WILL THE CLEAN AIR ACTION PLAN REVOLUTIONIZE PORT OPERATIONS AT LOS ANGELES AND LONG BEACH?

Long Beach Container Terminal

BY STAS MARGARONIS

 

IN THIS REPORT:

• EXECUTIVE SUMMARY
• INTRODUCTION
• PORTS OF LOS ANGELES & LONG BEACH CLEAN AIR ACTION PLAN
• LONG BEACH CONTAINER TERMINAL IS ELECTRIFIED
• TRAPAC TERMINAL LOS ANGELES INVESTS IN ELECTRIC POWER
• PACIFIC MARITIME ASSOCIATION SAYS CLEAN AIR MANDATES UNDERMINE CALIFORNIA PORTS COMPETITIVENESS
• SSA ALSO EXPRESSES CONCERNS
• NETHERLANDS: ELECTRIC EQUIPMENT PRICES
• HARBOR TRUCKING ASSOCIATION & GSC LOGISTICS
• PORTS SUPPORT MICROGRIDS
• P2S: CHALLENGES FOR TERMINALS & MICROGRIDS
• TOYOTA: HYDROGEN FUEL CELL TRUCK
• COULD LONG BEACH CLEAN POWER AUTHORITY INCREASE PORTS’ RENEWABLE ENERGY GENERATION?
• UNIVERSITY OF MAINE: FLOATING WIND FARM
• SOUTHERN CALIFORNIA EDISON
• CALSTART: ELECTRIC TRUCK DEVELOPMENTS IN CALIFORNIA
• DEPENDABLE HIGHWAY EXPRESS ELECTRIC TRUCK STRATEGY
• CHINA DOMINATES WORLD BATTERY MANUFACTURING
• FAILURES OF U.S. BATTERY MANUFACTURING
• SIMON MOORES BENCHMARK MINERAL INTELLIGENCE
• REDWOOD MATERIALS: NEW U.S. BATTERY START-UP
• CONCLUSION

 

EXECUTIVE SUMMARY

The Ports of Los Angeles and Long Beach Clean Air Action Plan (CAAP) goals for zero emission cargo-handling equipment and harbor trucks are lowering emissions at the ports, reducing respiratory incidents for people living nearby and improving the competitiveness of port operations.

Since the adoption of the original CAAP, diesel particulate emissions from mobile sources in and around the Ports are down 87%.

Heather Tomley at the Port of Long Beach and Chris Cannon at the Port of Los Angeles direct the CAAP and say the Ports’ support of grants and demonstration projects is helping terminals and harbor truckers’ transition to electric powered equipment. This represents a costly upfront investment but results in lower operational costs.

Port of Long Beach executive director, Mario Cordero expresses confidence that terminals will meet CAAP goals for zero emission cargo-handling equipment by 2030 and that the zero emission harbor truck mandates will be achieved by harbor truckers by 2035.

Cordero’s confidence in the 2035 date for trucks was given validation by the General Motors announcement in January that it plans to eliminate all gasoline and diesel vehicles from its fleet and produce only electrical vehicles by 2035. The GM announcement may have been influenced by the earlier decision by Chinese policy makers to mandate that most vehicles made in China will be electrical by 2035, according to a New York Times report. The report went on to warn that the GM transition to electrical vehicles will benefit China because of Chinese government support and subsidies that have resulted in Chinese companies dominating the market for batteries.

Except for Tesla, the effort to build a strong U.S. battery manufacturing industry has not succeeded in the United States The case of the A123 battery maker is cited in a 2020 ProPublica report.

James McKenna heads the Pacific Maritime Association and is concerned about the cost to terminals of zero and clean air goals  and this is echoed by Ed Denike who heads Stevedoring Services of America Containers. Weston LaBar head of the Harbor Trucking Association and Scott Taylor chairman of GSC Logistics are concerned about the cost of new electric trucks to harbor truckers.

Experiences at the automated and electrified Long Beach Container Terminal and the primarily electrified TRAPC terminal at the Port of Los Angeles show that while the process transitioning from diesel to electrical is costly, it also yields improved performance in operations.

Both terminals report that average truck waiting times to load and unload containers at their terminals are under 40 minutes which is half the time experienced at conventional terminals. This means that twice as many trucks can load and unload than at conventional terminals: a key productivity metric.

Greg Alexander at P2S, is working with a Southern California container terminal on a feasibility study for the terminal to build a microgrid. He argues that hydrogen fuel cells “offer the possibility of reducing the infrastructure cost by providing similar duty cycles to cars and trucks. You use filling stations to refill vehicles with hydrogen fuel and then you don’t need as much battery charging and storage. The question is how cost-effective and safe are hydrogen fuel powered vehicles and equipment?”

Toyota Motor Corp. is developing hydrogen-fuel-cell-powered trucks for the North American market with its subsidiary Hino Motors Ltd. Toyota said it is providing fuel-cell technology and its truck unit will supply the chassis based on its new XL Series. Toyota has been involved in a pilot project to test fuel-cell trucks at the Port of Los Angeles since 2017.[1]

Dependable Highway Express reports that electric trucks reduce costs for maintenance and fuel., but GSC Logistics worries that purchases of electric trucks will be costly for owner operators.

Troy Musgrave at DHE and Bill Van Amburg at CALSTART note that batteries for trucks are getting cheaper and the range is improving. Both express confidence that the 2035 zero emission mandate will be met.

The result is that cargo-handling and harbor trucking are likely to reduce costs at the Ports of Los Angeles and Long Beach and provide a competitive advantage with port rivals on the Atlantic and Gulf coasts.

The Pacific Maritime Association commissioned a 2020 Mercator report that identifies the bigger threat from the Canadian ports of Vancouver and Prince Rupert. The two ports benefit from substantial terminal operation and rail transportation cost savings. Rail transport charged by the Canadian National and Canadian Pacific railways to U.S. Midwest customers is far less than U.S. rates charged by the Union Pacific and Burlington Northern Santa Fe railroads who provide service between the Midwest and U.S. West Coast ports. The PMA warns that U.S. West Coast ports could lose a large share of their container business to the two Canadian ports.

Musgrave and Van Amburg worry about infrastructure. Providing sufficient battery charging for trucks remains a concern. DHE is investing in a microgrid to provide additional renewable power to its truck operations and lower costs. The Ports of Los Angeles and Long Beach also support microgrid projects to reduce electric power costs.

The Harbor Trucking Association’s Weston LaBar worries about whether utilities are investing in sufficient new power generation. The Ports zero emission power generation projections for meeting zero emission goals are estimated at between 200% to 400% more than in 2021.

LaBar says: “We need to have a real ramp up of power generation and we need to start doing that now.”

Critics worry that investor-owned utilities bound by compensating shareholders may be unable to make the large investment in new renewable energy.

Clay Sandidge, the chair of the Long Beach Community Choice Energy (CCE) working group, represents a grass roots organization seeking Community Choice Aggregation (CCA) adaptation. The CCA is a legal entity established by California law. The CCA allows a locality to make power purchase agreements with developers that avoid the higher dividend-based costs of investor utilities, such as Southern California Edison and Pacific Gas and Electric. The CCA could offer the City of Long Beach and the Port of Long Beach a means to invest in new power generation independent of the investor-owned utilities.

Sandidge introduced floating wind turbine pioneer Habib Dagher to Port of Long Beach officials several years ago. Dagher is the founding executive director of the Advanced Structures and Composites Center at the University of Maine which built the first U.S. prototype floating wind turbine.

Now, a 12 MW floating wind farm pilot project off the coast of Maine is planned in collaboration with Cianbro Corporation, the University of Maine, and the Advanced Structures and Composites Center. The floating wind turbine will float on a concrete hull designed by the University to be built in the United States. The turbine will be sourced from abroad, Dagher said.[2]

Floating wind turbines are essential for the U.S. Pacific coast because of the plunging depths of the offshore seabed.

In Northern California, the Humboldt Bay Harbor, Recreation and Conservation District is making plans to become an offshore wind farm port in anticipation of new offshore wind farms planned for California.

So, the CCA model might help the Port of Long Beach increase renewable power generation to meet zero emission needs and reduce reliance on an increasingly challenged California grid, providing that it is approved by the Long Beach City Council.

Alex Milley at TRAPAC is worried about whether there will be sufficient trained technicians to operate the next generation electric powered ports and says more needs to be done to encourage local schools to increase vocational education so as to train students to become qualified electricians and also handle IT and networking issues.

DHE’s Musgrave expressed concerns about a shortage of batteries. This was cited by Elon Musk as the reason for the delay in delivering new Tesla electric battery trucks.

Musgrave and Alex Milley are both looking at hydrogen fuel cells as a possible alternative or supplement to batteries.  They agree with Alexander that hydrogen is a fuel that powers batteries and can be transported and deployed in tanks like gasoline and diesel. It does not require the charging infrastructure required by batteries.

However, cost and safety considerations have hampered development of hydrogen.

A new U.S. start-up may provide a partial answer. Tesla’s former battery chief, J.B. Straubel, envisions a long-term solution that would produce batteries from recycled lithium, nickel and cobalt salvaged from other cars, not mined from the earth. His new startup, Redwood Materials, is developing a closed-loop battery supply chain.

INTRODUCTION

The Ports of Los Angeles and Long Beach plan to transition cargo-handling equipment and harbor trucks to zero emissions by 2030 and 2035 respectively.

The changes are made under the auspices of the Clean Air Action Plan.

