California’s Proposed Strategy toReduce Emissions from On-RoadDiesel VehiclesCalifornia Environmental Protection AgencyAir Resources BoardDecember 11, 20082Today’s Presentation• Introduction and overview• Truck and Bus Regulation• Truck and Trailer Efficiency Regulation• Integration of the proposed regulations• Availability of incentive funding• Recap and closing3We Cannot Afford to Wait to CleanupExhaust Emissions• Largest source of emissions• State Implementation Plan (SIP)– Majority of reductions from trucks• Cancer risk from diesel PM is high• Thousands of lives lost each year• No equivalent federal programs• California leadership is critical4We Cannot Afford to Wait to ReduceGreenhouse Gas Emissions• Discrete early action measure in Scoping Plan• Progress towards meeting AB32 commitment• Demonstrates California’s leadership• Substantial cost savings• Benefits environment and economy5Timing is Challenging but the Need is Great• Cost of inaction outweighs costs of clean-up• Actions not required for several years• Significant flexibility provided• Minimizes costs and meets air quality goals• Minimizes potential overlap of costs6Staff’s Proposals• Shaped by input from stakeholders• Provisions to reduce costs• Savings from improved efficiency• Incentives• No barriers to technologyProposed Truck and Bus Regulation8Truck and Bus Regulation Overview• Need for emissions reductions• Proposed requirements• Emissions benefits and costs• Alternatives considered9Stationaryand Other3%Trucks andBuses37%Marine16%Locomotives5%Off-Road37%Other OnRoad2%Trucks andBuses, 28%Off-Road, 22%Locomotives,5%Marine, 6%Other OnRoad, 25%Stationaryand Other,15%Significant Contributors to StatewideEmissions: 2005NOxDiesel PM10Diesel Particulate Matter Exposure• Trucks and buses largest source of diesel PM• 70% of known cancer risk from all air toxics• Diesel Risk Reduction Plan adopted in 2000– Risk reduction goals by 2010 and 202011Area Designations for National AmbientAir Quality Standards for Ozone and PM2.5



# 8-Hour Ozone

PM2.5 AnnualUnclassified/AttainmentNonattainment15 areasviolate thestandard2 areas violatethe standard12State Implementation Plan• Approved in September 2007• Trucks largest component of SIP– Most significant measure• Critical to attaining ozone and PM standards– South Coast: 2014 and 2023– San Joaquin Valley: 2014, 2017, and 202313Significant Health Impacts from Trucks andBuses (2008)Number ofCasesEffect2,600,000Restricted activity days450,000Work loss days71,000Asthma related and lower respiratorysymptoms4,500Premature deathsTruck and Bus Regulation:Proposed Requirements15Proposed Truck and Bus Regulation• Diesel vehicles operating in California– Interstate, intrastate, international, and other• Vehicles over 14,000 GVWR and shuttle buses• Any person, business, or government agencywho owns, leases, rents, or sells a vehicle inCalifornia• Excludes certain vehicles16Diverse Vehicle Types CoveredHay SqueezeWater TruckTow TruckFuel Tank TruckPassenger BusConcrete MixerReefer VanDump TruckDrill Rig17Overview of Proposed Regulation• Phase-in most PM requirements 2011-2014– No action if not available or not safe• Phase-in NOx requirements 2013-2023– New vehicles never required• Certain special provisions• Three compliance options18Compliance Options• Best available control technology (BACT)schedule• Percentage limits• Fleet averaging19Only Older Vehicles Replaced14202314202214202120202019No replacementrequirements201811-12201712-13201621+201512-14201414 -192013Engine AgeTo Be Replaced(Years)CalendarYear20Accelerated Replacement Not Required forEvery TruckNo Requirements64%PM Retrofits23%AcceleratedReplacements13%Number of Different Trucks Operating in Californiain 2008 = 941,00021How Emissions Change with EngineModel Year22.012.07.01.60510152025Pre-2004 2004-2006 2007-2009 2010Engine Model Year

