Alternative Fuel Vehicles:
A Guidebook for Local Governments
By
Roy F. Weston, Inc.
Carl Vinson Institute of Government
The University of Georgia
Produced for the
Conference of Southern County
Associations
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£PA °lOH/6-
Alternative Fuel Vehicles:
A Guidebook for Local Governments
January 1997
This document was produced for the Conference of Southern County Associates (CSCA). Techn.ca ass stance wa
provided by Roy F. Weston, Inc., (WESTON,) and Dr. James E. KundelL The State Assoc,ations participating in the
Regional Solid Waste/Environmental Network include: Alabama, Arkansas, Florida, Georg.a, Kentucky, M.ss.ss.pp, North
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TABLE OF CONTENTS
Section Title Page
INTRODUCTION iii
1 THE REGULATORY DRIVERS 1-1
2 ECONOMIC AND ENVIRONMENTAL DRIVERS 2-1
3 THE TECHNOLOGY 3-1
4 CREATING AND OPERATING AN ALTERNATIVE FUEL FLEET 4-1
LIST OF FIGURES
Figure Title Page
1.1 CAAA Criteria for Local Government Clean Fuel Fleet Requirements 1-3
1.2 Ozone Non-Attainment Areas in CSCA Counties (Serious or Higher) 1-4
1.3 Energy Policy Act Criteria for Local Government AFV Fleet Requirements 1-9
4.1 Life Cycle Cost Analysis 4-3
4.2 Alternative Fuel Vehicle Incentives and Laws 4-4
LIST OF TABLES
Table Title Page
1.1 CSCA Counties In Non-Attainment Areas 1-4
1.2 Purchase Requirements of the C AAA 1-5
1.3 Example of CFFV Credit Use 1-6
1.4 Purchase Requirements of EPACT 1-10
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TABLE OF CONTENTS (Continued)
LIST OF TABLES (Continued)
Table Title Page
3.1 Clean Fuels and Alternative Fuels 3-1
3.2 Availability of Alternative Fuel T echnology 3-4
3 .3 Performance and Maintenance Requirements of Alternative Fuel Vehicles 3-5
3.4 Relative Costs of Alternative Fuels 3-7
3.5 Capital Costs of Four Conversions 3-8
4.1 Choosing a Fuel 4-1
LIST OF APPENDICES
APPENDIX A - Case Studies
APPENDIX B - Alternative Fuel Vehicles Incentive Worksheet
APPENDIX C - Resources
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CONVERTING FLEETS TO ALTERNATIVE FUELS
A GUIDEBOOK FOR LOCAL GOVERNMENTS
INTRODUCTION
Many local governments in the nation are investigating fleet vehicles that operate on alternative
fuels. Local governments are motivated to consider the use of alternative fuels for many
reasons including legislative and regulatory requirements, cost savings, improved
environmental conditions, or the desire to use a domestic (and sometimes even local) fuel
source. As the United States strives to increase the use of alternative fuels, fleet vehicles are an
ideal place to start. Fleet vehicles are typically centrally purchased and centrally refueled and
have higher annual mileage and more frequent replacement schedules than personal
vehicles.
Local governments face a multitude of questions as they consider alternatively fueled fleet
vehicles. What type of fuel and technology should they use? Where can they purchase vehicles
and fuel? How much will conversion cost? What are the operational requirements of these
vehicles? Most local governments that use alternative fiiel vehicles have begun to do so
recently and do not have much documented operating experience to be drawn on to answer
these questions. This Guidebook attempts to compile some of the operating experience and
answer the questions faced by local government decision-makers as they consider using
alternatively fueled vehicles for their fleets.
Section 1 of the Guidebook identifies the current and potential future legislative and regulatory
requirements faced by local governments. Section 2 describes the non-regulatory reasons that a
local government might consider converting its fleet to alternative fuels. Section 3 of the
Guidebook describes alternative fuel options, including vehicle and fueling station technology,
costs and benefits, operations and maintenance requirements, and commercial availability.
Section 4 of the Guidebook discusses the implementation issues associated with fleet
conversion and is designed to help each local government reach its own conclusions about how
to proceed, providing the information and resources to accomplish this.
Appendix A of the report provides case studies of local governments in the South that use
alternatively fueled vehicles. The case studies have been selected with the objective of
representing various sized communities and kinds of programs. At the end of each case study is
a summary of "Lessons Learned", which highlights what involved local government officials
have indicated are important to a successful program. Appendix B of the Guidebook contains
directions for a worksheet and three of the calculations of the payback period for alternative
fuel vehicles. Appendix C contains a list of resources for more specific information about
technologies, funding programs, etc., and Appendix D contains a glossary of acronyms and
terms related to alternative fuels.
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SECTION 1
THE REGULATORY DRIVERS
There are a number of reasons that local governments may consider converting their fleets
to clean or alternative fuels. The most pressing reason for some local governments is
regulatory - they may be required by the Clean Air Act Amendments of 1990 (CAAA) to
purchase vehicles that emit less pollutants. In addition, the Energy Policy Act of 1992
(EPACT) may eventually require all local governments that meet certain size thresholds to
purchase vehicles that use fuels other than those derived from imported oil.
What do the Clean Air Act Amendments say?
The Clean Air Act, initially passed in 1967, provided the legal foundation for a national
program to control air pollution. The federal strategy to accomplish this goal was centered
around a set of National Ambient Air Quality Standards (NAAQS) based on scientific
determinations of the threshold levels of air pollution. In areas where ambient air quality is
below threshold levels, the Act's objective is to prevent the future deterioration of air
quality. In areas where air pollution exceeds the standards (i.e. "non-attainment") the
purpose of the Act is to authorize efforts to reduce air emissions to improve air quality
and achieve compliance with NAAQS.
The Clean Air Act Amendments of "
1990 (CAAA) establish tighter ffae Air Act Amendments at |££0
pollution standards for vehicle (CAAA) establish lighter poHtttion :
emissions. EPA regulations S&fcrtdferds f&r vehicle emissions,
promulgated pursuant to the CAAA
address vehicle inspection and maintenance program requirements, vehicle fueling
operations, vehicle fuel and fuel additives, maintenance of vehicle emission control
systems, and clean fuel requirements for vehicle fleet operators.
One provision of the CAAA is specifically targeted at local government fleet vehicles. The
CAAA require that all local governments that fall within the three highest levels of non-
attainment for ozone or carbon monoxide convert their fleets to fuels that result in
reduced emissions. Starting in model-year 1998, a percentage of all new fleet purchases in
these non-attainment areas must be certified as a low-emission vehicle (LEV) ultra low-
emission vehicle (ULEV), or a zero-emission vehicle (ZEV).
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What are clean fuels?
The CAAA consider as clean fuel "[any] power source used in a clean fueled vehicle that
complies with the standards and requirements applicable to such vehicle when using such
fuel or power source." The CAAA specifically mention the following fuels:
• methanol;
• ethanol;
• other alcohols;
• reformulated gasoline;
• reformulated diesel (for trucks only);
• natural gas;
• liquefied petroleum gas (propane);
• hydrogen;
• electricity; and
• any other fuel that "complies with the standards and requirements applicable to
such vehicle when using such fuel or power source."
However, just because a vehicle operates on one of these fuels does not mean it meets the
requirements of the CAAA. To qualify as a clean fuel fleet vehicle (CFFV), the particular
model and engine must be certified by the U.S. Environmental Protection Agency (EPA).
Currently, few OEMs and no converted vehicles are certified. Manufacturers, conversion
firms, and local governments operating CFFVs that are not certified attribute the lack of
certified vehicles to the cost and administrative requirements of the certification process.
Which local governments are subject to CAAA clean fuel fleet requirements?
The CAAA and subsequent regulations require that clean fuel fleet programs be instituted
in serious, severe, and extreme non-attainment areas for ozone or carbon monoxide if the
metropolitan area has a 1980 population of 250,000 or more. In these geographic areas,
all public and private fleets with 10 or more vehicles that are fueled or capable of being
fueled at a central location (not including vehicles that are regularly housed at a private
residence) must begin to purchase Clean Fuel Fleet Vehicles (CFFVs). Figure 1.1 shows a
process to determine whether a particular local government is subject to the CFFV
purchase requirements of the CAAA.
As of December 1995, the Conference of Southern County Associations (CSC A) counties
that are in areas designated as serious, severe, or extreme non-attainment areas for ozone
are shown in Table 1.1 and Figure 1.2. No counties in the CSCA areas were categorized
as serious, severe, or extreme non-attainment areas for carbon monoxide. Some
communities that fall under a lower category of nonattainment have converted their fleets
to demonstrate a commitment to improve air quality. It is important to note that the
designation as a particular category of attainment can change over time depending on
changing air pollutant levels. Any local governments in newly designated serious, severe,
or extreme non-attainment areas are subject to clean fuel fleet requirements.
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Figure 1.1
CAAA Criteria for Local Government Clean Fuel Fleet
Requirements
Is entity located within an area designated as
a serious, severe, or extreme non-attainment
area for ozone or carbon monoxide?
According to the 1980 census, is entity
located in a metropolitan area with a
population of more than 250,000?
Does fleet have more than 10 vehicles, under
26,000 lbs gross vehicle weight rating
(GVWR), that are capable 1,2 of being
centrally fueled?
^ven if fleets are not centrally fueled, if they can be centrally fueled, they are subject to
requirements.
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Table 1.1 CSCA Counties In Non-Attainment Areas
Metropolitan Area
Counties Affected
Desfert&tiOn
Atlanta, Georgia
Cherokee, Clayton, Cobb, Coweta, DeKalb, Douglas, Fayette,
Forsyth, Fulton, Gwinnett, Henry, Paulding, Rockdale
Serious
Beaumont-Port-Arthur, Texas
Hardin, Jefferson, Orange
Serious
El Paso, Texas
El Paso
Serious
Houston-Galveston-Brazoria, Texas
Brazoria, Fort Bend, Galveston, Harris, Liberty, Montgomeiy,
Waller, Chambers
Severe
Washington, D.C. (Virginia Counties)
Arlington, Fairfax, Loudon, Prince William, Stafford
Serious
Figure 1.2
Ozone Non-Attainm ent Areas in CSCA Counties
(Serious or Higher)
Which vehicles are subject to these requirements?
Starting in model year 1998, passenger cars and most categories of trucks and vans are
subject to CFFV purchase requirements. Heavy duty vehicles up to 26,000 pounds gross
vehicle weight rating (GVWR), including buses, also are subject to requirements. The
following types of vehicles are excluded:
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• motor vehicles held for lease or rental to the general public;
• dealer demonstration vehicles that are used solely for the purpose of promoting
motor vehicle sales, either on the sales lot or through other marketing or sales
promotions, or for permitting potential purchasers to drive the vehicle for pre-
purchase or pre-lease evaluation;
• emergency vehicles (defined as vehicles authorized to exceed the speed limit);
• law enforcement vehicles;
• nonroad vehicles (farm and construction vehicles);
• vehicles that are garaged at a personal residence and are not being centrally fueled;
• vehicles used for motor vehicles manufacturer product evaluations and tests;
• any vehicle with a GVWR greater than 26,000 lbs; and
• vehicles in fleets with less than 10 vehicles.
Although these types of vehicles are exempt from the purchase requirements, many local
governments still buy CFFVs for some of these purposes, especially for emergency and
law enforcement vehicles, to help them maximize the benefits realized.
When does a local government have to begin to purchase CFFVs?
—————— i If a local government answers "yes" to all the
A specified percentage of questions in Figure 1.1, it must begin to purchase
new vehicle purchases urast:: vehicles certified as CFFVs in model-year 1998. A
he CFFVs. specified percentage of new vehicle purchases must be
CFFVs. The required percentage for vehicles under
8,500 pounds GVWR starts at 30 percent and increases through the year 2000 to 70
percent of all new purchases. For vehicles between 8,500 and 26,000 pounds GVWR, the
percentage remains at 50 percent starting in 1998. Table 1.2 shows the schedule for local
governments to convert their fleets to clean fuels.
Table 1.2 Purchase Requirements of the CAAA
Model Ym
Bereent of New Vehide PurchasesWhirfi Mirth* nrfrv^
GVWR Less Than 8,500 lbs
GVWR Between 8,500 and 26,000 lbs
1998
30
50
1999
50
50
2000 and beyond
70
50
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What options does a local government have to meet regulations ?
Regulations can be met through new vehicle purchases, conversion of existing vehicles to use
clean fuels, or through the purchase of conversion credits (see below). However, either new or
converted vehicles must be certified by EPA to count toward the purchase requirement in the
CAAA. Because of the limited availability of new clean fleet fuel vehicles, many local
governments are converting new or existing conventionally fueled vehicles. Local governments
either perform these conversions themselves or through a contract with a private entity.
What incentives does the CAAA provide?
The CAAA of 1990 allow affected entities to earn credits for purchasing certified CFFVs
before model-year 1998, purchasing more certified vehicles than required in any year, or
purchasing vehicles certified to have stricter emission standards than required. Credits can
be applied to future years or sold or traded against fleet vehicle purchasing requirements
within the same non-attainment area. The fleet owner or operator only accrues credits if
purchases exceed the required amount or type of vehicle for basic compliance.
Table 1.3 illustrates one way credits can be used. In this case, purchasing two CFFVs per
year for two years prior to the effective date of the requirements allows a local
government to ease into the transition to CFFVs and reduces required purchases in future
years. Rather than purchase fewer than the number of CFFVs required in the year 2000,
the fleet manager could have sold or traded the credits with another fleet manager in the
non-attainment area.
Table 1.3 Example of CI
W CredU
Use{1'
Model
Year
Vehicles in
meet
CFFVs in
fleet
AowiaJ
Purchases
CPSV
Pnrctisse
Actual
; <®W
Purchase
Cmlit
Accrued
1996
100
10
-
2
+2
1997
100
2
10
-
2
+4
1998
100
4
10
3
5
+6
1999
100
9
10
5
5
+6
2000
100
14
10
7
5
+4
(1)The number of credits per vehicle may be greater or less than one depending on the size of the vehicle
and the emission standard met (LEV, ULEV, or ZEV).
What does the Energy Policy Act of1992 say?
The Energy Policy Act of
1992 (EPACT) is intended to
reduce the United States'
dependence on imported crude
oil by encouraging the use of
The Act requires tite use of AFVs by federal and
state governments and alternative fuel providers.
Other private and local government fleets may be
required to purchase AFVs in the future, if
alternative fuel targets are not met.
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domestic fuels. The goal is to replace at least 10 percent of motor fuels by the year 2000
and 30 percent by the year 2010 (on an energy equivalent basis). This Act mandates the
use of alternative fuel vehicles (AFVs) and provides incentives to help with compliance.
The Act requires the use of AFVs by federal and state governments and alternative fuel
providers. Other private and local government fleets may be required to purchase AFVs in
the future, if alternative fuel targets are not met.
What fuels qualify as alternative fuels?
Alternative fuels are fuels that reduce dependence on imported crude oil. With a few
exceptions (see Table 3.1), alternative fuels are the same as clean fuels. Specifically,
EPACT considers the following alternative fuels:
• methanol;
• ethanol;
• higher alcohols;
• blends of alcohol with gasoline or other fuels as long as at least 85 percent by
volume is alcohol;
• compressed natural gas;
• liquefied petroleum gas (propane);
• hydrogen;
• fuels derived from biomass;
• liquid fuels derived from coal; and
• electricity.
Dual and flexible fuel vehicles qualify and there is no requirement that the vehicle operate
on the alternative fuel.
Are local governments subject to the alternative fuel vehicle requirements?