A brief history of the CAAP by the Ports of Los Angeles and Long Beach states:

“In 2006, the ports of Long Beach and Los Angeles created and approved the San Pedro Bay Ports Clean Air Action Plan, or ‘CAAP.’ The CAAP provides the overall strategy for dramatically reducing air pollution emissions from cargo movement in and around the Ports. The Ports updated the CAAP in 2010 with new strategies and emission-reduction targets. Since the adoption of the original CAAP, diesel particulate emissions from mobile sources in and around the Ports are down 87%. Despite this significant progress, the Ports recognize that more needs to be done. The CAAP 2017 Update provides new strategies and emission reduction targets to cut emissions from sources operating in and around the Ports, setting the Ports firmly on the path toward zero-emissions goods movement.”[3]

The CAAP effort received a boost with the announcement by General Motors that it will only manufacture electric cars and trucks starting in 2035.

PORTS OF LOS ANGELES & LONG BEACH: CLEAN AIR ACTION PLAN

The Clean Air Action Plan is directed by Chris Cannon, chief sustainability officer Port of Los Angeles and Heather Tomley, managing director planning and environmental affairs, Port of Long Beach.

In an interview, Cannon and Tomley expressed hope that the GM decision will increase awareness and encourage harbor trucking companies to acquire zero emission trucks.

Cannon said: “It’s really good to see the GM announcement which is a seismic change for trucks and cars and commits them to producing all zero emission vehicles by 2035. It feels good because it supports what we are doing.”

Chris Cannon

He noted that infrastructure is still a big challenge: “For me the biggest challenge is infrastructure and questions are like if a truck breaks down and it’s electric where do you tow it compared to diesel where there’s a lot of places to tow it.”

He explains: “Right now we have battery powered trucks that claim a range of 150 miles although actual users say the range is closer to 110 miles. To get to a range of 500 miles like diesel trucks, is going to require a big change in technology and we have to support the companies in looking at demonstration projects that help guide them.”

Heather Tomley noted: “The business challenge for truckers and trucking companies is that you can acquire a used diesel truck for $50,000 and a new electric trucks costs $350,000. So, our strategy has been to help fund demonstration projects that allow fleet operators and truckers to see how electric trucks can work and save them money.

Heather Tomley

 The infrastructure is a very challenging issue and for that reason we are embarked on demonstration programs to work with our partners to test out new technologies.”

Bill Van Amburg is the executive vice president for the non-profit CALSTART, which promotes clean and zero emission trucks in California. He believes the CAAP will enhance the competitiveness of the two Southern California ports:

“Being first brings challenges and opportunities. However, the California ports are getting through the learning curve for zero emission technologies now, and thanks to California investments are actively planning their infrastructure and support strategies as well as actively demonstrating current technology trucks. The other Gulf and East Coast ports will be facing the same demands and requirements for zero emissions soon, and likely the phase in timing will mirror California’s (New Jersey is planning to adopt California’s zero emission truck rules; NY is reviewing it; Massachusetts is reviewing it). Communities surrounding these other ports can also see what is happening in California and will demand similar solutions.  The California ports will have a running start not just on implementing and incorporating these solutions but on putting into play their operational cost savings earlier.”

Van Amburg also believes the 2035 zero emission truck goals are feasible:

“The products we will need to shift to by 2035 are already entering first production this year and next: Volvo VNR electric in early production now; BYD electric tractor in production now; Peterbilt and Kenworth Class 8 tractors will enter early production in 2022, as will Navistar’s Class 8 regional tractor; Tesla is bringing its first electric semis to the road in 2021; Lion Electric has a Class 8 distribution truck.  We see similar timelines in Europe and China.

Now, that does not mean this will be easy, but it is completely viable.  It will require investments in infrastructure (which the utilities are authorized to make), further reductions in vehicle price as volumes scale, and new financial and ownership models to enable smaller operators to have access to these vehicles.  It is work; but we see these elements coming into place over the next couple of years. And to help jump start the effort, CARB (California Air Resources Board), CALSTART and industry are targeting at least 800 drayage truck sales in 2021 (Project 800) to help speed the ramp up and share lessons on operation, performance and business case.”

Globally, Van Amburg says “we are pursuing a global drive to zero emission trucks to address air quality issues in communities that have been the victims of chronic air pollution and the resulting respiratory problems to the population, as well as reach our carbon reduction targets for climate change. Both need to be done at the same time. This is a principal objective of CARB and needs to be addressed at the same time as we are improving the capabilities of commercial vehicles to transit to zero emissions. The key elements of this are: strategies, regulations, investment and supply chain. In each case we are pursuing goals to speed the transition. These goals are complemented by the Clean Air Action Plan at the Ports of Los Angeles and Long Beach, which calls for zero emission terminal equipment by 2030 and zero emission harbor trucks by 2035.”[4]

Two key CAAP goals will require:

Advancing the Clean Trucks Program. The intent is to phase out older trucks and transition to near-zero emissions in the early years and zero-emission trucks by 2035. Cannon noted that the two ports placed a $10 per container assessment as part of a Clean Truck Fund (CTF) rate, although the assessment has been delayed. Once implemented the funds will support new zero emission trucks: “The $10 per container assessment was approved by both ports and is sufficient to support the level of investments that we need to make right now. In the event that we need more, we can go back and ask for more. What is important right now is that we demonstrate that we can generate value for the assessment.”

Zero-Emission Cargo-handling Equipment. This will require terminal operators to purchase zero emissions equipment, if feasible, or near-zero or cleanest available when procuring new equipment.[5]

Tomley provided additional explanation:

The imposition of the $10 fee will generate $90 million per year but there has been no decision as to when to start collecting the money: “When the Boards of Harbor Commissions of the two ports approved a resolution for a $10/TEU rate for loaded containers in March 2020, the estimate of potential revenues was up to $90M.  Actual revenues will be dependent on cargo volumes and, more specifically, moves of loaded containers by heavy-duty truck.”

However, the timing of when the $10 assessments will be imposed has not yet been decided: “We continue to monitor the situation. The Ports are committed to moving forward and hope to do so as soon as possible. The specific timeline for moving forward with the rate will be determined by our Boards of Harbor Commissioners.”

Current demands for power at the Ports of Long Beach and Los Angeles is a combined 90 MW (Megawatts) at peak demand: “POLB conducted a baseline power demand assessment for 2015, prior to the opening of Middle Harbor (the automated Long Beach Container Terminal), which indicated a base load of approximately 10-14 MW of coincident base load and approximately 40MW of coincident peak demand. Current demand at the Port of Los Angeles is about 50MW.”

The projected demand for 2035, assuming a transition to electrical power from diesel is complete is 200% to 400% higher: “Depending upon how the technology advances and how terminals move forward with meeting zero emission operations, it is estimated that power demand in the future could increase by a factor of two to four times.”

Mario Cordero

On Feb 4^th at the Port of Long Beach State of the Port address, Mario Cordero, executive director of the Port reported that 15% of Long Beach operations are zero emissions. He said he was confident that the Ports would meet their zero emission goals for equipment and trucks and perhaps earlier than projected. Approximately 7% of the equipment in the Port of Los Angeles is fully electric.[6]

At his February 17^th media briefing Port of Los Angeles executive director Gene Seroka  said the effort to achieve the zero emission goals required “a public private partnership” and the ability to drive down the cost of electrically powered equipment and trucks.

To do so, the Ports of Los Angeles and Long Beach had sponsored a number of demonstration programs with cargo-handling equipment and trucks in order to encourage terminal operators and truckers embrace zero emission technologies.

Seroka said there were proposals in the California Legislature to eliminate sales tax charges on zero emission equipment and trucks to make them more affordable.

Tomley recalled the two ports have come a long way: “When I came to work at the Port 15 years ago, there were many people who felt we were not paying enough attention to the environmental impact that trucking and port operations were having on communities near the port and along freight lanes to warehouses and distribution centers. Thanks to progress we have made with the CAAP, we are making progress and I think people see that. But people still want us to do more and do it faster.”

Cannon agreed: “I echo what Heather said I think the environmental justice groups want us to do more and we are working to address those concerns… “

Tomley said the two ports have applied for a California Energy Commission and California Air Resources Board grant to fund a zero-emission trucking fleet of between 50-100 trucks to be operated by several companies so as to provide detailed data on the needs for charging, costs, maintenance and support infrastructure for trucks serving the Los Angeles and Long Beach ports.[7]

Cannon noted that “Ultimately, it’s up to the truckers and terminal operators to make the decision about deploying this equipment and our role is to provide the support and help facilitate the process including grant programs to help companies test equipment, reduce the cost and help them make the choices that works best for them.”

In January 2021, the two ports announced they had been awarded a combined $152M in grant funds to support the advancement of technology.

To date, the Ports developed demonstration projects to reduce emissions for the following:

2   x Tier 3 ships

2   x zero- and 2 x near-zero emission on-road trucks

26 x zero and 20 x near-zero emission port equipment units.[8]

Cannon noted progress in terminals moving to less dependency on diesel powered equipment and more on electricity: “At the Port of LA, we have the TRAPAC terminal that is 66% electrified and the APMT (A.P. Moeller Marine Terminal) that will utilize electrical and hybrid equipment to automate operations.”

LONG BEACH CONTAINER TERMINAL IS ELECTRIFIED

Tomley noted that at the Port of Long Beach, the automated Long Beach Container Terminal (LBCT) was built to be powered by electricity and generate zero emissions.