NOx Emission Factors (g/mile)3.361.250.810.110.01.02.03.04.0Pre-1991 1991-1993 1994-2006 2007+Engine Model Year

PM Emission Factors (g/mile)NOxPMNote: For Heavy Heavy-Duty Vehicles (GVWR >33,000 lbs)22Percentage of California Trucksby Fleet Size1 Truck32%2 Trucks10%3 Trucks6%4 Trucks4%21 ~ 50 Trucks8%51 ~ 100 Trucks4%> 100 Trucks16%6 ~ 10 Trucks9%5 Trucks3%11 ~ 20 Trucks8%2006 DMV DATA: Heavy Heavy-Duty & Medium Heavy-Dutyvehicle population23Optional Small Fleet Provisions• Additional time for fleets up to 3 vehicles• No clean up requirements before 2013– First vehicle with 2004 model year engine and filteruntil 2018• Remaining vehicles upgraded 2014-2016• Cleanest engines by 202324Provisions to Delay ReplacementRequirements• Unique vehicles• Cab-over engine truck tractors• Early credit for filters• Lower usage vehicles• Attainment area operationAttainment AreaCountiesAttainment Area Counties - Alpine, Colusa, Del Norte,Glenn, Humboldt, Lake, Lassen,Mendocino, Modoc, Monterey, Plumas, San Benito, San Luis Obispo, Santa Barbara,Santa Cruz, Shasta, Sierra, Siskiyou, Trinity, Tehama, and Yuba25Other Key Provisions• Very low use vehicles exempt from clean-up• Credits for hybrid and alternative fueled vehicles• Retrofit safety• Manufacturer delays• Three day pass for out-of-state trucks26Agricultural Vehicle Provisions• Used exclusively in agricultural operations• Exempt below mileage thresholds– 15,000/20,000/25,000 annual miles until 2017– 10,000 miles starting 2017• Specialty farm vehicles exempt until 2023• All trucks cleaned up by 202327Screening Evaluation of Localized Risk• Analysis of firstprocessing center• Potential forlocalized risk– Dependent onuncontrolled truckactivity• Further analysisand report toBoardRisk greaterthan 10 in 1millionRoadway



# First Processor280 metersAssumes 80 trips per day28School Buses• PM requirements necessary– Pre-1977 bus replacements• $200 million in Lower-Emission School BusProgram funding– Sufficient for 95% of costs• Staff will monitor implementation29Technology Already Exists• PM control technology– New engines equipped with filters nationwide– Thousands of retrofit filters in use• NOx control technology– 2010 model year engines on schedule– SCR retrofit systems being demonstrated• Sufficient new and used trucks available30Changes to Existing Regulations• Improve enforceability and clarity• Includes:– Drayage truck regulation– Public fleet and utility regulation– Off-road vehicle regulation– Cargo handling regulation– Idling provisions– Portable Engine Registration Program– Portable engine regulationTruck and Bus Regulation:Emissions Benefits and Cost32Updated Truck and Bus Emissions• Builds on EMFAC2007• Reflects multiple new data sources• More detailed truck and bus categories• Category-specific population, age distribution,and mileage accrual33Statewide NOx Emissions0100200300400500600700800 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

NOx Emissions (tpd)Without RegulationWith ProposedRegulation124 tpd98 tpd34Statewide PM2.5 Emissions051015202530 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

PM2.5 Emissions (tpd)Without RegulationWith ProposedRegulation12.8 tpd5.2 tpd35Overall Health Benefits• Provides major health benefits– About 9,400 fewer premature deaths– 150,000 fewer lower respiratory and asthma-relatedsymptoms– 950,000 fewer lost work days• Value estimated to range from $48 to $68 billion• Meets combined PM and NOx SIP targets for allyears• No other measures can provide same benefits36Statewide Costs• Estimate at $5.5 billion (2010-2025)– $4.5 billion for California registered vehicles– $1.0 billion for out-of-state vehicles• Cost effective compared to other regulations37Vehicle Prices Vary by AgeConventional Truck Without Sleeper0204060801001200 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15Vehicle Age