Ultimately, EPACT requirements may ——
impact more local governments than the IMPACT re<|»ireiiie»ts
CAAA. Initially, local governments are not may isig&tf more local governments
required to purchase alternative fuel 18 thfc t&aA tfefe CAAA*
vehicles (AFVs) according to EPACT. '
However, if local governments are included in the mandate, all local governments that
meet the population and fleet size thresholds will be covered.
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The decision about whether or not local governments will be subject to these requirements
will depend on how well current fleet conversion requirements are implemented. The
federal government was scheduled to begin purchases of AFVs in 1993, with 7,500 AFVs
purchased, and increase to 75 percent of all new purchases by 1999 and beyond. State
governments are supposed to purchase AFVs, starting with 10 percent of all new
purchases in 1996 and increasing to 75 percent in the year 2000.
EPACT provides two opportunities for the U.S. Department of Energy (DOE) to
implement rules requiring local governments to purchase AFVs. The first date for
rulemaking is December 15, 1996, if DOE determines that such a mandate is necessary to
meet the alternative fuel goals of EPACT. If the DOE does not issue a rule by this first
deadline, it may finalize a later rulemaking for local governments to purchase AFVs by
January 1, 2000. DOE anticipates having a proposed rule issued for comment in July
1996. However, it is unlikely that the final rule will be issued before December 15, 1996.
Thus, local governments will probably not be subject to AFV requirements prior to 2002.
If rulemaking is implemented for local governments, the requirements will apply to all
fleets with at least 20 vehicles that can be centrally fueled, are operated in a metropolitan
area with a population of at least 250,000 (1980 census), and are controlled by an entity
that controls at least 50 such vehicles in the United States. Figure 1.3 illustrates a process
to determine whether a local government is subject to the requirements to purchase AFVs
under potential EPACT requirements.
Which vehicles are subject to the requirements?
Light duty vehicles with a GVWR of 8,500 pounds or less, including passenger cars, pick-
up trucks, and vans, are subject to alternative fuel purchase requirements. Exempted
vehicles are those held for lease, dealer vehicles held for resale, law enforcement vehicles,
emergency vehicles, defense vehicles, non-road vehicles (farm and construction), and
those normally garaged at personal residences at night. If the goals are not met, modified
fleet requirements may subject law enforcement vehicles and urban buses to the alternate
fuels requirements.
If subject to the requirements, when would local governments have to purchase
AFVs?
If the rules are issued by December 15, 1996 (which is unlikely as described above), then
local governments would be required to begin purchasing AFVs in model-year 1999.
Twenty percent of new vehicle purchases in 1999 would be AFVs, increasing to 70
percent in model-year 2006 and beyond. Table 1.4 shows the AFV purchase requirements
for each sector according to EPACT. If DOE takes the second opportunity to implement
rules (by January 1, 2000), the percentages for local governments would be 20 percent of
all new purchases in model-year 2002, escalating to 70 percent in model year 2005 and
beyond.
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Figure 1.3
Energy Policy Act Criteria for Local Government AFV Fleet
Reauirements
Did DOE issue rules by December 15, 1996 (or
January 1, 2000 for second opportunity)?
1 NO
Do vehicles operate in metropolitan statistical area
with more than 250,000 people (according to 1980
census)?
YES
Does entity operate at least 20 vehicles that can be
centrally fueled?
NO
rA
/ Not subject to \
\ requirements M
j YE^
/A
/ Not subject to \
\ requirements m
NO
~ /CA
\ requirements J
YES
Does entity control at least 50
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Table 1.4 Purchase Requirements of EPACT
P«rcenf of New Vehicle Jharthases1
Year
Federal
State
Alternative TftieJ
Provider
UeaJZPriv*tez
1993
7,500 vehicles
1994
11,250 vehicles
1995
15,000 vehicles
1996
25
10
30
1997
33
15
50
1998
50
25
70
1999
75
50
90
20
2000
75
75
90
20
2001
75
75
90
20
2002
75
75
90
30
2003
75
75
90
40
2004
75
75
90
50
2005
75
75
90
60
2005 and beyond
75
75
90
70
1 Except 1993-1995 is number of vehicles.
2 If DOE issues rules by December 15,1996.
What incentives are provided by EPACT?
Like the CAAA, EPACT provides for credits for fleets operators that purchase qualified
vehicles earlier or in greater quantities than required by the Act. For example if a county
purchases ten AFVs prior to 1999, the County could apply the credits received for those
vehicles to offset future purchases or sell the credits to another fleet. Unlike the CAAA,
which limits the exchange of credits within the non-attainment area, EPACT permits
credits to be transferred nationwide. EPACT credits and CAAA credits are not
transferable since EPACT does not set an emission related standard.
EPACT authorizes DOE to establish guidelines for states to implement alternative fuel
vehicle incentive programs. Ten million dollars per year has been authorized (for five years
from the date of enactment) for this program. As of early 1996, the guidelines for fundable
programs were being finalized. If funds are appropriated, they can be passed through
states to local governments.
EPACT offers income tax deductions for the cost of AFVs depending on the weight and
type of vehicle. The tax deductions range from $2,000 for passenger cars weighing less
than 10,000 pounds GVWR to $50,000 for heavy trucks, vans, and buses. EPACT also
provides for low interest loans for the incremental costs of purchasing AFVs or for
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converting vehicles to alternative fuels. Providers of alternative fuel refueling facilities,
including facilities dedicated to recharging electric vehicles, are eligible for a tax deduction
of up to $100,000 for the year the facilities are placed into service. There are additional
tax credits, deductions, and subsidies for electric vehicle projects.
What additional federal incentives are available?
The Congestion, Mitigation, and ,
Air Quality Improvement Program, The Conges tidft.IVlitigatioiH Air
administered by the U.S. Implement Program, administered fcy tite
Department of Transportation, 1LS. Department of Transportation,
reimburses state or local reimburses State or local goveruitieiits lor
governments for up to 80 percent to SO of the ««* Of public attmwth*!
of the cost of public alternative fuel ft* vehicfes and fmttng Mntsmmr*.
vehicles and fueling infrastructure. ******mmmm*m**rn**m*m*mmmiimimmmmmmmmmmm
This $6 billion program, established in the Intermodal Transportation Efficiency Act, is
primarily intended to improve air quality by improving traffic flow. Funded programs must
be in a non-attainment area, identified as a strategy in the State Implementation Plan, and
demonstrate air quality benefits or reduce traffic congestion. CMAQ funding extends for
two years beyond attaint to allow local governments a transition period. Houston,
Texas tapped into these funds for their alternative fuel vehicle programs (see case study in
Appendix A).
What is the role of state governments?
State governments are required to prepare State Implementation Plans defining a strategy
for improving air quality and demonstrating compliance with National Ambient Air Quality
Standards. The CAAA require states with serious, severe, or extreme non-attainment areas to
revise their State Implementation Plans to include clean-fuel fleet programs These programs
must comply with the Federal Clean Fuel Fleet requirements. States implement and enforce the
programs defined in their State Implementation Plans. States are also responsible for
administering CAAA credit programs.
Many states have deregulated the sale of alternative fuels and/or exempted these fuels
from all or a portion of the motor fuels tax. Some states offer tax credits or deductions for
capital expenses related to alternative fuel development or vehicle conversion. Several
states require that state agencies, local governments or private companies purchase a
certain percentage of alternative fuel vehicles.
The most common role of states is to offer grants or loans to local governments and
others that purchase alternative fuel vehicles or develop fueling infrastructure. The City of
Houston used grant funds from the State to purchase vehicles and develop infrastructure
(see Appendix A). The money for many of these programs comes from oil overcharge
funds from the U. S. Department of Energy or the Congestion, Mitigation, and Air Quality
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Improvement Program. However, several states have appropriated funds from their own
budget for alternative fuels programs.
Because each state has different Clean Fuel Fleet Program requirements and incentives, it
is important for local government fleet operators to work with their State regulatory
officials. Table 1.5 summarizes alternative fuel programs and contacts in the CSCA states.
Who else offers incentives?
Some private entities (mostly utilities) offer incentives for conversion. For example,
Atlanta Gas Light Company, Western Kentucky Gas, Mississippi Valley Gas, and several
North Carolina utilities offer a cash rebate for a portion of conversion costs or incremental
purchase costs of natural gas vehicles. Virginia Power offers a special rate for recharging
electric vehicles.
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Table 1.5 State Clean Fleet and Alternative Fuel Programs and Contacts
State
Programs
SterteBoefxy Office
Alabama
Alternative Fuels Program provides grants up to $25,000 per project with 50% match for converting fleets to
alternative fuels or purchasing original equipment manufacturers (OEMs).
Alabama Dept. of Economic
and Community Affairs
(334) 242-5294
Contact: Russell Moore
Arkansas
Alternative Fuels Commission established to promote alternative fuel use and assist the State to implement a state
energy strategy. In 1994, the responsibilities of the Commission were transferred to the Arkansas Energy Office.
$250,000 fund rebates up to 50% of the cost of converting vehicles to CNG, LPG, alcohol.
Arkansas Energy Office
(501)682-7377
Contact: Morris Jenkens
Florida
Clean fuels pilot program encourages State to convert their fleet to alternative fuels with goal that all vehicles must
operate on the most efficient, least polluting alternative fuels by the year 2000.
Created the Florida Gold Coast Clean Cities Coalition which must submit a plan for converting or replacing 30,000
conventionally fueled vehicles with alternatively fueled vehicles in Broward, Dade, and Palm Beach Counties by
December 31, 1996. $2.5 million to support low interest loans for AFVs/CFFVs in the Gold Coast Clean Cities
Coalition (maximum loan: $5,000 to $30,000 depending on vehicle size and type). $1.1 million available for local
government grants.
Certain suppliers of CNG are exempt from regulation as a motor fuel.
$2 million for state agencies to convert vehicles to AFVs or to pay the incremental cost of AFVs.
State and local governments exempt from the AFV annual decal fee.
All electric vehicles purchased between July 1, 1995 and June 30, 2000 are exempt from sales tax.
AFVs exempt from emissions inspection requirements.
Electric vehicles exempt from insurance surcharges.
Florida Energy Office,
Dept of Community Affairs
(904) 922-6086
Contact: Jane Rickey
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Table 1.5 State Clean Fleet and Alternative Fuel Programs and Contacts (Continued)
Slate
Slate Energy Office
Georgia
Removed authority from the Public Service Commission to regulate the sale of CNG to the public for use as a motor
fuel.
Require additional fee for a permit to dispense CNG for vehicular fuel.
The City of Atlanta established a Clean Cities organization, working towards conversion of vehicles to alternative
fuels. Issued guidelines to ensure compliance with the CAAA and EPACT with ultimate fleet conversion of 70% of
new vehicles purchased by the year 2000 in the Atlanta nonattainment area for state, local, and private fleets.
Zero interest revolving loan program available to public entities to fund conversions and incremental cost of
purchases. A companion grant program provides $400,000 (in 1993, $300,000 anticipated in 1994) to public
entities for vehicle conversion and infrastructure improvements - limited to $25,000 per applicant.
Georgia Environmental
Facilities Authority, Division of
Energy Resources
(404) 656-5176
Contact: Elizabeth S. Robertson
Kentucky
Requires the sale of reformulated gasoline in nonattainment areas beginning in 1995.
Removed authority of Public Service Commission to regulate the rates, terms, and conditions for the sale of CNG as
a transportation fuel to an end user.
Kentucky Division of Energy
(502) 564-7192
Contact: John Stapleton
Mississippi
Deregulated natural gas for use as a motor vehicle fuel.
Program to use cotton waste to make ethanol.
Mississippi Dept. of Economic
and Community Development
(601) 359-6600
Contact: Carl Burnham
North
Carolina
Requires state agencies to study the use of alternative fuels in state-owned vehicles and establish a CNG
demonstration project.
Implements the reformulated gasoline requirements of the CAAA.
Requires that all CO nonattainment areas must comply with the 2.7 weight percent oxygen content for oxygenated
gasoline from November through February.
Motor fuels tax exemption for non-anhydrous ethanol.
North Carolina Energy Division
(919) 733-2230
Contact: A1 Ebron
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Table 1.5 State Clean Fleet and Alternative Fuel Programs and Contacts (Continued)
State
Programs
State Energy Office
Oklahoma
Deregulated sale of CNG, LNG, and LPG for use as a motor vehicle fuel.
Alternative fuels exempted from excise taxes. Instead, alternative fuel vehicles are assessed a $100 per vehicle fee
annually.
No sales tax is imposed on CNG.
Income tax credit for the purchase (10 percent of cost up to $1,500) or conversion (50 percent of cost) of fleet
vehicles to alternative fuels.
$1.5 million revolving loan fund with zero interest to reimburse state, county, and municipal governments and
school districts for alternative fuel vehicles and for the installation of fueling facilities. Repayment with fuel savings
achieved by fleet. If price of alternative fuel does not remain below price of conventional fiiel replaced, repayment is
suspended.
Oklahoma Dept. Of Commerce
(405) 841-9365
Contact: Gordon Gore
South
Carolina
CNG sold by retailers for transportation can be sold at unregulated prices.
Budget and Control Board
State Energy Office
(803) 737-8030
Contact: Howard Coogler
TomHodkins
Tennessee
Resolution to urge development of "environmentally sensitive domestic alternative fuels."
Tennessee Energy Division
Dept. of Economic and
Community Development
(615)741-2994
Contact: Terry Ellis
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Table 1.5 State Clean Fleet and Alternative Fuel Programs and Contacts (Continued)
State
Programs
Texas
Requires state agencies with more than 15 vehicles to purchase alternative fuel vehicles if fuel is available and does
not cost more, reaching 90 percent of total fleet by 1998.
In nonattainment areas, metro transit authorities and local governments with fleets of 15 or more (excluding
emergency vehicles) and private fleets of more than 25 vehicles must meet low emission vehicle (LEV) exhaust
standards. By 1998, 30% of new purchases or 10% of total fleet must meet LEV standards; by 2000, 50% of new
purchases and 20% of total fleet must meet LEV standards; by 2002, 90% of new purchases 45% of total fleet must
meet the LEV standards. Transit authorities in nonattainment areas must have 50% LEVS by 1996 and 90% by
1998.
$50 million in revenue bonds, issued by the Texas Public Finance Authority, for alternative fuel projects. Funds
available to school districts, state agencies, and mass transit authorities to cover capital costs on installing refueling
systems, modifying engines or purchasing new vehicles that run on alternative fuels.
Natural gas and propane exempt from sales tax when sold as motor vehicle fuel.
Mobile Emissions Reductions Credit Program applies to purchases of low emissions vehicles. The credits may be
sold, traded or banked within the same nonattainment area. The distribution of program credits began on
September 1, 1994.
Rebates from City of Austin/Southern Union Gas, Entex, Atmos for purchase of CNG AFVs. City of Austin rebates
for any AFV.
General Services Commission
State Energy Conservation
Office
(512) 463-1931
Contact: Craig Davis
Virginia
No-charge licensing for AFVs. Exemption from HOV-lane use restriction.
Revolving fund provides loans for publicly owned alternative fuel vehicles. Fund renewed in 1994 with
appropriation of $750,000.
Vehicles manufactured to run on CNG, LPG, hydrogen, or electricity are exempt from 1.5 percent of the sales tax.
Provides tax credits of 10% of federal clean fuel tax deduction allowed for clean fuel vehicles and refueling property
to corporations, individuals and public service companies.
Mines, Minerals and Energy
Energy Division
(804) 692-3226
Contact: Susie Thomas
-------
Table 1.5 State Clean Fleet and Alternative Fuel Programs and Contacts (Continued)
State
T&osg&m
State Energy Office
West
Virginia
Grant program (up to $10,000) for conversion by local governments, school boards, and transit authorities.
