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Home My WebLink AboutVW Draft Beneficiary Management Plan Outreach Presentation 06-1-2018-VWREDUCING THE COST OF ENERGY IN ALASKA Volkswagen Settlement Betsy McGregor Preliminary Design and Environmental Manager REDUCING THE COST OF ENERGY IN ALASKA SAFE, RELIABLE, & AFFORDABLE ENERGY SOLUTIONS Draft Beneficiary Management Plan Public Meetings Fairbanks, Anchorage, Juneau June 2018 REDUCING THE COST OF ENERGY IN ALASKA 2 Volkswagen Settlement •Background •Eligible Mitigation Actions •Proposed Draft Beneficiary Mitigation Plan •How and where should Alaska focus our efforts? REDUCING THE COST OF ENERGY IN ALASKA Background 3 REDUCING THE COST OF ENERGY IN ALASKA 4 Volkswagen Violations •Over 8 years, VW installed illegal software in 2.0L and 3.0L diesel vehicles that masked actual in-use emissions of nitrogen oxides (NOx) •Released thousands of tons of NOx in excess of the EPA standards, violating the Clean Air Act. REDUCING THE COST OF ENERGY IN ALASKA 5 Why is this important? NOx is directly harmful to humans and damages the environment. REDUCING THE COST OF ENERGY IN ALASKA 6 Nitrogen Oxides (NOx) •Health Effects •Respiratory irritation, increased risk for infection •Aggravates asthma and other respiratory diseases •Carcinogenic –increases risk for lung and bladder cancer •Premature death •Reacts with other chemicals to form ground-level ozone (smog) and particulate matter •Contributes to acid rain, haze and nutrient pollution in water REDUCING THE COST OF ENERGY IN ALASKA 7 Diesel Particulate Matter •Health Effects •Irritation of eyes, nose, throat and lungs •Aggravates asthma and other respiratory diseases •Likely carcinogenic •Premature death REDUCING THE COST OF ENERGY IN ALASKA 8 Volkswagen Environmental Settlement: Three Parts 1.Buyback, Lease Termination, Vehicle Modification and Emissions Compliant Recall Program 2.Zero-Emissions Vehicle (ZEV) Investment Plan 3.Environmental Mitigation Trusts REDUCING THE COST OF ENERGY IN ALASKA •$2.925 billion total to fund mitigation actions •Reduce NOx emissions to fully mitigate the lifetime excess NOx emissions from affected vehicles •2 Trusts •Federally-recognized Tribes (Tribal Trust) •States and Territories (State Trust) 9 Environmental Mitigation Trusts: REDUCING THE COST OF ENERGY IN ALASKA Nationwide: •~580,000 vehicles •$$ allocated based on proportion of affected vehicles registered in each jurisdiction. Alaska: •1,450 vehicles = 10.54 tons of NOx •$8.125 million for mitigation to reduce NOx 10 Volkswagen Violations: How Many Cars? REDUCING THE COST OF ENERGY IN ALASKA •Court defined 10 types of Eligible Mitigation Actions to fully mitigate for the excess NOx pollution •Court appointed a Trustee to hold and disburse the funds to the Beneficiaries •Alaska became a Beneficiary January 29, 2018 •Alaska Energy Authority designated as AK Lead Agency 11 VW Settlement: State Trust REDUCING THE COST OF ENERGY IN ALASKA •$$ flow from Trustee to AEA to grantee •Grantee provides proposal to AEA •AEA submits project funding request to Trustee •Trustee must approve each project •Trustee funds AEA for each approved project •Grantees can be government, private company, or nonprofit 12 VW Settlement: State Trust REDUCING THE COST OF ENERGY IN ALASKA •Trust Effective Date October 2, 2017 •Beneficiary Designation –January 29, 2018 •Public comment through AEA’s VW Settlement website, list serve, survey •Draft Beneficiary Mitigation Plan –May 1, 2018 •60-d public comment period on Draft Plan: May 1 –Jul 2 2018 •Submit Final Plan to Trustee for approval -Summer 2018 •Request for Applications –Summer/Fall 2018 13 State Trust Timeline: REDUCING THE COST OF ENERGY IN ALASKA Questions? 