Price (thousands of $)38PM Retrofit Costs$12,000*1994 and newer$15,000Pre-1994Installed CostPM Retrofits* $11,000 for medium heavy-duty vehiclesAdd retrofit picture xxxWall Flow Filter39Potential Cumulative Costs• Evaluated impact with other rules– Transportation Refrigeration Units– Off-Road Regulation• Evaluated several individual fleets• Impacts relatively small• Little overlap with Truck GHG regulation• Lowered costs– Sweepers– Cranes40Impact on California’s Economy is Small• California is a $3.1 trillion economy– Could reduce GDP by 0.014 percent– May slow job growth in some sectors, increase others• Impact on consumers not noticeable– $0.01-$0.02 per pair of shoes– $3 to $10 for new car41Compliance Example:Actual Trucking Company• Regional haul trucking fleet– Average age of vehicles 11 years– Normally replaces 2-3 per year– Normally buys 4 year old used– Annual revenue $3,500,0008535Total1869712513714115Number ofTrucksTruck EngineAge42What Actions Would be Needed?02468101214 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Calendar Year

Number of Replacements or RetrofitsPM RetrofitReplacement with RegulationNormal Replacements43Capital Investments$0$50,000$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Calendar Year

Capital Costs (Current Year Dollars)PM RetrofitReplacement with RegulationNormal Replacement Costs44Implementation, Outreach, and Education• Committed to work with industry• Extensive outreach and education• Compliance assistance• Planning toolsTruck and Bus Regulation:Alternatives Considered46Fewer Benefits with Industry Proposal0100200300400500600700800 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

