National Clean
Campaign

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Contents
EXECUTIVE SUMMARY	3
1. INTRODUCTION	9
2. EPA's NATIONAL CLEAN DIESEL CAMPAIGN	13
   Overview	13
   Verifying That Emission Reduction Technologies Work	14
   Tapping Into Regional Collaborates	16
   Regulating Diesel Engines and Fuels	17
3. THE ENERGY POLICY ACT OF 2005, DIESEL EMISSIONS
   REDUCTION ACT PROGRAM	19
   Background	19
   The National Clean Diesel Funding Assistance Program	22
   The National Clean Diesel Emerging Technologies Program	23
   The SmartWay Clean Diesel Finance Program	25
   The State Clean Diesel Grant and Loan Program	27
   Inaugural Year  Results in Impressive, Cost-Effective Reductions Across
   All Sectors	28
4. RESOURCES THAT SUPPORT THE NATIONAL CLEAN DIESEL CAMPAIGN	35
   Diesel Emissions Quantifier	35
   Agency Guidance for Calculating Cost-Effectiveness	35
   Guidance on State Implementation Plans	36
   Public Outreach Materials	36
   NCDC Joins Forces With International Partners	37
5. REMAINING CHALLENGES ..                                            .. 38
                                                                Contents

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6. LESSONS LEARNED AND NEEDS FOR THE FUTURE	40
   Lessons Learned	40
   Next Steps	41
APPENDIX A: NATIONAL CLEAN DIESEL FUNDING ASSISTANCE PROGRAM,
             FY 2008 GRANTS	43
APPENDIX B: NATIONAL CLEAN DIESEL EMERGING TECHNOLOGIES
             PROGRAM, FY 2008 GRANTS	47
APPENDIX C: SMARTWAY CLEAN DIESEL FINANCE PROGRAM,
             FY 2008 GRANTS	48
APPENDIX D: STATE CLEAN DIESEL PROGRAM, FY 2008 GRANTS	49
APPENDIX E: NATIONAL PROGRAM EVALUATION CRITERIA	52
APPENDIX F: EPA REGIONAL CLEAN DIESEL COLLABORATES	54
ACRONYMS AND ABBREVIATIONS ..                                    ,.. 56
REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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Executive Summary
NATIONAL  CLEAN  DIESEL  CAMPAIGN

      REDUCING emissions from diesel engines is one of the most important public health
      challenges facing the country. Despite EPA's stringent diesel engine and fuel stan-
      dards taking effect over the next decade, the 20 million engines already in use will
continue to emit large amounts of nitrogen oxides (NOX) and paniculate matter (PM)—both
of which will contribute to serious public health problems for years to come.

Fortunately, a variety of cost-effective technologies can dramatically reduce harmful emis-
sions, save fuel, and help our nation meet its clean air and  sustainability goals. To meet
these challenges, the U.S. Environmental Protection Agency (EPA) established the National
Clean Diesel Campaign (NCDC). NCDC consists of both regulatory programs to address new
engines and innovative nonregulatory programs to  address the millions of diesel engines
already in  use. EPA standards apply to new diesel engines,  and because these engines can last a
long time,  solutions are needed to reduce harmful emissions from the existing  fleet. These innova-
tive approaches promote a variety of emission reduction strategies such as retrofitting,  repairing,
replacing,  and  repowering engines; reducing idling; and switching to cleaner fuels.

Through a  dynamic network of Regional Collaborates, whose development EPA initiated, environmen-
tal groups,  industry, and government were inspired and motivated—despite their sometimes conflict-
ing perspectives—to unite behind a common goal. NCDC mobilized diverse and unusual partners with
historic differences to work together, creating broad support based on the urgency of the public health
problem and bringing new technologies into use years earlier than would otherwise have occurred.

In 2008, Congress appropriated funding for the Diesel Emissions Reduction Act (DERA) Program
under the  Energy Policy Act of 2005 (EPAct 2005) to reduce emissions from heavy-duty diesel
engines in  the  existing fleet. In the first year of the  DERA program, EPA awarded $49.2 million for
diesel emission reduction programs across the country.1 EPA gave priority to projects that:

• Demonstrated a  clear public health  benefit in areas with high population density and poor air quality.
• Fostered cost-effective strategies that maximized the useful life of a  certified engine  configura-
  tion, verified technology, or emerging technology.
• Conserved diesel fuel.
• Used cleaner fuels.
  Congress also provided $10 million for grants for cost-effective emission reduction projects for two California air quality
  management districts (South Coast and San Joaquin).
                                                                Executive Summary

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The fiscal year (FY) 2008 funding enabled EPA to award 119 grants, which will lead to emission
reductions of approximately 46,000 tons of NOX and 2,200 tons of fine paniculate matter (PM2 5).
The PM-related emission reductions translate into a significant quantifiable public health benefit
of approximately $580 million to $1.4 billion. Additionally, projects funded under these grants
will save 3.2 million gallons of fuel per year for a cost savings to operators of more than
$8 million each year (at $2.50 per gallon). More  than 14,000 diesel-powered vehicles and pieces
of equipment are cleaner as a result of the first year of this program. More than two-thirds of
these vehicles are trucks and school buses that were upgraded through EPA's sector outreach
programs such as Clean School Bus USA.

DERA directs EPA to fund two different components: a national competition and a state alloca-
tion program. The national  program, with 70 percent of the funding, consists of three separate
competitions:

1. The National Clean Diesel Funding Assistance Program
2. The National Clean Diesel Emerging Technologies Program
3. The SmartWay Clean Diesel Finance Program

The State Clean Diesel Grant and Loan Program  utilizes the remaining 30 percent of the funding.

          National Clean Diesel Campaign Funding Structure
                                 Federal Funding

                    Diesel Emissions Reduction Program

                Nationally Administered Competitions
                                         Allocation to States
          f
        t


    National Clean
    Diesel Funding
  Assistance Program
   National Clean
  Diesel Emerging
Technologies Program
SmartWay Clean
 Diesel Finance
   Program
  State Clean
Diesel Grant and
 Loan Program
REPORT TO CONGRESS:  HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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NCDC programs deploy proven technologies much earlier than would occur otherwise, accelerate the
use of emerging technologies, and provide innovative financial incentives that make the business case for
doing the right thing for the environment. States are key partners in the success of clean diesel programs
and are given the opportunity through the state program to enhance their leadership on air quality issues.


NATIONAL CLEAN DIESEL PROGRAMS

National Clean Diesel Funding Assistance Program. The response to EPA's National Clean
Diesel Funding Assistance Program was overwhelmingly positive. This  program allows communi-
ties to meet their most pressing needs to reduce harmful diesel emissions. Communities benefit by
activities as diverse as retrofitting school buses so that children's exposures are reduced, repower-
ing locomotives used at  seaports to save fuel as well as reduce emissions in neighborhoods, and
replacing high-emitting construction equipment used to build hospitals and our nation's roads.

EPA's seven Regional Collaborates held grant competitions. In FY 2008,
applicants nationwide submitted 236 applications, requesting more than
$144 million and offering approximately $81  million in matching funds.
Demand for funding under this component of DERA exceeded available
funds by 5:1. The variety of needs and approaches reflects the diversity of
air quality challenges facing local communities across  the country. After
careful evaluation and ranking, EPA awarded approximately $30 million
to 60 applicants, who provided matching funds of approximately $35
million. The high level of response to this program shows the desire communities have to clean up
their fleets. The response also shows the ability of federal dollars to attract funds from other partners
to accelerate the introduction of cost-effective clean diesel technologies.

National Clean Diesel Emerging Technologies Program. The emerging technology pro
gram, for which EPA may make available up to 10 percent of the funding, fosters the deployment
of cutting-edge technologies and encourages private-sector investment in innovation. The program
promotes the deployment of innovative technologies (those not yet verified or certified by EPA or
the California Air Resources Board) by providing funding to develop  and evaluate these technolo-
gies in the field. EPA received 10 eligible applications that requested $5 million and offered more
than $1.1 million in matching funds. EPA ultimately awarded six grants totaling $3.7 million with
$1.1  million provided as matching funds. These grants will demonstrate new technologies, including
technologies that reduce NOX. This program will help expand  the currently limited retrofit options
for nonroad engines, such as those used in construction equipment and on marine vessels.

SmartWay Clean Diesel Finance Program. For the first time, DERA gives EPA the authority to es-
tablish national low-cost revolving loan and other financing programs to provide funding to fleets to re-
duce diesel emissions. EPA exercised this authority by awarding grants where the recipients could  provide
innovative financing methods for clean diesel technologies. For the first time, partners are able to  provide
financial incentives (e.g., low-cost revolving loans, rebates, below-market rates) that stretch the federal
dollar further. A small investment of federal funds leverages significant private investment and spurs
the purchase of fuel-saving and emission reduction technologies for trucks.  Under the SmartWay Clean

                                                                 Executive Summary

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Diesel Finance Program competition, EPA received four grant applications requesting approximately $9.5
million that would leverage $44 million in outside funds, to establish innovative financing programs. EPA
awarded three grants totaling approximately $3.4 million, leveraging $19 million. These grants establish
national financing programs that provide funding to small- and medium-sized trucking companies to
purchase clean diesel technologies. These trucking companies include many small businesses that would
otherwise be unlikely to update their fleets with cleaner, more fuel-efficient equipment.


STATE  CLEAN DIESEL GRANT AND LOAN PROGRAM

Recognizing that many states, such as California, Texas,  Washington, Illinois, Maine, and New
York, have developed successful clean diesel programs over the years, Congress included a state-
only component in  DERA to recognize the vital role played by states. In contrast to the national
competitive program, the State Clean Diesel Grant and Loan Program is a formula allocation
program. By meeting certain requirements, any state is eligible to participate. According to the
statute, if adequate appropriations are available, 30 percent of any funds appropriated for  DERA
must be allocated to the states through this program.

In the first year of the state program, all 50 states elected to participate and established new clean
diesel projects. The programs responded to state needs, focusing on a variety of sectors, such as
school  buses, construction,  freight,  refuse haulers, and transit buses. Based on funding availabil-
ity and the states' ability to provide matching funds, individual state grant amounts ranged from
$196,880 to $492,200.  EPA funded the state programs with almost $13 million. Thirty-three states
matched the federal dollars by providing more than $6.3  million in matching funds altogether.


COST-EFFECTIVE RESULTS OF PROVEN TECHNOLOGICAL SOLUTIONS

In this report, EPA analyzes the overall cost-effectiveness of various diesel emission reduction
strategies. EPA compares the amount of federal grant funds used to the lifetime tons reduced
to evaluate the effectiveness of federal investments in spurring diesel emission reductions.  The
Agency concludes that the  innovative finance provisions are an important new approach with an
impressive ability to leverage significant additional resources.

In the first year of funding, clean diesel strategies have proven to  be about as cost-effective in  reduc-
ing air pollution and health impacts associated with diesel  emissions as other EPA programs, as shown
in the table  on page 7. Under the National Clean Diesel Funding Assistance Program, EPA calculated
the average cost-effectiveness of federal investment to be  approximately $27,700 per ton of PM re-
duced over the lifetime of the project and just under $2,000 per lifetime ton of NOX. In the SmartWay
Clean Diesel Finance Program, the cost-effectiveness was about $9,000 in federal funds per lifetime
ton of PM and $400 in federal funds per lifetime ton of NOX. The average cost of federal invest-
ment for the state program was approximately $16,700 per lifetime ton of PM reduced and $600 per
lifetime ton  of NOX.  These per ton costs compare very favorably with strategies used to attain national
ambient air  quality standards, such as stationary source standards that range from $1,000 to $20,000
and as high as $100,000 per ton of PM25 on an annualized basis.2'3 However, DERA projects are on


REPORT TO CONGRESS: HIGHLIGHTS  OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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average4 less cost-effective for PM than regulatory programs designed to set emissions standards for
new diesel engines, such as the 2007 Heavy-Duty Highway diesel emissions standards. EPA has esti-
mated that this regulation has a cost-effectiveness of $14,200 per ton PM and $2,100 per ton N0x.

Average Cost-Effectiveness of DERA Projects
                 DERA Program
 National Clean Diesel Funding Assistance Program
$27,700
$2,000
 SmartWay Clean Diesel Finance Program
$9,000
 State Clean Diesel Grant and Loan Program
$16,700
Regulatory Programs

Heavy-Duty Engine and Highway Diesel Fuel Requirements
PM NAAQS RIA


$14,200
$3,000-15,000


$2,100
-
Note 1: Values reported for the DERA program are for federal funds per ton pollutant reduced over project lifetime. Lifetime tons
are not discounted. This report presents two different types of cost-effectiveness: federal funds per lifetime tons and total cost per
ton. The comparisons for the regulatory programs are in annualized costs per ton.
Note 2: Values were rounded to nearest $100. Federal funds do not include matching amounts.
Note 3: The Emerging Technologies program is designed to demonstrate new technologies. At this phase in the development of
these technologies, costs would be expected to be higher than when at a more fully mature commercial scale of deployment stage.
Therefore, the cost comparisons with the other national program components have been omitted.

The first year of implementation for the  Diesel Emissions Reduction Program has been extremely suc-
cessful. By harnessing overwhelming support from environmental organizations, state and local govern-
ments,  industry, technology vendors, and  other groups, EPA has been able to magnify the available dol-
lars and strategically fund important emission reduction and fuel-saving projects. In total,  EPA awarded
119 grants in the first year of the DERA  program. More than  14,000 vehicles and pieces of nonroad
equipment in a wide array of sectors will be cleaner as a direct result of this program. New clean diesel
programs have been established in every state, and technologies have been  advanced for the future.

