STATE OF CALIFORNIA ENERGY RESOURCES CONSERVATION AND DEVELOPMENT COMMISSION ADVANCED TRANSPORTATION TECHNOLOGY STAKEHOLDERS (ATTS) FORUM Theme: "Transportation Technology Partners for California and the World" Friday, November 21, 1997 9:00 a.m. Held at the: California Energy Commission 1516 Ninth Street, Hearing Room B Sacramento, California Reported by: George Palmer STAFF PRESENT (Alphabetically listed) McKINLEY ADDY, Energy Technology Development Division AVTAR BINING, Ph.D., Program Manager, Transportation and Energy Technologies Advancement Program SUSAN BROWN, Deputy Directory, Transportation Technology & Fuels Office NANCY DELLER, Deputy Director, Energy Technology Development Division JAMES FOLKMAN, Energy Technology Development Division DAN FONG, Senior Policy Analyst, Transportation Technology and Fuels Office JERRY WIENS, Energy Technology Development Division Consultant to the California Energy Commission WALT LOSCUTOFF, Ph.D. ALSO PRESENT (Alphabetically listed) TONY ANDREONI, Air Resources Board, Research Division ROGER A. ANDERSON, Clean Energy Systems, Inc. DAVID ASHUCKIAN, California Air Resources Board JOSEPH BLAND, inventor MITCH BORETZ, Center for Environmental Research and Technology College of Engineering, University of California, Riverside NORM BRYAN, Electric Vehicle Association of the Americas DENNIS CHAMBERS, Allied Signal JAMES J. COLE, Southwest Research Institute STEPHEN E. DOYLE, Clean Energy Systems, Inc. RICHARD A. DUSTE, U.S. Electricar JOHN EASTWOOD, Trinity Flywheel Power ALSO PRESENT, continued (Alphabetically listed) JOHN T. GUERIN, AeroVironment Inc. JONATHAN HAINES, Toyota Technical Center, USA, Inc. MARCEL L. HALBERSTADT, Ph.D., American Automobile Manufacturers Association GERALD HALPERT, Ph.D., Jet Propulsion Laboratory JACK KITOWSKI, California Environmental Protection Agency, Air Resources Board, Mobile Source Controls Division MARK KRAGEN, Calstart W. A. LUSBY, Northrop Corporation JASON MARK, Union of Concerned Scientists CECILE M. MARTIN, California Electric Transportation Coalition PAUL NORTON, National Renewable Energy Laboratory GLENN D. RAMBACH, Desert Research Institute KENNETH D. SMITH, Mathanex J. RAY SMITH, Ph.D., Lawrence Livermore National Laboratory ALEX SPATARU, A-DEPT Green ARTHUR SWEET, Goremotive Industries, Inc. JAMES P. TAYLOR, Clean Energy Systems, Inc. GREGORY E. VLASEK, California Natural Gas Vehicle Coalition WEI-MING WANG, Delphi-E INDEX Agenda Item Page Welcome and introductory comments by Ms. Deller: 5 ATTs' role by Mr. Fong: 7 Discussion: 10 Part I TETAP by Dr. Bining: 20 Discussion: 33, 39 Summary by Ms. Brown: 75 Introduction to afternoon session by Dr. Bining: 77 Part II Specific technologies and barriers by Dr. Loscutoff: 84 Dicussion: 89 Summary by Mr. Fong: 157 Closing remarks by Ms. Brown: 162 Adjournment: 163 Reporter's Certificate: 164 5 1 Friday, November 21, 1997 9:03 o'clock a.m. 2 P R O C E E D I N G S 3 MS. DELLER: I'm Nancy Deller, and I'm head of the 4 Energy Technology Development Division. And part of Division 5 Programs include the Transportation, Technology and Fuels 6 Office, in which the TETAP Program is located. And I'm here 7 today just to welcome you to this activity. 8 We've been working for a long time trying to improve 9 our TETAP process, our Transportation Energy Technology 10 Advancement Program process. And we wanted to make sure that 11 we were involving all the people who are stakeholders and have 12 an interest in making sure this is a successful activity, so 13 we've invited you here today. 14 The purpose of our meeting today is we want to go 15 through the solicitation process that we have and to work with 16 you to identify the things that we can do to improve that 17 process. 18 We have hired a contractor who has interviewed a 19 number of people, some of which may be you. And he has given 20 us some insights on what the stakeholders he has spoken to 21 think are the problems and the issues that we need to deal 22 with in making the TETAP process more accessible, more user 23 friendly, more effective. 24 And that's one of the purposes in our meeting today 25 is we'd like to get your input on the issues that have been 6 1 identified and to see if you agree with the issues that have 2 been identified, if there are other issues that we need to 3 focus on and change in order to be able to work with you more 4 effectively. That's one of the items we want to talk with you 5 about. 6 The other is that we want to focus on what 7 technologies should we focus the TETAP Program on? What 8 transportation technologies should we put our efforts into? 9 And we've identified some. We want to get your reaction to 10 that and to identify what the critical issues are that are 11 associated with those technologies so that we can target, to 12 the extent possible, what we do so it can be more effective. 13 I'll put up the Agenda for today's meeting and then 14 introduce you to the people here from the Energy Commission. 15 I think we have an ambitious meeting Agenda today, 16 but I think we'll be able to get through it. 17 As I said I'm Nancy Deller, I head up the Energy 18 Technology Development Division. In the audience is Susan 19 Brown, in the red jacket, who heads up the Transportation 20 Technology and Fuels Office. And to my right is Dan Fong, 21 who's our Senior Policy Analyst for the Transportation 22 Technology and Fuels Office. And then we have various Staff 23 who are also in the audience. Avtar Bining will be presenting 24 some information to you today, as well as Walt Loscutoff. 25 Is Walt here? Hi, Walt. 7 1 So with that, I'll go through the desired outcomes 2 for today's meeting just so that we can all understand what 3 we're trying to get out of this. We're trying to make sure 4 that we understand all the stakeholders' roles; what role we 5 all play in trying to develop transportation technologies, and 6 how we can effectively work together? 7 We want to give you an overview of our TETAP process 8 so that you understand what we use to evaluate proposals and 9 the process we have to go through in doing that. We also want 10 to identify all the advanced transportation technologies that 11 we should be focusing on. And then we want to talk about how 12 we can work with you more effectively to make it a positive 13 experience for all of us that has significant results. 14 So with that I'll turn it over to, I guess, Dan. 15 MR. FONG: Thank you, Nancy. 16 Well, it's good to see a lot of familiar faces here. 17 I'm glad that all of you have taken the time and made the 18 effort to attend today's forum. 19 The topic of my short discussion here will be the 20 role that the advanced transportation technology stakeholders' 21 group can play in our endeavors to resolve some important 22 technical barriers on technologies that we believe are 23 important for California's long-term future. 24 We've invited you and the organizations that you 25 represent because we believe that you have knowledge, 8 1 expertise and resources that can be used to address 2 technological barriers of various technologies that we think 3 can really improve California's economy and long-term 4 environment. 5 We've brought you here today to begin a process of 6 information exchange, to build teams and collaboratives that 7 can marshalled, along with our assistance, to work in 8 resolving many of these important technological barriers. 9 We also believe that you, in your organizations, are 10 the implementors of many of these different potential 11 technology projects. We want to be able to work with you as 12 an equal. But because we know that you may have a different 13 perspective than ours, we want you to give us that feedback. 14 How are you approaching the resolution of some of these 15 technical barriers? How can the Energy Commission cooperate 16 with you as a team, you know, to make progress? 17 We want to hear from you on what technologies merit 18 Energy Commission support, what are those key barriers that 19 prevent those technologies from being a commercial product in 20 the marketplace? 21 We also would like direct feedback on today's 22 presentation. What is it that you will hear today that makes 23 sense to you? What do you hear today that doesn't make sense 24 to you? You have an opportunity to really influence how we 25 proceed with our solicitations for technology R&D. 9 1 We may not entirely agree. But then again we're 2 hopeful that there is going to be some important consensus 3 reached so that, when we do release our solicitations, you'll 4 find it beneficial and so will we. 5 Long ago Benjamin Franklin was quoted as saying, 6 "Sometimes it's better to remain silent and be thought of to 7 be a fool than to speak out and remove all doubt." Well, 8 hopefully today no one here will believes that we hold that 9 belief. We want you to speak out. We want to hear your 10 opinions on how we should be investing our resources in 11 technology R&D. 12 Yes, we have some of our own opinions, but those 13 aren't cast in concrete. We're willing to entertain new ideas 14 and new approaches. But we also feel that there are some key 15 technologies where we would like to make progress in, because 16 again, we're trying to change California's dependence on 17 petroleum, we're trying to improve the emission performance of 18 all of these various transportation energy technologies. 19 We feel that those two characteristics are inherently 20 linked together. That if California is to prosper, as a 21 state, we both need to use our energy resources wisely, while 22 at the same time we need to preserve and protect the state's 23 environment. It would be a disaster, I think, that we have 24 this tremendous economic boom and yet those individuals who 25 actually would benefit from that boom suffer from the 10 1 environmental effects of energy consumption and use. 2 So I'd like to open it up for a few moments here, get 3 some feedback from you on what I just said, whether or not you 4 believe that we're taking this in the right manner. Are there 5 specific roles that you have in mind that I may not have 6 mentioned? 7 Anyone? 8 MR. RAMBACH: Yes. One comment on developing 9 advanced technologies for transportation or energy. It's not 10 always necessary to think that that stuff has -- that that 11 technology has to be employed locally. As things progress 12 over the next several decades, the developing world and the 13 rest of the world will have to do repurchasing of remedial 14 technologies, advanced transportation technologies, and you 15 need to include in your portfolio thinking the fact that we 16 can pervade this, that we'd be selling this overseas, for 17 example. So that any new, you know, fuel cell technologies or 18 advanced technologies can be sold in the underdeveloped 19 communities as well as new energy -- as new energy 20 opportunities. 21 MR. FONG: That's a good point. Could you identify 22 yourself? 23 MR. RAMBACH: Glenn Rambach from Desert Research 24 Institute in Reno. 25 MR. FONG: Thank you. 11 1 Yes? 2 MR. KEN SMITH: Ken Smith, Methanex. 3 Having been through this process before -- and I know 4 you're trying to revamp it -- and having been very frustrated 5 with the process before, I hope that you're going to 6 reconsider the immediacy of commercialization in this program, 7 because some of the technologies that are out there, 8 especially fuel cell technologies, are going to take a little 9 bit longer to develop. And the pressure put on by the need 10 for commercialization and royalties and those sorts of things 11 are just going to ensure that you don't get good technologies. 12 And so I think that to a certain extent, statutorily, 13 you have some requirements, but on the other hand you have a 14 lot of discretion to adjust those timeframes. And I know you 15 were under a lot of pressure at the time we came into the -- 16 when Gerry Halpert and I came into get the -- direct inhouse 17 fuel cell technology, you know, applying here. But I think 18 that really has to be taken into consideration, or you're not 19 going to get through the projects. 20 MR. FONG: Yes. I hope that some of the things that 21 you'll hear later on in today's session, Ken, will address the 22 important point that you raised there. I think we are moving 23 in a direction that you suggest. How far we can go, that's 24 something we need to flush out internally. 25 But I agree with you, that in the past at least, some 12 1 of the requirements placed upon our TETAP Program were not 2 very well received. And I can certainly understand why they 3 weren't. 4 Now we're going to make some attempts to move in the 5 opposite direction. That is make our process, as well as our 6 funding, a little easier to accept for all of the participants 7 that, you know, we want to partner with. 8 MR. KEN SMITH: That's what I found out, push the 9 envelope again, that's what we need to do. 10 MR. FONG: Yes, Greg? 11 MR. VLASEK: I'm Greg Vlasek, California Natural Gas 12 Vehicle Coalition. 13 We had a meeting similar to this, in this same room, 14 you know, with a similar group of people, about six months 15 ago. So it would be helpful, just for my edification meeting 16 here, for the edification of others, to talk about what 17 advancements we think have been made specifically since that 18 meeting, and how this meeting is intended to carry on from 19 that meeting. 20 Also I would just like to comment on your stated 21 commercialization goal here, because I think it's important 22 that we all have a clear sense of what CEC's -- it's important 23 we have a clear picture of what that goal actually is from 24 CEC's standpoint. 