Zorik Pirveysian, Air Quality Policy and Management Division Manager Policy and Planning Department

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1 Environment Committee Meeting: April 11, 2006 To: From: Environment Committee Zorik Pirveysian, Air Quality Policy and Management Division Manager Policy and Planning Department Date: March 20, 2006 Subject: Implementation of a Greater Vancouver Diesel Emission Reduction Program Recommendation: 1. That the Board: a) approve the implementation of a Greater Vancouver Diesel Emission Reduction Program and authorize $200,000 from Air Quality Reserves for implementation of this program for 2006 subject to availability of match funds from other governments or private sector; b) direct staff to allocate $200,000 for 2007 and 2008 subject to annual budget review and availability of match funds from other governments or private sector; c) direct staff to provide annual progress reports on implementation of the Greater Vancouver Diesel Emission Reduction Program; 2. That the Board direct staff to work with the federal, provincial, and local governments as well as environmental organizations, public interest groups, and the industry to develop a national diesel emission reduction program with sustainable funding; and 3. That the Board forward the report entitled Implementation of a Greater Vancouver Diesel Emission Reduction Program dated March 20, 2006 to the federal and provincial governments, municipalities and school districts fleet managers requesting them to consider participating in the Greater Vancouver Diesel Emission Reduction Program. 1. PURPOSE To request GVRD Board s approval for implementing and funding a 3-year diesel emission reduction program for the Greater Vancouver area in partnership with other governments or private sector, and working toward developing a national diesel emission reduction program. 2. CONTEXT Air Quality and Health Impacts of Diesel Engines Heavy-duty trucks, buses, ships, and non-road vehicles (e.g., bulldozers, backhoes) operated in the Greater Vancouver area are primarily powered by diesel engines because of their reliability, durability, and fuel efficiency. However, these engines emit large quantities of diesel particulate matter (DPM), commonly called soot, and nitrogen oxides (NOx) in the region. Health impacts from diesel particulate matter (a major component of PM 2.5, fine particles less than 2.5 microns in diameter) range from the increased risk of premature death to cancer, asthma, and respiratory and cardiovascular illnesses. DPM is classified as a toxic air contaminant by California Air Resources Board and a probable carcinogen by the U.S. Environmental Protection Agency. A number of studies have indicated that at least 70% of cancer risk from air pollution is associated with diesel particulate emissions. Nitrogen oxides also contribute to the formation of ground level ozone which is the major ingredient of smog, causing irritation of the respiratory

