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Talking Freight

Freight Planning: Impacts on Air Quality and Greenhouse Gas Emissions

June 18, 2008 Talking Freight Transcript

Presentation

Jennifer Symoun:
Good afternoon or good morning to those of you to the West. Welcome to the Talking Freight Seminar Series. My name is Jennifer Symoun and I will moderate today's seminar. Today's topic is Freight Planning: Impacts on Air Quality and Greenhouse Gas Emissions. Please be advised that today's seminar is being recorded.

Today we'll have three presenters, Anthony Erb of the US Environmental Protection Agency who is filling in for Cheryl Bynum who was no longer able to present due to a last minute emergency, Greg Nadeau of the Maine Department of Transportation, and Sarah Flagg of the Port of Seattle.

Anthony Erb has worked at the US Environmental Protection Agency for over 25 years. He holds a Bachelor of Science degree in Conservation and Resource Development and a Masters degree in Engineering Management. Over the years Anthony's work at the EPA has involved the development and implementation of numerous air pollution control programs related to emissions from mobile sources. Anthony currently works in the SmartWay Transport Partnership focusing on technology performance matters related to fuel efficiency and emission reduction in the freight transportation industry and is the primary lead for the rail sector.

Greg Nadeau is the MaineDOT Deputy Commissioner for Policy, Planning & Communications. He served as a member of the Maine House of Representations from 1978 -1990 and served as Senior Policy Advisor to Governor Angus King of Maine from 1995 to 2002. Greg joined MaineDOT in 2002, and was named Deputy Commissioner in 2003 under Governor John Baldacci's Administration. He served as Governor King's liaison with the New England Governors / Eastern Canadian Premiers Conference, and continued that role under Governor Baldacci. Greg currently serves as Co-Chair of the NEG/ECP's Transportation and Air Quality Standing Committee and serves on the AASHTO Authorization Steering Committee, the Finance and Funding Legislative Team and Chair of its Freight Modal Funding Sub-Group.

Sarah Flagg is an Environmental Management Specialist with the Port of Seattle Seaport Environmental Programs, where she specializes in air quality and sustainability. Sarah holds a B.A. in Environmental Planning and Policy from Western Washington University and an M.A. in Policy Studies from the University of Washington. This fall she will begin an MBA in Sustainable Business at Bainbridge Graduate Institute.

I'd now like to go over a few logistical details prior to starting the seminar. Today's seminar will last 90 minutes, with 60 minutes allocated for the speakers, and the final 30 minutes for audience Question and Answer. If during the presentations you think of a question, you can type it into the smaller text box underneath the chat area on the lower right side of your screen. Please make sure you are typing in the thin text box and not the large white area. Please also make sure you send your question to "Everyone" and indicate which presenter your question is for. Presenters will be unable to answer your questions during their presentations, but I will start off the question and answer session with the questions typed into the chat box. Once we get through all of the questions that have been typed in, the Operator will give you instructions on how to ask a question over the phone. If you think of a question after the seminar, you can send it to the presenters directly, or I encourage you to use the Freight Planning LISTSERV. The LISTSERV is an email list and is a great forum for the distribution of information and a place where you can post questions to find out what other subscribers have learned in the area of Freight Planning. If you have not already joined the LISTSERV, the web address at which you can register is provided on the slide on your screen.

Finally, I would like to remind you that this session is being recorded. A file containing the audio and the visual portion of this seminar will be posted to the Talking Freight Web site within the next week. We encourage you to direct others in your office that may have not been able to attend this seminar to access the recorded seminar.

The PowerPoint presentations used during the seminar are available for download from the file download box in the lower right corner of your screen. The presentations will also be available online within the next week. I will notify all attendees of the availability of the PowerPoints, the recording, and a transcript of this seminar.

We're now going to go ahead and get started. Today's topic, for those of you who just joined us, is Freight Planning: Impacts on Air Quality and Greenhouse Gas Emissions. Our first presentation will be given by Anthony Erb of the US Environmental Protection Agency. As a reminder, if you have questions during the presentation please type them into the chat box and they will be answered in the last 30 minutes of the seminar.

Anthony Erb:
We'll start out with the slide on the greenhouse gas emission inventory which is slide two. So if we go to that, it provides basic information on greenhouse gas inventory for the U.S., and we're looking at U.S. contributions being 7,261,000,000 metric tons. Of that, roughly 28% or 2,014,000,000 metric tons are coming from the transportation sector which is what I'm going to focus on today. The left hand side pie chart shows the transportation sector. The right hand table shows the sources within the transportation sector and where the greenhouse gases on the right side are coming from. As you can see, roughly 59.5% are coming from light-duty trucks and passenger cars. We also have a significant contribution from freight trucks of 19%. So what we're seeing from the transportation sector is primarily from light-duty trucks, freight trucks or passenger cars. Today I'm going to focus on the contribution we're seeing from the freight trucks.

So we'll move on to the next slide -these are the regulatory efforts EPA has undertaken in heavy highway diesel emission standards, and as you can see in 1990, we were at a PM level of 0.60 zero grams per brake horsepower-hour (g/bhp-hr) and NOx of 6 g/bhp-hr. If we look at the phase period for the new standards, in 2007 PM is reduced to 0.01 and in 2010 the NOx standard is reduced to 0.20. So the standards have ratcheted down significantly in terms of their regulatory requirements for new emission standards. But you know, diesel engines last a long time so that's why we've implemented some voluntary programs that will also focus on reducing emissions from the existing fleet. Another issue we have relates to highway vehicle miles traveled. If we look at the 1950, we were at half a trillion miles traveled on our highways, in 2000 we are up to 3 trillion miles. So the increase there is significant to say the least. Regarding ton miles of freight, if we compare 1980 to 2001, we have significantly increased freight ton miles - going from 100 billion ton miles in 1980 to 200 billion ton-miles in 2001. Essentially, it's doubled over this period of time.

