[IMAGE]fuel.jpg[/IMAGE]In addition to the obvious environmental benefits, reduced operating costs and government incentives have spurred the increased use of alternative fuels in the transit industry.

As the government mandates stricter emissions regulations in an effort to improve air quality, many transit agencies have turned to alternative fuels. According to Washington D.C.-based NGVAmerica, an organization that advocates for greater use of natural gas vehicles, roughly 14 percent of transit buses currently on the road run on natural gas. Demand is growing, says Stephe Yborra, the organization's director of market development. Natural gas engines are now specified for about 25 percent of all new bus orders.

Improved Engine Technology

Yborra cites natural gas engine performance and the "three Es" — emissions, energy security and economics — as the key drivers for this growth. "Natural gas engine technology has improved tremendously over the last five to 10 years," Yborra says. "It's state-of-the-art, proven and highly reliable. In fact, it's now recognized by many in the transit industry as being the new benchmark that every other technology has to meet."

In addition to being cleaner, quieter and delivering performance equal to or better than their diesel counterparts, Yborra says natural gas buses are easier to maintain than diesel buses, which have had to incorporate complex exhaust aftertreatment systems to meet emission requirements, such as particulate traps, urea storage and injection systems, and ­related sensors.

He points out that heavy-duty natural gas engines complied with 2010 EPA regulations governing emissions of nitrogen oxides (NOx) and particulate matter three years before the 2010 regulations came into effect. "The cost of complying with the EPA's ever-tightening emissions requirements for heavy-duty engines has increased not only the cost of diesel buses, but also the cost to operate and maintain them," says Yborra. "Natural gas buses, which start with an inherently cleaner fuel, have a far less complicated and maintenance-free exhaust system."

Transit agencies looking to switch to alternative fuels or expand their alternative-fuel fleet and infrastructure can save on operating costs while meeting government regulations.

Funding Opportunities

To fund the higher cost of alternative fuel vehicles and infrastructure, several federal incentives are available, and states may have their own programs. The federal program, TIGGER (Transit Investments for Greenhouse Gas and Energy Reduction), appropriates $75 million to transit agencies for capital investments that help reduce energy consumption and greenhouse gas emissions. In addition, the Clean Fuels Grant program allots $81 million to assist non-attainment areas in achieving the National Ambient Air Quality Standards for ozone and carbon monoxide ­emissions.

According to Yborra, Congress enacted two income tax credits in 2005, one for the incremental cost of vehicles and the other for the purchase of fueling equipment. Although a tax-exempt transit agency can't directly take advantage of these income tax credits, the seller can take the credits and pass them along to the transit agency by lowering the cost of the vehicle or ­fueling equipment.

The federal tax credit of 50 cents per gallon or gasoline gallon equivalent (GGE) of alternative fuels pumped expired at the end of 2009, but an extension is in reconciliation as of this writing, to be extended until the end of the year and retroactive to the beginning of the year.

Some alternative fuel suppliers, such as Clean Energy, have a dedicated grants department familiar with both federal and state programs to help ­customers attain grant funding.

[PAGEBREAK]Abundant Domestic Supply

Natural gas advocates also highlight the abundance of domestic natural gas. "We have so much low-cost natural gas available right here in the U.S." says Yborra. "That translates into less foreign oil, more American jobs and greater energy security."

According to Clean Energy's John Somers, director of transit business development, new technologies available to extract shale gas have led the federal government to revise their estimates of the supply of natural gas available. "It's all domestic fuel," he says. "It's really exciting because we've for so long been dependent on foreign fuel."

The U.S. Energy Information Administration's 2010 Annual Energy Outlook predicts that a rise in domestic production of natural gas will lower U.S. net imports from 13 percent of total supply in 2008 to 6 percent in 2035.

American Power Act Impact

The American Power Act, a bill written by John Kerry (D-Mass) and Joseph Lieberman (D-Conn), aims to reduce greenhouse gases and the reliance on fossil fuels. The bill has beneficial components for the natural gas industry and includes the 50-cent tax credit, but Trillium USA's Bill Zobel is doubtful of its benefits. "The devil's in the details," he says. "You don't know the outcome until the regulators actually put into words the congressional intent of the legislation."

