Volkswagen Settlement: Opportunities for States

Karen El MannSenior Vice President

National Conference of State LegislaturesTask Force on Energy SupplyDecember 10, 2017

Overview of the Volkswagen Partial

Consent Decree

Buyback, Lease Termination, and Vehicle

Modification Recall Program

$10 billion

Covers buybacks, lease terminations, and/or emissions modifications to

affected VW diesels

Zero Emission Vehicle (ZEV) Investment

Commitment

$2 billion

Supports the increased use of ZEVs, including infrastructure, access,

and education

California to receive $200 million every 30 months and U.S. to receive $300 million

every 30 months for 10 years

Environmental Mitigation Trust Agreement

$2.7 billion (or more!)

Funds NOx reduction projects across multiple sectors – on-highway, marine, locomotive,

and off-road

Each state’s “Beneficiary” is responsible for

selecting the types of projects funded

California to

receive $200

million every 30

months and U.S.

to receive $300

million every 30

months for 10

years

EMT’s Eligible Mitigation ActionsVehicle Type Classification Eligibility of Existing Vehicles Eligibility of New Vehicles

Large TrucksClass 8 Local Freight Trucks and

Port Drayage Trucks1992 – 2009 (extends to 2012 if the

state already has relevant regulations)

New vehicle or repowered engine must be the

MY in which the action takes place or one

engine MY priorBuses

Class 4-8 School Bus, Shuttle Bus,

or Transit Bus

Medium Trucks Class 4-7 Local Freight Trucks

Freight Switchers N/APre-Tier 4 switcher locomotives that

operate 1000 or more hours per year

Must meet EPA emissions standards for the

MY in which the action takes place

Ferries / Tugs N/AUnregulated, Tier 1, or Tier 2 marine

engines

Tier 3 or Tier 4 marine engines, or upgraded

with an EPA-certified Remanufacture System

or EPA-Verified Engine Upgrade

Ocean Going Vessels

Shorepower

Systems that enable a vessel’s main

and auxiliary engines to remain off

while at berth

N/A

Systems must comply with international shore

power design standards and should be

supplied with power from the local utility grid

Airport Ground Support

EquipmentN/A

Tier 0, Tier 1, or Tier 2 diesel

equipment, or uncertified, or certified to

3 g/bhp-hr or higher emissions, spark

ignition engine equipment

Must be all-electric

Forklifts N/A Greater than 8,000 pounds lift capacity Must be all-electric

Light-Duty ZEV Supply

Equipment

Each Beneficiary may use up to 15% of its allocation on the costs necessary for the acquisition, installation, operation and

maintenance of new light-duty ZEV supply equipment. This includes Level 1, Level 2, and DC Fast Charging equipment as well

as hydrogen fuel cell supply equipment.

DERA OptionEach Beneficiary may use EMT funds for their non-federal voluntary match as well as “over-match” funds. EMT funds can not be

used to meet the mandatory cost-share requirement of any DERA grant.

Public Participation in Beneficiary

Mitigation Plan Development

45%

8%

31%

16%Comment deadlinepassed

No action

Ongoing comments

Open comment period

Colorado – Who Wants What…

ZEVs, including Electric and Hydrogen

Natural Gas

Open Competition

Clean Diesel and Retrofits

Opposed to Clean Diesel

Opposed to NG Propane

Source: https://www.colorado.gov/pacific/cdphe/VW

On-Road, 43%

Locomotives, 2%

Marine Vessels, 7%

Non-Road, 12%

EVSE, 16%

DERA, 12%

Admin, 4%Flex Funds, 3%

Allocation of Funding by Eligible Mitigation Action

What Do the Beneficiary Mitigation

Plans Look Like?State On-Road Rail

Marine

Vessels

Non-

RoadEVSE DERA Admin Flex Funds

Arkansas 85% 15%

Colorado 54% 15% 7% 7% 18%

Connecticut 30% 3% 7% 43% 15% 2%

Delaware 21% 2% 13% 12% 15%

Idaho 35% 10% 10% 15% 15% 15%Maine 20% 10% 10% 15% 20% 25%

Michigan 14% 76% 10%

Nevada 80% 15% 5%

Ohio 50% 5% 10% 10% 15% 7%

Oregon 15%

Pennsylvania 30% 45% 7% 10% 7%

Utah 84% 11% 5%

Vermont 43% 6% 5% 16% 15% 15%

Washington 0% 4% 38% 4% 13% 4%

Sample State Legislation

• Kentucky-funding allocations directed by

General Assembly

• Oregon-at least 450 school buses

• California-35% of funds to benefit low-

income or disadvantaged communities

• Utah-replace model year 2006 and older

school buses

State Supplementary Objectives?

• Consensus based on public input

• Supplement public budget

• Support existing state plans and/or

regulations

• Transportation Fuel Diversity

• Economic development

• Emission reductions

Supplemental Benefits of Alternative Fuel

Vehicles

• Energy diversity

• Reduced greenhouse gas emissions

• Reduced diesel particulate matter

• Improved operating costs

• Market acceleration decreased capex

The Near Zero Alternatives

• Current EPA NOx emission standard is 0.2 g/bhp-hr

• The cleanest heavy-duty diesel engine available today is certified at

0.2 g/bhp-hr

• Propane engines available today at 0.05 g/bhp-hr, 70% cleaner than

the EPA NOx standard

• Cleanest natural gas engine is certified at 0.02 g/bhp-hr, 90%

cleaner than the standard

Considering Real World Emissions, the NZE Benefit is Even Greater

In-Use Emissions of Diesel Engines

UC Riverside study shows that real-world, in-use emissions in heavy duty diesel engines are higher than their certification levels

Large Trucks & BusesPrivate-25% of AFV and 75% of EV

Public-100% for AFV or EV

What Could $10M Buy?

Electric TruckPublic

Fleet

Private

Fleet

Funding Per Unit $ 325,000 $ 243,750

NOx Reduced (annual tons) 0.133 0.52

Near Zero

Emission TruckPublic

Fleet

Private

Fleet

Funding Per Unit $ 200,000 $ 50,000

NOx Reduced (annual tons) 0.130 0.51

0.0

20.0

40.0

60.0

80.0

100.0

120.0

Public FleetElectric

Public FleetNZE

Private FleetElectric

Private FleetNZE

An

nu

al

To

ns o

f N

Ox R

ed

uced

Locomotives

• New Tier 4 unit is approximately $3M

• Maximum funding is 25%-$750,000

• Annual NOx reductions are 2.3 tons per

locomotive

• $10M=30 tons on NOx

• Low admin burden

Cost Per Ton of NOx Reductions

Less is More

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

On-road Locomotives Marine Vessels Shore Power Airport GSE

Analysis of $738M in

California Grant Funding

The Case For Corridors

Corridor Strategy

For many states, heavy duty diesel trucks that are passing

through the state have a big impact

“To, from, and within” State freight truck movement.

ARKANSAS TEXAS

VW Opportunity for Corridors

• Existing grant programs do not support long-haul

• Long-haul = high fuel use and great emission benefits

• Funding interstate trucks will spur private investment in infrastructure

• State VW funding portioned by operations

• Nationwide funding and electronic tracking make this a new and exciting prospect

Karen MannSenior Vice President

310-573-8546

karen@gladstein.org

For more details about incentives and VW funds, contact: