1. Natural Gas and Transportation Fuels Boise, Idaho September 7, 2006 353 Sacramento Street, Suite 1700 San Francisco, CA 94111 Telephone: (415) 391-5100 http://www.ethree.com

2. Agenda 9:30Introduction by Co-Chairs 9:45Clean Air Act and Treasure Valley 10:05 Biofuel Incentives (John Crockett) 10:25 Transportation Programs (Eric Cutter & Hillary Sinnamon) 10:45Break 11:00Review results of Conservation Subcommittee 11:15Biofuels Policy Goals 12:00 Lunch 1:15Petroleum & Transportation Policy Goals 2:00Natural Gas Policy Goal 2:45Break 3:00Wrap Up 3:30 Adjourn

3. Goals Further develop general policy goals from last meeting Further develop general policy goals from last meeting Consensus recommendations on specific policy goals for state energy plan Consensus recommendations on specific policy goals for state energy plan Focus on high level policy goals Focus on high level policy goals

4. State Transportation Programs

5. Clean Cars Program Adopted by 10 states, including WA and OR Adopted by 10 states, including WA and OR 1/3 rd of US car market 1/3 rd of US car market Beginning in 2009 model year Beginning in 2009 model year 34%/25% reduction in greenhouse gas emissions for cars/light trucks by 2015 34%/25% reduction in greenhouse gas emissions for cars/light trucks by 2015 Could decrease gasoline consumption by 7.2 billion gallons annually by 2020 Could decrease gasoline consumption by 7.2 billion gallons annually by 2020 Help Idaho meet Federal air quality standards Help Idaho meet Federal air quality standards Automaker lawsuits in several states Automaker lawsuits in several states

6. Oregon Public Transportation Oregon Transportation Enhancement Program Oregon Transportation Enhancement Program Rural Transportation Assistance Program Rural Transportation Assistance Program Intercity Passenger Program Intercity Passenger Program Transportation and Growth Management Program Transportation and Growth Management Program Pedestrian and bicycle program grants Pedestrian and bicycle program grants Safe routes to schools Safe routes to schools

7. Washington Rural Mobile Grants Rural Mobile Grants Intercity Bus Transportation Intercity Bus Transportation Job Access and Reverse Commute Job Access and Reverse Commute

8. Market Transformation

9. Transforming the Market TransformPopularize DevelopSupport COSTCOST GENERALTARGETED INCENTIVES MANDATES USE OF 10% BIOFUEL BLENDS FLEX/ALT FUEL VEHICLES USING 85% BLENDS PLUG IN HYBRIDSHYBRID/HIGH MPG VEHICLES

10. Building Consensus TransformPopularize DevelopSupport COSTCOST GENERALTARGETED INCENTIVES MANDATES RENEWABLE FUEL STANDARD MINIMUM AFV PURCHASE REQUIREMENT R&D GRANTS REBATES TAX INCENTIVES BOOKENDS