In addition, the American Recovery and Reinvestment Act of 2009 (Recovery Act) provided  $300 million
in new funding for the Diesel Emissions Reduction Program. EPA has already awarded more than $85
million through the State Clean Diesel Grant program, and  those funds are currently at work creating
green jobs and reducing air pollution. EPA is in the process of awarding national competitive grants under
the Diesel Emissions Reduction Program  with additional goals of creating and preserving jobs and pro-
moting  economic recovery. In response to this competitive program, EPA received more than 600 applica-
tions requesting approximately $2 billion and offering  more than $2 billion in matching funds. This clearly
demonstrates the high level of interest in clean diesel programs across the country. Implementation of the
EPAct 200B's Diesel Emissions Reduction Program is a critical step toward reaching our national clean air
goals and protecting public  health and the environment for all Americans for generations to come.
2  National Ambient Air Quality Standards for Particle Pollution Regulatory Impact Assessment (PM NAAQS RIA 10-06-06,
  Chapter 3, pg. 3-14, Table 3.2): Compares other stationary and area sources for PM reduction. Report is available at www.epa.
  gov/ttn/ecas/ria.html and www.epa.gov/ttn/ecas/regdata/RIAs/Chapter%203-Controls.pdf.
3  The Cost-Effectiveness of Heavy-Duty Diesel Retrofits and Other Mobile Source Emissions Reduction Projects and Programs
  (EPA-420-B-07-006, May 2007, Appendix Table 3, pg. 13-15): Compares other mobile source programs cost-effectiveness for
  NOx/VOCs. Report is available at www.epa.gov/otaq/stateresources/policy/general/420b07006.pdf.
4  The weighted average federal cost of DERA projects is about $25,000 per ton PM and $1,500 per ton N0x.
                                                                         Executive Summary

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1.  Introduction
     Reducing Diesel Emissions Garners Broad Support
     FROM the farm to the interstate highway to the neighborhood grocery store, we find diesel
     engines in every corner of society. Diesel engines power the movement of goods across
     the nation and help construct the buildings in which we live and work. Diesel engines aid
in building the roads on which we travel and power the buses that carry millions of children to
school safely each day. While diesel engines provide the mobility and power Americans require,
are more fuel-efficient than gasoline engines, and serve as the workhorse of the nation's econo-
my, exhaust from these engines sullies our skies with pollutants that harm our health and damage
the environment.

Because of our reliance on diesel engines, reducing emissions from them is one of the most impor-
tant public health challenges facing  the country. Despite the U.S. Environmental Protection Agency's
(EPA's) stringent diesel engine and fuel standards, which, for new engines beginning with engine
model year 2007, are being phased  in over the next decade, 20 million engines already in use
continue to emit relatively large amounts of nitrogen oxides (N0x) and fine paniculate matter (PM25).
N0x, which contributes to both ozone and paniculate formation, as well as directly emitted PM25,
can lead to serious health conditions such as triggering asthma and worsening heart and lung dis-
ease. In  addition, diesel engines emit black carbon, which might contribute to global climate change.

The problem of diesel emissions is not limited to a few discrete geographic areas or to one seg-
ment of the  population. Harmful diesel  emissions contribute to poor  air quality in much of the
country. No fewer than 141 million Americans—nearly half the population of the United States—
live in areas  that are designated as nonattainment with the eight-hour ozone standard and/or the
PM25 standard, based on the National Ambient Air Quality Standards (NAAQS).5

Due to the sheer numbers of engines in use and the volume of pollutants they emit, the health
effects and environmental pollution stemming from diesel emissions could be substantial. Nation-
wide, in 2009 diesel emissions from mobile sources alone will  account for approximately 300,000
tons of directly emitted PM25 and 6.4 million tons of NOX, which contribute to the formation of
ozone and additional fine particles. These emissions will come from approximately 20 million en-
gines operating in 2009, including approximately 13 million on-highway vehicles, 7 million nonroad
engines, and 47,000 locomotive and marine engines. (See Figures 1 and  2.) Reducing diesel emis-
sions quickly is vital to helping communities reach their public  health goals.
  As of December 16, 2008, there are 57 eight-hour ozone nonattainment areas (1997) that consist of 293 full or partial counties,
  with a total population of almost 132 million. An additional 74 counties, where 16 million people reside, show air quality values
  that do not meet the 2008 ozone standard. As of December 16, 2008, there are 39 PM25 nonattainment areas (1997) that
  consist of 208 full or partial counties, with a total population exceeding 88 million. On December 22, 2008, EPA designated
  nonattainment areas for the 2006 PM2 5 NAAQS. As of December 22, 2008, there are 58 PM2 5 nonattainment areas (2006) that
  consist of 211  full or partial counties.

                                                                      1. Introduction

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                    Figure 1. 2009 NOX Mobile      Figure 2. 2009 Directly Emitted
                      Source Diesel Emissions               PM2 5 Mobile Source
                             for 50 States                Diesel Emissions for 50 States
                           (6,400,000 tons)                        (300,000 tons)
                                                                              Nonroad Diesel
                Harbor Craft
                Marine Diesel
                  13%
                                                            C3 Marine
                                                                                              Highway
                                                                                               Diesel
                                                  Highway Diesel
                                                     36%
                                                                       Harbor Craft     Locomotive
                                                                      Marine Diesel       9%
                                                                         9%
                Fortunately, a variety of cost-effective technologies can dramatically reduce harmful emissions,
                save fuel, and help our nation meet its clean air and sustainability goals. In 2000, to address the
                concerns of both new and existing diesel engines, EPA created the National Clean Diesel Cam-
                paign (NCDC), a partnership program that incorporates traditional regulatory approaches and
                innovative nonregulatory approaches to achieve results. The regulatory aspect of the program
                requires new engines and their fuels to meet stringent technology-based standards to  reduce the
                amount of emissions released.

                The innovative component of the program promotes the use of a variety of techniques to reduce
                emissions, including retrofitting, repairing, replacing, and repowering vehicles and equipment;
                reducing idling; and switching to cleaner fuels. To encourage these  actions, NCDC cultivates the
                involvement of national, state, and local partners in the public and  private sectors.

                In 2008, for the first time ever, Congress appropriated funding under the Energy Policy Act of
                2005 (EPAct 2005) to reduce emissions from diesel engines in the nation's existing fleet. In the
                first year of the program, the EPA's NCDC distributed  $49.2 million  to initiate diesel emission
                reduction projects and programs across the country. Reflecting the  goals in the statute, EPA gave
                priority to projects that:

                • Demonstrate a clear public health benefit and apply to areas with high population density and
                  poor air quality.
                • Use cost-effective strategies that maximize the useful life of a certified engine configuration,
                  verified technology, or emerging technology.
                • Conserve diesel fuel.
                • Use cleaner fuels.
10       +     REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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The EPAct of 2005, Title VII, Subtitle G, Section 794,
requires that the EPA Administrator submit a report
to Congress evaluating the implementation of the
Diesel Emissions Reduction Act (DERA) Program.  This
report fulfills that requirement.

In the inaugural year of the program, EPA awarded
119 grants that are already achieving significant
emission reductions, as detailed in Appendices A
through F. As part of this effort, all 50 states have
begun new state clean diesel program grants. The
suite of national and  state diesel emission reduction
programs is a vital part of state and local efforts  to
reduce harmful air pollution. These first DERA grants
are expected to significantly reduce emissions in
communities across the country.

As shown in Table 1, the total emission reductions
are noteworthy. The FY 2008 funding for the Diesel
Emissions Reduction Program is estimated to reduce
approximately 46,000 tons of NOX and 2,200 tons
of PM2 5 over the life of the program. These emission
reductions translate into a significant quantifiable
public health benefit of approximately $580 mil-
lion to $1.4 billion  in quantifiable PM-related health
benefits over the life of the program.6

In addition, the FY 2008 grants will save more than
3.2 million gallons of fuel per year, which equates
to a savings in fuel costs to operators of more than
$8 million per year (at $2.50 per gallon). This cor-
responds to 35,600 tons of carbon  dioxide (C02)  per
year reduced. These fuel savings calculations only
reflect the savings from idle reduction technologies
and do not reflect the improved fuel economy that
may result from engine replacements; thus the actual
fuel savings might be higher than shown.
       Diesel  Exhaust Health Effects
Direct emissions from diesel engines, especially PM2 5, N0x,
and sulfur oxides (S0x), contribute to health problems. In
addition, N0x contributes to the formation of ozone and
PM through chemical reactions.

PM2 5 has been associated with an increased risk of pre-
mature mortality, increased hospital admissions for heart
and lung disease, and increased respiratory symptoms.
Long-term exposure to components of diesel exhaust,
including diesel PM and diesel exhaust organic gases, are
likely to pose a lung cancer hazard. Exposure to ozone can
aggravate asthma and other respiratory diseases, leading
to more asthma attacks, the use of additional medication,
more severe symptoms that require a doctor's attention,
more lost school and work days, more visits to the emer-
gency room,  increased hospitalizations, and even prema-
ture mortality.  People in many areas of the United States
experience short-term (one to three hours) and prolonged
ozone exposures (six to eight hours), which have been
linked to diminished lung function, greater respiratory
symptoms, and increased hospital
visits. Repeated exposure to
ozone can increase  susceptibility
to respiratory infection and lung
inflammation and can aggravate
preexisting asthma. At suf-
ficient concentrations, ozone
can even cause permanent
damage to the  lungs, in-
cluding the development of
chronic respiratory illnesses.
Children, outdoor workers, those
who exercise outdoors, people
with heart and lung disease, and
the elderly are  most at risk.
  Many of the benefits will accrue in the first five years of the program, and the benefits are discounted using a 3 percent rate.
                                                                        1. Introduction
                                                   11

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                  Table 1. Estimated Air Emission Reductions of FY 2008 NCDC Programs Over
                  Lifetime of Projects (Lifetime Tons)
                   National Clean Diesel Funding
                   Assistance Program
1,100
1,900
                                                                              7,300
                                      113,600
                   National Clean Diesel Emerging
                   Technologies Program
                                        600
   30
               30
               100
                   SmartWay Clean Diesel Finance
                   Program
                                      9,600
  400
              BOO
             1,600
238,200
                   State Clean Diesel Grant and Loan
                   Program
                                     21,000
              2,000
                          5,700
                        112,900
                   Total
                                    46,000
2,200
            4,400
           14,700      464,600
                  Note: Values were rounded to the nearest 100 lifetime tons or to one significant figure. Sums might not add due to rounding.
                  Lifetime tons are not discounted.
                  *  Hydrocarbon
                     Carbon monoxide
                  f  Does not include C02 reductions from engine replacements, repowers, or vehicle replacements.


                  The map in Figure 3 shows the location  of the projects for the first year of the program. These
                  projects are helping communities lower their public health risks from air pollution, accelerating the
                  use of proven technologies,  making  engines cleaner and more efficient, encouraging  new cutting-
                  edge  technologies, and  utilizing new financial  incentives to reach more fleets.
                             Figure  3. FY 2008 DERA Projects Across  the Country
                               %  Carson City   Salt Lake City
                                • Bakersfield
                              f • Diamond Bar
                                Los Angeles
                                                      Cheyenne
                                                        Denver
                                                                                          Augusta

                                                                                 Willistonfc
                                                                                 Montpelier  ^ Manchester
                                                                        pigeon        Albany  ^Boston
                                                                           Buffalo.  NewPaltz* -• Providence
                                                                                    Scarsdale ^Hartford
                                                                                 NewTork   Centereach
                                                       DesMoines     '^uinxjnw-ueiroii  Philadelphia  East Brunswick

                                                 ^         Chi-° Portage ^•"ZSe'r*""10"
                                                             Springfield  "   4
                                                                 . ,. *•.. Columbu
                                                                 Innianapohs
                                                                                                Derwood   District of Columbia
                                                  Topeka <
      St. Louis   Indianapolis
        %•      »»f
      Jefferson City   Louisville
                                                                                      Knoxville     Ralei
                                                                                     Jashville     Columbia
                                                                                         Atlanta
                                                                                                  *Charle
                               Honolulu
                                                                                ^^

                                                                                igfi*
                                                National Program

                                             0 State Program
12
REPORT TO CONGRESS: HIGHLIGHTS OF THE  DIESEL EMISSIONS REDUCTION PROGRAM

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2.  EPA's National Clean  Diese
                                                                     j
    ^4 First-of-Its-Kind Campaign Lives  Up to  Its Goals
OVERVIEW

     EPA's NCDC responds to the national need to reduce harmful diesel emissions. In April 2000,
     EPA began its Voluntary Diesel Retrofit Program with a few targeted projects. Using a small
     sample of the existing national fleet of school buses, delivery trucks, and transit buses,
EPA demonstrated emission reduction technologies and cleaner fuels likely to be used for all new
engines seven years before the 2007 effective date for the new engine standards.

Through this initial collaboration on retrofit projects, partners realized that they had found a way
to put aside their sometimes-conflicting perspectives to unite behind a common goal. Fueled by
this initial success, NCDC mobilized diverse partners with a wide  range of perspectives—such as
engine manufacturers, environmental groups, emission technology vendors, fuel suppliers, private
fleet owners, state and local governments, and transportation  officials—to work together, creat-
ing awareness of the urgency of the public health problem and accelerating the use of technolo-
gies years earlier than  otherwise would have occurred. EPA provided seed money and technical
expertise to create markets for new technologies and bring stakeholders together around an issue
of mutual interest.

This tiny spark caught flame. Since 2000, EPA has awarded approximately 300 demonstration
grants under the Clean Air Act for diverse sectors such as transit
and school buses and marine, construction, and freight vehicles
and equipment. These projects reduced unnecessary idling and
promoted the use of alternative and cleaner fuels, retrofitting
engines and replacing  old engines or equipment with new, cleaner
versions. Each year additional partners have joined NCDC, adding
and showcasing new technologies. EPA tailored incentives to key
sectors such as school buses, marine ports, construction, freight,
transit, and agriculture. These successful demonstration projects
resulted  in the use of ultra-low-sulfur fuel in parts of 20 states
well before the EPA mandate took effect. This cleaner  diesel fuel
directly reduces emissions from engines and enables the use of the
most effective emission control devices. Now the use of this fuel  is
widespread and fleets are experiencing maintenance and emissions
benefits  of cleaner fuels.
                                     2. EPA's National Clean Diesel Campaign
13

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                        Clean School Bus USA Is Key to a  Healthier  Ride for Kids
                   Due to the innovation and success of EPA's Clean School Bus USA,
                   begun in 2003 as the flagship program of the National Clean Diesel
                   Campaign, approximately 3 million children ride cleaner school
                   buses today.
                                                                               JP CLEAN SCHOOL BUS
                   Clean School Bus USA's goal is to significantly reduce children's exposure to harmful exhaust
                   from diesel school buses. By establishing partnerships with local and state governments, school
                   transportation officials, fuel providers, and equipment and engine manufacturers, EPA created
                   a highly successful, incentive-based program to reduce the pollution from the nation's 400,000
                   oldest and dirtiest school buses and to protect the 24 million children who ride buses daily.

