ubcapPalmetto State Clean Fuels Coalition • SC Energy Office • SC Budget and Control BoardH SC's Hub for Advanced Vehicle Technologies

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Fifth Anniversary and Propane Road Show

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this issue

June 2009

Fifth Anniversary and Propane Road Show

Funding Opportunities, Federal and State Tax IncentivesHydrogen Conference, Staff Update

Federal Updates - National Fuel Economy Policy and GM Issues

The Palmetto State Clean Fuels Coalition recently celebrated its 5th anniversary by host-ing a propane vehicle road show event in con-junction with the SC Propane Gas Associa-tion and the Propane Education and Research Council. There were over 140 attendees at the Road Show, which was held in Columbia on March 18, 2009.

The road show highlighted propane-powered vehicles such as a school bus, police cruiser, and Ford F150, as well as a Dixie Chopper lawnmower.

This event was a clear success, drawing local

Propane Quick Facts:

Propane is a simple • hydrocarbon that is a by-product of refining oil and natural gas processing.The US is one of • the world’s largest producers of propane and has the largest storage capacity for propane in the world.Propane has the lowest • flammability range of any alternative fuel.Propane can reduce • operating costs by 30% or more when compared to gasoline or diesel.

Benefits of Propane:

Available tax incentives• Environmental benefits• Cost-savings• Reliability & • AvailabilityProven Fuel• Domestically produced • & Abundantly availableLow-cost infrastructure• Numerous vehicle • options

media attention and high profile speakers such as Lt. Governor Andre Bauer and State Senator Phil Leventis. Since the event, we have seen widespread interest in propane vehicle conversions and infrastructure instal-lations.

The PSCFC will continue to collaborate with the propane industry to expand propane transportation fuel options. For more infor-mation on propane vehicles and conversions, as well as incentives please visit the Propane Education and Research Council’s website at www.propanecouncil.org.

Blue Bird propane-powered school bus on display at the Propane Road Show.

Avoiding Ethanol-Related Problems for Boaters

Getting Involved, Calendar, Contact Information

Volume 9: Spring 2009

Most recently, the PSCFC has finalized materials as part of the Carolinas Blue Skies and Green Jobs application for the Clean Cities AOI4 grant, a partnership with North Carolina, in which the PSCFC will be requesting just under $5 million for alterna-tive fuel vehicle conversions and infrastruc-ture projects in South Carolina with a total investment of $15.9 million dollars. Projects include propane, CNG, biodiesel, ethanol, electric and hybrid vehicles and infrastruc-ture. This would cover 6 of the 7 areas that are up for non-attainment in SC (among other counties widely dispersed throughout the state). The grant request from both states together totaled nearly $15 million dollars.

Project partners included Anderson County, Blossman Propane, City of Greenville, City of Rock Hill, Furman University, M&M Oil & Propane, Midlands Biofuels, OM Biofuels, Palmetto Gas, Plug-In Carolina, Richland County Fleet, City of Spartanburg, Spinx Company, University of South Carolina, South Carolina Energy Office and DHEC.

The 2nd round of applications for funding under AOI4 grant is due September 30, 2009. PSCFC will be submitting an application for this round of funding to include those stakeholders who were unable to participate during in the first application.

Funding Opportunity Applications New Federal Tax Incentives

Plug-in Electric Drive Vehicle Credit For businesses and individuals buying electric

vehicles, the act simplifies and expands the avail-able tax credits. If the qualified vehicle draws propulsion from a battery with at least 5 kilowatt hours of capacity, the credit is increased by $417, plus another $417 for each kilowatt hour of bat-tery capacity in excess of 5 kilowatt hours up to 16 kilowatt hours. Taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter in which the manufacturer records its 200,000th sale of a plug-in electric drive vehicle. The credit is reduced in following calendar quarters. The credit is allowed against the alterna-tive minimum tax (AMT). The bill also restores and updates the electric vehicle credit for plug-in electric vehicles that would not otherwise qualify for the larger plug-in electric drive vehicle credit and provides a tax credit for plug-in electric drive conversion kits. See pages 50-68 of the act, as well as PDF pages 138-141 of the joint explanatory statement of the conference committee.