Now, regarding the voluntary efforts EPA is undertaking to focus on these issues. We have formed a number of clean diesel partnerships including, marine, ports, non-road construction, school buses, the freight industry as well as agriculture. Each one of these programs is set up to provide for voluntary adoption of technologies that reduce emissions of both CO2 and the primary pollutants that we're concerned with. The goal of all these programs is essentially to reduce emissions from the 11 million engines that are in use out there. You can see various logos we have for the SmartWay Transport Partnership, Clean Port U.S.A., as well as the School Bus Program on our website. I'm going to focus on SmartWay, the other programs are similar to SmartWay. SmartWay is set up to provide information on the cleanest and most efficient transportation options for the transport industry. We have a website for passenger vehicles for somebody who is interested in finding out which passenger vehicles are going to be the cleanest and most efficient. For commercial vehicles, SmartWay Class 8 (tractors-trailers), we have a designation as a SmartWay tractor-trailer, that basically is the best of the best that the companies can provide in terms of efficiency and lowest emissions. As far as our partnership goes, when the SmartWay Transport Partnership is joined, there's a commitment to conserve fuel and reduce emissions in the transport sector by the partners and especially the carriers who transport the freight we're looking at.

A little bit of background on SmartWay, it's free to join and companies of any size can join. We have some partners that only have one truck and we have some that have thousands of trucks. SmartWay companies join and commit to improve fuel efficiency over a three-year period and shipping companies joining as well. Anyone that ships goods commits to ship 50% or more of their product with SmartWay-designated trucking partners and to improve over a three-year period. So what we're trying to do with the SmartWay program is to reduce emissions from the freight industry voluntarily. And what we're finding is that as the price of fuel goes up, it's a much easier sell. It was an easy sell from the beginning , EPA folks were coming from the government and rather than setting up programs that were costing them money, we were setting up a program that would save them money so the buy-in was pretty quick.

We also try to accelerate technology implementation into the field. The way we do that is to provide information to the industry via the web and at industry events showing the advantage of these technologies. Also the shipper relationships reward high-performing fleets. A shipper can look on our website and get an idea of how well each company performs. If they want to go with the most efficient company to reduce their environmental footprint, they're able to go to our website and nationally select the ones with the highest scores. Therefore, in their shipping mode they're as efficient as they can be. We've also promoted dealer networks so that folks can get equipment easily, find sources for this equipment. On the funding side, there are some listed on the slide here that can be accessed for emission technologies and they're all included in the websites that we've set up for our sectors. We've provided access to capital via a finance center which is a pretty slick operation and I'll discuss that in a little bit. Benefits for the partners, better info about their transportation footprint and how they cab reduce it. We're finding a lot of companies are in the green mode and want to go as far as they can with this. They demonstrate good corporate citizenship, hiring the environmentally-minded carriers and that's important for us because for somebody that's in SmartWay, they'll have more business directed to them and so overall the environment is the benefit is enhanced.

And for the carriers, it's pretty straightforward that if they're going to use less fuel, they're going to save money. We provide a method for them to track fuel consumption as well as emissions and they can do a cost benefit analysis using tools on our website. This covers rail and truck fleets so the programs we've set up are going to apply to rail as well. We're a little bit behind on the rail compared to where we are on the truck sector, but we're picking up speed. We have affiliates and provide them to access with tools for marketing and outreach to get the SmartWay word out. Truck stops that are set up for no idling zones and truck stop electrification, we promote them as well. We recognize them in the public sector for providing this information.

I talked a little bit this earlier. It's our freight logistics and environmental energy tracking fleet model. This is as way for a company to look at what they're doing to their fleet and calculate their CO2, NOx and PM emissions and effective of strategies to reduce their footprint and estimate cost savings. Shippers can track the percentage of freight shipped with SmartWay Partners and measure their environmental footprint based on the selection of partners who are the best of the best. Regarding benefits for the environment, I think most folks are familiar with these, health impacts are lessened, air quality is improved and our vulnerable populations, you know, the children, the elderly with existing health conditions that are most affected by the pollution -- it lessens the impact on them as well. And an interesting fact is that for every gallon of diesel fuel is going to produce 22.2 pounds of CO2, so in terms of global warming and climate change, there's significant impact there. And last but not least to improve our energy security, fuel prices as we've all seen have grown up dramatically in the last few months. Regarding the availability of fuel, we still have it available. But it's at a high price and I guess at some point in the future, availability is going to be more of an issue.

Right now, SmartWay has 882 partners, and this is the list that of the folks that we have included. On the right column you've seen the gallons of fuel we project to save a year. Currently based on our commitments, co 2 is basically a reflection that have fuel. And then the NoX savings as well as the pm reduced on a per-year basis from the commitments we have. So we're on the path to what our goals are in SmartWay but we've got further to go for sure. So each year we're doing our best to improve that.

Obviously looking at intermodal shipments and rail shipments is going to save quite a bit of fuel based on the efficiency of the rail sector. Shipping with full truckloads and then idle-reduction policies at modal facilities can significantly reduce the fuel that's burned and more and more you're seeing no idling zones set up in various aspects of transportation sector. These are types of carrier strategies for trucks and locomotives. You know, idle reduction, you know, you can put on a -- an auxiliary power unit to provide heat and cooling. You can put on a heating unit that'll provide you essentially heating in the winter time. We have improved aerodynamics for tractors and trailers, low resistance tires, and speed management and I won't go through the list completely but all the way down to hybrid technology so these are all strategies that are being promoted within the SmartWay sector and essentially you can make significant reductions in your fuel use. And somebody that's using a number of these strategies, 10% to 20% and fuel consumption reduction would be possible.

Under the SmartWay technology program, we've done testing, and we're looking at modeling to quantify technologies. We've actually published a number of SAE papers to show efficiency gains that we did with low resistance tires and aerodynamic improvements as well as idling reduction. Regarding idle reduction equipment not too distant future will be we'll be setting up a testing program that will evaluate idling technologies, and give the manufacturers the opportunity to evaluate the performance of their individual products with the program we're establishing with Texas A&M Research Foundation. Regarding emission control technologies, EPA's voluntary diesel retrofit program has been around for a while and they're evaluating these control technologies because a lot of times folks will come up with something that they've had a number of testimonials on. But the idea behind the test protocols that we have for technologies provides a level playing field to really get the results that you need to judge these technologies fairly. We have some SmartWay tractors and trailers that are designated based on the way they're built and engine emissions as well as aerodynamic features that can be qualified that we have evaluated but not completely. But we're going to be setting up a test program to do more evaluation in the not too distant future, probably starting this summer.

