Natural Gas is NowPIOGA Marcellus to Manufacturing Conference

Pittsburgh, PA * November 7, 2019

About NGVAmerica

NGVAmerica represents 200+ companies, LDCs, fleets, OEMS, environmental and

government organizations.

NGVAmerica is the national organization dedicated to the development of a growing, profitable, and sustainable marketplace for vehicles powered by natural gas and biomethane and for promoting the use of more natural gas in transportation… trucks, trash, transit, and even off-road uses like HHP marine, rail, and construction/mining applications.

NGVAmerica Members

Transportation Trends

On-Road Trucking Grows as Fleets Age

Port volumes continue to rise.

More and more trucks are on our roads.

Source: IHS Automotive, 1/17

13 million commercial vehicles in the U.S.

With rise of online retail, just-in-time shipping, and delivery-on-demand goods and services, trend will only continue.

Explosive Growth of eRetail

Rising Demand for Same-Day Delivery

"The time in transit has a direct relationship to the environmental impact. I don't think the average consumer understands the environmental impact of having something tomorrow vs. two days from now. The more time you give me, the more efficient I can be.“

- Patrick Browne, Director of Global Sustainability at UPS

Fewer packages per load = more miles driven, more fuel used, more emissions released resulting in greater environmental impact

Growing Goods Movement Industry

Source: US DOT, Bureau of Transportation Statistics, 11/15/17

Everything we eat, wear, and use…

50%

17%

17%

5%

Freight Distance by Weight

<100 miles

100-249

250-499

500-749

750-999

1000-1499

1500-2000

>2000

16,89617,978

25,346

0

5,000

10,000

15,000

20,000

25,000

30,000

2012 2015 2045

Total Freight by Weight

Millions of tons

Fleets continue to age.

Source: IHS Automotive, 11/15

Average age of Class 4-8 vehicles now 14.8 years.

• Up from 12.5 years in 2007 (18.4% increase)

• Class 6 – 21.2 years

The Problem

Urban Emissions & Public Health

Urban Emissions: Public Health Impacts

Source: American Lung Association, 2019

Breathing in particle pollution increases the risk of:• Asthma• Lung Cancer• Heart Disease • Premature Death

141.1 millionAmericans live in areas with air that is unhealthy to breathe…4 out of every 10 Americans

25 millionAmericans suffer from asthma… about 8% of our total population (1 in 12 people)

Source: Centers for Disease Control and Prevention

Every day in the United States, due to asthma:

• 30,000 people have an asthma attack

• 5,000 people visit the emergency room

• 11 people die.

Clean Air: An Environmental Justice Issue

Source: EPA, July 2016

• From 2001-2009, the greatest rise in asthma rates was among black children – a 50% increase

• 1 in 6 black children had asthma in 2009

71% of African Americans live in

counties in violation of federal air pollution standardsBlack children are 2x likely to be hospitalized for asthma and 4x likely to die from it than white children Source: Centers for Disease Control and Prevention, May 2011

Urban Emissions: Leading Sources

Source: DTF Analysis on IHS Vehicles in Operation Data, December 2015

Not just a California problem…

Source: Centers for Disease Control and Prevention

Pittsburgh-New Castle-Weirton, PA-OH-WV air quality continues to decline

• Ranked 28th for high ozone days out of 228 metropolitan areas

• Ranked 10th for 24-hour particle pollution out of 217 metropolitan areas

• Ranked 7th for annual particle pollution out of 203 metropolitan areas

Allegheny County, PA

• The only U.S. county outside of California to receive all F's in the American Lung Association's national air quality report card – 2018 and 2019

Source: American Lung Association,State of the Air Report 2019

Articulating The Solution

Increased Natural Gas Use in Transportation:

Sustainable, Responsible, Available & Domestic

#1: NGVs Offer Unmatched Emission Reduction Benefits

What is Compressed Natural Gas?

CNG is Safe, Non-Toxic, and Lighter Than Air.

• CNG is up to 98% methane• CNG is a low-carbon fuel• 75% of combustion energy comes from the

hydrogen reaction• CNG for engines is 130 octane• CNG is lighter than air• CNG is not toxic

How Does CNG Compare to Other Transportation Fuels?

• CNG is NOT a complex hydrocarbon like gasoline or diesel

• Carbon is the major pollutant affecting our air quality

• Natural gas has 1 carbon atom

• Gasoline has 8 carbon atoms

• Diesel has 16 carbon atoms

CNG Gasoline Diesel

The cleanest heavy-duty truck engine in the world is powered by natural gas

- Certified in 2018 by the U.S. Environmental Protection Agency and California Air Resources Board

The Cummins Westport Ultra-Low NOx engine is certified to a 0.02 g/bhp-hr standard, which is:

• 90% cleaner than the EPA’s current NOx standard

• 90% cleaner than the latest available diesel engine

In-use testing results of heavy-duty trucks in port applications found:

» Natural gas vehicles emitted lower NOx: The ISL G natural gas engine emitted lower NOx emissions than its EPA certification standard. Emissions decreased as the duty cycles decreased (i.e., slower speeds, idling, stop-and-go traffic).

» Diesel vehicles emit up to 5x more NOx: 2010 diesel engines with SCR emitted up to 5 times more NOx emissions than its EPA certification standard. Emissions increased as the duty cycles decreased.

Fueling with natural gas reduces CO2 and greenhouse gas emissions

Source: NGVAmerica Emissions Whitepaper based on CARB LCFS*Numbers compared to diesel emissions (well-to-wheel)

RNG provides even greater CO2 and GHG emission reductions• Renewable CNG (dairy gas) up to 382% fewer GHG emissions than diesel

• Electric (national grid average) only 61% cleaner than diesel

Carbon Intensity of Transportation Fuels

Values based on CARB LCFS program data under CA-GREET 3.0

RNG: the most sustainable transportation fuel available today

Source: EER Carbon-Intensity values based on CARB LCFS program data under CA-GREET 3.0

+

What does this really mean?

NGVs + RNG offer the cleanest commercially available path to reduce heavy-duty vehicle emissions

(for likely a decade or more).

#2: NGVs Stimulate Our Economy & Maximize the Impact of Fleet Investment Funding

NGVs Deliver the Largest & Most Cost-Effective NOx Emissions Reductions

Across All HD Applications:✓ Heavy-Duty Trucks

✓ Refuse Trucks

✓ Transit Buses

✓ School Buses

Source: Emission comparisons are based on results using Argonne National Laboratory’s HDVEC tool (https://afleet-web.es.anl.gov/hdv-emissions-calculator/) and include modeling of new low-NOx natural gas engines and the diesel in-use emissions option.

Heavy-Duty = Heavy Impact

#3: NGVs are Road-Tested & Commercially Available

About 30% of transit buses operate on NG

About 60% all new refuse trucks orders are NG

Long & short haul truck market continues transition

Rail industry piloting LNG locomotives

vessels

Every Medium- & Heavy-Duty andHigh Horsepower Application

Ready-Right-Now Technology On and Off the Road Today.

Natural Gas is the #1 Alternative for Heavy-Duty...

Natural gas fuel station infrastructure is continually expanding

Source: https://www.ngvamerica.org/fuel/

≈2,000 Natural Gas Stations

33

#4: Natural Gas is a Low-Cost, Domestically Abundant Fuel

Every State is a Natural Gas State

Pennsylvania the #2 dry natural gas producing state in 2017

Pennsylvania natural gas is fueling transportation and public investments

Source: Marcellus Shale Coalition, February 2019

RNG is Produced in Every StateWaste to Gas

Food Waste

Landfill Wastewater

Agriculture

Promise of RNG: North America has abundant sources of renewable natural gas that can be harnessed

