Item No.: 5B-Supp Date of Meeting: July 17, Briefing on Air Quality Grant Funding

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1 Item No.: 5B-Supp Date of Meeting: July 17, 2018 Briefing on Air Quality Grant Funding

2 Briefing NWSA staff is exploring the following grant opportunities to supplement costs associated with emission reduction projects: Volkswagen Mitigation Settlement (VW) Diesel Emission Reduction Act (DERA) 2018 Washington State Department of Ecology Clean Diesel Grants 2018 DERA 2017 agreement with South Coast Air Quality Management District (SCAQMD) Staff is seeking confirmation from the Managing Members on the prioritized projects. With the priorities established staff is requesting that all Managing Members advocate for these priorities with local, state and federal entities. 2

3 Background - Policy The overarching Northwest Ports Clean Air Strategy goals are reduce: Diesel particulate matter emissions per metric ton of cargo by 80% by 2020, to decrease immediate and long-term health effects on adjacent communities, relative to NWSA DPM emissions per metric ton of cargo were reduced by 80% between 2005 and Greenhouse gas emissions per metric ton of cargo by 15% by 2020, to limit contributions to climate change and reduce associated environmental, health, and economic impacts, relative to NWSA GHG emissions per metric ton of cargo were reduced by 17% between 2005 and

4 Background - Policy Greenhouse Gas Policy Resolution ( ) targets are as follows: By 2030: 50% below 2005 levels (Scope 1,2, and 3 emissions) By 2050: Carbon neutral (Scope 1 and 2) 80% below 2005 levels (Scope 3 emissions) 4

5 Summary of Progress Towards NWPCAS Goals 120% 30 Emissions per Ton of Cargo Relative to % 80% 60% 40% 20% Cargo Throughput (M Tons) Cargo CO2 DPM CO2 Goal 0% Northwest Ports Clean Air Strategy (NWPCAS) goals are 15% reduction of CO 2 e and 80% of DPM emissions per ton relative to 2005 levels of cargo by NWSA achieved 17% and 80% reductions for CO 2 e and DPM respectively on airshed scale. Met goals 4 years ahead of schedule. 20 DPM Goal 5

6 GHG Emission Reduction Glidepath 1,400,000 1,200,000 Emission Reduction Measures Electric Trucks GHG Emissions (Tons per year) 1,000, , , , ,000 IMO Efficiency Shore Power Electric CHE Electric Switchers Hybrid Tugs Truck Efficiency Renewable Fuels/Offsets Targets NWPCAS Year 6

7 VW Maritime Priority Projects: 1. Shore Power 2. Cargo Handling Equipment 7

8 VW Location of Violating Vehicles Source: Draft State of Washington Proposed Volkswagen Beneficiary Mitigation Plan 8

9 VW Statewide NO x Distribution Source: Washington Department of Ecology, 2014 Comprehensive Emissions Inventory, preliminary estimates 7/9/2018 9

10 VW Statewide NO x Distribution Source: Draft State of Washington Proposed Volkswagen Beneficiary Mitigation Plan 7/9/

11 VW - Eligible categories Marine Vessels. (up to 45%, $50.7 million) Includes infrastructure for shore power as well as vessel and engine replacements. Government owned ocean-going vessel shore power infrastructure projects can be funded at up to 100%. Non-Road Equipment. (up to 5%, $5.6 million) Cargo handling equipment is eligible here. Only proposals for all electric equipment will be considered. Non-government owned cargo handling equipment replacements and repowers can be funded at up to 75%. Light Duty Zero Emission Vehicle Supply Equipment. (15%, $16.9 million) On-Road Heavy Duty Vehicles. (up to 45%, $50.7 million) New equipment only, priority for school busses and public transit. Staff are not pursuing funding for drayage trucks at this time due to the following factors: Funds are likely to be distributed after the January 1, 2019 deadline for the Clean Truck Program. VW funds must be spent on new trucks, which are not a cost-effective option for truck drivers, even with 50% grant contribution. Locomotives. (up to 5%, $5.6 million) Government owned switching locomotives can be funded at up to 100%. DERA Match. (up to 5%, $5.6 million) 11

12 VW - Project Selection Principles Guiding Principles cost effectiveness for nitrogen oxide (NOx) emission reductions (most pollution reduction per dollar); emission reductions of other air pollutants and greenhouse gasses (PM, CO2, VOCs, etc.) reducing pollution exposure of highly impacted communities; leveraging with other emission-reduction efforts; and large-scale projects that are too expensive to be funded by other grant programs. 12

13 VW Priority Project #1: Shore Power Shore power (cold ironing) eliminates at berth emissions from auxiliary engines while the vessel is at berth. Reduces indirect emissions based on the source of power PNW grids are very clean due to hydropower Good fit for VW Funding Project unlikely to occur without grant funding Electrification of operations Large total emission reduction Grant funding is especially important in shore power projects because: Infrastructure is expensive and operational cost savings alone rarely provide adequate payback period 13

14 VW Priority Project #1: Shore Power Click to edit Master title style Operational Advantage Cost savings of 10-20% by using shore power vs. burning. Creative rate structuring could further reduce operational costs and remove risk posed by demand charges Sensitive to: Cost of fuel, cost of electricity, number of ships plugging in per month (assuming an electricity rate with a demand charge) 14