11. Biofuels

12. Alt. Fuel Recommendations It is in the interest of Idaho to promote the production and use of alternative fuels, through policies, strategies and actions that are cost-effective and environmentally sound. In adopting incentives and other measures to promote alternative fuels the state shall consider the benefits to economic development, security, reliability, environmental protection and public health. Potential measures may include but are not limited to: It is in the interest of Idaho to promote the production and use of alternative fuels, through policies, strategies and actions that are cost-effective and environmentally sound. In adopting incentives and other measures to promote alternative fuels the state shall consider the benefits to economic development, security, reliability, environmental protection and public health. Potential measures may include but are not limited to: Encouraging state fleet purchases and use of alternative fuel and efficient vehicles Encouraging state fleet purchases and use of alternative fuel and efficient vehicles Incentives and investment tax credits for Idaho growers and producers of alternative fuels Incentives and investment tax credits for Idaho growers and producers of alternative fuels Encourage future development of cellulosic ethanol production in Idaho Encourage future development of cellulosic ethanol production in Idaho Adopting cleaner tailpipe emission standards Adopting cleaner tailpipe emission standards Incentives for the purchase of FFV and alt. fuel vehicles Incentives for the purchase of FFV and alt. fuel vehicles Incentives and grants for retail and wholesale alternative fuel supply infrastructure Incentives and grants for retail and wholesale alternative fuel supply infrastructure Incentives and tax credits for the sale and purchase of alternative fuels Incentives and tax credits for the sale and purchase of alternative fuels Promoting research and development and business-university partnerships to speed commercialization of alternative fuel technologies. Promoting research and development and business-university partnerships to speed commercialization of alternative fuel technologies. Education and promotion campaigns for consumers and regulators Education and promotion campaigns for consumers and regulators Incentives may include fuel tax deduction or exemptions, tax credits, loans, loan guarantees, grants, parking and HOV lane privileges, Incentives may include fuel tax deduction or exemptions, tax credits, loans, loan guarantees, grants, parking and HOV lane privileges, Maintain flexibility to adapt to changing and improving technology and adjust to price and supply issues in a maturing market. Maintain flexibility to adapt to changing and improving technology and adjust to price and supply issues in a maturing market.

13. Biofuel Proposals 1. Grants to retailers for biofuels infrastructure 2. Investment tax credit for biofuels infrastructure upstream of retailers 3. Promote culture of conservation 4. Countercyclical biofuel producer incentive 5. Flexible fuel vehicle state fleet pilot project 6. Incentives to use feedstock byproducts from biofuel production 7. Include synthetic fuels in definition of alternative fuels

14. Production Incentives TransformPopularize DevelopSupport Rely on existing incentives Rely on existing incentives Incentives for growers Incentives for growers Incentives for producers Incentives for producers Loan guarantees/tax credits for producers Loan guarantees/tax credits for producers Grants for producers Grants for producers Business-university partnerships Business-university partnerships Renewable fuels development program Renewable fuels development program Support Federal R&D efforts Support Federal R&D efforts

16. Biofuel Demand TransformPopularize DevelopSupport Require stations be allowed to offer ethanol blends Require stations be allowed to offer ethanol blends Lower fuel tax for biofuels Lower fuel tax for biofuels Tax incentives for retail sale of biofuels Tax incentives for retail sale of biofuels Expedite Permitting Expedite Permitting Study options for RFS Study options for RFS Adopt RFS goal Adopt RFS goal Adopt Mandatory RFS Standard Adopt Mandatory RFS Standard Adopt alt. fuel infrastructure requirement Adopt alt. fuel infrastructure requirement Adopt Alt Fuel Infrastructure Goal Adopt Alt Fuel Infrastructure Goal Incentives/grants for retail infrastructure Incentives/grants for retail infrastructure Support 10 year extension of federal biofuel tax credits Support 10 year extension of federal biofuel tax credits Support 10% federal agency biofuel purchase requirement Support 10% federal agency biofuel purchase requirement Public education and promotion of biofuels Public education and promotion of biofuels

17. Petroleum & Transportation

18. Petroleum Recommendations Promote conservation as primary means of improving the reliability and cost of Idaho’s transportation fuel supply while also encouraging development of new resources Promote conservation as primary means of improving the reliability and cost of Idaho’s transportation fuel supply while also encouraging development of new resources Support responsible exploration and production of petroleum supply and expansion of transmission, storage and distribution infrastructure benefiting Idaho Support responsible exploration and production of petroleum supply and expansion of transmission, storage and distribution infrastructure benefiting Idaho

