[Author Name] [Type the abstract of the document here. The abstract is typically a short summary of the contents of the document.] Green Fleet Policy

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1 [Author Name] [Type the abstract of the document here. The abstract is typically a short summary of the contents of the document.] Green Fleet Policy Green Fleet Operations and Environmental Issues [ C o m p a n y A d d r e s s ]

2 Policy Overview Factors Driving Development of Green Fleet Plan Government Regulation Vehicle Technology Advances Fuel Cost Increases Green Fleet Plan Technology Introduction/Evaluation Implementation Plan

3 Government Regulation Energy Policy Act (EPAct) Energy Security Purpose of act was to reduce dependency on foreign oil in the transportation sector Adopted CNG as alternative fuel, purchased CNG vehicles, and constructed fueling stations Met EPAct mandates with purchases of alternative fuel vehicles and built up a bank of vehicle credits Strategy to meet mandates shifted to using bio-diesel and spending banked credits EPAct revision in included provision for an alternative compliance path Opted to use alternative compliance in 2008 Alternative compliance plan substitutes reduction of total petroleum use for purchase of alt. fuel vehicles Allows employment of various strategies including bio-diesel, hybrid vehicles, increased fuel efficient engines, and other methods to reduce total petroleum usage Clean Air Act Air Quality State classified as a serious non-attainment area under the act s regulations Point and non-point sources contribute to non-attainment classification Largest non-point source polluter is vehicle emissions Factors contributing to pollution levels are traffic volumes and road congestion Air quality mitigation addressed by states through road expansion planning, mass transit systems development, and alternative transportation programs

4 Other mitigation methods use fuels such as; ethanol, oxygenated gasoline, or ultra low sulfur diesel to reduce vehicle emissions 2010 diesel engines were required to meet stricter emission standards for SO x and NO x and require more operator attention and interaction due to particulate filter regen 2010 diesel engines must meet more stringent emissions standards. Even lower NO x and PM standards (0.2 g/bhp-hr, 0.1 g/bhp-hr) met using Selective Catalytic Reduction (SCR) or Advanced EGR technology. Climate Change Carbon Emissions Reduction Regulation of carbon emissions not finalized or codified Carbon emission reduction is central component of strategy to affect climate change impact Carbon footprint reduction achieved through use of: Fuels employing bio matter such as ethanol and bio-diesel Hydrogen as a vehicle fuel is at least 10 years into the future Ultra low sulfur diesel currently in use to meet 2007 engine emission standards Electricity as a vehicle fuel through use with niche vehicles that plugin for recharge and with hybrid drive technology

5 Vehicle Technology Advances Hybrid Drive System Hybrid drive system is a combination of a diesel or gasoline engine and an electric traction motor with regenerative braking system Current hybrid drive technology primary used in light duty vehicles Hybrid drive in heavy duty vehicles currently in production stage with additional models becoming available Advanced Diesel Engines Advanced diesel engines developed to operate on ultra low sulfur diesel fuel produce less particulate matter and lower amounts of NO x and SO x Advanced diesel engines planned for introduction into light and medium duty vehicles as method to improve fuel economy and reduce emissions Fleet applications of advanced diesel engines to be introduced in 2009 and later Fuel Cost Escalation Global Energy Markets Fuel price volatility has increased over past several years because of supply issues including; Increased world demand for petroleum Lack of refining capacity Political unrest in oil producing states/areas Natural disasters Nationalization of production facilities and resources Environmental based restriction on new source development

6 DOE Short Term Energy Outlook World oil consumption projected to grow by 1.6 million barrels per day in 2010 US consumption of petroleum expected to increase in 2010 by 160,000 barrels per day Ethanol production expected to displace another 660,000 barrels per day in 2010 Company fuel costs have increased as a result of global energy conditions in addition to Company created pressures Diesel prices have increased by 83% from 2005 to 2008 and gasoline prices have increased by 60% during the same period Total annual fuel expenditures have increased by 200% in the 2003 to 2008 period to $6.5 M Fleet size has increased from 1108 in 2003 to 1203 in 2010 a ~8% increase Per vehicle weight has increased due to size of vehicle and payload carried Operator behavior contributes to increased fuel costs through excessive idling, high speed, and quick acceleration

7 Fuel Costs Green Fleet Plan Technology Introduction/Evaluation Introduce alternative vehicles/engine technologies into the fleet in limited numbers and for specific applications Gain experience in maintenance and operation of new technologies Evaluate performance of new technologies Match fleet applications to appropriate new technology Review vehicle selection for fuel economy, emission levels, and compatibility with job requirements Base future adoption on performance evaluation from 2008 and 2009 test period Continue use of bio-diesel (B20) Implementation Plan In 2008, purchased Chevrolet Malibu hybrid sedans (6) For 2010 purchase the following units; Chevrolet hybrid pick-up trucks (3) Ford Fusion Hybrid sedans Van/pick-up trucks with the new Duramax diesel engine International/ODyne plug-in hybrid splicer truck (1) International/Eaton hybrid small bucket trucks and continue operation of current unit For purchase units proven to meet duty cycle expectations and deliver maximum economic benefits $12,000,000 Fuel Cost $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $ Year

8 Hybrid introduction fuel cost reduction estimated at $440,000 beginning in 2012 Hybrid introduction economic case assumptions Hybrid vehicles planned for manufacture actually enter market as planned Hybrid heavy and medium duty vehicles available as planned Starting in 2010 hybrid replacements are increasing as manufacturers create vehicles suited to our fleet needs Reduction of fuel use from hybrid drive system is ~30% Fuel usage based on 2007 EPACT Alternative Compliance Plan filing Partner with Corporate Communications to develop an education plan for leaders and employees that addresses: Employees behaviors impact on fuel expenditures Excessive or unnecessary idling of vehicles Rapid starts, high speeds, and quick acceleration Size and weight of vehicles impact on fleet expenditures New working height requirements Amount of on-board stock and total vehicle weight Tandem versus single axles Vehicle utilization Matching work requirements to type of vehicle Key Issues Risk to Fleet Cost Climate Change Carbon Emissions Reduction Fuel Cost Escalation Vehicle Technology Advancement Medium - High High Low $550,000 to reduce carbon footprint by 5.8% Market prices are volatile: ($4.2 M increase from 2003 to 2008) $450,000 for 2010 planned purchases

9 Factors for Consideration Reduction of Idling Potential Cost Savings Truck at idle burns ~ 1 gallon per hour 508 diesel trucks in fleet May 2010 DOE diesel cost $ 2.85 per gallon If unnecessary idling was reduced by 1 hour per day for each truck in the fleet, the reduction of fuel expenditures would equal $378,000. Change Driver Behavior Potential Cost Savings Driver behavior can produce a difference of up to 30% in fuel economy between the best and worst drivers in a fleet. (Heavy Duty Trucking, June 2008 issue) Diesel fuel used 2009 was 1,004,138 gallons 15% improvement in fuel economy equals 150,620 gallons of diesel fuel not used If driver behavior improved 15%, which led to a corresponding reduction in fuel used, the savings would be $429,000.