                   As part of the program, EPA awarded 157 grants throughout six years, totaling $31 million, to
                   demonstrate pollution control techniques. EPA has distributed its Key to a Healthier Ride educa-
                   tional materials to more than 400 school districts nationwide,  reaching more than 74,000 school
                   bus drivers and affecting more than 83,000 diesel school buses. These school districts are also
                   formally recognizing bus drivers who successfully reduce school bus idling. For more informa-
                   tion, visit: www.epa.gov/otaq/schoolbus/index.htm.
                VERIFYING THAT EMISSION  REDUCTION TECHNOLOGIES WORK

                Testing and evaluating the efficacy of diesel emission reduction technologies is a cornerstone of
                NCDC. From the beginning, fleet owners demanded to know that the technologies they wanted or
                were expected to use would work and would  not harm their operations. State and local govern-
                ments wanted assurance that they could rely on these strategies now and in the future to meet
                their air quality goals. In response to these needs, EPA created the Retrofit Technology Verification
                Program in 2002 to evaluate objectively the effectiveness of emission control technologies.

                Through this program, EPA assures users that the actual emission benefits from retrofit technologies
                match those claimed by the manufacturer. The  Agency also evaluates technologies that assist fleets
                in reducing idling. In addition, the  California Air Resources Board (CARB)  provides its own list of
                verified emission  control technologies (www.arb.ca.gov/diesel/verdev/verdev.htm), which EPA recog-
                nizes. By verifying technologies, leading successful demonstrations, and operating recognition and
                education programs, these agencies have helped develop markets for new, greener technologies.

                Yet this was only the beginning.  Congress recognized the important role the verification process plays
                by making it a foundation of the implementation and integrity of the Diesel Emissions Reduction Pro-
                gram. Thus, in the national grant program, EPA requires the use of technologies that have been veri-
                fied or certified by EPA or CARB when federal funds are applied.  Congress also wanted to continue to
                spur innovation and encouraged the support and development of emerging technologies under DERA.
14
REPORT TO CONGRESS:  HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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In establishing its verification program, EPA realized that verifying a technology only prior to its
use is not enough. The technologies need "real world" testing to ensure that they maintain their
performance throughout their useful life. As retrofit technologies are introduced into the market in
higher volume, verifying the field performance and long-term durability of these products through
in-use testing is increasingly essential.  EPA requires all manufacturers to rigorously test each verified
technology at two different stages during its useful life to confirm the percent of emissions reduc-
tion and evaluate durability. In-use testing offers confidence that verified retrofit technologies have
been proven in the real world and will  maintain that performance throughout their useful lives.

As a sign of the strength of the initial  tests and of the technologies themselves, results from in-
use testing are consistent with the original verified levels of emission reductions. In addition, EPA
has been able to increase the level of  reduction listed on its Web site for some of the technolo-
gies, given their outstanding performance in the in-use program.

To date, EPA and CARB have verified more than 50 emission  control technologies. In addition,
over the past seven years, EPA's SmartWay Transport Partnership has evaluated idle reduction
technologies through grants, engineering analysis, and peer-reviewed reports. As of March 2009,
EPA has designated six categories of idle reduction technologies as eligible for grant funding:
1) electrified parking spaces (truck stop electrification); 2) shore side power for ships, also known
as cold ironing or Alternative Maritime Power; 3) auxiliary power units and generator sets; 4) fuel-
operated heaters; 5) battery air-conditioning systems; and 6) thermal storage systems.
            Clean Ports  USA Helps Marine Ports Save Money
                             and Decrease Emissions
   Due to EPA's Clean Ports USA program (part of                                   USA
   the National Clean Diesel Campaign), leading      ^^^_^^^_  5\/£  ^_^_
   marine ports are saving fuel, increasing operational
   efficiency, and decreasing diesel emissions. In addition, several prominent ports have developed
   clean air action plans, which include greenhouse gas reduction goals, to assist them in reducing
   air pollution in gateway communities.

   In January 2005, EPA partnered with the American Association of Port Authorities to create
   Clean Ports USA as an outreach- and incentive-based program designed to reduce emissions
   from existing diesel engines operated at marine ports. EPA is working with port authorities;
   terminal operators; and shipping, trucking and rail companies to promote environmentally
   superior technologies through education, incentives, and financial assistance. For more
   information, visit:  www.epa.gov/cleandiesel/ports.
                                        2. EPA's National Clean Diesel Campaign

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                                      SmartWay Transport Partnership
                                                                           SmartWay
                                                                 Transport Partnership
                                                                 U.S. ENVIRONMENTAL PROTECTION AGENCY
  EPA developed the SmartWay Transport Partnership
  Program to address the environmental impact of
  the freight system in the United States. The Smart-
  Way program is a voluntary public-private initiative
  designed to improve the environmental performance
  of the freight delivery system through money-saving, market-based approaches. The goal of the
  program is to reduce emissions by promoting cost-effective strategies that reduce fuel consump-
  tion and air pollution, using such  methods as eliminating unnecessary idling, installing emission
  control devices, and improving freight logistics.

  The SmartWay program works hand in hand with the National Clean  Diesel Campaign to
  promote diesel emission reduction strategies. The SmartWay program has pioneered innovative
  approaches to emission reduction, such as the creation of SmartWay-approved trucks to identify
  trucks with superior environmental performance and the development of low-cost financing
  for the purchase of fuel saving and emission control devices.  The innovative financial strategies
  offer increased access to lenders who can provide financing for SmartWay-verified technologies
  and provide truck owners with low-cost financing for the purchase of SmartWay Upgrade Kits
  (which include idle reduction technologies, advanced aerodynamic technologies, and low-rolling
  resistance tires) or the  purchase of cleaner used diesel trucks with aftertreatment devices. The
  SmartWay program also recognizes partners who achieve superior environmental performance.
  For more information, visit: www.epa.gov/smartway.
                TAPPING INTO  REGIONAL COLLABORATIVES

                With the foundation of cost-effective,  reliable technologies, EPA's partners wanted to reach more
                fleets in more sectors to reduce harmful diesel emissions. As a next step, beginning in 2003, EPA's
                regions began organizing Regional Clean  Diesel Collaboratives with states, local nonprofit organi-
                zations, private industry, and municipalities. (See Figure 4 for a map.) By tying into a network of
                regional stakeholders, this collaborative structure is well-suited for achieving significant emission
                reductions across large geographic areas. Members of these collaboratives have agreed to col-
                lectively leverage additional funds and take a local approach to diesel emission mitigation. These
                collaboratives play a vital role in EPA's proactive, incentive-based approach to  achieving superior
                environmental results. Information on  the collaboratives can be found in Appendix F.
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REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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             Figure 4.  Regional Clean Diesel Collaboratives
                                                                     Northeast
                                                        Midwest      PA  9—'
                                                       IL   ,N   OHMid-At
REGULATING DIESEL ENGINES AND FUELS

While cost-effective technology and strong coalitions of committed stakeholders form the back-
bone of NCDC, another important component is a series of regulations designed to reduce pollu-
tion emitted from new diesel engines and their fuels.

Under the Clean  Air Act, EPA developed and implements a suite of stringent regulations to
mitigate emissions from new diesel engines and their fuels. These regulations apply to a variety
of new engines, including those in trucks, buses, construction equipment, locomotives, harbor
craft, and large ships. Over the long term, these standards will yield enormous public health and
environmental benefits.

When fully implemented, these regulatory programs will reduce NOX by about 7 million tons per
year, PM25 by more than 300,000 tons, and SOX by about 800,000 tons.  By 2030, when the regu-
latory programs are fully phased  in and implemented, the net public health benefits total approxi-
mately $186 billion per year, including annually preventing 26,000 premature deaths, approxi-
mately 20,000 hospitalizations, and more than 3.3 million days lost from  work due to respiratory
problems as described in EPA's Regulatory Impact Assessments.
                                     2. EPA's National Clean Diesel Campaign
17

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                In general, these rules require stringent standards for PM and NOX, based on levels achievable
                with advanced diesel aftertreatment technologies, such as diesel particulate filters (DPFs) for PM
                and lean NOX traps or selective catalytic reduction (SCR) for NOX. Additionally, each of these rules
                ultimately requires reducing fuel sulfur levels to 15 parts per million (ppm) to enable the use of
                advanced aftertreatment technologies.

                NCDC's goal is to bring these impressive benefits to the American people earlier by accelerating
                the adoption of proven technologies through its strategic regulatory approach.
18
REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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BACKGROUND

      THE EPAct of 2005 provides EPA new grant and loan authority to promote diesel emission
      reductions and authorizes appropriations of up to $200 million  per year to the Agency under
      the Diesel Emissions Reduction Program provisions (for FY 2007 through FY 2011). Congress
appropriated funds under this statute for the first time in FY 2008, in  the amount of $49.2 million.
This portion of the report highlights key components of the statute and explains  how EPA is imple-
menting the program with state partners pursuant to Congress's direction in the statute.

DERA includes a national program and a state allocation program. The national program includes
70 percent  of appropriated funds, and the state program makes available 30 percent. Under this
act, EPA  can offer competitive grants and, for the first time, low-cost revolving loans to eligible
organizations and entities on a competitive basis.

To spur innovation, DERA allows for up to 10 percent of the national funds to be spent on
"emerging technologies." Additionally, not less than 50 percent of the funds available for the na-
tional program  must be used for the benefit of public fleets. DERA requires that engine configura-
tions and technologies supported by the national program be verified or certified by EPA or CARB.

While the national program offers competitive grants in three categories, the state program is a
single allocation program, which means that base funding is distributed to states using a specific
formula based on participation, and incentive funding is also available for any states that match
their base funding. Funds not claimed under this program—either if states decline to participate
and/or do not match the base funding—revert to the national  program. By meeting certain re-
quirements, all  of the 50  states and the District of Columbia are eligible to participate.7

Under the statute, EPA provides guidance to the states about the process for applications,  permis-
sible use  of funds, and the cost-effectiveness of various emission reduction technologies. EPA es-
tablished an annual deadline for submitting applications, an approval process, and a streamlined
renewal process. Discretion is given to the governors for apportioning funds between grants and
loans in each state. EPA  published a Federal Register notice (73  FR 12728, March 10, 2008) that
discussed how it intended to implement the state programs.
7  The District of Columbia is now an eligible entity for the State Clean Diesel Grant and Loan Program, but it was not eligible when
  EPA awarded the FY 2008 state grants.
                                                  3.  The Energy Policy Act of 2005
19

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                                         The Energy Policy Act of 2005
                    Under the EPAct 2005, EPA gives priority to those diesel emission reduction programs that:
                    1. Maximize public health benefits.
                    2. Are the most cost-effective.
                    3. Are in areas with high population density and poor air quality (including nonattainment
                      areas or areas that require maintenance of national ambient air quality standards for a
                      criteria pollutant, federal Class I areas, or areas with toxic air pollutant concerns).
                    4. Are in areas that receive a disproportionate quantity of air pollution from diesel fleets,
                      including truck stops, ports, rail yards, terminals, and distribution centers, or that use a
                      community-based multi-stakeholder collaborative process to reduce toxic emissions.
                    5. Include a certified engine configuration or verified technology that has a long expected
                      useful life.
                    6. Maximize the useful life of any certified engine configuration or verified technology used or
                      funded by the eligible entity.
                    7. Conserve diesel fuel.
                    8. Utilize ultra-low sulfur diesel fuel (15 ppm of sulfur content) ahead of EPA's mandate (for
                      nonroad or marine projects).
                    Relevant sections of the EPAct 2005 that govern the DERA program are found in Title VII,
                    Subtitle G.
                                 Section 791, "Definitions"
                                 Section 792, "National Grant and Loan Programs"
                                 Section 793, "State Grant and Loan Program"
                                 Section 794, "Evaluation and Report"
                                 Section 795, "Outreach and  Incentives"
                                 Section 796, "Relationship to Clean Air Act"
                                 Section 797, "Authorization for Appropriated Funds (2007-2011)"
20
With the foundations of its successful Clean Air Act demonstration programs, verification program,
sector-based focus, Regional Collaboratives, and SmartWay brand, NCDC was well-poised to
deploy cost-effective diesel emission reduction strategies even more broadly under DERA.

REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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EPA's goal for the first year of DERA funding was to establish diesel emission reduction programs
in every state and accelerate the adoption of clean diesel technologies in the existing fleet. The
EPAct 2005 statute establishes a general framework for the Diesel Emissions Reduction Program,
charging EPA to develop other details for how the total program is implemented. Ultimately,  EPA
designed four programs:

1. The National Clean Diesel Funding Assistance Program
2. The National Clean Diesel Emerging Technologies Program
3. The SmartWay Clean Diesel Finance Program
4. The State Clean Diesel Grant and Loan Program

These programs deploy proven technologies much earlier than would otherwise occur to meet
critical local air quality needs. They accelerate the use of emerging technologies and provide inno-
vative financial incentives that make the business case for reducing diesel emissions. Furthermore,
states are key partners in the success of clean diesel programs, and the state program enhances
their leadership in reducing  harmful diesel emissions.

    Figure 5.  National Clean Diesel  Campaign Funding Structure
                                   Federal Funding

                        Diesel Emissions Reduction Program
                         Cost-Effective, Verified and Certified Technologies to
                                Reduce Harmful Diesel Emissions

                    Nationally Administered Competitions
Allocation to States

National Clean
Diesel Funding
Assistance Program
Reducing the Most
Damaging Emissions

National Clean
Diesel Emerging
Technologies Program
Moving Innovations
From Concept to
the Marketplace

SmartWay Clean
Diesel Finance
Program
Supporting Low-Cost
Loans for High-Value
Technologies

State Clean
Diesel Grant and
Loan Program
Reaching Its Goal of
Programs in
All 50 States
                                                3. The Energy Policy Act of 2005
                                    21

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               THE NATIONAL CLEAN DIESEL FUNDING ASSISTANCE  PROGRAM

               Reducing the Most Damaging Emissions

               EPA received an overwhelmingly positive response to its Requests for Proposals (RFPs) under the
               National Clean Diesel Funding Assistance Program. This program offered the majority of the fund-
               ing available, through grant competitions handled by the Agency's seven Regional Collaboratives.
               The Agency received 236 applications nationwide, requesting more than $144 million and offering
               $81 million in matching funds. Thus, applicants requested $5 for every $1 available.
               Applicants requested funding to address their most
               pressing needs, such as retrofitting school buses so that
               children's exposures are reduced on their way to school,
               repowering locomotives used at seaports to save fuel and
               reduce emissions in neighborhoods while still delivering
               freight used in every part of commerce, and replacing
               high-emitting construction equipment used to build
               hospitals and our nation's roads.