25 I notice you already mentioned energy diversification 13 1 and displacing or reducing our dependency on petroleum. But 2 your goal statement doesn't say that. It says you're looking 3 to commercialize technologies to reduce fuel use, which to me 4 means increasing fuel efficiency, or increase the efficiency 5 of the transportation system, or to reduce emissions. So I 6 hope to hear, fairly early on in the proceedings today, some 7 clarification then. 8 MR. FONG: Yes. I think you have a good point 9 there. And I also commented on that to my staff, or to the 10 people that I now work with, that we need to be a little more 11 clear on that particular statement. Yes, we are focused on 12 transportation technologies that really displace petroleum 13 use; that's one area. Now that could take the form of more 14 efficient technologies, but also in the form of alternative 15 fuels. 16 We recognize that most of the alternative fuel 17 options are not as efficient, and are not as reliable, or 18 durable, as competing existing technologies. And so this 19 program will try to make investments to improve the efficiency 20 of those alternative fuel technologies. 21 Any other questions or remarks, based upon this 22 subject of what your role can be, or what you see your role as 23 being? 24 Yes? 25 MR. ANDREONI: Tony Andreoni, from the Air Resources 14 1 Board Research Commission. 2 From the last meeting, since that was brought up, 3 there was a marketing group that was involved with evaluating 4 the TETAP process. Has that been finalized and is that going 5 to be discussed today? 6 MR. FONG: Yes. You'll hear some of the 7 recommendations or issues that have been identified by that 8 consultant firm. And, in fact, let me get back to a little 9 bit of Greg's earlier question, is that today's group is a 10 much broader set of individuals and organizations. The 11 earlier meeting that we had tended to focus on sort of the 12 academic and industry technical sort of expertise. 13 We were trying to, at least at that stage several 14 months ago, really help us focus on the different technologies 15 that we might focus on. Now we're bringing this to this wider 16 group of stakeholders. Basically you'll hear presentations 17 this afternoon on the sort of technology areas that were 18 highlighted in the previous meeting. And subsequently we've 19 also identified some additional criteria, I guess, that we 20 would like to focus on with our solicitation. 21 Any other comments? 22 Yes? 23 MR. LUSBY: Art Lusby, with Northrop-Grumman down in 24 Los Angeles. 25 We're building an advanced technology transit bus. 15 1 That's an experimental bus right now. And one of the things 2 that we had as an objective from the start was to try to 3 develop an alternate fuel vehicle that cost at most the same 4 price as a competitive product. 5 And it seems to me one of the things that's 6 inhibiting alternate fuel vehicles is the overall system cost 7 of them. And so we're trying to develop one that is no more 8 and may be even cheaper. So I think that the cost is a major 9 element in getting these into production and into the systems. 10 MR. FONG: Yes, we would agree. 11 Any other points that you'd like to make, none to the 12 group as a whole, just to stimulate some thinking and 13 discussion? 14 (No response.) 15 MR. FONG: Good. I appreciate the comments that we 16 did receive. I thought all of them had merit, and we would 17 like this sort of dialogue and interchange to continue 18 throughout the day. We believe that you folks can be the 19 nucleus of important teams and collaboratives that together, 20 along with some assistance from the Energy Commission, you can 21 make some real important progress in this area of technology 22 advancement for a variety of transportation alternatives. 23 Yes? 24 MR. SPATARU: My name is Alex Spataru, on the A-DEPT 25 Green. 16 1 A lot of these projects may require a prolonged 2 participation. You're looking at programs that may require 3 more than a year to come to a commercial fruition. Certain 4 programs, like this vehicle program, for instance, has a 5 format that allows gradual increased participation if the 6 actual project turns out to have merit, that the technology is 7 proven to have initial merit. So it's a go-no-go-type program 8 where you have a look-see, does it make sense, does it not 9 make sense? If it does make you drop it; that's good. You 10 allow it for a greater participation. 11 There doesn't seem to be this kind of continuity in 12 TETAP. Is that intentional, or is it meant to be a 13 hit-and-run-type program, or does it allow -- I didn't mean 14 that in a negative sense -- is it meant to be a once-in-a- 15 lifetime-type opportunity, or is there room there for a 16 continuous involvement as a technology advances, until it 17 becomes at a point where it goes on its own for commercial 18 purposes? Do you follow the gist of what I'm saying? 19 MR. FONG: Yes. I think what you're saying makes 20 very good sense. It's something that we've actually done in 21 the past but not necessarily through our TETAP Program. TETAP 22 intends to focus on those early R&D technical barriers; that's 23 correct. 24 But there are other elements within our 25 transportation development program which hopefully will take 17 1 that development if it's successful, and then go along what I 2 call a continuum of different phases for technology 3 development and commercialization. 4 Yes, there's an appropriate timeframe where R&D, and 5 resources for R&D, need to be invested. And if that R&D 6 proves that that technology has some long-term potential 7 commercial merit, then we will try to nurture that and make 8 additional investments to bring it to the market. 9 But some of our problems in the past, in really 10 fulfilling that goal, is basically a funding issue. We 11 basically go on a 12-month cycle for our funding. And for 12 those of you who have experienced the California state 13 budgeting process I think you recognize that it's not 14 necessarily a process where a lot of rationale and consistency 15 is forthcoming from our elected leaders. I guess that's part 16 of the playing field that comes with the territory. 17 And we recognize that our funding hasn't been as 18 consistent as we would like. We're going to do everything 19 that we can to improve that. You know, we're raising this 20 internally with our management. And hopefully the 21 organizations that have oversight over the Commission's budget 22 will recognize that if the state really is serious about 23 supporting some technologies and investing in those 24 technologies, for long-term state benefits, then the funding 25 has to be established at some reasonable level with some 18 1 consistency, some dependability. 2 And so I think your remarks are very accurate that, 3 you know, if you really are going to be successful in bringing 4 some of these technologies to the marketplace, where they can 5 be self-sustaining, then the state also needs to ensure that 6 some level of support is provided those technologies. Not 7 just once in a lifetime. And not just during a certain stage 8 or phase of its development. 9 But once we make an investment our hope is that that 10 investment leads to long-term commercial success. And we'll 11 continue to try to make those investments along that 12 development path to where that product can be competitive with 13 existing products. 14 You know, we don't believe in sort of a lifetime of 15 government support, but we do believe that in those early 16 years where the playing field may not be level, where the 17 entrenched sort of technologies have, you know, sort of 18 significant advantages over these more beneficial 19 technologies, then we will try to overcome those disadvantages 20 with supportive measures or initiatives that we have some 21 ability to create. 22 Do you have a follow-on question? 23 MR. SPATARU: There was one point here that I don't 24 think was addressed. Part of the TETAP's function, as I see 25 it -- and I'd like to be corrected, if I'm wrong on it -- part 19 1 of this function is to essentially act as a high-risk bank, as 2 a high-risk state bank, because the funds are repayable. And, 3 as such, you shouldn't be subject to the vagaries of the 4 budgetary process of the state of California. 5 If there was a real commitment to this kind of an 6 investment, then there would be a set-aside. And that set- 7 aside would be immune to the budgetary process. 8 And, second of all, that set-aside would create its 9 own inertia because if, in fact, the investments were properly 10 placed, it would create its own inertia and its own 11 continuity. 12 And there's an argument for structurally redesigning 13 the process to allow for a continual rather than an up-and- 14 down. We should look at the history of what has happened. 15 And I think that that should be addressed at some point. 16 MR. FONG: Yes, good point. 17 Any other comments? 18 MR. ADDY: Just a program proceeding note. I'd like 19 to encourage the participants to please hold up their hand and 20 wait until I bring this microphone to them before you speak, 21 because we're attempting to capture the comments that you make 22 on the reporter's notes there. Thank you. 23 MR. FONG: Good. Well, we're pretty much on 24 schedule. I'm pretty pleased so far with the participation 25 and the very good comments that we've received so far. We're 20 1 going to be moving along to the next item on our Agenda. And 2 I think Mr. Bining will then carry this through for the 3 morning session. And then I'll try to summarize at the end. 4 DR. BINING: Good morning, my name is Avtar Bining, 5 and I'm Program Manager of Transportation and Energy 6 Technologies Advancement Program, in short called TETAP. 7 This morning I will be giving a complete overview of 8 this program from its inception in 1992-93, and then walk you 9 through this history of four or five years, of how this 10 program evolved, what we have been doing, how we have been 11 doing and what we plan to do in the future. 12 And all those issues that have been raised just in 13 this morning's good discussion shows that there is 14 considerable interest in this program. And people do take 15 notice of this program for the sake of advancement of 16 transportation energy technologies. 17 How many of you are familiar with TETAP? If you 18 could, raise your hand? It seems like there is a fairly good 19 number of people. 20 When I joined this program in 1992-93 we were having 21 hard times in getting the proper sort of acronym of this 22 program from people. People used to call it TIPTOP, TETOP, 23 all kinds of acronyms. And I'm glad that over this period of 24 four or five years people recognize this name, TETAP, which is 25 Transportation Energy Technologies Advancement Program. 21 1 One comment that Greg made this morning regarding 2 omission of ordinary fuels. There was no intention of moving 3 that alternate fuel in our program, rather we wanted to see 4 how our stakeholders recognize even of our nonexplicit mention 5 of alternate fuels. And when we say petroleum fuel use 6 reduction, we are seeking all kinds of technologies that can 7 achieve that objective. And there is no other better way than 8 developing alternate fuels to achieve that objective. 9 This program basically is a public/private 10 partnership program. And we focus on that, that we cannot do 11 this thing alone. This a program that needs private/public 12 partnership in such a way that we can achieve that goal that 13 we have intended to achieve. 14 This program was initiated in 1992-93 Budget Act. 15 The California Legislature provided $2 million in petroleum 16 violation escrow account to establish this program. 17 TETAP is a hardware development co-funding program 18 designed to promote the research, development and 19 demonstration of advanced transportation technologies. 20 Through TETAP the Commission has provided qualified companies 21 co-funding for a variety of advanced transportation 22 technologies R&D projects. 23 The ultimate goal of our program is commercialization 24 of those technologies that we are developing. And this 25 commercialization of these transportation technologies would 22 1 reduce fuel use emissions while remaining cost competitive 2 with existing fuel choices. To enable new technologies to be 3 viable options they need to be thoroughly available to 4 development and demonstration to prove their viability, 5 performance, cost-effectiveness and consumer acceptability. 6 Additionally, investments in new transportation 7 technologies development will revitalize California's economy 8 and improve Californians' environment. 9 Since 1992-93 we have been getting funds from the 10 Legislature almost every year except in the year 1996-97. Our 11 annual funding has been on the order of $1- to $2 million. 12 And this year, in 1997-98, we have $2 million allocated for 13 this program. And that is the money that we would like to use 14 to co-fund projects in our next solicitation. 15 Many of you are aware of our program, of how it 16 works. But I will quickly walk you through that whole 17 process, which probably takes more than eight to ten months 18 for us and for you to get those funds. But I will give you 19 that quick, run through that whole exercise in probably in 20 less than two minutes. 21 This program starts with we starting with our request 22 for proposal preparation after discussing with various 23 stakeholders the technology focus and the process that we want 24 to use. And in the past we have been evaluating solicitation 25 requesting proposals on the best innovations from the private 23 1 and public sector to advance the state of the art of 2 transportation and energy technologies applicable in 3 California. 4 Then once we get those proposals, we evaluate those 5 proposals on the technologies to determine the best 6 opportunities for California, using a selection process which 7 is based on technical merit and policy merit. 8 After we select those qualified projects, we provide 9 co-funding, up to 50 percent, to the most promising 10 innovations where such assistance is most needed to 11 commercialize a technology. 12 TETAP funds are used to leverage match funds from 13 other sources. And typically other points are in the range of 14 15 to 20 percent of the total project cost. And we like to 15 maximize the participation of other agencies or other entities 16 to co-fund those projects. 17 Then an essential feature of our program is 18 repayment. The repayment of the Commission of other funds in 19 the form of royalty based on gross revenue is required if the 20 subject technology is commercialized. 21 Now again that commercialization part is important. 22 And it is important from jobs, growth and economic growth in 23 California, because this successful commercialization provides 24 more jobs for California, leads to repayment of funds, 25 allowing for the possibility of continued co-funding for 24 1 future projects. And all TETAP awards are fully repayable if 2 that technology is commercialized and generates revenue. 3 So during this process our first solicitation was 4 released in 1992-93. We targeted demonstration projects that 5 increase value by demonstrating an existing technology in a 6 new application, or an existing technology using a new or 7 improved complement or process, or demonstrating the 8 integration of commercially available technologies into a new 9 or improved technology. 10 And in that solicitation we allocated our funds to 11 six technology categories that we thought were quite needed at 12 that time. And ultimately we co-funded four projects out of 13 those. 14 And the technology categories that we considered at 15 that time are shown on this slide. As you can see, there is a 16 wide variety of technologies that we presented in that RFP and 17 solicited proposals on. And in addition to give some specific 18 direction to prospective applicants how much funds will be 19 available in each category. We tried that method in that 20 solicitation that we allocated specific funds for those 21 specific technologies, so that applicants can get some idea of 22 what level funding will be available in each category. So we 23 have been trying to that kind of approach. We tried that kind 24 of approach in our first solicitation. 25 The four projects that we selected out of that 25 1 solicitation were these. And all these four projects have 2 been completed now. First was BAYTEC in compressed natural 3 gas vehicle demonstration. And it was a very small amount, 4 and it was one of our most successful projects. 5 The second was with Calstart to develop an electric 6 school bus demonstration. And this project developed the 7 first electric school bus in the nation, and I believe it was 8 in the world, also. And this bus became a kind of model for 9 developing an electric school bus by Bluebird. 10 The third project with Cummins was to develop an 11 advanced diesel engine turbocharger. And that project we 12 completed just recently. And we hope that that technology 13 will be put to use in the next four to five years in 14 heavy-duty diesel engines. 15 And our fourth project was an advanced flywheel 16 project, which was funded with our Commission funds, and other 17 participation was very small. And that project has also been 18 completed. 19 Then we came to the second solicitation. And the 20 second solicitation was released in November 1993. And in 21 that solicitation we targeted research and development and 22 demonstration projects that provided greater diversity of 23 transportation energy sources by commercializing new 24 transportation technologies, those projects that demonstrated 25 and commercialized new vehicle propulsion systems and fuel 26 1 technologies. 2 And we had about $2.2 million in funds available for 3 that solicitation. And that solicitation was our most 4 successful solicitation in terms of getting response from the 5 applicants, in terms of quality of those projects. And out of 6 the total projects that we had received here for evaluation we 7 could select actually ten projects. And we were having funds 8 for only six. And we funded those six projects. 9 And the reason for that was it was the second time -- 10 the first time that many people did not know about our 11 solicitation, about our program. The second time they knew 12 about our program and so there was good response, and we were 13 very happy with that. 14 The technologies again, the range of technologies, 15 you will be surprised again, that we asked for in that 16 solicitation was also quite diverse. You can see there is a 17 great diversity of all those technologies that we were 18 seeking. There were electric vehicle technologies, heavy-duty 19 alternate fuel vehicle technologies, efficiency or emission 20 improvement technologies, advanced fuel production 21 technologies or fuel additives. And we are going to include 22 some light or ultralight vehicles' projects or technologies 23 there. And those projects that we funded out of this 24 solicitation were these. 25 Three of these projects have been completed and the 27 1 other three are still going on. And they are very much close 2 to the finish line. Among these six projects, one of our 3 projects was to develop a thermoelectric heating and cooling 4 system for electric vehicles or automobile seats. And you can 5 see that hardware here, outside, displayed in our exhibits. 6 And those seats are being evaluated by all major auto 7 manufacturers to be integrated into their vehicle designs. 8 Another project on conversion of United States Postal 9 Service vehicles. That was against a very good niche market 10 for electric vehicles. And we got very good performance out 11 of those vehicles. Those were actually conversions rather 12 than ground-up designs. But we proved that concept that 13 electric vehicles can work in those kinds of specific 14 applications very successfully. 15 We have been demonstrating electric shuttle buses. 16 We have been developing a 44 Electric Townsend Bus that is 17 actually a hybrid electric bus. And we are working on 18 developing an advanced compressed natural gas engine with T- 19 cogen (phonetic) that was meant to improve the fuel efficiency 20 and emissions. 21 So this was our second solicitation. 22 And then we came to the third solicitation after some 23 gap of about more than two years. And this solicitation we 24 released in 1996. And we have only $1 million for that 25 solicitation. Again we targeted development and demonstration 28 1 projects that included an existing technology in a new 2 application, an existing technology using a new company 3 process, the integration of commercially-available 4 technologies into new or improved technology and demonstrating 5 a technology that has significant potential to become 6 commercial due to the proposed demonstration. 7 We received 11 proposals. But nearly half of those 8 proposals could not meet the eligibility criteria, which 9 included like match funds or some other administrative 10 requirements. And we were left with only six proposals, out 11 of which we found that there was not very good focus in any of 12 those proposals on our specific goals or objectives. So we 13 had to cancel that solicitation so that we can focus on 14 another program, on another process, another overall co- 15 funding mechanism of these projects in such a way that those 16 funds can be used in a better way. 17 And again you can see the technologies that we 18 mentioned. We even gave preference to certain technologies so 19 that we can focus on specific technologies that we thought 20 would be needed during that time. Very few people took notice 21 of that, and very few people focused on those technologies. 22 Let me give you again the highlights of the ETAPs, 23 that I have already mentioned. We have done some work on 24 electric and hybrid electric vehicle technologies. We have 25 worked on energy efficiency improvements and emission 29 1 improvements and fuel technologies. And we have worked on 2 alternate fuels. 3 And we talked of allocation of those funds in 4 different categories. The bulk of our funds were used for 5 electric and hybrid electric vehicle technologies in the past. 6 Some emphasis was on emissions and alternate fuels. But again 7 we were dependent on the proposals that we were getting, and 8 those funds were allocated that way in terms of what projects 9 were selected out of what we were given by our applicants of 10 stakeholders. 11 So we have to do some soul-searching here after our 12 third solicitation. And we started thinking about our future 13 TETAP. The Commission has full commitment to continue funding 14 the development of advance transportation technologies to 15 overcome technical barriers. And that can also be used the 16 other way, that we want to continue funding to overcome 17 barriers to the development of advanced transportation 18 technologies. 19 We wanted to revise the TETAP process. And we 20 started that revision process at our last meeting in June in 21 the form of an advanced transportation technology group where 22 we discussed a number of those issues. And we also contracted 23 with a company, New Point Group, to do the evaluation off of 24 our TETAP process. And we completed that evaluation last 25 October. 30 1 And today we are here, on November 21st, as advanced 2 transportation technologies stakeholders. And we will seek 3 your input on those issues and on those technologies so that 4 we can develop future TETAP. And that is the crux of this 5 meeting, that we need your participation. We need feedback 6 from you. We need your total commitment to move as partners 7 in this TETAP process, program and future plans. 8 And after we get your feedback, we have to put 9 together our next solicitation in whatever process that comes 10 out with your feedback with our statutory requirements. And 11 we want to use over $2 million for this solicitation as 12 effectively or as best as we can. So we need your feedback. 13 And our proposed timeframe for release of that 14 solicitation is early next year. So there is not a whole lot 15 of time left. We will have to move very quickly on this one. 16 So this is a complete overview of TETAP, starting 17 from 1992-93, what we have done, what technologies we have 18 focused on, how much funds we have spent, how we have spent, 19 what success we have achieved, what difficulties we have 20 faced, how we want to move further. 21 And so we are at this point now. And at this point I 22 would like to come back to the issues of that solicitation 23 process again. And based on our TETAP evaluation by New Point 24 Group, we identified seven issues, some of which are short- 25 term, short-term in the sense that we feel that if we want to 31 1 take some action on those we can take action that quickly, or 2 we need to take that action quickly, and move forward. 3 Among these five short-term issues there are some 4 that we can do; there are some that we cannot do, or some that 5 we can modify in some sense that it meets some requirements. 6 As you know, this MWDVBE participation requirement, 7 it is a statewide requirement. And we are required to meet 8 certain statutory requirements there. And we participated in 9 that MWDVBE end of those. So there is a statewide process 10 going on to revise that thing, and we are constantly reviewing 11 that progress of how it is moving. 12 The second issue is regarding modifying repayment for 13 reasons. That issue is more at our Agency level. We are 14 facing that issue, not only in TETAP, but in our other 15 programs also. And we are working on that, how to overcome 16 that hurdle, or how to modify that for reason, in such a way 17 that it is not a barrier to those programs, rather beneficial 18 to those programs. And there is a Commission-wide effort on 19 that thing, and we are continuously working on that. 20 Then the third critical issue that, from our 21 perspective, is that if we can implement a preproposal 22 process, which came out of our discussions with various 23 stakeholders, that instead of spending a whole lot of money in 24 putting together a complete proposal, which sometimes cost as 25 much as $10,000 or $15,000, if there is a preproposal process 32 1 in which we can give them quick feedback, and those proposals 2 are brief, and that feedback can be used to improve the 3 quality of those projects when they are submitted in full form 4 in response to our solicitation. 5 And that process probably is one of the easiest for 6 us to do, though on Staff side there will be lots of 7 additional work that will be involved, but we are willing to 8 take up that responsibility. 9 Other issues like clearly identifying or articulating 10 program goals and objectives, we can do that with your 11 participation. And to market that program to preferred 12 stakeholders, that is why we are asking or we are inviting you 13 here so that we can see who are the preferred stakeholders. 14 Naturally those people who do not take that much initiative to 15 come in to our meetings, they may have probably less 16 preference to our program also. So we are trying to implement 17 that, too. 18 Among these short-term issues, I would like to open 19 it for discussion here at this time, that among these five, if 20 you feel that we have the proper identification of those 21 critical issues, or if you can give us some feedback in terms 22 of prioritizing those, I would like to open that for 23 discussion now. 24 MR. ADDY: Let me just remind you to wait until you 25 get the mic before you make your remarks. 33 1 MR. LUSBY: Yes, Art Lusby, again, from Northrop- 2 Grumman. 3 I had a question on your minority business and 4 women's business participation. Is that a firm requirement? 5 Is that what number 4 is? 6 DR. BINING: Say it again, please? 7 MR. LUSBY: Is 4 minority and women-owned 8 businesses, item 4? 