AGENDA #5d

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

SUBJECT:       Biodiesel Use for the Town’s Vehicle, Heavy Equipment and Transit Bus Fleet

 

DATE:             January 13, 2003

 

 

This information report responds to the Council’s questions regarding the potential use of B-20 biodiesel as a fuel for the Town’s vehicles, heavy equipment and transit buses.

 

BACKGROUND

 

On February 12, 2001, the Town Council adopted a resolution authorizing the Mayor and/or the Town Manager to sign a Memorandum of Understanding between the United States Department of Energy, the Triangle J Council of Governments and various other agencies participating in the Triangle Clean Cities Coalition.  On March 19, 2001, the Town was represented at the Triangle Clean Cities designation ceremony in Raleigh.  At this ceremony, the Mayor signed the Clean Cities Coalition memorandum of understanding, thereby committing the Town of Chapel Hill to continuing participation in the Clean Cities program and to continuing our efforts to increase the use of alternative fuel vehicles.

 

The Town took the first step toward replacing some of its fleet with alternatively fueled vehicles in December 1998 when, at the direction of the Town Council, we applied for a Mobile Sources Emissions Reduction Grant.  Our grant application was successful and we began procurement of six vehicles and the associated refueling equipment.  We are now operating seven compressed natural gas (CNG) vehicles and two electric pickup trucks.  We have CNG refueling equipment installed at the Public Works Department and the Parks and Recreation Department. 

 

Our plans for future expanded use of alternative fuels include the increased use of biofuels such as E-85 ethanol and B-20 biodiesel, the addition of 2 to 4 compressed natural gas vehicles per year under the fleet replacement program and the inclusion of alternative fuel handling infrastructure in the planning for the new Municipal Operations Facilities to be located on Millhouse Road.  We will investigate the availability of grant funds for alternative fuel infrastructure projects and pursue any available grants for funding to support the construction of alternative fuel infrastructure at the new Municipal Operations Facilities.     

 

In fiscal year 2002-2003, biodiesel fuel became available for purchase via the State of North Carolina Division of Purchasing and Contracting.

 

 

DISCUSSION

 

Definition:  Biodiesel is a naturally oxygenated fuel produced from organic feed sources, such as soybeans, cooking oil and animal fats.  It is usually marketed as blended B-20, a mixture of 20% biodiesel and 80% regular diesel fuel.  It can be used in any diesel engine equipment, including transit buses, without vehicle modifications.   The attached “Biodiesel Fact Sheet”, prepared by the Triangle Clean Cities Coalition, provides additional general information on biodiesel as a motor fuel.

 

Availability:  B-20 biodiesel fuel (80% diesel & 20% biodiesel) is readily available to the Town via the State contract.   The cost of B-20 biodiesel ranges from $0.12 to $0.27 more per gallon than the market price of diesel fuel or kerosene fuel.

 

North Carolina Experience:  Data collected by the Clean Cities Coalition Program Coordinator shows that, for the 10-month period from November 2001 to September 2002, B-20 biodiesel consumption in North Carolina averaged 138,000 gallons per month.  The primary users of B-20 biodiesel fuel are NCDOT, City of Raleigh, City of Wilmington, Town of Garner, Town of Cary and the Town of Carrboro.

 

Logistic Considerations:  The logistic considerations of making a change to B-20 biodiesel are minimal.  There is no requirement to purchase new fuel handling equipment and no requirement to modify existing fuel handling equipment.  Based on reports from other North Carolina fleets that are already using biodiesel, we would anticipate no impact on fleet maintenance operations.

 

Benefits:  The primary benefit of the use of biodiesel is significantly lower emissions of particulate matter, carbon monoxide, toxic contaminants, sulfur dioxide, hydrocarbons, visible smoke and noxious odors compared to petroleum diesel.  Another benefit is the increased lubricity of the fuel, which should result in reduced engine wear and longer engine service life.  Biodiesel is produced domestically, reducing our dependence on foreign oil and supporting our domestic agricultural businesses.

 

Disadvantages:  B-20 biodiesel is more expensive than regular diesel fuel.  While market prices are constantly fluctuating, the cost difference over the past few months has ranged from $0.12 per gallon to $0.27 per gallon. 

 

While the use of B-20 biodiesel reduces most harmful emissions, it does increase nitrogen oxide emissions by about 1.2%.  Nitrogen oxide is one of the elements necessary for the production of ozone; therefore, the use of biodiesel will contribute to ozone production during the summer months.