               After screening for eligibility and carefully ranking the
               applications, EPA selected 60 recipients across  the coun-
               try in the fall and winter of 2008—within  nine months
               of the program start date—and awarded $29,039,803
               in federal dollars, attracting approximately $35 million in
               matching funds. The federal share included $1,476,600
               from unclaimed state funds (states that did not match
               their base funding). Appendix E lists the ranking cri-
               teria, reflecting the priorities listed on page 20. Table
               2 summarizes the awards by region, and Appendix A
               contains a comprehensive list of the awardees and grant
               amounts.
                                                      Emissions Reduced From Nonroad
                                                    Cargo Handling  Equipment at  Pacific
                                                                Northwest Ports
                                                   Through its Clean Ports USA Program, EPA awarded the
                                                   Puget Sound Clean Air Agency an $850,000 grant to
                                                   fund replacements and retrofits, such as diesel particu-
                                                   late filters, of nonroad truck engines for cargo-handling
                                                   equipment at Puget Sound ports.

                                                   This grant helps the port authorities achieve the goals
                                                   in their Northwest Ports Clean Air Plan. Additionally,
                                                   the Ports of Seattle and  Tacoma and the Puget Sound
                                                   Clean Air Agency are  providing matching funds totaling
                                                   $318,000.

                                                        CLEANPORTSUSA
                       Illinois School  Buses Reap the Benefits of DERA Grants
                  EPA's Clean School Bus USA grants to Illinois EPA's Green Fleets Program, including school buses,
                  totaled $678,600, plus a $654,700 match from Illinois EPA, funding a variety of clean diesel tech-
                  nologies, including diesel oxidation catalysts, diesel paniculate filters, closed crankcase ventila-
                  tion, and auxiliary power units.

                  The Illinois Green Fleets Program formally recognizes businesses, governmental entities, and
                  organizations that use clean, domestic, renewable fuel vehicles in their fleet. The program also
                  recognizes Illinois vehicle fleets equipped with diesel retrofits.
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REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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Table 2. FY 2008 Awards for the National Clean Diesel Funding Assistance
Program by EPA Region
Region
1
2
3
4
5
6
7
8
9
10
Collaborative
Northeast
Mid-Atlantic
Southeast
Midwest
Blue Skyways
Rocky Mountain
West Coast
Total
Number of Applications
16
33
24
39
38
20
10
11
30
15
236

6
9
6
7
13
3
3
5
5
3
60
Dollars Awarded
$1,970,484
$3,268,402
$3,277,166
$3,789,289
$4,879,049
$2,719,880
$1,986,802
$1,755,645
$3,953,079
$1,440,007
$29,039,803
                    Public Fleets Directly Benefit From
                       DERA National Program Funds
   Public fleets across the nation—including transit buses, school buses, refuse haulers, municipal
   trucks, snowplows, and fire trucks—are emitting less pollution in towns and cities as a direct
   result of the Diesel Emissions Reduction Program. In FY 2008, the Agency awarded 74 percent of
   competitively awarded national funds to public fleets. Section 792 (b)(2) of the EPAct 2005 re-
   quires that no less than 50 percent of the funds for the national program be spent for the benefit
   of public fleets.
                                   Many partners stepped forward to deploy clean diesel
                                   technologies in public fleets to lead by example. Making
                                   the public-sector vehicles that do the nation's work the
                                   cleanest they can be creates a powerful example for
                                   other fleets to imitate.
THE NATIONAL CLEAN DIESEL EMERGING TECHNOLOGIES PROGRAM

Moving Innovations From Concept to Marketplace

EPA's NCDC has been demonstrating new technologies and creating new demands for environmen-
tally superior products since its inception. To continue to encourage new technologies to meet the
needs of fleets and air quality planners, Congress recognized the need for the DERA program to
promote cutting-edge advanced technologies. EPA developed the National Clean Diesel Emerging
Technologies Program to respond to Section 792 (b)(3)(B)(i), which directs that "...the Administra-
tor shall provide not more than 10 percent of funds available for a fiscal year under this provision to
eligible entities for the development and commercialization of emerging technologies."
                                              3. The Energy Policy Act of 2005
23

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                 In FY 2008, under the National Diesel Emerging Technologies Program, 10 applicants requested
                 $5 million and offered more than $1  million in matching funds.  EPA awarded six grants in five
                 states for a total of $3.7 million in federal funds, with $1.1 million in matching funds. These funds
                 supported NOX reduction technologies such as SCR systems for on-highway trucks and nonroad
                 construction equipment, greater emission controls from a combination of diesel oxidation cata-
                 lysts (DOCs)/DPFs and exhaust gas recirculation (EGR) systems, and new techniques for harbor
                 craft, such as an emission upgrade kit for two types of marine engines. The criteria by which the
                 applicants were evaluated are presented in Appendix E. The new federal dollars used  for these
                 emerging technologies are vital to spurring investment by NCDC's partners.

                 The National Clean Diesel Emerging Technologies Program is an opportunity to advance new,
                 cutting-edge technologies to reduce diesel emissions from the existing fleet. Building  on EPA's
                 verification program, EPA developed a process by which a manufacturer can request that its
                 technology qualify in advance as an emerging technology. Through its collaborative network, EPA
                 has been encouraging new technologies to reduce NOX, save fuel, and perform better on a wider
                 array of conditions and vehicles, including nonroad equipment and marine vessels.

                 To qualify as an emerging technology, manufacturers should be in the initial stages of the verifica-
                 tion process with  EPA or CARB and listed on EPA's Emerging Technology List. The manufacturer
                 must  also provide an approvable application for verification (including an explanation  of the en-
                 gineering principles of the technology and why the technology should be considered an emerging
                 technology) and an approvable test plan. An emerging technology must be close to being, if not
                 already, commercially available.
                  Emerging Technology
             An emerging technology is defined in
             Section 791 of the Energy Policy Act to be
             "... a technology that is not certified or veri-
             fied by the Administrator or the California Air
             Resources Board but for which an approvable
             application and  test plan has been submitted
             for verification to the Administrator or the
             California Air Resources Board."
                                        Once approved, emerging technologies are listed on
                                        EPA's Web site. Technologies may remain on EPA's
                                        Emerging Technology List for up to two years. During
                                        that two-year period, EPA estimates that manufactur-
                                        ers will be able to complete the necessary steps to
                                        obtain full verification. Once a technology is verified
                                        or certified, it will no longer be considered "emerg-
                                        ing" but will then be fully eligible for projects under
                                        the National Clean Diesel Funding Assistance Program
                                        and then deployed more widely. This program will
                                        accelerate the pace of introduction of new diesel
                                        emission reduction strategies and will allow the DERA
                                        program to evolve to better serve the public.
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REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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             Emerging Technology to Bring Large Reductions
                               in Four Pollutants
   EPA awarded a grant to the South Coast Metropolitan Air Quality Management District, in
   California, home to approximately 16 million people, to install selective catalytic reduction
   technology (SCRT) on 1999 to 2002 heavy-duty Class 8 on-road diesel trucks, which will
   reduce PM, NOX, CO, and HC emissions by at least 90, 65, 85, and 90 percent, respectively.
   This project will improve the air quality of a
   high-population-density nonattainment area.
   At the same time, the project will produce
   useful data about the effectiveness and
   durability of this emerging technology.
THE SMARTWAY CLEAN DIESEL FINANCE PROGRAM

Supporting Low-Cost Loans for High-Value Technologies

Under the SmartWay Clean Diesel Finance Program, EPA received four applications requesting
$9.5 million and leveraging $44 million. Ultimately, in September 2008, EPA awarded three
competitive grants totaling $3.4 million to establish a national financing program that provides
funding to small- and medium-sized trucking companies to purchase clean diesel technologies,
including leveraging more than $19 million in additional funding.

These innovative financing programs will help smaller trucking firms lower their emissions, fuel
costs, and carbon footprint by purchasing cleaner used trucks equipped with diesel exhaust filters
and/or fuel-saving technologies. The program will also support idling and emission reduction  tech-
nologies for 2,460 trucks. Appendix E presents the criteria by which the applicants were evalu-
ated. Appendix C provides additional details about the projects.

DERA provided EPA with new authority to establish national grant and low-cost revolving loan
programs to finance clean diesel projects. Administered by EPA's SmartWay Transport Partnership,
the FY 2008 RFP for this program focused on establishing low-cost loan programs for retrofit-
ting used  pre-2007 highway vehicles and new or used pieces of nonroad equipment with EPA- or
CARB-verified emission control and idle reduction technologies. EPA encouraged financing pro-
posals to include strategies such as loan guarantees, equity investments that leverage additional
funds, tax-exempt or taxable bonds to create a low-cost loan program, and revolving loan funds.
                                               3. The Energy Policy Act of 2005

-------

                Using up to 10 percent of the funds available for the national program, the SmartWay Clean
                Diesel Finance Program  is designed to allow eligible entities to create financing mechanisms to
                assist fleets with the purchase of EPA-approved fuel-saving and emission reduction technologies.
                To date, EPA has offered grantees the opportunity to develop innovative financing projects instead
                of issuing direct federal  loans.

                Loan programs are important because they enhance financial sustainability and allow the funds to
                be used multiple times as the loans are repaid and additional loans can be offered to purchasers of
                cleaner vehicles or technologies. They are able to leverage substantial  nonfederal funds to increase
                the federal dollar's effectiveness. For example, in the case of a finance program using an equity
                investment, the award funds could be used to leverage additional funds from a lending institution
                to increase the amount available for loans.
                Although potentially far reaching, this program presents
                unique challenges that are not faced in the National
                Clean Diesel Funding Assistance Program. Unlike public
                school bus fleets, where the fleet owners have a strong
                motivation to reduce emissions, most private diesel truck
                and equipment owners do not have the same incentives
                and may not be as receptive to installing diesel emission
                reduction technologies.  EPA has attempted, in previous
                demonstration grants, to provide retrofit technologies to
                truck operators and  has received only minimal interest.

                To help manage these challenges, EPA's SmartWay
                program worked with a variety of stakeholders in the
                trucking industry including truckers, truck dealers, truck
                finance companies, and trucking associations. EPA con-
                cluded that the best incentive to install retrofit technolo-
                gies on older trucks  is to provide lower cost financing
                to purchase newer trucks already equipped with these
                technologies. In fact, the assessment shows that truck-
                ers will  purchase cleaner diesel trucks equipped with
                advanced  air pollution control devices if the monthly
                finance charge is $100 to $200 less than traditional
                trucks without these technologies. The federal grant
                funds can be used to lower the monthly finance cost by
                either extending the terms of the loans or reducing the
                interest rates.
                                                       Grant  Offers Low-Interest Loans
                                                            for SmartWay Upgrades
                                                     Using new authority to issue grants for loans
                                                     and other innovative financing mechanisms, EPA
                                                     awarded $1.13 million to the Community Develop-
                                                     ment Transportation Lending Services, Inc. to estab-
                                                     lish a revolving loan fund for the purchase of used
                                                     trucks that have SmartWay upgrades or will receive
                                                     SmartWay upgrade kits.

                                                     The program uses the grant to provide a lower inter-
                                                     est rate than borrowers would otherwise be able to
                                                     get—in this case, 5.5  to 8.5 percent, based on each
                                                     applicant's business history, available collateral,
                                                     cash flow, credit score, and other factors. The loan
                                                     payback period is three to six years.
                                                                                             'SM
         vvSmartWay
Transport  Partnership
 U.S. ENVIRONMENTAL PROTECTION AGENCY
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REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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THE  STATE CLEAN DIESEL GRANT AND LOAN  PROGRAM

Reaching Its Goal of Programs in All 50 States

As a telling indication of the need for and interest in diesel emission reductions throughout
the United States, all 50 states elected to participate in the FY 2008 State Clean Diesel Grant
and Loan Program. EPA apportioned a base amount of $196,880 to each state.8 In addition, as
another sign of the nationwide support for diesel emission reduction programs, 32 states were
able to match the base funding, providing more than  $6.3 million, and therefore received ad-
ditional incentive funding, as allowed by  DERA. For these states, EPA established a total grant of
$492,200 (with $295,320 in federal funds and
at least $196,880 in state funds).
With this money, each state established a clean
diesel program within its air agency and worked
in consultation with EPA to develop an effective
work plan and application. The projects varied
and utilized a number of emission reduction
strategies. A total of 21 states concentrated
their efforts on school  buses;  nine focused
on the construction sector; and other states
focused on agriculture, transit buses,  marine
ports, rail, or trucking. Several states  that have
never initiated a state clean diesel program
before are starting new programs. Appendix D
presents a list of projects.

EPA issued a Federal Register notice (73 FR
12728; March 10, 2008) that  announced the
funding opportunity and explained the main
provisions of the State Clean Diesel Grant and
Loan Program. The state program is not a
competition but, rather, an allocation process
in which the states indicate their interest in
participating and applying for the funds,  and
EPA awards a specific allocation based on the
total number of states whose applications are
approved. Any state wishing to participate
receives funding if the state submits an approv-
able work plan. Early on, the EPA Administrator
sent a letter to the governor of each state out-
lining the goals of the State Clean Diesel Grant
and Loan Program.
Provisions for State Uses of State Clean
 Diesel Grant and Loan Program Funds
 States had significant flexibility in their proposed work plan.

 States were encouraged to use funds for EPA- and/or CARB-
 verified or certified technologies, although there were
 cases where emerging technologies or other cost-effective
 strategies were allowed, as they advanced the goals of the
 program.

 States could use funds to select various state fleets or projects
 for funding.

 States were encouraged not to use funds for emission reduc-
 tions that are mandated under federal, state, or local law
 (similar to Section 792 (d)(2), "Use of Funds—Regulatory
 Programs").

 States could use up to 15 percent for administrative costs.
  The District of Columbia is now an eligible entity for the State Clean Diesel Grant and Loan program, but it was not eligible when
  EPA awarded the FY 2008 state grants.
                                                 3. The Energy Policy Act of 2005
                                                   27

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               INAUGURAL YEAR RESULTS IN IMPRESSIVE, COST-EFFECTIVE

               REDUCTIONS ACROSS ALL SECTORS

               Receiving significant levels of funding changes the complexion of possibilities for communities
               struggling with ways to reduce harmful diesel pollution. Instead of small demonstrations, entire
               fleets can take advantage of proven technologies. Federal investments can attract private capital
               through low-cost loans under the new DERA provisions. Financially strapped states can move
               forward to maximize public health programs and  improve air quality for their citizens.