Tax Credits for Alternative Refueling Property The alternative refueling property credit provides

a tax credit to businesses (e.g., gas stations) that in-stall alternative fuel pumps, such as fuel pumps that dispense E85 fuel, electricity, hydrogen, propane, and natural gas. For 2009 and 2010, the bill would increase the 30% alternative refueling property credit for businesses (capped at $30,000) to 50% (capped at $50,000). Hydrogen refueling pumps would remain at a 30% credit percentage; how-ever, the cap for hydrogen refueling pumps will be increased to $200,000. In addition, the bill would increase the 30% alternative refueling property credit for individuals (capped at $1,000) to 50% (capped at $2,000).

New State Tax Incentives

Beginning July 1, 2009, a $0.05 incentive pay-ment is available to E85 retailers for each gallon of E85 fuel sold, provided that the E85 fuel is subject to the South Carolina motor fuel tax. Additionally, a $0.25 incentive payment is available to biodiesel retailers for each gallon of pure biodiesel (B100) sold, provided that the resulting blends contain at least 2% biodiesel (B2). These incentives apply only to fuel sold before July 1, 2012. Biodiesel fuel is de-fined as a fuel for motor vehicle diesel engines com-prised of vegetable oils or animal fats and meeting ASTM specifications D6751 or D975. (Reference South Carolina Code of Laws 12-63-20)

More information on available biofuel tax incen-tives can be found on the PSCFC website at www.palmettocleanfuels.org. 2

Current Solicitation Notifications

Solicitation: DE-FOA-0000096 on www.grants.gov entitled “Demonstration of •Biorefinery Operations” Estimated total program funding $480 million. Requires letter of intent to apply by May 29, 2009. Application due June 30, 2009. Notice of Intent to Issue Funding Opportunity Announcement (FOA) #TBD •entitled “Recovery Act Funding for Expansion of Infrastructure for Ethanol Blends” This will provide funding for refueling infrastructure and education and outreach for ethanol blends. Notice of Intent to Issue Funding Opportunity Announcement (FOA) #TBD •entitled “Recovery Act Funding of Development of Algal Biofuels and Advanced Fungible Biofuels through Consortiums” This will fund R&D for algal biofuels and advanced fungible biofuels.Solicitation: DE-PS26-09NT01236-00 “Clean Cities FY09 Petroleum Reduction, •Area of Interest 4” This provides funding for alternative vehicle conver-sions and infrastructure. Minimum funding $5 million, maximum fund-ing $15 million. This requires 50% match. Round 2 applications due September 30, 2009 pending remaining funds.

Alternative Fuel County Number of Vehicles

RefuelingInfrastructure

Propane

Heavy Duty HybridCompressed Natural GasE-85

E-85 & B-20

B-20Electric

Anderson, Greenville, Richland, Charleston, SumterPickens

YorkAnderson, Greenville, Lexington, Oconee, Orangeburg, Richland, SpartanburgAnderson, Greenville, Greenwood, Spartanburg, YorkFairfield, CharlestonCharleston, Greenville

353

1

5

8

116

11

232

director of the South Carolina Hydrogen and Fuel Cell Alli-ance Dr. Shannon Baxter-Clemmons, “South Carolina has a dynamic hydrogen community and the knowledge neces-sary to be a leader

in the hydrogen economy.” She also argues that “hydrogen and fuel cells are a stra-tegic investment in South Carolina to create jobs in the short term and provide a structure for green growth in future years.”

As part of the weeklong hydrogen festivities, the PSCFC joined others from around the state in celebrating the grand openings of South Carolina’s first two hydrogen refueling stations located in Columbia and Aiken, which connect along US Interstate 20 to form the “South Carolina Hydrogen Freeway.” This will connect two major hydrogen research hubs of the state, the University of South Carolina and the Savannah River National Laboratory.

During the next year, Columbia will host a hydrogen hybrid bus that will be used and tested on routes for the University of South Carolina and the Central Midlands Regional Transit Authority.

For more information about the South Carolina Hydrogen and Fuel Cell Alliance, please visit their website at www.SCHydrogen.org .

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Hydrogen Conference and Refueling Station OpeningsColumbia, South Carolina hosted the National Hydrogen Conference

and Expo from March 30-April 3, 2009. This event attracted more than 1,000 researchers, manufacturers and government and business leaders. Speakers at the conference included officials from the U.S. DOE, Office of Naval Research, and Honda among others. During the conference, the PSCFC sponsored an informational booth and contributed to the Ride and Drive event featuring the Honda Clarity and hydrogen-powered Segways.

