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Home My WebLink About14. Net Zero UpdatePage 1 of 25 Item 14. LICENTRAL SAN September 21, 2023 FROM: MELODY LABELLA, RESOURCE RECOVERY PROGRAM MANAGER REVIEWED BY: GREG NORBY, DEPUTY GENERAL MANAGER - OPERATIONS ROGER S. BAILEY, GENERAL MANAGER SUBJECT: RECEIVE UPDATE ON NET ZERO EVALUATION I n response to the Board's request to bring back information for consideration of a potential policy on Net Zero greenhouse gas (GHG) emissions, staff has issued a task order to GHD to complete an initial evaluation. Staff, along with representatives from GHD, will review the attached presentation, which provides background, an estimate of Central San's overall GHG emissions, where possible, some preliminary ideas on areas for reduction and potential next steps. Staff is seeking the Board's guidance on continuing with efforts to gather information for a potential Board policy decision on Net Zero or other GHG emissions reduction commitment. Strategic Plan Tie -In GOAL TWO: Environmental Stewardship Strategy 4 - Identify and advance sustainability initiatives, including reducing energy usage and emissions ATTACHMENTS: 1. Presentation September 21, 2023 Special Board Meeting Agenda Packet - Page 97 of 174 Page 2 of 25 September 21, 2023 Special Board Meeting Agenda Packet - Page 98 of 174 Page 3 of 25 3 PRESENTATION OVERVIEW • What is Net Zero? • Greenhouse Gas (GHG) Emissions Across the Value Chain • How to Implement • Challenges and Opportunities Possible Approaches Recommended Next Steps 0 i September 21, 2023 Special Board Meeting Agenda Packet - Page 99 of 174 Page 4 of 25 WHAT IS NET ZERO? Net zero refers to a state in which the GHG emissions going into the atmosphere are balanced by removal out of the atmosphere. Generally, emissions are bounded by a `scoped' approach: Scope 1 — direct entity -owned or controlled GHG emissions occurring at the source; Scope 2 — GHG emissions associated with the production of energy consumed by an entity; and Scope 3 — indirect GHG emissions associated with an entity's activities from sources not owned or controlled by the entity. 5 GHG EMISSIONS ACROSS THE VALUE CHAIN 0®0®0• Scope 2 Scope 1 INDIRECT DIRECT 7A Scope 3 Scope 3 INDIRECT INDIRECT p.r<a aue Upstream activities Reporting Company D.—stre.. activities o<>a, +��wkVGon v.eo.. wm ` t ul Source: Corporate Value Chain (Scope 3) Accounting and Reporting Standard by World Resources i Institute and the World Business Council for Sustainable Development ! 6 0 3 September 21, 2023 Special Board Meeting Agenda Packet - Page 100 of 174 7 Page 5 of 25 EXPERT RECOMMENDATIONS ON HOW TO IMPLEMENT • There is strong international agreement across the climate community that net zero targets should: Include actions in all three scopes Reach net zero by 2050 Set interim targets Act immediately Process for net zero GHG emissions Initial GHG emissions footprint measurement (baseline) Strategic GHG emissions reduction initiatives Implementation of renewable energy solutions Carbon offsetting CHALLENGES AND OPPORTUNITIES Renewable Energy ranerto Gas Challenges Pmffle 7,313 WJR. Fe�weretl Waae Heat 4,695 MMR. Feasibility Wa, y 30 MM3—q. Cost p97V X06% MCE To[al ,235MME 4W Renewables 38,235MM81� 460 MM6n eq. Availability 76% 0-61% Opportunities Central San has already taken some actions. Moving away from our natural gas cogeneration system would result in a dramatic reduction in Central San's Scope 1 emissions. M September 21, 2023 Special Board Meeting Agenda Packet - Page 101 of 174 POSSIBLE APPROACHES Incorporate net zero into our Phase II solids handling evaluation by Brown & Caldwell (currently in process) Develop a Climate Action Plan, as cities have done to comply with Assembly Bill (AB) 32 requirements Commit Central San to net zero by 205C and develop a roadmap