               In the first year of DERA funding, EPA's programs achieved what they set out to do. More than
               14,000 diesel-powered vehicles and pieces of nonroad equipment became cleaner as an  immedi-
               ate and direct result of this work.

               DERA  Funding Supported Reductions Across All Sectors. As shown in Figure 6, the
               FY 2008 grants supported a wide array of projects in numerous sectors, from agriculture and con-
               struction to marine and seaports to rail to transit. Collectively, the power of many small actions
               across the range of commercial, municipal, and private endeavors yielded significant emission
               reductions.
                        State of Delaware Expands Its Program to Cover More
                                             Municipal Vehicles
                  EPA awarded the Delaware Department of Natural Resources and Environmental Control with a
                  state clean diesel grant to retrofit 1998 Class 7 refuse haulers. Because the state put some of its
                  own resources toward the program, EPA allocated additional incentive funding as well. This proj-
                  ect is an excellent example of how the DERA funds allocated toward state programs can benefit
                  the air quality of each state that opts  into the program.
28       +     REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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       Figure 6.  FY 2008 National  Grants—Types and Numbers
                         of Vehicles and Equipment
                                                            5,392
                    City/County   Delivery
                     Vehicle     Truck
     Airports
 Marine      Rail


Sector Totals
                                                       Refuse
                                                       Hauler
       Short
       Haul
School Bus   Transit Bus
DERA Funding Supported a Wide Range of Technologies and Fuels. As shown in Figure
7, the FY 2008 projects represent a wide variety of verified technologies, cleaner fuels, and certi-
fied engine configurations, such as repowers, replacements, idle reduction technologies (e.g.,
auxiliary power units [APUs], shore power, truck stop electrification), biodiesel, alternative fuels,
lower-sulfur fuels in nonroad equipment, and retrofit devices such as diesel oxidation catalysts
and diesel paniculate filters.
                                              3.  The Energy Policy Act of 2005
                                                        29

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                     Figure 7. Technologies Employed in FY 2008 DERA Grants
                       4,500
                       4,000
                                        4,034

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45 29
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                                 /*'    ///V
                                 y             T  .w  .ACS      /^
                               .^
               DERA Funding Helped Reduce the Amount of Diesel Fuel Used. Table 3 shows the
               impressive amount of diesel fuel conserved by the idle reduction programs DERA funded. Taken
               together, the FY 2008 NCDC grants will save more than 3.2 million gallons of fuel per year, which
               corresponds to reducing  35,600 tons of C02 per year. This savings equates to more than $8 mil-
               lion a year in fuel savings for fleet operators (assuming $2.50 per gallon fuel). For comparison,
               freight trucks and locomotives consume 35 billion gallons of diesel fuel annually. Burning this fuel
               produces more than 350 million metric tons of carbon dioxide annually.


               Table 3. Diesel Fuel  Conserved Annually by FY 2008 DERA Projects With Idle
               Reduction Technologies
                               Program
                                          CO., (annual tons)
                National Clean Diesel Funding Assistance Program
                                                       8,200
Diesel Conserved
(annual gallons)
           736,000
                National Clean Diesel Emerging Technologies Program
                SmartWay Clean Diesel Finance Program
                                                      18,700
          1,683,100
                State Clean Diesel Grant and Loan Program
                                                       3,800
                Total
                                                      35,600
         3,207,900
               Note: Values were rounded to the nearest 100 or to one significant figure. Sums may not add due to rounding. Calculation of C02
               does not include C02 savings from engine repowers, replacements, or upgrades.
30
REPORT TO CONGRESS:  HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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DERA Funding Results Are Relatively Cost-Effective. In addition to being successful in
meeting their core goal, which is to reduce emissions,  EPA's clean diesel programs are also cost-
effective uses of federal funds, as shown in Table 4. As NCDC has developed over the years, clean
diesel projects have become more cost-effective as the technology has developed, as more vendors
are competing, and as stakeholders have become more experienced in implementing projects.

Table  4.  Projected Cost-Effectiveness
                                                                             Program     Recipient
                                                                              Fe
                                                                             Funding      Amount
                                      Federal costs per lifetime ton
 National Clean
 Diesel Funding
 Assistance Program
 SmartWay Clean
 Diesel Finance
 Program
 State Clean Diesel
 Grant and  Loan
 Program
 National Clean
 Diesel Emerging
 Technologies
 Program
 Federal grant
 dollars per
 lifetime ton for
 three programs
 combined
 Total dollars
 per lifetime
 ton*** for
 three programs
 combined
 $2,000
  $400
  $600
$1,000
 $27,700
  $9,000
 $16,700
$20,600
 $15,300
  $7,300
  $6,600
$10,500
 $4,000
 $2,100
 $2,300
$3,100
                                                    oer lifetime ton
$300
  $10
 $100
$29,039,803
 $3,390,000
$12,994,080
                                                        $3,776,117
$100
  $34,749,839
$19,100,000**
   $6,300,160
                                                             $1,130,927
$1,600
$33,300
$16,900
$5,000
$200
Note 1: Values were rounded to the nearest $100 or to one significant figure. Sums may not add due to rounding. Lifetime tons are
not discounted.

*  C02 was calculated for idle reduction technologies only and does not include reductions for repowers or replacements.

** Leveraged amounts; no matching was included in the grants, and this dollar amount is not included in the figure below.

*** Where cost includes federal funding, plus match, minus administrative costs assumed to be 15 percent, excluding leveraged
   amounts and the Emerging Technologies program.

Note 2: The Emerging Technologies program is designed to demonstrate new technologies. At this phase in the development of
these technologies, costs would be expected to be higher than at a more fully mature commercial scale of deployment stage.
Therefore, the costs comparisons with the other national program components shown in Table 4 have been omitted.

In a series of studies, EPA analyzed clean  diesel strategies generally and evaluated the cost-
effectiveness of using add-on retrofits on  buses, trucks, and nonroad equipment using a standard
set of assumptions.9 Specifically,  in these studies,  EPA evaluated the cost-effectiveness of retrofit-

ting school buses, freight  trucks, and  bulldozers with DOCs and catalyzed  DPFs, two of the most
common PM   emission reduction technologies for diesel engines.
  The Cost-Effectiveness of Heavy-Duty Diesel Retrofits and Other Mobile Source Emission Reduction Projects and Programs (EPA-
  420-B-07-006, May 2007)—Tables 3 and 4 provide comparisons of cost-effectiveness of other mobile source programs; and
  Diesel Retrofit Technology: An Analysis of the Cost-Effectiveness of Reducing Particu/ate Matter and Nitrogen Oxides Emissions Erom
  Heavy-Duty Nonroad Diesel Engines Through Retrofits (EPA-420-R-07-OOB, May 2007). The full reports are available on the EPA
  Web site: www.epa.gov/otaq/diesel/publications.htm.

                                                        3.  The Energy Policy Act of 2005
                                                                                              31

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                   • For nonroad equipment retrofit device cost-effectiveness:
                             PM: DOCs and DPFs for nonroad equipment ranged from $18,700 to $87,600 per
                             ton of PM25 reduced.
                             NOX: SCR systems and engine upgrade kits were calculated to range from $1,900 to
                             $19,000 per ton of NOX reduced.

                   • For on-highway applications, such as school buses and trucks cost-effectiveness:
                             PM: DOCs ranged from $11,100 to $67,700 per ton of PM25 reduced and DPFs
                             retrofits ranged from $12,100 to $69,900 per ton of PM25 reduced.
                             NOX: Truck stop electrification ranged from $1,400 to $2,000 per ton of NOX re-
                             duced, and APUs ranged from $2,700 to $3,500 per ton of NOX reduced.
                These estimates of cost-effectiveness for retrofit devices depend  on a number of factors such as
                equipment activity, survival rates, effectiveness of the  system, and costs.

                For early retirements of vehicles and engine replacements or repowers, the new engines must
                meet EPA's more stringent regulations and thus are significantly cleaner. Cost-effectiveness esti-
                mates were made to support EPA's Clean Air Act regulatory programs.

                   • For nonroad vehicles:
                             PM: For EPA's Tier 1/Tier  2 standards, the cost-effectiveness is estimated at $2,000
                             per ton of PM25 reduced.
                        -   NOX:
                             •  For EPA's Nonroad Tier 4 standards,  the cost-effectiveness is estimated at
                                $1,010 per ton (NOX + nonmethane  hydrocarbons [NMHC]).
                             •  For the locomotive and marine standards, the cost-effectiveness is $30 to $190
                                per ton (NOX +NMHC).

                These PM-related original equipment manufacturer costs are comparable to or lower than those
                of installing retrofit technologies on an existing  vehicle because of economies of scale in mass
                production and related factors. Depending on the age  of the engine being retired, replacements
                and repowers can also improve fuel efficiency. Replacements can be cost-effective strategies
                for the oldest vehicles and vessels in the fleet, but there is often  a significant financial barrier,
                because EPA grants only offset a portion of the overall cost of the vehicle. Several of the FY 2008
                grants take advantage of the very cost-effective NOX and PM reductions possible with locomotive
                and marine repowers.

                Similarly, EPA anticipates that as emerging technologies become  commercialized and more widely
                available, their cost-effectiveness too will  be comparable to other verified technologies; however,
                at this early stage in their development, comparisons can be somewhat misleading, so they are
                not included in the analysis.
32      +     REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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For comparison, for the PM NAAQS Regulatory Impact Assessment, for PM25 reductions:
•  The annualized cost for electrostatic precipitators for utility boilers was $3,000 to $15,000 per
   ton of PM2 5 and  $1,000 to $20,000 per ton for industrial boilers.

•  The cost of fabric filters for these same units ranged from $2,000 to $100,000
   per ton  of PM25.

•  Area source controls' annualized costs are less than $100 per ton of PM25.

When analyzing the effectiveness of the federal plus matching costs of the FY 2008 DERA proj-
ects, EPA found that they were within the expected range of cost-effectiveness. The average full
program cost of the national, state, and SmartWay finance programs is about $33,300 per ton of
PM25 (including the matching amounts and assuming an upper limit on  administrative costs of 15
percent, excluding leveraged amounts).
EPA analyzed the way in which federal dollars were leveraging
other funding to achieve emission reductions. The reductions
achieved over the lifetime of the FY 2008 DERA grants are being
financed in different manners. In  some cases, for instance, the fed-
eral share  of the grant might pay for the entire cost of the retrofit
device. In other cases, the federal share of the grant might provide
a small amount, coupled with state incentive funds or private in-
vestment.  In the SmartWay Clean Diesel Finance grants and in the
other program  grants that used the new loan provisions, relatively
small federal investments on a per-unit basis attracted large pri-
vate  investment, especially where additional economic benefit in
terms of fuel savings or the value of a newer vehicle was involved.
For the federal competitive national program:
•  National Clean Diesel Funding Assistance Program: The average federal cost was
   estimated at $27,700 per ton of PM2 5 reduced over the lifetime of the project and just under
   $2,000 per ton of NOX reduced over the project lifetime.

•  SmartWay Clean Diesel Finance  Program: The average federal cost was estimated at
   $9,000 per ton of PM2 5 reduced over the lifetime of the project and $400 per ton of NOX
   reduced over the project lifetime. Federal funds leveraged significant private sector funding and
   fuel savings in this new approach.

For the State Clean  Diesel Grant and Loan Program:
•  The average federal  cost was estimated at $16,700 per ton of PM2 5 and $600 per ton of NOX
   over the lifetime of the project. State program  costs are lower than national program costs
   because many states have established programs that are generally more limited to specific
   lower-cost vehicle categories or have leveraged amounts not captured here.
                                                 3. The Energy Policy Act of 2005
33

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                  For the three programs together:
                  •  The grants will reduce approximately 46,000 tons of NOX and 2,240 tons of PM2 5 over the
                     programs' lifetimes  in addition  to substantial reductions in HC and other pollutants.
                  •  The weighted average federal cost is about $25,000 per ton of  PM2 5 and $1,500 per ton of
                     NOX reduced over the lifetime of the program.
                  DERA Funding Is Yielding Tangible Public Health
                  Benefits. The DERA programs reduce emissions that affect
                  people's everyday lives, especially for sensitive populations
                  such as children, the elderly, those with heart and lung
                  disease, outdoor workers, and people who exercise outdoors.
                  The diesel emission reductions resulting from the FY  2008
                  grants for NOX and  PM will  total approximately 46,000
                  and 2,200 tons, respectively,  by 2031, yielding a variety of
                  health benefits. Fewer emissions leads to  less air pollution,
                  resulting  in fewer respiratory symptoms, reduction in the
                  use of medication for asthma, and fewer visits to emergency
                  departments or health care providers. Parents miss fewer
                  work days caring for their children or their own respiratory
                  symptoms.
                  •  The health benefits from the FY 2008 grant projects will range from a net present value of
                     $580 million to $1.4  billion (2006 dollars), assuming a 3-percent discount rate throughout the
                     lifetime of the  program.
                  •  These benefits include an estimated 95 to 240 avoided premature deaths.10

                  Ozone-related health benefits, cancer risk, and other welfare effects were not quantified in this
                  analysis.
                  10 The estimates are based on the peer-reviewed studies on the relationship between PM2 5 and premature mortality from:
                  Pope, C.A., III, R.T. Burnett, M.J. Thun, E.E. Calle, D. Krewski, K. Ito, and G.D. Thurston. 2002. Lung Cancer, Cardiopulmonary
                  Mortality, and Long-Term Exposure to Fine Particulate Air Pollution. Journal of the American Medical Association. 287: 1132-1141.
                  Laden, F., J. Schwartz, F.E. Speizer, and D.W. Dockery. 2006. Reduction in Fine Particulate Air Pollution and Mortality. American
                  Journal of Respiratory and Critical Care Medicine. 173: 667-672.
                  For more information about this approach, please see EPA's 2008 Technical Support Document: Calculating Benefit Per-Ton Estimates,
                  Ozone NAAQS Docket #EPA-HQ-OAR-2007-0225-0284. The premature mortality estimates are generated using PM25 co-benefits
                  data from EPA's 2006 Ozone Final Regulatory Impact Analysis (RIA), NAAQS for Particulate Matter, Chapter 5 Benefit Analysis and
                  Results. These techniques are described in a memo to the file: Memo From Michael Wolfe, Ken Davidson, Rosalva Tapia, Kuang
                  Wei, and Jen Went to Jim Blubaugh, Manager, Innovative Strategies Group, EPA Office of Transportation and Air Quality.  March 25,
                  2009. Energy Policy Act of 2005 Diesel Emissions Reduction (DERA) Program FY 2008: Benefit and Cost-Effectiveness Calculation
                  Methodologies.
34
REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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            m
           ir3
     Diesel Campaign
    Partners Fulfill Commitments and Measure Progress
  T7THILE reducing diesel emissions is the first priority, producing technical and programmatic
 \A/ SLJPPort materials for stakeholders is a necessity as well. To ensure the successful imple-
  V Y  mentation of NCDC, EPA developed the Diesel Emissions Quantifier (DEQ) calculator;
guidance documents; public outreach materials including a dynamic Web site, an idle reduction
campaign, and a Scholastic Magic School Bus book; and a Web-based tool kit for state and local
programs.
DIESEL EMISSIONS  QUANTIFIER
To help state and local governments, fleet owners, school districts, municipalities, contractors,
port authorities, and others in estimating emission reductions and cost-effectiveness for clean
diesel projects, EPA created an interactive, Web-based calculator tool called the DEQ. Users enter
specific information about a fleet, and emission and cost-effectiveness calculations are made
based on existing EPA models and guidance. The DEQ performs real-time calculations and esti-
mates project-level emissions for PM25, NOX, HC, CO, and C02. To support users of this tool, EPA
also created a user guide and  held interactive training webinars.

