BOARD MEETING DATE: March 5, 2010
AGENDA NO. 41
PROPOSAL:
Approve and Adopt Technology Advancement Office Clean Fuels Program Annual Report and Plan Update
SYNOPSIS:
As a requirement of the Clean Fuels Program funding, the Technology Advancement Office must submit to the Legislative Analyst by March 31st of each year an approved Annual Report for the past year and a Plan Update for the current calendar year. Staff has reviewed the Clean Fuels Program with the Clean Fuels Advisory Group, the Technology Advancement Advisory Group, and other technical experts. Additionally, staff presented the 2010 Clean Fuels Program Draft Plan Update to the Board for review and comment at its October 2, 2009 meeting. At this time, staff is submitting the final Technology Advancement Office Clean Fuels Program Annual Report and Plan Update for Board approval.
COMMITTEE:
Technology, February 19, 2010, Recommended for Approval
RECOMMENDED ACTIONS:
Adopt the attached Technology Advancement Office Clean Fuels Program Plan Update for 2010 and include it in the AQMD’s Clean Fuels Program;
Approve the attached Technology Advancement Office Annual Report for 2009; and
Approve the attached Resolution finding that the update of the Technology Advancement Office Clean Fuels Program Plan and its proposed projects do not duplicate any past or present programs of specified organizations.
Barry R. Wallerstein, D.Env.
Executive Officer
Background
Achieving federal and state clean air standards in the South Coast Air Basin will require emission reductions from both mobile and stationary sources beyond those available from current technologies. The 2007 Air Quality Management Plan (AQMP) relies on the expedited, future implementation of cleaner mobile and stationary advanced technologies in the Basin to achieve these standards. To meet these needs and accelerate commercialization of progressively lower-emitting vehicles and advanced technologies that are not yet fully developed, the AQMD initiated a Clean Fuels Program in 1988 and established the Technology Advancement Office (TAO) to administer the Program. Concurrently, the State Legislature authorized funds for the AQMD’s Clean Fuels Program through SB 2997 and subsequently renewed this funding authorization through SB 316 in 1993. On June 8, 1999, SB 98 extended the Clean Fuels Program funding mechanism until January 1, 2005, added administrative requirements and specified the creation of and expectations for the Clean Fuels Advisory Group. On September 22, 2003, SB 288 was signed into state law and extended the Clean Fuels Program funding mechanism until January 1, 2010. On September 30, 2008, SB 1646 was signed into state law, reauthorizing these funding mechanisms, removing the funding sunset of January 1, 2010, and reinstating the five percent administrative cap.
The AQMD Clean Fuels Program is implemented as a public-private partnership in conjunction with private industry, technology developers, academic institutions, research institutions and government agencies. This public-private partnership has enabled the AQMD to historically leverage public funds with outside investment in a ratio of more than $4 of outside funding to every dollar of AQMD funding.
Health and Safety Code (H&SC) Section 40448.5.1 requires that the AQMD adopt a plan that describes the expected cost and benefits of proposed projects prior to any Clean Fuels Program expenditure after January 1, 1996, and find that the proposed projects do not duplicate programs of other organizations specified in the H&SC provision. The Board initially adopted such a plan at its March 8, 1996 meeting. SB 98 amended this provision by requiring annual updates to this Plan and 30-day public notice to specified interested parties and the public prior to the annual public hearing at which the Board takes action on the Clean Fuels Program.
SB 98 also requires the preparation of an annual report with specified contents. This annual report requires the review and approval by an advisory group and the Board, prior to submittal to specified offices of the Legislature by March 31st of each year. This legislation also specifies the make-up of the advisory group and its primary responsibilities to make recommendations regarding the most cost-effective projects that advance and implement clean fuels technology and improve public health. The membership of the advisory group was previously approved by the Board on September 10, 1999. Changes to the composition are reviewed by the Board’s Technology Committee and submitted to the Board for approval on an as-needed basis.