Reducing unnecessary truck idling and rail idling. We've got a paper out there that provides guidance to states to implement an idle reduction project, and a model state on reduction law to provide consistency across the states. Because, if one of these guys is going from one state to the next, it'd be nice if the law is the same versus, you know, if different aspects of it are adopted it would be just too hard to follow for one individual trucker going through all the 50 states. So we've provided that, and I think in general that that's the guideline most states are using. And relative to funding for truck stops electrifications and auxillary power units. We've issued some grants and we have 86 projects nationwide that are currently underway. This is something we provide to show that technology pays for itself. It's very simple. We have a calculator tool on our website that would help folks out with that. But as you can see, on a ton-mile basis, technology actually saves these guys money.

Our finance center (available on our website) , we've set this up, you can't really read this (too small on the slide). But it's a simple process for somebody to obtain a loan. We had the information out there on the technologies but actually trying to find financing for these folks sometimes it was difficult. So that was standing in the way of implementation. So we recently spent some time and set up a finance website to do this. We have other opportunities for financing as well that we've promoted in the past. There are various lenders out there. And we try to provide information to give the freight companies the opportunity to have easier access to this financing if it's an issue.

We have a SmartWay truck, I talked about that earlier, a tractor and trailer and essentially it's got to be the latest and greatest with the 20007 emissions package, low rolling-resistance tires and again, 10% to 20% fuel savings is what we're featuring here along with lowered emissions. We do provide information on our website on which SmartWay trucks are available.

Promotion, we have a number of publications out there and various magazines. And we're just going to start over a new SmartWay Leaf program which hopefully you'll be seeing on the TV soon. It promotes SmartWay. There are tractor makers that bought into the SmartWay program as well as trailer manufacturers. We did a review of how their specifications, how they're built, essentially to qualify as SmartWay trucks. So far we've had good response from them, not every truck is going to be SmartWay truck and the manufacturers understand that. Again, this is EPA's website for passenger vehicles. Check out the green guide, SmartWay Certified and SmartWay Elite, two different classifications in SmartWay, different categories that folks can look at as far as being efficient and having low emissions.

Believe it or not, we are going to have a SmartWay NASCAR out there that should be pretty neat. We had a Trick My Truck show episode with the Chrome Shop Mafia and they did produce a SmartWay truck and retrofit an older truck with SmartWay components and that was well-received. And, you know, we have our website that provides all the information on what we're doing with SmartWay. PSA campaign, you'll see a number of these out there. The rail folks are getting more active as well. Truck haulers are more active, and we're trying to do the best we can to get the word out on the SmartWay program. ATA, the American Trucking Association, announced an initiative in May 8, 2008 and a number of goals they have set out. You know, they're putting up some big numbers as far as what they'd like to do over the next 10 years. One of their recommendations is that actually to join SmartWay and we were pretty pleased to see that and again, there's a website here for more information on that.

Getting close to the end. We're talking about green supply chain. It includes intermodal use of rail. And the next slide will go in a little more detail about everything that's essentially in a SmartWay supply chain model concept so people would be able to track their emissions all the way through. We start out, we have the ships, port, border trucks, rail, air travel, all the various aspects of how goods can be transported from one place to the next. And we want to get the entire footprint so somebody would be able to evaluate how efficient they're being in all modes of their transportation. We have an after four years 882 SmartWay partners, committed to save, significant amounts of fuel. We're looking at tons of CO2 and NOx and PM as well and we have goals in SmartWay to streamline carrier tools so it's easier for them to figure out, how effective they're being. The test protocol we've established for trucks, we have a draft out there that will look at the efficiency of various trucks and provide a way to evaluate technologies on a level playing field. We will launch a new PSA to promote SmartWay and collaborate with stakeholders to evolve SmartWay in ways that add the most value for all our partners -trucking companies, shippers, states, and the general public.

Again, I'm Anthony Erb and I'm presenting this for Cheryl Bynum. Her information there is on the slide, and I can give my information over the phone if that's useful to folks. I'm at 202-343-9259, and my e-mail is erb.anthony@epa.gov. That's the end of the presentation for me and we can have some questions at the end as time allows.

J. Symoun:
Thank you, Anthony. We do have some questions typed in there, and we'll get to those after the other presentations. Our next presentation will be by Greg Nadeau of the Maine Department of Transportation.

Greg Nadeau:
I'm going to discuss sort of a policy overview, if you will, with regard to freight issues, both regional, state and national. And I've actually been presenting a talk, really principally around the New England northeast region to rail and shipper groups. So the emphasis for the most part is sort of rail oriented. But I'll expand that in a minute. But the theme of the talk has been the transportation trifecta and the link of global preparedness and clean air. Actually do know how that got in there. I don't miss an opportunity to remind people that Maine is in New England and New England are Red Sox fans. My apologies to my Yankees' fans. I meant to replace this with the Boston Celtics logo in honor of our great victory last night.

I'll move on, in each dollar invested in improving the efficiency of freight transportation, you impact the global competitiveness of those industries and businesses that depends on transportation to be competitive. We have the significant potential to reduce greenhouse gas emissions as was just discussed at length, like the impact of green gas house emissions and co 2 on climate change. And shifting significant amount of freight off of our highway and bridges on to options like freight rail or marine options will lead to improving the condition of our highways and bridges and given the constraints of DOTs to find the highway and bridge system, that's going to become more and more important.

With respect to global competitiveness, our competitors, China as one of the biggest and principal example, 10.5% of their annual GDP growth is devoted to transportation through 2002 and 2006. China will invest 9%. I'm sorry, that's the annual growth rate between 2002 and 2006. Of that growth, they're planning on investing 9% of their total GDP to infrastructure through 2011. 52,000-mile national expressway system is going to be complete by 2020, that 41% number is actually higher now. They're planning 18 major intermodal rail yards for construction in that period as well and they're well underway. With respect to air quality, climate change will be a central policy focus in the next federal station act in 2009. I think that evidence already exists. California and the northeastern states are really leading the nation in policy development to reduce green gas house emissions from the energy and transstation sectors, and I'll tell you how year's participating in that a little bit later.