Source: Coalition for Renewable Natural Gas, 2017

Market Snapshot

Takeaways• Light-duty vehicle decline over time • Growth mostly in freight trucks

Market Forecast for NGVs

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

2018 2020 2025 2030 2035 2040 2045 2050

EIA AEO 2019: On-Road NGVs

Light Duty Cars & Trucks Freight Trucks, Transit Buses and School Buses

Importance of Freight Trucks• Red line shows percentage of all fuel consumption – greater than 60%

• Green line shows percentage of overall vehicle inventory – currently less than 30 percent but growing over time

Freight Truck Fuel Consumption

0%

10%

20%

30%

40%

50%

60%

70%

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

450,000,000

2018 2019 2020 2021 2022 2023 2024 2025

EIA AEO 2019 Freight Truck Consumption GGE

• AEO 2019 shows growth trend in on-road, non-road and total natural gas use in transportation

• Figures from Transportation Table 37 (AEO 2019)

• Freight trucks account for about 30% of vehicles but almost 60% of fuel use

• Non-road includes marine and rail but not pipeline fuel

NG Transportation Fuel Consumption On-Road and Non-Road

Natural Gas vs. Diesel:

• Nearly $2 price spread created significant interest and momentum

• Resulting in positive economic development and expansion of fueling infrastructure

• Lead to expanded vehicle availability and increased interest in developing new engines and product offerings

Recent Price Differential Has Been Challenging

DOE AFDC Price Report (Jan. 2019)

Natural Gas vs. Diesel:• Pump prices end of April CNG priced at about 69 cents

less than diesel• California CNG about $1.55 less than diesel

Natural Gas Provides Long-Term Fuel Cost Savings

EIA AEO 2019: Projected Fuel-Price Differential(prices per $DGE)

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

NG DGE Price Diesel DGE Price

NG Discount

RNG Use Here and Abroad is Growing

RNG Growth 2014 - 2018

Driving Down Emissions with RNG

Market Influencers

The Rise of the “Belief-Driven” Buyer

Source: Edelman, 2018

Impacting purchasing decisions on everything: eat, wear, and use…

Consumers believe brands should take a stand on societal issues. Impacting public perception of company, its future sales, and its stock value

Brands now an important way for consumers to express themselves. Consumers want companies to align with their core beliefs

The Rise of the “Belief-Driven” Buyer

Source: 2019 Edelman Trust Barometer Special Report: In Brands We Trust?

Consumers still focused on brand trust, but it means so much more…

The Rise of the “Belief-Driven” Buyer

Source: 2019 Edelman Trust Barometer Special Report: In Brands We Trust?

Businesses required to walk the walk, not just talk the talk…

IMO 2020 Compliance

Compliant MGO fuel:• Comes from middle distillates, just like diesel

• Oil industry not prepared for increased demand, refineries at capacity

• 3% of global diesel demand in 2015 to 10% in 2021

Four Ways to Comply:• Bunker current Heavy Fuel Oil (HFO); add

expensive and unproven “scrubbers”

• Blend low sulfur fuels with conventional HFO

• Switch to LNG

• Switch to compliant Marine Gas Oil (MGO)

January 1, 2020: all fuel used to power marine vessels must contain no more than 0.5% sulfur, down from 3.5% sulfur by mass

Municipal Diesel Restrictions/BansIs U.S. Next?

Paris, Mexico City, Madrid, Athens• Restrictions increase annually• Ban all diesel by 2025

Hamburg, Germany• Partial ban began 2018

As of 10/1/18, all newly registered trucks servicing ports to be MY 2014 or newer

Ports of LA/Long Beach

EU Heavy-Duty CO2 Standards New Mandate Passed April 18th

CO2 emissions reductions

Vehicle-based CO2

monitoring/reporting

Euro VI engine

emissions

CO2 emissions reduction targets:• 15% by 2025, and 30% by 2030• 2019 baseline emission level (period from 1 July 2019 to 30 June