Proposal
This package includes an adoption resolution (Attachment A) and one combined document, the TAO Clean Fuels Program Annual Report and Plan Update (Attachment B), for the Board’s consideration. The first portion of the document is the Draft TAO Clean Fuels Program Annual Report (Annual Report) for 2009 and the second portion is the Draft TAO Clean Fuels Program Plan Update (Plan Update) for 2010. As part of the Board’s consideration of the Plan Update, the Board must make a finding that the update to the TAO Clean Fuels Program Plan and its proposed projects do not duplicate any past or present programs of specified organizations. An adoption resolution is provided in Attachment A making such a finding.
Clean Fuels Program Annual Report 2009
The Annual Report covers projects and progress of the Program for Calendar Year (CY) 2009. As discussed earlier, this report addresses all of the requirements specified in H&SC 40448.5.1(d). Specifically, the report includes the following required elements:
A description of the core technologies that the AQMD considers critical to ensure attainment and maintenance of ambient air quality standards and a description of the efforts made to overcome commercialization barriers;
An analysis of the impact of the AQMD’s Clean Fuels Program on the private sector and on research, development and commercialization efforts by major automobile and energy firms, as determined by the AQMD;
A description of projects funded by the AQMD, including a list of recipients, subcontractors, co-funders, matching state or federal funds and expected and actual results of each project advancing and implementing clean fuels technology and improving public health;
The title and purpose of all projects undertaken pursuant to the Clean Fuels Program, the names of the contractors and subcontractors involved in each project and the amount of money expended for each project;
A summary of the progress made toward the goals of the Clean Fuels Program; and
Funding priorities identified for the next year and relevant audit information for previous, current and future years covered by the report.
During CY 2009, the Clean Fuels Program executed 68 new projects or studies and modified 6 continuing contracts adding additional dollars to sponsor research, development, demonstration and deployment projects of alternative fuel and clean fuel technologies. The AQMD’s contribution to these projects was more than $6.25 million, with total project costs of more than $27.2 million from other governmental agencies, private sector, academia and research institutions. These projects address a wide range of air quality issues with a diverse mix of advanced technologies. Figure 1 shows the distribution of funding committed from the Clean Fuels Program through executed agreements in 2009. It should be noted that the executed agreements typically lag the Governing Board awards due to the time necessary to negotiate contracts. During this phase, project awards may be reduced in scope, encounter delays in execution, or may not be contracted at all due to unforeseen difficulties following Board approval. As such, the funding distribution represents a “snapshot-in-time” of the Clean Fuels Program for the calendar year.
Figure 1: Distribution of Clean Fuels Program Funds
in CY 2009 (Total: $6.25 Million)
During CY 2009, the AQMD supported a variety of projects and technologies, ranging from near-term to long-term research, development, demonstration and deployment activities. This “technology portfolio” strategy provides the AQMD the ability and flexibility to leverage state and federal funding while also addressing the specific needs of the South Coast Air Basin. Projects in CY 2009 included the further development and demonstration of plug-in hybrid and battery electric vehicle technologies; development and demonstration of hydrogen infrastructure; and continued expansion of natural gas infrastructure and vehicle deployment. The AQMD also executed two studies to evaluate the effects of compositional variations in natural gas on vehicle emissions and remote sensing measurements of heavy-duty on-road emissions.
In addition to the new projects, 25 research, development and demonstration projects and 25 technology assessment projects or studies were completed in CY 2009. Summaries for each of the technical projects are provided in Appendix C of the Annual Report.
As required, this annual report has been reviewed and approved by the SB 98 Clean Fuels Advisory Group and is due to the state by March 31, 2010.
2009 was also a remarkable year of federal funding opportunities through the American Recovery and Reinvestment Act (ARRA). The AQMD applied for and was awarded more than $78.5 million in funds through ARRA and other related funding programs. The projects align well with the Clean Fuels Program and staff will continue to pursue funding opportunities as these become available. The contracts for these projects will be reflected with next year’s annual report.
Clean Fuels Program Plan Update 2010
The Draft Clean Fuels Program Plan Update was presented for Board consideration on October 2, 2009. At that time, the Draft Plan Update was received and filed, pending further review by the Board.
