10/1/2024
Economic Development
PORT
DATE: October 1, 2024
TO: Mayor Martinez and Members of the City Council
FROM: Charles Gerard, Port Director
Subject: Partial Funding of CARB -Approved Emissions Control Solution (CAECS) to Meet CARB At Berth Regulations for
Roll-on/Roll-off Ships.
FINANCIAL IMPACT: No impact to General Fund.
The Port will allocate up to $500,000 from the Port Fund to the 2024-2025 budget to offset the deployment cost of a CARB-Approved Emissions Control Solution (CAECS).
This cost is not in the budget so there is no current
account string. An account string will be established to receive these funds once approved.
This action would reduce the Port Fund cash balance by
up to $500,000. This action would also eliminate up to $2,500,000 in annual remediation fees payable to CARB
for non-compliance.
PREVIOUS COUNCIL
ACTION:
None
STATEMENT OF THE
ISSUE:
California Air Resources Board (CARB) At Berth
Regulations for Roll-on/Roll-off (RoRo) Vessels will be mandatory on January 1, 2025. The Port of Richmond is
not prepared to meet these regulatory requirements.
One alternative to address these requirements is for the shipping lines to utilize a CARB-Approved Emissions
Control Solution (CAECS) to filter and reduce harmful
exhaust gases from the ship while at berth. Because the Port of Richmond is a smaller Port with limited ship calls, AGENDA
REPORT
10/1/2024
the CAECS provider and the shipping lines have not
reached a commercial agreement. To close this
commercial gap between the shipping lines cost and the
CAECS provider’s cost, the Port will fund up to $500,000 to offset the cost of the CAECS deployment. This will
alleviate the risk of penalty fees or remediation fees
incurred by the Port
RECOMMENDED ACTION: ADOPT a resolution to APPROPRIATE $500,000 from the Port fund to the Fiscal Year 2024-25 budget to
support the funding to deploy a CARB-Approved
Emissions Control Solution (CAECS) barge at the Port of Richmond; and AUTHORIZE the Port to complete its
evaluation of potential vendors and negotiate an
agreement with the selected CAECS provider for an
amount not-to-exceed $500,000 – Economic
Development Department (Charles Gerard 510-620-
6792).
DISCUSSION:
Regulatory Compliance Requirements:
Starting January 1, 2025, the California Air Resources Board (CARB) At Berth regulations will require Roll-On/Roll-Off (RoRo) ships to reduce their emissions while docked at California ports. Key requirements include:
1. Emission Reduction Targets: RoRo vessels must cut their auxiliary engine emissions of nitrogen oxides (NOx) and particulate matter (PM) by at least 80% compared to baseline levels when at berth.
2. Compliance Options: To meet these reductions, vessels can either plug into shore power, use alternative control technologies (such as exhaust gas cleaning systems), or rely on other CARB-approved technologies that achieve the same or better emission reductions.
3. Monitoring and Reporting: Ports and shipping lines will need to monitor and report compliance, including the number of vessel visits, time at berth, and the methods used to achieve emission reductions.
4. Penalties: Non-compliance can result in significant fines and other enforcement actions by CARB.
These regulations aim to improve air quality by significantly reducing harmful emissions from vessels while they are in port.
Port’s previous efforts to deploy shore power solution:
In March through May 2023 the Port commenced looking at options for shore power solutions to comply with the CARB regulation. However, due to ongoing supply chain constraints and a lack of familiarity with the solution requirements, the Port did not
10/1/2024
receive any proposals for this work. Ultimately, the Port contracted with Rosendin Electric, a Bay Area electrical contractor that has done work with the Port in the past, to engage them on this work. At present the Port is working with Rosendin to finalize an agreement where Rosendin will provide the initial design phase of a shore power solution.
Completing the design of the layout and the electrical connections to PG&E to provide shore power to Berths 7 & 8 is only the first step in a multi-year process. The Port anticipates the total project timeline from start of design to installation and completion of work will be two years. Hence, the shore power solution option to meet the CARB regulations will be at least two years delayed. Any delay past January 1, 2025, will cause either penalty or remediation fees to be applied against the Port from CARB.
Port’s engagement with a CARB-Approved Emissions Control Solution (CAECS):
An alternative to providing shore power to the ships at berth is to provide a CAECS, which is an exhaust gas filtering solution that reduces harmful emissions within compliance levels.
The current CAECS solutions are designed as “barge and bonnet” solution as show in the picture below. The bonnet placed over the exhaust gas stacks on the ships and transfers the exhaust gasses to an emissions control solution on the barge.
At the time of the Port’s evaluation of these solutions, the CAECS vendors were still working on CARB approval for their solutions. One company, STAX Engineering, is the preferred and recommended provider by the shipping lines operating RoRo ships.
Over the past several months, the Shipping Lines have been negotiating with CAECS solution providers for the ships calling at the Port of Richmond. However, despite
10/1/2024
ongoing negotiations and because there is a limited number of ship-calls in Richmond, there is a commercial gap that has not been finalized between CAECS providers and the Shipping Lines to operate in Richmond. As an example of the challenge, Port of Richmond receives between 70 to 80 RoRo ships per year. Other RoRo ports are receiving a higher number of ships, so the cost of the service is spread across more ships which reduces the cost per ship-call. As example, Amports in Benecia is receiving approximately 200 RoRo ships per year, so their CAECS cost per ship is lower.
In order to facilitate acceptable commercial terms across all parties the Port has opened a Request for Proposals (RFP) available to CAECS providers to offset their deployment and operations costs. The $500,000 in funding will close this financial gap allowing a CAECS provider and the lines to finalize a direct agreement between their organizations. The contract with the selected CAECS provider would be for an amount not-to-exceed $500,000.
Cost of Non-Compliance or remediation:
As indicated above, non-compliance can result in significant fines and other enforcement actions by CARB. The Port of Richmond, in combination with the shipping lines, the terminal operator, and the CAECS provider share responsibility for compliance, but the Port – as the owner of the facility – is on point to ensure compliance.
On a vessel call basis the Port can apply to pay a remediation fee rather than a penalty fee. The remediation fee is granted when the Port can demonstrate that it is working in earnest towards a solution to meet the regulatory requirements. The Ports estimates remediation fee costs for Richmond would be approximately $2,500,000 per year. The penalty fee will be significantly higher. These fees would be detrimental to the Port’s operations and revenue.
Once deployed, the use of the CAECS will eliminate the remediation fee and potential penalty fee as long as the CAECS solution is operational.
DOCUMENTS ATTACHED:
Attachment 1 – 2024.08.08 Port Summary Notes on CARB Compliance Attachment 2 – Resolution Port Funding of CARB-Approved ECS