With respect to highway and bridge president aggravations, 85% of all freight tonnage is moved by trucks in Maine down from 9% in 2002. Maine alone is looking at a shortfall of $3 billion just to add and maintain our current highway and bridge infrastructure and invest in basic strategic investments over the next 10 years. According to federal highway or it may be federal highway, the national revenue commission, ash to, there's a number of groups projecting an increase in freight in the next two years. We have got to get more freight off the roads and on to rail or marine options. An ounce of prevention is worth a pound of cure when it comes to this.

What's driving this? We talked about the growth that everyone is projecting in freight over the next 20 years. There's four major drivers that they discussed with respect to what's driving this freight demand. First, consumption, the U.S. population reached 300 million in 2006 and will reach 380 million by 2035. This population growth will drive more demand for goods driving the demand for more freight train transportation. The second is production. Investment in technology and improvements in manufacturing processes will increase manufacturing output and generate demand for freight transportation. These are sort of fundamental economic principles. The third is international trade. Trade grew very slowly between the 1800s and 1960s but if you look at recent trend in terms of GDP? A. We've projected 30% by 2015 and 60% by 2030. So this is clearly going to intensify the flow of goods through our international gateways and around the country and employ a tremendous amount of pressure on our transportation system. Most businesses have moved or are moving to pool the on-demand chains so that has converted transportation system to a system of rolling warehouses. It's good for business, it's good for business but it has increased tremendously the pressure on the transportation system.

Rail is becoming increasingly important in the -- in addressing the kind of pressure that this increased freight movement and goods movement is going to have on our national system. But it sorely needs some attention. I want to use an example of what we're doing in Maine to, if you will, take advantage of the capacity that exists on the rail system. A consequence of the birth of the interstate system 50-plus years ago now was the demise of much of our freight system, much of our freight rail infrastructure. So 50 years later we find ourselves in a position of having to rebuild a lot of that infrastructure we lost over the years because one of mobility solutions, particularly in the congested northeast and elsewhere in the country is to try and exploit capacity that is under utilized to solve some of our congestion issues on our major -- particularly in the interstate system and our major mega regions and metropolitan areas. So what we've done in Maine, we've got a program called the freight rail improvement program. It's relatively new and our first project was something called Danville junction. And a $5 million joint investment we know two of our regional railroads, in this case the PanAm railways and the St. Lawrence. It grew 68% in four years from 14,000 carloads in 2002 to 21,000 carloads in 2005. You can tell by the dates, that was before the big spike in energy costs and fuel costs as I think was referred to earlier that that increase fuel cost is going to be driving shippers to find alternative ways to move their products in. And freight rail is capacity exists today. And it resulted in the public wait time at great crossings. It was bringing about increased noise and air pollution and increased transit time for main shippers because of the bottleneck. So these projects will realign interchange to make the mobility in that particular area not only easier by the local residents impacted by the switching but easier for the railroads to put their trains together so the outcome is basically reduce public wait time and increase safety. And reduce noise and air pollution and reduce transit time for shippers for up to days which is big money if you're moving a train load of paper and Maine still has a significant paper industry that we depend on as an economic engine.

The other project is the industrial rail system, IRAP, we put an investment who is half a million dollars to the shippers who want to reconnect to rail. It's all designed to incentivize shippers. The freight that doesn't have to be on the road shouldn't be on the road. So this program essentially our criteria are do you remove trucks from the road? And do you have a job impact? And that's kind of -- when we score these requests on a competitive basis, that's the criteria that matters the most and that's what achieves the highest score and gets the grant. So every dollar that we spend in public dollar we leverage it all through private investment. Using those two innovative programs we think as an example, what who can make this kind of investment happen? It's the state government, it's the Federal Government. In our Kay the Canadian Federal Government and provinces, we have extensive relationships and joint ventures given our location with these board of provinces which will be more relevant when I get to the second half of my presentation. But mainly because the freight system is so dependent on private operators and private corporate owners, we have to establish significant partnerships with railroads and shippers and retailers and manufacturers of the entire supply chain because much of the alternative freight transportation is privately owned and unlike much of the rest of the transportation system, we don't have a state DOTs or public transportation agencies the same level of control that we would otherwise.

With respect to the Federal Government, it's a new mindset and this is a conversation we often have with my private sector friends who in answer to the question what can government do to help you move freight, moving in a more efficient manner, you know, the typical traditional answer has been to get out of their way. We don't need the Federal Government in this case to get out of the way. We need them to get on board. The Federal Government funding for intermodal is in need at best. And we need the Federal Government to become full partners in the private sector in the business of moving goods in this country. And if you hear conversation in preparation for the next act discussion, clearly freight and the challenge of how we move it more efficiently is achieving a much higher standing in the next authorization debate. And speaking of federal authorization, SAFETEA-LU expires in 2009. Go Congress is working on how to cure the $2 billion shortfall, projected in the next fiscal year in the form of the Grassley amendment that's pending, so we have an immediate funding crisis at our doorstep. The next transstation funding act needs to address really the long-term funding crisis, the current method of funding transportation in this country, principally the gas tax really isn't sustainable in part of the revenue commission and AASHTO's principles calls for the development in the nearer term than we thought. Really a new method of funding transportation investment in this country. And as I said before and I'll refrigerate, climate change will be a big part of that talk. I do not discount the possibility of marine options. The marine highway is also an area where there is potential capacity to be utilized to relieve the stress on the highway and bridge system.