accordingly E Page 6 of 25 RECOMMENDED NEXT STEPS Consultant evaluation Board workshop Draft a Board Policy 10 5 September 21, 2023 Special Board Meeting Agenda Packet - Page 102 of 174 Page 7 of 25 QUESTIONS/DISCUSSION 11 Actions Since April 2022 Pivoted to focus on Fleet Electrification in 2022 due to upcoming regulations Used an existing Board -approved contract with GHD for GHG evaluations and executed a $100,000 task order for an initial Net Zero Evaluation for Central San on January 19, 2023 4A, Kick-off meeting on January 30, 2023 Completed a major data gathering effort for Scope 1, 2 and 3 GHG emissions through May 30, 2023 Presentations to Executive Team, Managers and Real Estate, Environmental & Planning Committee 12 September 21, 2023 Special Board Meeting Agenda Packet - Page 103 of 174 GHD's Scope of Work Develop a GHG Baseline Inventory and Visualization r Establish Boundary Collect and Quantify Data Organize Data and Develop Visualization Conduct a Scope 3 Emissions Screening' 7 Net Zero Evaluation i, Industry Benchmarking Evaluate Envision for Capital Decision-making Identify Reduction Opportunities and Planning -level Cost Considerations Provide Recommendations 13 Page 8 of 25 14 7 September 21, 2023 Special Board Meeting Agenda Packet - Page 104 of 174 Page 9 of 25 15 16 September 21, 2023 Special Board Meeting Agenda Packet - Page 105 of 174 TYPICAL PATHWAY TO CLIMATE LEADERSHIP 11 — Inception meeting(s) — Clarity the vision, document expectations, identify key stakeholders and agree on a project plan — Review existing documents to understand current state 17 — Evaluate current inventory, — Establish current and climate change mitigation future risks being faced and adaptation actions, related to your business strategies, policies and and the climate programs Develop net zero roadmap — Conduct workshops and — Identify potential — Identify data gaps and mitigation and prioritize data collection adaptation responses — Conduct benchmarking of _ Understand risks and industry best practice and realize co -benefits peers and regulatory to Track progress and success establish climate context and communicate results — Settargets — Translate risks to — Define the appropriate enterprise management metrics for your operations Process and systems and other applicable KPIs long-term results Page 10 of 25 — Establish net zero pathways — Plan for prioritization and for existing emission focused implementation of sources and quantify projects impacts of decarbonization — Develop net zero roadmap — Conduct workshops and desktop analysis to source _ Develop communication optimal reduction plans (internal f extemal) approaches. Conduct detailed assessments for more tactical planning. — Track progress and success 1 Low Emissions and communicate results — Settargets 4 Zero Emissions — Evaluate opportunities to — Aign with stakeholder expand scope to achieve expectations for disclosure long-term results Central San Net Zero Evaluation Update I September 2023 WHAT IS NET ZERO? NET CARBON Net o or Carbonreductions balancingby ZERO . b NEUTRAL %,—./ Varying Terminology 1 Low Emissions 2 Net Zero 3 Carbon Neutral 4 Zero Emissions 5 Carbon Negative Low Carbon Generating lower Emissions are Amount of CO2 in the Zero carbon emitted. Amount of CO2 emissions than the generated but offset by atmosphere =amount However, no removed from the 'norm'. However, it is the same amount in a of CO2 removed. technology is truly atmosphere > amount difficult to determine different area. Similar Zero impact. emissions -free, so of CO2 put into the what the norm is. to carbon neutral. usually referred to as atmosphere. zero ongoing emissions Positive impact. is Central San Net Zero Evaluation Update I September 2023 September 21, 2023 Special Board Meeting Agenda Packet -Page 106 of 174 September 21, 2023 Special Board Meeting Agenda Packet -Page 106 of 174 Page 11 of 25 What are offsets and offset projects? — Offsets are generated from projects that reduce GHG emissions (i.e., are carbon negative) — Offsets can be purchased from voluntary or compliance markets — Purchasing offsets can contribute to emission reduction targets — Offsets vary in cost depending on the jurisdiction. In the United States, the price of offsets fluctuates quite significantly and range from $5 to $40/tCo2e. 1 GHG Offset = 1 metric ton of carbon dioxide equivalent (tCO2e) IM&TMr -- Central San Net Zero Evaluation Update I September 2023 20 10 September 21, 2023 Special Board Meeting Agenda Packet - Page 107 of 174 METHODOLOGY — Identified by Central San as a typical pre -pandemic year — Prior to site improvements to enable progress measurement. — All Scope 1 & 2 sources within Central San's operational control. — Expands beyond mandatory reporting requirements to include additional Scope 1 sources and Scope 2. — Preliminary screening and partial estimate of Scope 3. 21 21 BOUNDARY Central San Operational Boundary Scope 1 Direct Emissions Page 12 of 25 — Energy consumption data was provided by Central San. — Default emission factors were sourced from the CARB. — Limited data (e.g., used spent data) for Scope 3 — The GHG Protocol: A Corporate Accounting and Reporting Standard. (Scope 1, 2) — WEAO tool (Process Emissions) — The GHG Protocol: Scope 3 Standard and Technical Guidance (Scope 3) — Aligned quantification methods with CARB mandatory reporting procedures for consistency. Emissions from Vehicle Process Biogenic From Purchased Combustion Omissions Emissions Emissions Electricity CO2, CHa & N20 from CO2 from diesel N20, CHq from CO2 from LFG & CO2 from imported NG combustion and gasoline aerobic treatment sludge combustion electricity from the + CHq & N20 combustion + fugitive N20, grid emissions from LFG CHq from effluent & sludge combustion discharge 7 Typical includ Central San Net Zero Evaluation Update I September 2023 Outside Central San's Direct Control Scope 3 Indirect Emissions Indirect emissions associated with upstream & downstream activities (15 categories) Legend: Mandatory Vehicle Emissions Process Biogenic Electricity Up/Downstream 22 (Scope 1) (Scope 1) (Scope 1) (Scope 1) (Scope 2) (Scope 3) Central San Net Zero Evaluation Update I September 2023 22 11 September 21, 2023 Special Board Meeting Agenda Packet - Page 108 of 174 CARB MANDATORY REPORTING 5019 Imhoff P1, Mattinez Treatment Plant (General) IIIIIIIZZIIIIIII MHZIIIIIII 883 757 Cogen Auxiliary Auxiliary 18,031 2,169 1,188 IIIIIII Boiler 1 Boiler 2 Warehouse Admin HHWZIIIIII Mandatory 23 (Scope1) 23 Page 13 of 25 metric tCoze/yr CARB Mandatory Reporting: • Boundary is the site boundary (5019 Imhoff PI, Martinez) • Reporting Direct CO2e from Combustion only • Currently not Reporting: o Indirect GHG emissions from imported electricity o Process emissions Central San Net Zero Evaluation Update I September 2023 EXPANDED BOUNDARY & SCOPE 2 metric tCoze/yr 5019 Imhoff PI, Martinez ® ®Expanding Boundary & Scope 2: Treatment Plant (General) • Expanding the boundary to 1,138 883 757 Central San's operational boundary, i.e., collections HQ in Auxiliary Auxiliary Walnut Creek, vehicles and BoilerIIIIIIIZZIIIIIII pumping stations 18,031 Adding Scope 2 emissions, i.e., 2,169 1,188 indirect GHG emissions from imported electricity ® Does not include emissions from customers driving to/from the 8 24 2 3 4 HHWCF or Reuse Room. 528 Mandatory Vehicle Emissions 24 (Scope 1) (Scope 1) 24 1,084 60 Electricity (Scope 2) Central San Net Zero Evaluation Update I September 2023 12 September 21, 2023 Special Board Meeting Agenda Packet - Page 109 of 174 Page 14 of 25 BASELINE EMISSIONS SUMMARY SCOPE 1 & 2 ANTHROPOGENIC EMISSIONS Excluding Process Breakdown