Requires 50 percent matching.
Require state and local governments with 15 or more vehicles to acquire alternative fuel vehicles. In FY 1995, 20
percent of vehicle acquisition must be AFVs/CFFVs, increasing to 50 percent in 1997 (75 percent in 1998 if cost
effective).
Sale of CNG as motor vehicle fuel deregulated by State.
WV Dept. Of Administration
(304) 558-2614
Contact: Ken Miller
-------
SECTION 2
ECONOMIC AND ENVIRONMENTAL DRIVERS
As of the end of 1995, only 30 counties in the states covered by the Conference of
Southern County Associations (CSCA) were required by the CAAA to purchase CFFVs.
However, other local governments in these states, including Jefferson County, Kentucky
and Thomson, Georgia (see case studies in Appendix A) had purchased or converted to
alternative fuel vehicles (CFFVs/AFVs) and even more were planning to do so. These
local governments are motivated for reasons other than legislation or regulations. These
other reasons include economics, environmental improvement, or the desire to use a
domestic or local fuel source.
What are the economic reasons for converting to alternative fuels?
Although the up-front costs to purchase alternative fuel vehicles and construct any
necessary infrastructure is likely to be higher than continuing to purchase conventionally
fueled vehicles, many local governments that use CFFVs/AFVs have realized long-term
savings primarily due to reduced fuel and maintenance costs. This is more likely to be the
case if the vehicles are driven enough that the lower operating costs make up for the
higher capital costs. Generally, a local government must consider the following costs:
• the relative costs of the conventional and alternatively fueled vehicles;
• the cost of providing a refueling station if none are sufficiently available;
• the cost of alternative versus traditional fuel;
• operation and maintenance costs between alternative and conventional vehicles;
• administrative costs, including training staff and monitoring the program; and
• any tax credits/incentives to use CFFVs/AFVs.
Section 4 provides local governments decision-makers with guidance on performing an
economic analysis of converting fleets to alternative fuels.
In what situations are the economics for conversion favorable?
The capital costs of CFFVs/AFVs are usually higher than gasoline or diesel vehicles. Since
some clean or alternative fuels cost less than gasoline or diesel, each mile results in
savings. Thus, the more miles that a CFFV/AFV is driven, the more operational savings
can offset the higher capital costs.
-------
How can capital costs be reduced?
One of the most costly components of operating some CFFVs/AFVs is construction of a
refueling station. For compressed natural gas, for example, there must be a pipeline to
access the fuel source, at least one compressor at each site, and a dispensing mechanism.
This can cost several hundred thousand dollars for a single site. In a large geographic area
or for many vehicles, more than one refueling station may be needed, although a single
refueling station may be adequate if all CFFVs/AFVs are centrally fueled.
The economics of using CFFVs/AFVs are greatly improved if refueling stations are
already readily accessible to the fleet. Private companies may already have refueling
locations (for example, for propane)
The ewmmm <>f using OTWAFVs are or be willin8 t0 develoP them Wlth a
greatly improved if refueling stations are commitment that local governments
already readily accessible to the fleet. wil1 be Purchasing CFFVs/AFVs. or
¦ ¦ ¦ example, in the City of Houston (see
case study in Appendix A), the private
sector was willing to finance and construct a fueling station, knowing that the City would
be purchasing CFFVs/AFVs as required by the Clean Air Act Amendments (CAAA).
Even if the fuel is available but has never been used for vehicles, all that may be needed is
the dispensing mechanism, thus greatly reducing the cost of providing a refueling station.
The compressor in the natural gas delivery system is by far, the most expensive component
of the natural gas refueling system. If the compressor is already in place and only the
pumps must be added, the cost of the refueling station is greatly reduced.
If a local government owns a utility that can provide vehicle fuel, most commonly the case
with natural gas, using alternative fuels may be more attractive. The fuel supply and cost
may be more predictable. The cost may be lower due to the purchase of large amounts for
many other energy uses. In addition, using fuel provided by a local utility contributes to
the local economy. Finally, another condition that makes alternative fuels more economical
is a grant or low-interest loan program that contributes to the cost of new vehicles and/or
refueling stations.
What are the environmental reasons for converting to alternative fuels?
More than 80 percent of urban air pollution is attributed to automobile emissions. Tailpipe
and evaporative emissions from cars and trucks consist of hydrocarbons, carbon
monoxide, and nitrogen oxides. CFFVs/AFVs generally emit less pollutants than
conventionally fueled vehicles. This is the reason that Clean Fuel Fleet Vehicles (CFFVs)
are required in the regions of the country with the worst air pollution problems. Emissions
from electricity, natural gas, or alcohol-powered vehicles can be up to 90 percent lower in
toxins and ozone forming hydrocarbons than emissions from conventionally fueled
vehicles.
-------
Converting local government fleets
may only make a minor difference The conversion of fleet vehicles by government
in air quality in an area. Jefferson can promote the u$* Of Alternative fuels in
County, Kentucky (see case study other sectors by tJetl&OBStratiwgihe costs a»
-------
SECTION 3
THE TECHNOLOGY
There are a dozen different types of fuel that qualify as clean fuels or alternative fuels, only
several of which are in wide commercial use. Each of these fuels has distinct advantages
and disadvantages which a fleet manager must consider when evaluating conversion.
What are Clean Fuels and Alternative Fuels?
Both the Clean Air Act Amendments of 1990 (CAAA) and the Energy Policy Act of 1992
(EPACT) list fuels that meet their requirements (although any fuel that results in the
vehicle meeting emissions requirements qualifies under the CAAA as long as the vehicle
using the fuel is certified). For the most part, the listed fuels are the same. One exception
is that reformulated gasoline and diesel qualify under the CAAA but not under EPACT
because they do not reduce dependence on imported oil. Another exception is that fuels
derived from biomass and coal qualify under EPACT but not the CAAA because they are
not necessarily cleaner fuels. Table 3.1 identifies the types of fuels that qualify according
to the two laws.
Table 3.1 Clean Fuels and A
Iternative Fuels
Fuel
. Cteau Fuel CAAA?
Alternative Fuel ©erE-MCX?
Electricity
V
~
Ethanol
V
~
Methanol
s
~
Higher Alcohols
~
Natural Gas
~
~
Propane
~
~
Reformulated Gasoline
¦/
Reformulated Diesel
~
Liquefied Petroleum Gas
~
~
Hydrogen
¦/
~
Fuels Derived from Biomass
~
Fuels Derived from Coal
~
What are the characteristics of each of the clean and alternative fuels?
The five most commonly used alternative fuels in vehicles are electricity, ethanol,
methanol, compressed natural gas, and propane.
-------
Electrically powered vehicles have rechargeable batteries onboard which power
an electric motor. The batteries are recharged from electrical outlets which are
supplied by local power generation sources, for example, coal, natural gas, nuclear,
hydropower, or renewable resources.
Ethanol is produced from grain or other agricultural product. The available fuel
types include E85 (85 percent denatured ethanol and 15 percent gasoline) for light
duty applications and E95 (blend of 95 percent denatured ethanol and 5 percent
gasoline) for heavy duty applications.
Methanol is an odorless clear liquid produced from gas, coal, or biomass. The
available fuel types are M85 (a blend of 85 percent methanol and 15 percent
gasoline) used in light-duty applications and Ml00 (pure methanol) which
currently is used only for heavy-duty applications.
Compressed Natural Gas is extracted from underground reserves and composed
primarily of methane gas.
Propane is liquefied petroleum gas, a byproduct of natural gas processing or
petroleum refining. The fuel is usually a mix of at least 90 percent propane, 2.5
percent butane and higher hydrocarbons, and 7.5 percent ethane and propylene.
What is the difference between vehicles that operate on both alternative and
conventional fuels and single fuel vehicles?
There are two kinds of vehicles that can operate on conventional and alternative fuels: bi-
fuel and dual fuel vehicles. Bi-fuel vehicles are able to operate on either the alternative or
the conventional fuel. In these vehicles, the driver can switch fuel types if the vehicle is
running low on alternative fuel and is far from a refueling location. Dual fuel vehicles run
on a mix of alternative and conventional fuel. These vehicles are usually heavy-duty diesel
vehicles.
Dedicated vehicles run only on alternative fuels. These vehicles tend to have better
performance and improved emissions since they are designed and tuned specifically to run
on the alternative fuel instead of having to accommodate two fuels. To date, only
dedicated vehicles have been certified to comply with the CAAA.
How available is the technology for each of these fuels?
For an alternative fuel to be . . . i
an optioirfor a fleet, both the For an alternative fuel to lie m Option for a fleet,
vehicles and the fuel must be botJl vehicles and the fuel must be readily
readily available. Local available. Local governments cite the lack of a
governments cite the lack of consistent, available supply of fuel or vehicles as one
a consistent, available supply »»»*** reasons they are hesitant to convert,
of fuel or vehicles as one of
-------
the main reasons they are hesitant to use CFFVs/AFVs. Although several of the major
automobile manufacturers are producing CFFVs/AFVs, several local governments report
difficulty in getting the vehicles delivered when needed. In addition to assured availability,
most local governments want to see historic operating experience before investing in a
particular technology. Table 3.2 describes the current availability of and experience with
the technology for each of the major fuel types.
Will the technology become more readily available?
As more government and private entities commit to purchase clean or alternative fuel
vehicles, it is likely that the private sector will manufacture more vehicles and invest in
refueling infrastructure. In addition, the CAAA has set manufacturing requirements for
CFFVs/AFVs in California, which may serve as an example for the rest of the country. By
model year 1996, automobile manufacturers must produce at least 150,000 clean-fiieled
cars; for model year 1999 and beyond, manufacturers must produce at least 300,000
clean-fuel vehicles.
If the technology is not readily available, local governments are likely to get a break. The
CAAA states that purchase requirements may be delayed if vehicles meeting emission
standards are not available.
What are the operational issues associated with each fuel?
In addition to the availability of vehicles and fuel, a fleet manager must consider the
performance, reliability, and maintenance requirements of the vehicles. Although
experience with some of these technologies is limited, there is a distinct difference in the
issues associated with each fuel. Table 3.3 lists the major operational issues with each fuel.
How safe are the alternative fuels?
The National Highway Traffic Safety Administration (NHTSA) within the U.S.
Department of Transportation is authorized to assure safe performance of alternative fuel
vehicles. NHTSA issued rules, effective September 1, 1995, containing safety standards
for manufactured natural gas and propane vehicles. Rules effective March 27, 1995 cover
standards for compressed natural gas containers. Some states and industries have issued
standards for compressed natural gas and propane conversion kits, as well.
The National Fire Protection Association (NFPA) also has standards regarding the
installation of conversion kits that some states have adopted as law. NFPA 52 emphasizes
general compressed natural gas equipment qualifications; engine fuel systems compressed
natural gas compression, storage, and dispensing; and residential fueling facilities. NFPA
58 has similar contents for propane.
-------
Table 3.2 Availability of Alternative Fuel Technology
FueJ
Vehicle Availability
Vehicle Experience
Fuel Availability
Electricity
Chrysler and Ford began offering minivans in
1994.
Solectria offers pickup and sedan.
Conversions available in larger metro areas.
Chevrolet taking orders for electric pick-up trucks
available early 1997.
An estimated 2,300 vehicles were
operating in U.S. in 1995.
Sources of power can be obtained from electrical
outlets, or special connections to electric outlets in
homes or businesses.
Ethanol
Ford began offering E85 flexible-fuel sedans in
1994.
M85 vehicles can be converted by adjusting fuel
metering system.
Heavy-duty compression-ignition engines can be
converted to E95.
An estimated 900 vehicles were
operating in U.S. in 1995.
Fueling locations are currently sparse: 36 stations
in U.S. and none in CSCA states.
E95 only available through bulk suppliers.
Methanol
Ford and Chrysler began offering M85 flexible-
fuel sedans in 1994.
Detroit Diesel offers a heavy duty compression-
ignition engine.
An estimated 25,000 vehicles were
operating in U.S. in 1995.
Fueling stations are currently sparse: 88 stations
in U.S. and 7 in CSCA states.
Ml00 can be obtained through bulk suppliers in
most major cities.
Compressed
Natural Gas
Bi-fuel and dedicated vans, minivans, and light
trucks are available from Ford and Chrysler.
Larger sedans are available as of 1995.
15 other manufacturers produce compressed
natural gas specialty buses and service vehicles.
Conversion technology readily available
throughout urban areas of country.
An estimated 66,000 vehicles were
operating in U.S. in 1995.
Fueling stations for compressed natural gas can be
found in most major cities and in many rural
areas.
Over 1,000 refueling stations nationally and 314
in CSCA states in 1995.
Propane
Ford offers factory installed conversion packages
for medium-duty trucks.
Conversion technology readily available
throughout urban areas of country.
An estimated 272,000 vehicles
were operating in U.S. in 1995.
Fueling locations in most areas: 3,385 nationally
and 1,059 in CSCA states.
-------
Table 3.3 Performance and Maintenance Requirements of Alternative Fuel Vehicles
Range and Performance
Maintenance
Fueling requirements
Electricity
Cars have reported range up to 90 miles;
trucks have reported range up to 60 miles.
Battery weight limits payload.
Battery packs replaced every 30,000 miles or 3 years.
Less downtime and maintenance than gasoline vehicles.
No tune ups or oil changes.
Tires may need more frequent replacement due to vehicle weight.
Battery water requires frequent checking.
Hours for battery to
recharge.
Ethanol
Range lower than comparable gasoline
vehicle.
Power, acceleration, payload, and cruise
speed comparable to gasoline.
Requires slightly more expensive special lubricants available by
direct order from supplier.
Replacement parts must be compatible.
Local dealers provide maintenance assistance.
Same as gasoline or diesel.
Methanol
Range about half of comparable gasoline
vehicle.
Power, acceleration, and payload all
comparable to gasoline.
Requires slightly more expensive special lubricants available by
direct order from supplier.
Replacement parts must be compatible.
Local dealers provide maintenance assistance.
Same as gasoline or diesel.
Compressed
Natural Gas
Range at least one-half of comparable
gasoline vehicles.
Power, acceleration, payload, and cruise
speed are comparable to gasoline.
Longer use life than gasoline vehicles.
Fewer tune-ups and oil changes.
"Slow" fill takes up to 8
hours; "quick" fill takes 3-5
minutes for compressed
natural gas.
Propane
Range almost equal to gasoline.
Power, acceleration, payload, and cruise
speed are comparable to gasoline.
Slightly longer use life than comparable gasoline vehicle.
Generally lower maintenance costs.
Refueling comparable to
gasoline.
Tanks are filled to 80
percent to allow for
expansion.
-------
What are the capital costs of converting fleets to each alternative fuel?
The two main capital costs of converting to alternative fuels are 1) the cost to purchase
new vehicles or to purchase and install conversion kits and 2) the cost for a refueling
station. Assuming that the alternative fuel vehicles will replace existing vehicles, rather
than be new additions to the fleet, the net cost of vehicles is the cost between the
alternative and the conventionally fueled vehicle. All types of alternative fuel vehicles,
whether purchased new or converted, currently are more expensive than comparable
gasoline or diesel powered vehicles. For
ethanol or methanol, the increase in cost is All types of alternative fuel vehicles,
$500 to $2,000 for the special fittings that are whether purchased dew or converted-,
required to use these fuels in a conventionally catrentfy are wore expensive thai*
fueled vehicle. For compressed natural gas or comparable gasoline powered vehicles,
propane, conversion kits cost several mrnmmmmrnmmmMmmitmmmmmmmmimmmmmim
thousand dollars. Because the most expensive part of these converted vehicles is the tank,
the increase in cost depends on the size and number of tanks. Average electric vehicle
conversions cost an estimated $7,000, while new electric vehicles are estimated to cost
several times more than equivalent gasoline models.