One other example of more regional cooperation different by states in this case provinces is the work of the New England governors at the eastern premier conference, following states and provinces listed on the screen are essentially Eastern Canada and the New England states. The New England governor's conference has been around for about 31 years, it has a long collaboration of regional issues with particular emphasis on environmental issues. Really focuses on issues that don't recognize borders like air quality, environment and transportation. There's a significant cross border dependency on moving our people and our goods in efficiently and obviously air pollution doesn't recognize borders. Reduction in greenhouse gas emissions has been a particular focus and priority of the government since they adopted their adoption plan in 2001 and most of the provinces have adopted those goals. At the 31st conference of the New England governors east Canadian premier in Canada in 2007, they received a report from a minister forum of environmental that was held earlier that year. In preparation for that forum, there was -- he wanted -- there's been a long lead to vehicles development greenhouse emission gas relationship to transportation kind of dialogue that began more significantly on the energy crisis so there's a good groundwork that's been lady that's become one of the more premier issues of our time. They adopted the recommendations of the forum which included the creation of a new standing committee on transtationary quality which I co-chair because my governor is the current chair of the New England's governor's conference this year and next year. The committee was charged to implement action items included in the forum recommendations. Action steps included the development of these goals and objectives. The principal goals and objectives are to reduce air emissions. There's an initiative entitled the region greenhouse gas initiative. It's actually going to be the first cap-and-trade market for co 2 in the country and it gets online September 10th. With the principal market, actually the only market initially being the electric generation sector. They also set regional goals for greenhouse gas reductions from the transportation sector which our committee has been charged to develop a strategy to achieve. And develop regional transstation action plan which we're in the final throes of doing, and we'll be presenting to them in September. The specific action steps that they've directed us to prepare strategies for are, one, the development of environmentally-friendly biofuels, low carbon fuel standards to meet the targets that have been set which I think you're probably all somewhat familiar with. It's become a barely full policy discussion around the country, particularly in light of the boxer-Lieberman-Warner debate in Congress.

Two, efficiency in all modes of transportation, and investing in use of incentives like fee bait programs and our public transportation fleet which governors and premieres have some ability to directly influence at least in the fleets that their own jurisdictions chrome. The extent to which we can look at our systems regionally and improve their efficiency, productivity and really their synergies to incentivize more people to use them will have a regional benefit to all the participants or jurisdictions and in doing so figure out if there's any innovative ways to deal with funding issues.

Four, alignment of our infrastructure probably the more difficult in that most of these decisions are driven locally, but nevertheless, in the area of funding and the policies associated with that funding, smart growth strategies can be built into some of our program outlines, if you will, but that he's politically challenging at times but never the left lanes, it's really a function that those dollars that the federal and state governments are nesting so smart growth strategies are going to be fairly directly related to the provision of resources to achieve certain transstation goals. At least that's a significant conversation that will be going on in the context of the next authorization act.

Five, just use of lifecycle greenhouse gas to set these indicators for project and program planning. It's not always necessary. But it's a tool that will become more and more necessary as we determine the parameters in the context of climate change policies that are on the horizon.

And six, the governors and premieres will seek to adopt the California low emission vehicle programs. Most of the northeast states have joined California. Basically they pursue at adoption of cafe standards that were higher and more aggressive than the federal energy act and that is pending again litigation between EPA and California and a number of northeastern states. But most of New England and actually most of the northeast states have adopted what's known as Cal-Ev and a number of eastern Canadian provinces are considering essentially adopting the same standards.

Seven, what I talked about, collaboration with the private sector to seek these new opportunities to enhance regional interzone activity and efficiency of freight in the system. Obviously rail is principal among them because it will do Maine no good to have a gold-plated rail system from one end of the state to the other. Most of our shippers are trying to get their goods to markets in the midwest and the mid-Atlantic states or abroad. So they're trying to get them to major port freight or intermodal facilities so it's necessary in order to attract more shippers to the alternative systems they're going to have to -- their confidence is going to have to grow in the reliability and the efficiency of those systems. So it's critical that we look at them from a regional and really national perspective to ensure that the connectivity of those systems is as efficient as it can be.

The market will dictate the more competitive option in terms of price. One shipper was looking at moving a shipper in paper. The difference in truck rates versus rate, it was $280 per ton versus $80. The market will be attractive the most but nevertheless, the shipper has to ensure that the product is getting to their client on time. That's where the government and the private sector can really join to ensure that those efficiencies can be built into the system because the private sector simply won't be able to do it by themselves. The resources are not there.

In closing, I'll touch about must of what I've talked about in sort of a preventing annual sense, working closely with AASHTO and that represents the DOTs across the country and working on the freight intermodal funding team. One of the issues that we're grappling with is this challenge, currently and historically there's been relatively anemic funding for freight-related government system from the government's side. It's been principally a privately held. To accelerate the development of efficiencies, more money has to be raised outside of the highway trust fund given that the highway trust fund is not able to meet the obligation of the current system. So AASHTO's working with a number of freight stakeholders, sort of identified in this slide for a number of sectors in the economy to try and work with them to build a consensus around a potential new source of funding that would accrue outside the highway trust fund and be able to invest in the freight distribution system. There's a number of proposals emanating from these other organizations dealing with specific elements of that system whether it's highway-related or rail-related or with respect to our waterways. We surveyed all of these organizations, AASHTO did, and questions like do you think that the freight industry in general would be willing to support new sources of revenue? New sources of revenue that have been mentioned include things like custom fees and weigh bill taxes and tax broader cut finances and other things listed here, we're bringing the question are some of these examples the type of assessment tax or fee that you might support? And which of the above should get further consideration? General criteria, would you apply to determine the acceptability of a new revenue source? Are there any analyses or position statements that they'd like to share with us in considers of our various options. But basically we're -- we surveyed these organizations. We're having follow-up discussions with them. We're trying to work with these other interest groups to determine whether there's a consensus around raising a new pot of money or multipots of money to invest in elements of this system.

Two or three things that will accomplish and it goes back to the trifecta. If we can succeed in finding this investment capital, we can achieve the objective of make our businesses more globally competitive because of the forces we talked about earlier,. That is becoming more and more essential. Obviously the stress that is being felt by transportation departments across the nation, the strain on gas tax picture caused by the high prices, our revenues are down, federal highway trust revenues are going down, we are going to be facing a very difficult time in maintaining putt highway and bridge system that we have today and the highway and bridge system that we have today is not adequate. So there's going to be a significant change there. So the extent to which we can utilize these other systems becomes critically important to preserve the highway and bridge systems that we have already. And the third item obviously is the climate change debate and the policies that are going to arise that are going to affect the transportation programs of the future. And my last slide suggests that when you have these polar political opposites, at least agreeing that global warming isn't a hoax, I think they both don't necessarily share the level of urgency associated with the global warming, but there has been a basic acceptance that the problem is real. Certainly Senator McCain and Barack Obama may be approaching it differently but both agree climate change as serious issue so it's an influence on the transportation sector and how we move freight and goods in this country is going to be a significant component of the next authorization conversation. And these are some of the ideas, discussions and initiatives that are going on around the country to address that particular element of our transportation policy discussion. And with that, I thank you for your kind attention and look forward to your questions.