9 MR. FONG: The answer is yes. 10 DR. BINING: Yes. 11 MR. LUSBY: Yes. I had a question: What is the 12 requirement, and is it firm? 13 DR. BINING: Yes. The requirement is that whatever 14 funds we provide for that project, fifteen percent, five 15 percent and three percent of those funds should be contributed 16 towards those businesses who have minority, or woman or 17 disabled veterans. But it is a participation in the program 18 in two ways. One is that is if you could find those 19 businesses who can participate in your program of that 20 project, and if you allocate certain funds to be used for 21 those services that are provided by those companies, then that 22 is the perfect example of meeting that requirement. 23 But then there is also another part which means that 24 you make that good-faith effort to find those partners. And 25 if, by chance, you find that you did not find anybody, or any 34 1 of those businesses, but you still could document your 2 good-faith effort, you still meet that requirement. 3 MR. VLASEK: Avtar, I'd like clarification on a 4 couple of things, including not only this list but the 5 previous programs that you've outlined. And I guess I have a 6 number of items, and I guess I'll just go through them one at 7 a time. 8 As far as the objectives and goals, I guess we're 9 clear at this point that even though diesel efficiency was 10 funded in previous programs, that would not be something that 11 would be funded, given your criteria of petroleum displacement 12 in future solicitations; is that correct? 13 DR. BINING: No, we will still be open to all kinds 14 of technologies, including conventional fuels. 15 MR. VLASEK: Okay. 16 DR. BINING: Though our focus is on alternate fuels. 17 MR. VLASEK: Okay. You mentioned that you'd sort of 18 summarize the success of the programs. But I'd like to have 19 you elaborate on that, if you would, a little bit more. One, 20 with respect to repayment, the repayment program, for any 21 revenues generated. 22 I really didn't hear any characterization of the 23 success of the various first and second solicitation programs. 24 And I am only familiar with the BAYTEC project, which I think 25 was, given the money spent, has proven to be very successful. 35 1 But I don't know that any money has -- any royalties have been 2 generated that would accrue back to the CEC. 3 Could you summarize the results of those with respect 4 to any return to the CEC or to actual commercialization of a 5 product? 6 DR. BINING: Yes. In our first solicitation our 7 repayment requirements were based on a net positive cashflow, 8 that if there is a net positive cashflow generated by the 9 business from that sale or commercialization of that product, 10 then the repayments will trigger. And it was very hard to 11 determine that net positive cashflow. 12 In our BAYTEC Project they have been selling this 13 technology, the technology that was developed in this project. 14 And also this effort in that project became a stepping stone 15 to develop more advanced technologies. So we take it as a 16 success from that angle that though, because of certain 17 administrative requirements, or certain provisions, 18 administrative provisions, we have not received any repayment 19 yet, but the technology is already being put to use. 20 And there are some secondary benefits that all the 21 other businesses in the state are getting in terms of some 22 sales tax, some other revenue generated. But our main success 23 is in actual deployment of that technology in the field. And 24 we have some reports that we have been getting from BAYTEC 25 that this technology is being used. And people are satisfied 36 1 with that product. And the technology is making further 2 progress. 3 The second project I can think of is our electric 4 school bus. In the second solicitation of our repayment 5 provisions were slightly changed. And there we asked for some 6 percent of gross revenue. And that was based on some royalty 7 basis. And we changed that provision from net positive 8 cashflow to generating gross revenue. 9 And there were specific terms and conditions that we 10 had to negotiate with each contractor at that time. And we 11 have not received any repayment so far from any of those 12 projects that we have funded. But we do know that there is 13 some success in advancing that technology and deploying that 14 technology. 15 MR. FONG: Avtar, I'd like to also comment. 16 I'd like to make it clear that the Energy Commission 17 Staff does not necessarily equate project success with 18 repayment. Repayment was a policy requirement placed upon us 19 by those who approve our budgets. We recognize that the true 20 value of the investments that we make, through this program, 21 comes from the successful deployment of these technologies, 22 not in the potential revenues that are generated, and the 23 potential revenues that come back to this program. 24 And even though there's some emphasis on the process 25 for repayment, that is really not a primary issue or goal from 37 1 our investment prospective. Yes, the state of California, who 2 made these moneys available, would like to see some of this 3 money returned, if there is financial success for the 4 participants. But from our Staff prospective that is not a 5 primary success point for our projects. 6 We know, though, that some of the repayment 7 constraints make our program less attractive. We want to 8 eliminate as much as we can some of that unattractiveness that 9 is related to this issue of repayment. But I just wanted to 10 make sure that Greg understood that, you know, our successes 11 are not dictated upon repayment. 12 MR. VLASEK: Yes. I understand that. I know you 13 guys have struggled with the repayment issue, figuring how to 14 make this process work. I guess what occurs to me, one way to 15 approach it would be to have -- if there's a way that you 16 could make the repayment in a preferable, preferred benefit of 17 a program in your project criteria. 18 Again I think the real bottom line is identifying and 19 articulating the goals, the objectives and the criteria. And 20 if part of your criteria is to have that you would prefer to 21 have some sort of contractual agreement for repayment of 22 commercialized technology that would be attractive from the 23 standpoint of the Commission, but it should be clear, if it's 24 not a requirement of a proposal, then it should be clear in 25 the solicitation that you don't have to submit that, but you 38 1 will get favorable consideration if you do submit that. You 2 know, to me that's part and parcel of making it as simple and 3 straightforward a process as possible. 4 MR. FONG: Our current understanding of the 5 requirement, imposed upon us, is that the Commission does have 6 discretion on the form of repayment. Now we are working on 7 other options potentially to provide even greater flexibility 8 on the question of whether repayment is even a part of any 9 particular investment that we make. 10 But our current ability, I think, or our flexibility 11 is in this establishment of what exactly constitutes 12 repayment. So there is some flexibility there. And we're 13 going to push that as far as we can so that project 14 participants don't feel that they're being penalized if 15 they're successful. And that fact is one of the reactions 16 that we got from our New Point consultant in that those 17 entities, who felt that they were successful, were then being 18 penalized because other entities were not successful. And 19 that's not what we want. We don't want those successful 20 projects to feel that they're the only ones carrying the 21 financial burden for program success. 22 MR. VLASEK: Since I've got the mic, I'd just like 23 to make a comment about BAYTEC. For people who might not be 24 familiar with it, and this is a little bit of a plug, but 25 BAYTEC is not a member of my -- I don't represent them in any 39 1 way, and they're not a member of the California NGV coalition. 2 But BAYTEC is a company with a net worth of under $2 3 million. And yet, partially as a result of the TETAP Program, 4 they have successfully certified a low emission natural gas 5 engine as an OEM product. So I'd venture say they're probably 6 the smallest OEM engine manufacturer, certainly in California, 7 probably one of the smallest in the United States. 8 But because of the successful experience they've had 9 through TETAP, and working with United Parcel Service as a 10 partner, I think it's clearly a success story for the TETAP 11 Program, and for BAYTEC, that with the amount of funds that 12 were leveraged, you've now resulted in a production OEM low 13 emission natural gas engine. So our industry is very proud of 14 that. 15 DR. BINING: Thank you. 16 MR. SWEET: Avtar, I'm Arthur Sweet, from Goremotive 17 Industries. And this is the first meeting of this type I've 18 been to. I'm here from Southern California. 19 How does your ETAP Program tie into tie in with the 20 federal SBIR grant, energy grant program. And also how does 21 it tie in with the federal Energy Department; is there any 22 connection at all? 23 DR. BINING: Yes, there is some connection. One is 24 that these funds that we get, these are petroleum violation 25 escrow account funds that come to us through the Department of 40 1 Energy. Those funds come from the federal government to the 2 state government and then the state Legislature allocates 3 those funds to those parties who were requesting funds from 4 that account. So that is one connection. 5 The second connection is that we like to see 6 participation from other entities in various projects. And if 7 there is some federal funding involved that is given credit 8 for match funds. 9 The third connection is that we always keep in 10 contact with other agencies in terms of looking at their 11 programs, their projects, at what kind of technologies they're 12 focusing on. And we steer our program in those directions. 13 In most of our programs, projects, there is a good 14 amount of participation of DOE and some other entities, as 15 well. And we like to seek more and more participation of 16 federal funds or federal programs. 17 MR. LUSBY: Art Lusby, with Northrop-Grumman. 18 Just a quick question: Are the results proprietary 19 when you do them under these kind of contracts? 20 DR. BINING: Yes. In our standard agreement there 21 are some provisions for the confidentiality, debtor rights, 22 and proprietary issues. I do not have those specific details 23 at this moment. But as far as I know, most of the time the 24 contractor has those rights to file patents, or rights to the 25 proprietary information. But the state has a right to use 41 1 that product for the welfare of the state or for the welfare 2 of the public. So it is somewhat -- put it badly -- but 3 certainly there is a good amount of proprietary rights that 4 stay with the contractor. 5 MR. FONG: However, confidentiality is not an 6 automatic option. The applicant does have to apply and make 7 it very clear why confidentiality is necessary. Keep in mind 8 we are a public agency. Public money is being spent on these 9 projects. And there is some expectation that the information 10 generated from the state's investment is then going to be made 11 available to the public. 12 But there are instances where we have been able to 13 provide confidentiality and protect the proprietary nature of 14 private sector investments. But there is a process that you 15 have to comply with. And unfortunately my understanding is it 16 is not necessarily a simple process where you simply state you 17 require a confidentiality or there is some proprietary nature 18 to the work that you want to perform. 19 MR. LUSBY: If the project were successful and if 20 contracts were paid, the fifty percent up front, co-sharing, 21 and then repaid all of the money at the end, he would have put 22 all of his own money into it. 23 MR. ADDY: Now please state your name and your 24 affiliation before you speak. 25 MR. MARK: Hi, Jason Mark, with the Union of 42 1 Concerned Scientists. I wanted to highlight the need of the 2 Energy Commission to focus its public investments on those 3 technologies and options that deliver the greatest public 4 return on that investment. And from my mind that sort of 5 questions the role of diesel and diesel efficiency options in 6 the slate of technologies that TETAP has funded in the past, 7 but also in the future. 8 And as I'm sort of looking ahead towards the 9 afternoon and flipping through some of the technologies that 10 the Energy Commission is considering for future funding, I 11 just want to lay out on the table that we should really 12 perhaps be questioning the wisdom of pursuing those strategies 13 when we have a small chunk of funds. Perhaps we ought to be 14 targeting them towards technologies and options that deliver 15 the greatest social good for the investment. 16 MR. FONG: Could I clarify what you just said there? 17 Are you suggesting that we not look at the scope of 18 technologies that we are currently looking at, but instead 19 limit that even further; is that your remark? 20 MR. MARK: Yes. I'm suggesting that if a diesel -- 21 improving just the efficiency of a diesel combustion engine is 22 on your list of possible funding options, which I think is the 23 impression that I got, based on Greg Vlasek's question, then I 24 don't think that's appropriate to be inside the scope of 25 TETAP's purview. 43 1 MR. FONG: Okay. 2 MR. SWEET: Arthur Sweet. I don't know whether this 3 is the time to bring this up, but I'm re-reading your TETAP 4 coal commercialization. And there is a phrase in there, 5 "while remaining cost competitive with existing fuel choices." 6 In my basic opinion, this is one of the major problems that 7 we're having in the alternate fuel development field and 8 alternate technology, because, if you'll look at Europe, that 9 has a very, very successful alternate fuel program with 10 natural gas vehicles. You compare them with ours, where the 11 dedicated fuel vehicles are going to amount to maybe 15,000 12 units this next year. And the conversions, even though it's 13 being supported, are maybe fairly substantial. But it's 14 strictly the result of federal financial support credits that 15 are available. 