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# VNG.co 

# EPA/NHTSA 2017 - 2025 Regulations: Ensuring Fair and Consistent Incentives for Natural Gas Vehicles

Presentation to EPA, April 5, 20122 

# VNG.co



# VNG Strategy for NGVs 

# (and FCEVs)3 

# VNG.co 

# VNG Strategy Overview VNG to Develop National CNG Fueling Network

• VNG will provide CNG for light - duty vehicles at retail locations

— Takes fueling from private, “behind the fence” stations and puts it “in the market,” public access

• VNG using “fleets first” strategy to seed the market

— Initial focus on national and large regional fleets – government and commercial

— Promotes consumer awareness of availability and pricing of fuel, viability of NGVs

• National buildout begins with emphasis on top - 50 MSAs – most populous & important markets

— Buildout expands from initial fleet - focused stations to provide robust consumer access

• Monitor opportunities to outfit stations for hydrogen production, dispensing as FCEV market develops (2015+)4 

# VNG.co 

# VNG Progress Steady Progress On All Fronts Automakers

— Joint marketing [redacted]

— Senior level discussions of long - term NGV plans Station Owners

— Letters of interest signed by owners representing over [redacted] retail gasoline stations

— Includes major markets across the country Equipment Providers

— Developing equipment packages w/top suppliers

— Using state - of - the - art “pistol grip” CNG nozzle, unsurpassed consumer ease - of - use Government

— Meetings with EPA/NHTSA, White House

— Meetings with governors supporting NGV fleet MOU in Colorado, Pennsylvania 

### VNG expects to have its first stations built and operational in

early 2013

Joint VNG - GM exhibit at NTEA Work Truck Show, Indianapolis, March 6 - 85 

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# NGV Benefits for Fleets & Consumers Light - Duty NGVs Provide Customer Satisfaction

• Meets same preferences in model selection, performance, serviceability as gasoline vehicles

• CNG fuel cost savings of ~40% compared to gasoline

• Dual - fuels key for early market, no range anxiety Particularly Well - Suited For Light Trucks

• Low MPG but popular vehicles, esp for US OEMs ~ 1/2 of total US vehicle market ~ 2/3 of Big Three sales

• Larger vehicle envelope accommodates CNG tanks, while EVs are limited to smaller cars

• Benefits from power, performance, and increasing efficiency of internal combustion engine platform

• ICEs will dominate market for foreseeable future
SUV 8% Mini - vans 6% Crossovers 20% Pickups

13% Mid - size Cars 26%

Small Cars 20% Luxury Cars 7% Total US Light - Duty Vehicle Sales,

Feb 2012



### Chrysler and GM have announced plans for bi - fuel NGV pickups this year6 

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# NGVs as the Bridge to Hydrogen
NGVs and CNG Fueling Infrastructure are Essential Bridge to Hydrogen

• Hydrogen FCEVs are an essential zero - emission technology, along with EVs

• Automakers and regulators (California) anticipating rollout in 2015 - 2017

• NGVs and development of CNG infrastructure are essential bridge to hydrogen FCEVs:

— Reduces Capital Costs: Key NGV refueling hardware (compressors, storage tanks, dispensers) can be adapted for gaseous hydrogen, reducing infrastructure costs

— On - Site Hydrogen Production: Natural gas can be used as feedstock for hydrogen production (via steam reforming) at station level  Recognized by DOE in 2005 as lowest - cost, lowest - emission transition pathway

— Fuel Blends: Natural gas and hydrogen can be blended and used with no modification in NGVs or H2 ICEs, reducing emissions and building H2 demand

— Vehicle Storage Technologies: Development of on - board storage technologies for NGVs will also help lower costs, weight, space requirements for H2 storage 

### NGV development today leverages US natural gas resources to accelerate the transition to hydrogen tomorrow – a new opportunity to lead in FCEV technology7 

# VNG.co 

# NGVs and EVs Both Essential to Hydrogen FCEV

BEV Electric Drivetrain 

# NGV Gaseous Fuel Management and Storage 

# CNG Gaseous Fuel Compressors, Dispensers, H2 Feedstock 

# FCEV Zero - Emission Electric Drive

+ Energy - Dense, Fast - Fueling Gaseous

Hydrogen Fuel 

# H2 Fuel Bridge: Distributed NG steam reforming Long - Term: H2 via renewables (electrolysis, direct solar conversion, bio - hydrogen,...)8 

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# Further Steps Needed for Fair and Consistent 

# NGV Incentives9 

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# Summary of 2017 - 2025 Rules for NGVs

Agencies can play key role in supporting President’s “All of the Above” energy strategy with fair, consistent NGV incentives comparable to EVs Positive Steps for Dual - Fuel NGVs in EPA/NHTSA 2017 - 2025 Proposal

• “Utility Factor” methodology for dual - fuel NGVs

• Performance - based credit for “game - changing” pickup trucks



### • New dual - fuel rules begin on EPA side in 2012 ...But More Needed for Fair Incentives, Level Playing Field

• Consistent NHTSA credits from 2012



### • Extend EPA GHG incentive on same schedule as EV 0 g/mi

• EPA multipliers for NGVs on par with PHEV/EVs

* Page numbers throughout presentation refer to Federal Register Vol. 76, No. 23110 

# VNG.co 

# New CAFE Dual - Fuel Rules in 2012? Now: CAFE Incentives Hampered by Law

• CAFE incentives for dual - fuel CNG are tied to FFVs and subject to shared cap that declines to 0 in 2019 (p. 75396)

• Dual - fuel CNG effectively blocked from receiving intended credits

• Agency plans recognize that new regime for dual - fuels is fairer and more in line with intent of law

– NHTSA plans to adopt new regime with no cap, utility factor methodology in 2020 after old statutory regime expires (p. 75419)

– EPA is free to adopt new regime in 2012 and plans to do so (p. 75018) Possibility for Separate Track?

