South Coast Air Quality Management District

Execute Contracts to Fund Marine Vessel Repower Projects under AES Settlement Allocation for AQIP and Establish the AES Settlement Projects Fund

SYNOPSIS:

At the March 16, 2001 Board meeting, the Board approved $2 million from the AES settlement for pre-funding the AQIP. There is an immediate availability of very cost effective emission reductions from marine vessel projects which were not funded due to insufficient funds under the Carl Moyer Program for Marine Vessels. It is recommended that 13 such marine vessel projects be funded from the AQIP in an amount not to exceed $2 million, resulting in total NO_x reductions of 3,892 tons over 20 years.

COMMITTEE:

Technology, March 23, 2001, Administrative, April 13, 2001, Recommended for Approval

RECOMMENDED ACTION:

1. Establish the AES Settlement Projects Fund
   
   
2. Transfer $13,000,000 from the General Fund (AES settlement) to the AES Settlement Projects Fund and Recognize $4,000,000 in settlement monies due on or before July 1, 2001.
   
   
3. Transfer $2,000,000 from the AES Settlement Projects Fund to the Air Quality Investment Special Revenue Fund for RECLAIM AQIP.
   
   
4. Authorize the Chairman to execute the following marine vessel contracts for emission reductions under the pre-funded AQIP:

• A contract with Seaboard Marine to purchase 12 new ARB certified diesel-fuel engines for seven marine vessels, in an amount not to exceed $367,578 from the pre-funded AQIP funds.
  
  
• A contract with Ocean Air to purchase 11 new ARB certified diesel-fuel engines for six marine vessels, in an amount not to exceed $1,632,422 from the pre-funded AQIP funds.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The AQIP is an air quality investment fund that would be used, at a minimum, to provide equivalent emission reductions that would otherwise be required of AQIP participants. Applicants can voluntarily participate in this proposed program by submitting a specified fee into the AQIP. This fee would be used to fund stationary and mobile source projects that would produce equivalent emission reductions of VOC, NO_x, SO_x, CO, or PM10. The AQIP will be pre-funded with emission reductions that have been generated external to the AQIP program from mobile or stationary sources.

The Carl Moyer Memorial Air Quality Standards Attainment Program (Carl Moyer Program) provides funding for the incremental cost of implementing low emission heavy-duty vehicle technologies. ARB developed overall program requirements and criteria, and allocated funds to local air districts for program administration to reduce diesel emissions from heavy-duty vehicles and off-road equipment.

On August 18, 2000, the Board approved Carl Moyer Program contracts totaling $1,529,136 for 14 marine vessels resulting in total NO_x reductions of 1,760 tons over a project life of 20 years. From all the applications that were received for FY 1999-00, 12 marine vessels did not receive funding for conversion to low emission technologies.

Progress to Date

In the Carl Moyer Program, the marine vessel projects are very cost effective for reducing NO_x emissions. While ARB's overall cost effectiveness criteria for the Carl Moyer program is $13,000/ton of NO_x reduced, most emission reductions in this category for FY 1998-99 and FY 1999-00 has been calculated to be less than $2,000/ton of NO_x.

Proposal

The Governing Board at its February 16 and March 16 meetings approved the allocation of the $17 million AES settlement. This action is to establish the AES Settlement Projects Fund and to implement the Board approved $2 million from the AES settlement for pre-funding the AQIP. There is an immediate availability of very cost effective marine vessel projects. The AQMD recommends that 10 of the 12 previously unfunded marine vessel projects and an additional three marine vessel projects be funded from the AQIP for an amount of $2 million, resulting in total NO_x reductions of 3,892 tons over 20 years. Some of the vessels will use more than one engine, hence there are 23 new engines for the projects.

Benefits to AQMD

The conversion of diesel marine vessels to low emissions technology is very cost effective, and can reduce significant amounts of NO_x emissions at a very competitive price as compared to other categories. The 13 marine vessel projects proposed for funding will produce real and surplus NO_x emission reductions of 3,892 tons over 20 years, which will be credited to the AQIP.

Resource Impacts

The proposed funding of $2 million will be obtained from the $2 million that was approved for pre-funding the AQIP by the Board on March 16, 2001 for marine vessel projects. The distribution of pre-funded AQIP funds for the proposed funding amount is presented in Table 1.

Table 1

FY 2000-01 AQIP Funding
Proposed Awards for Marine Vessels
 

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