14 REDUCING THE COST OF ENERGY IN ALASKA 1.Class 8 local freight trucks & port drayage trucks 2.Class 4-8 school buses, shuttle & transit buses 3.Freight switcher locomotives 4.Ferries and tugboats 5.Shore power for ocean going vessels 6.Class 4-7 local freight trucks 7.Airport ground support equipment 8.Forklifts and cargo handling equipment at ports 9.Light duty ZEV supply equipment 10.Voluntary matching funds for Diesel Emission Reduction Act (DERA) projects 15 10 Eligible Mitigation Actions (EMAs): REDUCING THE COST OF ENERGY IN ALASKA •Expands range of diesel engines eligible for replacement under other EMAs, generally •Expands range of eligible replacement engines •Nonroad Diesel Engines •Electricity generation •Construction equipment 16 EMA 10 -DERA Option REDUCING THE COST OF ENERGY IN ALASKA •Availability of EMA 10 subject to the federal budget •State, National and Tribal DERA •Funding limits & mandatory cost-share established by EPA •VW funds cannot be used for mandatory DERA cost-match 17 EMA 10 -DERA Funding Limits REDUCING THE COST OF ENERGY IN ALASKA •GVWR >33,000 lbs. •Haul cargo/freight to and from ports, or intermodal rail yards •Waste haulers •Dump trucks •Cement mixers 18 Class 8 Local Freight Trucks and Port Drayage Trucks (EMA 1) REDUCING THE COST OF ENERGY IN ALASKA 19 Class 4-7 Local Freight Trucks (EMA 6) Class Four: 14,001 –16,000 pounds Class Five: 16,001 –19,500 pounds Class Six: 19,501 –26,000 pounds Class Seven: 26,001 –33,000 pounds REDUCING THE COST OF ENERGY IN ALASKA •VW EMA 1, EMA 6 •Eligible MY –1992-2009 •Limited to local freight trucks •EMA 10 DERA •Class 4 not eligible •Eligible MY –1994-2010 •Includes long-haul trucks 20 Class 8 Local Freight and Port Drayage Trucks (EMA 1); Class 4-7 Local Freight Trucks (EMA 6) REDUCING THE COST OF ENERGY IN ALASKA •GVWR >14,001 lbs. •Transport people •School Bus types A-D 21 Class 4-8 School Bus, Shuttle Bus, Transit Bus (EMA 2) REDUCING THE COST OF ENERGY IN ALASKA •VW EMA 2 •Eligible MY –2009 or older •EMA 10 DERA •Class 4 not eligible •Eligible MY –1994-2010 22 Class 4-8 School Bus, Shuttle Bus, Transit Bus (EMA 2) REDUCING THE COST OF ENERGY IN ALASKA 23 Freight Switcher Locomotives (EMA 3) VW EMA 3 •Eligibility –pre-Tier 4, operated >1,000 hrs per year EMA 10 DERA •Includes line haul (freight and passenger) •Eligibility –pre-Tier 2+ REDUCING THE COST OF ENERGY IN ALASKA 24 Ferries and Tugs (EMA 4) VW EMA 4 •Eligibility –pre-Tier 3 •Repower or upgrade only EMA 10 DERA •Includes any marine vessel operated >1,000 hrs per year •Eligibility –pre-Tier 3 •Repower or upgrade only REDUCING THE COST OF ENERGY IN ALASKA •Newer Diesel •Alternative Fuel •CNG •LNG, gensets (freight switcher locomotives) •Propane •Hybrid •All-electric + associated charging infrastructure 25 Repower/Replacement Engine Options EMAs 1-4, 6, 10 REDUCING THE COST OF ENERGY IN ALASKA 26 Airport Ground Support Equipment (EMA 7) VW EMA 7 •Eligibility •Pre-Tier 3 diesel •Uncertified gasoline engine, or certified to >3 g/bhp-hr spark ignition •Repower/Replacement with all-electric engine only EMA 10 DERA •Eligible MY –varies based on hp •Repower/Replacement options include newer diesel, alternative fuels and all-electric REDUCING THE COST OF ENERGY IN ALASKA 27 Forklifts and Port Cargo Handling Equipment (EMA 8) VW EMA 8 •Eligibility ->8,000 pound lift capacity •Repower/Replacement with all-electric engine only EMA 10 DERA •Eligible MY –varies based on hp •Repower/Replacement options include newer diesel, alternative fuels and all-electric REDUCING THE COST OF ENERGY IN ALASKA •Government –up to 100% repower or replacement •Non-government •Newer Diesel and Alternative Fuel •up to 40% repower; 25% replacement non-drayage •up to 40% repower; 50% replacement drayage •All-electric + associated charging infrastructure •up to 75% repower or replacement 28 Trust Fund Limits for Repower/Replacement (EMAs 1-4; 6-8) REDUCING THE COST OF ENERGY IN ALASKA •Established by EPA, subject to change •Funding Limits vary for State, National and Tribal DERA •2017 State DERA limits, generally •Newer Diesel and Alternate Fuel •up to 40% repower; 25% replacement •All-electric + associated charging infrastructure •up to 60% repower; 45% replacement •VW funds cannot be used for mandatory DERA cost-match •DERA funding limits include DERA funds + VW funds combined 29 DERA Funding Limits for Repower/Replacement REDUCING THE COST OF ENERGY IN ALASKA 30 Shore Power for Ocean Going Vessels (EMA 5) •Cables, cable mgmt. system, coupler