• Is it possible for NHTSA and EPA to create a new ‘track’ for dual - fuels to allow them to receive credits under new regime starting in 2012?

• Vehicles with less than 200 - mile range on NG not covered by existing dual - fuel definition

• Or: Dual - fuel vehicles expected to fuel predominantly on NG (according to utility factors)

• ...Other options?

• Starting new dual - fuel incentives for BOTH EPA and NHTSA in 2012 would provide fair and consistent support11 

# VNG.co 

# Extend GHG Incentive for Natural Gas
Now: CNG GHG Incentive Ends in 2016

• Now: CNG currently counts for 0.15x GHG emissions of gasoline

– Harmonized with CAFE credits

• 2016+: After 2015, CNG = tailpipe emissions level, ~24% below gasoline

– Significantly lower incentive But EV Incentives Last to 2025 (p. 75372)

• Now: 0 g/mi incentive value through 2021, despite upstream emissions

• 2022+: Upstream GHGs only counted in 2022 - 2025 for certain manufacturers

– Only for manufacturers surpassing cumulative production caps (200 - 600k from 2022 - 2025) Proposal: Extend GHG Incentive To 2021+

• Maintain 0.15x emissions incentive for CNG through 2021 for all NGVs

• Phase in tailpipe accounting in 2022 - 2025, and only for manufacturers surpassing production caps (as with EVs) Fairer, Harmonized Incentive

• Gives GHG incentives for CNG the same timeframe as for electricity (although electricity retains better incentive)

• Maintains harmony with CAFE credit, making incentives easier to use

• As with EV incentive, impact on regulation benefits limited by duration, production caps12 

# VNG.co 

# NGV Multipliers Now: EV/FCV Multipliers (p. 75372)

• Every EV/FCVs counted as 2 vehicles for GHG compliance calculations

• Every PHEV counted as 1.6 vehicles

• Multipliers decline, expire after 2021

• EPA requests comments on providing similar multipliers to NGVs (p. 75013) Model year EV/FCV PHEV 2017 2.0 1.6 2018 2.0 1.6 2019 2.0 1.6 2020 1.75 1.45 2021 1.5 1.3 Proposal: NGV Multipliers

• NGVs deserve multipliers as part of pathway to FCV – develops technologies, fueling infrastructure

• Dual - Fuels = same multiplier as PHEV

• Consistent with same utility factor treatment for dual - fuel and PHEVs

• Dedicated NGVs = same as EV Model year Dedicated Dual - Fuel 2017 2.0 1.6 2018 2.0 1.6 2019 2.0 1.6 2020 1.8 1.45 2021 1.6 1.313 

# VNG.co 

# “Game - Changing” Pickup Truck Credits
Performance - Based Standard for Game - Changing Technologies (p. 75385)

• 10 - 20 g/mi per pickup (plus equivalent CAFE) for use of “game - changing” technologies

• GM, Chrysler introducing NGV pickups – increasing recognition of natural gas as an important “game - changer” for reducing emissions for larger light - duty vehicles

• Performance - based credit – NGVs should qualify, potentially even dual - fuels

• Assuming 24% tailpipe emissions reduction for CNG, a dual - fuel pickup would only need a range of 80 miles on CNG to qualify for 20% threshold

• 20 g/mi credit likely attainable for most pickup NGVs, available through 2025

• But: minimum penetration rates overly aggressive – should be lowered/eliminated

• We also support expanding eligibility to smaller pickups – good potential for NGVs Level Minimum Penetration Duration Value 15% GHG reduction 15% - 40% of pickups 2017 - 2021 10 g/mi 20% GHG reduction 10% of pickups 2017 - 2025 20 g/mi

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# Conclusion

• ICE Emissions and Petroleum Use: 24% lower GHG emissions, 0% petroleum use for ICEs – which will remain dominant tech for years

• Economic Practicability/Consumer Choice: Low production costs, applicable to full range of vehicles including light trucks (consumer choice)



### • Minimal Technology Risk: Established, commercial technology, with 14 million NGVs on the road worldwide, OEM production for overseas markets

• Consumer Acceptance: Full range of vehicles (including minivans, pickups, SUVs), similar range/refueling as gasoline, superior safety



### • Bridge to Hydrogen: Proliferation of NGVs lowers barriers for hydrogen ICE and FCEV, particularly fueling

• Contributes to Other Regulations: Low criteria pollutant emissions helps compliance for Tier 3/Lev III; biogas a low - cost, low - emission compliance 

### option for RFS2 advanced biofuels requirement s 

## NGVs are a uniquely valuable compliance pathway in both near and long term and deserve broadly similar incentives as EVs

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# Questions?
Contact us:

• Paul Kouroupas 

## Vice President, Regulatory & Government Affairs 973 - 886 - 7675 pkouroupas@vng.co

• John Atkinson Manager, Public Policy 646 - 734 - 7209 

## jatkinson@vng.co