NOx (tpd)BaselineProposed RegulationDTCC Proposal47Impact of Recession on Emissions• Recession has resulted in fewer miles driven,lower diesel fuel sales, and reduced new trucksales• Fewer miles driven lowers emissions• But reduced truck sales means older higheremitting trucks stay on the road• Higher emission rates associated with oldertrucks may offset lower emissions due to lessdriving48Staff Recommended ModificationsProposed 15-Day Changes• Add retirement credit provisions• More operating time for back-up sweepers• Delay replacements for motor coaches• Other clarifying and corrective changesProposed Truck and TrailerEfficiency Regulation50California GHG Emissions2002-2004 AverageTransportation38%CA GHG Emissions(469 MMTCO2E1)Electricity23%Commercial &Residential9%Industrial20%Agriculture6%High GWP3%Recycling &Waste1%1MMTCO2E = million metric tons carbon dioxide equivalent emissions51California GHG Emissions2002-2004 AverageTransportation(179 MMTCO2E)Heavy-DutyTrucks19%Passenger Cars75%Ships2%Aviation (Intrastate Only)2%Rail2%1MMTCO2E = million metric tons carbon dioxide equivalent emissions52Goals of Proposed Regulation• Reduce GHG emissions from long haul tractors byreducing– Tractor and trailer aerodynamic drag– Tire rolling resistance• Tractor aerodynamics– Streamlined hood, sleeper cab roof fairings, gap fairings, fueltank fairings, aerodynamic bumper, and mirrors• Trailer aerodynamics– 53-foot or longer box-type trailers– Side skirts, front gap fairings, rear trailer fairings• Low rolling resistance tires53Goals of Proposed Regulation(continued)• U.S. EPA SmartWay Program– Voluntary partnership– Test protocols and guidelines– Certifies fuel efficient tractors, trailers, andtechnologies• Staff proposal establishes a Californiamandatory program based on SmartWayProgram54Impacted Tractors and Trailers1,089,000997,00093,000Trailers436,000399,00037,000TractorsTotalOut-of-StateCACalendar Year 201055Available Technology (New)New SmartWay Certified Tractors• Fully aerodynamic tractor with lowrolling resistance tires• Manufacturers:– Freightliner, International, Kenworth,Mack, Peterbilt, Volvo• Fuel efficiency improvement 3% -4.5% - resulting in annual fuel costsavings of $1,800• Average incremental cost: $2,10056Available Technology (New)NEWSmartWay Certified Trailers• Purchased directly from trailermanufacturer/dealer:– Great Dane, Hyundai Translead, Manac,Stoughton Trailers, Strick Corp., TrailmobileCanada, Utility Trailer Manufacturing, WabashNational Corp.• Fuel efficiency improvement of 6.5%minimum - resulting in annual fuel costsavings of $1,300 to $3,300• Trailer incremental cost: $2,900• Refrigerated-van certification coming soon57Available Technology (In-Use Retrofit)SmartWay VerifiedAerodynamic Technologies• Side skirts– 4% or greater fuel efficiency improvement– Fleets have experienced positive results– Average cost: $1,90058Available Technology (In-Use Retrofit)SmartWay VerifiedAerodynamic Technologies(continued)• Front gap fairings– 1% or greater fuel efficiencyimprovement– Average cost: $870• Rear trailer fairings– 1% or greater fuel efficiencyimprovement– Average cost: $2,80059Available Technology (New and In-Use Retrofit)SmartWay Verified Low RollingResistance Tires• Dual or single wide tires– 3% or greater fuel efficiencyimprovement (tractor-trailercombination)– Incremental cost: $0 to $50 per tire($0 to $900 per tractor-trailer)60Emerging Technologies• Manufacturers continuouslydeveloping & improving productfunctionality & durability– Retractable skirts– Flexible skirts– Double channel skirts– Flow control devicesFlow Control DevicesRetractable SkirtsDouble Channel SkirtsFlexible Skirts61Scope of Regulation• Tractors that pull box-type trailers that are53-foot or longer– Greater than 26,000 pounds (Class 7 and 8)– Operate in California• 53-foot or longer box-type trailers– Dry van and Refrigerated van• California and out-of-state registered• Primary responsible parties: Owners• Other responsible parties: drivers, motorcarriers/ CA-based brokers, and CA-basedshippers62Proposed RequirementsTractors• 2011+ model year (MY) sleeper cab tractors– SmartWay certified– January 1, 2010• 2011+ MY day cab tractors– SmartWay verified low rolling resistance tires– January 1, 2010• All pre-2011 MY tractors– SmartWay verified low rolling resistance tires– January 1, 201263Proposed RequirementsTrailers• 2011+ MY 53-foot or longer box-type– SmartWay certifiedor– Retrofitted with SmartWay Technologies:• Low rolling resistance tires– Minimum of 1.5% fuel efficiency improvement• Aerodynamic devices– Minimum of 5% fuel efficiency improvement for a dryvan, and– Minimum of 4% fuel efficiency improvement for arefrigerated van64Proposed RequirementsTrailers(continued)• Pre-2011 MY 53-foot or longer box-type– Same requirements as 2011+ MY trailers– Delayed compliance until January 1, 2013– Three Optional Plans• Small Fleet Compliance Plan• Large Fleet Compliance Plan• Reefer Van Compliance Plan65Proposed RequirementsOptional Compliance Schedule- 2010 and Older MY Trailers -• Small fleet – 20 or less trailers– Phase-in: 2013 - 2016• Large Fleet – 21 or more trailers– Phase-in: 2010 - 2015– Early compliance credit• Refrigerated van – 2003-2008 MY– Phase-in: 2017 - 201966Proposed RequirementsExemptions• Short haul tractors and trailers– 100 mile radius or less than 50,000 miles per year• Drayage tractors and trailers– Operate 100 mile radius of port or intermodal railyard• Container chassis• Drop frame vans• Curtain side vans• Authorized emergency vehicles• Military tactical vehicles67GHG Emission Benefits(MMTCO2E)7.852.10102030405060