LBCT: Zero Emission Automated Guided Container Carrier

LBCT’s has a capacity to handle 3.1 million TEUs (twenty- foot unit containers) per year and is in the final stage of construction. LBCT operates with battery-powered automated guided vehicles that transport containers to and from electrically powered ship to shore container cranes. The cranes are dual hoist gantry cranes that are manned. The terminal utilizes an automated container stacking system. These operations are electrically powered and generate zero emissions.[9]

The Port of Long Beach invested $1.3 billion in LBCT with an additional $650 million investment by the then terminal owner, Orient Overseas Container Line.[10]

The result is the terminal is designed to handle 18,000 TEU container ships and larger, utilizing more advanced cargo-handling equipment and systems than older, conventional terminals.

One measure of the competitiveness of LBCT is that terminal managers say their automated system keeps truck times, when picking up and delivering containers at the terminal, to 30-40 minutes. This is significant because this time is half the average at other terminals at Long Beach and Los Angeles. There, the average is 70-80 minutes, according to Weston LaBar, president of the Harbor Trucking Association.[11] This means that roughly twice as many trucks can do pick-ups and deliveries at LBCT compared to other conventional terminals and less wait time means less truck idling and less pollution.

TRAPAC TERMINAL  LOS ANGELES INVESTS IN ELECTRIC POWER

 TRAPAC Los Angeles: Automated Straddle Carrier

Alex Milley, assistant vice president for health, safety, security, environment, at the TRAPC container terminal at the Port of Los Angeles is optimistic about the potential for zero emission technologies to improve terminals handling productivity:

“Until recently I did not think that the CAAP 2030 date for transitioning to zero emission equipment was practical, but thanks to the availability of Teslas and other electric cars and the availability of electric powered cargo-handling equipment you can see that zero emission technologies are getting affordable and available.”

He said that the TRAPAC Board made a decision to make the transition from diesel to electric in partnership with the Port of Los Angeles:

“Originally, we had electric powered ship to shore cranes which regenerate power while lifting and lowering containers. They unloaded onto diesel powered tractors that pulled a trailer called a bombcart. The tractor is called a UTR (Utility Tractor Rig). The UTR might have to idle waiting for the next container and generate a lot of emissions.

Then the UTR would drive the container into a stack of containers where it would be unloaded by a top handler-a giant forklift – or a rubber tire gantry crane, known as an RTG. The RTG would load the container into the stacks and when the truck arrived to pick up the container, the RTG would maybe have to hunt for the container and find it and then load it on to the truck’s chassis.”

The decision to go electric changed that.

He noted that TRAPAC handles 1.6 million TEUs annually and the automation and electrification system was installed over five years, between 2009 – 2014. The total cost was $720M of which the TRAPAC investment was $200M in equipment and the Port of Los Angeles investment was $520 million in infrastructure.

Milley says changes in the operation included:

The ship to shore crane unloaded containers into a pile.

An electric or hybrid powered automated straddle carrier (ASC) now picks up the containers in the pile and loads them into container stacks.

Kalmar, a cargo-handling equipment manufacturer, contrasts the difference between automated straddle carriers and diesel-powered rubber tire gantries and top handlers:

“An automated straddle carrier terminal offers several clear advantages over a traditional manual straddle carrier terminal. The most immediate and most easily quantified gain is significant savings in terminal operating expenses such as labour and maintenance costs. Other direct benefits include increased efficiency, more predictable operations, higher availability, significantly improved occupational safety, better site security and longer equipment life spans….”

Other benefits are significant fuel savings, through optimal driving patterns, a reduced need for air-conditioning. An automated terminal also requires less lighting in the yard, which decreases power consumption and reduces the environmental impact of operations.”[12]

Automated stacking cranes prioritize the location of the containers the containers in order of truck arrivals based on a truck appointment system. The actual loading process is manned and directed by a longshore worker who makes sure the container is safely fitted onto the truck chassis or if it’s a delivery safely lifted into a stack from the truck.

TRAPAC Los Angeles: Automated Stacking Cranes

The Kalmar reference material explains some of the advantages of automated overhead cranes:

” Automated overhead cranes can reduce labor costs, track inventory, optimize storage, reduce damage, increase productivity and reduce the capital expense associated with forklift systems. …. Every crane … utilizes the most recent developments in software…”[13]

Rail-mounted gantry cranes deliver containers onto or off rail cars. Just as with the trucks, longshore labor remotely loads or unloads the container.

The TRAPAC terminal is 66% electric-powered and the wait times for trucks picking up and delivering containers is about the same as for LBCT – under 40 minutes he says.

That’s half the truck waiting time of conventionally operated and powered terminals.

The result is that “we haven’t had the same congestion issues unloading ships during the congestion crisis. The result is that automated systems powered by electricity have kept us from getting overwhelmed.”

TRAPAC is also looking at hydrogen fuel cells: “We have powered a UTR that we are working with that is powered by hydrogen and powers a fuel cell battery that is zero emissions. This operates just like a diesel truck which you just fill up with hydrogen fuel instead of diesel. This doesn’t need battery charging or battery storage, so the infrastructure isn’t as complicated.”

Milley is concerned about the human resources challenge of finding new skilled workers: “For us the human resources will be the big challenge. The traditional terminal repair people were mechanics who used wrenches to repair mechanical problems with the machinery, but with electrical equipment that mechanic needs to be able to maintain and repair electrical equipment and maintain wireless connections to the system. These are new skills and we need to start getting the high schools to train   people to maintain and repair the next generation of cargo-handling technology. Otherwise, we may have the technology in 2030 with not enough people qualified to operate and maintain the equipment.”

“The other challenge is going to be with the grid, “he says:” We have not had brown-outs or black-outs due to wildfires as people in Northern California experienced with PG& E shutdowns. However, as we move to more electrical equipment, the quality of the power needs to be consistent as well as the supply of sufficient power: both important priorities.”

PACIFIC MARITIME ASSOCIATION SAYS CLEAN AIR MANDATES UNDERMINE CALIFORNIA PORTS’ COMPETITIVENESS

The two ports were being criticized by some maritime stakeholders for supporting environmental air quality goals that they say are costly and undermine California ports’ competitiveness compared to their Atlantic and Gulf Coast rivals.

Jim McKenna, president of the Pacific Maritime Association (PMA) which represents U.S. Pacific Coast terminal operators discussed two reports that the PMA commissioned in 2020 to look at competitive cost differences between U.S. West Coast ports and U.S. Atlantic and Gulf Coasts ports as well as a comparison with the two West Coast Canadian ports of Vancouver and Prince Rupert.

Jim McKenna

The reports showed that U.S. West Coast ports are more costly to operate due to land, labor and regulatory costs than the Atlantic and Gulf Coast ports. McKenna particularly singled out clean air and zero emission mandates and cited the California Air Resources Board mandates.

One Mercator study, commissioned by PMA, warns that high U.S. rail costs and other factors could cause U.S. West Coast (USWC) ports to lose between 15% to 45% of intermodal import business to British Columbia (BC) ports by 2030.

The report says 15% of “Intact Intermodal import volumes” could be lost by 2022 and over “45% of the USWC’s current intact intermodal import traffic is at risk of diversion to BC ports over the balance of this decade.”

The report described the additional costs at USWC ports: “USWC ports have substantially higher costs for ship-to-train handling. SPB (San Pedro Bay) costs are about $120 higher than in BC (British Columbia). Surcharges include the Harbor Maintenance Fee in the US (0.125% of cargo value, which we estimate to be about $90/container) and the Alameda Corridor Fee in San Pedro Bay ($26.33 per TEU, or nearly $50 per container).”

The Mercator report also found that the Puget Sound ports (Seattle and Tacoma) and the ports of Los Angeles and Long Beach, which utilize the Burlington Northern Santa Fe (BNSF) and Union Pacific Railroads (UP), face higher rail costs delivering containers to and from Midwest destinations. This contrasts with lower rail and terminal handling costs via the Ports of Prince Rupert and Vancouver, British Columbia utilizing Canadian National (CN) and Canadian Pacific (CP) trains:

“The two British Columbia container ports – especially Prince Rupert – have route cost advantages of several hundred dollars per import FEU (fort foot unit containers) – load over both the San Pedro Bay (SPB) gateway and the Puget Sound gateway for Intact Intermodal imports from Asia to the inland metro markets that Canadian National Railway (CN) and/or Canadian Pacific Railway (CP) serve from those ports – in particular, the critical Chicago market, the Memphis market (CN only), Minneapolis (CP only), and Detroit, which collectively account for nearly 45% of all Intact Intermodal volume moving thru USWC ports….”[14]

Higher rail costs charged by UP and BNSF are a major cost differential:

“The two British Columbia container ports – especially Prince Rupert – have competitive transit times and have route cost advantages of up to $500-600 per import FEU for Northeast Asia loads destined to the major markets of Chicago and Detroit, and (for CN only) about $300-400 to Memphis.

These route cost advantages of Vancouver — and especially Prince Rupert– over SPB and Puget Sound are underpinned by:

* Lower costs for locomotive fuel, ownership/leasing, and maintenance/repair for CP and especially CN trains.

* Lower unit costs for marine terminal labor and lower terminal lease rates.

* Avoidance of payment of the Harbor Maintenance Tax and (for SPB only) of the Alameda Corridor Transportation Authority transit fee.”[15]

SSA ALSO EXPRESSES CONCERNS

Ed Denike

Ed Denike is president of SSA Containers, a Carrix company. The company operates cargo-handling facilities around the world including container terminals in California at Oakland and Long Beach.  Denike was the architect and terminal manager for several major facilities in San Francisco, Oakland and Long Beach. In 1986, he relocated to Seattle and assumed overall responsibility for Carrix’s West Coast container and select breakbulk operations.