16 This is the essential problem, to expect 17 commercialization, with all these new developments, in light 18 of keeping competitive with existing fuel cost, I think you're 19 asking for a great amount. I think that fundamentally your 20 goal should be to develop new technology. And the idea of 21 having it competitive with existing fuels is going to be -- 22 apt to be let to the future. 23 DR. BINING: Do you want to make a comment on that? 24 MR. SPATARU: Yes, I'd like to make a comment. 25 Alex Spataru, of the A-DEPT Group. 44 1 This is a suggestion made to the Commission. I think 2 that the mission should be one of looking at a portfolio of 3 technologies, what you've essentially done up to now, where 4 you have a portfolio of different risk projects, where you 5 have some projects that have a longer risk, where 6 cost-competitiveness would not be a high criteria, where you 7 make allowances for that because you have to have the 8 long-term perspective. 9 And, at the same time, you have to pay attention to 10 existing technologies, like ACM, and see what you can do about 11 helping people who are in a situation to make those engines 12 more efficient, to make them less pollutant and what-have-you, 13 because sudden change is practically impossible. 14 So if you can help with a transition process in an 15 intelligent fashion and a cost-effective fashion, that should 16 be part of your portfolio as well. I think it's very -- I 17 think it's well intended. But I think it would be a mistake 18 to just say we are not going to fund an area that has proven 19 to be a very cost-efficient means of transportation in the 20 United States and in California. So that discretion has to be 21 left to the Commission. 22 DR. BINING: Good point. 23 DR. HALBERSTADT: My name is Marcel Halberstadt. 24 I'm with the American Automobile Manufacturers Association. 25 And even though our members do not, at this moment, 45 1 manufacturer a lot of diesels, I would like to support what 2 Alex just said, in that it's inappropriate, in my opinion, to 3 prejudge the value of any technology that could come under 4 development. 5 And it appears to me that one of the ground rules 6 under which technology development takes place is that 7 appropriate and applicable environmental concerns will be 8 addressed. And it's totally inappropriate in that sense to 9 exclude a potential improvement to an existing technology 10 without considering it among all the others. 11 MR. MARK: Jason Mark, with the Union of Concerned 12 Scientists, again. I'll try to rebut some of the previous 13 comments and just sort of clarify, to the extent possible. 14 First of all, I certainly would agree that the best 15 way to guide the public investments would, in fact, be to set 16 performance targets that we all agree upon are appropriate. 17 And if, in fact, a conventional vehicle technology can compete 18 in that market, that that perhaps makes some sense. 19 However, I have two responses to that reasoning. 20 First of all, we're talking about a very small amount of 21 funds. And we really, I think, have an opportunity through 22 TETAP rather than other programs, which may create incentives 23 for things like reducing emissions from diesel technology, 24 through TETAP I think we have an opportunity to really set out 25 the mark for truly innovative options. 46 1 Second of all, my concern is that in TETAP and in 2 other funding programs we don't have a mechanism by which we 3 can incorporate or capture the performance, the environmental 4 performance targets that really are truly protective. In 5 other words, how do we incorporate, for example, CO2 benefits, 6 or energy dependence benefits. How do we incorporate toxic 7 emissions, something that Cal/EPA is currently pursuing 8 through a regulatory process to identify diesel exhaust as a 9 human carcinogen. 10 So it becomes clear to me that our existing process 11 doesn't capture all of the performance targets that would 12 allow us to make smart environmental choices about our public 13 investment dollars. And so given that inability, I would much 14 prefer the TETAP Program to focus its emphasis on options that 15 clearly deliver those types of gains. 16 MR. VLASEK: Greg Vlasek, California NGV Coalition. 17 I can never remember whether it's $1 billion or $8 18 billion that the automobile industry was given, under the 19 Partnership for New Generation of Vehicles, to enhance 20 efficiency of our light- and medium-duty vehicle fleet. The 21 $1 million or $2 million a year we're talking about here 22 obviously pales in comparison to that. 23 So I think it's fair to say the Energy Commission 24 could focus, being that you do have the goal not only of 25 efficiency, but of reduction of the use of petroleum, it would 47 1 probably be fair to focus, as Jason is suggesting, on those 2 fuels that really meet both of those goals and not get 3 sidetracked into diesel technologies for light-duty 4 automobiles, or your continued investment in diesel vehicles, 5 or gasoline vehicles, for that matter. 6 MR. NORTON: Paul Norton, with the National 7 Renewable Energy Lab. 8 I think it's important in a discussion of -- that the 9 word "diesel" comes up quite often -- to make the distinction 10 between conventional diesel fuel, and what's usually referred 11 to as diesel engines, which are compression/ignition, 12 direct-injection throttleless engines. 13 And I think it's very important to continue to look 14 at research directed towards diesel engines or 15 compression/ignition engines, because they have a high 16 potential for being high-efficiency engines for various fields 17 in the future. 18 So when we're talking about whether to fund diesel or 19 not to fund diesel, I think it's important to make that 20 distinction. Although I would agree that perhaps funding 21 projects out of TETAP for conventional diesel fuels is perhaps 22 not appropriate; for diesel cycle engines I think it's very 23 appropriate. 24 DR. BINING: Yes, good point. 25 MR. FONG: Are there any feelings from the audience 48 1 regarding a preproposal process as being part of our 2 solicitation award? 3 MR. EASTWOOD: My name is John Eastwood. I'm with 4 Trinity Flywheel Power. 5 Clearly as a individual who works with a company 6 that's developing advanced flywheels, my comments are 7 inevitably somewhat prejudiced, but so are everybody else's, 8 so I'm going to make them anyway. 9 I think that a couple of observations to be made, 10 particularly by the representative from the Union of Concerned 11 Scientists, which are very relevant, in that the amount of 12 funding that's made available through the TETAP process is 13 relatively limited. 14 And therefore I think that it's very important that 15 the process, the process that we're talking about here, should 16 identify novel and different means of propulsion systems that 17 have the advantages of providing the opportunity for increased 18 efficiency and obviously for cleaner air. 19 And therefore to invest money into such things as a 20 diesel engine is a mere drop in the bucket. And I would 21 suggest this is a wonderful opportunity to pursue new 22 technologies which could contribute towards solutions, both in 23 terms of efficiency, and also in terms of clean air, as I 24 mentioned. 25 The other thing is Mr. Fong asked a question 49 1 concerning the presolicitation process. I think that's a very 2 good idea because I think what it does, it provides an 3 opportunity for various interested parties to submit 4 documents, whether they be white paper or whatever, which are 5 then reviewed by the Commission. 6 And since Mr. Bining has indicated an interest and 7 willingness on the part of the Staff to do that, that means 8 that when the bidding process takes place there is already a 9 prescreening. And I think that, as you said earlier, saves 10 money on the part of the participants and helps to focus the 11 effort. So I think it's an extremely good, productive idea. 12 MR. DUSTE: Yes, Rick Duste, with U.S. Electricar. 13 And we've submitted proposals in the past, one that 14 was successful and one that wasn't. And as you're aware, 15 there's quite a bit of work involved in doing them. And we do 16 a fair number of proposals with other agencies around the 17 country. It's pretty common, either white papers or 18 pre-proposals. So we so support that quite strongly. I think 19 it makes a lot of sense, not only from our company's 20 standpoint, but also from the Commission's, because you can 21 get maybe a wide variety of ideas you wouldn't have gotten 22 otherwise to select from. 23 You might also want to open the idea of allowing more 24 than one preproposal from a company, because in the past maybe 25 we had to select which item we thought we could sell you, so 50 1 to speak. Where maybe we had a variety of ideas and maybe one 2 of the other ideas was something you were more interested in. 3 MR. KRAGEN: Mark Kragen, with Calstart. 4 And actually I agree that the preproposal idea is an 5 excellent one. My only caution would be to not extend the 6 timeframe from application to actual funding too much further 7 than it already is, because that is a concern that, you know, 8 at what point do you get the money, especially if you have 9 other funding commitments that are associated with the 10 program. 11 MR. BLAND: Joseph Bland, B-l-a-n-d. I'm sorry I 12 came in late. I just have a quick question. When you say, 13 "market the program to preferred stakeholders," would you mind 14 telling me what a "preferred stakeholder" is? 15 DR. BINING: The preferred stakeholders means that 16 those people who propose certain technologies that fit 17 directly into our objectives and goals, and those stakeholders 18 are fully committed to those kinds of technologies or 19 projects. And if we get that feedback from those people, who 20 are already committed to those projects, then we feel that 21 those projects fall into other goals and objectives, then we 22 can market other programs to those specific stakeholders. 23 MR. BLAND: Then I guess I need to have defined what 24 you mean by "market," then? What do you mean when you say 25 "market the program?" 51 1 DR. BINING: "Market" means to provide whatever 2 information we can provide to them so that the program is 3 accessible to them and it is not that -- 4 MR. BLAND: Is this exclusionary at all? I guess 5 that's what I'm trying to get to. Is it an exclusionary 6 process that we're talking about? 7 DR. BINING: No. 8 MR. BLAND: Okay. It sounds that way. 9 MR. BORETZ: My name is Rich Boretz, from UC 10 Riverside. 11 I wanted to get back to your question on 12 preproposals. I think that's a excellent idea. I agree with 13 Rick Duste's comment that more than one preproposal from an 14 organization should be welcomed. 15 And one further comment is you might invite, in the 16 preproposal, some sort of statement allowing the Energy 17 Commission to disclose our preproposals to other proposers. 18 And in that way there might be some match-making process that 19 wouldn't affect your impartiality, but might form stronger 20 teams. 21 And, in our case, you know, the University, we're not 22 in it for profit. We're just here for the knowledge. And if 23 we could find someone who is in it for the profit that might 24 improve achieving your goals, our goals and private sector's 25 goals -- 52 1 MR. FONG: That's an interesting point. In most 2 cases the material that is submitted to our agency becomes 3 public information, although we don't sort of, you know, go 4 out of our way to duplicate it and then mass-mail it. But 5 those entities who do have an interest can simply request of 6 our Contracts Office to review those submittals. And in every 7 case that I'm aware, those proposals have then been made 8 available to those interested parties. 9 MR. SPATARU: Alex Spataru. Quick comment on 10 preproposals. I think it's a great idea. You don't want to 11 make sure -- at the same time you don't want to make it that, 12 if someone doesn't submit a preproposal, they cannot submit a 13 proposal. You want to make sure that you allow that door to 14 stay open. 15 And if somebody wants to have a preproposal 16 circulated among the other preproposer parties, they should 17 simply check off a box saying that. Then you simply make that 18 available. That's a great idea. 19 DR. BINING: Yes. 20 MR. SWEET: Art Sweet. The preproposal idea is an 21 excellent idea. However, I would take and limit the size of 22 the preproposals to maybe a one-page, or two-page, or whatever 23 you want to do. The same way I'd do that with the final 24 preproposals when you do that. Because in other agencies in 25 different fields, where we have submitted grant preproposals, 53 1 they tend to do that. And it makes you concentrate your 2 efforts in actually meeting the goals which you have, which 3 you stated. 4 DR. BINING: Yes, that is what the intent is on 5 preproposals that it should not be like a 20-page, 40-page 6 document, because we will answer and have a hard time in 7 evaluating that 30-, 40-page preproposal document. So our 8 preferred approach will be something like no more than four 9 pages or five pages. Preferably one or two pages. 10 Any other? 11 MR. ADDY: McKinley Addy of the Energy Commission. 12 One of the questions that Avtar asked at the 13 beginning of his presentation or somewhere in the middle 14 there, was whether the list of issues that are posted up there 15 on the screen that were identified by the consultant as 16 potential barriers to the submittal of good proposals to the 17 TETAP process, were issues that you in this audience identify 18 with. 19 And I haven't heard any confirmation from anybody 20 that these are some of the issues that would keep people from 21 responding to the TETAP solicitation and whether, if the 22 Commission were to resolve some of these issues, it would 23 encourage a greater number of you to respond to a future TETAP 24 solicitations. 