G H G R e d u c tio n s (M M T C O 2 E )California NationwideCumulative GHG Benefits 2010-202016.701234567

G H G R e d u c tio n s (M M T C O 2 E )California Nationwide2020 GHG Emission Benefits68Additional Benefits• NOx reductions in California– 2014 = 4.3 tons per day– 2020 = 1.4 tons per day• Contribute towards SIP commitments• Cumulative fuel savings (2010-2020)– California = 750 million gallons diesel fuel– Nationwide = 5 billion gallons diesel fuel69Costs and Benefits1.02.31.22.3Payback period in years(Trailer : Tractor = 1:1)(Trailer : Tractor = 2.5:1)Assume: baseline fuel economy of 5.8 miles per gallon, and an average long haulannual mileage accrual rate of 100,000 miles.$3,250$4,060Annual Savings @ $3.14/gallon10341293Fuel savings (gallons/year)$2,900$2,900Trailer incremental cost$250$2,100Tractor incremental cost8%10%Fuel Savings (%)In-UseRetrofittedNew SmartWayCertifiedTractor-Trailer Combination70Economic Impacts• Initial capital cost to businesses significant– But so are the fuel savings• Costs and savings to businesses 2010-2020– Costs≅$8.5 billion– Savings≅$17.1 billion• Net savings (2010-2020)≅$8.6 billion71Proposed 15-Day Changes• Remove 100-mile operating range exemptionfor tire requirement• Remove reporting requirements for refrigeratedvan compliance provision• Exempt solid waste trailers• Other minor modificationsIntegration of Proposed Regulations73Each Regulation Targets Different Fleets• Truck and Trailer GHG Regulation– Newer long haul fleets• Truck and Bus Regulation– Older in-state fleets• Different compliance timelines• Incentives available for both74-1 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29Truck Tractor Age

Poplulation of Truck TractorsPotential Overlap is MinimalIn-State and Out-of-State TractorsAhead ofRegulationEfficiencyOnlyExhaustClean-up OnlyPotentialOverlap