While higher initial investment may be a deterring factor for transit agencies, it's best to consider the long-term cost savings of alternative fuels. Benefits include investment in domestic fuel, lower operating costs, cleaner emissions and more stable fuel ­prices.

Clean Energy

Clean Energy, based in Seal Beach, Calif., supplies both compressed natural gas (CNG) and liquified natural gas (LNG) to transit fleets across North America, operating 180 stations and fueling 5,000 buses a day. Transit systems serviced by Clean Energy include: MTA Long Island Bus in New York; Metro in Los Angeles; Metro RTA in Akron, Ohio; and TransLink in Vancouver, British Columbia.

While CNG is gas tapped from an existing pipeline through a utility, then compressed, LNG is liquefied gas that is transported in, Somers explains.

"For the transit business, I would say there's more movement to CNG because, usually, it's cheaper because you don't have to transport it," he says. Somers adds that denser gas compression for CNG — 3,600 pounds per square inch - now allows for a range equal to diesel fuel. Agencies that don't have access to a sufficient amount of gas may choose an LNG fleet.

To the end user, however, "it's essentially just like using diesel, gasoline or any other fuel," Somers says.

Clean Energy offers a turnkey operation, and Somers adds that, "based on a volume commitment, we could actually build a station with our own funding, our own capital upfront." The company charges for operations and maintenance, based on volume.

"The design, the operations and maintenance [of fueling stations] are very critical because there are a lot of moving parts," Somers emphasizes. "I think that's why you really want experts who have a vast inventory of parts, and have a lot of experience building and maintaining machinery."

[PAGEBREAK]From In-House to Outsourcing

The Regional Transportation Commission of Southern Nevada (RTC) operates a fleet of 430 fixed-route fleet buses, of which 52 are CNG and 121 are hybrid-electric buses. The system's 280-vehicle paratransit fleet includes 51 larger-capacity CNG ­vehicles.

The agency's first fueling facility, built by the RTC, was operated in-house. When the decision was made to put out a competitive procurement, Clean Energy was chosen. "They handle all of the maintenance of the equipment so, basically, all we do is just pull up and fuel. We found that having folks that have the expertise in this equipment has really made a huge difference for us," says Sandra Stanko, RTC's director of transit ­services.

Currently, RTC has two fueling facilities: the original, which Clean Energy has since upgraded, and an additional one constructed by the company. Although one station can be used as a backup to the other, the 24/7 on-call maintenance team responds immediately if problems arise.

An additional benefit has been the significant fuel cost savings. The agency has budgeted $2.50 per gallon for 5-percent blend biodiesel fuel, while CNG costs $1.13 per therm - equal to $1.45 per GGE. Stanko explains this is on the high end, as cost-per-therm had been as low as 90 cents. The government tax credit of 50 cents per GGE reduced the per-gallon cost even further.

In 2004, RTC was selected as the lead agency for the Cooperative Pilot Procurement Program under the FTA, which allowed the agency a 90 percent reimbursement on their CNG vehicle purchases within a five-year time frame.

Trillium USA

Salt Lake City-based CNG provider Trillium USA primarily focuses on transit agencies, providing both turnkey contracts that include construction, maintenance and operation, and the takeover of existing fueling stations.

According to Zobel, Trillium senior vice president, one of the benefits of handing over maintenance and operations to a specialized provider like Trillium is optimization.

"We have some proprietary systems that we put in place that help our customers optimize their labor costs and energy efficiency and maximize those savings throughout their operations," Zobel says. He adds that with the large number of buses that need to be refueled per night, ensuring optimal fueling performance with minimal time is essential.

Transit agencies making the decision to move to CNG will work with their local utility provider and a retail provider, such as Trillium, to install a fueling station. The company will work with transit agencies to design stations, obtain the permits necessary for a new installation, and work with utility companies to get both the gas and electricity needed to power the compressors.

From design to completion, Zobel estimates a four- to eight-month timeframe, depending on the permitting process. The agency would then align the procurement of their CNG vehicles to the completion of the fueling ­station.

A traditional CNG infrastructure contract for a large transit system is usually set up over a term of years, and Trillium will maintain and operate the station and collect fees on a per-gallon (GGE) basis.