The attached Plan Update for the Clean Fuels Program identifies potential projects to be considered for funding during 2010. The proposed projects reflect promising low- and near zero- or zero-emission technologies and applications that are emerging in the different source categories. This Plan Update includes a number of proposed projects, not all of which are expected to be funded in the current calendar year given the available budget. Projects not funded in 2010 may be considered for funding in future years.
In addition to identifying proposed projects to be considered for funding, this Plan Update confirms nine key technical areas of highest priority to the AQMD. These high priority areas are listed below based on the proposed funding distribution shown in Figure 2:
Hybrid and Electric Vehicle Technologies and Related Infrastructure
Infrastructure and Deployment (predominantly compressed and liquid natural gas)
Hydrogen Infrastructure and Mobile Fuel Cell Technologies
Emission Control Technologies
Engine Technologies
Fuels and Emission Studies
Stationary Clean Fuels Technologies (including renewables)
Health Impacts Studies
Outreach and Technology Transfer
It should be noted that these priorities represent the areas where AQMD funding is thought to have the greatest impact. In keeping with the diverse and flexible “technology portfolio” approach, however, these priorities may shift during the year to (1) capture opportunities such as cost-sharing by the state government, the federal government or other entities or (2) address specific technology issues which affect residents within the AQMD jurisdiction.
Figure 2 graphically depicts the potential distribution of AQMD Clean Fuels funds, based on projected program costs of nearly $16.5 million for the nine project areas discussed above. The expected actual program expenditures for 2010 will be much less than the total projected program cost since not all projects will materialize. The target allocations are based on balancing technology priorities, technical challenges and opportunities discussed previously and near-term versus long-term benefits with the constraints on available AQMD funding. The higher overall project costs projected for 2010 ($116,500,000 as reflected in Table 8 within the Plan Update) compared to 2009 reflect the $78.5 million the AQMD has been awarded to date through the Stimulus bill as well as other federal grant programs. Specific contract awards throughout 2010 will be based on this proposed allocation, the quality of proposals received and evaluation of projects against standardized criteria and, ultimately, the Board’s approval. At that time, additional details will be provided about the technology, its application, the specific scope of work, the project team capabilities and the project cost-sharing.
These technical priorities will necessarily be balanced by funding availability and the availability of qualified projects. Revenues from several sources support the AQMD’s Technology Advancement program. The principal revenue source is the Clean Fuels Program, which, under H&SC Section 40448.5 and Vehicle Code Section 9250.11, establishes mechanisms to collect revenues from mobile and stationary sources to support the program’s objectives, albeit with constraints on the use of the funds. Grants and cost-sharing revenue contracts from various government agencies, such as the California Air Resources Board, the California Energy Commission, the National Renewable Energy Laboratory and the United States Department of Energy, also support technology advancement efforts.
Figure 2: Projected Cost Distribution
for Potential Projects in 2009 ($16.5 million)
The proposed Plan Update is the result of a comprehensive planning and review process. This process has included consideration of the 2007 AQMP control measures and coordination activities involving outside organizations. As part of this process, staff hosted two one-day retreats in September 2009 and February 2010 to solicit input from the Clean Fuels Advisory Group, the Technical Advancement Advisory Group and other technical experts. During these retreats, the participants reviewed the current Technology Advancement projects and discussed near-term and long-term technologies as potential projects. These discussions, where appropriate, were fashioned into project areas and included in this year’s Plan Update. Additionally, staff presented the 2009 Clean Fuels Program Draft Plan Update to the Technology Committee on September 25, 2009, and to the full AQMD Board for review and comment at its October 2, 2009 meeting.
Based on communications with the organizations specified in H&SC Section 40448.5.1 and review of their programs, the projects proposed in this Plan Update do not appear to duplicate any past or present projects. As each individual project is recommended to the Board for funding, staff will continue to coordinate with these organizations to ensure that duplication is avoided and ensure optimal expenditure of Clean Fuels Program funds.
Attachments (EXE, 1m)
Resolution
TAO Clean Fuels Program 2009 Annual Report and 2010 Plan Update