Applying Incentives and Funding Mechanisms for Heavy Truck Technology to Heavy Hybrids

Transcription

1 Applying Incentives and Funding Mechanisms for Heavy Truck Technology to Heavy Hybrids Annie Kee US Environmental Protection Agency SmartWay Program Office of Transportation and Air Quality SAE Government/Industry Meeting May 16, 2007

2 SmartWay Transport Program The SmartWay Transport Partnership is a collaborative effort between EPA and industry designed to create a demand for cleaner, more fuel efficient freight transportation SmartWay was launched in February, 2004 By 2012 the program aims to save between 3.3 and 6.6 billion gallons of diesel fuel per year which translates to eliminating between million metric tons of CO 2 emissions and up to 200,000 tons of NOx emissions per year 2

3 Building Sustainable Deployment Programs Goal: Accelerate deployment of fuel-efficient, clean technologies Increase overall freight efficiency Reduce fuel consumption and CO2 emissions Reduce criteria pollutants (PM and NOx) Be easily replicated along transportation corridors and at freight gateways Strategies: Corporate Partnerships - Leverage business relationships to improve environmental performance Technology Testing - Generate test data to verify the environmental performance of emerging technologies for fleets Innovative Financing - Work with the financial community, SBA and others to help smaller trucking companies purchase fuel-saving technologies Marketing & Outreach - Provide creative marketing and recognition for companies that demonstrate measurable environmental improvement 3

4 Developing Corporate Partnerships Corporate partnerships are the foundation of SmartWay Partner with manufacturers, nonprofits, and others to create new and innovative ways to package and market fuel-saving technologies SmartWay introduces Shippers looking to reduce their transportation footprint to carriers that are willing to reduce their footprint SmartWay shippers commit to ship 50% of their goods with SmartWay carriers SmartWay carriers commit to reduce their environmental footprint (CO 2, NOx, PM) As a result, Shippers encourage their current and potential contract carriers to improve SmartWay FLEET model helps shippers to quantify their transportation footprint and determine which carriers are more efficient Carriers benefit from the shipper pressure by saving fuel and securing contracts 4

5 Technology Outreach Information about new commercially ready technologies was limited to those fleets that could afford to test Fleets that can test technologies generally keep results proprietary Smaller companies waited Wal-Mart is breaking that mold by releasing all of their testing to public Most truck fleets skeptical about new technologies It works for another company s operation, but will it perform the same in my operation? Old habits are tough to break: We ve always done it this way Most truck fleets skeptical about the federal government They know EPA as a regulator 5

6 Technology Testing and Information EPA conducted three different two-year test programs on commercially available products Tests on idle reduction equipment Tests with the Department of Defense and with Southwest Research Institute on aerodynamic equipment and single-wide tires All tests included fuel economy and emissions impacts EPA published its results EPA technical paper on idle reduction Three SAE technical papers EPA collaborating on a test program with the University of Texas and SwRI for port drayage trucks Easy to Use Fleet Model articulates benefits of new technologies 6

7 Creating Access to Capital Lack of financial flexibility is a major barrier to adoption of fuel and emission saving technologies Smaller fleets/oos cannot afford the upfront cost of even the most cost-effective technologies with very quick paybacks (2 years or less) This was not a focus of small business funding or state funding sources Some state energy offices have funding/financing for energy-saving projects Federal programs have not looked closely at innovative financing strategies for trucking improvements 7

8 Innovative Financing: SmartWay and SmartWay Plus Loan Programs Goal is to increase access to capital with loan programs and other innovative financing concepts for SmartWay Upgrade Kits and upgraded used trucks SmartWay Upgrade Kits that package together bundles of tested technologies for ready installation and access Aerodynamic fairings for tractors and trailers Low-rolling resistance tires Idle reduction devices Phase I: SmartWay Loans for Upgrade Kits EPA and SBA Partnership to finance Upgrade Kits SBA-qualified banks can offer loans for trucking companies, including: Bank of America, Business Loan Express, Superior Financial Loans offered at retail outlets: Cascade Sierra Solutions (I-5 corridor), 4 State Trucking (Chrome Shop Mafia) and other retail outlets (EPA developing) Payback and interest rate tend to promote purchase of fuel-saving devices, rather than after-treatment purchases 8