25 And I wonder if we can hear on that point from you? 54 1 DR. BINING: Anybody to comment on McKinley's 2 comment? 3 MR. COLE: Jim Cole with Southwest Research 4 Institute. 5 The RFP process that you guys do have is one of the 6 most difficult we've ever seen before. And we make our living 7 responding to proposals. And I think you've got most 8 everything there. 9 But there was one issue, and I may be wrong on this, 10 but it had to do with the people doing the work had to invest 11 their own money. And that's very difficult for universities 12 or nonprofit institutes to do. And I don't see that on there. 13 So even if there was a commercial manufacturer 14 putting 50 percent of the money up for a commercial product, 15 if he utilized the university to do that, some rule of the 16 people doing the work had to put in their own money. And 17 that's difficult for universities and nonprofits to do that. 18 And I don't see how that really affects the end outcome or the 19 goals of the Commission on where the money comes from, as long 20 as it comes from outside the Commission. 21 DR. BINING: Yes, there is that requirement that 20 22 percent of the match funds should be applicant's own 23 contribution. And that provision or requirement has been 24 there for quite some time. And the basic intent there is that 25 the applicant can show full commitment to that project. If 55 1 there is no direct investment by the applicant, then sometimes 2 it is considered that perhaps the applicant is not committed 3 to doing that project. 4 But to me that 20-percent requirement, there are 5 certain provisions of how you can meet those requirements. It 6 is not a direct cash contribution. There are some other 7 in-kind contributions that are granted towards that. But we 8 are certainly looking at all those issues, and that is a good 9 point to look at. 10 MR. KRAGEN: Mark Kragen, Calstart. 11 On that 20-percent required applicant match, what I 12 would suggest is, if you're concerned about the commitment and 13 perhaps not overusing government funds, that you just make it 14 the 20-percent private match, nongovernmental match. And I 15 believe that would perhaps satisfy the commitment concerns 16 that you have and at the same time allow for nonprofits to 17 take on these kind of work activities. 18 DR. BINING: Any other issue that you think can be 19 put on this list, for short term, other than these? 20 Yes? 21 MR. FOLKMAN: Jim Folkman from the Energy 22 Commission. 23 I just want to make a quick comment about 24 communication and sharing information on the preproposal 25 process. If that comes to fruition and a preproposer checks 56 1 that, there is the Internet that these proposals can be, you 2 know, shared also. 3 And our preproposal solicitation and the final 4 solicitation will be on the Internet on our Website, too. I 5 just wanted to let you know that. And if you have a chance at 6 lunchtime, we do have a computer out there where you can check 7 out our Website. And it's pretty self-explanatory. 8 MR. BLAND: Joseph Bland, inventor. 9 Again, I came in late so it might have been covered, 10 but has anybody spoken about the idea of rating or somehow 11 looking at deep pockets having to pay back more than shallow 12 pockets? 13 MR. DUSTE: Rick Duste, with U.S. Electricar again. 14 After thinking about it a little bit, I'd like to 15 support Mark Kragen's thought there on the 20 percent, that it 16 not necessarily be the applicant but just from the commercial 17 sector. 18 DR. BINING: Yes. Regarding the different rates of 19 repayment, yes, when we -- actually in our repayment 20 provision, there is a range of that royalty rate, which is 21 negotiable. It is not a fixed rate. And each contract or 22 each project is negotiated on those repayment provisions that 23 way. So if one applicant feels that a low rate is more 24 suitable, then that is negotiable. 25 MR. ANDREONI: Tony Andreoni from the Air Resources 57 1 Board, Research Division. 2 I guess it's kind of easily, or not maybe easily 3 defined, when you look at number one, clearly identify the -- 4 articulate program goals and objectives, when you start 5 talking about the repayment and when you start talking about 6 commitment, as far as percent, and the amount committed to the 7 project, with other agencies we look at -- for example, the 8 ICAP Program. The reason for that amount is to show 9 commitment to getting this product developed, demonstrated and 10 on the market, versus research. 11 So I guess there needs to be a definition of what 12 constitutes research funds and what constitutes or allows 13 funding for further development. 14 DR. BINING: Yes. 15 MR. ANDREONI: So that bridge may allow the amount 16 required to be needed in the project to be more defined. 17 DR. BINING: Yes, let me rephrase that. What you 18 mean by that is that we should allocate certain funds towards 19 the research, certain towards development, certain towards 20 demonstration that way. 21 MR. ANDREONI: It possibly may be necessary for the 22 fact that, if somebody's concerned about a research entity 23 like Southwest where they are not for profit, they may not be 24 developing the product. It may be a private entity that may 25 have to take it over. 58 1 So there's a definite line between where research or 2 prototype develops to further develop the product into the 3 market itself. So that fine line may not be clearly defined 4 in the beginning, but may be defined later, and that needs to 5 be shown. 6 DR. BINING: Yes. We have been thinking about those 7 kinds of allocations. But then our main concern was that our 8 total amount is so small that, if we start splitting it 9 further, then our contribution in each of those areas becomes 10 even smaller. So that was of our only concern there. That is 11 why we wanted that whole part available to all kinds of 12 innovative ideas. And wherever that innovative idea fits into 13 that later in their research, or in development, or 14 demonstration, it should be able to come into that program. 15 But certainly there could be some consideration for 16 those kinds of projects, like we talked earlier, that if it is 17 for technology advancement, where it is a long-term, there can 18 be some consideration for that that way. And naturally that 19 perhaps falls into more research and development than 20 demonstration and commercialization. 21 MR. SPATARU: This is a request for a clarification. 22 And I'm making an assumption. I want to make sure this 23 assumption is a good assumption or if it needs further 24 clarification. The assumption is that this is a California 25 Energy Commission program, strictly a California Energy 59 1 Commission program. And being a California Energy Commission 2 program it must follow the Mission of the California Energy 3 Commission. And that Mission, the last time that I -- maybe, 4 you know, I don't know -- my understanding of that Mission is 5 that, number one, it must reduce fuel dependency, traditional 6 fuel dependency in California. 7 Okay. And that is to be achieved in two classic 8 fashions. Number one, conservative moves the existing fuels. 9 And, two, encouragement of other fuels to displace existing 10 fuels. And I'm not giving any priority to one or the other. 11 But these are the two essential objectives of the Mission, 12 stated by the Mission of the California Energy Commission. 13 So my clarification, the question that I have, is: 14 Are these two criteria the primary criteria that are used in 15 evaluating the merits of any proposal that is submitted under 16 TETAP? 17 DR. BINING: Yes, they are. 18 MR. SPATARU: Okay. 19 MR. FONG: Yes, I would agree with Avtar's response. 20 Those are the important two attributes in these projects that 21 are submitted to us. There is, though, sort of an important 22 balance that obviously we want to see technologies that are 23 commercialized that also don't degrade the state's 24 environment. 25 Yes, we can reduce petroleum consumption. But at the 60 1 same time whatever technology we choose to develop and try to 2 commercialize, we then don't go into worsening the state's 3 environment. 4 MR. SPATARU: Worsening the environment. There was 5 one other comment which I wanted to make. Would it not be 6 ideal if someone who's had a project that would meet both 7 criteria at the same time? 8 MR. FONG: Yes. 9 DR. BINING: Even in some cases the technologies 10 that have developed for conventional fuels can improve the 11 performance of alternate fuels as well. So that is one reason 12 why we'll keep that option open that, if there is that 13 opportunity, then that should also be explored. 14 MR. KITOWSKI: Jack Kitowski with the California Air 15 Resources Board. 16 And I just want to emphasize the -- obviously my 17 opinions are biased, too -- the emphasis on emissions and the 18 need for that. You do have that, I believe, as even part of 19 the Mission Statement of the California Energy Commission, 20 that a look towards emission is in there. And that's 21 appropriate because we could obviously all go back and make 22 systems that improve fuel economy but worsen emissions, they 23 wouldn't be allowed to be sold. 24 And in addition many of the projects you're looking 25 at will not be available for commercialization for years down 61 1 the road. And we are constantly, constantly looking to lower 2 those standards. It would not do much good to come up with a 3 system that's available for commercialization four years down 4 the road but is only able to meet the current emission 5 standards, because those would probably be outdated at the 6 time. So there does need to be a strong look at the emissions 7 impact. 8 DR. BINING: And also, as the name of this program 9 suggests, in itself it is a technology advancement. And that 10 is what we are seeking. In whatever way we can make that 11 advancement that should be our goal. And it should not be at 12 the cost of one benefit over the other, like energy efficiency 13 improvements or petroleum displacement versus environmental 14 issues. And the Commission is obviously very sensitive to 15 those kinds of issues as well. 16 MR. CHAMBERS: Dennis Chambers, Allied Signal. 17 Avtar, you mentioned it took eight to ten months to 18 evaluate a proposal? 19 DR. BINING: Say it again, please? 20 MR. CHAMBERS: Did you state earlier it took eight 21 to ten months to evaluate a proposal? 22 DR. BINING: No, eight to ten months is our total 23 cycle, starting with the preparation authority, to finally 24 putting the contract in place. And during that time there are 25 certain feeders that are essential, like we give up to about 62 1 eight weeks to applicants to respond. 2 MR. CHAMBERS: I would like to recommend a point. 3 Number 6, that that be shortened, if at all possible. 4 DR. BINING: Yes. 5 MR. CHAMBERS: That seems like an awfully unusual 6 extended period of time. 7 DR. BINING: Yes, actually that is a part of my 8 other issues. If we are done with these more short-term 9 issues, then I can move to those. So I see there is not any 10 other issue that is coming out of this list. So we are 11 focusing on these five issues. And within those five issues 12 we are focusing on these three issues. Number two, which is 13 quite obviously a sort of preferred issue by most of us. 14 Second, is modifying MWDVBE participation requirements and 15 part of modifying repayment provisions. 16 On the long-term issues, there are these eight issues 17 that we have listed, that we have come up with. There again, 18 there are some issues that we can easily deal with. And again 19 they are on long-term basis that, as we are moving along, we 20 will keep on making those changes, but the final result may 21 not be. 22 So any discussion on these eight? 23 MR. BORETZ: Yes, this is Mitch Boretz from UCR. 24 A couple of comments on this is the -- most of the 25 Energy Commission's research money is now going to be coming 63 1 through the PIER program, the Public Interest Energy Research 2 program. And there seems to be some confusion, or at least 3 not -- a decision not made yet on whether any of that money 4 can apply to mobile sources and obviously the integration 5 between things like electric vehicles and hybrid electrics and 6 the utility grid. 7 So I don't know if you all have any insight on that. 8 And I see you've also got -- aligning TETAP and ETAP and also 9 establishing collaborative projects with other agencies. Yes, 10 I think this issue of synchronization of funding and what you 11 might recognize as co-funding, and previous funding, could 12 come into play there. 13 MR. FONG: Yes. Let me try to throw some light on 14 that issue. We are still internally trying to develop a clear 15 policy on how the resources being made available for the 16 Public Interest Energy Research program might be used for 17 mobile source or mobile source kinds of technology, R&D 18 projects. 19 I think one of the sensitive public issues, though, 20 is that these moneys essentially come from electricity 21 ratepayers. In previous decisions, issued from the Public 22 Utilities Commission, on using ratepayer funds for research 23 and development, there were some constraints placed upon using 24 those kinds of moneys for transportation or mobile source 25 related technologies. 64 1 Those constraints still exist. And the PIER Program 2 will likely have to adhere to those previous PUC guidelines on 3 how ratepayer funds are used for research and development 4 projects. 5 We think, though, that there are some opportunities 6 where certain kinds of dual application kinds of technologies, 7 that both have potential for stationary energy applications as 8 well as for mobile applications, could then qualify for 9 support through the PIER Program. But that is still sort of 10 an internal policy issue. 