Navigant Research Blog

California Ports Look to Strategies for Reducing Port Emissions

— April 19, 2018

At the end of 2017, the Ports of Los Angeles and Long Beach (LA-LB) jointly announced aggressive emissions reduction goals in the Clean Air Action Plan (CAAP) Update. The intent of the CAAP is to provide stakeholders with high level guidance to drive down port emissions. Mayors of both cities have declared their desires to eliminate emissions from cargo-handling equipment by 2030, and share a zero-emissions goal for on-road drayage trucks by 2035.

LA-LB’s focus on emissions reductions from port and other non-road transport aligns with broader California plans. In 2017, the California Air Resources Board (CARB) passed resolutions to develop air quality regulations to achieve 100% zero emissions vehicle (ZEV) compliance for cargo-handling equipment by 2030. Additionally, the South Coast Air Quality Management District and CARB will work to develop concepts for an Indirect Source Rule to control pollution from large freight facilities, including ports, and any alternatives to achieve emissions reductions.

LA-LB are committed to supporting a host of regional and state regulations to reduce port emissions, including ZEV standards for on-road trucks; engine standards for locomotives and vessels; emission controls from non-regulated vessels; fleet turnover requirements for harbor crafts and cargo-handling equipment; and idling restrictions for cargo-handling equipment.

However, future regulations will have few teeth. Signed in April 2017, the State of California Senate Bill 1, while it supports developing a funding mechanism for transportation infrastructure, prohibits the development of new regulations that would create requirements for the replacement of trucks before 800,000 miles or 18 years from the engine model year. Unable to require changes, LA-LB will have to advocate for significant voluntary incentive and grant programs to entice fleets to opt in.

Balancing Immediate Results with Long-Term Strategies

LA-LB want to reduce their port emissions as much as possible, as quickly as possible. However, finding strategies to immediately bring port emissions reductions before certain technologies are available will prove challenging. ZEV and near-ZEV trucks are not yet broadly commercially available, though demonstration projects are underway. According to CAAP, the only near-ZEV engines available are fueled by natural gas, while near-ZEV diesel will come to market sometime after 2020. The ports have suggested an update to the Clean Truck Program to limit drayage vehicle registrations to newer engine years beginning mid-year 2018, as well as establishing a rate trucks must pay for entry to the port, with exemptions for near-ZEV and ZEV trucks.

LA-LB can still move toward the electrification of off-road vehicles while waiting for heavy-truck electrification technology to become commercially viable. The electrification of cargo-handling equipment provides another path toward reducing port emissions. Port of LA has several cargo-handling electrification projects, including demonstration projects of plug-in yard tractors and the electrification of 10 rubber tire gantry cranes. A full list of cargo-handling electrification projects and implementation can be found on the Port of LA’s Zero Emission Technologies page.

Will Improvements Pull in or Drive Away Business?

LA-LB’s adoption of the CAAP Update signals the market that there is an increasing demand for cleaner vehicles operating within the ports. This plan could hasten the development of commercially viable ZEV vehicles for ports, helping spur the market beyond Los Angeles and Long Beach. While the CAAP Update is an ambitious plan for emissions reduction in the region, it comes with a possible $14 billion price tag, with the assumption that businesses and taxpayers will foot the bill. LA-LB hope the quality and emissions improvements will make them more desirable than their competitors, but the potential for increased costs and fees may drive cargo shippers to other, less expensive ports.

 

Colorado Charges Forward with Plan to Support EVs

— February 8, 2018

While California garners deserved headlines for being the most ambitious state in promoting EVs, Colorado is pushing with its own aggressive agenda. On January 24, Colorado Governor John Hickenlooper announced the debut of the Colorado EV Plan to a crowd outside Colorado’s Alliance Center. The plan, developed in support of his 2017 executive order Supporting Colorado’s Clean Energy Transition, outlines specific programs, strategies, and goals to electrify travel corridors around the state to support the widespread adoption of EVs.