In January, Denike told the Propeller Club of Northern California that transitioning to zero emission equipment “will be expensive.”

He cited the following:

The zero emission requirements for California terminals will be expensive:  Zero emission requirements for terminal handling equipment mandated by the State of California “will triple the cost of purchasing this equipment at current market prices.” Denike suggested that diesel electric equipment would be more affordable than all electric equipment.

The Southern California power grid is inadequate to meet terminal demands for zero emission operations:  The power grid in Southern California “needs increased power” in order to maintain the current power requirements for cargo handling at Southern California ports and provide the additional demand to meet California’s zero emission requirements. Denike recalled that when the automated and electric-powered Long Beach Container Terminal at the Port of Long Beach went on line, it caused brief power outages in the city of Long Beach. This is a reflection of Southern California power grid inadequacies, he said.[16]

NETHERLANDS: ELECTRIC EQUIPMENT PRICES

A Dutch terminal manager said that the transition from diesel to electric powered equipment while costly results in two important improvement for the terminal:

The cost of maintenance and repair is less with electric than with diesel.

The cost of fueling via the grid is cheaper than paying for diesel fuel.

The manager noted that the gap between the price of electric power and diesel power is narrowing, citing the cost in Euros of straddle carriers used to move containers around the terminal:

Fully electrical straddle carrier is nearly 1,000,000 euros

Hybrid straddle carrier is approx. 850,000 euros

Diesel straddle carrier is 750,000 euros

The manager noted that the terminal will need to increase the hiring of qualified electricians to operate and maintain the equipment.

In addition, as more terminal operations and data exchanges are handled electronically and via the internet, companies need to invest in more IT personnel to administer electronic transactions, maintain operations and guard against cyber-attacks that are on the rise: “Terminals are being attacked all the time now. You have to invest more in defending your operations and that means more IT personnel.”

Finally, the manager said that the Port of Rotterdam has invested in additional power generation resources to support automated container terminals at the recently completed Maasvlakte complex.[17]

HARBOR TRUCKING ASSOCIATION & GSC LOGISTICS

Weston LaBar, president, Harbor Trucking Association represents harbor trucking companies in California. LaBar believes that the technology to develop zero emission trucks will be available in 2035 and that batteries and trucks will be affordable.

Weston LaBar

The problem, he believes, will be with be with the infrastructure:

“In terms of the Clean Air Action Plan, we have a serious problem with the infrastructure.

The cost of batteries is going down. Batteries are getting smaller. They’re going to be more efficient. As a result, trucks are going to be more efficient and the cost of the trucks will go down.

The technology needs to be available, reliable and affordable.

That’s not the challenge. The challenge is the infrastructure. The most important element are the utilities and the reluctance of utilities to invest in new power plants to support the growth in zero emission trucks and electrical and equipment.

Without this we don’t have the ability to expand and it won’t help to have a 2035 mandate for clean trucks and zero emissions trucks if the power isn’t there.”

At the moment, “the main utilities in California are not making sufficient investment in new power plants. As a result, we see brown-outs during the summer, we see blackouts during fires season when power is shut down to prevent fires. We see the high costs of peak periods when power demand is high … We need to have a real ramp up of power generation and we need to start doing that now.”

Scott Taylor is chief executive officer and chairman of GSC Logistics. The company provides harbor trucking services at the Port of Oakland and in the Pacific Northwest.

Taylor says the company operates three battery-powered trucks built by the Chinese manufacturer BYD at the Port of Oakland.  He says the electric truck capabilities still do not match those of diesel trucks. Even if costs and capabilities improve, he feels adoption of electric trucks by trucking companies utilizing owner operators will be difficult:

“We own three BYD electric trucks … These we acquired with grants …. We use them going from the Port to our yard and they go maybe 15-20 miles per day. We can do this because the drivers of the electric trucks are the only 3 employee drivers we have.”

Taylor says the legal mandates for owner/operators means that GSC cannot buy trucks for the drivers that contract for its business and that without changes in the law, it is up to the drivers to decide whether to acquire electric trucks. Since they have to pay off the purchase of diesel trucks that they currently own, the transition to electric trucks will be difficult:

“The rest of our drivers are owner/operators… They are smart people and good businessmen and maybe own up to 3 trucks. I was offered a grant to deploy 30 battery trucks. I can’t use them because I have to have an arm’s length relationship with my drivers. I can’t provide them with a charging station, I can’t loan them money or provide group insurance.”

PORTS SUPPORT MICROGRIDS

The Port of Los Angeles expects microgrids to help terminal transition to zero emissions citing a Pasha Stevedoring and Terminals L.P./ Port of Los Angeles collaboration. This launched the Green Omni Terminal Demonstration Project “a full-scale, real-time demonstration of zero and near-zero emission technologies at a working marine terminal. At full build out, Pasha will be the world’s first marine terminal able to generate all of its energy needs from renewable sources. The project is funded in part by a $14.5 million grant from the California Air Resources Board for reducing greenhouse gases and other pollutants. As part of the project, Pasha will integrate a fleet of new and retrofitted zero-emission electric vehicles and cargo-handling equipment into its terminal operations and demonstrate the latest generation of advanced technology for capturing ship emissions from vessels unable to plug into shore power at berth. With the goal of making the Pasha terminal a more sustainable and resilient facility that can operate independently off the grid in the event of a power loss, the project also features a microgrid that includes solar generation, battery storage and an energy management system to maximize usage.”[18]

The Port of Long Beach has signed a contract for a new microgrid “that will enable critical energy resilience. Schneider Electric will create a microgrid technology demonstration that will include an integrated system of distributed energy resources (DER) and microgrid controls, enabling added resilience via long-term islanding at the port’s critical response facility, the Joint Command and Control Center (JCCC) …The … $7.1 million project … is partially funded by a $5 million grant from the California Energy Commission (CEC).”[19]

P2S: CHALLENGES FOR TERMINALS & MICROGRIDS

Greg Alexander, senior project manager for P2S, is working with a Southern California container terminal. The project is a feasibility study for the terminal to build a microgrid that would provide electricity to transition cargo-handling equipment from diesel to electrical by the 2030 mandate.

Greg Alexander

Alexander said that the transition to zero emissions will be very costly with many challenges ahead:

“There is a huge cost in the investment of electrical equipment to replace the cleanest Tier 4 diesel equipment. We know from the experience of electrical cars that the fuel and maintenance cost is lower than diesel or gasoline powered vehicles.

A big challenge is investing in the infrastructure to support vehicle and equipment charging which is sizeable and is clouded by unknowns, such as how much charging, how fast charging and how can battery storage systems alleviate costs.”

He said that hydrogen fuel cells “offer the possibility of reducing the infrastructure cost by providing similar duty cycles to cars and trucks. You use filling stations to refill vehicles with hydrogen fuel and then you don’t need as much battery charging and storage. The question is how cost-effective and safe are hydrogen fuel powered vehicles and equipment?”

TOYOTA: HYDROGEN FUEL CELL TRUCK

Toyota is one of the companies that is investing in hydrogen fuel cell trucks, according to an American Journal of Transportation report:

“Toyota Motor Corp. plans to develop a hydrogen-fuel-cell-powered big rig for the North American market with its subsidiary Hino Motors Ltd.

Toyota: Hydrogen Fuel Cell Truck

Toyota said …  it will provide fuel-cell technology and its truck unit will supply the chassis based on its new XL Series. The Japanese automaker did not provide a timeline for beginning sales of the Class 8 truck but said it would debut a prototype in the first half of 2021. This expands on a March agreement to develop a 25-ton fuel-cell semi for the Japanese market.

‘Toyota’s 20-plus years of fuel-cell technology combined with Hino’s heavy-duty truck experience will create an innovative and capable product,’ Tak Yokoo, senior executive engineer at Toyota’s R&D unit, said in a statement.

The automaker has been involved in a pilot project to test fuel-cell trucks at the Port of Los Angeles since 2017. Toyota also has been one of the few to invest in hydrogen-powered cars despite uncertain demand and infrastructure hurdles. Fuel cells convert hydrogen gas and oxygen into electricity, which powers an electric motor with zero harmful emissions.”[20]

Alexander said that microgrids at terminals and at trucking facilities “could offer a partial answer to the energy infrastructure and recharging needs by creating storage onsite and creating an excess of capacity that could be resold back to the grid thus reducing installation and purchasing costs of electrical equipment and trucks ….

However, he says, there is some resistance to the concept from California utilities:

“A problem that we are having is that the IOUs (investor-owned utilities) do not have a process in place to connect to microgrids and this is slowing down their development. Fortunately, the California Public Utility Commission (CPUC) has just adopted new rules that will speed up the process.”[21]

Another problem “is that we don’t know how much electrical demand to plan for. We project that it will be 300-400 percent more electricity than is required by the Ports of Los Angeles and Long Beach today.”

A new grant that is designed to help identify power requirements for a trucking fleet and deploy 50-100 trucks as cited by Cannon and Tomley, “could help the ports, fleets and utilities answer this question.”

Alexander said the development of local power authorities in California cities and counties called Community Choice Aggregations could help the Port of Long Beach make investments in new power generation for microgrids, “but the concept has not yet been approved by the City of Long Beach. The CCA could facilitate the partnership with terminals and others to develop microgrids, which the IOUs have been slow to embrace.”