by Scope Breakdown by Maior Sources Breakdown by Energy Source Pumping5 ations Transportation unleaded oiese€ 1,084 sm 197 331 4%_ 2% 1% Treatmerrt Planf _ Scope 2 1,13a�v�ae 2,312 sss 1 era 8% 1.rwa 696 25 Unit: metric tCO2e/yr Central San Net Zero Evaluation Update I September 2023 25 PROCESS EMISSIONS Current Industry Approach • The wastewater industry has become aware that process GHG emissions of N20 and CH4 are significant. • Several countries require process emissions to be included in water utility inventories and have country -specific EF & calculations. • In NA, a growing number of utilities are tracking process emissions: EBMUD, Toronto Water, MCES (MN), Metro Vancouver... Methodologies & EF are available for: ✓ process N20 and CH4 from aerobic treatment, ✓ fugitive CH4 from AD, ✓ fugitive N20 and CH4 from effluent discharge. There is no simple method yet to estimate CH4 from the sewer collection system. Methodologies & EF are being improved upon with latest research (e.g., OWWA/ WEAO, WEF, WRF). For example, a recent study showed N20 EF ranging from 0.1 to 8% of total influent N. • Process emissions are very site-specific. Next step would be to measure the real emissions (e.g., dissolved N20 probe). 26 26 Central San Process Emissions Estimate (preliminary modeling -20,000 tCO2e/yr) 1,500 - 100,000 (using 1.1 % EF: 15,600) (WEA0 model: 1,105) (WEAO model: 3,247) (WEAO model: 644) Unit: metric tCO2e/yr Central San Net Zero Evaluation Update I September 2023 13 September 21, 2023 Special Board Meeting Agenda Packet - Page 110 of 174 PROCESS EMISSIONS 5019 Imhoff P1, Martinez Treatment Plant (General) 1,138 —20,000 883 IIIIIIIZZIIIIIII 18,031 2,169 8 24 r 757 1,188 3 4 528 1,084 60 Mandatory Vehicle Emissions Process Electricity 27 (Scope 1) (Scope 1) (Scope 1) (Scope 2) 27 BIOGENIC EMISSIONS 5019 Imhoff PI, Martinez Treatment Plant (General) 1111111=Z1111111 1111111=Z1111111 1,138 20,625 883 31,755 757 17,422 IIIIIIIZZIIIIIII Auxiliary Auxiliary 18,031 Boiler 1 Boiler 2 2,169 47 1,188 56 8 24 2 3 4 528 1,084 60 Mandatory Vehicle Emissions Process Biogenic Electricity 20 (Scope 1) (Scope 1) (Scope 1) (Scope 1) (Scope 2) 28 Page 15 of 25 Preliminary modeling (WEAO tool) metric tCoze/yr Process Emissions: • Process N20 and CH4 from aerobic treatment, • Fugitive N20 and CH4 from effluent discharge. Central San Net Zero Evaluation Update I September 2023 metric tCoze/yr Biogenic Emissions: • CO2 emissions from combustion of LFG and Sludge in the MHFs and Auxiliary Boilers Central San Net Zero Evaluation Update I September 2023 14 September 21, 2023 Special Board Meeting Agenda Packet - Page 111 of 174 SCOPE 1, 2 & 3 EMISSIONS Scope 1: Direct Emissions • Facility emissions 000000 (MHFs, Cogen, Boilers...) Scope Scope INDIRECT DIRECT • Central San vehicles emissions Scope 2: Indirect Emissions • Purchased electricity (treatment plant, pumping stations...) Scope 3: Indirect Emissions • 15 categories associated with upstream & downstream activities 29 29 Scope 3 IM IM INDIRECT Ilk 1213 Hal Fau��ies Source: https://ghgprot000l.omlsites/default/filealstandards/Corporate-Value-Chain-Accounting-Reporing- Standard 041613 2.pdf SCOPE 3 SCREENING Page 16 of 25 Scope 3 INDIRECT Central San Net Zero Evaluation Update 1 September 2023 Category tCOZe/yr Comment 1. Purchased Goods & Services 12,720 Based on 2022 spend data. 2. Capital Goods ?? Relevant, not calculated. Data not available for 2022. 3. Fuel- and energy- related activities5,876 Upstream emissions for natural gas, electricity, gasoline & diesel not included in Scope 1 & 2 using 2019 baseline information 4. Upstream transportation and distribution 15 Transportation emissions from ash, sludge, grit and spoils removal. Based on spend data. 5. Waste generated in operations 586 Grit screenings and hazardous waste disposal. Does not include Central San MSW. 6. Business travel ?? Relevant, not calculated. Data not available for 2022 7. Employee commuting 570 Assume passenger cars and no commuting for teleworking staff. Teleworking emissions are not included in calculation. —20% commuting emissions reduction with alternative schedule & telework. 