Appendix 1 – Overview of OLEV Bid

Bluestar 2 Fleet- Euro 6 buses- proposed bid- note

This document provides information on a proposed use of EBC-held Developers Contribution £20,000, as match funding to support a bid for new ultra low emission buses operating on the Bluestar 2 bus route between Fair Oak, Eastleigh and Southampton. This route operates through a substantial part of the Eastleigh Town Centre Air Quality Management Area (AQMA) - hence introduction of ultra low emission buses to this route would result in reduced emissions from buses of pollutants affecting air quality in this area.

Background

The Office for Low Emissions Vehicles (OLEV) is a central Government body which is working to increase uptake of ultra low emission (CO2 and air pollutants such as NOx, particulates) vehicles. It is working to achieve this through programmes of financial support for purchase and operation of low and zero emission vehicles of various types (primarily private cars but also taxis, public sector fleet vehicles, and buses). It also is funding research and development work by the automotive sector to reduce the environmental impact of new-build vehicles.

OLEV have recently announced a £30m Low Emission Bus fund. This fund will provide financial support for purchase of new low emission buses between 2016 and 2019. Like most central government funding, this funding can only be accessed through competitive bidding. This comes in addition to a low emission taxi fund and also financial support for low emission vehicles for public sector fleets.

EBC investigated the possibility of bids to the taxi and public sector fleet funds but bids to these funding streams have not been possible due to a lack of interest/ support from the taxi trade, and due to poor value for money / financial terms of a bid, respectively. However officers believe that a competitive bid to the low emission bus fund is feasible and should be developed.

The OLEV bus funding is specifically for purchase of brand new buses meeting Euro 6 emission standards. This includes advanced conventional diesel buses as well as gas, hybrid and full electric buses. Unfortunately hybrid flywheel retrofits are not a permitted option (these are seen as having potential for reducing emissions from the older fleets of some of the smaller local operators who are unable to afford the purchase of brand new vehicles). Bids for funding may be submitted by local authorities, bus operators, or jointly by these groups. Bids will be assessed according to four main criteria:

  • Ambition (30%)
  • Deliverability (10%)
  • Benefit to air quality (25%)
  • Value for money (35%)

Bids which result in reduced bus emissions within an AQMA are likely to score well. The Eastleigh AQMA covering Southampton Road and Leigh Road (designated for NOx emissions) sees large numbers of bus movements, particularly in the town centre area. Consequently a bid for low emission buses on routes serving the town centre may perform well.

The latest Euro 6 emissions standards, particularly for NOx, are extremely stringent, with buses being required to emit no more than 1 gram of NOx per km. In comparison, Euro5 standard buses typically emit 7 to 9 g/ km, and Euro 3 standard buses around 12g/km. Testing has indicated that Euro 6 compliant buses actually achieve an even greater reduction in NOx emissions (see chart below).

Proposed Bid/ Project

Officers from EBC and Southampton City Council , and Bluestar bus, have held several meetings and identified a potential joint bid for OLEV bus funding. This potential bid would seek funding for new Euro 6 compliant buses operating on the Millbrook corridor (within Southampton) and on the Bluestar 2 route between Southampton, Eastleigh and Fair Oak. It is the Bluestar 2 element of the bid for which match funding from AQMA-allocated DCs is being sought.

Bluestar 2 is the most frequent bus service running within Eastleigh town centre and through the AQMA. It runs at a frequency of 3 buses per hour in each direction Monday to Saturday Daytime, with an hourly Sunday and evening frequency. The routing of this service means that there are 9 bus movements per hour through Romsey Road roundabout, and also some parts of the town centre route involve doubling back (eg from Bishopstoke Bridge to Eastleigh station) hence there is a substantial amount of “activity” within the town centre on this route. Within Southampton, the Bluestar 2 transits parts of the city centre where there are general air quality problems, but does not directly pass through an AQMA.

New low emission buses for the Bluestar 5 (Eastleigh to Romsey) route could also be included in a bid as this route also generates vehicle movements through the AQMA and offers potential for emissions reductions- but Bluestar 2 being the more regular and higher profile route is the priority. Inclusion of the Bluestar 5 would be subject to sufficient EBC held match funding (from DCs) remaining after the Bluestar 2 element is funded, and a satisfactory business case existing for Bluestar to buy new vehicles.

The Bluestar 2 has a current peak Vehicle Requirement (PVR) of 8 vehicles. 4 of these vehicles are Euro-5 compliant ADL Enviro 400 double decks, newly purchased last year but of an older design. The other 4 vehicles are older 58 reg Scania Omnicities which have Euro 4 compliant engines. All of these vehicles emit much more NOx than potential Euro 6 compliant replacements. They also are more polluting with regards to other emissions eg particulates and CO2.

The proposed bid would involve applying for funding for Bluestar to purchase 8x brand new Enviro 400 double decks (of a newly launched and significantly improved design). These vehicles would be Euro 6 compliant and also would be “micro hybrids” whereby brake energy is recuperated to power onboard electrical systems such as power steering, lighting etc- saving fuel compared to current vehicles.

Introduction of these vehicles to the Bluestar 2 would enable the current vehicles operating the route to be “cascaded” to other routes, possibly including college services and the Bluestar 5, thus replacing (and removing from the local fleet) vehicles which are 10+ years old and highly polluting by current standards. This may provide some further indirect benefit for air quality in the town centre area.

Options considered and rejected:

- Electric buses: Go South Coast (Bluestar’s parent company) have some experience from operating 2 electric buses in Dorset. Aside from the extremely high purchase cost and mechanical problems experienced with these buses, the limited range of current electric buses means that these vehicles simply could not operate a fairly lengthy route such as the Bluestar 2 without causing major operational difficulties.

