HomeMy WebLinkAboutStaff Report 3.C 08/05/2019TO:
FROM:
Revised Agenda Item #3.0
Revision No. 1 — Thursday, August 1, 2019
August 5, 2019
Honorable Mayor and Members of the City Council through City Manager' - -
Dan St. John, F.ASCE — Director, Public Works & Utilities
Leah G. Walker, P.E. — Environmental Services Manager
SUBJECT: Resolution Authorizing the City Manager, or the Assigned Representative, to
Execute All Documents on Behalf of the City of Petaluma Related to the
Application for and Receipt of State and Federal Credits for the Production of
Alternative Vehicle Fuel
RECOMMENDATION
It is recommended that the City Council adopt the attached Resolution authorizing the City
Manager, or the Assigned Representative, to Execute all Documents on Behalf of the City of
Petaluma Related to the Application for and Receipt of State and Federal Credits for the
Production of Alternative Vehicle Fuel.
BACKGROUND
The City of Petaluma is preparing to start up the Biomass-to-Biofuel project (B213) which will
use methane gas produced at the Ellis Creek Water Recycling Facility (ECWRF) and turn it into
Compressed Natural Gas (CNG) to fuel the City's refuse vehicles. 13213 is a local, sustainable
project to beneficially reuse wastes generated in the City.
The 132B project includes three primary components: a second anaerobic digester at the ECWRF,
a High Strength Waste receiving station, and gas conditioning equipment to clean and compress
the biogas to meet vehicle manufacturers' requirements and standards.
The CNG will be used to fuel new trucks in the refuse collection fleet operated by the City's
franchise refuse hauler, Recology Sonoma Marin. Over the next several years, Recology will
replace diesel -fueled vehicles with CNG -fueled vehicles and is projected to use 170,000 diesel
gallon equivalents of renewable CNG and reducing the production of greenhouse gas emissions.
The project will include a CNG fueling station located at the ECWRF site with mobile fueling
provided to Recology's site. The City will own the fueling equipment and use the fuel for the
refuse fleet and other City vehicles.
Completion of the project is scheduled for September 2019.
DISCUSSION
One of the advantages of the 13213 program is the ability to generate federal and state
environmental credits for alternative fuels. The City will be able to monetize the fuel credits and
use these funds to offset the operations and maintenance costs of the 13213 program.
The Federal Renewable Fuel Standard (RFS) was created under the Energy Policy Act of 2005
and was expanded under the Energy Independence and Security Act (EISA) of 2007, requiring
36 billion gallons of fuel to be blended by 2022. RFS2, the revised federal regulation, allows
biogas that is used as transportation fuel to be eligible to generate credits, known as Renewable
Identification Numbers (RIMS). RINS can be purchased by obligated parties (refiners, fuel
importers) to meet compliance with EISA. Only biogas that is produced through the conversion
of organic matter, and used as renewable fuel, can generate RINS. Types of gas that qualify are
landfill gas, agriculture digester gas and municipal wastewater treatment -facility digester gas.
The gas that will be produced at the ECWRF qualifies for the Advanced Biofuel standard (D5),
and a portion may qualify for the higher priced Cellulosic Biofuel standard (133). The RFS2
program is administered by the US Environmental Protection Agency (USEPA).
The California Low Carbon Fuel Standard (LCFS) was established in 2007 through a Governor's
Executive Order. It uses a market-based cap and trade approach to lower the greenhouse gas
emissions from petroleum-based transportation fuels. The City is eligible to participate in the
LCFS credit market as well. The price for LCFS credits is based upon the Carbon Intensity (CI)
of the fuel generated. The CI for co -digested materials such as High Strength Waste is some of
the lowest, thus generating the highest fuel credit prices. The City may choose to use an
established pathway to determine CI, or to conduct an analysis to determine a specific CI for the
ECWRF. The LCFS program is administered by the California Air Resources Board (CARE).
To take advantage of the fuel credit programs, in September 2018 the City Council authorized an
agreement with a consultant experienced with the federal and state alternative fuel credit
programs. The consultant, Blue Source LLC, is preparing applications for registration with the
USEPA and CARB. In order to submit the applications and subsequent reports, the City must
designate a Responsible Party or Responsible Corporate Officer for the RFS2 program, prepare
affidavits regarding the CNG production method and third -party audits, and sign related
documents. The proposed action will authorize the City Manager, or the City Manager's
assigned representative, to execute the necessary documents.
The proposed action meets Council Goals #7 and #51: "A City that Works for Everyone —
Leverage local, regional, and state programs and resources to maximize city revenues; and Our
Environmental Legacy — Complete Biomass to Biofuel project at the City's Ellis Creek Water
Recycling Facility."
PUBLIC OUTREACH
This agenda item appeared on the City's tentative agenda document on Monday, July 22, 2019
which was a publicly -noticed meeting. Additional outreach on the 13213 project was completed
during the numerous council items for planning, design, and award of the three CIP projects
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which make up the larger B2B project. Three public presentations at industry conferences have
been completed highlighting the 13213 project.
FINANCIAL IMPACTS
The proposed action will not cause any unanticipated fiscal impacts.
ATTACHMENTS
Resolution
Attachment 1
RESOLUTION AUTHORIZING THE CITY MANAGER, OR THE ASSIGNED
REPRESENTATIVE, TO EXECUTE ALL DOCUMENTS ON BEHALF OF THE CITY
OF PETALUMA RELATED TO THE APPLICATION FOR AND RECEIPT OF STATE
AND FEDERAL CREDITS FOR THE PRODUCTION OF ALTERNATIVE VEHICLE
FUEL
WHEREAS, the City of Petaluma General Plan 2025 recognizes the importance of
reducing reliance on non-renewable energy sources, and encourages the use and development of
renewable or nontraditional sources of energy; and
WHEREAS, the City of Petaluma General Plan 2025 recognizes the importance of
reducing greenhouse gas emissions; and
WHEREAS, the City is implementing the Biomass-to-Biofuel (13213) project to use
methane gas produced at the Ellis Creek Water Recycling Facility and turn it into Compressed
Natural Gas (CNG) to fuel the City's refuse vehicles; and
WHEREAS, the installation of gas scrubbing and compression equipment and a CNG
fueling facility will provide CNG fuel that can be used for City refuse and other vehicles; and
WHEREAS, converting City vehicles to CNG fuel will reduce greenhouse gas emissions
and reduce reliance on petroleum-based fuels; and
WHEREAS, by converting biogas to transportation fuel, the City will produce low
carbon transportation fuels and will be eligible to register with the California Low Carbon Fuel
Standard (LCFS) program and generate environmental credits that have a monetary value; and
WHEREAS, by producing low carbon transportation fuels, the City will be eligible to
register with the federal Renewable Fuel Standard (RFS2) program and produce credits
(Renewable Identification Numbers, or RIMS), under the D5, Advanced Biofuel standard, and
D3, Cellulosic Biofuel standard; and
WHEREAS, the environmental credits generated through the LCFS and RFS2 programs
have a monetary value that can be sold to obligated parties, and the revenues can be used to
offset operations and maintenance costs of the 13213 project; and
WHEREAS, various documents are required to be filed with the US Environmental
Protection Agency and the California Air Resources Board in order to obtain fuel credits.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of
Petaluma hereby authorizes the City Manager, or the assigned representative, to execute all
documents on behalf of the City of Petaluma related to the application for and receipt of state
and federal credits for the production of alternative vehicle fuel.
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