11 Our program here at the Commission in the 12 transportation area is being handled by a different subset of 13 policy individuals. We are, though, trying to bring to the 14 attention of the responsible parties for the PIER Program 15 where there might be some overlap and potential to take 16 advantage of those PIER dollars. 17 But you're right, there is clear limitation, I think, 18 on how we can apply the PIER resources to transportation 19 programs. 20 DR. RAY SMITH: Ray Smith, Lawrence Livermore 21 National Laboratory. 22 I guess I'd like to make a comment to urge the 23 Commission to review in great depth that, because the coupling 24 of the utilities with the transportation sector probably 25 offers the biggest change in energy consumption that we see, 65 1 either through production of hydrogen fuels, manufactured 2 fuels, or electric vehicles, rolling storage if you will. It 3 could markedly change the off-peak poor production 4 efficiencies of the utilities and help all sectors. 5 And so the Commission needs to take a broad, 6 systematic view of this potential coupling, because the 7 leverage could be tremendous. 8 DR. BINING: Any other comment? Any other issue 9 that needs to be put there on this list? 10 MR. BLAND: What's deregulation of the electric 11 utilities going to do to the electric car potential industry, 12 et cetera; anybody given consideration to that? 13 MR. FONG: Well, actually you can look at it as the 14 cup half full or the cup half empty. I mean there are some 15 positive developments with restructuring of the electric 16 utility industry. There are now spin-offs from the regulated 17 utility. And those spin-offs are now focusing on the future 18 development and commercialization of electric vehicle 19 technology. So that's very good. 20 It does have to be, I think, looked at from a 21 business perspective, rather than to sort of take ratepayer 22 money and then make that investment without any sort of 23 financial risk is not necessarily a good long-term policy. 24 And so I think, you know, what we see happening in 25 this restructuring overall is going to be a positive 66 1 development. Where those entities, if they make those 2 investments, then they seriously believe they're going to make 3 money. And that's what we want. We don't want somebody who's 4 got some money just trying to think about where to put it. We 5 want investments that lead to long-term economic success. 6 MR. BLAND: Joseph Bland again. One type of 7 electric vehicle, of course, is a hybrid in which you store 8 energy and then release it. In effect, stored in a battery, 9 and then release it, or you can store it other ways. It seems 10 to me that hybrid technology has some interesting applications 11 to PIER-type technology. 12 So one possible route for somebody looking for 13 funding might be to consider building or applying under PIER 14 to develop a storage engine or an engine with electric 15 storage, which could then effectively be also doubled with 16 your type of a transportation program. 17 So that's one example, I think, where you could see a 18 benefit coming out of PIER that could be applied your program 19 as well. I'm looking at your number 11 on the thing, 20 "Establish collaborative projects." And that that's just and 21 example that comes to my mind, anyway, of one collaborative 22 approach that might work. 23 DR. BINING: Yes, there are two areas where we think 24 that that kind of stationary and transportation sector can 25 collaborate on. One is on energy storage technologies that 67 1 you mentioned, like flywheels, even fuel cells, to some extent 2 all truck factors. 3 And the second technology area is on the 4 infrastructure side, like charging, battery charging 5 infrastructure. So we are exploring those dual application 6 opportunities. And perhaps in our next solicitation we will 7 mention that. And the same thing we feel that the PIER 8 program is going to do, because there certainly is a benefit 9 of taking advantage of that dual application. 10 With some of these technologies that are too 11 expensive for transportation applications now perhaps can be 12 less expensive for the stationary applications and the 13 experience gained from those stationary applications can be 14 used towards developing more cost-effective technologies for 15 transportation applications. 16 So that is the approach we are thinking of in the 17 future, that those flywheels, if some of those bulkier 18 flywheels, they can be cost effectively used in stationary 19 applications as of this time. That is one way to go. And 20 using those funds and demonstrating those technologies in 21 stationary applications, and then experience gained from those 22 can be used towards developing more cost-effective 23 technologies for transportation. So that is the kind of 24 approach we are thinking. 25 Charging infrastructure, that is perhaps easier than 68 1 even energy storage technologies, because the utilities or 2 energy suppliers have some vested interest in having more 3 consumption of electricity in various applications. So they 4 might like to collaborate on that more easily than on energy 5 storage kind of technologies. 6 MR. VLASEK: Greg Vlasek. I have a couple comments 7 on your long-term issues list, since you asked for that. 8 Future solicitations being more consistent, I think that's 9 critical to the longevity and success of the program. And I 10 should mention up front some of these things tie in very 11 closely to each other. I think having that consistent program 12 with the anticipation that this will be an ongoing, you know, 13 funding priority at the Commission, to have some 14 transportation technology advancement program is important. 15 Simplifying the process and reducing cycle times, all these 16 things are going to add value. 17 I mean, if you proceed with these, as you proposed 18 them here, they're all going to increase the value and I think 19 increase the quality of the projects that get submitted. 20 Because people will know, for example, even if they can't make 21 it a narrower application window, or they don't quite have 22 their act together to apply in one cycle, they know that there 23 will be another cycle the following year to do that. 24 The line in TETAP and ETAP makes sense. That aids 25 the efficiency of the whole process. I think collaborating 69 1 with other agencies would be very valuable. And I think 2 there's probably some overlap of criteria or scoring 3 mechanisms that may already exist like for the ARB Research 4 Commercialization Program, for example. So there's probably 5 synergies that can be derived, and possibly even some actual 6 collaboration on projects that could be derived from that. 7 Institute of performance measure, I hope you plan to 8 do that. I'd hate to have any program that had no measurement 9 of its performance by any entity, government or otherwise. 10 Increase funding levels, sure, why not, to the extent 11 you can find funding. I think if we've learned anything in 12 past ten years, in this energy sector, is that there's 13 constant opportunities and constant changes that can be 14 effected towards energy diversity and better air quality and 15 efficiency through advanced transportation technology. 16 I guess the only thing I'm not real clear on is 17 number 7, "Exploring the merits of an open process." And I'm 18 not sure what exploration is required at this point to 19 determine if that has merits or not. 20 DR. BINING: Yes. That issue has something to do 21 with other contractual process or solicitation process. The 22 open solicitation process, the way we are thinking is that we 23 can accept proposals. Any time through the year anybody can 24 submit any proposal at any time. And we keep on evaluating 25 and funding those projects if they are worthwhile to fund and 70 1 the funds are available. 2 But there are some pros and cons of that process 3 that, if we get those proposals from people on that open 4 timeframe, then, one, that we won't be able to target, 5 specific areas that we want to, because one proposal comes at 6 one time, and we evaluate that on one basis. 7 And then the second is a resource issue that how much 8 Staff we will need to manage that kind for program. 9 And the third is regarding having equal opportunity 10 to everybody. Like when we release a solicitation it is one 11 time open opportunity to everybody to respond. Whereas, in 12 this case some people may question that one applicant got more 13 opportunity because of more resources, and so on. 14 So those are the kinds of issues which we want to 15 explore before we expand on that. 16 MR. BRYAN: Norm Bryan, EVAA. I guess I agree with 17 what Greg said about solving most of the long-term issues that 18 are going to add value to your program. 19 One note of caution, though, on the collaboration 20 area. You have to recognize if that isn't done really 21 cautiously and doesn't really support the program, it's going 22 to go significantly against 8 and 9. And so, you know, make 23 sure that any collaboration that you bring into it is 24 something where it's a clear added value and going to enhance 25 the output, so that the extra complication in slowing it down 71 1 doesn't offset it. 2 MR. SPATARU: Let's be finished with this sooner. 3 Can we start on the other part, so we can have the break 4 later, so we can maybe get out earlier today? 5 If we are finished with the items now, rather than 6 take up -- 7 DR. BINING: Yes, one comment that I would like to 8 make on this one. As I mentioned, most of our funding so far 9 has been coming from the petroleum violation escrow account. 10 And that account is almost close to complete depletion. So we 11 will have to seek some other sources of funds. And that is 12 another issue that we wanted to explore with you, that if you 13 have any other ideas, or other information regarding other 14 sources of funding, we would like to seek your input on at 15 that, also. 16 MR. SCHWARTZ: Fred Schwartz, consultant to Trinity. 17 Anything you can do to reduce the time between 18 proposal submission and the flowing of money would be 19 tremendously useful. 20 MR. LUSBY: How long is that time? 21 DR. BINING: At this time it takes between eight to 22 ten months. 23 MR. LUSBY: From the time the solicitation comes 24 out? 25 DR. BINING: The time the solicitation is started in 72 1 terms of putting together the solicitation, putting it on 2 roll, accepting proposals, evaluating proposals, notifying 3 selected applicants, and setting up contracts, eight to ten 4 months. 5 MR. LUSBY: Thank you. Art Lusby, again. 6 DR. BINING: Anything else? 7 DR. RAY SMITH: Ray Smith, Lawrence Livermore, 8 again. 9 In the reduction of the cycle time on the 10 solicitations, you've talked about all the different steps. 11 We understand that. What are the one or two major things that 12 are causing the biggest hold up? Is it evaluation, or is it 13 response from the applicants? What's the major hang up? 14 DR. BINING: Response time is typically eight weeks, 15 from the date we release solicitation, and then a due date. 16 That is about eight weeks. 17 And sometimes we had to extend that at the request of 18 some people. When something happens and it was decided by the 19 Commission that it is beneficial to extend that date. 20 Then from that time onward we take somewhere between 21 four to six weeks to evaluate those proposals. 22 And then we take another four weeks to put it through 23 our approval process from the Commission, because we have to 24 take these selected projects to the business meeting and get 25 full Commission approval on that thing. 73 1 And at that time we can notify the applicants that 2 are selected. And applicants can start spending their match 3 funds. But it is at their own risk at that time because, from 4 that point onward, we send our contract documents. 5 And then the negotiations start, because some of the 6 applicants, they may like to change certain terms and 7 conditions. And there is a provision for that in that process 8 that you can propose some terms and conditions that you would 9 like to change. And that is the most time-consuming step. 10 And sometimes that goes even beyond eight to ten months. 11 And we have been lucky that we have not been like 12 some other programs, where it has taken like sometimes up to 13 two years. But we have been able to set up our contracts 14 within an eight to ten months window. 15 But we would certainly like to reduce that and the 16 preproposal process is one where the applicant knows about the 17 project, and the applicant knows about the program terms and 18 conditions. And if we simplify our process, perhaps it will 19 be beneficial on both sides and we can reduce that time. 20 MR. VLASEK: Greg Vlasek. Yes. That explanation 21 makes it clear to me how you get bogged down in the process. 22 And at the risk of repeating myself, I'd say again that the 23 criteria that you guys set up is, you know, really the bottom 24 line for making this process work properly. And I think 25 anything that involves negotiation is obviously going to 74 1 involve some protraction of the time schedule. And that's 2 going to work against the overall efficiency of the program. 3 So I'd say, I guess again, look real hard at your 4 criteria and try and set up each step of what you want to get 5 out of the program as a series of gates, to make sure that -- 6 I mean, it really becomes a series of yes-and-no decisions as 7 to whether or not you can work with a particular project and a 8 particular proposal and try and absolutely minimize the amount 9 of negotiation that's required in these things. I think that 10 will be a big help in saving time. 11 MR. KITOWSKI: Jack Kitowski, Air Resources Board. 