2 Page 2 of 5 system, coughing and reduced lung capacity. In addition, nitrogen and sulphur oxides emitted from diesel engines undergo chemical reactions in the atmosphere to form secondary particles which also contribute to visibility degradation. In recognition of the health impacts associated with existing levels of air pollution and the need for further reductions beyond the national regulations, the GVRD s new Air Quality Management Plan (AQMP) established a primary goal of reducing risk to public health and a secondary goal of improving visibility. Since the GVRD does not have direct authority to regulate on-road and non-road diesel engines, the AQMP includes several strategies for achieving reductions from diesel vehicles and equipment through partnerships with other levels of government and the industry. Specifically, two of the AQMP s priority actions call for the GVRD to facilitate diesel engine retrofits and the use of cleaner fuels for heavy duty trucks, buses, locomotives, and other non-road equipment. In order to support these actions, two new studies (sponsored by GVRD and other partners) on emission reduction options for on-road and non-road diesel engines were recently completed. These studies identify a number of available technologies and fuels which are capable of reducing emissions from diesel engines in a cost-effective manner. It is also estimated that for every dollar spent in diesel emission reductions, up to $13 in public health benefits are realized. Regulatory and Voluntary Efforts to Date Emissions from diesel engines used in on-road and non-road applications are regulated by the federal government which has established national engine and fuel standards (harmonized with the U.S. EPA s regulations). Since 1989, the diesel engine emission standards have progressively become more stringent, with 2007 and later model on-road diesel engines having to comply with some of the most stringent emission standards ever. Similarly, the latest lowemission standards for non-road diesel engines would be phased in from 2011 to However, these standards are only applicable to newly manufactured diesel engines, and as such, the full emission benefits of these standards will not be realized until 20 to 30 years later because of the durability and the slow turn over rate of existing diesel engines. Therefore, in order to reduce the emissions impact of existing diesel engine, additional emission reduction strategies based on available technologies and fuels should be considered and implemented to complement and accelerate the emission benefits associated with national regulations. Primary diesel reduction strategies include: 1) replacement of existing older engines with newer and cleaner engines, 2) retrofit of existing engines with available add-on control technologies (e.g., diesel particulate filters, diesel oxidation catalysts); and 3) switching to cleaner fuels (e.g., ultra low-sulfur diesel fuel, biodiesel, natural gas). Retrofit technologies which are commercially available today provide some of the most cost-effective means of reducing emissions from diesel engines. For example, diesel particulate filters (DPFs) are capable of reducing particulate matter (PM) emissions by 90% at a cost of about $6,500 per unit and $500 in annual operating and maintenance cost. Diesel oxidation catalysts can reduce particulate emissions by 20 to 50% at a cost of $1,500 per unit. To date, a number of voluntary incentive programs (primarily funded by the federal government) have been implemented to reduce the impact of diesel emissions. Under the BC School Bus Emission Reduction Project, approximately 450 school buses from 20 public schools and one private school were recently retrofitted with diesel oxidation catalysts (DOCs) and closed crankcase ventilation (mostly outside GVRD). Translink and BC Transit have also retrofitted 37 buses with DOCs through a national program (i.e., Urban Bus Retrofits Across Canada). Last year, 70 municipal trucks were also retrofitted with DOCs through a partnership project between Environment Canada, GVRD, and 9 municipalities (North Vancouver, Delta, Vancouver, Maple

3 Page 3 of 5 Ridge, New Westminster, Whistler, Richmond, Coquitlam, and Mission). Funds for this project were provided by Environment Canada and participating municipalities while GVRD staff provided technical support and managed the project. Finally, in September 2005, Environment Canada, in partnership with GVRD conducted a diesel emission reduction workshop for which the Environment Canada provided funding opportunities (up to 50%) and solicited proposals for diesel emission reduction projects. Five projects were finally selected for implementation which are currently on-hold pending availability of federal funds for FY Implementation of a Regional Diesel Emission Reduction Program Although the federally-funded voluntary incentive projects have been very successful so far, their benefits for this region have been limited because of inadequate funding for achieving significant reductions. Both the U.S. EPA and California have considered diesel emission reduction as a top priority (because of health impacts of diesel engines) and have allocated significant levels of funding for reducing these emissions. Accordingly, hundreds of millions of dollars are spent on diesel retrofit projects annually through California s Carl Moyer and other federal, state, and regional incentive programs. In addition, a newly adopted U.S. Diesel Emission Reduction Act would provide $1 billion over five years nationally on diesel emission reduction projects. In contrast, the level of funding allocated by Environment Canada for the Lower Fraser Valley in 2005 was about $150,000 which is substantially less than what is spent elsewhere on diesel projects. Therefore, there is a definite need to continue and expand the existing diesel emission reduction projects for this region to maximize public health benefits. Thus far, GVRD has not directly contributed to funding such projects and its main activities have been limited to conducting research studies and providing technical in-kind support for implementing diesel emission reduction projects (i.e., retrofitting municipal trucks with diesel oxidation catalysts). However, in accordance with the AQMP s goals and priority actions, staff is proposing that the GVRD take a more active role in addressing the air quality impacts of diesel vehicles and equipment by developing a regional program and providing funding contribution for cost-sharing the implementation of diesel emission reduction projects for the Greater Vancouver area. GVRD funding for these projects would be contingent upon availability of funds from other levels of governments and private sector. The intent of a Greater Vancouver Diesel Emission Reduction Program would be to provide financial incentives to operators of diesel vehicles and equipment to implement a number of possible strategies for reducing emissions from their diesel vehicles and equipment. Depending on availability of funds from Environment Canada (EC), GVRD (or in partnership with the Environment Canada), would conduct workshops throughout the region to present the program and solicit proposals for diesel emission reduction projects from municipalities, schools, and private fleet operators. Proposals will be reviewed by a Technical Review Committee including GVRD and EC staff based on a selection criteria (e.g., estimated reductions, cost sharing amount, cost-effectiveness, proximity to sensitive receptors) and would have to meet minimum application requirements (e.g., project description, timeline, partner funding). Funding provided by GVRD of these projects would be contingent upon a minimum of 50% match funding from other sources. In order to fund the Greater Vancouver Diesel Emission Reduction Program, staff is proposing that GVRD Board authorize $200,000 per year for at least the next three years (2006 to 2008) which will be leveraged with (and contingent upon) funding from other levels of governments and private sector. For 2006, funds could be approved from the GVRD s air quality reserves while approval of funds for 2007 and 2008 would be conducted as part of the annual budget review process. In the absence of any funding from Environment Canada, the GVRD s funding