COULD LONG BEACH CLEAN POWER AUTHORITY INCREASE PORT’S RENEWABLE ENERGY GENERATION?

Clay Sandidge, who has worked with Alexander, is the chair of the Long Beach Community Choice Energy (CCE) working group, a grass roots organization seeking CCA adaptation. The CCA is a legal entity established by California law.

Clay Sandidge

The CCA allows a locality to make power purchase agreements with developers that avoid the higher dividend-based costs of investor utilities, such as Southern California Edison and Pacific Gas and Electric, who pass on these additional costs into utility rates paid by consumers, he says.

By avoiding dividend costs, CCA’s reduce utility bills by 4% “on average” Sandidge says. The investor utility still distributes power and bills customers under the CCA system, but at a reduced rate and giving CCA’s the option to negotiate their own power agreements. This is creating new opportunities for renewable energy developers.

According to the California Community Choice Association: “Over the last decade, local governments in more than 200 towns, cities, and counties throughout the state have chosen to participate in CCA to meet climate action goals, provide residents and businesses with more energy options, ensure local transparency and accountability, and drive economic development. There are currently 21 operational CCA programs in California serving more than 10 million customers, and with many more in progress, those numbers are set to grow.”

Sandidge and Community Choice Energy (CCE), are urging the Long Beach City Council to file an application with the California Public Utilities Commission. That move was delayed by the Long Beach City Council, but Sandidge is hopeful the City will reconsider in 2021.

Sandidge says that thirty-one cities in Southern California compose the Los Angeles Power Alliance. One option for Long Beach is to join the Alliance. The other is to set up its own independent CCA.

The Port of Long Beach and Los Angeles Clean Air Action Plan is not only designed to transform port operations to zero emissions. It is also designed to curb current emissions that contribute to the high rate of asthma and respiratory cases that plague poorer neighborhoods in Long Beach, that are contingent to harbor trucking corridors such as the 710 freeway. This respiratory exposure of Long Beach residents can be reduced by the CCA supporting the Port’s Clean Air Action Plan goals and accelerating clean renewable power generation, Sandidge says.

Several years ago, former Port of Long Beach executive director Jon Slangerup advocated the so-called “Energy Island” strategy for the Port of Long Beach. He argued that the Port’s zero emission goals could be advanced by utilizing underutilized Port properties for the assembly and manufacture of new wind and solar projects to make the Port energy independent, create new economic development and meet zero emission goals.[22]

At a time when California ports are losing market share to East and Gulf coast ports, Sandidge argues, implementation of the Long Beach CCA would allow the City and the Port to contract for solar and wind projects that could reduce the higher utility costs paid to Southern California Edison (SCE) and fast track new renewable power generation jobs and economic development:

“There is decent wind offshore off nearby Catalina Island that could support a wind farm and utilize transmission lines connecting to the Ports of Long Beach and Los Angeles … The Port is projecting that it will triple its energy consumption over the next fifteen years. The State mandate for container ships to utilize shore power when at berth requires 1.5 to 3.5 megawatts per vessel. So, if you had ten vessels at berth at the same time you are looking at 30 megawatts just to power those ten ships. New California regulations will expand shore power requirements for other vessels. At the same time, the Ports’ Clean Air Action Plan is pushing to switch container handling equipment and trucks to electric power. This will need to be supported by new renewable generation at the Port. The CCA can incentivize new developers at a time when Edison is less able and willing to support additional renewable power.”

UNIVERSITY OF MAINE: FLOATING WIND FARM

Sandidge introduced floating wind turbine pioneer Habib Dagher to Port of Long Beach officials several years ago. Dagher is the founding executive director of the Advanced Structures and Composites Center at the University of Maine which built the first U.S. prototype floating wind turbine.

A 10-12 MW floating wind farm pilot project off the coast of Maine is planned in collaboration with Cianbro Corporation, the University of Maine, and the Advanced Structures and Composites Center. The wind turbines will float on a concrete hull system designed by the University and to be built in the United States. The turbines will be sourced from abroad, Dagher said.[23]

University of Maine Floating Wind Turbine

In August 2020, the University of Maine announced a wind farm consortium to test its floating wind turbine design:

“The University of Maine will collaborate with New England Aqua Ventus LLC, which includes two global energy companies that are investing $100 million in the project. That investment comes on top of $47 million in grants already awarded by the U.S. Department of Energy.

Diamond Offshore Wind, a subsidiary of Mitsubishi Corp., and RWE Renewables, the world’s second-largest offshore wind company, have joined the public-private partnership, the university announced Wednesday. The goal is to show the feasibility of a full-scale, floating wind turbine in deep water, where winds are more consistent and turbine blades are out of sight from the mainland.

Chris Wisseman, CEO of Diamond Offshore Wind, said his company and RWE are currently responsible for about a quarter of the world’s offshore wind energy supply, most of it produced in shallow coastal waters.

‘We’re both keenly interested in floating offshore wind,’ Wisseman said. ‘Offshore wind has really taken off in the last decade and floating fits in places like Maine, California and Japan where the oceans are really deep.’

Using a floating concrete hull featuring a can-and-box design commonly used to build bridges, the project will support a 10- to 12-megawatt wind turbine 2 miles south of Monhegan Island and 14 miles from the Maine coast. Three mooring lines will anchor the hull in 300 feet of water.”[24]

So, if a Long Beach CCA contracted for 360 MW of power from an offshore wind farm located off the California coast, it would be theoretically possible to take the Ports of Los Angeles and Long Beach’s off the grid and allow them to operate as an independent renewable power authority.  This notion is based on the 90 MW current power requirements at the Ports of Los Angeles and Long Beach in 2021 being multiplied by 4 to correspond to the high end 400% future power projected by the Ports of Los Angeles and Long Beach, as explained by Heather Tomley (i.e., 90 x 4 =360). According to the University of Maine demonstration project, 360 MW divided by a single 12 MW wind turbine would require 30 turbines to meet the two ports’ high-end peak power requirement (i.e., 360 divided by 12=36).

Thus, the CCA model might help the Port of Long Beach and Los Angeles increase renewable power generation and emissions and reduce reliance on an increasingly challenged California grid. Of course, it would have to be approved by the Long Beach City Council.

At the same time, offshore wind farms may create new business for ports: In June, New Jersey Governor Phil Murphy announced plans for the “New Jersey Wind Port”, proposing a $400 million investment in a facility on the Delaware River that would employ 1,500 workers and provide staging and assembly of components for offshore wind projects up and down the entire East Coast:

“The New Jersey Wind Port will create thousands of high-quality jobs, bring millions of investment dollars to our state and establish New Jersey as the national capital of offshore wind. This is a vital step forward in achieving our goal of reaching 7,500 MW of offshore wind power by 2035 and 100% clean energy by 2050.”

Earlier this year, New Jersey chose Ørsted Ocean Wind to build the state’s first offshore wind project, expected to generate 1.1 gigawatts at a site off the coast of Atlantic City.

I gigawatt, or 1,000 megawatt hours (MWh), would power around 725,000 homes.

The initiative was hailed by Laura Morton, American Wind Energy Association senior director, policy and regulatory affairs, offshore: “This forward-thinking effort underlines New Jersey’s leadership in harnessing the economic and environmental potential of offshore wind.”[25]

In Northern California, the Humboldt Bay Harbor, Recreation and Conservation District is making plans to become an offshore wind farm support port for proposed offshore wind farms off the California coast:

“… the Board of Commissioners for the Humboldt Bay Harbor, Recreation and Conservation District will consider hiring local engineering firm LACO Associates to develop a conceptual master plan for a completely reimagined port — one with a modern, seven-acre dock capable of handling large cargo vessels and assembling offshore wind platforms, turbines and blades …”[26]

SOUTHERN CALIFORNIA EDISON

While Southern California Edison (SCE) is “technically neutral,” Sandidge says, the CCA poses a major threat to the utility’s revenue base: Long Beach is the second largest city in Los Angeles County and contains the Port of Long Beach, the second biggest port in the United States, and Long Beach Airport.

Sandidge says that the existing investor utility system has become a barrier to renewable energy development because the demands of profits to reward shareholders do not encourage the level of investment necessary to replace fossil fuel sources of power, including at the Port.

However, SCE is making major investments in battery storage and renewable energy according to a Greentech Media December 2020 report:

“The new contracts bring SCE’s energy storage total to just more than 2 GW installed and procured to date. If approved by the California Public Utilities Commission, the NextEra contract is set for delivery in 2023, while the other two utility-scale projects are scheduled to come online in 2022 … others are following suit. Pacific Gas & Electric is contracting seven battery projects totaling 423 megawatts, or nearly 1.7 gigawatt-hours of energy storage capacity, for August 2021 delivery. Municipal utility Los Angeles Department of Water and Power has contracted for up to 300 megawatts/1.2 gigawatt-hours of storage being built alongside 400 megawatts of solar power being built by 8Minute Energy.

Community-choice aggregators, the city and county entities that serve about one-quarter of the state’s electricity customers, have added 1,700 MW of renewable energy and more than 1,000 MW of battery energy storage over the past year, bringing total capacity to more than 6,000 MW.