Some fuels require a costly refueling station or other infrastructure. A new refueling
station for compressed natural gas can cost several hundred thousand dollars although
small fleets may be able to use a small compressing unit for a fraction of the cost.
The total cost of refueling stations depends on how many are needed which, in turn,
depends on the number and range of the vehicles. The cost may be reduced, or eliminated,
depending on the existing infrastructure. For example, the City of Thomson only needed
one refueling station (see case study in Appendix A) to serve its 36 vehicles. Because the
City already operated a natural gas system, it only needed to add a compressor and
dispenser at its maintenance facility. Still, the cost to add this totaled $35,000 in 1979.
Tables 3.4 and 3.5 contain more information on capital costs associated with each fuel.
What are the operating costs of each alternative fuel?
Compressed natural gas, propane, and electricity are generally less expensive than gasoline
or diesel (on a fuel equivalent basis). However, relative fuel costs vary tremendously based
on location and over time. Fleet prices for some fuels may be different than prices paid by
individuals since local governments may have contracts with local utilities or companies.
The cost of ethanol and methanol is generally
higher than for gasoline Compressed natural
gas, propane, and electricity are generally less
expensive than gasoline or diesel (on a fuel
equivalent basis).
The main operating costs of
alternative fuel vehicles are fuel
costs, maintenance costs, and
costs resulting from other
changes in operations. The fuel
cost of ethanol and methanol is
generally higher than for gasoline.
-------
Table 3.4 Relative Costs of Alternative Fuels
Fuel
Fuel Cost
Vehicle Cost
Other Costs
Electricity
Depends on local utility rates, usually
less than gasoline.
Estimates for conversion as high as
$25,000, average $7,000.
New cars and pick-up trucks low
$30,000s.
Minimal cost for charging facility.
New battery costs $3,000 to $4,000.
Service and diagnostic equipment if no access to
commercial maintenance facility.
Ethanol
About twice the cost of gasoline.
Conversions from $500 to $2,000.
Up to $250 more than gasoline vehicles,
due to special fittings.
Approximately $250 per hose more for nickel plate
at refueling station.
Methanol
About 50 percent more than gasoline.
Flexible fuel vehicle cost an estimated
7 percent more than equivalent gasoline
vehicle.
Up to $250 more than gasoline vehicles,
due to special fittings.
Approximately $250 per hose more for nickel plate
at refueling station.
Compressed
Natural Gas
About three-fourths of gasoline,
depending on local utility rates.
Seasonal variations in price.
Conversion cost averages $2,700 to
$5,000 per vehicle.
Cost for new vehicle averages $3,500 to
$7,500 more than comparable gasoline
vehicle.
Completely new refueling facility costs up to
$350,000.
Service and diagnostic equipment if no access to
commercial maintenance facility.
Propane
Bulk purchase can offer fuel savings over
gasoline.
Seasonal variations in price.
Averages $1,000 to $2,500.
Comparable to gasoline refueling station.
Service and diagnostic equipment if no access to
commercial maintenance facility.
Source: Burmeister, George and Katherine Mahoney, Alternative Transportation Fuels: Options for State Legislatures, State Legislative Report Vol. 17,
No. 9, May 1992.
-------
Table 3.5 Capital Costs of Four Conversions1
Jefferson Co., K¥
Thomson, OA
Houston, TX
Broward Co., FL
Vehicles
$4,000 - $5,000 2'3
$1,200 4
$5,0005
$4,000 6
Refueling Station
existing station used
$35,000 7
private
private
1 See case studies in Appendix A.
2 Including installation by contractor.
3 $5,000 - $10,000 for trucks.
4 Installed by city; labor cost (estimated to be one person for one day) not included.
5 Difference in purchase price between gasoline and natural gas vehicle.
6 $1,800 per vehicle for propane.
7 In 1979.
-------
Maintenance costs for electric, compressed natural gas, and propane vehicles tend to be
less than for gasoline powered vehicles. With fewer carbon deposits, alternate-fueled
vehicles need fewer oil changes and tune-ups (none for electric vehicles). With ethanol and
methanol, maintenance costs are likely to be slightly higher since special lubricants are
required which cost a little more than for gasoline powered vehicles.
A fleet manager must also consider changes in operations that may lead to changes in
costs. Because many alternative fuel vehicles must be refueled more frequently and
refueling stations are likely to be less accessible, drivers may spend more time refueling.
This loss in productivity may cost some local governments more money. In addition,
training of technicians and drivers is a cost.
Table 3.4 describes the operating costs for each of the fuels.
What is the net economic result of these capital and operating costs?
Every local government documents different net costs and savings resulting from the use
of alternative fuels. The City of Thomson, Georgia, who has operated alternative fuel
vehicles for 15 years, reports a net savings primarily attributed to reduced fuel costs and
reduced maintenance costs. Broward County, Florida reports similar reductions in costs.
On the other hand, the City of Houston, Texas, claims that it does not see a significant
cost savings resulting from the use of alternative fuels. Section 4 includes some guidance
on performing a cost analysis, and Appendix B has an example of cost analysis to convert
a fleet to natural gas.
-------
SECTION 4
CREATING AND OPERATING AN ALTERNATIVE
FUEL FLEET
Each local government will need to consider different factors when considering alternative fuels.
For some local governments, long-term savings may drive decisions. For others, availability of
equipment may determine when and how they shift to alternative fuel. This section assists local
government decision makers in answering questions that may arise when considering fleet
conversion.
How do we choose a fuel type?
Section 3 describes the availability, performance, maintenance, availability, and costs associated with
the five most commonly used alternative fuels. This information should be used as a guide for each
local government to evaluate which fuel type best meets its needs. Table 4.1 provides further guidance
on fuel choices based on the criteria of most importance to a local government. Some of the most
important factors, such as the accessibility of a fuel source or maintenance capabilities, will vary from
area to area. In most cases, the answer will not be straightforward because most local government
decision makers have more than one criterion to meet.
Table 4.1 Choosing a Fuel
IT¥OttwaBtlo«.«
Titen choose...
Reduce air emissions
Electricity (which, depending on the fuel source, has
the potential for zero emissions).
Reduce conversion costs
Ethanol or methanol
Reduce life cycle costs
Compressed natural gas or propane (if vehicles are
driven enough miles to break even)
Provide readily accessible refueling locations
The fuel that a private entity or the local government
has committed to provide.
Use a domestic fuel source
Electricity, ethanol, or compressed natural gas.
Avoid reducing vehicle range
Propane
Use a fuel with the most fleet experience
Compressed natural gas or propane
What are the legal requirements for conversion?
Section 88.306-94 of the Code of Federal Regulations states the requirements for a converted
vehicle to qualify as a clean fuel fleet vehicle (CFFV). Vehicles meeting these requirements are
certified through an EPA testing program which is similar to the current test procedures for new
-------
gasoline powered vehicles. This procedure ensures that the converted vehicles do indeed result in
cleaner emissions.
How do we determine how much switching to alternative fuel vehicles will cost or
save?
For local governments that are not
required to purchase alternative fuel
vehicles (CFFVs/AFVs), the
decision may be based, at least in
part, on the cost to convert to clean
or alternative fuels. Although
initially it will cost more to convert
fleets to alternative fuels, in the long run, the costs may be more than offset by savings. Therefore, it is
important to consider short- and long-term costs and savings resulting from switching to
CFFVs/AFVs.
Figure 4.1 shows one way to perform a life cycle cost analysis of switching to alternative fuel.1 At a
minimum, this analysis should be performed for typical fleet replacement with conventionally fueled
vehicles and compared to the alternative fuel vehicles of choice. A life cycle cost analysis could be done
for each fuel being considered to aid in decision-making. A local government may use this analysis to
make decisions about fuel types or to inform decision-makers about the fiscal impact of conversion.
A simpler method to assess the costs of conversion is to calculate how many miles a vehicle must travel
before the typically lower fuel costs make up for the typically higher capital costs. Figure 4.2, from the
United States Department of Energy's Guide to Alternative Fuel Vehicle Incentives and Laws, shows
how this is calculated. Appendix C contains directions on how to use this worksheet and three
calculations of the payback period for alternative fuel vehicles. These worksheets account for any
incentives received from government or a private entity but do not consider reduced maintenance
costs.
Who should convert existing vehicles?
Alternative fuel vehicles can be purchased directly from the manufacturer. The City of Houston (see
case study in Appendix A) reports that only the vehicles that were originally manufactured with the
alternative fuel equipment (and not those converted from conventionally-fueled vehicles), showed
improved emissions over the conventionally-fueled vehicles. However, because of limited availability,
local governments more commonly add conversion kits for natural gas and propane after the original
conventionally-fueled vehicle has been purchased.
Although initially it will cost more to convert fleets to
alternative fuels, in the long run, the costs may be wore
than offset by savings. Therefore, it is important to
consider short- and long-term costs and savings
resulting from the conversion.
-------
Figure 4.1
Life Cycle Cost Analysis
Perform at
net present
value for each
year of
program.
STEP 1 - Develop fleet plan.
T
1
STEP 2 - Estimate equipment cost, including
purchase cost, expected life, and salvage value.
- rolling stock
- conversion kits
(including installation)
- refueling equipment
i
STEP 3 - Estimate other start-up costs.
engineering
training
tools
T
STEP 4 - Project annual O&M costs.
- fuel
- maintenance
- ongoing training
I
STEP 5 - Compare to other fleet options.
-------
FIGURE 4.2
ALTERNATIVE FUEL VEHICLE INCENTIVES AND LAWS
AFV FUNDING WORKSHEET - State of
PART 1 - Sources of Funding
I. Sl.ne Incentives
II. I Ilitlip^/Priv.ilf Incpnlivre
+ 5
III. Si.iip laws f< Regulations
+ s
IV. f prfpral Tax Incentives
+ s
Amount You Expect lo Receive
S
Cos* of Comparable Gasoline
Vehicle
* NOTE: If you are converting existing fleet vehicles, then substitute (lie conversion cost for the Incremental CosL
2} Subtract from the Incremental Cos!, boot la. the Total Funding from the box at bottom of Part 1 to gel the Net Incremental Cost.
s[
s
s
2a
Total funding (from pan 1)
Net Increment.*' Cost
Inoemeniol Cost
(tirom box I a)
3) To frnd the $ per mile fuel cost, divide your fuel cost per gasoline gallon equivalent (gge) by your vehicle's miles per gallon (mpg). Do this
calculation for both gasoline and the alternative fuel
aj gasoline:
i pet gallon
b) alternative fuel:
c) electric
ipergge
$
/
/
/
vehicle mpg
vehicle mpg
mpg
mpg
$
S per mile tu
-------
Local governments can either install conversion equipment themselves or contract with someone else.
Conversion kits used by fleet operators must be certified by EPA or the California Air Resources
Board (C ARB) in order to avoid tampering violations. Thomson, Georgia (see case study in Appendix
A) fleet mechanics have been installing their own conversion kits for over a decade. The conversion
kits cost $1,200 and it takes one person one day to install them (barring any unforeseen problems).
Jefferson County, Kentucky contracts with several private firms to install the equipment, at a cost of
$4,000 - $5,000 for the kit and installation. Jefferson County strictly monitors the performance of the
installer by performing a safety and workmanship inspection on every vehicle, in addition to emissions
tests before and after installation. Broward County, Florida initially installed the kits themselves and
then decided to contract for the installation.
The decision on who converts vehicles depends on the number of vehicles to be converted, the
capabilities of the local government and local contractors, and the relative costs of each approach. If a
contractor is used, the local government will need to closely monitor every installation. Conversion
companies have to register with EPA and be certified as a qualified converter. Local government
should require that EPA Memo 1A, that lays out requirements for conversion, are followed. Local
governments can get this memo through EPA's Office of Mobile Sources (313-668-4310). Finally, the
local government should ask the contractor to provide the results of emissions tests before and after
conversion, any warranties regarding the conversion, and any changes to the vehicle warranty resulting
from conversion.
Who should own and operate the refueling station?
If the local government OWnS a Utility that provides
If the iot&I gOVfctffti&ertt Owitt & Utility the fuel that will be used (for example, natural gas),
tMt provides the that Will Ise wseti it may make sense for it to provide the refueling
{for example, natural gas), it may make stations. Thomson, Georgia, which owns a gas
sense for it to provide the refueling utility, operates its own single refueling station at its
stations. maintenance garage. On the other hand, private
companies may already have refueling stations (for
example, for propane) or be willing to provide them. For example, in the City of Houston, the private
sector offered to construct a sufficient number of refueling stations for the City's compressed natural
gas fleet. If a private company provides the refueling stations, the initial capital cost to local
government to use CFFVs/AFVs may be significantly reduced because often, a refueling station, is one
of the largest expenses. A local government should negotiate with the private fuel provider on a price
for fuel (based on gallons per gas equivalent), the length of time the price will be in effect, the location
of refueling sites, and hours of operation.
No matter who provides the refueling stations, they _ „ i
must be accessible. One of the most common for rdtetog
drawbacks to using alternative Ms, is the difficulty «>«W r«h.« the productfvity of
with access to refueling stations. Some alternative luel ^
vehicles have shorter ranges than conventionally fueled vehicles. Traveling long distances for refueling
could greatly reduce the productivity of the vehicle and its driver. Depending on the use of vehicles to
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be converted, the fuel source must be available at odd hours of the day. For example, if police cars
operate on alternative fuels, the refueling station probably needs to be available 24 hours each day. If
the local government decides to use the private sector to provide fuel, the provider will need to agree
to site a sufficient number of refueling stations in convenient locations that are accessible at the hours
needed.
Who should be involved in implementing an alternative fuel program?
A fleet manager is likely to depend on the private sector to implement parts of the program. A private
firm will manufacture the original vehicle. In addition, the private sector may be involved in converting
vehicles and providing refueling stations.
For the program to be successful, a fleet manager also will need to work closely with the departments
operating the vehicles. The departments will need to support the use of CFFVs/AFVs. They should be
involved in selecting the vehicles. Drivers should be trained in operating the vehicles, including
refueling. The concerns and complaints of vehicle operators, from performance issues to accessibility of
refueling locations, should be heard and, whenever possible, addressed.
The local government converting its fleet can open its program to others. In Jefferson County,
Kentucky, the federal funds for conversion are offered to all 95 municipalities in the County as well as
quasi-public agencies like the transit and water authorities. Each agency must apply to the County for
funds and the County monitors performance. One primary benefit of this approach is the cumulative air
quality improvements of converting multiple fleets.
What training will be needed?
Training needs to focus on two groups: mechanics and drivers. Depending on the level of involvement
of local government fleet mechanics in installing conversion kits or repairing alternative fuel vehicles,
they need training on the technology, safety issues, and repair of vehicles and refueling stations. Usually
the equipment manufacturer can provide this training. Some states have a specific training course that
is required for mechanics installing, diagnosing, or repairing certain types of alternative fuel vehicles.
Drivers need to be educated about the operations and safety issues associated with their vehicle,
including refueling. The City of Thomson, Georgia (see case study in Appendix A) cites errors in
refueling by new and inexperienced drivers, as one of main challenges of its alternative fuel program.
The local government mechanics working on the alternative fuel vehicles may be the best person to
provide the training to drivers.
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How should the program be monitored?
The results of using alternative fuels can
be monitored in terms of improved air
quality, vehicle performance, costs or
many other factors. The choice of what
to monitor depends on the reason that
the program was implemented and the
documentation requirements associated
with any regulatory or funding programs.