Ultimately, the tool became a  critical component of NCDC, as most grant applicants rely on it to
estimate their emission reductions. Grant applicants are required to evaluate the quantifiable and
unquantifiable benefits of the emission reductions of their proposed projects in each grant ap-
plication, using a methodology approved by EPA or the National Academy of Sciences.


AGENCY GUIDANCE FOR CALCULATING COST-EFFECTIVENESS

EPA published two peer-reviewed technical papers analyzing the cost-effectiveness of reducing
emissions from both on-highway and nonroad diesel  engines. (The full reports are available at:
www.epa.gov/otaq/diesel/publications.htm.)

•  The Cost-Effectiveness of Heavy-Duty Diesel Retrofits and Other Mobile Source Emission Reduction
   Projects and Programs (EPA-420-B-07-006, May 2007).
            4. Resources That Support the National Clean Diesel Campaign
35

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                 •  Diesel Retrofit Technology: An Analysis of the Cost-Effectiveness of Reducing Paniculate Matter
                   and Nitrogen Oxides Emissions From Heavy-Duty Nonroad Diesel Engines Through Retrofits
                   (EPA-420-R-07-OOB,  May 2007).

                 In these papers, EPA evaluated the costs and emission benefits of retrofitting school buses, freight
                 trucks, and bulldozers with DOCs and catalyzed DPFs, two of the most common PM emission
                 reduction technologies for diesel engines. The findings from these studies indicate that retrofits
                 can be a cost-effective way to reduce air pollution compared with other EPA programs.


                 GUIDANCE ON STATE  IMPLEMENTATION  PLANS

                 EPA published guidance to help state and local air quality and transportation planners satisfy
                 three EPAct 2005 Section 795 provisions: 1)  quantify the emission reductions from retrofitting die-
                 sel vehicles, engines, and equipment; 2) appropriately include the emission reductions from diesel
                 retrofits in state implementation plans (SIPs)  to help demonstrate progress toward, attainment of,
                 or maintenance of NAAQS; and 3) appropriately include emission reductions from diesel retrofits
                 in transportation conformity or general conformity.

                 •  Diesel Retrofits:  Quantifying and Using Their  Benefits in SIPs and Conformity—Guidance for State and
                   Local Air and Transportation Agencies (EPA-420-B-06-005, June 2006).
                 •  Truck Guidance: Guidance for Quantifying and Using Long-Duration Truck Idling Emission Reductions in
                   State Implementation Plans and Transportation Conformity (EPA-420-B-04-001, January 2004).
                 •  Locomotive Guidance: Guidance for Quantifying and Using Long-Duration Switch Yard Locomotive
                   Idling Emission Reductions in State Implementation Plans (EPA-420-B-04-002,  January 2004).


                 PUBLIC  OUTREACH MATERIALS

                 EPA has created a robust national Web site (www.epa.gov/cleandiesel) and myriad public out-
                 reach materials to assist partners and others with diesel emission reduction projects. In addition,
                 each Regional Collaborative maintains a Web site with regional priorities and resources.

                 As a sign of the national Web  site's utility, more than  80,000 users visited the site in FY 2008.
                 The site is continually updated with vital new information  and materials, tailored to meet
                 stakeholder needs. Its design includes a searchable list of  demonstration projects, case stud-
                 ies, technology information, listservs, a trucker portal  (www.epa.gov/otaq/diesel/truckers.htm),
                 sector-specific content (www.epa.gov/cleandiesel/ports), and  other helpful links, including links to
                 Regional Collaborative Web sites.

                 The breadth of EPA's reach in communicating information  about clean diesel and NCDC to the
                 public in FY 2008 can be measured by the following statistics:
                 •  100 diesel conferences supported by EPA via financial sponsorships, promotion, and participa-
                   tion, including  the delivery of 12  major speeches by EPA's senior executives.


36      +      REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL  EMISSIONS  REDUCTION PROGRAM

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•  19 press releases issued highlighting clean diesel accomplishments and their benefit to
   the public.
•  40,125 program brochures distributed to stakeholders.
•  650 Clean School Bus USA idle reduction training videos in use.
•  300 Clean Construction USA videos viewed.
•  128,000 copies of Scholastic's The Magic School Bus Gets Cleaned Up books distributed.

NCDC JOINS  FORCES WITH INTERNATIONAL PARTNERS

Using funding from non-DERA sources, partnering with local governments and nongovernmen-
tal organizations, and supported by U.S. technology vendors, EPA led demonstration projects in
Mexico City, Mexico; Bangkok, Thailand; Santiago, Chile; Beijing,  People's Republic of China; and
Pune, India.

EPA retrofitted about 20 vehicles in each city to demonstrate the emission reductions obtainable
with various devices. The projects helped educate government and nongovernment staff about
clean diesel technologies and aim to build the capacity so they can conduct retrofits on their own.
Following the Beijing demonstration project, the city of Beijing independently retrofitted more
than 5,000 diesel vehicles in preparation for the 2008 Summer Olympics. EPA also worked with
the U.S.  Department of Transportation's Maritime Administration on a project with the Port of
Shanghai that resulted in a broader Pacific Ports Initiative,  promoting cleaner diesel technologies
among key trading partners and their ports.
Also on the international front, EPA launched a cooperative
project among the Port of Rotterdam, the Port of New York
and New Jersey, a terminal operator with facilities in both
ports, and  technology providers to develop hydraulic hybrid
cargo handling equipment. This technology promises to dra-
matically improve fuel economy while reducing PM and NOX.

Lastly, EPA hosted a workshop for Canadian federal and
provincial staff in June 2008. The workshop transferred
knowledge and built relationships with appropriate Cana-
dian government personnel so that they might learn from
the NCDC  efforts and be better equipped to launch their
own program.

These international actions are consistent with DERA
Section 795(d), "Outreach  and Incentives; International
Markets."
     Tool Kit for State and  Local
        Government Partners
To support state, regional, and local governments
in improving air quality and public health through
diesel engine emission reduction efforts, EPA
developed a Web-based tool kit that compiles
examples of program components they could model
(www.epa.gov/otaq/diesel/slt/basicinfo.htm). The
content focuses on designing programs, communi-
cating success, identifying funding, and evaluating
program results. This tool kit is just one example of
how NCDC operates as a shared responsibility be-
tween EPA and state and local air quality agencies.
             4. Resources That Support the National Clean Diesel Campaign
                                          37

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               5.  Remaining Challenges
                   Adding Verified Technologies  and Incentives Could
                   Enhance Implementation
                    EPA's advance work in developing guidance and materials, offering educational tools to
                    partners developing clean diesel programs, and communicating consistently and clearly with
                    partners and stakeholders was essential to the success of the first year. At the same time,
               the Agency's ability to troubleshoot problems that arose and working within the collaborative and
               sector networks to improve and adjust the program along the way ensured that it met its mission.

               The challenges encountered in implementing the first year of this program were relatively few.
               At the end of the year, however, two challenges remain:

               1. The number of verified technologies for nonroad and marine engines is too few.

               While the list of  technologies available on EPA and CARB's lists for on-highway applications is
               long, the technologies available for nonroad and marine applications are limited. The agencies
               have  identified a lack of laboratory facilities and field testing instruments capable of evaluating
               marine technologies as the main barrier.  Both agencies have been focusing their efforts on in-
               creasing the availability of nonroad retrofit technologies, closely working with technology manu-
               facturers to encourage additional technology verification for nonroad and marine equipment.

               There are also some important gaps in diesel retrofit technologies for older heavy-duty diesel
               trucks. While EPA and CARB have verified numerous heavy-duty diesel truck retrofit technolo-
               gies,  the low-cost devices only reduce PM emissions by a limited amount, and the more effective
               devices might not work as well with the older trucks' duty cycles and business models. In some
               cases, the value  of the retrofit device can exceed the remaining value of an old truck. Accordingly,
               EPA will continue to work with diesel retrofit manufacturers to identify cost-effective solutions for
               older diesel trucks.

               Responding to this need, EPA held a Retrofit Technology Verification Workshop in Washington,
               D.C.,  on December 13, 2007. The workshop was an overwhelming success, with nearly 100
               people attending, including technology vendors, original equipment manufacturers, fuel and fuel
               additive makers, diesel engine technology organizations, and state and local governments such
               as CARB.
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This workshop spurred additional verification activity among manufacturers. In 2008, EPA
approved seven additional technologies for nonroad applications and  13 additional technologies
for on-highway applications. In addition, EPA approved six emerging technologies (three nonroad
and three on-highway applications), which will continue in the verification process and could well
be verified within the next two years.

Despite these gains, EPA had to remove a number of technologies from its Technology Verification
List in December 2008,  due to the implementation of a new, more stringent limit on the amount
of unwanted nitrogen dioxide (N02) that retrofit devices are allowed to produce. EPA anticipates
that some of the removed technologies will soon meet the new requirement and the Agency will
be able to reinstate them.

2. New incentives are needed to retire the oldest and dirtiest engines.

As EPA's Clean Diesel regulations under the Clean Air Act phase in, new engines that must meet
significantly more stringent standards are increasingly available in the marketplace. The challenge
is to create additional incentives for private fleet owners to replace their older diesel engines with
new engines that meet the new standards.

Under the current law, national program grants cannot go toward private fleet owners or to
projects for which there is a federal, state, or local mandate. First, it is  a challenge to encourage
private fleets to apply, as they must partner with eligible entities, creating a barrier to participation
especially for small businesses that may own or operate the oldest and dirtiest fleets. Second, rou-
tine attrition of old vehicles is considered to be compliance activity with Clean Air Act requirements
and currently is not eligible for funding. Accordingly, early  replacement projects can receive federal
grants, but not projects that might target the oldest, dirtiest engines that are already past their
useful life and should have been replaced through normal  attrition but are nevertheless still in use.
These dual challenges are especially great for small business owner/operators for equipment such
as drayage trucks that serve seaports, tug and tow vessels, and construction equipment.

EPA will continue to work to identify incentives utilizing the innovative finance and loan  provisions
of the statute and our SmartWay Transport Partnership, as well as to fashion additional incentives
together with our state  and local government partners.
                                                           5. Remaining Challenges     +       39

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                 ».  Lessons Learned  and Needs for  the Future
                    Continue, Improve, and Expand
               Wi
       NILE the DERA program has achieved significant emission reductions from diesel engines
       in its first year, a tremendous amount of work remains, and substantial investments are
       needed.
               LESSONS LEARNED

               Lessons learned from the first year include the following:

               • EPA and others must continue efforts to utilize existing national and regional
                 networks to further improve the program results. In order to expedite the program,
                 EPA developed materials to communicate the program options, technologies, goals, and
                 schedules. Providing clear information and catalyzing networks allowed all parties to engage
                 in the process and move projects forward. As the programs grow, EPA must promote efforts
                 that allow agencies to share experiences to encourage action. To this end, EPA will work to
                 strengthen existing regional diesel collaboratives.

               • EPA must continue to cultivate state and local leadership. All 50 states elected to
                 participate in the first year of the program. For some, this was just the beginning of their work
                 in this program area. To ensure future success,  EPA must continue to work with state agen-
                 cies and the District of Columbia to build comprehensive clean diesel programs. The results of
                 the program can be seen at the state and local levels where leadership from state and local
                 agencies, nonprofit organizations, and private organizations engages interested fleets in the
                 program and works with them to achieve results. EPA must encourage more organizations to
                 take this role as both an environmental initiative and an economic  opportunity.

               • EPA and other organizations must continue to involve the private sector. The
                 private  sector plays a key role in implementing  the program. Organizations that supply eligible
                 technologies must continue to work to improve their technologies and identify opportunities
                 for fleets that are willing to take action. In addition, EPA and other agencies should encourage
                 private  fleets in priority areas to take proper steps to address the air pollution from their fleets.
                 The SmartWay Transport Partnership, for example, has created a program for private fleets in
                 the freight sector. In exchange for making a commitment to reduce emissions and fuel usage,
                 EPA provides technical advice, public recognition, and the opportunity to become preferred car-
                 riers for SmartWay shippers. Through corporate leadership to reduce emissions and reduce fuel
40
REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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   usage, the DERA program has a great opportunity for expansion. In order to accomplish this,
   corporate champions must step forward and make measurable commitments.

•  Organizations must continue to develop and advance verified nonroad and ma-
   rine technologies. Opportunities continue to arise in new program areas as the program
   grows. Vendors must recognize these opportunities and work to create improved options to ad-
   dress the multitude of emission sources covered  under the legislation, especially in the nonroad
   and marine sectors.  EPA will expand  the emerging technology and verification programs to
   promote innovative technologies that reduce priority pollutants and conserve fuel.

While the verified technologies list available on EPA's and CARB's Web sites for on-highway ap-
plications is long, there are limited products verified for nonroad, marine, or older diesel trucks.
There are limited products available to reduce NOX  for any category of engine. Adequate labora-
tory facilities and field testing instruments capable  of evaluating PM emission reductions from
marine technologies will be needed. EPA has been  working closely with manufacturers to verify
technologies and fill these gaps. The nonroad market is complicated by the number and diversity
of nonroad equipment  types,  by the range of horsepowers and engine types involved, and by
the varying usage  and  duty cycles of the equipment. There are many opportunities, however, to
provide cost-effective diesel emission reduction technologies to meet local air quality needs.


NEXT STEPS

Moving forward in the  program, EPA commits to the following:

•  Continue to work aggressively to reduce pollution from diesel engines across the country by
   partnering with key  stakeholders to promote clean diesel  strategies.
•  Target current PM and ozone nonattainment areas where clean diesel strategies will have the
   greatest public health impact.
•  Provide assistance to state and local  governments in developing their own clean diesel pro-
   grams.
•  Continue to provide  high-quality data to states that depend on the performance of diesel emis-
   sion reduction strategies in their air quality plans, through in-use testing.
•  Continue to work cooperatively with  CARB and other states to  provide a robust list of clean
   diesel technology options for partners.
•  Continue to confirm  the emission performance of verified  technologies in the field.
•  Continue to develop innovative financing approaches for stretching federal dollars to achieve
   maximum diesel emission reductions, especially where fuel savings can create a business case
   for low-cost loans or other financial incentives.
•  Develop timely educational materials to continue to build  awareness of clean diesel
   opportunities.
                                   6. Lessons Learned and Needs for the Future     +       41

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                In summary, the first year of implementation for the Diesel Emissions Reduction Program has been
                extremely successful. By harnessing broad support from environmental organizations, state and
                local governments, industry, technology vendors, and other groups, EPA has been able to magnify
                the available dollars and  strategically fund important emission reduction and fuel saving  projects.

                In total, EPA awarded 119 grants in the first year of the DERA program. More than 14,000 vehicles
                and pieces of nonroad equipment in a wide array of sectors will be cleaner as a direct result of this
                program. New clean diesel programs have been established in every state and technologies have
                been advanced for the future. The implementation of the EPAct 200B's Diesel Emissions Reduction
                Program is a critical step toward reaching our national clean air goals and protecting public health
                and the environment for all Americans for generations to come.
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REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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                                       LnfelfliBJuJ
Assistance Program, FY 2008 Grants
State Grant Recipient EPA Award Match Sector(s)
AL
AZ
CA
CA
CA
CA
CO
CO
CO
CT
DC
FL
GA
ID
IL
IL
Alabama State Port
Authority
City of Phoenix
CALSTART, Inc.
Kern County Superin-
tendent of Schools
Sacramento
Metropolitan Air
Quality Management
District
South Coast Air
Quality Management
District
City and County of
Denver
Colorado Department
of Public Health
Regional Air Quality
Council
Connecticut Depart-
ment of Environmental
Protection
Metropolitan
Washington Council
of Governments
City of St. Petersburg
Georgia Ports Authority
Idaho Department of
Environmental Quality
Chicago Public Schools
Illinois EPA
$750,000
$553,629
$895,827
$540,000
$553,630
$1,000,000
$200,000
$400,000
$455,645
$50,000
$598,516
$666,510
$250,000
$500,000
$373,909
$678,604
$1,580,000
$732,000
$1,015,325
$540,000
$2,581,600
$7,095,900
$87,059
—
—
—
$193,983
$5,745
$33,075
$500,000
$92,000
$654,699
Ports, Rail
Utility
Construction,
Utility, Transit Bus
School Bus
Utility, School Bus
Long-Haul Trucks
Utility, Construction
School Bus
School Bus
Utility, Construction
Construction
Utility, Construction
Ports
School Bus
School Bus
School Bus, Transit
Bus, Utility
Technology Types*
Replacement
Engine Replacement, DPF
CNG, DPF, B20Fuel
CNG Replacement
DPF, Engine Replacement
DPF
Heater
DOC, Closed Crankcase Ventilation
(CCV) System and Engine Preheater
DOC, CCV System
Diesel Oxidation Catalyst, DPF,
Ultra-Low Sulfur Diesel
DPF, Repower, Engine Upgrade
DPF, B20 Fuel
DOC, CCV System
DPF, Partial Flow Filter, DOC
Retrofit (DOC, DPF)
Retrofit (DOC, DPF, CCV System),
Auxiliary Power Unit, Direct-Fired
Heater, Hybrid Replacement
' Refer to page 56 for a list of acronyms and abbreviations.
Continued on page 44
                                            Appendix A
           43

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             Appendix A. National Clean Diesel Funding Assistance Program, FY 2008 Grants (continued)
State Grant Recipient EPA Award Match Sector(s) Technology Types
IN
IN
KS
KY
MA
MA
MA
MD
MD
Ml
Ml
Ml
Ml
MN
MO
MO
NC
NH
NJ
NY
NY
NY
Indiana Department
of Environmental
Management
Northwest Indiana
Forum Foundation Inc.
Kansas Department
of Health and
Environment
Kentucky Clean Fuels
Coalition
Massachusetts Port
Authority (Massport)
NESCAUM
NESCAUM
Maryland Environmen-
tal Services
Montgomery County
Public Schools
Lenawee Intermediate
School District
Michigan Clean Energy
Coalition
NextEnergy Center
Laker School District
Minnesota Environ-
mental Initiative
Grace Hill Settlement
House
Missouri Department
of Natural Resources
North Carolina Depart-
ment of Environment
and Natural Resources
Manchester Transit
Authority
New Jersey Motor
Truck Association
Board of Cooperative
Educational Services of
Ulster County
Capital District Trans-
portation Authority
Environmental Defense
Fund
$334,500
$164,032
$1,525,524
$473,939
$400,000
$400,000
$535,250
$361,951
$699,501
$154,381
$250,000
$250,000
$251,100
$400,000
$454,849
$726,227
$750,000
$229,703
$503,285
$130,690
$125,000
$400,000
$61,257
$173,432
$1,871,500
$2,160,000
$147,815
$100,000
—
$25,909
$7,350
—
$250,580
$650,500
$253,220
—
—
$621,550
—
$5,652
—
—
—
$2,025,000
Transit Bus
Construction
Trucks and Transit
Buses
Ports
Ports
Construction
Rail
Ports
School Bus
School Bus
Construction
Long Haul Trucks
School Bus
School Bus, Utility
School Bus
Construction
Construction
School Bus, Con-
struction, Utility
Long-Haul Trucks
School Bus
Transit Bus
Utility
Retrofit (DOC, DPF), APU
Repower
DOC w/ CCV System
Vehicle Replacement
Shore Power
DPF
Auxiliary Power Unit
DPF
DPF
DPF
Repower
APU
Bus Replacement; Idle Reduction
Technology, B20 Fuel, Heater
Retrofit (DOC, CCV System)
Crankcase Filtration System (CFS)
DOC, CCV System, APU, Engine
Shutdown
Repower, Replacement
DOC, CCV System, S-Bar Heater,
B20 Fuel
APU, Bunk Heater, DOC, DPF
Vehicle Replacement
DPF
Vehicle Replacement (Hybrid-Electric)
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Appendix A. National Clean Diesel Funding Assistance Program, FY 2008 Grants (continued)
State Grant Recipient EPA Award Match Sector(s)
NY
NY
NY
NY-
NJ
NY-
NJ
OH
OH
OH
OR
PA
PA
SC
SD
TN
TX
TX
TX
UT
VA
VT
Erie County Depart-
ment of Environmental
Planning
Middle Country Cen-
tral School District
Scarsdale Union Free
School District
Port Authority of New
York and New Jersey
(PANYNJ)
PANYNJ
Ohio Environmental
Council
Ohio Indiana Clean
Diesel Collaboration
Stark County Educa-
tional Service Center
City of Portland
City of Philadelphia
Pennsylvania Depart-
ment of Transportation
South Carolina Port of
Charleston
Sioux Falls School
District
Knox County
Government
North Central Texas
Council of
Governments
North Central Texas
Council of
Governments
Texas Commission on
Environmental Quality
Utah Department of
Air Quality
Port of Norfolk
Chittenden Solid
Waste District
$523,395
$359,305
$346,240
$280,500
$750,000
$394,589
$412,554
$465,364
$498,726
$750,000
$219,434
$735,002
$300,000
$163,871
$750,000
$750,000
$500,000
$400,000
$647,457
$205,523
$72,278
$361,305
$29,020
$80,500
$1,250,000
$29,571
$81,344
$89,905
$58,658
$2,250,000
$24,381
$963,502
$300,000
$23,056
$750,000
$1,500,000
—
$4,000
$1,732,600
$616,569
School Bus
School Bus
School Bus
Utility
Ports
Ports, Utility, Refuse
Haulers
Utility
School Bus
Ports, Construction
Utility
Rail
Utility, Construction
School Bus
Utility, Construc-
tion, Agricultural
Trucks
Construction
School Bus
School Bus
Ports and Rail
Utility
Technology Types
DOC, CCV System, Diesel-Fired
Engine Warm-Up Heater
Vehicle Replacement (CNG)
DOC, CCV System
DPF, Flow Through Filter, DOC
Flow Through Filter, DPF
Retrofit (DOC, DPF, CCV System);
APU
DPF
Retrofit (DPF, CCV System, DOC),
Replacement
DOC, Exhaust Retrofit, Ultra-Low
Sulfur Diesel
CNG Vehicle Replacement
APU
Engine Repower, Ultra-Low Sulfur
Diesel
Replacement
Emission Control, Ultra-Low Sulfur
Diesel
APU
Replacement
DOC, DPF, Partial Flow Filter, CCV
System
DOC and CCV System
Engine Repower
Vehicle Replacement
                                                           Appendix A
45

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             Appendix A. National Clean Diesel Funding Assistance Program, FY 2008 Grants (continued)
State Grant Recipient EPA Award Match Sector(s) Technology Types
WA
Wl
Puget Sound Clean Air
Agency
Wisconsin Department
of Transportation
Total
$850,000
$750,000
$29,038,162
$318,000
$750,000
$34,749,839
Ports
Construction
Vehicle Replacement, DPF, Partial-
Flow Filter, Crankcase Ventilation
Filter, DOC
Repower

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                                                    -i**:' •Lt
APPENDIX B: National Clean  Diesel  Emerging
Technologies Program, FY 2008 Grants
                                                                                 Iji—lll
•vwra
CA
MD
TX
TX
TX
WA
Grant Recipient EPA Award Match Sector(s) Vehicle Types Technology Types
South Coast Metropolitan
Air Quality Management
District
Montgomery County
Maryland
Center for Transportation
and the Environment
Texas Transportation
Institute
University of Houston
Puget Sound Clean Air
Agency
Total
$900,000
$400,000
$300,000
$500,000
$500,000
$700,000
$3,300,000
$858,614
$88,168
—
$64,200
$119,945
—
$1,130,927
•
Delivery
Truck
Short Haul
Construc-
tion
Construc-
tion
Marine

m
Class 6 (19,501-
26,000 Ibs)
Class 8a (33,001-
60,000 Ibs)
Graders
Tractors, Loaders,
Backhoes
Marine

Selective Catalytic
Reduction (SCR)
SCR
Other Emissions
Control Devices
SCR
SCR
Engine Upgrade

For the FY 2008 National Clean Diesel Emerging Technology Program competition, EPA approved
six technologies, as shown below. These included two technologies for marine vessels and SCR
technologies for on-highway vehicles and nonroad equipment that expand technological options
to reduce NOX by approximately 65 percent. This list of EPA's emerging technologies is updated as
information is submitted from manufacturers, and EPA anticipates that the types and numbers of
technologies will continue to grow.
        Manufacturer
 Caterpillar, Inc.
     technology
Applica
Engine Upgrade Kit
Marine
 ESW Canada
DOC, CCV System
Marine
25
70
N/A
25
95
 Johnson Matthey
Urea-Based SCR System, DPF
On-Highway
90
85
 65
 Nett Technologies, Inc.
Urea-Based SCR System
Nonroad
20
60
 65
60
90
60
 Tinnerman/Shadowood
Reformer, LNT, SCR, DPF
On-Highway
90
90
 65
 Truck Emission Control Technologies Inc.
DOC, DPF, EGR
On-Highway
50
70
 40
                                                           Appendix B
                                                      47

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                 APPENDIX C:  SmartWay  Clean  Diesel
                 Finance  Program,  FY 2008  Grants
                           Grant Recipient
                  Cascade Sierra Solutions
                  Everybody Wins USA Lease Program
                  Grant Amount: $1.13 million
                                                       Project Overview
                                     Loan Interest Rate: 8% to 11%, includes 7% for financing cost,
                                     1% collection fee, and 1% to 3% reservation loss.
                                     Loan Payback Period: Three years.
                                     Eligible Activities: Installation and leasing of EPA SmartWay or
                                     CARB-verified emission and idle reduction technologies. The truck
                                     owners will purchase  the equipment for $10 at the end of the loan
                                     period.
                                     Program Goal: Establish a leasing program for the installation of
                                     emission reduction technology and idle reduction technology on
                                     1,700 trucks.
                  Community Development Transportation
                  Lending Services, Inc.
                  National Low Interest Revolving Loan Fund
                  Grant Amount: $1.13 million
                                     Interest Rates: 5.5% to 8.5%, varies based on, among other
                                     things, each applicant's business history, available collateral, cash
                                     flow, and credit score.
                                     Loan Payback Period: Three to six years, varies based on, among
                                     other things, business history, available collateral, and cash flow.
                                     Eligible Activities: Purchase used trucks to upgrade with EPA
                                     SmartWay or CARB-verified idle reduction and/or emission reduc-
                                     tion technology.
                                     Purchase used trucks that are upgraded with EPA SmartWay or
                                     CARB-verified idle reduction and/or emission reduction technology.
                                     Program Goal: Establish a revolving loan fund for the purchase of
                                     used trucks that have SmartWay upgrades or will receive SmartWay
                                     upgrades.
                                     Service Fee: 2% to 3%.
                  Owner-Operator Independent Drivers
                  Association Foundation
                  Innovative Financing
                  Grant Amount: $1.13 million
                                     Loan Interest Rate: Varies based on market Solid Waste Alterna-
                                     tive Program rate.
                                     Eligible Activities: Purchase and installation of emission reduction
                                     and idle reduction technologies verified by EPA and/or CARB.
                                     Program Goal: Offer rebates to selected applicants/truck owners
                                     to install emission reduction and/or idle reduction equipment on
                                     their trucks. The first rebate to the truck owner will be for the cost
                                     of the equipment installation. Then, every six months, depending
                                     on  idle/fuel use reductions demonstrated, the truck owner will
                                     receive additional rebates until 40% of the total cost of the equip-
                                     ment is paid.
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APPENDIX  D: State  Clean  Diesel Program,
FY  2008  Grants
  AK
               rant Recipien
Alaska Department of
Environmental Conservation
                                 Federal
                                nding
                                >tment
$295,320
            Sector(s)
Construction
                  Technology Types
Research, Retrofit
  AL
Alabama Department of
Environmental Management
$196,880
Rail
Repower
  AR
Arkansas Department of
Environmental Quality
$295,320
School Bus, Long
Haul Trucks,
Construction
Retrofitted, Idle Reduction
  AZ
Arizona Department of
Environmental Quality
$196,880
Short Haul
Truck Stop Electrification
  CA
California Air Resources Board
$295,320
Long Haul Trucks
Retrofit
  CO
Colorado Department of Public
Health and Environment
$196,880
School Bus
Retrofit
  CT
Connecticut Department of
Environmental Protection
$295,320
School Bus, Long
Haul Trucks
Idle Reduction
  DE
Delaware Department of
Natural Resources and
Environmental Control
$295,320
Refuse Hauler
Retrofit
   FL
Florida Department of
Environmental Protection
$295,320
Long Haul Trucks,
School Bus
Retrofit, Idle Reduction
  GA
Georgia Department of Natural
Resources
$295,320
School Bus,
Construction
Retrofit
   HI
Environmental Health
Administration
$196,880
School Bus, Utility
Retrofit
   IA
Iowa Department of Natural
Resources
$196,880
School Bus
Replacement
   ID
Idaho Department of
Environmental Quality
$196,880
School Bus
Retrofit
        Illinois Environmental
        Protection Agency
                                 $295,320
         Long Haul Trucks
                Idle Reduction
        Indiana Department of
        Environmental Management
                                 $295,320
         Long Haul Trucks
                Retrofit
   KS
Kansas Department of Health and
Environment
$295,320
Long Haul Trucks
Replacement, Idle Reduction
                                                                          Appendix D
                                                                                              49