8. Upstream leased assets n/a Not Relevant 9. Downstream transportation and distribution n/a Not Relevant 10. Processing of sold products ?? Relevant, not calculated. Data not available for 2022 11. Use of sold products n/a Not Relevant 12. End -of -life treatment of sold products n/a Not Relevant 13. Downstream leased assets ?? Relevant, not calculated. Data not available for 2022 14. Franchises n/a Not Relevant 15. Investments n/a Not Relevant 30 15 September 21, 2023 Special Board Meeting Agenda Packet - Page 112 of 174 LIMITED SCOPE 3 EMISSIONS 5019 Imhoff PI, Martinez Treatment Plant (General) 1,138 20,625 883 31,755 757 17,422 1111111321111111 Auxiliary Auxiliary 18,031 Boller 1 Boller 2 2,169 47 1,188 56 8 24 2 3 4 528 1,084 60 Mandatory Vehicle Emissions Process Biogenic Electricity Up/Downstream 31 (Scope 1) (Scope 1) (Scope 1) (Scope 1) (Scope 2) (Scope 3) 31 Page 17 of 25 metric tco2e/yr Partial Scope 3 Estimate Purchased goods(#1) 12,720 Upstream emissions of NG, electricity, gasoline, diesel (#3) 5,876 Transportation emissions of ash, sludge, grit removal (#4) 15 Grit Disposal (#5) 586 Employee Commute (#7) 570 I San Net Zero Evaluation Update I September 2023 32 16 September 21, 2023 Special Board Meeting Agenda Packet - Page 113 of 174 CALIFORNIA NET ZERO TARGETS E o Carbon Neutrality by 2045 204 4- Methane EXECUTIVE ORDER AB 1279 (2022) CARB B-55-18 THE CALIFORNIA 2022 SCOPING PLAN TOACHIEVE CARBON CLIMATE CRISIS ACT FORACHIEVING NEUTRALITY CARBON NEUTRALITY 33 33 Page 18 of 25 k T =:. re2d0au0Tc5oe bweanms-e(sli"ne• leels;1�5Y(lpi`tDgl eiisnlogtwo zry' RAFT Lc(Mr ENVISION( • T 2030 �rget CO e)n s community -wide emissions down fo 79,854 MT COi•. - Central San Net Zero Evaluation Update I September 2023 WATER UTILITIES CLIMATE GOALS Example benchmarking: 1 4 4 i! 3 EBMUD WATER WASTEWATER Water system: Carbon neutral by 2030 Direct: 100% reduction by 2030 Indirect: 100% reduction by 2030 Wastewater system Direct: 100% reduction by 2040 Indirect: 50% reduction by 2040 34 34 Policies ✓ Climate Action Policy (2021) ✓ Energy Policy (2020) ✓ Climate Action Plan (2021) • 2022 Inventory ✓ Direct emissions: 2,500 tCO2e/yr ✓ Indirect emissions: 2,000tCO2e/yr ✓ Process emissions: 50,000 tCO2e/yr Mitigation Measures+Adaptation Strategies ✓ Renewable Energy: hydro, biogas, solar PV, CCA ✓ Resource Recovery: organic waste AD ✓ Water Conservation ✓ Transportation: hybrid or plug-in electric for light-duty; renewable diesel for heavy-duty; H2 fueling station; Joined CALSTART (nonprofit for clean transportation solutions); Signed Drive to Zero pledge Climate Action Plan (CAP) CAP: Based on the information gathered by the GHG inventories • Comprehensive roadmap / framework outlining specific activities an agency will undertake to reduce GHG emissions Climate and Environmental Action Plan (CEAPI: • CAP + address other environmental issues Advantages: ➢ Climate leadership— an increasing number of countries, cities, agencies develop CAPS ➢ Benefits for external funding (e.g., low-interest loans; grants) Central San Net Zero Evaluation Update I September 2023 17 September 21, 2023 Special Board Meeting Agenda Packet - Page 114 of 174 4- Methane 100% clean Zero -emission electricity truck and bus fleet 40% below by 2045 by 2045 2013 levels by 2030 CARB SB100 (2018) Advanced Clean Fleets SB1383 (2016) k T =:. re2d0au0Tc5oe bweanms-e(sli"ne• leels;1�5Y(lpi`tDgl eiisnlogtwo zry' RAFT Lc(Mr ENVISION( • T 2030 �rget CO e)n s community -wide emissions down fo 79,854 MT