In his speech, Hickenlooper announced Colorado was eighth in EV market share last year, and that the Colorado EV Plan is “a big step toward pushing that forward.”

The plan’s five goals include:

  1. Increase adoption of light duty EVs to reach goal of 940,000 EVs in Colorado by 2030
  2. Increase the number of electric transit vehicles to 500 by 2030
  3. Increase the number of employers that provide workplace charging to employees
  4. Develop strategies and partnerships that prepare property owners for future investments in EV charging infrastructure and electrify challenging facility types
  5. Lead by example by accelerating the purchase of EVs for agency fleets and investment in EV charging infrastructure

Charging Infrastructure Expected to Benefit

The plan details that 15% of the $68.7 million Volkswagen (VW) settlement funds that the state will receive will go toward light-duty EV charging infrastructure, the maximum allowable under the settlement terms. Colorado also intends to capitalize on public-private partnerships and the grants provided through new and existing programs.

Hickenlooper spoke to how the plan fulfills Colorado’s commitment to the Regional EV West memorandum of understanding (discussed in a previous blog). This bipartisan effort brings together eight states (Arizona, New Mexico, Colorado, Utah, Nevada, Wyoming, Idaho, Montana) to connect and electrify over 7,000 miles to establish the Intermountain West EV corridor. The plan also mentions that Colorado will investigate opportunities to partner with cities, manufacturers, and transportation network companies (i.e., Lyft and Uber) to support the electrification of a variety of mobility options.

While the plan is good news for EV enthusiasts, it also marks declining support for other alternative fuel vehicles. The plan commits to changing the ALT Fuels Colorado program—which since 2014 has provided grants for the construction of publicly-accessible compressed natural gas, propane, and EVs—to begin directing funds toward the build out of the EV fast-charging corridors.

Colorado currently has only 53 DC fast-charging stations, and Hickenlooper stated that, “we probably need 4 times that, but the demand [for charging infrastructure] is not going to decrease, it’s only going to increase.” Increasing public charging infrastructure will relieve some of the anxiety that prospective and current EV owners may have about vehicle driving range.

Demand Is Great, but What’s the Cost?

The high estimate scenario for the goal of 940,000 EVs on the road by 2030 requires as many as 632 fast charger stations to support the EV population, or 580 additional chargers in the next 12 years. According to Navigant Research’s recent report, DC Fast Charging Equipment for EVs, this would require approximately $60,000 per charger, or $34.8 million. With the VW settlement funds of just over $10.3 million allowed to be used for EV charging infrastructure, this leaves the Colorado Energy Office looking for another $24.5 million from the private sector, the ALT Fuels Colorado budget, or other funding opportunities to build out the infrastructure needed to support almost 1 million EVs in the state.

 

Finding Value in Public EV Charging Infrastructure

— December 19, 2017

Although the chicken/egg debate still looms over EVs and public charging infrastructure, the market is now moving forward under the assumption that mass adoption of EVs will require a sufficient network of public charging infrastructure. Public fast charging infrastructure along highways enables regional travel, and fast chargers in and around metro areas can support drivers who don’t have a home charger. Navigant Research expects EV supply equipment sales to grow from around 875,000 in 2017 to over 6 million in 2026 to meet the needs of the growing EV market.

Public Charging Availability Bolsters the EV Market

Public chargers represent a relatively small percentage of this total growth, but well-established and reliable public charging networks are considered an important factor for prospective EV owners. Publicly available charging networks give consumers the confidence that an EV will serve their driving needs, even if they are likely to do the vast majority of their charging in-home.

The business case for public charging remains difficult. For the private sector, high installation costs and low utilization rates can make it difficult for any profit-driven business model, particularly for a business model that only uses pay-to-use as its source of revenue. In addition, any profit-driven business model for the buildout of EV charging infrastructure encounters challenges of providing sufficient and equitable charging networks throughout entire communities.

Examining Business Drivers

What are the business models that will drive the rollout of public infrastructure that Navigant Research’s forecasts project?