 

Some engine manufacturers have included language in their warranties such as, “Engine failures that can be attributed to the use of biodiesel fuel will not be covered by the warranty.”  We view this as a low risk disadvantage for most vehicles because we can find no evidence of any such failures among the North Carolina fleets currently using B-20 biodiesel fuel.  We have less information about the use of biodiesel in transit bus fleets; therefore, until we have seen some examples of successful use of B-20 biodiesel in transit buses, we would categorize the risk to transit bus engines to be slightly higher than for other diesel engine vehicles.

 

Public Works Department Information:  The information below is specific to the potential uses of B-20 biodiesel as a fuel for the Town of Chapel Hill automotive fleet managed by the Public Works Department.

 

• The diesel fuel throughput at the Public Works refueling facility is about 150,000 gallons per year.  About 100,000 gallons (67%) are used for Town vehicles and about 50,000 gallons are sold to other tax exempt customers.

 

• The cost to the Town of converting to B-20 biodiesel would range from about $12,000 to $27,000 per year, for the Town vehicles and equipment that refuel at the Public Works Department fuel station.

 

• In fiscal year 2002-2003, we budgeted fuel cost at $0.95 per gallon. The average cost of diesel fuel for the first half of fiscal year 2002-2003 was about $0.81 per gallon.

 

Transportation Department Information:  The information below is specific to potential uses of B-20 biodiesel as a fuel for the Town of Chapel Hill bus fleet managed by the Transportation Department. 

 

·        The Transportation Department uses clear kerosene as a motor fuel.  The fuel throughput at the Transportation Department refueling facility is about 460,000 gallons per year.

 

• According to the National Renewable Energy Laboratory, the kerosene fuel that we are currently using in our transit bus fleet is a cleaner burning fuel than B-20 biodiesel; therefore, there are no air quality advantages to be gained by changing the transit bus fleet from clear kerosene to B-20 biodiesel. 

 

• The cost to the Town of converting the Transportation Department bus fleet from kerosene to B-20 biokerosene would range from about $55,200 to $124,200 per year.

 

• In fiscal year 2002-2003, we budgeted kerosene fuel cost at $1.00 per gallon.  The average cost of kerosene fuel for the first half of fiscal year 2002-2003 was about $0.92 per gallon.

 

External Fuel Customer Issues:  The Town is currently providing diesel fuel services to several external customers, including Orange County Landfill, Orange County Recycling, Orange County EMS, UNC Recycling and Carolina Air Care.  If we elect to make the transition from low sulfur diesel to B-20 biodiesel as the primary fuel for the Town’s heavy truck and equipment fleet, we should give our external customers at least 30 days notice of the change.  This time would allow them the opportunity to decide if biodiesel is acceptable for their use and if they are willing to pay the additional cost of biodiesel use.  For those who decide not to use this fuel, the 30-day notice should give them a reasonable amount of time to find another supplier of low sulfur diesel fuel.

 

                                                            CONCLUSIONS

 

We believe the use of biodiesel fuel in the Town’s fleet at this time would be consistent with the Town’s commitment to clean air and the increased use of alternative fuels in the region.

 

We believe that the greatest air quality benefits would be achieved by converting the Public Works diesel fuel tanks to B-20 biodiesel.  The kerosene fuel currently used by our transit bus fleet is a cleaner burning fuel than low sulfur diesel, achieving emissions reductions greater than or equal to B-20 biodiesel.   Conversion of the transit bus fleet from clear kerosene to B-20 biodiesel would not result in decreased harmful emissions and may actually slightly increase harmful emissions. 

 

Fuel prices during the first half of fiscal year 2002-2003 have been about $0.14 per gallon below the amount we budgeted for diesel fuel.  If this trend continues during the third quarter, we will have accumulated a surplus of about $10,500 in our fuel accounts.  This amount should be sufficient to cover the incremental cost of B-20 biodiesel fuel for the fourth quarter, allowing us to transition the Public Works fuel tanks to B-20 biodiesel without increasing the overall fuel budget for fiscal year 2002-2003.  At the end of the third quarter, we will evaluate the potential uses for this surplus including unanticipated costs for ice storm debris removal and to offset unanticipated revenue shortfalls.  If the fuel budget surplus is not needed to cover deficits in other areas, we would make the transition to B-20 biodiesel on about April 1, 2003. 

 

A letter of our intent to make this change will be sent to our diesel fuel customers at least 30 days prior to any transition.  In preparation for the fiscal year 2003-2004 budget and future years, we will present the Council with a standard fuel budget recommendation and an option that adds sufficient funds to cover the estimated cost of the use of B-20 biodiesel for the entire fiscal year. 

 

ATTACHMENT

 

1. Biodiesel Factsheet (p. 5).