ACT 2011 Panel on Fueling the Future: ‘Getting to Zero'

Kerry Drake, U.S. EPA: The message that I'm trying to give here is, across the board, we have all been doing everything that we can. I firmly believe that there is not a person up here who represents the Air District, the state, or the EPA, that isn't doing everything that we can to help clean up the air, particularly in these air basins. However, it's not enough, because, frankly, it will take the next generation of technology to help attain the current standards by the year 2023. That's going to have to happen.

We got together in 2008-with U.S. EPA District IX (and our headquarters office was very engaged), along with the California Air Resources Board, the South Coast Air Quality Management District, and the San Joaquin Valley Air District-and agreed to work together and collaborate to collect resources to promote the next generation of technologies. The leadership of those four agencies chose to become a part of this initiative, along with the California Energy Commission, the Department of Energy, the Department of Transportation, and private partners. The leadership of the agencies chose San Bernardino and the San Joaquin Valley community of Bakersfield as the places that we would like to showcase the next generation of technologies through the Clean Air Technology Initiative. The federal EPA is interested in trying to get a cluster of clean technology companies in these two areas, along with our partners. The goal is pretty easy: accelerate the development, deployment, and demonstration of the next generation of technologies.

What have we done since 2008? Well, we've brought in a lot more partners, like the California Energy Commission and their $100 million a year, the other federal departments, which have a lot more money and influence than the EPA, and private partners, like the Southern California Gas Company. We've gone to areas to put out RFPs, and I'm happy to say that by the end of this year, we expect to see the first on the ground projects in the San Bernardino and Bakersfield area as part of this clean technology initiative...

...We've got lots of partners, we've got lots of ideas, and we've selected areas that we'd like to see, among other areas, and other things that we're working on. My question is, what do you do need to demonstrate your technologies in those areas? Some of our partners have funding that they might offer. Some might offer streamlining for various regulatory hurdles. Maybe it's recognition from the administrator of the EPA. What will it take to demonstrate the next generation of clean technologies in the San Bernardino or Bakersfield areas? Why there? Because those particular residents of this country breathe the absolute worst air in the entire country. That's why we're trying to focus on those areas as part of our much-wider efforts.

David Abel: Thanks for presenting the question. Richard Corey is going to tell us what he can provide in the answer territory.

Richard Corey, CARB: The core of why this is being done is that it is important for health. It's health benefits; it's health impacts. There are two elements to our focus. Near term is implementation and more reductions. Long term is zero emissions.

The key element is that there are a number of activities, regulations, and initiatives, that have been adopted or on the books. Making sure that those are adhered to through fruition is a critical element of the overall strategy. Equally important is laying the groundwork for the transitional transformation changes. Near term, you don't get reductions just by adopting regulations. To realize ongoing, effective work, it takes stakeholders responding to the issues as they come about, making adjustments if they need to be made. A group I am responsible for oversees the Low Carbon Fuel Standard-making sure we continue to move forward, carrying through implementation. Implementation of the Low Carbon Fuel Standard works closely with stakeholders. The way that works is effective communication, identifying areas of concern and areas that can help implementation.

In the near term, there are certain opportunities for getting further reductions. With respect to the Low Carbon Fuel Standard, the way we structured it back-loaded mechanisms to reduce the carbon intensity of automobiles by ten percent from 2010 to 2020-a ten percent reduction of carbon emissions in ten years. For the long view, reduction will require a whole sector of alternative fuels. It will require policy that encourages a transition to a full spectrum of alternative fuels. The only way to carbon intensity reduction is with a full spectrum of alternative fuels. Near term will be lower carbon intensity ethanol because of the initial requirements.

What we're already seeing growing capital investment. But, full capital investment continues on two important elements: confidence and certainty. Industry will make investments with certainty that particular policies are standing strong...

...With respect to the Low Carbon Fuel Standard, we're in an implementation process already. We've made a lot of progress in terms of the overall organization of the program, getting the reporting tools, working from the stakeholders, and moving forward with that program...

David Abel: Gwen is the Director of Commercial and Industrial Services for Southern California Gas Company. Gwen, set the stage for the near and long term implementation of this vision.

Gwen Marelli, SoCal Gas: We all recognize the tremendous challenge agencies have in developing policies that meet federal mandates while keeping our region economically viable. As the only non-agency person on the panel, I'd like to talk to you about natural gas as an energy source will play an important part in meeting the energy and air quality goals for our region. From another perspective, we have to work together as industry partners to deliver the best possible solutions, with an acknowledgement that success will not only come from one source, but from portfolio options that work interdependently to help achieve efficiency, conservation, and the reduction of the greenhouse gasses and other air pollutants.

Electricity and natural gas, plus the combination of viable renewable sources-wind, solar, and renewable, pipeline quality natural gas-should be included in the application and approaches to new technology, including distributed generation fuel cells, natural gas vehicles, electric vehicles, and so on. All of these things work together and create a large palate of opportunities for entrepreneurs, technology developers, manufacturers, and others to produce the best technology for California and spur growth and employment.