J. Symoun:
Thank you, Greg. We do have a number of questions that we'll get to after the final presentation that will be given by Sarah Flagg of the Port of Seattle.

Sarah Flagg:
I'm on the west coast so good morning to you on this side of the continent. My name is Sara Flagg and I'm in the seaport environmental programs at the Port of Seattle. My primary focus here is working on looking at the goods movement chain and trying to address the deficiencies and reducing emissions from everything related to transport of goods. Cargo handling equipment, trucks, rails, harbor vessels, if it moves on the waterfront, try to reduce emissions from it.

To give you a quick overview of the port of Seattle, we're an independent municipal corporation that was created in 1911. This is particularly important that we are a government agency. But we are not part of the city. We are not part of the state. We are responsible to the voters of King County who elect our five ember commission. We operate the Seattle Tacoma international airport which is the major airport in the Pacific Northwest region for Washington. We have commercial real estate including World Trade Center in Seattle. And we also have the seaport which is extremely diverse for a seaport. We have container operations. We have unbreakable facility which is a grain terminal and we have four marinas and 19 parks and public access sites. It's one of our main reasons for being was to preserve public access to the Waterfront. We have a broad economic impact to the recently. The port itself employs about 1700 people but all of the facilities that we own and lease to terminal operators or other companies support nearly 200,000 jobs for the Puget Sound region. And we give back just over $600 million in state and local taxes. So we're a significant employer in this region, not quite Microsoft but we try.

This is a visual map of where we're located in the Seattle area. I think this is important to note that downtown Seattle is right here. If you're familiar with the space needle, it's right here. And all the color areas are our different facilities that we own. The yellow ones are the container terminals. And we do have two cruise facilities. We're extremely close to our intermodal facilities, we have the Pacific northern and the Burlington Santa Fe railyard almost adjacent to our terminals. The typical lengths of travel time between our terminals is a mile or less which is extremely unique. We're a very space-constrained city on the east side of us. That's lake Washington so not a lot of room. And wanted to talk a little bit about, you know, how we try to strike the balance, how we try here at the port of Seattle to really be a good steward of the environment and balance port competitiveness.

One thing I should mention is we are -- the port of Seattle is what is called a discretionary port. By discretionary, I mean 70% of what is transported through our port goes out of the region, 30% of is consumed here. There's about six million people in Washington state, not a large population. In contrast, the , the ports of Long Beach and Los Angeles, 70% of consumed that goes through here. We have 20 million TEUs come through our port. This is contrast to L.A. and Long Beach again where they had 15 million. So it really does affect kind of the dynamics that go into our environmental program. About a year ago, we had a new CEO come onboard and our goal was for the port of Seattle to be the cleanest, greenest and most energy efficient port in the U.S., which is a tall order but is one that I think we're on a solid foundation to getting to. We do have on our terminal facilities that I showed you, most of that land is still in tidal marsh. It's at the south of the Duwamish River. And the early settlers filled it in to get some industrial land. And over the years, that land has been used. Any land that the port finds, we always clean up and being good stewards of the land and provide public access and habitat. It is an industrial area and we have a lot of growth movement. The way the economy is, we've still seen significant growth over the past few years and as we're a space-constrained port, more growth is always challenging, and we're always concerned about impacts on the public health and the environment. We know that diesel particulate matter from equipment operating in and around our terminals does have public health impacts. We're trying to seek to create a level playing field and, at the same time, using environmental stewardship is the competitive edge. I'll get into the level playing field a little bit more toward the end of the presentation. But one of the things that we don't want to do is create a situation where it is more -- it's so much more expensive to go to come through the port of Seattle that it is not attractive to shippers. We want to create a situation where they're both willing to do the thing environmentally and move the freight.

Why is freight important to the port of Seattle? I touched on a few of things. We are in the Puget Sound region, if you're not familiar with it, we're very close to Canada, British Columbia, about a hundred or so miles to the north of us is port metro Vancouver which is the largest port on the Canadian west coast, about 25 or 30 miles to the south of us is port of Tacoma. Those ports are the same size as port of Seattle. And we all share the same air sheds. We work together. Our seaport air quality program has been founded on being collaborative and voluntary. The Puget Sound region is still [ Indiscernible ] we want to keep it that way for the all the ambient air standards. Views we don't have the same drivers that are elsewhere, we needed to look for a way that we could get ahead of the game, maintain our good air quality and still be economically viable. One of the first things that we needed to understand was what our contribution was in terms of pollutants, and so we came together to connect the Puget Sound maritime air emissions inventory. And the next slide will talk about that a little bit more.

We try to focus on emission reduction and efficiencies at the same time, reducing fuel consumption, increasing productivity moving more with less. In contrast with the Southern California ports, for us on the west coast, it's kind of important. These have been a very top down mandated approach. They've had a different set of regulatory drivers and a different set of community concerns than we've had and we've been lucky to have the flexibility to take the collaborative voluntary approach that we've been able to. The Puget Sound air emission inventory, it's inventory of all maritime operations in the Puget Sound. This is important because it is the first maritime air emissions inventory that was voluntarily conducted that didn't just look at what was happening at a port. Our region is heavily maritime. We're a big inland sea, lots of stuff crosses the water. We have two major, major ports in Seattle and Puget Sound and Tacoma. We have a lot of little ports, Bellingham, we're active in moving Boeing parts so we wanted to have an accurate picture of everything that was happening, not just what was happening at our terminals in our boundaries. We have a lot of oil refineries, we included that as well. So this span is everything from the U.S. Canada border south and out to the red lines east and west. This was coordinated with a similar effort that was going on in Canada, and for the Georgia basin side of the air shed and we were the first to include greenhouse gases which is something that we wanted to include because we knew would be information that we would need and when we published this in April of 2007, kind of congratulated ourselves on our foresight because shortly after that was when the debate on greens house gases really started to take off.