The conference yielded more than a dozen direct leads to companies interested in working with and within South Carolina. According to the

PSCFC Welcomes New Co-Coordinator,

Amy Lawrence

The Hydrogen Refueling Station on Richland Street in Columbia, S.C.

The PSCFC would like to welcome its newest staff member, Amy Lawrence. Lawrence has worked at the South Carolina Energy Office as a policy analyst since October 2008. She is a na-tive of Greenwood, SC and holds a B.A in Economics and Spanish from Wofford College, as well as, an MPA in Public Policy from the University of Georgia. According to Amy, she is excited to finally put her love for cars to good-use--“I have always loved learn-ing about the latest and greatest technology. Now, I can merge that with my love of cars and work for positive change in South Carolina.” Amy will be attending the Clean Cities Coordinator 101 course and Eastern States Peer exchange in Pittsburgh during June to learn more about the organization and garner information on strengthening the Palmetto State’s role in advanced vehicle technologies. Please feel free to contact Amy for any assistance regarding the PSCFC at alawrence@energy.sc.gov.

Recent EPA initiatives aimed at improving air and overall environmental quality have lead to the use of ethanol as an oxygenate additive blended with gasoline, instead of the traditional Methyl Tertiary-Butyl Ether (MTBE). MBTE has links to cancer and easily leaks into groundwater aquifers. Ethanol-blend fuels are described by the percentage of alcohol in the blend. “E-10” which is 10 % ethanol is the current EPA mandated motor fuel blend maximum. E-85 (85% alcohol) is an alternative fuel and can be used in flex fuel vehicles, but should not be used in your boat.

E-10 is now common at gas stations and marinas, with some states mandating this blend level. While this fuel is fine for your modern automobile, it can cause numerous boating headaches when it sits in your boat tank. Boat Owners Association of the United States offers the following solutions to common ethanol boating problems.Problem: E-10, like all alcohols is a powerful solvent and will clean residues off fuel tank walls, potentially clogging fuel filters.Solution: This problem should disappear after 2-3 tanks of fuel. In the meantime, be ready to change fuel filters more often and carry spare 10-micron filters, as well as, a galvanized bucket to safely store the used

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Boating “No-No’s”

Don’t drain fuel tanks of •ethanol. This is not practical and is potentially dangerous.Don’t plug a fuel tank to •prevent moist air from entering. Without room for expansion, pressure could rupture fuel system components.Don’t install a water separator •thinking it will prevent phase separation. Ethanol readily absorbs water, which will burn safely. But, if ethanol-blended gasoline becomes saturated, the engine won’t run on the “water-soaked” ethanol solution, which sinks to the bottom.Do not use E-85 in any boat.•

More information on this can be found at www.boatus.com

filters until proper disposal.Problem: Not all fuel hoses are compatible with ethanol.Solution: Make sure hoses are marked J-1527.Problem: Ethanol chemically reacts with fiberglass fuel tanks, which can cause them to deteriorate and potentially fail. Fiberglass tanks most likely to react were built before the mid 80’s.Solution: Many manufacturers can certify if the fiberglass gas tank can withstand ethanol. Also, replacing the tank with another material such as aluminum, stainless steel or polyethylene tanks provides a solution.Problem: Ethanol can phase separate, or form two separate solutions in the gas tank over a long period of time because ethanol attracts greater amounts of water. This can cause the engine not to run.Solution: Fuel stabilizer does not prevent phase separation. The only immediate solution is to drain the tank and refill with fresh gasoline. Problems with phase separation are rare and most likely occur when the boat is idle for long periods of time and the tank is partially filled. The best practical recommendation is to fill the tank to 95% full, leaving room for expansion. Topping off the gas tanks between outings may reduce condensation.

Fishing for AnswersBoating and Ethanol Issues

In May, President Barack Obama announced a new national policy aimed at increasing the fuel economy and reducing the greenhouse gas emissions of all vehicles sold in the U.S. The new standards will exceed the requirements of the Energy Independence and Security Act of 2007, which required an average fuel economy of 35 mpg by model year 2020. Obama’s plan is set to achieve an average fuel economy of 35.5 mpg for model year 2016.

The standards will also reduce carbon dioxide emissions from new vehicles by 30% by 2016. Over the lifetime of these new vehicles, they will save an estimated 1.8 billion barrels of oil and will avoid the emission of 900 million metric tons of carbon dioxide.