9 SmartWay Upgrade Kit Example Device Cost/Unit (Retrofit) PM Reduction NOx Reduction FE/CO 2 Change Super Single Tires w/ alum. wheels $5, % 4% Trailer Aero Kit $2, % 5% APU $8,500 10% 9% 9% Totals: $16,500 10% 17% 17% Assume 100,000 6 mpg = 16,667 gallons/year Fuel savings: 2,833 = $7,083/year Payback 2.3 years $16,500/$7.083 Or can do a five year 12% APR: Monthly Fuel Savings: Monthly Loan Payment: Monthly Cash for Driver: $578 ($367) $211 9

10 Innovative Financing: SmartWay and SmartWay Plus Loan Programs Phase II SmartWay Plus Loans for Used Trucks Very favorable loan terms for upgraded used trucks Focus is on emission controls Must use EPA- or CARB-verified emissions equipment Provides the potential to leverage more funding opportunities Carl Moyer (California) - TERC (Texas) USDA Community Development Banks - Federal loan guarantee programs State tax exempt bonds - DOT SIBs, Private Activity Bonds 2004 MY Truck on the Used Market Extend loan by 12 months and lower interest to 6% Purchase Price: Term (12%/ 6% Interest): Monthly Payment: Total Cost: $75, Months $2,242 $80,712 $80, Months $1,701 ($540 less) $81,648 10

11 Potential Sources of Financing Private Banks Variety of loan programs including green loans Community Development Banks Low cost and market rate loans for economically challenged communities Small Business Administration Market rate loans for small business, no collateral, quick approval USDA Intermediary Relending Program Very low cost loans limited to rural areas North American Development Bank Low cost loans for Mexican trucking companies DOT State Infrastructure Banks Longer-term potential to capitalize very low cost loans Congestion Mitigation and Air Quality Improvement Program Longer-term potential to capitalize very low cost loans 11

12 Interstate Corridor Financing Project Goal: Develop large scale I-95 and I-5 corridor multi-state projects to sell and finance SmartWay Upgrade Kit Leverage public and private funds Establish SmartWay Dealerships to sell and install Upgrade Kits Create idle-free SmartWay Truck Stops State Infrastructure Banks (SIBs) are one potential source of lowcost financing Expand on initial success of Oregon SIB Working with I-95 Corridor Coalition to bring State DOTs together 10 states on East Coast w/ active SIBs: DE, FL, ME, NY, NC, PA, RI, SC, VT, and VA 12

13 Marketing: Public Awareness Campaign Industry-friendly PSA campaign Multiple channels Web site and E-Updates Print and Radio PSA Airport kiosks Delivered directly to trucking industry Radio interviews (XM Satellite) Trick my Truck TV show and DVD Industry events and conferences Partner Awards for top-performers Awards presented at industry events 13

14 Initial investment in ~$650K for PSA placement in trade magazines has lead to over $3M in complementary media placements, including: Forbes - Business Week Inc. - Fast Company 51% of truck fleets polled have favorable or very favorable attitude toward SmartWay ATA and state trucking associations have joined as Affiliate Partners Created other opportunities including a SmartWay segment on Trick my Truck Results of Public Awareness Campaign 14

15 SmartWay Program Results After just 3 years, the SmartWay Program with its many effective strategies for overcoming deployment challenges has achieved the following: 530 Companies and Organizations 272M gallons diesel fuel saved 3M tons less CO 2 12K tons less NOx 600 tons less PM 15

16 Summary Create demand for the technologies Leverage business relationships to improve environmental performance Share data and benefits of technology testing and information Develop national, regional, and/or local marketing and advertising Work with dealer/truck service networks to make technologies accessible to truck fleets Develop innovative financing for technology deployment Integrate government/public funds with private capital to create unique financing tools More environmental controls = Better financing rates and/or terms Work with various stakeholders Be flexible, there might be multiple options Create a mix of loan incentives (e.g., extended terms, less collateral, lower fees, lower interest rates, rapid approval) 16

17 Questions? Thank you! Annie Kee SmartWay Transport Partnership