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CC - CONSENT ITEM: Approval of an Agreement with Trillium Transportation Fuels, LLC for the Provision of Renewable Compressed Natural Gas (RNG) and the Management of Associated Environmental Attributes for a Two-Year Period with Three One-Year Extension Options.
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Meeting Date: July 10, 2023
Contact Person/Dept.: Allison Cohen/Transportation
Phone Number: 310-253-6543
Fiscal Impact: Yes [X] No [ ] General Fund: Yes [] No [X]
Attachments: Yes [ ] No [X]
Commission Action Required: Yes [ ] No [X]
Public Notification: (E-Mail) Meetings and Agendas - City Council (07/06/2023)
Department Approval: Diana Chang, Chief Transportation Officer (06/28/2023)
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RECOMMENDATION
Staff recommends the City Council approve an agreement with Trillium Transportation Fuels, LLC for the provision of Renewable Compressed Natural Gas (RNG) and the management of associated environmental attributes for a two-year period with three one-year extension options.
BACKGROUND/DISCUSSION
The California Air Resources Board (CARB) developed the Low Carbon Fuel (LCFS) program in compliance with AB 32 (the Global Warming Solutions Act of 2006) to reduce the carbon intensity of transportation fuels used in California thereby reducing greenhouse gas (GHG) emissions in California’s transportation sector. Under this program, each metric ton of CO2 reduced generates one LCFS credit. The CARB regulations allow producers of low carbon fuels including fossil compressed natural gas (CNG) to earn LCFS credits. Consequently, the City with its own CNG fueling operation and facility qualifies to participate in this state program.
RNG is a substantial lower carbon fuel compared to fossil CNG and is a cleaner burning
fuel source compared to conventional natural gas. RNG is methane captured from the
decomposition of organic materials at landfills, agricultural facilities, and wastewater
treatment plants that have been cleaned and treated to meet natural gas pipeline quality
standards. The pipeline quality bio-methane is then injected into the natural gas pipeline grid; and the CNG currently used will be displaced with RNG. This "displacement” significantly reduces carbon footprint because for every unit of RNG injected into the pipeline, an equal unit of fossil fuel is not extracted from the earth. The eligible credits generated are based on the amount dispensed from the City's CNG station to nearly 100 CNG vehicles including transit buses, sanitation trucks, dump trucks, aerial trucks, and sewer trucks. Since Southern California Gas Company (SoCal Gas) currently provides natural gas to the City's compressing station though their existing pipeline infrastructure, the amount dispensed is verifiable through their monthly billings to the City.
In July 2016, City Council approved an agreement with Clean Energy for the purchase and delivery of Clean Energy Redeem 100% Renewable Natural Gas (RNG) and consulting services for the management of the City’s participation in the Low Carbon Fuel Standard Program for a five-year term. The City of Culver City executed a natural gas commodity and Renewable Natural Gas supply agreement on May 17, 2018 for a Delivery Period defined as June 1, 2018 through June 1, 2023. Staff returned to Council in June 2023 to extend the term of the agreement through September 30, 2023 to provide adequate time to evaluate responses received under the Request for Proposals (RFP) released for the next five year term.
On April 6, 2023, the City released RFP 2324 for the provision of renewable natural gas (RNG) for use as a vehicle fuel and the management of associated Renewable Identification number (RIN) and Low Carbon Fuel Standard (LCFS) credits associated with the supply and consumption of RNG. Proposals were due by April 20, 2023 and a total of five responsive proposals were received. Proposals were received from the following firms:
• Clean Energy Renewable Fuels, LLC
• GHI Energy, LLC
• Maas Energy Works
• Mercuria Energy America, LLC
• Trillium Transportation Fuels, LLC
An evaluation committee comprised of Culver City staff reviewed all proposals submitted in response to the solicitation. The committee evaluated each proposal based on several criteria including qualifications and experience, response to the scope of services requested, proposed fees, and references. Based on staff’s evaluation of the proposers’ experience, ability, and overall value to the City of Culver City for this project, staff recommends awarding an agreement to Trillium as the best qualified firm for the provision of RNG and the management of associated environmental attributes.
Trillium has the requisite qualifications and experience to perform the scope of services outlined in the RFP. Trillium is a vertically integrated company owning RNG production assets in California and CNG fueling facilities in California and across the country. The personnel assigned to this project have specialized expertise in every aspect of the process from biogas processing, scheduling, delivery, dispensing, credit generation, third-party verification, credit monetization, and regulatory compliance. Additionally, Trillium provides RNG credit management services for trucking companies, waste haulers, municipal, and public transit agencies in California and across the country and has performed similar services for Victor Valley Transit Authority, Los Angeles Metropolitan Transportation Authority, and Norwalk Transit.
FISCAL ANALYSIS
For the initial two-year term, and for the subsequent three one-year options, Trillium will not invoice the City for any fees associated with the service. Instead, the City will receive payments from Trillium for allowing Trillium to use the CNG volumes dispensed at the CNG fueling facility to generate RIN/LCFS credits. Credit revenue will be determined by (1) the number of credits generated by the City of Culver City, and (2) the LCFS credit market. Based on these factors, staff anticipates that this agreement will result in approximately $1.5 million in net revenue for the City throughout the duration of the five-year term.
Trillium operates on a net-back model and will collect its Broker Fees when the credits are transacted.
ATTACHMENTS
None.
MOTION
That the City Council:
1. Approve a two-year agreement with Trillium Transportation Fuels, LLC for the Provision of Renewable Natural Gas (RNG) and the Management of Associated Environmental Attributes; and,
2. Authorize the City Manager to approve three additional one-year options; and,
3. Authorize the City Attorney to review/prepare the necessary documents; and,
4. Authorize the City Manager to execute such documents on behalf of the City.