To give you an idea of kind of our findings, we're focused on diesel particulate matter and greenhouse gases. So this is for the Puget Sound Clear Air Agency, that's our local regulatory agency, and they're responsible for the central Puget Sound recently where the majority of the populations are. This is the breakdown of what segments of the goods movement chain contributed, what amounts to diesel particulate management in the area, that's our Washington state ferries, passenger ferries, Washington state, excursion vessels, pleasure boats, you name it's in there. We also wanted to break down the vessels because of the fact that your different solutions, solutions are different based on what mode of transit the vessels are in. Heavy-duty vehicles is just what is port-related. So there's a lot of other freight that's happening in the region but we wanted to know what it was that was coming and going to marine terminals. And that was about 1% of the emissions. The estimated that we 3% of all the heavy-duty vehicle traffic in the Puget Sound traffic was coming and going from marine terminals. In the meantime, we've had a lot of emission reduction projects. There's hydrodiesel blends and catalysts, again focusing on efficiencies and gate improvements. Rail grade separations have been a big thing here as well. And looking for technology such as radio frequency identification to get the cargo flowing faster through the Terrell terminals. We're lucky here in the Pacific Northwest that we have hydropower so it's a clean source of energy. We do have shore power the only berth in the world that is able to plug in two vessels at the same time. And these were projects that were initiated by princess cruises and Holland American line. And they have would cruises that run through April through October and they can plug into the city grid and pilot a sea water scrubber for the engine back on one of the Holland America line vessels.

What we've been working on in the last year, this is creating a level playing field, understanding that we're in the -- we share an air shed with port metro Vancouver and port of Tacoma and wanting to not compete on environmental issues. Our CEO would like to use our environmental stewardship as our competitive edge. But, at the same time, we don't want to be competing with our sister ports to the north and to the south of us for business based on the environment. So our objective here is to create a voluntary and joint strategy to reduce port-related emissions that affect air quality and climate change in the Georgia air basin shed. You have two countries and three ports. And we work very closely with our agencies on this. It was adopted by the Port of Seattle commission in January of this year as well as Port of Tacoma commission. Port Metro Vancouver is -- you may hear me kind of messing their name up since they just became Port Metro Vancouver a few days ago. They've been amalgamating all the different ports. We've been very collaborative in our process, this is a sampling of the partners that we worked with, anyone from state and local, state, nonprofit organizations such American lung association. We really feel like this is an important approach for us because of the fact that we don't -- we are trying to do things so proactively and voluntarily and get the industry buy-in and do things that allow the industry to have more efficient operations here.

Our strategy approach is to have a clear measurable approach. And to really encourage innovation instead of mandated solutions. Set the target, don't set the way to get there. With short term, and long-term targets, short-term is 2010, long-term is 2015. This is a matrix of our performance measures as a very simple slide. This is actually in the report. For trucks, we are looking at finding a way to increase the age of the trucks that call to the port of Seattle to 1994. Right now, our average age of trucks that call to the port of Seattle is 1996. We have about 400 trucks that are older than 94. And then by 2015, we would like 80% admitted to the 2007 standards. The reason we set those standards is again we're looking at particulate matter. On the SmartWay commitments, EPA, and looking what we can do related to fuels in their switching operations and intermodal operations. Stakeholder consultation, outreach has been a huge part of this effort. We really developed this in conjunction with our industry and community stakeholders. We developed stakeholder work groups for each of the different industry segments working with the truckers, working with the shippers, working with carriers, working with the terminal operators. We did also have environmental group, a nonprofit organization, and we had a couple of published meetings and public comment periods so that we could take into account community concerns. And I will point out that the stakeholder process is still he very much underway. We may have created the strategy, but we still have to create the implementation program which is much, much more difficult than just creating the document which took us a year to do. Again, working with the industry is a collaborative bottom-up approach instead of top-down mandated and looking for emission reductions at the port in metro Vancouver, and building on what works at the port of Seattle, one of the things that we have heard universally is don't recreate the wheel, use what we already have, or build on what we already have here so that it is much easier for people to implement and it's not a huge headache that discourages participation.

Strategy implementation, like I said, we're working on the implementation plans now, continuing to work with stake holders, balancing environmental business needs and really we need to start securing funding. None of those gets done without funding somehow. We're looking at all those options right now and some of the business considerations that we have during this whole process is, you know, what are the impacts to the efficient goods moment. We don't want to do anything that's going to shut down the core or create bottlenecks or say that you have to have trucks that are a certain age and nobody can meet that and there are no trucks to move product off the terminals and the environmental and community considerations, does this support our goal for public health. We have a lot of work to do but a good solid foundation to do it on. And with that, here's my contact information, and I look forward to any questions.

Q&A

J. Symoun:
Thank you, Sarah. We're going to go ahead and move into the question-and-answer session which we have less time than usual for today so I'll go ahead and put up the slide in the presenter contact information. I'll get started with the first question. Let me see here. Anthony, can you describe the efficiency formula or algorithm that shippers get for using rail over truck.

A. Erb:
We've created in our fleet model for trucks a methodology to come up with the efficiency for rail versus trucks. And in looking at intermodal what we're really looking at is that. The model looks at the tons of freight that are going to be shipped and a comparison between the miles traveled for truck versus rail. Also we include the preshipment, how much of it would be dray, and it also looks at the fleet. If you're a truck fleet, the efficiency of your trucks overall and the emissions based on the model years of the trucks in your fleet are put into the equation. And for rail, we're looking at the type of shipment, if it's going to be a bulk shipment or if it's loading intermodal shipments or other type-- and that, you essentially select which type of shipment it would be. And then we have rail efficiency numbers based on data that we have in the rail regulations regulatory impact analysis documents - so the numbers are coming from there in terms of freight efficiency. And that's it basically -- if you put in all those bits of information, you can come out with a projected fuel efficiency savings for an intermodal type transport versus a truck transport. Does that answer the question?

