1. WGA TRANSPORTATION FUELS FOR THE FUTURE INITIATIVE Non-conventional Fuels Report Summary Yvonne Anderson (representing the Natural Gas and Propane team) Transportation Fuels for the Future Workshop Denver, CO October 10-12, 2007

2. Fuel Potential in the West  Point 1 – Natural gas is a secure, domestic resource with 98% of the U.S. supply coming from North America and proven domestic reserves exceeding 75 years at current production.  Point 2 – Five of the nation’s largest natural gas producing states are in the West (Colo., N. Mex., Okla., Texas, Wyo.)  Point 3 – In addition to current conventional supplies of natural gas, the U.S. Dept. of Energy estimates that the U.S. can feasibly produce 10 billion gge biomethane annually from landfills, animal waste processing, sewage, etc.  Point 4 – Compressed natural gas (CNG), liquefied natural gas (LNG), and liquid petroleum gas (LPG – a product of natural gas processing and oil refining) are well- known alternative transportation fuels. Natural gas and propane vehicle engine and fueling technology is developed and in current deployment.

3. Unique Challenges  Challenge 1 – Small number of Original Equipment Manufacturers vehicles in the North American CNG, LNG, and LPG vehicle market  Challenge 2 – EPA emissions certifications are very expensive to obtain and preclude wide product variety among the small volume manufacturers who produce conversion systems. Economies of scale are difficult to reach.  Challenge 3 – Fueling infrastructure and conversions can be costly. Vehicle deployment primarily lies in niche market or return-to-base fleets such as taxi cabs, street sweepers, transit buses, refuse haulers, school buses, delivery vehicles, truck and trailers, and airport shuttles.

4. Priority Recommendations  Recommendation 1 – Develop and maintain a consistent, long-term commitment to the development and deployment of alternative transportation fuels to achieve acceptance of existing and emerging fuel and vehicle technologies at both federal and state levels.  Recommendation 2 – Build a secure market for natural gas and propane vehicles through revision of federal, state, and fuel provider mandates to include credits and penalties that will ensure fuel use rather than vehicle purchase or lease alone.  Recommendation 3 – Develop, refine, and renew incentives for vehicle purchase and lease, and for infrastructure development for non-mandated fleets, non-tax paying entities such as local governments, and the general public.  Recommendation 4 - Incentivize natural gas and propane OEM vehicle production, research, development and deployment for the North American market.

5. Key Actionable Recommendations  Establish state government, public school, college and university fleet purchase requirements that include fuel consumption and emission requirements to promote the adoption of alternative fuels and alternative fuel vehicles*.  Develop state grant funds that can be used by consumers and private industry seeking to offset the costs of adding alternative fuel vehicles fleet purchases or constructing alternative fueling stations.  Establish and/or renew state tax incentives for individual purchase of alternative fuel vehicles and installation of home refueling appliances  Develop multistate, multifuel, regional corridor demonstration projects *alternative fuels and alternative fuel vehicles as used includes natural gas fuels, propane, biomethane, ethanol, biodiesel, hydrogen, HEVs, PHEVs, CTL, GTL, etc. and any combinations thereof.