The groundbreaking policy represents an unprecedented collaboration among the U.S. Department of Transportation (DOT), the U.S. Environmental Protection Agency (EPA), 10 of the world’s largest auto manufacturers, the United Auto Workers (UAW), leaders in the environmental community, the State of California, and other state governments. Meanwhile, 10 major car companies and the UAW have embraced the national program because it provides certainty and predictability to 2016 and includes flexibilities that will significantly reduce the cost of compliance.

To put the new policy in place, the EPA and DOT intend to initiate a joint rulemaking for new vehicle standards. The proposed standards are

Obama Announces a Comprehensive National Fuel Economy Policy

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expected to be divided into categories of vehicles, based on the size of the vehicles, and they are expected to include a variety of measures to allow flexibility in meeting the standards, including credits earned for actions such as implementing advanced air conditioning technologies and using additional technologies that reduce carbon dioxide emissions. Such credits would be tradable among the auto manufacturers.

General Motors declared bankruptcy and as part of the company's restructuring, it plans to revive one of its idled U.S. factories for the production of a future small car. The new small car will add to a group of small and fuel-efficient vehicles that the company is planning to roll out in the near future, including the Chevrolet Cruze and GM's plug-in hybrid vehicle, the Chevy Volt. The retooled plant will be capable of building 160,000 cars annually, including both small and compact vehicles, but GM has not yet decided which of its manufacturing plants will be retooled.

The White House characterized the GM restructuring as a shift toward a new leaner, greener GM, which will aim to break even with annual sales of 10 million cars. GM previously had to sell more than 16 million vehicles per year to break even. President Obama declared that the restructuring "will mark the end of an old GM, and the beginning of a new GM; a new GM that can produce the high-quality, safe, and fuel-efficient cars of tomorrow; that can lead America towards an energy independent future; and that is once more a symbol of America's success."

Restructured GM to Build a New Small Car in the U.S.

The Chevy Volt pictured above will be released in 2010.

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About the Palmetto State Clean Fuels Coalition

The Palmetto State Clean Fuels Coalition (PSCFC) is part of the U.S. DOE Clean Cities program and is one of approximately 90 designated coalitions in the United States. The Department of Energy approved the application for PSCFC's designation in 2004, recognizing the commitment of our stakeholders to building an alternative fuels market in South Carolina. We have just completed our 5 year redesignation process and look forward to another great five years.

The PSCFC is dedicated to promoting alternative fuels, fuel blends, advanced vehicles, hybrid vehicles, fuel economy, and idle reduction. As a Clean Cities organization, the PSCFC strives to advance the nation's economic, environmental, and energy security by supporting local decisions to adopt practices that contribute to the reduction of petroleum consumption.

Contact Us

Amy LawrenceClean Cities Co-Coordinatoralawrence@energy.sc.gov

Erika H. MyersClean Cities Co-Coordinatoremyers@energy.sc.gov

South Carolina Energy Office1200 Senate Street408 Wade Hampton BuildingColumbia, SC 29201(803) 737-8030 (office)(803) 737-9846 (fax)

SC Energy Office www.energy.sc.gov US Department of Energy www.energy.gov/recovery PSCFC www.palmettocleanfuels.org

Upcoming Events

June 23-25Clean Cities 2009 Eastern States Coordinator Peer ExchangePittsburgh, PA

August 22-24Clean Cities Regional MeetingPittsburgh, PA

August 11-13SE Bioenergy ConferenceTifton, GAwww.sebioenergy.org

September 1Green is Good for Business ConferenceColumbia Metropolitan Convention CenterColumbia, SCFor more information, call (803) 545-2722 or email cpac@columbiasc.net

November 2-5Clean Cities Coordinator Leadership RetreatGatlinburg, TN

Getting Involved with our OrganizationBecoming a stakeholder in the Palmetto State Clean Fuels Coalition is very simple. Membership

in this organization is free and will include email updates on grant opportunities, educational outreach, and promotion of your organization on our website which lists stakeholders (www.palmettocleanfuels.org/). Stakeholders are asked to complete a copy of our Memorandum of Understanding which can be found on our website. To join our listserve, please email Amy Lawrence at alawrence@energy.sc.gov with your contact information.

Fueling ChangeWe're On the Road to Cleaner Air