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# Less50,000 MilesTruck Tractor Age (Years)75Few Trucks Have Overlapping CostsNo Impacts24%Truck andTrailer GHGOnly40%PotentiallyAffected byBoth5%Truck and BusOnly31%76Enforcement to Ensure Equity• Expand existing inspection efforts– Weigh stations, random roadside, and fleet• Web based database for vehicle records• Crosscheck other programs• Record audits• Additional resources requestedAvailability of Incentive Funds78Incentive Funding Will Play An ImportantRole• Economic challenges• Obtaining traditional credit difficult• Substantial grants available• Couple with loan guarantees• Funding provides critical role79Incentives Portfolio• Carl Moyer Program– About $140 million per year– Funds available for grants and vouchers• Proposition 1B– $1 billion over several years– Funds available for grants and loan guarantees• Assembly Bill (AB) 118– $350+ million for low interest loans• Lower Emission School Bus Program– About $200 million for replacements and retrofits80Selected 2009 Changes toCarl Moyer Guidelines• Facilitate funding for small fleets• Add three years of model year eligibility• Add additional flexibility for minimum project life• Add “Two Vehicles to One” option• Grantees: use BACT Compliance Schedule duringcontract81Carl Moyer Program: Vouchers• New grant option beginning in 2009• Provides approx. $30,000 - $35,000 per truck• Simplified requirements– Quick turn around (1 week)– Voucher good at participating truck dealers– Available statewide• Can be combined with loan guarantee82AB118 Loan Guarantee Program• Priority for small fleets and those with “financialhardship”• Target “nearly bankable” small businesses• Loans available by Spring 2009• Loans for used trucks, new trucks, SmartWay productsand exhaust retrofitsbankable unbankabletarget83Proposition 1B Funding• $1 billion over several years– First installment of $250 million in 2007-2008– Second installment of $250 million in 2008-2009• Replacement funds available for 2003 and older trucks• Available for large and small fleets• Grants competitive: cost-effectiveness & reductions• Loan guarantee program for small fleets in development• Guideline revisions scheduled for February 2009– Add funding options for Class 7 trucks (over 31,000 GVWR)– Fund small fleets 2 years before compliance deadline84Funding Options for Small Fleets(1-3 trucks)• Fleet Modernization Grants (old truck 1993 or older)– Up to $50,000 for 2007-2009 replacement truck– Up to $75,000 for 2010+ replacement truck– Exhaust retrofits (up to 100% of cost)• Voucher Program (old truck 1993 or older)– Approx. $30,000 - $35,000 for replacement truck– Focus on quick turn-around (one week)• Truck Replacement Grants (old truck 2003 or older)– Up to $35,000 for 2007-2009 used replacement truck– Up to $45,000 for 2007-2009 new replacement truck– Up to $50,000 for 2010+ replacement truck– Funding also available for retrofits and repowers• Loan Guarantees– Lower interest rates and qualification criteria– Loans for new & used trucks and SmartWay products85• Truck Replacement Grants (old truck 2003 or older)– Up to $35,000 for 2007-2009 used replacement truck– Up to $45,000 for 2007-2009 new replacement truck– Up to $50,000 for 2010+ replacement truck– Funding also available for retrofits and repowers• Loan Guarantees– Potential funding for fleets in “financial hardship”• Retrofits– Limited funding for Level 3 exhaust retrofits– Future funding opportunities for NOx retrofits that bring usedtrucks into complianceFunding Options for Large Fleets(4 or more trucks)86• Agricultural Vehicles– Limited use vehicles: through 2013– Low use & specialty vehicles: through 2019• School Buses– $200 million Lower Emission School Bus Program• At least 3,500 exhaust retrofits• Funding could retrofit every eligible public school bus– Additional local and state fundsFunding Options for Other Fleets87TruckDealershipsTruck StopsBanksAir DistrictsAir ResourcesBoardTruckOwnerProgram Provides Multiple Access Points88Incentives Portfolio SummaryFleet Type Programs For What Source(s)Small fleet(1-3 trucks)Grants;Vouchers;LoanguaranteeReplacement of 1993or older truck with 2007or newer truck;Carl MoyerAB 118Replacement of 1993or older truck with 2010or newer truckExhaust retrofitFleets moving goods ina trade corridorGrants Replacement of 2003or older truck with2007 or newer truck;Exhaust retrofit;Proposition 1B1-10 trucks(financial hardship)Loanguarantee2007 or newer truck;Exhaust retrofit;GHG EfficiencyAB 11889Tying it all Together• Many funding options, significant aid• Coordinated programs: grant programs asdown-payment, loans can complement• Integrated outreach to best assist affected fleets• Coordinated approach can get new truck ~ $800per monthRecap and Closing91Importance of Proposed Truck and BusRegulation• Largest component of SIP reductions– Cannot attain PM and ozone standards• Billions in transportation funding at risk• Thousands of lives at stake• Benefits outweigh costs• State’s obligations cannot be delayed– Industry alternatives do not meet SIP targets92Importance of Proposed Truck GHGRegulation• Key early action measure in Scoping Plan• Investment pays for itself• Environmental benefits93Needed Technology is Available Now• Numerous retrofits verified• New trucks already have filters• 2010 engines on track• Low-rolling resistance tires common• Smartway tractors available• Trailer retrofits now in use94Minimizes Economic Impacts• No actions required until 2010• Significant flexibility provided• Small fleets have additional time• Newer trucks ahead of exhaust requirements• Little overlap from both regulations95Incentives Will Play an Important Role• Over $1 billion is available• Will target those most in need...small fleets• Numerous ARB programs being coordinated• Private lenders will be key partners96Recommendation• Adopt staff proposal with 15-day changes• Direct staff to:– Evaluate and report on localized impacts fromagricultural provisions by end of 2009– Monitor potential impacts on pupil transportation