BOARD MEETING DATE: December 4, 2009
AGENDA NO. 9
PROPOSAL:
Allocate Funds to Provide Local Incremental Incentives Under CARB Air Quality Improvement Program
SYNOPSIS:
The California Air Resources Board created the Air Quality Improvement Program (AQIP) to incentivize clean vehicle and equipment purchases. Three programs have been announced to incentivize hybrid trucks and buses, light-duty plug-in hybrid and zero-emission vehicles, and lawn and garden equipment. Staff recommends providing additional incremental incentive for these programs up to $1.5 million for hybrid trucks and buses and $500,000 for the light-duty plug-in hybrid and zero-emission vehicles from the Clean Fuels Fund, and a local match of up to $816,000 from the Rule 2202 Air Quality Investment Program Fund.
COMMITTEE:
Administrative, November 13, 2009, Recommended for Approval
RECOMMENDED ACTIONS:
Approve the allocation of the following amounts as local match:
$1.5 million to the Hybrid Truck and Bus Voucher Incentive Program (HVIP) from the Clean Fuels Fund (31);
$500,000 to the Zero Emission and Plug-in Hybrid Light-Duty Vehicle (Clean Vehicle) Rebate Project from the Clean Fuels Fund (31); and
$816,000 to Lawn and Garden Equipment Replacement Project from the Rule 2202, Air Quality Investment Program Fund (27).
Authorize the Executive Officer to transfer funds from other qualifying funding sources to reimburse the Clean Fuels Fund should funds such as but not limited to AB 923, Proposition 1B and various federal funds be deemed eligible.
Barry R. Wallerstein, D.Env.
Executive Officer
Background
In 2007, AB 118 was signed into law and authorized CARB to create the Air Quality Improvement Program (AQIP), a voluntary incentive program to fund clean vehicle and equipment projects. In April 2009, CARB adopted the AQIP guidelines and Funding Plan for FY 2009-10, which created two categories for funding: hybrid medium- and heavy-duty trucks and buses and zero-emission and plug-in hybrid light-duty vehicles.
In August 2009, CARB released the solicitation to select the administrator for the Hybrid Truck and Bus Voucher Incentive Program (HVIP). This incentive program will provide up to $45,000 per vehicle on a first-come, first-served basis for eligible hybrid trucks and buses for a total first-year program cost of $20.4 million. This incentive is approximately half of the incremental cost for a new hybrid truck or bus, so the program also seeks to leverage other funds such as local or federal grants. The HVIP solicitation closed on September 30, 2009 and CalStart was subsequently selected as the program administrator.
A similar rebate program is also being offered through CARB’s AQIP for zero-emission vehicles, such as fuel cell and battery buses and vehicles, as well as light-duty plug-in hybrid electric vehicles. The Zero-Emission and Plug-in Hybrid Light-Duty Vehicle (Clean Vehicle) Rebate Project will offer up to $20,000 per eligible vehicle for a total first year program cost of $4.1 million. This incentive is intended to cover approximately half of the clean vehicle incremental cost, but unlike the HVIP, the Clean Vehicle Rebate is paid after the vehicle is purchased or leased. CARB released the solicitation to select the administrator for the Clean Vehicle Rebate Project on September 17, 2009 and is scheduled to select the administrator by November 12, 2009.
Finally, on October 22, 2009, CARB released a solicitation to administer the Lawn and Garden Equipment Replacement (LGER) project for $1.6 million under the FY 2009-10 AQIP Funding Plan. The funds are intended to provide up to $250 to buy-down the cost of zero-emission residential lawn mowers to replace internal combustion mowers. The solicitation is open to non-attainment air districts and requires a one-to-one cost match. Unlike the previous two programs, more than one air district may be selected for award. The solicitation closes on November 15, 2009 with selections to occur by December 16, 2009.
Proposal
In order to ensure the greatest number of clean vehicles and equipment are deployed in the South Coast Air Basin, staff recommends providing local match for all three programs. Since these programs are based on a first-come, first-served basis, the local match in addition to the state incentive will provide significant savings for users in our region.
For the HVIP, staff recommends utilizing $1.5 million from the AQMD’s Clean Fuels Program as a local match. The total incentive, HVIP plus the AQMD’s local match, will not exceed the total incremental cost for the advanced technology.
Similarly for the Clean Vehicle Rebate Project, staff recommends utilizing $500,000 from the AQMD’s Clean Fuels Program as a local match to the Clean Vehicle Rebate Project. The total incentive will not exceed the total incremental cost for the advanced technology. AQMD, with a team of qualified subcontractors, submitted a proposal to administer the program, and this local match provides higher points in the evaluation process.
Finally, staff recommends utilizing a similar local match for the LGER utilizing the AQMD’s own highly successful AQIP lawn mower exchange program. In 2009, 4,000 lawn mowers were exchanged and staff is proposing to double this effort if granted the CARB AQIP funds. In order to administer twice this amount of electric lawn mowers, staff recommends a request to CARB for $816,000.
Benefits to the AQMD
The successful implementation of all three incentive programs, HVIP, Clean Vehicle Rebate Project and LGER, will achieve emission reductions of NOx, PM and other pollutants in a cost-effective and expeditious manner to meet the goals of the 2007 AQMP. In addition, replacement of diesel engines with hybrids and zero-emission vehicles will result in significant reductions of greenhouse gas emissions. The vehicles funded under this program will operate many years and will provide long-term emission reductions. Finally, the replacement of older two-stroke lawn mowers with zero-emission units has shown to be highly effective in reducing CO and VOC emissions.
Resource Impacts
The proposed local match for HVIP and the Clean Vehicle Rebate Project shall not exceed $2,000,000 from the Clean Fuels Fund (31). Sufficient funds are available from the Clean Fuels Fund, established as a special revenue fund resulting from the state-mandated Clean Fuels Program. The Clean Fuels Program, under Health and Safety Code Sections 40448.5 and 40512 and Vehicle Code Section 9250.11, establishes mechanisms to collect revenues from mobile sources to support projects to increase the utilization of clean fuels, including the development of the necessary advanced enabling technologies. Funds collected from motor vehicles are restricted, by statute, to be used for projects and program activities related to mobile sources that support the objectives of the Clean Fuels Program.
Once the HVIP and Clean Vehicle Rebate Project are fully implemented and their guidelines approved, however, other funding sources may be more appropriate and eligible as local match. Specific funds that may be appropriate based on the types of technologies incentivized may include, but are not limited to, Proposition 1B for goods movement related vehicles and school buses, AB 923 for heavy-duty vehicles and school buses, and federal funds for diesel emission reductions, transit buses, or hybrid trucks. Should these more targeted and more appropriate funds be eligible for local match, staff recommends the AQMD Executive Officer be granted authority to replace the Clean Fuels Fund, up to the specified limits authorized in this Board action, with these more appropriate funding sources as local match.
The local match for the LGER shall not exceed $816,000 from the Rule 2202 AQIP Special Revenue Fund (27). Sufficient funds are available to implement this local match.