4 Page 4 of 5 of $200,000 could generate at least $400,000 in total available funds (through match funding) for implementing diesel emission reduction projects. However, assuming the same level of funding available from Environmental Canada (i.e., $200,000) in conjunction with 50% match funds from other sources, the available funds for diesel projects could grow to at least $800,000 per year. Table 1 provides an estimate of the emission benefits associated with retrofitting heavy-duty trucks and non-road equipment with diesel oxidation catalysts assuming two levels of available funding. Table 1 Emission Benefits for Diesel Retrofits Available Funds Vehicle/Equipment Retrofits Control Technology $400, Diesel Oxidation Catalyst $800, Diesel Oxidation Catalyst Reduction Efficiency PM2.5: 30% VOC: 50% CO: 40% PM2.5: 30% VOC: 50% CO: 40% Emission Benefits (tonnes) PM2.5: 11 VOC: 22 CO: 62 PM2.5: 22 VOC: 44 CO: 129 However, considering the operation of tens of thousands of diesel vehicles and equipment in the region, higher levels of funding should be sought from the federal government for an expanded and extended program. Therefore, staff is also proposing to work with the federal, provincial and local governments, environment organizations, public interest groups and the industry to explore various funding mechanisms for developing a national diesel retrofit program with sustainable funding from the federal government. GVRD Funding for 2009 and beyond will depend on the development of a national diesel retrofit program and will be reviewed in ALTERNATIVES The Board may: a) Direct staff to proceed with development and implementation of a 3-year Diesel Emission Reduction Program from Greater Vancouver, authorize $200,000 per year from reserves for 2006, allocate $200,000 for 2007 and 2008 subject to GVRD s annual budget review and availability of match funds from other governments and private sector. This action would be consistent with the AQMP s goals and priority actions in reducing risk to public health. It would re-iterate GVRD s leadership in addressing the air quality impacts in the region, and would help improve air quality particularly in areas subject to high concentration of diesel emissions. The Board could consider adopting other levels of funding for this program. The annual progress reports on the Program implementation could provide the basis for continuation of this Program. There might be concerns over the use of public funds for subsidizing private sector, however, air quality benefits would be realized by the public. b) Take no action at this time. This action would mean that GVRD will not take an active role in implementing diesel emission reduction projects other than providing in-kind technical support. Any future air quality improvements associated with diesel emission reduction projects would be limited to possible funding or programs sponsored and implemented by Environment Canada. 4. CONCLUSION

5 Page 5 of 5 There are significant health impacts associated with diesel emissions. It is well recognized that existing regulations and standards for diesel engines are not fully protective of public health from the adverse impacts of diesel engine emissions because of the longevity of these engines and applicability of regulations to newly manufactured engines. Therefore, complementary programs (e.g., voluntary incentive programs) are needed to maximize the emissions benefits from diesel engines based on available control technologies. Implementation of a regional diesel emission reduction program would be consistent the AQMP s goals and actions and would help reduce the adverse impacts of diesel emissions and improve the air quality in the region. GVRD s funding program would be leveraged with funds from public and private sectors

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