Our focus is to continue to deliver the benefits of natural gas as the foundation of the state's sustainable energy future. Natural gas is clean, abundant, economic, reliable, and flexible. It can be stored near the market center, and it is always available. Natural gas is the fuel of choice for many applications: cost effective water heating for homes, energy efficient boilers and furnaces for businesses, reliable electric generation that can respond to electricity demand, and a critical backup to support wind and solar resources.

SoCal Gas is supporting the development of new technologies to reduce dependence on foreign oil, such as natural gas vehicles, reducing our energy consumption overall with incremental energy efficiency programs, and using our existing resources and infrastructure in new ways for the development and delivery of carbon-neutral renewable natural gas. Energy efficiency has been the first loading order of the state's energy policy for many years. SoCal Gas is proud of what we've achieved with our customers over the last 10 years.

When the state established AB 32, with the goal of reducing greenhouse gases to 1990 levels, everyone knew it would be a challenge. Through our energy specific programs and tighter building and appliance standards, the total greenhouse gas emissions from the natural gas sector are already below the 1990 levels and are projected to be lower still by 2020. SoCal Gas energy efficiency programs have cumulatively saved over 425 million burns and have achieved emission vehicle reductions equivalent of taking 411,000 cars off the road. A new program we are excited about, solar water heating as an integrated solution, addresses AB 32 and lower emissions goals. This new technology would exist in the current infrastructure, assuring you a hot shower even when the sun isn't shining. Natural gas-assisted water heating is already one of the lowest-cost solar options.

Using research and development, you can support and help fund demonstration projects for technologies that are in the nascent stage. SoCal gas spends approximately $10 million a year on R&D, $2-3 million a year for equity investments in promising companies, and, in the near future, we're expanding our focus and dollars on renewable natural gas and natural gas vehicles.

SoCal Gas is giving toward a set of demonstration and development projects to support the viability of renewable natural gas. Biomethane comes from a variety of waste products, wastewater, animal manure, food waste, and green waste-you get the idea. It reduces waste volumes and maximizes the use of existing infrastructure. It increases sustainability and the same commonalities as natural gas, but the important part is that the energy produced is carbon-neutral.

Transportation represents over 40 percent of Californian's greenhouse gas inventory, and 85-95 percent of Southern California's ozone challenge. Natural gas vehicles are vital to reach the Low Carbon Fuel Standard, with 30 percent lower carbon intensity than gasoline, which means lower emissions from our vehicles. SoCal Gas is committed to spur growth in the low emissions vehicle sector. We have major successes with fleets, waste haulers, and buses. For example, L.A. Metro just retired its last diesel bus. It now runs more than 2,000 natural gas-fueled buses-a CNG-dedicated fleet. It's helped reduce thousands of tons of greenhouse gases in the basin by replacing diesel with CNG. Natural gas is highly reliable and cost effective for transit use. Many have seen 15-28 percent savings compared to the use of diesel. Natural gas vehicles are unmatched by any other alternative fuel vehicles, with options in Class 8 heavy duty trucks, transit buses, garbage trucks, school buses and more. Performance of these vehicles is comparable to diesel or gasoline. These are savings in fuel costs, and, for many, providing natural gas fueling infrastructure in one home location.

Success will only come from teamwork. I've mentioned some of the benefits of viable natural resources and technological advancements to deliver integrated portfolio solutions. There is no one answer. Southern California can lead the way in commitment to entrepreneurial spirit and innovation, a skilled workforce, and partnerships with utilities and organizations, such as the Los Angeles Economic Development Corporation, to make it happen. Our role: continue our commitment to R&D, support innovation, and reward success. The agencies' role: establish policy and rules that provide predictability, flexibility, and ample time to comply. Your role: think laterally, outside the box, with creative solutions, and view the utilities as partners to help advance innovations. We all win, and California wins, when we work as a collaborative team with an open mind to balance the great new approaches for a clean energy future.

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David Abel: We've heard a lot about the need for vision and technology to power the next generation. We've heard about the sticks to drive us there. What about the carrots? What were the carrots for this industry, the private sector, to provide the research in a lot of these technologies entering the market? From the point of view of the California Energy Commission, what are the carrots?

Mike Smith, California Energy Commission: From our perspective, there are several types of carrots. The most important one we have is the funding program. But funding is not enough, it's how funding is strategically and carefully applied. In terms of changing behavior and moving this market, we have to be able to make purchases, for example, of alternative fuel vehicles indifferent. So that if they are comfortable with the choice of purchasing a diesel vehicle versus a natural gas or other alternative fuel vehicle, it's important that we find ways of making that decision for them indifferent. They, from a cost standpoint, are going to pay something comparable whether they make one choice or the other. From our perspective, if we're not effective or successful in convincing them and fleet operators, transit agencies ,or other purchasers to purchase these vehicles for example, from an air quality standpoint, we've achieved an objective. We certainly have. We've put a very clean diesel vehicle on the road. From an energy security standpoint, we've failed. From a greenhouse gas standpoint, we've failed. Because what we've done is we've locked in another 15 or 20 years of consumption of diesel in that vehicle. While we've achieved an air quality objective, we have not achieved other important objectives. So if we can make the purchaser indifferent, and provide them the correct incentive to choose an alternative fuel vehicle, then they can set themselves on a course of experiencing that vehicle and, in the current environment, realizing fuel savings in the process. There is a policy importance and imperative there, and there is also an economic imperative to those folks.