19. Transportation Recommendations Work with other states to promote increase in Federal CAFE standards Work with other states to promote increase in Federal CAFE standards Encourage use and purchase of hybrid, high mileage, alternative and flex fuel vehicles. Explore opportunities for adoption by private and state owned fleets, public transportation and school busses. Encourage use and purchase of hybrid, high mileage, alternative and flex fuel vehicles. Explore opportunities for adoption by private and state owned fleets, public transportation and school busses. Promoting use and expansion of public transportation where effective in reducing vehicle miles traveled, including intercity transportation where feasible Promoting use and expansion of public transportation where effective in reducing vehicle miles traveled, including intercity transportation where feasible Promote reduction of truck and tour bus idling Promote reduction of truck and tour bus idling Investigate encouraging use of rail and intermodal freight transportation where feasible Investigate encouraging use of rail and intermodal freight transportation where feasible

20. Vehicle Program Categories By TypeBy OwnerBy Niche High MPG Ethanol Biodiesel Methanol Natural Gas Propane Hybrid Electricity Aftermarket Conversion State Government Local Government Fleets General Public Airport Vehicles School Busses Transit Bussed Shuttle Busses Refuse Haulers Taxis Delivery Vehicles Traffic Enforcement Police Vehicles

21. Alt Fuel/High Efficiency Vehicles TransformPopularize DevelopSupport Support efforts to encourage development of plug-in hybrid Support efforts to encourage development of plug-in hybrid Adopt CA Clean Cars Program (OR, WA) Adopt CA Clean Cars Program (OR, WA) Carpool/State Parking Carpool/State Parking HOV Lane use (w/ MPG qualifier) HOV Lane use (w/ MPG qualifier) Min alt fuel vehicles requirement Min alt fuel vehicles requirement Freebates Freebates Min. avg. fuel efficiency Min. avg. fuel efficiency Sales Tax Exemption Sales Tax Exemption Reduced registration fees Reduced registration fees

22. Public Transportation TransformPopularize DevelopSupport Grants, loans, technical assistance to transportation agencies Grants, loans, technical assistance to transportation agencies Commuter checks Commuter checks Employer incentives for carpooling Employer incentives for carpooling HOV Lanes HOV Lanes Grants, loans, technical assistance for intercity transportation Grants, loans, technical assistance for intercity transportation Bikes on Transit Bikes on Transit

23. Idle Reduction TransformPopularize DevelopSupport Incentives for installation of idle reduction technology at truck stops Incentives for installation of idle reduction technology at truck stops Time Limits for truck idling Time Limits for truck idling Time Limits for bus idling Time Limits for bus idling Require automatic shutdown on new engines Require automatic shutdown on new engines

24. Natural Gas

25. Natural Gas Recommendations Encourage the highest and best use of natural gas. Encourage the highest and best use of natural gas. Encourage direct end use in applications for which natural gas is the most efficient energy source. Encourage direct end use in applications for which natural gas is the most efficient energy source. Where appropriate and cost effective encourage use of natural gas vehicles for company and/or state owned fleets Where appropriate and cost effective encourage use of natural gas vehicles for company and/or state owned fleets Support responsible exploration and production of natural gas supply and expansion of transmission, storage and distribution infrastructure Support responsible exploration and production of natural gas supply and expansion of transmission, storage and distribution infrastructure Support non traditional natural gas supply resources, including landfill methane, anerobic digesters, biomass methane. Support non traditional natural gas supply resources, including landfill methane, anerobic digesters, biomass methane. Support siting of LNG terminals in the US as well as and infrastructure that provides delivery capability to Idaho Support siting of LNG terminals in the US as well as and infrastructure that provides delivery capability to Idaho

26. Direct Use of Natural Gas TransformPopularize DevelopSupport Consumer Education Consumer Education Incentives for fuel switching Incentives for fuel switching Ensure PUC and utility policies encourage efficient customer choice Ensure PUC and utility policies encourage efficient customer choice Consider fuel switching as resource in IRP Consider fuel switching as resource in IRP NGV incentives for state and local fleets NGV incentives for state and local fleets Actively support responsible exploration and infrastructure enhancements Actively support responsible exploration and infrastructure enhancements Incentives & grants for non- traditional methane sources Incentives & grants for non- traditional methane sources