COi•. - Central San Net Zero Evaluation Update I September 2023 WATER UTILITIES CLIMATE GOALS Example benchmarking: 1 4 4 i! 3 EBMUD WATER WASTEWATER Water system: Carbon neutral by 2030 Direct: 100% reduction by 2030 Indirect: 100% reduction by 2030 Wastewater system Direct: 100% reduction by 2040 Indirect: 50% reduction by 2040 34 34 Policies ✓ Climate Action Policy (2021) ✓ Energy Policy (2020) ✓ Climate Action Plan (2021) • 2022 Inventory ✓ Direct emissions: 2,500 tCO2e/yr ✓ Indirect emissions: 2,000tCO2e/yr ✓ Process emissions: 50,000 tCO2e/yr Mitigation Measures+Adaptation Strategies ✓ Renewable Energy: hydro, biogas, solar PV, CCA ✓ Resource Recovery: organic waste AD ✓ Water Conservation ✓ Transportation: hybrid or plug-in electric for light-duty; renewable diesel for heavy-duty; H2 fueling station; Joined CALSTART (nonprofit for clean transportation solutions); Signed Drive to Zero pledge Climate Action Plan (CAP) CAP: Based on the information gathered by the GHG inventories • Comprehensive roadmap / framework outlining specific activities an agency will undertake to reduce GHG emissions Climate and Environmental Action Plan (CEAPI: • CAP + address other environmental issues Advantages: ➢ Climate leadership— an increasing number of countries, cities, agencies develop CAPS ➢ Benefits for external funding (e.g., low-interest loans; grants) Central San Net Zero Evaluation Update I September 2023 17 September 21, 2023 Special Board Meeting Agenda Packet - Page 114 of 174 WATER UTILITIES CLIMATE GOALS (continued) Example benchmarking (continued): Status Sustainability Guide (2021) Carbon neutral by 2045 y--" 60% reduction from 1990 by 2030 • Climate Action Plan (2022) THEOFSOUTHERNCALIFORNARICT ➢ Zero -emission fleet WATER ➢ Carbon -free electricity WATER ➢ Improving energy efficiency from 2015 baseline ➢ Increasing waste diversion ➢ Increasing water conservation 5 ➢ Evaluating carbon capture & ESG Report(2022) sequestration 3 "" °' • Net -zero emissions by 2050 aeclam•tlon alelrle[ ru�•1•r cam•Ro with intermediary targets • Climate Action Plan (2023) WASTEWATER • ��III111 L 35 35 Page 19 of 25 4 Status Sustainability Guide (2021) : Several goals in Water, Energy, Installation of electric aeration DENVER Transportation, Materials, etc. including: blowers to provide full redundancy WATER Reduce GHG emissions by 50% by 2025 for steam driven aeration blowers from 2015 baseline blower and potentially install steam turbine 5 ESG Report(2022) Optimize aeration by installing fine Ongoing One of the ESG objectives is to set bubble diffusers and enhanced DO absolute, science -based GHG control lFR SERI tC� emissions reduction targets for More efficient UV system Ongoing Scope 1 & 2 by 2025 WATER Ongoing Generate renewable energy and reduce Scope • Reduce emissions by 80% by 2050 6 More efficient centrifuges from 2005 baseline Reduce Scope 2 emissions by reducing Environmental (aligned with NYC commitment) electricity demand for dewatering operations. Protection WATER WASTEWATER Central San Net Zero Evaluation Update I September 2023 CENTRAL SAN IS REDUCING ITS EMISSIONS Opportunity Status Potential Benefit to Reduce Central San's GHG emissions Installation of electric aeration Ongoing Reduce Scope 1 emissions due to reduced blowers to provide full redundancy steam demand and reduced natural gas firing to for steam driven aeration blowers produce steam. Flexibility to operate electric blower and potentially install steam turbine generator to convert steam to electricity. Optimize aeration by installing fine Ongoing Reduce Scope 1 emissions by optimizing bubble diffusers and enhanced DO aeration and reduce energy required to meet control aeration demand More efficient UV system Ongoing Reduce Scope 2 emissions 1.75 MW Solar PV project Ongoing Generate renewable energy and reduce Scope 2 emissions related to purchased grid electricity More efficient centrifuges Ongoing Reduce Scope 2 emissions by reducing electricity demand for dewatering operations. Potential for polymer savings (Scope 3). Lower power demands could also reduce cogen natural gas demands (Scope 1). Fleet electrification Ongoing Reduce Scope 1 emissions by reducing dependence on transportation fuel 36 36 FLEET ELECTRIFICATION $� -- -- ------ -----------——--- so i4ao� .