Some of the most commonly monitored
items include:
• emissions before and after conversion (and periodically after that) to estimate
improvement in air quality;
• mileage and fuel usage records to document performance and costs and to demonstrate
that bi-fuel vehicles are indeed operating on alternative fuel (this is a requirement of some
regulations and funding programs); and
• maintenance work orders on every vehicle to monitor performance and costs.
The results of using alternative fuels can be
monitored in terms of Improved air quality*
vehicle performance, costs or many other factors.
The choice of what to monitor depends on the
reason that the program was implemented and
the documentation requirements associated with
any regulator or funding programs.
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APPENDIX A
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BROWARD COUNTY, FLORIDA
I. Program Summary
Program Objective
Comply with State law.
Decrease dependence on imported oil.
Demonstrate commitment to improve air quality.
Selected Technology
Compressed natural gas, liquefied petroleum gas, electricity,
hydrogen (future).
Fleet Characteristics
1,000 vehicles total: 33 compressed natural gas, 10 liquefied
petroleum gas
By end of 1998: 312 compressed natural gas, 23 liquefied
petroleum gas, 15 electric vehicles
Funding Approach
State grant.
Implementation Approach
Conversion by contractor.
County performs maintenance.
County monitors work orders, fuel use and cost, emissions.
Costs
$4,000 for compressed natural gas conversion.
$1,700 for liquefied petroleum gas conversion.
Benefits
Reduced fuel costs.
Reduced maintenance costs.
Lower vehicle emissions.
Challenges
Finding suppliers of electric vehicles.
Reduced vehicle range.
Lessons
Be patient.
Be versatile.
Heed advice of peers.
Contact
Don Stiegerwald
(305) 357-6499
n. Background
Broward County, Florida, is a member of the Gold Coast Clean Cities Coalition which also
includes Dade and Palm Beach Counties. State law requires these three counties to develop a plan
to replace 30,000 conventional-fueled vehicles with alternative fueled vehicles.
Broward County, Florida, began its alternative fuel program in 1989 in order to decrease its
dependence on petroleum fuels and to demonstrate a commitment to a reduction in mobile
emissions to improve air quality. The County's current program uses compressed natural gas and
liquefied propane gas fuels. In addition, the County is also in the process of purchasing electric
powered vehicles to include in its fleet and is pursuing the use of hydrogen powered vehicles
which will be added in the fall of 1997.
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IV. Costs and Benefits
Conversion costs usually run approximately $4,000 per vehicle for COMPRESSED NATURAL
GAS conversions (including labor and parts) and $1,700 per vehicle for liquefied petroleum gas
conversions. According to quotes received by the County, the cost for an electrically-powered
vehicles is approximately $30,000 - $38,000 per vehicle, depending on the equipment options
provided.
Broward County's fuel usage records document reduced fuel costs as a result of the AFVs. The
maintenance log and purchase order records for maintenance parts show lower maintenance costs
than for the gasoline-powered vehicles.
In addition to the economic benefits, the County notes lower vehicle emissions. The County
periodically performs emissions tests of its vehicle fleet to determine if the AFVs are meeting the
low emission vehicle standards. Because the County has only converted vehicles previously used
as gasoline burning vehicles in its fleet, comparisons can be made between the emissions test
results taken before and after the conversion. The County has recorded improved emissions which
meet the low emission vehicle standards on its AFV vehicles.
Impediments experienced by the County include the following:
1. Difficulty getting vehicle purchases approved because of unfamiliarity with the new
technology.
2. Difficult with electrically-powered vehicles manufacturers ability to produce and deliver
vehicles.
3. The range of the AFVs has been less than that of gasoline vehicles, resulting in additional
costs and inconvenience. However, the improving technology of AFV vehicles is resulting
in longer ranges. Currently, the County's AFV vehicles average about 50-70 miles
between refueling stops.
V. Lessons for Other Local Governments
1. Be patient. When initiating an alternative fuel program, it is important to remember that
successful programs do not occur immediately. Local officials must understand that in the
long-run, these programs do yield benefits.
2. Be versatile. It is also important to experiment with different types of fuels to determine
which are best for a particular situation. Ultimately, Broward County will incorporate
three types of fuels in its program. Different types of alternative fuel vehicles work better
with certain uses or activities. For example, the County has found that electrically-
powered vehicles will be better for making short trips around the immediate area rather
than longer trips.
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3. Heed the advice of peers who have initiated alternative fuel conversion programs. There
are many options that local governments can choose to pursue when attempting to start an
alternative fuel program. Those local governments with experience in alternative fuel
conversion programs can be a valuable source of information when making critical
decision about a program.
VI. Contact
Don Stiegerwald
Broward County
Public Works Department
Office of General Services
Equipment Management Division
115 S. Andrews Avenue, Room 503
Fort Lauderdale, Florida 33301
(305) 357-6499
(305) 357-6182 FAX
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JEFFERSON COUNTY, KENTUCKY
I. Program Summary
Program Objective
Improve air quality.
Selected Technology
Compressed natural gas
Fleet Characteristics
Currently, 80 vehicles converted.
Project 500 vehicles will be converted.
Funding Approach
$1.5 million from Congestion, Mitigation, and Air Quality
Improvement Program.
Implementation Approach
County opened program to other governments.
Private contractors install conversion kits.
Extensive testing of emissions, workmanship inspection.
Costs
$400,000 to date to convert. $4,000 - $5,000 per car, $5,000 -
$10,000 per truck.
Benefits
Reduced emissions.
Stimulation of local economy.
Challenges
Limited refueling locations.
Congestion, Mitigation, and Air Quality Improvement Program
funding reimbursement procedure.
Extensive documentation required.
Lessons
Involve fleet managers early.
Create a database.
Test vehicles.
Be specific in bid solicitation for installer.
Contact
Gary Wilson
(502) 458-0944
n. Background
In 1993, Jefferson County, Kentucky (pop. 650,000) was awarded a $1.5 million grant from the
Federal Highway Administration's Congestion, Mitigation, and Air Quality Improvement Program
(CMAQ). This program reimburses state or local governments for 80 percent of the cost of
streamlining signals and improving traffic flow. In addition, a minor provision allows state and local
governments to use the funds for alternative vehicle technology. Jefferson County proposed to use the
funds to retrofit existing vehicles and to purchase new alternative fuel vehicles. One reason the County
applied for the funds was to take steps to improve air quality. The County, which includes the City of
Louisville and 95 other municipalities, was identified as a moderate non-attainment area for ozone with
a projected attainment date of 1996.
Jefferson County administers the program but shares the grant funds with other governmental or quasi-
governmental agencies in the County. The Jefferson County Air Pollution Control District (the
District), a unit of the County's Planning and Environmental Management Department, oversees the
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program. The District reviews applications, distributes funds, provides technical assistance, and ensures
program compliance.
IIL Alternative Fuel Fleet Conversion Program
A projected 500 AFVs will be used in the Jefferson County program. Any vehicle with official plates
that travels on surface roads is eligible to participate. Some of the current participants include the
County, the City of Louisville, the Louisville Water Company, the Metropolitan Sewer District, and the
Airport Authority. Each participant proposes the number and type of vehicles they intend to purchase
or convert and the fuel and technology they intend to use.
To date, approximately 80 AFVs are operating, all compressed natural gas. These vehicles are dual fuel
with the capability to run on gasoline as well as compressed natural gas, although the Louisville police
department is in the process of purchasing dedicated natural gas vehicles. As a requirement of the
program, the dual fuel vehicles must run on alternative fuel at least 80 percent of the time. Compliance
is verified by a review of fuel use and mileage records.
The AFVs range from small sedans to five ton trucks. Some are new vehicles that come with a natural
gas system; some are new gasoline-powered vehicles that the County retrofitted with a natural gas
conversion kit; and some are existing gasoline vehicles that the County "upfitted" to use natural gas.
The District estimates that 60 percent of the AFVs are existing vehicles that were converted while 40
percent are new alternative fuel vehicles. Some of the AFVs include the following.
• Jefferson County has converted approximately 25 vehicles to compressed natural gas and is
in the process of purchasing four or five heavy duty dual fuel (diesel/natural gas) trucks.
• The local transit authority is converting eight buses that operate on a downtown loop to
diesel and compressed natural gas in response to customer complaints about noise and
smoke.
• Anchorage, one of the smaller municipalities, has one compressed natural gas police car but
hesitates to invest in additional AFVs because of the inconvenience of refueling at a single
fueling location.
The County has contracts with private companies to install the natural gas kits (and propane kits, if
selected by the fleet manager) on gasoline and diesel vehicles. Agencies participating in the program
have the option of using the County's contractors or conducting their own solicitation of a contract
using acceptable bid procedures. The District monitors the performance of the contractors through an
extensive testing program, measuring the emissions of every vehicle on both fuels both before and after
the conversion is performed. In addition, a safety and workmanship inspection is performed after
installation of each conversion kit. If the conversion kit is installed incorrectly, the vehicle is sent back
to the contractor. At the beginning of the program, the equipment occasionally was installed
improperly. However, as the program has matured, the installation errors have occurred less frequently.
A major-drawback to the program is the unavailability of fueling locations. Currently, there is only one
fueling location in the County, operated by Louisville Gas and Electric. Several private companies are
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considering opening additional fueling locations. The District hopes that by purchasing or converting
500 vehicles, it will encourage companies to open fueling stations, which in turn will encourage more
companies to invest in alternative fuel vehicles.
Another impediment to broader participation is the CMAQ's funding procedure. The Federal Highway
Administration reimburses governments for expenses rather than providing money up front.
Sometimes, it is difficult for elected officials, especially in the smaller communities, to approve the
relatively large outlay of capital to purchase the vehicles or conversion kits.
A final reason that some eligible agencies may be hesitant to participate is the documentation
requirements of the program. A participant must first apply for the grant and then document expenses
with a receipt and a canceled check to be reimbursed. In addition, fuel, mileage, and maintenance
records must be maintained for each vehicle. Finally, every vehicle must be brought to the District for
testing, both before and after conversion. Although these requirements may seem burdensome to a
manager concerned about productivity, these testing and record-keeping requirements justify the
expenditure of grant funds and provide valuable information about alternative fuel vehicles.
IV. Costs and Benefits of the Program
The District estimates that to date, it has spent a total of $400,000 to purchase or convert vehicles to
use alternative fuels. Eighty percent of this cost is reimbursed through the CMAQ.
The average cost for converting an automobile in Jefferson County's program is $4,000 to $5,000. The
average cost for converting a truck is $5,000 to $10,000. The majority of the cost is for the fuel tanks.
Since Louisville Gas and Electric already operated the fueling station, there was no cost to the County
to install or operate one. Louisville Gas and Electric provides access to the existing station free of
charge.
The two major benefits of the program as cited by the District are improvement in air quality and a
boost to the local economy. The District measures the improvement in tailpipe emissions by comparing
the emissions of gasoline as compared to natural gas. The District predicts that pollution will be
reduced by 200 pounds per day once all 500 alternative fuel vehicles are operating. Perhaps more
importantly, the District hopes that its program will demonstrate the costs and benefits of alternative
fuels to local companies who will convert their fleets and further improve air quality.
The economic development benefits result from the influx of federal dollars into the local economy.
This money, which is funneled through the State Cabinet of Transportation, is provided to the District
and then to the contractor to install the alternative fuel equipment. The local contractor pays his
employees who are likely to spend their pay in Jefferson County. This transfer of money stimulates the
local economy.
V. Lessons for Other Local Governments
1. Involve fleet managers as soon as possible. Especially if multiple fleets are participating, it is
critical to involve fleet managers and other decision makers as soon as possible. Jefferson
County held introductory meetings, inviting all eligible fleets to participate. These workshops
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were effective but only reached those people who attended. A District official recommends
visiting each potential participant in his or her own office to determine their eligibility (by
determining the number and types of vehicles) and to garner support and participation.
Dedicate resources to create a database A database could help monitor and evaluate the
program. In the case of Jefferson County, it could be used to demonstrate efforts to comply
with the Clean Air Act Amendments. A database could document the number and type of
vehicles purchased or converted; the type and date of purchase or conversion; fueling and
maintenance needs; and the results of emission tests.
Test vehicles. Emission tests should be done before and after the conversion, on both fuels, to
determine the impact of conversion. In addition, a workmanship and safety inspection is critical
to make sure the conversion kits are installed correctly. A District official emphasized that if the
results of the tests and inspections are not satisfactory, the vehicle should be sent back for
repair. Allowing any leeway for vehicle performance could taint the reputation of the
technology. Also, the testing should be performed by someone with vehicle testing experience.
If a local government does not have this experience, a private contractor with experience
should be considered.
4 Be specific in the bid specifications for an installer Jefferson County chose to use a private
contractor to install the kits because the cost was lower due to the volume of vehicles
converted by the contractor. The contractor was selected based on his response to bid
specifications. The specifications should be explicit, detailed and consistent with National Fire
Protection standards (52 and 54). The procuring local government should hold a bidders
conference to address questions and comments in order to receive the best, most accurate bids.
VI. Contact
Gary Wilson
Technical Services Supervisor
Vehicles Emissions Testing Headquarters
1821 Taylor Avenue
Louisville, KY 40213
(502) 458-0944
(502) 456-9238 FAX
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CITY OF THOMSON, GEORGIA
I. Program Summary
Program Objective
To use domestic fuel source during oil
embargo.
Selected Technology
Compressed natural gas
Fleet Characteristics
104 total vehicles. 36 on compressed natural
gas.
Implementation Approach
City installs conversion kit.
Costs
$1,200 for conversion kit plus installation.
$35,000 for refueling system in 1979
Benefits
Reduced maintenance requirements.
Net savings.
Challenges
More frequent refueling.
Driver operation of refueling equipment.
Lessons
Access to fuel supply reduces costs and ensures
supply.
Use one responsible supplier.
Invest in training.
Consider dual fuel vehicles.
Contact
Emory Newsome
(706) 595-3751
IL Background
The City of Thomson, Georgia, began its conversion to a compressed natural gas fleet in 1979 and
1980, in response to the oil shortage. Concerned about the rising cost and uncertain supply of gasoline,
the Mayor and City Council decided to convert their fleet to compressed natural gas. was the
alternative fuel chosen because the City had its own natural gas system. The City continued the
program after the oil embargo ended both because the program was successful and because Thomson
already had made the capital investment in fueling equipment and vehicles.
III. Alternative Fuel Fleet Conversion Program
The City of Thomson operates 36 natural gas vehicles including police cars, pick-up trucks, and dump
trucks. The City's total fleet contains 104 vehicles (including equipment like lawn mowers, welding
machines, and street cleaners). The Mayor and City Council have directed that any vehicle that uses
gasoline and operates on the road be converted to operate on compressed natural gas.
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The City brought a natural gas pipeline into the vehicle maintenance facility and installed a compressor
and other necessary equipment to fuel the vehicles. The natural gas, which is normally at 40 psi, is
compressed to 3,600 psi and stored in cylinders for vehicle fueling.
All of the City's alternative fuel vehicles are dual fuel vehicles, that is, they can operate on both
compressed natural gas and gasoline. A driver can change fuel types using a toggle switch in the
vehicle. Gasoline is used if an alternative fuel vehicle runs out of compressed natural gas while it is
away from the vehicle maintenance facility until it can return to refuel.
The City purchases regular, gasoline powered vehicles and installs a compressed natural gas conversion
kit. Now that the City is replacing compressed natural gas vehicles, mechanics can transfer the
conversion system from the vehicle that is being replaced to the new vehicle. Transferring a conversion
system to a new vehicle requires a new mixer and electronic upgrade since most of the new vehicles
have fuel-injected, rather than carbureted engines. Still, transferring a conversion system is one-third
the cost of purchasing a new kit.