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             Appendix D. State Clean Diesel Program, FY 2008 Grants (continued)
State
KY
LA
MA
MD
ME
Ml
MN
MO
MS
MT
NC
ND
NE
NH
NJ
NM
NV
NY
OH
OK
Grant Recipient
Kentucky Division for Air Quality
Louisiana Department of
Environmental Quality
Massachusetts Department of
Environmental Protection
Maryland Department of the
Environment
Maine Department of
Environmental Protection
Michigan Department of
Environmental Quality
Minnesota Pollution Control
Agency
Missouri Department of Natural
Resources
Mississippi Department of
Environmental Quality
Montana Department of
Environmental Quality
North Carolina Department of
Environment and Natural
Resources
North Dakota Department of
Health
Nebraska Department of
Environmental Quality
New Hampshire Department of
Environmental Science
New Jersey Department of
Environmental Protection
New Mexico Environment
Department
Nevada Division of Environmental
Protection
New York State Department of
Environmental Conservation
Ohio Environmental Protection
Agency
Oklahoma Department of
Environmental Quality
Total Federal
Funding Sector(s)
$196,880
$295,320
$295,320
$295,320
$295,320
$295,320
$295,320
$295,320
$295,320
$295,320
$295,320
$196,880
$196,880
$196,880
$295,320
$196,880
$295,320
$295,320
$295,320
$295,320
School Bus
Marine
Refuse Hauler,
Rail, Utility
Transit Bus
School Bus, Long
Haul Trucks
School Bus
School Bus, Long
Haul Trucks
Long Haul Trucks,
Utility
Utility Vehicle,
School Bus
School Bus,
Transit Bus
Transit Bus,
School Bus, Rail,
Construction,
Refuse Haulers
School Bus
School Bus,
Refuse Hauler,
City/County
Vehicle, Transit
Bus, Construction
Transit Bus, Con-
struction, Utility
Construction,
School Bus
School Bus
School Bus
Marine
School Bus
School Bus
Technology Types
Retrofit
Repower
Retrofit, Replacement
Retrofit
Idle Reduction
Retrofit
Retrofit, Idle Reduction
Replacement, Idle Reduction
Retrofit
Retrofit, Repower
Retrofit, Idle Reduction,
Repower
Replacement
Retrofit
Retrofit
Retrofit
Retrofit
Retrofit
Replacement
Retrofit
Retrofit
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Appendix D. State Clean Diesel Program, FY 2008 Grants (continued)
State
OR
PA
Rl
SC
SD
TN
TX
UT
VA
VT
WA
Wl
WV
WY
Grant Recipient Funding Sector(s)
Oregon Department of
Environmental Quality
Pennsylvania Department of
Environmental Protection
Rhode Island Department of
Environmental Management
South Carolina Department of
Health and Environmental Control
South Dakota Department of
Environment and Natural
Resources
Tennessee Department of
Environment and Conservation
Texas Commission on
Environmental Quality
Utah Department of
Environmental Quality
Virginia Department of
Environmental Quality
Vermont Department of
Environmental Conservation
Washington State Department of
Ecology
Wisconsin Department of Natural
Resources
West Virginia Department of
Environmental Protection
Wyoming Department of
Environmental Quality
Total
$295,320
$295,320
$196,880
$295,320
$196,880
$196,880
$295,320
$295,320
$196,880
$196,880
$295,320
$295,320
$196,880
$196,880
$12,994,080
School Bus
Ports, Airports
Ports, Airports
School Bus,
Construction
School Bus
Long Haul Trucks
School Bus
School Bus
Utility Vehicle
School Bus
School Bus
Refuse Hauler,
Construction
Transit Bus
School Bus
Match
Technology Types
Retrofit
Repower
Retrofit
Retrofit, Repower
Retrofit
Idle Reduction
Retrofit
Retrofit
Retrofit
Retrofit, Idle Reduction
Retrofit
Retrofit, Repower
Replacement
Repower
$6,300,160
                                                            Appendix D

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                     FOR the National Clean Diesel Funding Assistance Program, all grant competitions used crite-
                     ria and points similar to those summarized in the table below, consistent with the priorities
                     described in Section 792 of the Energy Policy Act, Subtitle G (see page 20), and with
                Agency policy.

                National Clean Diesel Funding Assistance Program
                For the National Clean Diesel Funding Assistance Program, the seven EPA Regional Collaborates
                described in Appendix F held grant competitions, following Agency policy. Regions evaluated each
                Regional RFP following the same general criteria, supplementing with regional priorities worth  10
                points  in the final criterion.

                EPA devoted the  majority of the funding available to the National Clean Diesel Funding Assistance
                Program  and allocated it to its 10 regional  offices to award as competitive grants in support of
                clean diesel projects. EPA distributed funds across the regions based on a funding  formula that
                included  a base amount and considered population, diesel emission inventories,  and other factors
                consistent with the objectives listed in the statute Section 792.

                EPA's regions addressed certain regional priorities in their competitions, while following a model
                RFP to ensure that all of EPA's actions adhered to the statutory requirements and EPA policy.

                National Clean Diesel Emerging Technologies Program
                For the National Clean Diesel Emerging Technologies RFP, EPA employed similar  criteria to those
                in the table below; however,  EPA required that the projects propose to use technologies on EPA's
                Emerging Technology List by the closing date of the RFP. Criterion 9 was not applicable.

                SmartWay Clean Diesel Finance  Program
                For the SmartWay Clean  Diesel Finance RFP, EPA used criteria similar to those in  the table below;
                however, Criterion 9 was not applicable.
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Appendix E. National Program Evaluation Criteria (continued)
                                         Criteria
 1. Project Summary/Approach: EPA will evaluate the quality and extent to which the narrative
    proposal includes a well-conceived strategy for addressing the program priorities from the statute
    and a well-conceived, logical strategy for achieving the anticipated environmental results associ-
    ated with the proposed project in a timely manner.
25
 2. Programmatic Priorities: The Agency will evaluate the quality and extent to which the pro-
    posed project addresses the programmatic priorities.
10
 3. Past Performance—Programmatic Capability and Reporting on Environmental
    Results: The Agency will evaluate the applicant's technical ability to successfully complete and
    manage the proposed project, taking into account the applicant's past performance in success-
    fully completing and managing federally funded assistance agreements.
10
 4. Environmental Results—Outcomes and Outputs: The Agency will evaluate the effective-
    ness of the applicant's plan for tracking and measuring its progress toward achieving expected
    project outputs and outcomes.
15
 5. Budget/Resources: The Agency will evaluate whether the proposed project budget is appropri-
    ate to accomplish the proposed goals and measurable environmental outcomes.
10
 6. Clear Description of the Target Fleet: Applicants will be evaluated on the degree to which
    detailed information on the fleet (vessel[sj, vehicle[s], and/or equipment) is provided on the Ap-
    plicant Fleet Description Spreadsheet and the eligibility of technology for the fleet.
10
 7. Leveraging Resources and Partnering: Applicants will be evaluated based on the extent to
    which they demonstrate how they will coordinate the use of EPA funding with other federal and/
    or nonfederal sources of funds to leverage additional resources to carry out the proposed projects
    and/or how that EPA funding will complement other activities.
15
 8. Staff Expertise/Qualifications: Applicants will be evaluated on staff expertise/qualifications,
    staff knowledge, and resources or the ability to obtain them, to successfully achieve the goals of
    the proposed project.
 9. Regional Significance: For the National Clean Diesel Funding Assistance Program, a factor for
    regional significance was added.
10
                                                                                      Appendix E
                       53

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               APPENDIX F:  EPA  Regional Clean
               Diesel Collaboratives
                     BEGINNING in 2003, EPA's regions began organizing Regional Clean Diesel Collaboratives
                     with their states, local nonprofit organizations, private industry, and municipalities. The
                     Collaboratives listed below play a vital role in EPA's incentive-based approach to achieving
               superior environmental results. By tying into a network of regional stakeholders, this collabora-
               tive structure is ideal for achieving significant emission reductions across a large geographic area.
               Regional initiatives and state programs provide immediate and significant environmental results
               by working collaboratively with businesses, government and community organizations, industry,
               and others.

               Northeast Diesel Collaborative
               www.northeastdiesel.org
               The Northeast Diesel Collaborative is a local initiative that builds on a foundation of voluntary
               action. Developed with EPA Regions 1 and 2, the initiative encourages participants to engage
               in projects that will reduce transportation-related air pollution to help address the high asthma
               rates in the Northeast. The program partners with the Northeast States for Coordinated Air Use
               Management (NESCAUM).

               Mid-Atlantic Clean Diesel Collaborative
               www.dieselmidatlantic.org
               The Mid-Atlantic Clean Diesel Collaborative is a partnership among leaders from federal, state,
               and local governments; the private sector; and environmental groups in Delaware, Maryland,
               Virginia, Pennsylvania, West Virginia, and the District of Columbia.

               Midwest Clean Diesel Initiative
               www.epa.gov/midwestcleandiesel
               EPA Region B's Midwest Clean Diesel Initiative is a cooperative, public-private effort to reduce
               diesel emissions along major transportation corridors from various sectors including trucking,
               locomotive, construction, and ports, with an emphasis on urban areas  in the Midwest.

               Southeast Diesel Collaborative
               www.southeastdiesel.org
               The Southeast Diesel Collaborative is a voluntary, public-private partnership involving leaders
               from federal, state, and local governments; the private sector; and other stakeholders throughout
               the Southeast working to reduce diesel emissions.
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REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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Rocky Mountain Clean Diesel Collaborative
www.epa.gov/region8/air/rmcdc.html
The Rocky Mountain Clean Diesel Collaborative is a partnership of federal, state, and local
governments; nonprofit organizations; the private sector; and environmental groups in Colorado,
Montana, North Dakota, South Dakota, Utah, and Wyoming. The collaborative was established in
November 2006.

Blue Skyways Collaborative
www. b I uesky ways .0 rg
The Blue Skyways Collaborative was created to encourage voluntary air emission reduction in
North America's heartland. Through partnership with nonprofit and environmental groups; private
industries; and international, federal, state, and local governments, Blue Skyways strives to im-
prove air quality.

West Coast Diesel Collaborative
www.westcoastcollaborative.org
EPA Regions 9 and 10 were instrumental  in creating the West Coast Diesel Collaborative. This
initiative is a partnership among leaders from federal, state, and local  government; the private
sector; and environmental groups in California, Oregon, Idaho, Washington, Alaska, Canada, and
Mexico, committed to reducing diesel emissions along the West Coast.
                                                                         Appendix F     +       55

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                                                      ,.     v  *
.     :       .:


                APU      Auxiliary Power Unit

                CARB     California Air Resources Board
                CCV
          Closed Crankcase Ventilation
                CFS       Crankcase Filtration System

                CNG      Compressed Natural Gas

                CO       Carbon Monoxide
                C02       Carbon Dioxide
                DEQ      Diesel Emissions Quantifier

                DERA     Diesel Emissions Reduction Act

                DOC      Diesel Oxidation Catalyst

                DPF      Diesel Paniculate Filter

                EGR      Exhaust Gas Recirculation

                EPA      U.S. Environmental Protection
                          Agency

                EPAct     Energy Policy Act

                FY        Fiscal  Year

                HC       Hydrocarbon

                LNT      Lean Nitrogen Oxides Trap
NAAQS    National Ambient Air Quality
          Standards

NCDC     National Clean Diesel Campaign

NESCAUM Northeast States for Coordinated
          Air Use Management

NMHC     Nonmethane Hydrocarbon

N02       Nitrogen Dioxide

NOX       Nitrogen Oxides

          Paniculate Matter (Fine)

          Parts Per Million
                                              2.5
                                            PPM

                                            RFP       Request for Proposal

                                            RIA       Regulatory Impact Analysis

                                            SCR       Selective Catalytic Reduction

                                            SCRT     Selective Catalytic Reduction
                                                     Technology

                                            SIP       State Implementation Plan

                                            S0y       Sulfur Oxides
                                              A

                                            ULSD     Ultra-Low-Sulfur Diesel
56
REPORT TO CONGRESS: HIGHLIGHTS OF THE DIESEL EMISSIONS REDUCTION PROGRAM

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 National Clean Diesel Campaign
ased inks on 100% postconsumer, process chlorine free recycle

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