�.�e sm Source: Central San Preliminary Draft Fleet Electrification Report Central San Net Zero Evaluation Update I September 2023 I� September 21, 2023 Special Board Meeting Agenda Packet - Page 115 of 174 Page 20 of 25 MITIGATION OF PROCESS EMISSIONS Process N20from 1. Measure the real emissions with a dissolved N20 probe. Aerobic2. AI/ML-based aeration control strategy (maintaining the right DO) might get 1,500 - 100,000 5% to 50% reduction (site specific). (using 1.1 % EF: 15,600) 3. SRT control to ensure denitrification is complete with enough carbon, and managing ammonia loadings if possible (less of an issue at Central San, more of an issue at plants with AD and intermittent ammonia sidestreams). Process1. Measure the real emissions (e.g., from OCUs) Aerobic Treatment 2. Emissions could be from headworks buildings and aerated grit where dissolved (WEA0 model: 1,105) sewer -generated methane is being stripped, primaries especially splashing launders which can be exacerbated if carrying a septic sludge blanket, the front end of aeration where dissolved methane is stripped, and sludge handling (storage tanks and hoppers). Fugitive • and CH4 1. Reduce the discharge of BOD and total nitrogen (TN) from Effluent Discharge 2. E.g., a BNR system removing TN will have lower effluent N20 because of the lower (WEAO model: effluent TN. (However, process N20 is currently calculated based on influent N, 3,247+644) and would not change, even though in theory the process may emit less N20.) 37 Central San Net Zero Evaluation Update I September 2023 37 OTHER POTENTIAL NET ZERO ADVANCEMENT OPPORTUNITIES Scope 1 and Scope 2 emissions reduction opportunities ✓ Continue to expand renewable energy program (e.g., solar, wind) ✓ Consider additional energy efficient power generation equipment (e.g., gas turbine, lean burn IC engines, fuel cells) ✓ Optimize pumping systems and increase pumping efficiency— Pilot with Aquasight at influent pump station ✓ Screenings to incineration ✓ Consider FOG as supplemental fuel for incineration Scope 3 emissions reduction opportunities ✓ Optimize chemicals consumption e.g., eliminate/reduce lime for dewatering ✓ Explore other opportunities (e.g., sustainable procurement, leased assets) 38 Lr7 :O: OPTIMIZE PUMP ENERGY CONSUMPTION (and reduce maintenance costs) Low impenar life Low bearing Discharge ane life 77 � � rculahon ife O ew ne n �a�iranon T Q High temperature rise SucFion � recircNatbn I = Low bearing and law seal ite Best Efficiencv Point u Gavitati¢n Flow Source: GHD Central San Net Zero Evaluation Update I September 2023 19 September 21, 2023 Special Board Meeting Agenda Packet - Page 116 of 174 Page 21 of 25 OFFSETTING REMAINING EMISSIONS cot — Purchase of alternative energy sources and/or carbon offset credits is a viable approach to bridging the gap between emissions that can be reduced through capital or operational improvements to achieve a goal or target such as net zero — Primary approaches available to Central San include: Increasing renewable natural gas (RNG) usage (to replace their natural gas consumption) Acquiring low carbon or zero carbon power (renewable energy or "green" power) Purchasing carbon credits or offsets Needs to be rooted in a strong business case given the short- and long-term cost • Represents an annual cost that must accounted • Cost vary depending on approach and source • Annual