systems, distribution control systems, power distribution •Power source from local utility grid •VW EMA 8 •Government –up to 100% •Non-government –up to 25% •EMA 10 DERA •Up to 25% REDUCING THE COST OF ENERGY IN ALASKA •Electric Vehicle Charging Stations •Level 1, Level 2 or DC Fast charging equipment •Located in public place, workplace, multi-unit dwelling 31 Light Duty ZEV Supply Equipment (EMA 9) REDUCING THE COST OF ENERGY IN ALASKA •Total funding limit –15% of AK allocation •Electric vehicle charging station •Publicly available •government property –100% •non-government property –80% •Not available to general public –60% •Workplace, Multi-unit dwelling 32 EMA 9 ZEV Supply Equipment Funding Limits REDUCING THE COST OF ENERGY IN ALASKA •FY17 State DERA limits •up to 40%, generally •Alaska –75% in communities benefiting Alaska Natives •FY17 Tribal DERA limits for powerhouses •up to 80% 33 EMA 10 -DERA Funding: Stationary Generators for Power Production REDUCING THE COST OF ENERGY IN ALASKA •FY17 State DERA limits •up to 40% •repower with newer diesel or alternative fuel •certified remanufacture or upgrade •up to 60% •repower with all-electric engine 34 EMA 10 -DERA Funding: Marine Engines -Pre-Tier 3 Operated >1,000 hrs/yr REDUCING THE COST OF ENERGY IN ALASKA Questions? 35 REDUCING THE COST OF ENERGY IN ALASKA Beneficiary Mitigation Plan 36 REDUCING THE COST OF ENERGY IN ALASKA 37 Beneficiary Mitigation Plan •Requirement of settlement •Summarizes how AK plans to use funds: •Overall goals •Allocation of $$ across 10 EMAs •Environmental justice considerations •Estimated emissions reductions •Public involvement process REDUCING THE COST OF ENERGY IN ALASKA Beneficiary Mitigation Plan: Public Involvement Submit to Trustee 38 Proposed Draft Beneficiary Mitigation Plan Beneficiary Mitigation Plan Public Comments Governor State Agencies Governor State Agencies Public Comments 60 days REDUCING THE COST OF ENERGY IN ALASKA 39 Beneficiary Mitigation Plan: Goals (Page 2) 1.Reduce NOx emissions in the most cost-effective manner 2.Improve air quality and protect human health 3.Leverage additional funds to increase benefits to Alaskans 4.Target actions to benefit disproportionately affected communities REDUCING THE COST OF ENERGY IN ALASKA Considerations: Sources of Diesel Pollution in Alaska 40 REDUCING THE COST OF ENERGY IN ALASKA 41 Diesel Sources of NOx in AK •154,373 tons statewide •38,614 tons –commercial marine vessels •10,257 tons –electric generation •8,197 tons –onroad vehicles •1,818 tons –nonroad vehicles •915 tons –locomotives Wildfire 12%Other 1% Industrial/ Commercial 35% Electric Generation (Non-oil) 6% Electric Generation (Oil) 7% Aircraft 2% Commercial Marine Vessels 25% Locomotives <1% Onroad Mobile (Diesel) 5%Onroad Mobile (Non-diesel) 5% Nonroad Mobile (Diesel) 1%Nonroad Mobile (Non-diesel) 1% Figure 2, Page 29 REDUCING THE COST OF ENERGY IN ALASKA 42 Distribution of Diesel NOx Emissions in Alaska (Figure 3, Page 30) 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 NOx Emissions (tons per year)Census Area/Borough Onroad Mobile (Diesel) Nonroad Mobile (Diesel) Locomotives Commercial Marine Vessels Electric Generation - Oil REDUCING THE COST OF ENERGY IN ALASKA 43 Distribution of Diesel PM2.5 Emissions in Alaska (Figure 6, Page 33) 0 50 100 150 200 250 300 PM2.5 tons per year Onroad Mobile (Diesel) Nonroad Mobile (Diesel) Locomotives Commercial Marine Vessels Electric Generation - Oil REDUCING THE COST OF ENERGY IN ALASKA Considerations: Environmental Justice 44 REDUCING THE COST OF ENERGY IN ALASKA 45 Environmental Justice •Nonattainment Areas and Maintenance Areas •High pollution areas •Ports •Rail yards •Airports •Bus terminals •Areas of higher risk for cancer and respiratory effects •Demographics REDUCING THE COST OF ENERGY IN ALASKA 46 Environmental Justice: Nonattainment/Maintenance Areas (Appendix A; Figure A-4)•Nonattainment PM2.5 •Fairbanks •Maintenance PM10 •Juneau •Eagle River •Maintenance CO •Anchorage •Fairbanks •Butte, Rural Alaska REDUCING THE COST OF ENERGY IN ALASKA 47 Environmental Justice: Protecting Human Health (Appendix B; Figure B-2) •Risk indices for respiratory effects from diesel PM •95-100 percentile represents most vulnerable 5% of communities in AK •Fairbanks, Anchorage and Juneau also have areas within 80-100 percentiles REDUCING THE COST OF ENERGY IN ALASKA 48 Environmental Justice: Demographic Indices (Appendix B; Figure B-1) •Indices for low- income, minority, and Native Alaskan communities •Fairbanks, Anchorage and Juneau also have areas within 80- 100 percentiles REDUCING THE COST OF ENERGY IN ALASKA Proposed Allocation of $$ 49 REDUCING THE COST OF ENERGY IN ALASKA 50 Beneficiary Mitigation Plan: Allocation of Funds EMA 10 & EMA 9 (Pages 17-19; Table 1 on Page 25) •15% DERA project match –diesel prime power (EMA 10) •Administered by AEA •Disbursed equally over 5 years •15% Electric vehicle charging infrastructure (EMA 9) •Regional planning effort •DOT&PF, Local Govt, private business, EV owners •Disbursed equally over 3 years •Up to 15% of each funded project will be reserved for administration REDUCING THE COST OF ENERGY IN ALASKA 51 Beneficiary Mitigation Plan: Allocation of Funds EMA 1-8 & EMA 10 (non-prime power) (Pages 17-19; Table 1 on Page 25) •12% Government-sponsored engine/vehicle replacement •Minimum 10% match; $200,000 per project cap •Competitive solicitation disbursed first year •58% Engine/vehicle replacement for all applicants •Competitive solicitation disbursed over 3 years •13%; 25%; 19% •Up to 15% of each funded project will be reserved for administration REDUCING THE COST OF ENERGY IN ALASKA 52 Beneficiary Mitigation Plan: Scoring Criteria (Table 2, Page 26) Criteria Criteria Points Total Possible Points NOx emission priority areas < 100 tons per year 5 25100 –500 tons per year 10 500 –1,000 tons per year 15 >1,000 tons per year 25 Cost effectiveness in reducing NOx emissions (ton reduction/$) Least cost effective 10 35Middle cost effective 20 Most cost effective 35 Voluntary funding match 0.5 points for every 1 % match up to 20 points 20 Air quality priority areas Not located in priority area 0 10 Located in maintenance and other priority areas 7 Projects located within non-attainment areas 10 Applicant experience < 1 yr.2 101 -5 years 5 > 5 yr.10 REDUCING THE COST OF ENERGY IN ALASKA Questions? 53 REDUCING THE COST OF ENERGY IN ALASKA We want to hear from you! 54 REDUCING THE COST OF ENERGY IN ALASKA 55 Allocation of Funds Strongly Agree Agree Neutral Disagree Strongly Disagree 58% of funds allocated through competitive solicitation open to all applicants (government and non-government) for (EMAs 1-8 and EMA 10)1 2 3 4 5 12% of funds allocated for state and local government sponsored projects (EMAs 1-8 and EMA 10 (non-prime power))1 2 3 4 5 15% of funds allocated for Diesel Emissions Reduction Act (DERA) projects, primarily diesel prime power in rural Alaska power houses (EMA 10) 1 2 3 4 5 15% of funds allocated for Electric Vehicle infrastructure (i.e., charging stations) (EMA 9)1 2 3 4 5 REDUCING THE COST OF ENERGY IN ALASKA 56 Scoring Criteria Most Important Very Important Important Somewhat Important Least Important Project is in a NOx emission priority area 1 2 3 4 5 Project cost-effectively reduces NOx emissions (tons/$)1 2 3 4 5 Project has voluntary match funds 1 2 3 4 5 Project is located in an air quality priority area 1 2 3 4 5 Project is being developed by an applicant with experience 1 2 3 4 5 REDUCING THE COST OF ENERGY IN ALASKA 57 Priority of Sectors Low Medium High Locomotive:L M H Marine Vessels:L M H Rural Powerhouses:L M H School buses:L M H Electric Vehicle Infrastructure (charging stations):L M H Public Transportation:L M H Freight trucks:L M H Construction equipment:L M H Airport ground support equipment/Port Cargo handling equipment:L M H REDUCING THE COST OF ENERGY IN ALASKA Electric Vehicle Charging Infrastructure (EMA 9) •Competitive solicitation? •When? •Wait to disperse after plans developed? •Set aside funds for various regions? 58 REDUCING THE COST OF ENERGY IN ALASKA Questions? 59 REDUCING THE COST OF ENERGY IN ALASKA Please visit AEA website: www.akenergyauthority.org/programs/vwsettlement