August’s rolling blackouts during a regionwide heat wave highlighted the state’s need for grid resources that can store and shift its growing share of generation to serve demand peaks coming later in the day, as the sun goes down and solar power fades…

SCE’s “Pathway 2045” roadmap estimates the state needs to add 30 GW of utility-scale storage and 10 GW of distributed storage to meet the state’s decarbonization goals. The utility forecasts it will need to invest about $170 billion in clean-energy generation and energy storage by 2045 to meet that goal, along with up to $75 billion more for grid upgrades to help electrify transportation, heating and other sectors served by fossil fuels.

The state’s three investor-owned utilities are set to invest $1 billion on grid infrastructure and incentives, part of a big boost in EV charging funds accelerated by Gov. Gavin Newsom’s September decision to ban sales of new gasoline-fueled cars by 2035 in response to this year’s destructive and climate-change-exacerbated wildfires. “[27]

CALSTART: ELECTRIC TRUCK DEVELOPMENTS IN CALIFORNIA

Bill Van Amburg

Bill Van Amburg, the executive vice-president at CALSTART, sees progress with the transition to zero emission trucks: “There has been an improvement in the relationship that CARB (California Air Resources Board) has with private industry in California and recent regulations to establish zero emission goals for all diesel trucks by 2045 and harbor drayage trucks by 2035 are in line with incentives and zero emission technology that is developing to support the transformation of trucking and other vehicles from diesel power to electric power.”

Van Amburg, explained changes that are happening with electric trucks:

“The beachhead approach that I have cited saw the development of electrification beginning with transit vehicles such as buses, short distance delivery vans and is migrating into medium and heavy-duty trucks. We do not see this as a slow migration. It is happening rapidly and sometimes in parallel with other truck classification. Volvo has entered production on a Class 8 electric tractor truck; BYD is in early production on a Class 8 tractor; Peterbilt and Kenworth are in early production for Class 6 trucks and have said they will start production of Class 8 trucks in 2021; Tesla intends to start producing Class 8 trucks in 2021; Lion Electric has a Class 8 electric truck in early production; Freightliner will bring its eCascadia Class 8 to market in 2022; Navistar is looking at a similar timeframe for its electric Class 8 and this year for its Class 6 electric truck)  Indeed, we expect to see longer distance electric trucks traveling along corridors between cities by 2024/5.  These will include battery electric trucks with fast charging stations, and also likely fuel cell electric trucks with hydrogen refueling sites.

Refuse trucks are another battery-powered growth area because numerous stops support regenerative brake charging and compaction of refuse is 40% of energy consumption and so a battery-powered system can reduce costs and emissions.”

In the case of Volvo, “the power train for the transit bus has been deployed into Class 8 trucks, so that a modular system is developing in which economies of scale can help the OEM drive down the cost of production.”

At Tesla, “the Model 3 electric motor is deployed in four units to support Tesla’s electric truck. At the same time, Tesla has developed its batteries for cars into modules for energy storage on a home basis and industrial basis which allows for these batteries to also be deployed in electric trucks, providing a further modularization in the process.”

BYD, the Chinese battery maker, “has also located to California and is producing battery- powered buses at its facility in Lancaster, California. BYD is using the same component base to develop Class 8 trucks. BYD, like Tesla, can deploy its own battery modules to support the increased demand by heavy-duty trucks.”

In addition, Van Amburg says” we are seeing that California is attracting new investment that will help drive new jobs and technologies for zero emissions in the state … Proterra, a battery-electric bus maker moved from South Carolina to California; it also assembles its own battery packs for its buses; it is providing these battery systems to Daimler and other OEMs; and its customizable battery systems help provide regenerative electricity for trucks and vehicles…”[28]

Cummins, “the largest independent diesel engine maker, purchased EDI (Efficient Drivetrains Inc) in Milpitas, California to expand its electric drive component capability. Meritor, a global Tier 1 supplier to the truck industry, purchased Escondido, California-based TransPower to add electric drive components and battery technology to its electrified axle product capability.  GreenPower Motor Company of Vancouver, Canada has opened a production line in Porterville, CA because this is the first market.”

The business case for zero emission commercial vehicles: “does not yet exist without incentives in most applications, but the payback is getting better each year. For now, you need incentives in order to cover the cost of a new truck within six years, but it is our projection that by 2025 there will be life cycle parity with diesel, and by 2030 the technology will be sufficiently advanced in batteries, electric motors and in power trains to create a lower cost vehicle which will become much more affordable….

At the same time, we know that the electric truck has fewer moving parts than an internal combustion engine and so will be less costly to maintain and resulting in a faster return on investment.”

Infrastructure plays a key role in advancing these goals:

“Emphasis on infrastructure is needed, and California is focusing funds on these investments.  Ultimately, this will be a multi-billion-dollar changeover, but it does not all have to happen at once and will be rapidly scaled.  More is needed but the state is making a good start now.  The utilities are directed by State Senate Bill 350 (SB350) to invest in medium- and heavy-duty charging infrastructure, and the state Public Utilities Commission (CPUC) has approved hundreds of millions of dollars of utility investment plans for truck and bus depot charging.  The utilities have also been studying corridor charging needs along freeways in the West (https://westcoastcleantransit.com/) and the California Energy Commission is planning to scale its investment support for depot, regional and corridor charging.  The Governor’s office just unveiled a major ZEV market development strategy (https://business.ca.gov/industries/zero-emission-vehicles/zev-strategy/)   that has a big infrastructure component.  We are moving through the learning curve on scaling these big deployments of infrastructure. The challenge has been the lead-time needed to install.  But with experience, utilities and fleet operators are becoming savvier on how to stage and phase in the charging in a more effective and timely way.”

He says that “the construction of charging stations is critical and is being supported by the utilities, who are working with the truck fleets to build charging facilities at company sites. California’s Public Utilities Commission (CPUC) has approved significant investment by the utilities in infrastructure for electric commercial vehicles and the California Energy Commission (CEC) is also starting to make additional support funds available… There is an increased development of inductive charging, which does not require a plugged-in charge, but allows you to drive over a platform in order for the batteries to be charged.”

Plug-ins work well for vehicles that can be parked overnight: “However, utilities are urging fleets to anticipate their future needs and account for that in their infrastructure planning, so as to reduce the cost of installation.”

Inductive charging “is not necessarily faster than plug in; it simply offers the flexibility of no contact if that works better in a route or work rule structure.  It is also more expensive to install.  The likely path for a fleet that needs to keep vehicles in operation will be ultra-fast charge rates that currently are being developed for plug-in systems.”

In addition, “there are new fast charging stations being developed to allow trucks and vehicles to charge more quickly and these technologies could work in tandem with the development of park-and-charge lots that will be available for owner/operators who may not have access to a commercial charging station.  These systems could also be used for regional fast charging “hubs” or along major transportation corridors for longer haul trucks.”

Truck financing is available through leases:

“A company in San Rafael, California (Amply) is providing a type of lease/buy back service known broadly as ‘Transportation as A Service (TaaS).’ In their case they are financing the infrastructure on a long-term agreement that nets money to the operator.  In other cases, TaaS can include financing the vehicles, infrastructure and fuel and charge a single monthly fee for a super-lease. We believe these services can both reduce upfront costs, but allow the fleet to benefit from the operational cost savings by bringing those savings into the lease structure …

Incentives and financing are critical: “The main and most helpful incentive for fleets is a simple, streamlined purchase incentive: something that reduces the purchase price at the point of sale to be close to the cost of the diesel conventional truck.  This is the biggest initial barrier that can help early fleets procure vehicles.  Other support that can help is funding, or tax credits, for infrastructure; and reducing or eliminating excise tax on zero emission trucks …

Ultimately, we believe private capital will be moving significantly into this space as it becomes increasingly clear that investing in these systems have strong payback because of the operational cost savings for the users. Duke Energy and NextEra Energy are two examples of large companies setting up business strategies to support these deployments.  Most of the truck makers are also starting to offer financing mechanisms that can include the vehicle and the infrastructure in a bundle.”

Van Amburg concludes by saying:

“The sum total of the investment in zero emission trucks and vehicles is that it is creating a multitude of economic opportunities to transform commercial vehicles from diesel fuel to zero emission power and reduce long term costs for fleet operators, owner/operators and ultimately for shippers. The investment being made right now at the Ports of Los Angeles and Long Beach will give the two ports a big lead in reducing truck and equipment costs that also eliminate pollution and respiratory illnesses afflicting communities and help California transform itself into a zero-emission economy that also reduces the effect of global warming.”

The investment in battery storage “for truck fleets and other businesses creates an additional revenue stream for microgrids that allows the fleet to store electricity at peak production times (for instance, when solar production is high) that it can use itself or sell back to the grid during high demand times; this will help reduce the acquisition costs of zero emission trucks and potentially make the investment self-financing via the microgrid generation. All of these investments are going to create new jobs in zero emission and renewable energy fields. In fact, some trucking companies are already investing in solar facilities that they deploy for vehicle charging and battery storage adding an additional cost savings to the companies’ bottom line.”

DEPENDABLE HIGHWAY EXPRESS ELECTRIC TRUCK STRATEGY

Troy Musgrave, director of process improvement at Dependable Highway Express (DHE), is responsible for product and vendor review of hardware and software products that show potential value. He also supervises DHE’s electric truck program.

Troy Musgrave

DHE operates a long-haul trucking division but also operates 100 drayage trucks at the Ports of Los Angeles and Long Beach.

Almost all DHE drivers (94%) are employees and so are not subject to the owner/operator problems described by Scott Taylor at GSC Logistics.