J. Symoun:
I think that was good. If the person who asked needs any clarification, please feel free to type that in.

A. Erb:
And somebody could always e-mail me or go through your system and we could document the response. But and I could also point out we're in the freight logistic model that exists. And we're also seeing an interest in this from the railroad. So there are a couple of calculator tools that exists out there, Norfolk Southern has one on its website. And we have formed a group with the railroads that are going to look at projecting the actual efficiency of the railroads and their intermodal shipments, especially, because they're interested in promoting it to the rest of the industry. And so that is something that's up and coming in terms of what we're planning for the rail sector.

J. Symoun:
Great, thank you. I'm going to skip over to a question for Greg now just so we can try to get a variety of questions here. Has the Maine DOT tried to help develop any new freight railroad intermodal services recently? Previous attempts at rail intermodal services that were designed to shift trucks off of the road and onto railroads weren't successful (back in the 70s/80s/early 90s) due to low volumes and short-hauls that made these intermodal operations unprofitable for the railroads at that time. What is Maine/Maine DOT thinking about here and what might you all be able to do in partnership with your railroads?

G. Nadeau:
I talked about some of our work at Danville junction. Actually the newest intermodal system is in auburn, Maine, and it's actually the largest container port in the state. And it's an inland intermodal system the as we enhance the efficiency of the system, that bottleneck that I talked about, improves the shipping time by two days, our hope is that that type of investment is going to cause the business at the Intermodal facilities to grow combined certainly today with the high fuel prices and the high cost of diesel. The newest intermodal facility that we and the Federal Government and the public sector collaborated on is doing very well, the second example there's an intermodal facility that we had helped develop in years past that's has been dormant and the operators, the particular railroads involved are discussing with us reviving it and bringing more equipment in because the demand is growing due to other investments in the system that have made it more efficient. So the point is they go hand-in-hand. Unless we can demonstrate to shippers that the system is more reliable and more efficient, we're not going to be able to grow or develop new intermodal facilities but they're certainly on the horizon based on the experience I'm going through right now.

J. Symoun:
Great, thank you. Let's see this next question is actually for both Anthony and Greg. How can we get SmartWay transport shippers to apply for IRAP or similar programs and reward them for their dollar investments or business share investments via SmartWay transport? Anthony, I'll pass that to you first if you have any thoughts on that?

A. Erb:
You know, basically I think there are opportunities for various railroads to get money in the short lines especially. There's money available, I think there's $35 billion or something that's been available for a while under SAFETEA-LU, $ 7 billion I believe it is, designated in the Railroad Rehabilitation & Improvement Financing (RRIF) program, we've seen very little activity , there may be an interest out there for providing, or accessing these funds but some roadblocks exist out there that mean a number of the short line railroads won't apply due to the paperwork and other things like that (audit requirements). But there are a few of them that have actually gone through the process and obtained considerable funds through that system. And, as I said, a big pot of money exists. I think it's generally money that, you know, for which the Feds really have limited dollars available. It's supposedly there, but there are some roadblocks to overcome before you can get it. But that's not to say it's not possible to get it. We're working with the American Short-Line & Regional Railroad Association at this point to provide better information on that for the railroads and also to figure out what the roadblocks are and how we can best get around them so they could obtain this funding that's available and hopefully will be reauthorized and available in the future.

To better answer the question I should say that we support the use of innovative technology through our recently developed finance center and various funding for projects and as well as grants to support technology evaluation and installation. Companies that participate in SmartWay Transport programs save money, reduce fuel consumption and are recognized for their social responsibility and leadership. SmartWay offers cost saving through reduced cost of fuel use, payback on investment within just 1 to 3 years on most technologies, for example up to $9,000 in cost savings per truck per year after the payback period, reduced maintenance costs and improved employee retention due to incentive and training programs. A business-to-business advantage as more business is directed to Smartway partners. SmartWay offers the ability to obtain an improved reputation with the public for environmental stewardship while meeting corporate environmental sustainability goals, while at the same time demonstrating corporate values that matter to employees.

J. Symoun:
And Greg, do you have any thoughts?

G. Nadeau:
Yeah, sort of a different approach to the same question and a question I have actually. As I understand SmartWay and the way it's described, it's the incentive in that type of program is to become associated with it and for companies and shippers and manufacturers who are looking for that not only the ability to save money by just being smart which is what SmartWay is about, it's how to decrease your consumption and have all those beneficial by-products including saving money but you also get the label, the benefit of being a green company. And the question goes to how do you give more financial incentive for a shipper to participate. One concept is, and a concept that we're playing with at this point. It's very preliminary. But if you look at concept of cap-and-trade which we're introducing for the electric generation which is being discussed.

Cap-and-trade is a way to find benefits to reduce emissions. They have access to these credits so you basically, cap emissions create value in these credits, you reduce emissions, you now have something of value. You can trade it on the market and so obviously that depends on somebody out there who needs credits to buy and there may be shippers out there that can't reduce their emissions. So you have something you can sell incentivizing you to reduce your emissions. That may be what the question may be aiming for. That's one concept. And maybe I'm way off in what the questioner was after. But it's something we've been thinking about, how do we apply the concept of cap-and-trade to the transportation sector.

J. Symoun:
Okay. Thank you. Unfortunately we're just a little bit past 2:00 now, and we're going to have to close out. I'm going to compile them together and send them to presenters and type back the responds to me, and we'll get the questions and answers posted along with the presentation and the recording of today's webinar. And I urge you to contact the presenters directly. I apologize, we ran out of time. But it's a very good seminar and we had a lot of good information in there. We'll get the questions, the presentations and the recording posted and I'll send everybody an e-mail when that becomes available. The podcast will be available as well. The next seminar will be held on July 16 and will be on Integrating Freight in Project Selection. If you haven't done so already, I encourage you to visit the Talking Freight Web Site and sign up for this seminar. The address is up on the slide on your screen. I also encourage you to join the Freight Planning LISTSERV if you have not already done so. Enjoy the rest of your day!

Updated: 03/30/2011
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