tax exempts) (continued)

  28. Motor Fuels Excise Tax Credit • Provision bumped excise tax rate on taxable CNG and LNG. • CNG excise tax increased from $.0607/GGE to $.183/GGE • LNG excise tax increased from $.119/LNG gal to $.243/LNG gal • Credit began October 1, 2006Currently set to expire 12/31/09 but long-term extensions are in NAT GAS Act and other bills pending before Congress.Tax credit may be taken as excise tax credit, income tax credit, or direct payment, depending on circumstances (continued)

  29. Natural Gas Vehicle Incentives • In addition to tax credits, go after Federal Grants: • DOT Congestion Mitigation & Air Quality (CMAQ) grants • FAA VALE Grants for airports • FTA Grants for transit • DOE Clean Cities grants • 2009 stimulus bill provided $300 million for 30 projects @ $5-15 million) • EPA Diesel Emission Reduction Program grants • Although referred to as “Nat’l Clean Diesel Campaign,” two types of NGV projects qualify….repowers and early replacements • 2009 stimulus bill provided $300 million • Also – Check on availability of State incentives (credits, grants) • 2009 stimulus bill included $3+ billion in block grants • Join/work with your Clean Cities Coalition, MPO and Regional EPA Collaorative

  30. Passenger Van for Airport Limo • GVWR: 9300-9600 lbs. • Ford E-350 passenger van • Chevy/GMC 3500 passenger van • MPG: 10/12 City/Hwy, 50+K 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 station) • Life-cycle cost advantage: $18-23K(depending on use and mpd, cost differential)

  31. Step Van • Sample Applications • Package Service, Bakery/Snack Food, Laundry/Linen • GVW-14-26K lbs. (Workhorse W42/W62, FCCC MT45/55) • MPG: 4.0 – 6.5, 75-90mpd x6 days/wk, 26K/year • Fuel Use: 13-19gge/day; 4050-5800gge/yr • CNG Premium: $25-28,000 (before fed tax credit) • Fed Tax Credit: $20,000 • Simple Payback: 1.1 - 1.5 years(based on 1.55 savings/gge @ retail station ) • Life-cycle cost savings: $48-55,000+ !!!!

  32. Utility Crew Cab/Work TruckBeverage Delivery Truck • GVW - >26,000 lbs. • Int’l 4000 Series, Freightliner M2, GMC 6500/7500/8500 • MPG: 3.5 – 4.75 (depending on application) • Fuel Use: 14-25 dge/day; 5000-6500 dge/yr • CNG Premium: $50,000 (before fed tax credit) • Fed Tax Credit: $32,000 • Simple Payback: 2.2 – 2.6 years (based on $1.70 /dge savings for retail station) • Simple Payback: 1.6 – 2.0 years(based on 1.95/dge savings for O&O station:) • Life-cycle cost savings: $60,000+!!!

  33. Refuse Truck • GVW - 26,000+ lbs. • Crane Carrier LET, Autocar Xpeditor, Peterbilt LCF 320 , ALF Condor , Mack TerraPro (CWI ISL-G engine) • MPG: 2.5 – 3.0 (lots of idle and PTO time) • Fuel Use: 35-40gge/day; 8500-10,000dge/yr • CNG Premium: $50,000 (before fed tax credit) • Fed Tax Credit: $32,000 • Simple Payback: 1.5 years (based on 1.70 savings /dge @ retail) • Life-cycle cost savings: $75,000 - $95,000 • (based on 8-year life)Still only a 3.2 year payback if no tax credit available!!

  34. Summary of the Market Potential • Environmental, energy security and economic market drivers are very favorable to fleets’ use of NGVs. Developing fleet market will spur eventual consumer market….walk before running. • Many light-, medium- and heavy-duty NGVs are availablefrom a growing number of OEMs and SVMs • Variety of fueling options available – vendors have stepped in to partner with LDCs to develop market • Federal tax credits and grants further improve NGVs’ already favorable life-cycle advantages

  35. NGVAmerica’s Role inDeveloping NGV Market • NGVAmerica is the only national advocacy organization dedicated to advocating greater use of NGVs • We’re the voice of the NGV industry on Capitol Hill • Lobby for tax incentives, grants, NGV RDD&D • Provide analyses and lobby for equitable transportation, energy and environmental policies and facilitate agency implementation • Voice of the NGV industry in national media • Write articles and/or serve as expert resource to reporters/editors concerning clean fuel and vehicle technologies, generate positive press amid din of other alt fuel/energy news • Rebut inaccuracies via op-ed and letters to the editors • We serve as the expert resource to clean fuel/ clean transportation policy advocate-allies, our member LDCs and ES&S providers

  36. Elevate national/regional exposure for NGVs and support members’ marketing and sales activities • Strategies: • Educate niche sector fleet customers and clean air/transportation policy makers about NGVs’ benefits, available vehicles and fueling options, financial and other resources, and implementation tips. • Facilitate more “feet on the street” by strengthening cooperation with Clean Cities Coalitions and other advocate-allies, re-engaging inactive natural gas utilities and boosting OEMs’ national sales-marketing activities • Create marketing-sales tools that members and advocate-allies may use or modify for use in their own efforts

  37. Our Market Development Activities • Make presentations and exhibit at trade conventions and symposia • Participate in Clean Cities events • Coordinate regional “Compelling Case For NGVs” Workshops • Write articles for trade magazines, e-newsletters and blogs • Place advertorials in leading niche market trade magazines • Present web seminars (“webinars”) • Conduct direct sales calls on select national accounts • Prepare market and technology analyses and communications tools • Respond to incoming telephone and e-mail inquiries • Re-engage inactive natural gas utilities, provide training • Liaison with vehicle OEMs to help them build NGV sales • Participate on national trade associations’ program committees

  38. Other Factors Affecting Our Industry • Climate Change Legislation • NAT GAS Act (HR 1835) • Stimulus Funding – ARRA, P.L. 111-5 • Regulatory Relief Bill • AT&T Announcement • World Market for NGVs • Strong Supply Outlook for Natural Gas

  39. Questions?Thank you for your time and interest

  40. For more information please contact: Jeff Clarke – Director of Regulatory Affairs jclarke@ngvamerica.org(202) 824-7364 Stephe Yborra - Director of Marketing & Communications syborra@ngvamerica.org / syborra@cleanvehicle.org (301) 829-2520 NGVAmerica 400 N. Capitol Street, NW - Suite 450 - Washington, DC 20001 www.ngvamerica.org Clean Vehicle Education Foundation 6011 Fords Lake Court - Acworth, GA 30101 www.cleanvehicle.org

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