Musgrave explained the challenges facing DHE:

“The cost of the electric tractor and truck is over twice the cost of a comparable diesel vehicle so there is a big cost difference and we need the incentives from the State to make using electric vehicle a viable option…

We have one pilot box truck that we acquired from Volvo that operates a short distance service. We could replace all 10 trucks with electric trucks. I think we start with meeting the short distance demands of the box trucks which operate during the day and can charge at night.”

“Right now, we have 5 electric trucks, “he says.

Volvo Electric Truck

Originally, Volvo approached DHE management to acquire their battery-powered trucks and Musgrave was tasked with supervising the project:

“The drivers like driving the trucks and one said to me that ‘I would be disappointed to have to go back to a diesel.’ The electric trucks are quieter than the diesels, they have features that are similar to a diesel and in terms of performance they have the torque to pull the heavy loads just like the diesel trucks.

So …  we have electric fork lifts, electric yard tractors and the box trucks. In all of the cases we see cost savings in maintenance: fewer moving parts, no engine and so no oil changes, no emission controls to maintain and repair and fueling is cheaper with electricity than with a diesel.”

Musgrave summarizes improvements that must be made:

*The cost of trucks needs to be drastically reduced.

*The truck range needs to be extended to 500 miles: “I hear Tesla say they can deliver this but we haven’t seen it.”

*The supply of batteries needs to be increased: “There was just an announcement by Tesla that they are delaying the roll out of their electric truck because they don’t have enough batteries … Battery cell production needs to ramp up to keep current goals set by California and others.  Another barrier to be solved.”

*Charging capacity needs to be increased: “We have to rely on charging our vehicles on our property with chargers we invest in. When you take electricity off the grid you have a tremendous amount of electricity and so you need a transformer that you can connect to your charging plugs. Charging right now is a slow process and so you need to charge at night and that prevents you utilizing the tractor for dual uses: short distance during the day, long distance at night.  We are looking at a new technology which utilizes a 1 MW battery storage system in a container.”

Musgrave says DHE is investing in a microgrids to reduce electrical truck and equipment costs: “We currently have several solar installations and one new system with an 864-kwh capability here in Ontario (California). The solar system backed by storage batteries will allow us to charge the batteries and use the batteries to charge the trucks at night when the sun goes down. The system can also provide electricity to the grid and reduce DHE’s utility bill. So, we could eventually charge our trucks at no cost while generating revenues from sales of electricity to the grid. If trucking fleets did this all over California, we would provide Edison and PG& E with a backup power supply that would alleviate power outages and the need to contract for peak capacity suppliers during heat waves.”

A big worry of fleet owners is “what happens if the power goes out and what happens if there aren’t enough charging stations.”

The microgrid reduces the fleet’s exposure by creating a local source of power and battery charging.

Musgrave concludes: “I believe the 2035 goal of zero emission electric trucks at the ports is viable if the challenges can be met.”

CHINA DOMINATES WORLD BATTERY MANUFACTURING

Musgrave warns that the production and supply of batteries to power trucks and equipment remains a major challenge. He cited Tesla’s announcement that it had delayed its semi-truck development due to a shortage of batteries. According to the news report:

“Tesla’s oft-delayed Semi is still set for 2021 production, the company noted in its earnings release Wednesday, despite company founder and CEO Elon Musk noting that ‘it would not make sense for us to do the Semi right now” due to a shortage of battery cells.’” [29]

The shortage of batteries and dependency on China is likely to hurt U.S. car and truck builders without an effort to build up battery manufacturing in the United States.

The New York Times in a report subtitled “With government support and lavish subsidies, Chinese companies have come to dominate the market for batteries, motors and other essentials Detroit may need for its new fleets.”

The report pointed out that General Motors’ transition to electric cars and trucks would rely on batteries made in China and GM’s announcement “that it aspires to eliminate gasoline and diesel cars from its fleet by 2035 and embrace electric cars follows a road map successfully drawn by Beijing. To get there, G.M., the Detroit stalwart and symbol of American industrial might, may have no choice but to embrace car and battery technologies in which Chinese companies play leading roles.”

The New York Times goes on to say that when setting the time frame, G.M. seems to be matching China’s timeframe: Chinese policymakers ordered that most vehicles sold in China must be electric by 2035.

‘When it comes to global automakers’ electric vehicle plans, all roads lead back to Beijing,’ the Times quoted  Michael Dunne, a former president of G.M.’s Indonesia operations:” China has the market clout and the steadiness of regulatory policy to influence automotive decisions made from Detroit to Tokyo to Wolfsburg, Germany.’[30]

FAILURES OF U.S. BATTERY MANUFACTURING

The reason for the US. dependence on China is the result of the failure to maintain a competitive battery manufacturing industry in the United States.

A 2020 Pro Publica report gives the reasons:

“The failed U.S. effort to dominate global production of the lithium-ion battery — which is key to energy independence, automobile innovation and more — holds lessons for leaders grappling with the U.S.’s reliance on China for emergency medical supplies …

Lithium batteries now power not just a new generation of electric cars, but everything from cordless drills to personal drones. Utilities use them to store energy generated by windmills and solar panels. They even push air through the protective suits ordered recently by the Federal Emergency Management Agency to help New York hospital workers responding to COVID-19.

But the effort to establish a lithium battery manufacturing base in the U.S. largely failed, even after the Obama administration made it a keystone of its 2009 stimulus program, aiming to produce 40% of the world’s lithium-ion batteries for advanced vehicles by 2015.

Today, that number stands at about 10%, largely because of Tesla’s battery plant in Nevada. Most of the batteries used in a plethora of U.S. products are shipped in from China or other foreign suppliers. Despite its economic nationalist rhetoric, the Trump administration has done little to revive battery-making, proposing deep cuts to alternative energy research and favoring fossil fuels at every turn …

A shuttered battery plant in Romulus, Michigan, about 10 minutes from Detroit’s airport, is a monument to that fizzled dream. Just down a two-lane road from a General Motors plant that makes gas-powered engines, A123 Systems’ factory had opened a decade ago, with generous funding from Obama’s stimulus program.

Then, as now, the federal government was pumping money into the economy to stave off total collapse. Unlike today, however, the goal was to create as many jobs as possible rather than support people whose jobs had to disappear in order to contain a deadly virus. And the Obama administration wanted to do something else, too: Retool major industries to help them survive and thrive in the future …

That failure to build a robust industry that’s critical for the country holds many lessons for leaders during the current predicament….

‘The government invests in basic research and leaves everything else to chance,’ said Sridhar Kota, an engineering professor at the University of Michigan who served as assistant director for advanced manufacturing at the Office of Science and Technology Policy during the Obama administration. ‘The free market has spoken for 30 years. It’s not working for us, because we are not leveraging our own investments, and lithium-ion batteries are just one painful example of that.’”[31]

When both of its factories were built, A123 had the capacity to be America’s biggest lithium-ion battery producer. Its signature client was the startup Fisker Automotive, which made the sleek, battery-powered Karma sports car.

Making lithium-ion batteries is not unlike baking cinnamon rolls. At A123’s Romulus plant, where workers donned hazmat suits for protection, batches of graphite and lithium were mixed into a ‘slurry’ that was stored in giant holding tanks. Each mixture was rolled out onto copper or aluminum foil, baked in a special oven and pressed to a precise thickness …”

It didn’t take long for things to go wrong as the report went on to say:

“In 2011, defective A123 batteries sold to Fisker led to a $66.8 million recall that tanked the company’s stock price … A123 also struggled to build a customer base. General Motors, still recovering from its own financial crisis, chose South Korea’s LG Chem over A123 to make batteries for the Chevy Volt. “I was unwilling to take a risk on a startup battery company,” said Tony Posawatz, who ran GM’s Volt program at the time.

A123 wasn’t the only battery-maker slowly wilting. Johnson Controls, a leading manufacturer of lead acid batteries, scrapped plans for a new plant that would focus on lithium-ion batteries. After disappointing GM Volt sales, a federal audit found that LG Chem had spent nearly all of its stimulus grant but constructed only 60% of the promised capacity …

When A123 filed for Chapter 11 bankruptcy in October 2012, it had used $132 million of its $249 million federal grant, and its Michigan hiring peaked at 1,000 employees.

Deepening the wounds, a Chinese industrial conglomerate called Wanxiang paid only $256.6 million for A123’s assets in 2013. There was bipartisan outrage in Congress about the deal, but not enough to stop the sale. Wanxiang later bought Fisker too.”[32]

SIMON MOORES BENCHMARK MINERAL INTELLIGENCE

Simon Moores, managing director, Benchmark Mineral Intelligence, is a respected battery industry analyst. He testified before the US Senate Committee on Energy and Natural Resources Committee on June 24, 2020 and warned about the U.S.  loss of battery production to China:

“This is my third time presenting to the Senate in two and a half years on the criticality of securing supply chains for the electric vehicle and energy storage revolution.

In that time, we have witnessed a global battery arms race and watched the world’s number of supersized battery plants – known as battery mega factories or gigafactories – go from 17 to 142.

China has increased its number of battery mega factories from 9 to 107, of which 53 are now active and in production.

The USA has gone from 3 to 9 battery mega factories in the pipeline of which still only 3 are active, the same number as back in 2017.

Lithium-ion batteries are a core platform technology for the 21st century. They allow our energy to be stored on a widespread basis in electric vehicles and energy storage systems, and they spark the demand for the critical raw materials to be mined, chemically refined and made into engineered, functional materials.

A new global lithium-ion economy is being created.