12 If I pulled the numbers out from what you're saying, 13 though, an optimistic way of looking at it is from the point 14 that -- and if I've got the numbers right, correct me if I 15 don't -- from the Point A, applicants submit their proposal, 16 to the time that they've heard that your Board or your 17 Commission has actually approved it, is only about three 18 months. That's quick, you know, in some circles. 19 Now there's still hoops to go through. You've got to 20 write the contract; you've got to negotiate that. And, yes, 21 anything that can be done to reduce that is great. But for a 22 state contract process, that's pretty good. 23 DR. BINING: Yes. We are shooting for somewhere 24 between four to six months, if we do most of these things. 25 And if we are able to do those, we can probably set up 75 1 contracts between four to six months, easily, in spite of all 2 those hoops. 3 MR. RAMBACH: Glenn Rambach, Desert Research. 4 On the issue of constraining your requirements for 5 the review, you really can't -- in new energy technologies in 6 research in that area, you really have to prepare to expect 7 the unexpected. So you really can't overconstrain the 8 criterion so that there's no -- you know, to really minimize 9 the negotiation afterwards, you have to be prepared for quite 10 a range of technology, as well as market issues, that you may 11 not be able to expect ahead of time. So you have to leave 12 that open. 13 DR. BINING: All right. I think we covered this 14 prospect pretty well. And that was our part one of this 15 meeting. And our second part is in the afternoon for which I 16 will invite Susan Brown to speak. 17 MS. BROWN: Good morning. I'm Susan Brown, and I 18 have the unenviable job of being the last speaker before 19 lunch. And I'm going to make my remarks extremely brief. But 20 I do want to add my personal thanks to all of you for your 21 constructive input this morning, because this is exactly the 22 type of feedback we're seeking. 23 We've actually strayed, I think, from the morning 24 topics into the areas that we want to stress in the afternoon, 25 which are now on the viewgraph behind me. 76 1 What we're really interested in hearing from you this 2 afternoon is input on the specific technology categories that 3 are in the handout that we provided you. We're also very 4 interested in comments, constructive comments, on the 5 selection criteria. 6 One thing we don't want to do is duplicate the kind 7 of projects that have either already been funded by other 8 agencies or institutions, but we want to rather, as Dan has 9 stressed on numerous occasions this morning, we want to form 10 collaboratives. 11 So to the extent that as we go through the menu of 12 technologies this afternoon, if you have information about 13 other funding sources or available entities interested in co- 14 funding with us, we'd certainly like to have that come out in 15 the afternoon's discussion. 16 So I really don't have too much to add at this point. 17 I think we have a choice here whether to begin discussion of 18 the afternoon session for the next 20 minutes, or we can 19 provide some time for you to examine the displays that the 20 Staff have worked very hard on in the atrium, and come back 21 maybe a little bit earlier from lunch. 22 So what's the pleasure of the group? 23 AUDIENCE PARTICIPANTS: Let's go to lunch. 24 MS. BROWN: Go for lunch? 25 AUDIENCE PARTICIPANT: Head for lunch and come back 77 1 early. 2 MS. BROWN: Okay. Is that okay? 3 Then what I think we'll do is we'll adjourn the 4 meeting right now with the promise that you'll be thinking 5 about all of the technologies and selection criteria that we 6 provided you this morning. And be prepared to come back at 7 12:45 promptly in this room. 8 So thank you again for being here. And we'll see you 9 at 12:45. 10 (Whereupon, the luncheon break was taken from 11:35 a.m. 11 to 12:50 p.m.) 12 DR. BINING: Good afternoon. I think we are ready 13 for our afternoon session. Those people who want to leave 14 early, probably they came early for this session, so we can 15 take advantage of that. 16 So this is Part 2, specific technology approach for 17 TETAP. And again, for the sake of the record, my name is 18 Avtar Bining, and we are starting with the afternoon session. 19 Here I will take a slightly different approach from 20 the way it is presented on that earlier sheet. And what I 21 will do, I will go through a full set of those technologies 22 that are mentioned in the handout, quickly, and walk you 23 through those technologies. And then I will give you a little 24 overview on our last meeting that was the Advanced 25 Transportation Technology group meeting back in June. 78 1 And for the benefit of those people who were not 2 present at that meeting, they can get some information on 3 that. And then I will present information on selection 4 criteria that was talked about at that time. And then we can 5 open for discussion, and then focus on the selection of those 6 technologies after covering of the selection criteria. 7 So the technology categories that we have listed in 8 that, there are six categories. Ordinary fuel and 9 technologies, electric vehicle technologies, natural gas 10 vehicles, hybrid electric vehicles, advanced primary 11 technologies, materials for vehicle and subsystems. 12 And there is more detail in that handout that I gave 13 you in that package. And here under alternate fuel and 14 technologies, we have listed some technologies that are in 15 fueling infrastructure. So that fueling infrastructure 16 technologies is more efficient, there is durable storage in 17 terms of dispensing, blending, reforming the QFER 18 standardization. 19 Engine vehicle performance in terms of power, torque, 20 thermal efficiency, fuel economy, emissions, durability, 21 reliability and some demonstration programs. 22 And in each of these slides I have highlighted some 23 of those technologies, like these (indicating). There we feel 24 that there should be some technology focus. So as we go along 25 these different categories, you can take note of that, that 79 1 this is our understanding that these are the technologies that 2 deserve some kind of special focus. 3 In electric and vehicle technologies, advanced 4 batteries, including lead/acid, nicad, like nickel metal 5 hydride, lithium, polymer, thermal management of the battery 6 packs, energy efficient electric propulsion systems, vehicle 7 structures, charging infrastructure, because that is an 8 important issue in the electric vehicle category. 9 Natural gas vehicles, engine performance. In natural 10 gas vehicles all these technologies that we now tend to have 11 like 10- to 15-percent power loss, relative to their 12 counterpart engine. And again, 15 to 20 percent in the 13 thermal efficiency penalty. So that is one critical area that 14 we need to focus on. 15 Onboard storage tanks, they should be lightweight 16 composite materials, safety, durability, reliability cost and 17 standardization. 18 Fueling infrastructure, that is another major issue 19 in natural gas technology. We want that kind of fueling 20 infrastructure. They're like a compressor, so they are high 21 efficiency, low maintenance, long life, low cost and safety 22 and reliability. 23 Hybrid electric vehicle technologies includes power 24 trains. We have seen various combination of series, parallel, 25 combinations of series and parallel, and so on. And we were 80 1 having a hard time in sometimes getting the right definition 2 of those series and parallel combinations. 3 Power sources, again advanced batteries, fuel cells, 4 ultra-capacitors, internal and external combustion engines, 5 using alternative and conventional fuels. 6 Demonstration of hybrid electric buses and trucks. 7 In some cases these hybrid electric vehicles, they make better 8 sense in medium-duty and heavy-duty applications. So we would 9 certainly like to see those kinds of demonstrations. 10 Electronic controlled systems, both for power and for 11 energy management, during operation and nonoperation periods. 12 You know, one problem in electric vehicles we have faced often 13 is that when vehicles are not operated on a continuous basis 14 the batteries or battery packs, they tend to deteriorate, and 15 we do not get full usage of those. So those kinds of 16 management systems are needed there. 17 Advanced primary technologies, like fuel cells. We 18 have been focusing on proton exchange membrane fuel cell for 19 transportation applications because that is what we feel that 20 -- for transportation applications that this technology has an 21 edge over other fuel cells, like phosphorus or solid oxide, or 22 others. 23 Again, using hydrogen is very easy in fuel cells. 24 The fuel cell part is very simple in that respect. And so we 25 are interested in seeing direct use of hydrogen in proton 81 1 exchange membrane or sort of a true reformer. 2 Alternate fuel, like methanol, ethanol. Perhaps 3 methanol is more appropriate in near term than ethanol. Both 4 have got it, a fuel reformer. And there are some discussions 5 about using conventional fuels in fuel cells through reformer. 6 Flywheels, ultra-capacitors, both aqueous and solid 7 electrolyte. We have some experience on aqueous electrolyte 8 ultra-capacitors that you have seen outside displayed as one 9 of our projects, our completed projects. 10 Emissions and efficiency improvement technologies. 11 Lightweight engines that provide high specific power in terms 12 of kilowatt power kilogram or power density kilowatt power 13 later. So those technologies. 14 Lastly, materials for vehicles and subsystems. There 15 is some opportunity to reduce cost and improve performance by 16 integrated structures, manufacturing processes, lightweight 17 materials and demonstration of ultra-light vehicles. 18 So these are the six categories that we have kind of 19 put together as a full landscape. And in your handout you see 20 much more discussion on each of those things. And those are 21 the different points that you can review and comment on, or 22 you can use that as a basis for your own analysis or comments. 23 During our last meeting of the Advanced 24 Transportation Technology group we started evaluating -- or 25 not evaluating -- but kind of considering these various 82 1 technologies, based on the general focus at that time in that 2 group and discussed general attributes of these technologies. 3 And these are some of these examples from that discussion. 4 One item that was discussed was heavy-duty natural 5 gas engines. Their positive attribute is on emissions. There 6 is room for efficiency improvement. Cost is positive. 7 Timeframe is kind of between positive and negative. Risk, 8 there is some risk if seeking fundamental changes. Again, if 9 we expect too much in too little time, like efficiency 10 improvements, more power loss and those kinds of things. 11 And there were some comments that we're unsure if 12 even a larger step in engine efficiency will grant either 13 transition to this alternative fuel. The investment may be 14 too risky. We can debate about all this in today's 15 discussion. 16 The second technology that was discussed at that time 17 was fuel cell technology. Again emissions are a positive 18 attribute there. Efficiency is a positive attribute. Cost is 19 too high, which is one area to focus on. Timeframe, maybe it 20 is in mid term, long term, or in some cases maybe somewhere 21 close to end of the near term. Risk, again in some cases it 22 is high, especially in the near-term timeframe. Again there 23 was a cautionary note and may be applicable sooner in 24 medium-duty applications. 25 Funding in the amount of $500,000 may assist the 83 1 development of biplate and membrane technologies, direct 2 methanol and hydrogen fuel cell use. Common parts, that's 3 sort of advances in one area, may impact others. 4 Then based on this kind of discussion there were four 5 technologies that were suggested as our focus. Those were 6 fuel cell systems. And the emphasis was supposed to be on 7 cost reduction. 8 Internal combustion engine, electric hybrids. 9 Emphasis should be on performance and reliability 10 improvements. 11 Advanced batteries, subsystems. Emphasis with 12 improving specific power and specific energy. 13 And heavy-duty low emissions engines and subsystems. 14 Basically to improve emissions. 15 And there those technologies should be cost 16 competitive. So cost competitive as well as cost effective, 17 because most of these air quality districts, they have to meet 18 that requirement of cost effectiveness. So if there is that 19 kind of technology that is focused on reducing emissions, 20 then that will be one emphasis. 21 And then the selection criteria that was talked about 22 at that time, we came up with eleven points. But there was a 23 small -- a little overlap in terms of selection of technology 24 and selection of project. So due to that you will see some 25 points that are specific to the applicant from that company or 84 1 team strength, those kinds of things. 2 So with this background on our last meeting, we can 3 now start from this point backward. We will talk about the 4 selection criteria, also some additional points, and then move 5 to the technology selection. The process for that, what we 6 will use is Walt will have some opening comments, and then he 7 will moderate this discussion. 8 And we will move on then. By the end of this part of 9 this session, we will be able to select some technologies. 10 And if we have time, we will try to shoot for some barriers to 11 those technologies, so that we have some understanding of what 12 those technical barriers are. 13 And if we have time we can probably talk about some 14 specific goals in each of those technologies, or whatever 15 technologies we can cover today. As an example of those 16 goals, like in natural gas engine technologies, we