2020)• 2030 target is subject to revision in 2022

Fines:• 2025-2029, OEMs missing the target will have “excess emissions

premium" of 4,250 €/gCO2/t-km• 2030-on, 6,800 €/gCO2/t-km

Incentives: • 2025-on, ZLEV shall represent at least 2% of the new sold fleet• The ZLEV factor shall reduce the average specific emissions of an

OEM by a maximum of 3%. Review:

• First review by end of 2022• No later than 2023, review of full life-cycle CO2 emissions

EPA Announces New Cleaner Truck InitiativeStricter New Federal HD Emissions Are Coming

• Process was to begin Fall 2019• Expected to require 90% reduction –

from 0.2 to 0.02 g/bhp-hr standard • Possible credits for early compliance

On-Road HD Diesel NOx contribution to Ambient Ozone in 2025

Source: EPA

Push to Commit, Then Figure It Out

58

Fuel for Thought

Natural Gas is Now• Clean

• Cost Efficient

• Available Today

Consider the 4 C’s…

Making promises is different than making product.

Real Cost? Currently still a dream.

Why Wait?

Source: “Availability of Medium-Duty E-Trucks Is Limited as Testing

Continues,” July 23, 2019,

“Unfortunately, there is no business case today for a sane and sober customer to buy a battery-electric

truck.”Roger Nielsen, CEO Daimler Truck N.A.

Capability?

Not commercially proven.

Why Wait?

Source: “Availability of Medium-Duty E-Trucks Is Limited as Testing

Continues,” July 23, 2019,

“Waiting for electric vehicles is like seeing the sign at the bar that says,

‘Free beer tomorrow.’”

Scott Phillippi, Senior Director ofMaintenance and Engineering

Just how “clean” is that EV?

Life-cycle emissions matter too

Source: “The Environmental Downside of BEVs,” Wards Auto, October 27, 2017

According to the Union of Concerned Scientists, it takes so much energy to make batteries that BEVs with a 250-mile range start out life with a carbon footprint 68% higher than a piston-engine car.

It’s more than just the tail pipe…

Life-cycle emissions matter too

Source: Rex Weyler, Co-Founder, Greenpeace International, “The Tesla Dream,” Deep Green Blog, June 3, 2016

“An electric-powered Tesla Model S, at about 2240 kilograms of steel, plastics, metals and rubber, produces the CO2 equivalent of about 60,000 kilometers of driving a conventional vehicle –three to four years of typical driving and fossil fuel burning –before it is purchased. That represents the embodied energy and embodied carbon emissions.”

It’s more than just the tail pipe…

Securing ComponentsEvery Transportation Solution Has a Footprint

Saving the Planet With Electric Cars Means Strangling This DesertMining lithium and copper to supply the battery boom and fight climate change is wrecking a fragile ecosystem in Chile

- Bloomberg, June 11, 2019

Lithium mining for "green" electric cars is leaving a stain on the planetFetid pools of chemicals, water and air pollution — all the aftermath of a "green" movement

- Salon, June 17, 2019

Securing ComponentsThe Human Cost of EVs

“Without radical changes, the batteries which power green vehicles will continue to be tainted by human rights abuses.”

-Kumi Naidoo, Secretary General, Amnesty International, March 21, 2019

Blood, Sweat, and BatteriesTwo-thirds of the world's cobalt, an essential ingredient in our smartphones and electric cars, comes from one of the planet's poorest countries. All too often it is mined by children.

- Fortune, August 23, 2018

Beholden to ??

Although China contains only a third of the world’s rare earth reserves, it accounts for 80% of U.S. imports of minerals because it controls nearly all of the facilities to process the material, according to U.S. Geological Survey data.

- Reuters, June 5, 2019

Why Wait?

Clear the air and employ Pennsylvania.

Your source for all NGV industry news

and information.

NGVAmerica.org

Daniel Gage President

dgage@ngvamerica.org

Visit: www.ngvamerica.org