Yet, any US ambitions to be a leader in this lithium-ion economy continue to only creep forward and be outstripped by China and Europe. In more stark terms: China is building the equivalent of one battery mega factory a week, the USA one every four months.

This rise of the battery mega factories will require demand for battery raw materials to increase significantly: by 2029, demand for nickel will double, cobalt to grow by 3 times, flake graphite but four times, and lithium by more than six times.

The tectonic plates of the industry have shifted. Layered on top of this are new, emerging demands of supply chain security, transparency and accountability. Not only has the COVID-19 pandemic showed the weakness of truly global supply chains and the need to build domestically, it has continued to shine a spotlight on how these raw materials are extracted around the world.

In the USA, progress is far too slow on building out a domestic lithium-ion economy, but the opportunities that remain are vast and pioneers have emerged. Tesla has continued to lead the industry and build on its Nevada gigafactory by announcing super-sized battery plants in Germany and China and is widely expected to announce a fourth plant in Texas.

Ohio, with bipartisan support and of organizations like JobsOhio, has recognized the scale of this opportunity and successfully attracted the $2.3B General Motors /LG Chem joint venture. The state now has the potential to become a second major regional hub for batteries in the USA.

You can also turn to Alabama, Georgia and Tennessee for inspiration and knowhow in their successful attempts to court automotive and battery cell investment.

Yet most of these developments are more stand-alone achievements than a coherent US plan, and all rely on imported raw materials and chemicals for the two main components that make a lithium-ion battery: the cathodes and anodes.

America has some of the best cathode knowhow in the business, yet only three cathode plants producing under 1% of global output. While China produces over two third of global supply from over 100 cathode facilities.”[33]

NEW U.S. BATTERY START-UP

There is a bright spot.

Tesla’s former battery production director J.B. Straubel is working on a plan, according to an Axios report:

“President-elect Joe Biden has made vehicle electrification a core element of his energy and economic policy. But the U.S. is far behind in the global battery race, creating a potential supply chain bottleneck that could slow EV adoption for the next decade.”

…. Tesla’s former battery chief, J.B. Straubel, who has seen the issue developing for years, envisions a long-term solution that would produce EV batteries from recycled lithium, nickel and cobalt salvaged from other cars, not mined from the earth.”

His new startup,” Redwood Materials, is developing a closed-loop battery supply chain that he says would lead to cheaper electric vehicles — without harming the environment.”[34]

This addresses an important point, which is there is insufficient recycling of batteries and the batteries pose an environmental hazard when they are not recycled:

“As the popularity of electric vehicles starts to grow explosively, so does the pile of spent lithium-ion batteries that once powered those cars. Industry analysts predict that by 2020, China alone will generate some 500,000 metric tons of used Li-ion batteries and that by 2030, the worldwide number will hit 2 million metric tons per year.

If current trends for handling these spent batteries hold, most of those batteries may end up in landfills even though Li-ion batteries can be recycled. These popular power packs contain valuable metals and other materials that can be recovered, processed, and reused. But very little recycling goes on today. In Australia, for example, only 2–3% of Li-ion batteries are collected and sent offshore for recycling, according to Naomi J. Boxall, an environmental scientist at Australia’s Commonwealth Scientific and Industrial Research Organisation (CSIRO). The recycling rates in the European Union and the US—less than 5%—aren’t much higher.

‘There are many reasons why Li-ion battery recycling is not yet a universally well-established practice,’ says Linda L. Gaines of Argonne National Laboratory. A specialist in materials and life-cycle analysis, Gaines says the reasons include technical constraints, economic barriers, logistic issues, and regulatory gaps.

All those issues feed into a classic chicken-and-egg problem. Because the Li-ion battery industry lacks a clear path to large-scale economical recycling, battery researchers and manufacturers have traditionally not focused on improving recyclability. Instead, they have worked to lower costs and increase battery longevity and charge capacity. And because researchers have made only modest progress improving recyclability, relatively few Li-ion batteries end up being recycled.”[35]

Axios quotes Straubel as saying that recycling … “is staring us right in the face as the obvious answer to this.”

In a closed-loop system, mines won’t be needed, Straubel says but:

“The catch: There aren’t enough used EVs (electric vehicles) hitting the junkyard yet. So, for now, Redwood is perfecting its processes using batteries stripped from consumer electronics as well as scrapped battery materials from Panasonic, Tesla’s joint venture partner in its Nevada gigafactory.

It’s currently taking in 2 GWh worth of used batteries for processing — equivalent to 30,000 cars — and will scale as fast as it can as more EVs hit the end of their life cycle …”[36]

FOOTNOTES

[1] https://ajot.com/news/article/toyota-adds-to-hydrogen-bet-with-n-american-fuel-cell-semi

[2] https://ajot.com/insights/full/ai-proposed-city-of-long-beach-power-authority-could-accelerate-port-wind-power-development

[3] https://cleanairactionplan.org/documents/2017-clean-air-action-plan-update-fact-sheet-10-23-17.pdf/

[4] Global Commercial Vehicle Drive to Zero Program – www.globaldrivetozero.org

[5] https://cleanairactionplan.org/documents/2017-clean-air-action-plan-update-fact-sheet-10-23-17.pdf/

[6] Email from Heather Tomley to the author February 5, 2021

[7] https://www.energy.ca.gov/solicitations/2020-11/gfo-20-606-zero-emission-drayage-truck-and-infrastructure-pilot-project

[8] See www.cleanairactionplan.org

[9] https://www.ajot.com/premium/ajot-long-beach-container-terminal-offers-competitive-blueprint-for-automat#:~:text=LBCT’s%20ultimate%20capacity%20to%20handle,powered%20and%20generate%20zero%20emissions.

[10] Ibid

[11] Interview with Weston LaBar, president Harbor Trucking Association, February 2, 2021

[12] https://www.kalmarglobal.com/4ad329/globalassets/equipment/pdfs/whitepaper_conversion-to-automated-straddle-carrier-terminal.pdf

[13] https://www.konecranes.com/en-us/equipment/overhead-cranes/automated-cranes

[14] https://www.pmanet.org/wp-content/uploads/2020/09/USWC_and_BC_Competitiveness_Assessments_29_Aug_2020_005.pdf

[15] Ibid, p.26

[16] https://rbtus.com/ssas-denike-la-lb-port-congestion-will-last-at-least-until-march/

[17] Interview with author February 2, 2021 and email February 3, 2021

[18] https://www.portoflosangeles.org/business/terminals/breakbulk/pasha

[19] https://www.smartenergydecisions.com/energy-management/2018/10/12/port-of-long-beach-to-add-microgrid

[20] https://ajot.com/news/article/toyota-adds-to-hydrogen-bet-with-n-american-fuel-cell-semi

[21] Email to author by Greg Alexander, Monday, Feb 1, 2021 at 11:33 AM

[22] https://ajot.com/insights/full/ai-proposed-city-of-long-beach-power-authority-could-accelerate-port-wind-power-development

[23] https://ajot.com/insights/full/ai-proposed-city-of-long-beach-power-authority-could-accelerate-port-wind-power-development

[24] https://www.pressherald.com/2020/08/05/umaine-enters-into-public-private-offshore-wind-venture-worth-147-million/

[25] https://ajot.com/insights/full/ai-proposed-city-of-long-beach-power-authority-could-accelerate-port-wind-power-development

[26] https://lostcoastoutpost.com/2021/feb/8/harbor-district-exploring-major-port-redesign-supp/

[27] https://www.greentechmedia.com/articles/read/socal-edison-inks-another-massive-590mw-round-of-utility-scale-battery-contracts

[28] https://www.sfgate.com/business/article/Electric-bus-maker-Proterra-opens-California-11438401.php

San Francisco Chronicle July 26, 2017: “Proterra, the Burlingame builder of electric buses, opened a factory in the Los Angeles area Wednesday, in an effort to move some of its manufacturing closer to its West Coast customers.

The company’s new plant, in the City of Industry, will build buses for public transit agencies throughout California and other Western states. Until now, all of its battery-powered buses have been built in South Carolina and shipped to customers — a sometimes expensive proposition.

The company moved its headquarters to California in 2015 after concluding that the state — with its strong emphasis on fighting climate change — could become its biggest market.”

[29] https://www.ccjdigital.com/alternative-power/article/14973005/tesla-semi-production-on-pace-faces-battery-cell-shortages#:~:text=Tesla%20Semi%20on%20pace%20for,sense%20right%20now%2C’%20says%20Musk&text=%E2%80%9CThe%20main%20reason%20we%20have,for%20it%2C%E2%80%9D%20he%20said.

[30] https://www.nytimes.com/2021/01/29/business/gm-china-electric-cars.html#:~:text=the%20main%20story-,G.M.’s%20Electric%20Car%20Push%20Could%20Put%20China%20in%20the,need%20for%20its%20new%20fleets.

[31] https://www.propublica.org/article/to-understand-the-medical-supply-shortage-it-helps-to-know-how-the-us-lost-the-lithium-ion-battery-to-china

[32] Ibid

[33] https://www.energy.senate.gov/services/files/6A3B3A00-8A72-4DC3-8342-F6A7B9B33FEF

[34] https://www.axios.com/battery-shortage-risk-electric-car-era-fa699bfb-9d57-4bdc-b907-993903cc7620.html

[35] https://cen.acs.org/materials/energy-storage/time-serious-recycling-lithium/97/i28

[36] https://www.axios.com/battery-shortage-risk-electric-car-era-fa699bfb-9d57-4bdc-b907-993903cc7620.html