Initially, the City used natural gas conversion kits from five different companies. However, when the
systems needed repair, it was sometimes difficult to get parts. Occasionally, the City would have to
replace the entire system rather than repair it. Now, the City uses one company who provides all the
equipment and parts. With this centralized accountability, the City is able to repair rather than replace
natural gas systems and the parts are available within a few days (shipping is required since the supplier
is located in Missouri).
The head mechanic with the City of Thomson reports reduced maintenance requirements with the
alternative fuel vehicles. Because the natural gas burns cleaner than gasoline, there are less carbon
deposits and thus the vehicle requires fewer oil changes and less frequent replacement of new rings and
valves.
The vehicles do need to be refueled more frequently when using natural gas. Rather than operating for
two days before requiring refueling, the natural gas tanks (two per vehicle, each seven cubic feet) must
be refueled after four hours of operation. The drivers generally refuel when they return to the vehicle
maintenance facility at lunch time.
The primary operational difficulty reported by the head mechanic is getting drivers and operators to use
the equipment properly, especially when refUeling. New employees spend their first few days training
with an experienced driver, learning how to operate and fuel vehicles as well as the safety factors of
alternative fuel vehicles. Still, because employee turnover is high and most new employees have no
experience with alternative fuel vehicles, some operators use equipment improperly. Although the
vehicles themselves are relatively foolproof, refueling requires that the driver turn on a compressor, use
the appropriate valves, and hook up the fueling system correctly.
The City has not widely promoted its alternative fuel program. Each vehicle is labeled with a sticker
at 1 entities it as a natural fuel vehicle. There has been some television coverage and just this year, the
ty received a Clean Air Award from the United States Department of Energy.
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IV. Costs and Benefits of the Program
Although the City has not performed an in-depth analysis of the costs and savings associated with the
alternative fuels program, City officials report that the program has a net savings. The fluctuating costs
of natural gas and gasoline have the greatest impact on the degree of savings. The City does not
maintain records of how much it spends on natural gas for its fleet. The cost of natural gas to the City
of Thomson may be lower than in some communities because the City has its own gas system.
The capital costs of using natural gas vehicles include converting the vehicles and providing a fueling
system. The cost to put a new conversion kit on a vehicle is approximately $1,200. However, if an
existing conversion kit is used, which is only possible if existing AFVs are being replaced, the cost is
approximately $400 for a new mixer and electronic upgrade.
City officials report that in 1979-1980, the cost to install the refueling system was approximately
$35,000. The City is spending that much in 1996 to purchase an additional compressor. The City also
budgeted $8,000 in 1996 for spare and replacement parts. Other costs of the alternative fuels program
include the labor to convert vehicles to alternative fuels, which barring any problems can be
accomplished by one person in one day; any additional labor or loss in productivity due to increased
frequency refueling the vehicles; and the cost of training drivers and operators.
Reported savings, in addition to the lower fuel cost, include reduced maintenance cost. The other
major benefit cited by the City, although difficult to quantify, is reduced air emissions.
V. Lessons for Other Local Governments
1. Access to an alternative fuel system reduces cost and ensures supply. Because the City of
Thomson has its own gas system, it can better predict the cost of compressed natural gas.
Costs are likely to be lower because the City purchases compressed natural gas in large
quantities for many purposes. Developing fueling infrastructure only required piping in the gas
to the vehicle maintenance facility and compression. In other communities that do not have a
gas system, it may be necessary to negotiate agreements with local utilities.
2. Use one responsible equipment supplier. The City of Thomson found that a single supplier for
all conversion systems was more reliable than multiple suppliers. Once it began to use the same
exact equipment for all vehicles, the City was able to repair inoperable equipment rather than
having to replace entire conversion systems.
3. Invest in training new equipment operators. In Thomson, new vehicle drivers and operators
occasionally misuse equipment. An extensive training (and retraining) program may be needed
to make sure that new drivers and operators correctly use the equipment to minimize
maintenance costs. Also, minimizing turnover may reduce errors in operating equipment.
Alternatively, it may be worthwhile to invest in the most foolproof equipment available.
Thomson officials report less error with vehicles than with refueling equipment because if the
vehicles are not operated properly, they just don't start.
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4. Consider d"«l fiiel vehicles If the alternative fuel source is not readily accessible, for example,
if vehicles must refuel at a single location, the vehicles must be able to operate on a more
accessible fuel source. This is especially important if the vehicles travel far from the fuel source.
V. Contact
Emory Newsome
P.O. Box 1017
Thomson, GA 30824
(706) 595-3751
(706) 595-2161 FAX
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CITY OF HOUSTON, TEXAS
I. Program Summary
Program Objective
Comply with Clean Air Act Amendments of 1990 and state
requirements.
Selected Technology
Compressed natural gas (reformulated gasoline preferred but
unavailable).
Fleet Characteristics
12,000 total; 5,400 affected by requirements. 100 compressed
natural gas.
Funding Approach
Federal and state grants, including funds from Congestion,
Mitigation, and Air Quality Improvement Program.
Implementation Approach
Uses original equipment from manufacturer.
Private sector provides refueling locations.
Cost
Originally, $1,500 more per vehicle than conventionally-fueled
vehicles, now $5,000 differential.
Benefits
Reduced emissions.
Challenges
Limited range of vehicles.
Changing regulatory requirements.
Original vehicles recalled.
Lessons
Seek independent sources of information.
Analyze situation before making decisions.
Talk to peers.
Contact
Dewayne Huckaby
(713) 658-4517
II. Background
The City of Houston, Texas (population: 1.75 million) began its alternative fuel program in 1989
in response to the ozone attainment problems experienced by its metropolitan area and the
regulatory mandates issued by federal and state governments. The City is located within a serious
ozone nonattainment area as identified under the Clean Air Act Amendments of 1990 (CAAA).
Therefore, the City must meet the requirements of the CAAA. Under the CAAA, each state is
required to enforce the regulations as set-out by the EPA. The State of Texas has issued its
regulations which parallel the federal CAAA regulations and require the City to comply with the
following:
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• By the year 1998 - 30 percent of the City's new fleet purchases must meet the low
emission vehicle standards or 10 percent of the total applicable fleet (about 5400 of its
vehicles) must meet the low emission vehicle standards set by the regulations.
• By the year 2000 - 50 percent of the City's new vehicle purchases must meet the low
emission vehicle standards and 20 percent of its total applicable vehicle fleet must meet the
low emission vehicle standards set by the regulations.
• By the year 2002 - 90 percent of the City's new vehicle purchases must meet the low
emission vehicle standards and 50 percent of its total applicable vehicle fleet must meet the
low emission vehicle standards set by the regulations.
The City determined that the best strategy for cost effectively meeting these regulations is to buy
vehicles which use reformulated gasoline, except when alternative fuel vehicles are required
according to federal or state law since reformulated gasoline does not qualify as an alternative fuel
according to the Energy Policy Act of 1992. However, since the City found no available
reformulated gasoline vehicles on the market, it is purchasing compressed natural gas vehicles to
meet the CAAA standards.
HI. Alternative Fuel Fleet Conversion Program
The City of Houston currently maintains a fleet of approximately 100 compressed natural gas
vehicles which include passenger and light duty vehicles. Of the 100 compressed natural gas
vehicles, 25 are compressed natural gas dedicated and 75 are bi-fueled vehicles. The City
maintains a total fleet of approximately 12,000 vehicles including heavy rolling stock, of which
8,000 are trucks and passenger vehicles. Approximately 5,400 of these vehicles fall under the
affected categories of the federal and state regulations.
The City decided on compressed natural gas as its alternative fuel because of its own analysis of
different alternative fuels available on the market. The conclusion of the analysis resulted in the
City choosing compressed natural gas for the following reasons:
• Compressed natural gas was the only fuel that was significantly cheaper than gasoline
• Compressed natural gas was a cleaner burning fuel than gasoline or other alternative fuels
• Private sector compressed natural gas fuel providers were the only providers that would
support the program through the contribution of test vehicles to the City, at no cost, for the
analysis. Also they were willing to finance and construct fueling stations throughout the area.
The City purposely wanted to seek private sector fuel providers to encourage other entities to
use alternative fuels. With available compressed natural gas fueling stations, other companies
could avoid the potential start-up cost associated with providing refueling stations for its
vehicles.
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• The City wanted to select one alternative fuel to use in its fleet and compressed natural gas
was the only fuel that met the qualifications listed above.
In addition to its decision to use compressed natural gas, the City also conducted testing of air
emissions on vehicles with compressed natural gas conversion kits versus the purchase of Original
Equipment Manufactured (OEM) vehicles. The conclusion resulted in a decision to purchase
OEM vehicles because vehicles converted using the conversion kits produced inadequate results
for air emissions. In most cases, the emissions from conversion kits tested no better than the
gasoline powered engines. OEM vehicles tended to burn cleaner and met the low emission vehicle
standards set-out by the regulations. The City began by purchasing 110 GM compressed natural
gas vehicles at a cost differential of $1,500 per vehicle over the gasoline burning equivalent. The
City received a federal grant which paid for 50 percent of these vehicles. The City was later
notified by GM that due to a fuel tank problem, all of the vehicles would have to be recalled and
that GM would no longer produce the compressed natural gas vehicles. This prompted the City to
convert all of its 110 compressed natural gas vehicles to gasoline burning engines. The City was
given a rebate from GM to assist in paying for these conversions. In order to continue its
program, the City was then forced to find other manufacturers of compressed natural gas vehicles.
One detriment to using the compressed natural gas vehicles in Houston is their limited range.
Gasoline powered engines have an estimated range of 250 - 350 miles per tank. Compressed
natural gas vehicles have a range of 80 to 100 miles with the fuel tanks that the manufacturer
places on the vehicle. With an additional tank installed, the range increases to 150 to 180 miles;
however, there is an additional cost associated with the installation of the tank. The limited range
also creates an inconvenience and additional cost associated with man hours required for
refueling. To address this, manufacturers are designing compressed natural gas vehicles with
larger fuel tanks.
Changing regulatory requirements since 1989 have also had a heavy influence on the City's
program since these changes require the City to adjust its program accordingly. The State
originally required alternative fuel vehicles in S.B. 740 and 769 which did not include
reformulated gasoline. Then in 1995, the State enacted S.B. 200 rolling back the alternative fuel
vehicle mandates and requiring only that applicable fleets meet the low emission vehicle exhaust
standards. Therefore, the City shifted its strategy toward using reformulated gasoline and low
sulfur diesel fuels which previously did not meet requirements.
A final impediment to using compressed natural gas vehicles in Houston is the perceived lack of
reliability of the vehicles. The GM recall of compressed natural gas vehicles resulted in a loss of
confidence by City workers in the structural soundness of the vehicle.
IV. Cost and Benefits of the Program
According to its own cost monitoring measures, the City has not realized any significant cost
savings associated with its alternative fuel program. During recent years, gasoline prices have
continued to drop resulting in a reduction in the cost differential between compressed natural gas
-------
and gasoline. In addition, the current cost differential between compressed natural gas and
gasoline powered vehicles has risen to approximately $5,000 per vehicle.
The City continues to receive support in the form of federal and state grants which contribute
significantly towards the cost of additional compressed natural gas vehicles. The City plans to
purchase approximately 63 OEM (Original Equipment Manufacture) compressed natural gas
dedicated vehicles this year and will receive matching funds from the state's Alternative Fuels
Counsel Program totaling about 80 percent of the cost of the vehicles. Additional assistance will
also be received from the federal Congestion, Mitigation, and Air Quality Improvement program.
The federal and state assistance received from these programs has been instrumental in funding
the City's program.
V. Lessons for Other Local Governments
1. Seek independent sources of information when evaluating; what type of program to implement.
It is very important to obtain information from certified independent sources in order to limit
the reliance on representations from parties that have an interest in the outcome of the
program.
2. Analyze the existing situation. Local governments should assess the conditions of the area in
order to determine the needs that the program should address. For example, consider the air
quality of the area according to the EPA standards. Analyze why the program should be
established (i.e. to comply with regulations, to meet air quality standards, to decrease reliance
on petroleum fuels). Analyze the types of alternative fuels and alternative fuel vehicles that are
accessible, feasible, and meet all regulatory requirements. The problem or need to be
addressed will help determine the type of program to be implemented.
3. Talk to peers in other local governments that have initiated programs These entities are often
the best sources of information and can be very valuable during the decision making process.
VI. Contact
Dewayne Huckaby
City of Houston
Office of Energy Management (713) 658-4517
Finance and Administration Department (713) 658-4458) FAX
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APPENDIX B
ALTERNATIVE FUEL VEHICLE INCENTIVES
WORKSHEET1
-------
ALTERNATIVE FUEL VEHICLE INCENTIVES AND LAWS
Alternative Fuel Vehicle Incentives Worksheet
Clean Cities realizes that most of you do not have the time to search for funding opportunities. Therefore, this guide identifies
available funding opportunities and presents the information clearly and concisely. We have made every effort to replace wordy
descriptions with $ signs and numbers, because this funding guide is all about saving you money. To take this idea of $ signs and
numbers one step further, we have created an easy-kxjse worksheet so that you can calculate a cumulative AFV funding potential.
Examples of completed worksheets are included in this guide as well as a blank worksheet for you to calculate your potential savings.
An additional perforated blank worksheet can be found at the end of the book.
The worksheet is composed of two parts. The first part includes a section for tabulating various potential sources of funding. The
second part of the funding worksheet allows you to calculate the individual payback periods for your AFV purchases.
Completing Part 1 of the Worksheet
To complete the first part of the worksheet on sources of funding, please turn to your state's section of this book. To help identify
incentives with dollar values, we have highlighted in green those incentives that can be plugged into the worksheet Look at the AFV
funding opportunities in your state and insert into the worksheet those incentives for which you are eligible. In addition, read
through your state's section to see if there are any other possible sources of funding. You may need to make some phone calls to
get the details on some programs.
Part 1 of the worksheet, Sources of Funding, is divided into four headings: I. State Incentives, II. Utilities/Private Incentives, III. State
Laws & Regulations, and IV. Federal Tax Incentives. Headings I - III correspond to headings under each state section. Heading IV
corresponds to the Federal section of the book, starting on page 128.
I. State Incentives - If any state incentives apply to you, fill in the name of the programs on the lines, and enter the
total dollar amount in the corresponding box under the "Amount You Expect to Receive" column.
II. Utilities/Private Incentives - If your local utility has an incentive program listed, you can insert that into the
worksheet here. You may want to call the contact person listed to get the details on the program. In addition to
what is listed, many local utility companies will work with customers on a case-by-case basis to provide custom
incentives for AFVs. Call the local utility in your area for details. Some alternative fuel providers that are not
utilities offer incentives for AFVs. In addition, when purchasing a new vehicle, check with the manufacturer for any
rebates.
HI. State Laws & Regulations - Some state laws and regulations can provide savings for AFVs. For instance, several
states offer sales tax exemptions for AFV purchases. If your state offers this exemption, you could figure out how
much tax you would have had to pay and enter that amount in the worksheet If the fuel tax in your state is lower
on your alternative fuel of choice than on gasoline, you could calculate your fuel tax savings by multiplying the
difference between the gasoline fuel tax and the alternative fuel tax by the vehicle's miles per gallon (mpg) to find
the dollars per mile fuel tax savings. Then multiply the dollars per mile fuel tax savings by the annual driving
distance you expect for your vehicle to find the fuel tax savings for the first year. Again, enter the total amount in
the corresponding box.
