A Better, Affordable, Low Risk Approach Using Existing Technology Instead of CARB's In-Use Locomotive Regulation, Which Will Hinder Progress

OptiFuel’s Total-Zero? 5,600 hp RNG Hybrid Line Haul Locomotive and 11,800 DGE RNG Tender Will Have FRA Concurrence by 2027 and Completion of Million Mile Testing by 2028, Ready for Production of 2,000 Systems a Year in 2029

As the only US locomotive manufacturer that is focused 100% on zero emission locomotives, one might think that OptiFuel would love CARB’s In-use Locomotive Regulation program.?However, we strongly believe that the EPA and CARB are going down the wrong path for all three Classes of railroads with the proposed In-Use Locomotive Regulations.? While state and federal regulators have made commendable efforts to assess the environmental impact of US railroads, elements of the EPA’s and CARB's initiatives, such as requiring only zero criteria emissions with no mention of greenhouse gas (GHG) emissions, will hinder progress.

Here are a few additional red flags:

• 85% of the criteria and greenhouse gas (GHG) emissions in the rail sector come from line haul locomotives—those massive 4500 hp engines pulling trains with 150 rail cars or more across long distances. Six railroads, classified as “Class 1” due to their billion-dollar revenues, own the majority of the 25,000 line haul locomotives operating on US railroads. The remaining 15% of emissions come from smaller switcher locomotives, about a third of which are also owned by the Class 1 railroads, with the remaining two-thirds owned and operated by 550 short line railroads classified as Class 2 or 3 due to their significantly lower revenues. Despite contributing only 10% of emissions, these short line railroads with the smallest budgets—often buying 50-year-old hand-me-down locomotives for about 5% of their original price—are the first targets of new regulations. If we're aiming for impact, it looks like we’re barking up the wrong caboose.
• Because line haul operations require the most advanced technology, innovation naturally flows from the Class 1 railroads down to the Class 2 and 3 railroads. While high-horsepower technologies can easily be scaled down for smaller applications, the problem with encouraging technology demonstrations with the smallest, least demanding requirements is that solutions can't be scaled up. The key lies in developing affordable, low risk line haul power solutions that can be scaled down for switcher applications, ensuring interoperability across locomotives, railcars, and infrastructure. This approach will facilitate seamless operations throughout the entire U.S. rail network, preserving the efficiencies that have long made U.S. rail the world's most efficient supply chain.
• CARB's In-Use Locomotive Regulation restricts locomotive power options to battery-electric and hydrogen, influencing federal policy discussions. Over the past three years, the Federal Railroad Administration (FRA), Environmental Protection Agency (EPA), and CARB have conveyed to Class 1, 2, and 3 railroads, as well as the public, that only battery-electric or hydrogen solutions are acceptable. This approach, however, is questionable, as it overlooks the distance and operating hour limitations of these technologies, which are insufficient for 75% of switching operations and 100% of line haul operations.

How to Incentivize Rail Using Proven Strategies and Technologies?

Expanding the 'CARROT and STICK' strategy commonly used by federal and state governments for on-road vehicles to the rail sector could significantly boost the immediate adoption of existing, affordable zero emission technologies and low or zero carbon fuels for rail. This strategy would also expedite the adoption of zero-emission locomotives at an unprecedented pace by 2045. Here are a few suggestions tailored specially for rail:

For the regulatory “STICK” aspect:

• Create a new Federal EPA Tier 5 locomotive standard for all new locomotives (line haul and switchers), effective in 2028 with:

- NOx: 0.02 g/bhp-hr

- PM: 0.005 g/bhp-hr

- Carbon Intensity:? 0 gCO2e/MJ

• Allow for the adoption of any alternative fuel technologies that meet the Tier 5 standard. Specifically include RNG and Hydrogen IC engines along with battery and fuel cell solutions.
• Set an initial mandate requiring Class 1 locomotive fleet owners to start replacing or repower 7.5% of their line haul, road switcher, and switcher locomotive fleet older than 2013 by 2030 with Tier 5-compliant models.? Each year thereafter, increase the model year requirement by one year until 2029.?This schedule ensures that the 25,000 Class 1 locomotives that produce 90% of all locomotive criteria and GHG emissions in the US are updated to Tier 5 by FY 2045.
• Set an initial mandate requiring Class 2 and 3 locomotive fleet owners to replace or repower 7.5% of their line haul, road switcher, and switcher locomotive fleet older than 2018 by 2035 with Tier 5-compliant models.?Each year thereafter, increase the model year requirement by one year until 2034.?This schedule ensures that the 13,000 Class 2 and 3 locomotives that produce 10% of all locomotive criteria and GHG emissions in the US are updated to Tier 5 by FY2050.
• Exempt any Class 2, Class 3, historical, industrial, or military locomotive that annually uses 20,000 diesel gallons or less or any single railroad that has only 5 locomotives or less.

For the regulatory “CARROT” aspect:

• Provide open-ended federal and state grants that encourage early adoption, with incentives that decrease by a set percentage each year, with the net effect that the earliest adopters receive the highest benefit.
• Expand the existing on-road vehicle incentives used by federal and state governments to the off-road locomotive market. Currently, the cost of diesel fuel to locomotive fleet owners is 20% to 30% of the operating cost of a locomotive. By providing a lower-then-diesel fuel cost for early adopters of RNG locomotives, rapid adoption is incentivized.

- By 2026, modify the Federal RIN Credits to include all classes of locomotives.

- By 2026, modify the Federal Alternative Fuel Tax Credit (AFTC) Program (26 USC 6426 and 6427) to include all classes of locomotives, increase the credit to $1.00 per DGE, and extend the program until 2050.

- Request that any state specific RNG subsidies/credits from the Low Carbon Fuel Standard (LCFS) include all classes of locomotives starting in 2025 until 2050.

With these incentives in place, OptiFuel and other locomotive manufacturers will have a clear schedule, financial path, and comprehensive emissions parameters from which to produce zero emission line haul locomotives by 2030.?Whereas with the approach mandated in CARB’s In-Use Locomotive Regulation, the Class 1 railroads will have to begin convert line haul locomotive by 2030 using technologies that do not exist now and may never be developed. Meanwhile, viable, affordable, and low-risk technical solutions are already available.

OptiFuel’s Approach

Starting in 2028, with OptiFuel’s Locomotive as-a-Service (LAAS?) business model, OptiFuel will offer the Class 1 railroads a straightforward program that provides the RNG Hybrid Line Haul locomotives, RNG tenders, stationary and mobile RNG refueling systems, and RNG fuel through an integrated business model. Through the LAAS? program, Class 1 railroads pay one low, fixed-rate fuel price plus a single $1.1 million payment (20% of the total price) for use of OptiFuel’s Total-Zero? 5,600 hp RNG Hybrid Line Haul Locomotive for up to 30 years. There are no other costs for the locomotives outside of normal locomotive maintenance (daily inspections, filters, brakes, wheels, etc.). Through the LAAS? program, OptiFuel covers the 6-month, annual, 10-year, and 20-year maintenance costs for the engines, power modules and RNG storage systems for locomotives.

The all-inclusive fixed-rate fuel price proposed is $3.00 diesel gallon equivalents (DGE). ?OptiFuel will supply ZERO carbon intensity (CI) renewable natural gas (RNG) for refueling the locomotives; along with providing FREE the necessary RNG refueling station infrastructure and operating cost; FREE standard and powered RNG tenders; refueling services; and the -300 CI RNG production infrastructure to achieve the zero CI for the GHGs emissions.

The path to a truly impactful and sustainable future for US Railroads lies in a balanced affordable, low risk approach that incentivizes existing technical innovation that protects rail efficiencies while acknowledging the unique operating requirements of line haul and switcher operations.

Explore a more detailed analysis of feasible energy solutions and OptiFuel’s Locomotive as-a-Service (LAAS?) program for US Rail through OptiFuel’s response to the DOE’s Request for Information on Progression to Net-Zero Emission Propulsion Technologies for The Rail Sector: https://optifuelsystems.com/wp-content/uploads/2024/06/OptiFuel-Systems-DOE-RFI-061024.pdf