SoCal natural gas fleet

One of the transit systems serviced by Trillium is the Southern California-based Orange County Transit Authority (OCTA), operating a fleet of 299 CNG buses and 228 LNG buses. The remainder of the fleet consists of articulated diesel buses (equipped with particulate traps) and ultra-low emission gasoline-powered paratransit vehicles.

Of the agency's five bases, four are equipped with CNG fueling facilities, three of which were built and managed by Trillium (Clean Energy operates the fourth). Contracting for the facilities was chosen from the most cost-effective bid at the time.

OCTA's Maintenance Manager Tony Chavira says natural gas fuel is cheaper per gallon and the buses get about the same range as diesel. "We communicate with other properties that have the different generations of technology and learn from those other properties," he says. The agency is keeping an eye out for the newest technologies such as zero-emission electric vehicles.

[PAGEBREAK]Propane for Smaller Vehicles

While larger buses tap into natural gas, some agencies choose to use propane (also known as liquefied petroleum gas or LPG) to fuel their smaller shuttles, cutaway vans and paratransit vehicles.

Delta Liquid Energy, a family-owned company headquartered in Paso Robles, Calif., is a full-service propane company that provides fleets with a turnkey package to locations in California. In constructing a fueling station, Delta Liquid Energy helps find a suitable location, obtain installation permits, and constructs and installs the propane tanks and fueling dispensers. The company also provides training on refueling vehicles and software to allow the propane dispenser to interact with fuel management systems. Long-term contracts ensure periodic delivery of propane depending on use.

Ted Olsen, alternative fuels manager for Delta Liquid Energy, says infrastructure takes up just two parking spaces and includes a tall, upright tank, dispenser and buffer poles to protect the tank. Installation takes three to six months, and Olsen says it's cheaper to install than a diesel or natural gas fueling station. For a long-term fuel contract for a certain number of vehicles, Olsen says stations can be installed at no cost to the end user.

Approved by the federal government as a clean fuel, propane emits 50 percent less nitrogen oxide (NOx) and no particulate matter, according to Olsen. He says 95 percent of the propane used in the U.S. is from North America, and it's cheaper than other fuels. He estimates propane to be 30 percent cheaper than gasoline.

"There's been a huge interest in propane motor fuel vehicles in the last two years," Olsen says. "Traditionally, it's been in metropolitan areas because of air quality issues." He sees the interest increasing in the future, with the push for clean vehicles and government incentives available.

One of Delta's customers includes the University of Southern California, fueling 11 shuttles that run on routes to campus and housing locations as well as the train station.

When it was time to replace old diesel shuttles, Tony Mazza, director of transportation, says the pick was between CNG and propane. He chose the latter because of the small physical footprint of the propane fueling station. Mazza explains they didn't have the space to put in a CNG fueling station. They installed a 2,000-gallon tank at their storage and maintenance yard in 2009, allowing them to fuel on-site. The three-year contract has Delta coming out once a week to refuel the tank.

Mazza says he's been happy with the propane decision. Over the next two years, he hopes to replace the rest of his 24-vehicle fleet with propane-powered vehicles as soon as the chassis are available again.

[PAGEBREAK]Foton sees opportunity in CNG resurgence

Foton America offers CNG and CNG hybrid transit buses and also provides diesel and diesel-hybrid buses. Based in Brookfield, Conn., the company has been involved in the international market for more than 15 years and is producing its second unit for Altoona to sell to the U.S. market.

Foton America's CNG buses, available in 30-, 35- and 40-foot lengths, meet EPA emissions regulations up to 2014.

CEO Clifford Clare Jr. says there has been a resurgence of CNG vehicles since its popularity rose in the early and mid-90s. "What we're seeing now is not only due to the U.S. having a more-than-adequate supply of CNG availability and resources, but we're seeing a resurgence of it because it's a clean fuel, and the U.S. has identified that we need to rid ourselves of Middle East oil and bring it home," he says.

New efficiencies in CNG engines have led to better fuel economy - about 11 miles per gallon now compared to seven or eight, says Clare. In addition, the price of diesel equipment has spiked to the point where price differences between a CNG bus and a diesel or diesel-electric bus are lower than ever before, according to Clare.

The company will also be introducing its own CNG-hybrid engine for light- and medium-duty power generation under the Perkins name, which its engineers say can get up to double the mileage. In addition, Clare says Foton will be introducing an all-electric bus later this year.