cost could range from $1 to $10M per year 39 Central San Net Zero Evaluation Update I September 2023 39 OFFSETS OPTIONS V Low Carbon Power — PG&E 100% Solar Choice currently halted by CPUC. Potential new enrollments starting in 2025 — Option available from MCE to purchase 100% renewable power 4 Additional —$30k /yr 40 40 ( U} Renewable Natural Gas — Important to balance carbon intensity of RNG with cost (e.g., LFG vs Dairy RNG) — $5M (replacing all NG by LFG) to up to $9M (20% blend with -250 Cl RNG 4 net zero on NG) Indicative RNG Selling Prices: • Landfill (CI 50): 20-35 $/MMBTU WWTP:25-40 $/MMBTU Food waste :25-45 $/MMBTU • Agri -waste (Cl -250) : 50-120 $/MMBTU Notes: Cl: Carbon intensity in kgCo2e/MMBTU Prices depend on RIN & LCFS and Cl score. Prices indicated here are based on what GHD observed in the market in the last two years. COZ lio Carbon Offsets — Cost to offset Scope 1 & 2 emissions (w/o process): • Voluntary Market < $1M /yr • Compliance Market $0.5-1M /yr Central San Net Zero Evaluation Update I September 2023 20 September 21, 2023 Special Board Meeting Agenda Packet - Page 117 of 174 Page 22 of 25 41 POTENTIAL NET ZERO OPTIONS How can Central San achieve NZ: ➢ Efficiency, renewables ➢ Cogen alternatives ➢ Discussion with potential partners (e.g., sustainable procurement) ➢ Purchasing RNG ➢ Purchasing Offsets 42 42 ZE 0 2050 Best Practices NZ Priorities: 1. Reduce emissions 2. Improve efficiency 3. Develop / use renewables 4. Purchase offsets Central San Net Zero Evaluation Update 1 September 2023 21 September 21, 2023 Special Board Meeting Agenda Packet - Page 118 of 174 Page 23 of 25 POTENTIAL NEXT STEPS DISCUSSION ➢ There is still information needed for Central Santo make a decision on a potential commitment to Net Zero. 1. Refining GHG Inventory i. Scope 1: Measure actual process emissions (—$300-400k) ii. Scope 3: Collect data to more accurately estimate Scope 3 GHG emissions (—$50-100k) 2. Input to NZ decision-making i. Estimate anticipated emissions reductions from capital projects since 2019 baseline (—$25-50k) ii. Add Net Zero lens to the upcoming energy management evaluation (—$25-50k) iii. Further evaluate potential actions/projects with associated high-level cost estimates for planned and potential actions for Central San to reduce GHG emissions (—$50-100k) 43 43 My Observations Central San Net Zero Evaluation Update I September 2023 GHD needs to know our goals to effectively r provide guidance. Scope 1 and 2 emissions will slowly reduce over time with improvements in efficiency, "greening" our energy sources and transitioning to zero emissions fleet vehicles. Scope 3 emissions are the abyss. Beyond the reductions we'll make over time, the► only way to get to Net Zero is buying offsets for the remainder. 44 22 September 21, 2023 Special Board Meeting Agenda Packet - Page 119 of 174 Potential Paths Forward Focus on Scope 1 and 2 emissions only and create a road map of reductions Central San will achieve over time Could brand this as a Climate Action Plan (potential external funding benefits) Set a greenhouse gas reduction target based on planned projects and actions Could add in certain Scope 3 emissions within Central San's control Could consider going beyond our existing plans/ commitments 45 Questions for the Board Ultimately, staff will need to know where the Board wants to be at in terms of the degree of a commitment on GHG emissions reductions. Should staff continue this effort? Should staff follow up on GHD's Potential Next Steps? Should the focus be on all scopes or limited to scopes 1 and 2 and those elements of scope 3 within Central San's control? W. September 21, 2023 Special Board Meeting Agenda Packet - Page 120 of 174 I k Page 24 of 25 r+ 4 23 Page 25 of 25 47 24 September 21, 2023 Special Board Meeting Agenda Packet - Page 121 of 174