IV. Federal Tax Incentives - The Federal tax incentives on page 128 can be plugged right into the worksheet For
electric vehicles, the tax credit of 10% of the vehicle cost, up to $4,000 can be entered directly in the
corresponding box under numeral IV. For other AFVs, the value of the tax deduction will depend on your tax rate.
To find the dollar value of the tax deduction, multiply the amount of the deduction by your tax rate. For example,
if you were purchasing an AFV that qualified for the $2,000 tax deduction, and your income level put you in the
28% tax bracket, the value of the tax deduction would be $560. Check with your tax advisor for the details of
how the Federal tax incentives would apply to your specific situation, or call the Internal Revenue contact person
listed with the Federal tax incentives on page 128.
Once you have identified all the incentives that apply to you, simply add them up to see your potential savings, and enter the total in
the box labeled Total Funding.
B-1
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ALTERNATIVE FUEL VEHICLE INCENTIVES AND LAWS
Completing Part 2 of the Worksheet
Part 2 of the worksheet involves determining the payback period for your AFV. To calculate the payback period, follow these
step-by-step instructions.
1. Determine the Incremental Cost for your vehicle by subtracting the cost of a comparable gasoline vehicle from
the initial cost of your AFV. For converting existing vehicles, use the conversion cost as the Incremental Cost.
2. Subtract the Total Funding that you calculated in Part 1 from the Incremental Cost (la). This will give you the Net
Incremental Cost (2a) of the AFV. If the Net Incremental Cost is less than zero, then your incentives offset the
incremental cost for the AFV. You do not need to continue to figure your payback period, because you do not
have any additional costs to pay back. For most people, the incentives will not be enough to cover the additional
incremental costs of the AFV. However, if it costs you less to run your vehicle on the alternative fuel than it would
to run it on gasoline, then you can use steps 3 through 5 to determine how many miles you will need to drive the
vehicle to save enough in fuel costs to pay back the Net Incremental Cost of the AFV.
3. Determine your fuel costs per mile for using both the alternative fuel and gasoline. Complete section 3a below,
and then complete one of the two remaining sections, 3b or 3c, depending on the type of fuel for your AFV.
a) For gasoline, divide the per gallon price of gasoline by the vehicle's miles per gallon (mpg). For
example, if the average price in your city for a gallon of gasoline is $1.20, write $1.20 in the box
labeled "$ per gallon." If your vehicle gets 20 miles per gallon, write 20 in the box labeled
"vehicle mpg." Then divide $1.20 by 20 to get $0.06 per mile fuel cost.
b) For the alternative fuel, divide the price per gasoline gallon equivalent (gge) by the vehicle's mpg
when operating on the alternative fuel. If you are buying a new vehicle, the manufacturer can
provide you with this number. If you are converting a vehicle, the conversion company can
provide you with an estimate of the mpg. For example, if you are converting to a natural gas
vehicle (NGV), and natural gas will cost you $0.75 per gge, write $0.75 in the box labeled
"$ per gge." If the vehicle, once converted to natural gas will get 20 miles per gge, write 20 in
the box labeled "vehicle mpg." Then divide $0.75 by 20 to get $0.0375 per mile fuel cost.
c) For an electric vehicle, divide the price of electricity per kilowatt hour (kWh), by the miles the
vehicle will get per kWh. The manufacturer or conversion company will be able to give you this
figure. For example, if your electric rate is $0,041 per kWh, write $0,041 in the box labeled
"$ per kWh." If the vehicle will get 4 miles per kWh, enter 4 in the box labeled "vehicle miles
per kWh." Then divide $0,041 by 4 to get $0.01025 per mile fuel cost.
4. Find your $ savings per mile by subtracting the per mile fuel cost of the alternative fuel (box 3b or 3c) from the
per mile gasoline cost (box 3a). For example, for the NGV shown above in 3b, subtract $0.0375 per mile fuel
cost from $0.06 per mile gasoline cost in 3a to get a cost savings of $0.0225 per mile.
5. To find the Payback Period, divide the Net Incremental Cost (box 2a) by the $ savings per mile (box 4a) to get
the payback period in miles. This calculates the number of miles the vehicle would need to be driven to pay back
the additional incremental cost of the AFV.
n/95
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ALTERNATIVE FUEL VEHICLE INCENTIVES AND LAWS
AFV FUNDING WORKSHEET - State of
PART 1 - Sources of Funding
I. State Incentives
II. Utilities/Private Incentive
III. State Laws & Regulations
IV. Federal Tax Incentives
Amount You Expect to Receive
+ $
+ $
Cost of Comparable Gasoline
Vehicle
' NOTE: If you are converting existing fleet vehicles, then substitute the conversion cost for the Incremental Cost
2) Subtract from the Incremental Cost, box la, the Total Funding from the box at bottom of Part 1 to get the Net Incremental Cost
$
$
incremental Cost
(irom box la)
Net Incremental Cost
2a
3) To find the $ per mile fuel cost divide your fuel cost per gasoline gallon equivalent (gge) by your vehicle's miles per gallon (mpg). Do this
calculation for both gasoline and the alternative fuel.
a) gasoline:
b) alternative fuel:
c) electric
3a
3b
3c
J per kWh vehicle miles per kWh $ per mile fuel cost
4) Then subtract the $ per mile fuel cost of your alternative fuel from the $ per mile fuel cost of gasoline to find your $ savings per mile.
$
$
4a
i per mile iuel cost gasoline $ per mile fuel cost altematKe
(from box 3a) fuel (from box 3b or 3c)
$ savings per mile
5) Then divide the Net Incremental Cost, box 2a, by the $ savings per mile, box 4a, to get the payback period for your AFV in terms of miles.
miles
Net Incremental Cost
(from box 2a)
$ savings per mile
(from box 4a)
Payback in miles
B-3
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ALTERNATIVE FUEL VEHICLE INCENTIVES AND LAWS
Examples of Completed Worksheets
Example 1
Example 1 is the completed worksheet for the purchase of a new OEM CNG vehicle in Pennsylvania (see page 9). Suppose you live
in Pennsylvania and are interested in purchasing a new CNG Chrysler Ram Van. In this example, the cost of the vehicle is $20,556,
the cost of a comparable gasoline vehicle is S15,493, the vehicle gets 18 miles to the gallon on either gasoline or CNG, gasoline
costs are $1.20 per gallon, and CNG costs are $0.75 per gasoline gallon equivalent (gge).
On page 96 you find, in the green highlights box, that the State Energy Office's Incentive Grants program will pay for 50% of the
incremental costs for the natural gas option on your vehicle. Since the incremental cost for the natural gas option for the vehicle is
$5,063, the Alternative Fuel Incentive Grants (AFIG) program will pay 50% or $2,531.50. The AFIG program is put under the State
Incentives heading in Part 1 of the worksheet, with the amount of $2,531.50 in the box in the Amount You Expect to Receive
column. On pages 96 and 97 you see that if you live in the service area of Consolidated Natural Gas Company, you can receive a
$1,000 rebate on the purchase of an OEM AFV. Assuming that Consolidated Natural Gas is your local gas utility, the rebate is put
under the Utilities/Private Incentives heading in Part 1 of the worksheet, with the amount $1,000 in the box in the Amount You
Expect to Receive column. The details on the programs in the highlights section for each state are printed in green with a $ next to
them to make it easier for you to find the information you need. The text for each state also includes additional information on other
AFV programs in the state.
For the Federal Tax Incentives heading, turn to page 126. The CNG van qualifies for a $2,000 tax deduction. If you are in the 28%
tax bracket, the value of the tax deduction would be $560. The $2,000 Federal tax deduction is put under the Federal Tax
Incentives heading in Part 1 of the worksheet, with the amount of $560 in the box in the Amount You Expect to Receive column.
Add together all of the numbers in the Amount You Expect to Receive column to get a Total Funding amount of $4,091.50.
Part 2 of the worksheet calculates the payback period. In step 1, subtract the $15,493 cost of a comparable gasoline vehicle from
the $20,556 cost for the NGV to get the Incremental Cost of $5,063. In step 2, subtract the Total Funding of $4,091.50 from the
Incremental Cost of $5,063 to get $971.50 as your Net Incremental Cost after applying incentives. In step 3a, divide the price of
$1.20 per gallon for gasoline by the vehicle fuel efficiency of 18 mpg, to get $0.0667 per mile fuel cost. In step 3b, divide $0.75 per
gge cost of CNG by the vehicle fuel efficiency of 18 mpg to get $0.0417 per mile fuel cost. In step 4, subtract the $0.0417 per mile
fuel cost (box 3b) from the $0.0667 per mile gasoline cost (box 3a) to get a cost savings of $0,025 per mile. In step 5, divide the Net
Incremental Cost of $971.50 (box 2a) by the fuel cost $ savings per mile of $0,025 (box 4a) to get 38,860 miles as the payback
period. The vehicle would need to be driven 38,860 miles to pay back the additional incremental cost of the AFV.
Example 2
Example 2 is a completed worksheet for a CNG conversion in Kansas (see page 10). The amounts for the incentives for Kansas can
be found on page 52. The worksheet uses a conversion cost of $4,000. The green highlights box on page 58 shows that Kansas
offers a tax credit for 50% of the conversion cost for AFVs. With a conversion cost of $4,000, the 50% tax credit would be worth
$2,000. On page 51, you see that the Kansas Corporation Commission offers a $1,500 incentive for AFVs. Add together the
$2,000 tax credit and the $1,500 incentive to get a total of $3,500 for the State Incentives heading in Part 1 of the worksheet, and
enter the amount of $3,500 in the box in the Amount You Expect to Receive column. Then figure out value of the Federal tax
deduction as shown in Example 1. The $2,000 Federal tax deduction is put under the Federal Tax Incentives heading in Part 1 of the
worksheet, with the amount of $560 in the box in the Amount You Expect to Receive column. Add together all of the numbers in
the Amount You Expect to Receive column to get a Total Funding amount of $4,060. In this case, the Total Funding of $4,060
completely covers the incremental cost of the conversion, so there is no need to complete Part 2 of the worksheet
Example 3
Example 3 is a completed worksheet for the purchase of an EV in California (see page 11). The incentives for California are on
page 21. The worksheet assumes that the EV cost is $32,000, and the cost of a comparable gasoline vehicle is $20,000. A $5,000
incentive for EV purchases is available from the South Coast Air Quality District The Federal Tax Credit for EVs is based on 10% of
the vehicle cost, up to $4,000. For the vehicle in the worksheet, the credit would be 10% of $32,000 or $3,200. Add these two
incentives to get a Total Funding amount of $8,200. Part 2 assumes a cost for gasoline of $1.20 per gallon, and a cost of electricity
of $0,041 per kWh, and an EV fuel efficiency of 4 miles per kWh. Using these figures, the payback period for the EV would be
76,381 miles.
NOTE. These examples are provided tp give you arv idea of how to use the worksheets. Your individual situation may be different,
even if you live in the same state used in one of the examples. Be sure to call to confirm the details of incentives that apply to you.
11/95
-------
ALTERNATIVE FUEL VEHICLE INCENTIVES AND LAWS
EXAMPLE 1
AFV FUNDING WORKSHEET - Pennsylvania - Natural Gas Vehicle Purchase
PART 1 - Sources of Funding
I. Stale Incentives
AFIC1 my; 50% ol inrrcnipnl.il rovK on rli-dir.ilorl NOW (m-h iuop 95)
'tOO• $20nOO - Sfi 500 inrrpmfnl.il civil
S6.5(Xr0.50-SV250
II. Utilities/Private Incentives
$1.000 reh.ilp from Consolidilpd NI.Hur.il Ci.is
(see o.ige 95)
III. Slate Laws & Regulations
iv. Federal Tax Incentives
S2.000 l.ix deduction (see iwe 128)
• $2,000' 0.28 - $560
(28% tax bracket)
Amount You Expect to Receive
+ $
+ $
+ $
2,531.50
1,000
560
Initial Cost of AFV
Incremental Cost"
Cost of Comparable Gasoline
Vehicle
* NOTE: If you are converting existing fleet vehicles, then substitute the conversion cost for the Incremental Cost
2) Subtract from the Incremental Cost box 1 a, the Total Funding from the box at the bottom of Part 1 to gel the Net Incremental Cost
$
$
971.50
2a
lncremeot.il Cost
(from box 1 a)
Total Funding {from pad 1)
Net Incremental Cost
3) To find the $ per mile fuel cost divide your fuel cost per gasoline gallon equivalent (gge) by your vehicle's miles per gallon (mpg). Do this
calculation for both gasoline and the alternative fuel.
a) gasoline:
b) alternative fuel:
c) electric:
$
1.20
$ per gallon
0.75
$ per gge
$
/
/
/
18
vehicle mpg
18
vehicle mpg
mpg
mpg
$ per kWh
vehicle miles pet kwh
mi/kWh
$
$
$
0.0667
$ per mile fuel cost
0.0417
$ per mile fuel cost
% per mile fuel cost
4) Then subtract the $ per mile fuel cost of your alternative fuel from the $ per mile fuel cost of gasoline to find your $ savings per mile.
$
$
.0667
-$
.0417
.025
3a
3b
3c
4a
$ per mile fuel cost gasoline
(from box 3a)
% per mile fuel cost alternative
fuel (from box 3b or 3c)
$ savings per mile
5) Then divide the Net Incremental Cost box 2a, by the $ savings per mile, box 4a, to get the payback period for your AFV in terms of miles.
$
38,860
miles
Net Incremental Cost J savings per mile
(from box 2a) ((rom hox 4a!
* NOTE: fuH price* were coBecled q>on
Payback in miles
B-5
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ALTERNATIVE FUEL VEHICLE INCENTIVES AND LAWS
EXAMPLE 2
AFV FUNDING WORKSHEET ~ KansaszJ^owpressedNaturalGasVehicleConyersion
PART 1 - Sources of Funding
Amount You Expect to Receive
I. State Incentives
^0"/. f,ix credit lor rnnvr-txion rfW Nt'i* aw i8l
Convervionco
-------
ALTERNATIVE FUEL VEHICLE INCENTIVES AND LAWS
EXAMPLE 3
AFV FUNDING WORKSHEET -- State of California - Electric Vehicle Purchase
PART 1 - Sources of Funding
Amount You Expect to Receive
I. Si,lie Incentives
South Oust Air Qu.ililv M.in.mrmont Pislri( t
S>(XXVFI(h trie Vrhk 1c fM't* imu*' JO)
II. Ulilities/Private Incentives
+ $
III. State Laws & Reaulnlions
IV. Federal Tax Incentives
Federal ta\ credit tor electric vc-hic It* Ixv iww I
10 percent of vehicle cost up to S-UXX)
Vehicle cost - S !2,(HH)* 0.10 - S.t.-'IK)
5,000
3,200
Initio! Cost of AFV
Incremental Cost *
Cost of ComparaWe Gasoline
Vehicle
• NOTE: If you are converting existing fleet vehicles, then substitute the conversion cost lor the Incremental Cost.
2) Subtract from the Incremental Cost, box I a, the Total Funding from the box at the bottom of Part 1 to gel the Net Incremental Cost.
3,800
Tot.il Funding (from port 1)
Net Incremental Cost
2a
li>cren>enlal Cost
(from box la)
3) To find the $ per mile fuel cost, divide your fuel cost per gasoline gallon equKalent (gge) by your vehicle's miles per gallon (mpg). Do this
calculation for both gasoline and the alternative fuel.
3a
$ per mile fuel cosi
4) Then subtract the $ per mile fuel cost of your alternative fuel from the $ per mile fuel cost of gasoline to find your $ savings per mile.