15 VW Priority Project #1: Shore Power Shore Power Capable Vessels Terminal % of Call Shore Power Capable Calls Per Month Shore Power Capable Average Length of Shore Power Capable Call (hours) Average Shore Power Capable Hoteling Hours per Month T-18 43% T-30 36% T-46 57% Husky 48% PCT 56% WUT 23% T-5 30% P66 50% More of fleet may become shore power capable with increased implementation of Shore Power rule in California and possible shore power use in Asia 15

16 VW Priority Project #1: Shore Power Emission Reductions NO x VOC PM 2.5 CO 2 e NWSA Total Airshed Emissions (tons per year) 9, ,676 Emission Reductions per Terminal (tons per year) T ,478 T T ,937 Husky ,230 PCT ,302 WUT NWSA Total (current) ,525 NWSA % Reduction (current) 2% 3% 2% 2% T5 (projected) ,666 P ,477 7/9/

17 VW Priority Project #1: Shore Power Terminal Number of Berths On-Terminal Infrastructure Costs Utility Distribution Network Upgrade Costs T-18 2 $14.1 million a In Progress c T-46 2 $9.0 million a In Progress c T-30 2 $7.1 million a In Progress c T-5 2 $11.8 million a $592,250 d P66 1 $12.0 million a In Progress c PCT 2 $4.05 million b $7.5 million e Husky 2 $4.80 million b WUT 2 $5.83 million b TOTAL 15 $68.68 million TBD a 2006 study escalated by 5% per year, to be updated in July c SCL System Impact Study in progress 2018 d SCL T5 Method of Service cost estimate b Cross Engineering study from June 2018 including 75% e From Tacoma Power contingency 17

18 VW Priority Project #2: Zero Emission CHE VW requires electric equipment Targeting RTGs, possibly yard tractors and top picks VW is an opportunity for the NWSA to modernize terminal operations and likely create cost savings for tenants by reducing diesel use in favor of electricity Fits with VWs mission to electrify and replace diesel engines 18

19 VW Priority Project #2: Zero Emission CHE New electric RTG: ~$1.5 million Electric yard tractor: ~$275,000 Infrastructure: Dependent on grid system impacts of new load, number of equipment pieces using combined infrastructure, and synergy with other projects. $5.6 million could pay for 4 RTGs or 27 yard tractors, assuming 75% grant contribution and 25% match from tenants. 19

20 VW In-Kind Projects Click to edit Master title style Assist Tug Repowers Cost effective Many engines are very old and dirty Engine replacement and labor: ~$1 million for two propulsion engines Same pool of money as shore power Switching Locomotive Repowers Switchers so that emission reductions stay local Tacoma Rail switcher fleet Guaranteed to stay local Government Engine replacement: Approximately $1.5 million per engine based on 2009 locomotive repower project. 20

21 DERA 2018: Reach Stackers Click to edit Master title style Background In 2018, up to $900,000 was available, per project, in Region projects will be awarded Cost Cost per piece of equipment (subject to quotes): $750,000 Total project cost: $1.5 million DERA funds: $375,000 NWSA funds: $1,125,000 Selected Project Procure two new Tier 4 reach stackers at the EB-1 breakbulk terminal in the South Harbor Scrap three Tier 0 straddle carriers. 21

22 DERA 2018: Reach Stackers Click to edit Master title style Project Emission Reductions NO x PM 2.5 CO 2 e Tons/Yr Tons/Lifetime Percent Reduction Compared to Tier 1* 96% 98% 48% *The straddle carriers that will be scrapped in this proposal were built before Tier 1 regulations, meaning they likely emit more than the Tier 1 standard. Net reduction of 8,170 gallons of diesel fuel use per year Estimated health benefits of $38,220/yr; Lifetime Health benefit of $264,600. Timeline July 2018: Notification of Awards February 2019: Equipment order September 2019: Receive new reach stackers; scrap straddle carriers 22

23 Ecology Clean Diesel Grant Click to edit Master title style $500,000 total was available for projects within three eligible project categories: 1. Idle reduction projects using fuel-fired heaters 2. Marine shore power systems for harbor vessels 3. Scrap invectives for heavyduty on-road vehicles and buses Successfully awarded $216,000 for ~36 truck scrapping bonuses. Maximum of $10,000 bonus per truck Assumed ~$6000/truck on average. Bonus will supplement the difference between trade-in value and scrap metal value Staff will request authorization in August or September 23

24 SCAQMD DERA 2017 Transfer ten MY trucks from Southern California to the PNW and scrap 10 pre-2007 trucks. NWSA will help match truck owners in the PNW to SoCal fleets. SoCal fleet owners receive $100,000 grant toward a near zero truck and retain the proceeds of selling their truck in the PNW, capped at $30,000. Retail value of second-hand trucks $45,000- $60,000. NWSA will receive $2,500 per truck to administer the program which will be put back into the Clean Truck Fund for the loan loss reserver. Project complete by December 31,

25 Conclusion Next Steps VW Complete North Harbor on-terminal shore power cost estimates by end of July. Complete Seattle City Light system impact studies. Communicate Port priority projects to other agencies and stakeholders. Return to Managing Members for authorization to accept Clean Diesel grant (August or September 2018). Pending successful application, return to Managing Members for authorization to accept DERA grant (September or October 2018). 25

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