  • Automaker investments: These are a key driver to fast charging networks, with OEMs looking to replicate the Tesla Supercharger network model—but not necessarily as a free-to-use option.
  • Retail partnerships: Retail businesses have been popular targets for EV charging networks, with charging typically provided for free and seen as a tool to attract customers and increase sales. If the rollout of fast chargers in metro areas takes off, retail outlets would also be good locations because they would provide the driver something to occupy their time during a 15-minute charging session. There are also hypothetical business models that would use revenue-sharing strategies to offset costs of public chargers while still capturing the increased sales revenue from EV customers.
  • Electricity demand and grid services: Many utilities are interested in the value that EVs can provide. A utility-provided charging network may provide a utility with increased electricity sales in the long run. It could also provide the ability to utilize EVs for grid services through the utility’s provided chargers, which could offset costs in the long term.
  • Equitability: Public sector stakeholders that see equitable charging access as a priority may be able to justify the use of public funds for the increased equitability of the charging network. For some public agencies, decarbonization goals will also drive investment.

Visibility Is Crucial

If EVs are to continue to penetrate the market at an increasing rate, prospective buyers will need to see charging networks that support their use and enable them to travel without range anxiety. Identifying value will be critical for the rollout of publicly available charging infrastructure, which in turn has an impact on EV sales growth.

 

Mountain West States Buy In on Regional EV Fast Charging Network

— December 14, 2017

To support the growth and adoption of EVs on their regions’ roadways, governors of eight Mountain West states signed a memorandum of understanding (MoU) to work collaboratively on a regional EV fast charging network spanning across 5,000 miles of freeway. They will also work on a plan for the EV charging infrastructure to link their states together. The states that have signed on so far are Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming.

Anticipating EV Population Increases

These states have recognized the growth of EV populations and anticipate EVs will continue to penetrate the markets. As discussed in our Market Data: EV Geographic Forecasts report and illustrated in the following chart, Navigant Research expects sales of over 1.6 million plug-in EVs (PEVs) by 2026 in North America.

Historic and Projected Sales of PEVs, Base Scenario, North America: 2012-2026

Source: Navigant Research

Pursuing Goals

The goals of the MoU are to accomplish the following:

  • Coordinate station locations to maximize use and minimize inconsistency between charging infrastructure.
  • Develop practices and procedures to encourage the adoption of EVs and address range anxiety.
  • Develop operating standards for charging stations.
  • Incorporate EV charging stations in the planning and development process.
  • Encourage automotive OEMs to stock a variety of EVs in participating states.
  • Collaborate on funding and finding opportunities for the network.

Direct current (DC) fast charging stations will cost between $150,000 and $200,000 each. It would require 50 to 60 stations to electrify the key travel corridors in Colorado, according to officials.

Following in Their Footsteps

Unsurprisingly, West Coast states have already tackled a similar project. In 2013, California, Oregon, Washington, and British Columbia signed on to the Pacific Coast Action Plan on Climate and Energy. They committed to the creation of an electrified highway corridor connecting the three states and the province. In the years since, the governments have been able to install a network of DC fast chargers along Interstate 5, Highway 99, and other major roadways dubbed the West Coast Electric Highway.

Tackling the Funding Puzzle

The Mountain West states are looking for sources of funding as they move forward with their own plans for a regional highway. While the West Coast Electric Highway project was able to capitalize on federal grants and funding to capture investments, the current administration and majority party seem less keen on assisting the adoption of EVs, meaning the Mountain West states may have to look elsewhere. Colorado has identified and is already planning on using some of the funds received from the Volkswagen settlement, Electrify America, to drive interest in public-private partnerships to develop its electrified highway infrastructure. That being said, the MoU does not specify funding requirements or timeframes for the project or any of the states.

Absent the support of the federal government, the success of this regional project rests on the political will of the state governments and continued support from elected officials, automakers, utilities, and planners.

 

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