= $
$
0.04975
3b
3c
4a
$ per mile fuel cost gasoline
(from box 3a)
S per mile fuel cost alternate
fuel (from box 3b or 3c)
$ savings per mile
5) Then divide the Net Incremental Cost, Ixw 2a. by the $ savings per mile, l>ox 4a, to gel the payback |X?riod for your AFV in terms of miles.
$
76,381
miles
Nel Incremental Cost
(from box 2a)
' NOTE: fuH ixtcrs v%tfc cofloclcd in jnIy l'HIV
S savings per mile
(from box 4a)
B-7
Payback in mites
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APPENDIX C
-------
APPENDIX C
RESOURCES
Table C-l lists sources that were used to prepare this Guide. The Table indicates the contents of
each source so that the reader can evaluate the applicability of the document for specific purposes.
The end of this Appendix contains telephone contacts for more information about particular fuels.
-------
federal
State
fsltey
fret
Jfc&crfoHftKt
SeMOtttiei
Gaiiaact
Case
Studies
U.S. Environmental Protection Agency, "The Clean Fuel Vehicle Fleet
Program Information Sheet", July 1992.
~
U. S. Department of Energy, "EPACT Initiatives for Alternative Fuel
Vehicles: An Integrated Approach for Implementing the Energy Policy
Act", March 1995.
~
Comparative Alternative/Clean Fuels Provisions of the Clean Air Act
Amendments of 1990 and the Energy Policy Act of 1992.
~
George Burmeister and Katherine Mahoney, "Alternative Transportation
Fuels: Ootions for State Legislatures". State Leeislative ReoorL Volume 17.
No. 9. May 1992
~
~
~
U.S. Department of Energy, "Facts About CNN & LPG Conversion",
DOE/CHI00093-315.
~
Texas General Services Commission, "Workbook on Cost Effectiveness of
Alternative Fuels Using Life Cycle Cost Benefit Analysis", September 1,
1991.
~
~
U.S. General Accounting Office, "General Accounting Office Comparison
of Alternative Fuels", Air Pollution, Air Quality Implications of Alternative
Fuels, GAO/RCED-90-143, July 1990.
~
~
~
"A Fleet Manager's Guide to Natural Gas Vehicles", RP Publishing, Inc.,
1995.
~
~
~
U. S. Department of Energy, "First Interim Report of the Federal Fleet
Conversion Task Force", DOE/PO-OOOl, August 1993.
~
J. E. Sinor Consultants, Inc., The Clean Fuels Report, Volume 7, No. 4,,
Sept. 1995.
~
•/
~
~
Argonne National Laboratory, "Talcing an Alternative Route", U.S.
Department of Energy.
~
~
~
Alabama Alternative Fuels Program, "Fueling Alabama's Future".
~
~
~
U.S. Department of Energy, "State Alternative Fuel Laws & Incentives,
DOE/CH100093-319
~
Stephanie Gott, "NGV News Guide to NGV Funding", Pasha Publications,
Inc., Arlington, VA, 1993.
~
~
"Economic Analyses of Alternative Fuels and Vehicles" from an
Unidentifiable Source.
~
~
~
-------
GENERAL
METHANOL
National Association of Fleet Administrators
908-494-8100
American Methanol Institute
202-467-5050
National Alternative Fuels Hotline
1-800-423-1DOE
Clean Air Vehicle Association
770-261-0804
Clean Fuels Development Coalition
301-913-9636
National Fire Protection Association
617-984-7407
ELECTRIC
Electric Transportation Coalition
202-508-5995
The Electric Vehicle Association of the Americas
408-253-5262
NATURAL GAS
Natural Gas Vehicle Coalition
703-527-3022
American Gas Association
703-841-8000
Gas Research Institute
312-399-8100
PROPANE
National Propane Gas Association
708-515-0600
Propane Vehicle Association
202-371-6262
Edison Electric Institute
202-508-5000
Electric Power Research Institute
415-855-2984
ETHANOL
Renewable Fuels Association
202-289-3835
Clean Fuels Development Coalition
301-913-3633
American Biofuels Association
703-522-3392
-------
APPENDIX D
-------
ACRONYMS
AFV
alternative fuel vehicle
Btu
British thermal unit
CAAA
Clean Air Act Amendments of 1990
CAV
clean air vehicle
CFFV
clean fuel fleet vehicle
CNG
compressed natural gas
CO
carbon monoxide
DOE
U.S. Department of Energy
DOT
U.S. Department of Transportation
EPA
U.S. Environmental Protection Agency
EPACT
Energy Policy Act of 1992
GVW
gross vehicle weight
ILEV
inherently low emission vehicle
LEV
low emission vehicle
LNG
liquefied natural gas
LPG
liquefied petroleum gas (propane)
NAAQS
National Ambient Air Quality Standards
OEM
original equipment manufacturer
PSI
pounds per square inch
SIP
State Implementation Plan
ULEV
ultra low emission vehicle
ZEV
zero emission vehicle
-------
DEFINITIONS
Alcohols: Organic compounds that are distinguished from hydrocarbons by the inclusion
of a hydroxyl group. The two simplest alcohols are methanol and ethanol.
Alternative Fuel: As defined pursuant to the EPACT, methanol, denatured ethanol and
other alcohols, separately or in mixtures of 85% by volume or more (but not less than
70% as determined by DOE rule) with gasoline or other fuels, CNG, LNG, LPG,
hydrogen, "coal-derived liquid fuels," fuels "other than alcohols" derived from "biological
materials," electricity or any other fuel determined to be "substantially not petroleum' and
yielding "substantial energy security benefits and substantial environmental benefits.
Bi-fuel Vehicle: A vehicle with two separate fuel systems designed to run on either an
alternative fuel or conventional gasoline, using only one fuel at a time. These systems are
advantageous for drivers who do not always have access to an alternative fuel refueling
station but sacrifice the potential for optimized combustion and very low evaporative
emissions. Bi-fuel systems are usually used in passenger cars or trucks. These vehicles are
referred to as "dual-fiiel" in the CAAA and EPACT.
Biodiesel: A biodegradable transportation fuel for use in diesel engines that is produced
through transesterification of organically derived oils or fats. Biodiesel is used as a
component of diesel fuel. In the future, it may be used as a replacement for diesel.
Biomass: Renewable organic matter such as agricultural crops, crop-waste residues,
wood, animal and municipal wastes, aquatic plants, fungal growth, etc., used for the
production of energy.
British Thermal Unit (Btu): A standard unit for measuring heat energy. One Btu
represents the amount of heat required to raise one pound of water one degree Fahrenheit
(at sea level).
Clean Air Act Amendments of 1990 (CAAA): The original Clean Air Act (CAA) was
signed in 1963. The law set emissions standards for stationary sources (e.g., factories,
power plants). The CAA was amended several times, most recently in 1990 (P.L. 101-
549). The Amendments of 1970 introduced motor vehicle emission standards (e.g.,
automobiles, trucks). Criteria pollutants included lead, ozone, CO, S02„ NOx and PM as
well as air toxics. The regulations require certain fleet operators to use clean fuel vehicles
in 22 cities.
Clean Diesel: An evolving definition of diesel fuel with lower-emission specifications,
which strictly limit sulfur content to 0.05 weight %; in California, aromatics content is
further limited to 10 volume % (for large refiners).
Clean Fuel Vehicle (CFV): Any vehicle certified by EPA as meeting certain federal
emissions standards. The five categories of federal CFV standards from least to most
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stringent are LEV, ULEV, ILEV, and ZEV. CFVs are eligible for two federal programs,
the California Pilot Program and the Clean-Fuel Fleet Program. CFV exhaust emissions
standards for light-duty vehicles and light-duty trucks are numerically identical to those of
CARB's California Low Emission Vehicle Program, which also includes a TLEV
standard. (See Appendix A for a detailed listing of CARB's tailpipe emissions standards.)
Compressed Natural Gas (CNG): Natural gas that has been condensed under high
pressure, typically between 2000 and 3600 psi, held in a container. The gas expands when
released for use as a fuel.
Converted Vehicle: A vehicle originally designed to operate on gasoline or diesel that
has been modified or altered to run on an alternative fuel.
Duel-fuel Vehicle*:
* EPACT Definition: Vehicle designed to operate on a combination of an
alternative fuel and a conventional fuel. This includes: a) vehicles using a mixture of
gasoline or diesel and an alternative fuel in one fuel tank, commonly called flexible-fueled
vehicles; and b) vehicles capable of operating either on an alternative fuel, a conventional
fuel or both, using two fuel systems.
* CAAA Definition: Vehicle with two separate fuel systems designed to run on
either an alternative fuel or conventional gasoline, using only one fuel at a time.
E10 (Gasohol): Ethanol/gasoline mixture containing 10% denatured ethanol and 90%
gasoline, by volume.
E85: Ethanol/gasoline mixture containing 85% denatured ethanol and 15% gasoline, by
volume.
E93: Ethanol mixture containing 93% ethanol, 5% methanol, and 2% kerosene, by
volume.
E95: Ethanol/gasoline mixture containing 95% denatured ethanol and 5% gasoline, by
volume.
Electric Vehicle: A vehicle powered by electricity, generally provided by storage
batteries but also provided by photovoltaic cells or a fuel cell.
Energy Policy Act of 1992 (EPACT): (P L. 102-486) A broad-ranging act signed into
law on October 24, 1992. Titles III, IV, V, XV, and XIX of EPACT deal with alternative
transportation fuels. EPACT accelerates the purchase requirements for AFVs y t e
federal fleet, proposes eliminating the cap on CAFE credits that manufacturers can earn y
producing dual- and flexible-fuel vehicles and requires fleets in large urban areas to
purchase AFVs. Establishes tax incentives for purchasing AFVs, converting convention
gasoline vehicles to operate on alternative fuels and installing refueling or recharging
facilities by the private sector.
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Ethanol (also known as Ethyl Alcohol, Grain Alcohol, CH3CH20H): Can be
produced chemically from ethylene or biologically from the fermentation of various sugars
from carbohydrates found in agricultural crops and cellulosic residues from crops or
wood. Used in the United States as a gasoline octane enhancer and oxygenate, it increases
octane 2.5 to 3.0 numbers at 10% concentration. Ethanol also can be used in higher
concentration in vehicles optimized for its use.
Flexible-Fuel Vehicles: Passenger cars designed to run on blends of unleaded gasoline
with either ethanol or methanol.
Hybrid Electric Vehicle (HEV): A vehicle that is powered by two or more energy
sources, one of which is electricity. HEVs combine the engine and fuel tank of a
conventional vehicle with the battery and electric motor of an electric vehicle in a single
drivetrain.
Inherently Low Emission Vehicle (ILEV): FEDERAL ONLY. Describes vehicle
meeting EPA's CFV ILEV standards. Tailpipe standards may be LEV, ULEV, or ZEV
but include the requirement that evaporative emissions be 2 grams per test over the full
test procedure and 5 grams per test without the use of any auxiliary emission control
devices. ILEVs will be dedicated AFVs in most cases. Dual-fuel vehicles will be
considered ILEVs only if both fuels meet the standard. ILEVs are exempt from certain
transportation control measures, including high occupancy vehicle (HOV) lane
restrictions.
Liquefied Natural Gas (LNG): Natural gas that has been condensed to a liquid typically
by cryogenically cooling the gas.
Liquefied Petroleum Gas (LPG): A hydrocarbon and colorless gas found in natural gas
and produced from crude oil, used principally as a home heating fuel or motor vehicle fuel.
Also known as propane.
Low Emission Vehicle (LEV): Describes vehicle meeting either EPA's CFV LEV
standards, or CARB's California Low Emission Vehicle Program LEV standards. LEVs
produce fewer emissions than TLEVs.
M85: 85% methanol and 15% unleaded gasoline by volume, used as a motor fuel in
FFVs.
M100: 100% (neat) methanol.
Methane (CH4). The simplest of the hydrocarbons and the principal constituent of
natural gas. Pure methane has a heating value of 1,012 Btu per standard cubic foot.
Methanol (also known as Methyl Alcohol, Wood Alcohol CH30H) A liquid fuel
formed by catalytically combining CO with hydrogen in a 1:2 ratio under high temperature
and pressure. Commercially, it is typically manufactured by steam reforming natural cas
Also formed in the destructive distillation of wood.
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National Ambient Air Quality Standards (NAAQS): Ambient standards for air
pollutants specifically regulated under the CAA. These pollutants include ozone, CO,
N02, lead, particulate matter and SOx.
Natural Gas: A mixture of gaseous hydrocarbons, primarily methane, occurring naturally
in the earth and used principally as a fuel.
Nonattainment Area: A region, determined by population density in accordance with the
U.S. Census Bureau, which exceeds minimum acceptable NAAQS for one or more
criteria pollutants (see Clean Air Act Amendments). Such areas are required to seek
modifications to their SIPs, setting forth a reasonable timetable using EPA-approved
means to achieve attainment of a NAAQS for these criteria pollutants by a certain date.
Under the CAA, if a nonattainment area fails to attain NAAQS, EPA may superimpose a
FIP with stricter requirements or impose fines, construction bans, cutoffs in federal grant
revenues, etc., until the area achieves the applicable NAAQS.
Propane: See Liquefied Petroleum Gas (LPG).
Reformulated Gasoline (RFG): Gasolines that have had their composition and/or
characteristics altered to reduce vehicular emissions of pollutants, particularly pursuant to
EPA regulations under the CAA.
State Implementation Plan (SIP): Plan that a state must submit to EPA under the CAA
to demonstrate compliance to NAAQS.
Tax Incentives: In general, a means of employing the tax code to stimulate investment in
or development of a socially desirable economic objective without direct expenditure from
the budget of a given unit of government. Such incentives can take the form of tax
exemptions or credits.
Transitional Low Emission Vehicle (TLEV): Describes vehicle meeting either EPA's
CFV TLEV standards or CARB's California Low Emission Vehicle Program TLEV
standards. TLEVs produce fewer emissions than federal Tier 1 vehicles. TLEVs are
e lgible for the federal California Pilot Program but not eligible for the Clean-Fuel Fleet
Program.
Ultra-Low Emission Vehicle (ULEV): Describes vehicle meeting either EPA's CFV
EV standards or CARB's California Low Emission Vehicle Program ULEV standards.
EVs produce fewer emissions than LEVs. Fleets who purchase CFV ULEVs may earn
credits under the Clean-Fuel Fleet Vehicle Program. Manufacturers that sell CFV ULEVs
may earn credits under the federal California Pilot Program.
U'SJ..Department ®ner8y C^OE): A department of the federal government,
esta lished by the Carter Administration in 1977, to consolidate energy-oriented programs
agencies. The DOE mission includes the coordination and management of energy
conservation, supply, information dissemination, regulation, research, development and
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demonstration. The Department includes the Office of Transportation Technologies, the
umbrella of the Office of Alternative Fuels.
U.S. Environmental Protection Agency (EPA): A government agency, established in
1970, responsible for the protection of the environment and public health. EPA seeks to
reduce air, water, and land pollution and pollution from solid waste, radiation, pesticides,
and toxic substances. EPA also controls emissions from motor vehicles, fuels, and fuel
additives.
Zero Emission Vehicle (ZEV): Describes vehicle meeting either EPA's CFV ZEV
standards or CARB's California Low Emission Vehicle Program ZEV standards. ZEV
standards, usually met with electric vehicles, require zero vehicle (not power plant) source
emissions. ZEVs earn more Clean-Fuel Fleet Vehicle Program credits the ULEVs. ZEVs
may also meet ILEV standards if evaporative emissions are near zero.
EPA Libriiy Rwiton 4
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