- Hybrid electric/ diesel buses: Whilst operation of these vehicles would be quite feasible on the Bluestar 2, they cost much more to purchase and whilst OLEV funding may reduce this additional purchase cost significantly, it still would exceed the cost difference of the preferred option . Additionally, The NOx saving of Euro 6 hybrid buses is not much better than that provided by Euro 6 non-hybrid bsues (as the NOx emission lavels are so low already).

- Compressed natural gas buses: these were rejected for a variety of reasons, primarily around the fuelling station needed to support a fleet of CNG buses. Issues include very high cost, operational implications and likely difficulties installing a CNG fuelling station at the Barton park depot.

Benefits

The key benefit of supporting a successful bid is of course significantly reduced emissions from buses on the Bluestar 2 route. This will help support efforts to improve air quality in the Borough and in particular in the Eastleigh AQMA.

The table below shows information on emissions per kilometre of current and proposed buses for the route.

Vehicle / NOx g/km / CO2 G/ km / Particulates g/km
Current-Scania (Euro 4) [1] / 11.5 / 1572 / 0.13
Current- Enviro 400 (Euro 5)1 / 8.6 / 1253 / 0.045
Proposed- New Enviro 400 (Euro 6 micro hybrid) / 1 (max)[2] / 1200 (estimate)[3] / 50% reduction on Euro 5 [4]

A total of around 27,000 annual vehicle movements through the Eastleigh AQMA would be operated by low emissions buses funded through this bid. Preliminary estimates of total annual emissions savings are:

- 278kg NOx within Eastleigh AQMA:

- 2005 g Particulates

- 100 tons CO2 (entire route)

- 67 tons CO2 (within Borough only)

These figures exclude empty workings between the depot and the start/finish of the route etc. They also exclude any benefits enabled by “cascaded” older vehicles or removal of the oldest vehicles from the fleet.

There are multiple other benefits that would result from a successful bid. Firstly, the new vehicles would have lower fuel costs and possibly other operational costs would be reduced as well. This helps maintain the financial viability and stability of the route. Newer vehicles will enhance the passenger experience and provide a more marketable product for Bluestar, helping encourage increased patronage.

There is also a substantial publicity opportunity for EBC (and also Bluestar). In the event of a successful bid, supported by EBC, we would expect branding on the buses to note that these are lower emissions vehicles which help to improve air quality, and whose provision has been assisted through EBC support. Given the high profile and frequent nature of the Bluestar 2 route, this publicity is likely to be seen by a large number of residents.

Finally, the Enviro 400 is a British-built bus - thus purchase of these vehicles would help support the UK economy.

Costs

A quote provided to Bluestar shows that each Euro 6 compliant bus will cost £20,000 more to buy than a Euro 5 version of the same bus. OLEV will fund up to a maximum of 75% of this cost difference but the remaining 25% minimum must come from local sources.

For Bluestar 2’s PVR of 8, this is a minimum £40k local contribution required. Bluestar may put in some contribution, and we are currently waiting to hear what level of contribution SCC would provide for low emission buses on the Bluestar 2. However clearly a significant contribution (probably at least £20k) would be expected from Eastleigh Borough Council.

If the amount of EBC contribution required is relatively low (hence some DC funding remains) this could open the door to funding similar low emission vehicles for the Bluestar 5 route; however as the only areas of poor air quality this service operates through are in Eastleigh, EBC would be required to provide all of the required local contribution to a bid for this route.

Risks

The key risk to this bid is failure to find suitable levels of local contribution. The bid guidance requires that a minimum of 25% of the cost difference between a standard and a low emission bus is provided through local contributions. If this criteria is not met, bids will not be eligible. Allocation of the request DC will provide sufficient funding to ensure an eligible bid.

There are few cost risks- the costs of purchase of the new vehicles have been established, and as Bluestar will be the owners/operators of the vehicles, there are no ongoing capital or revenue costs for EBC.

The buses themselves, being advanced diesel buses, are comparatively low risk as they are an established technology compared to some of the alternative options considered (eg electric or CNG buses). There are no other major elements of the project, or dependencies, aside from ordering the new buses and introducing them to service. Testing has indicated that NOx reductions on Euro 6 buses actually significantly exceeds the minimum requirements for emissions, hence there is reasonable confidence that the technologies work as advertised.

There is a risk that the operator could, having received EBC support for purchase of new low emission buses, move these buses to a different route or area than that specified in the bid, or potentially sell them. In order to mitigate against this risk EBC will seek a service level agreement or similar requiring Bluestar to guarantee allocation of these buses to the Bluestar 2 route for a minimum period, perhaps 4 or 5 years.

Bluestar are a stable, well established operator and are part of a larger national group, and EBC has had a good working relationship with them for many years, minimising risk of buses being transferred to different routes, sold or otherwise utilised in a way contrary to that stated in the original bid.

There is also an opportunity cost regarding use of the DC funding for support for this bid, as opposed to other uses. The DC could potentially be used for other purposes. It is worth noting that:

-Other OLEV bid opportunities (taxis and public sector fleets) for which air quality DCs could have been used as supporting funding have been found to be either poor value for money, a poor fit for EBC needs, or are not feasible due to a lack of support

-Of all the technological options considered for the OLEV bus funding, these preferred option is considered the best value for money and has the lowest risk/complexity

-The proposed bid, if successful, would result in a definite reduction in pollutant emissions from a substantial proportion of the buses passing through the AQMA. Some other potential uses of the DC (eg signage, marketing and promotion, research projects etc) may not actually provide any results , may be higher risk, and/ or may require more EBC resource to implement.

-The proposed new bus purchase is a simple, low risk, easy to implement project, which can be implemented in the short/medium term (see below) and provide benefits lasting for at least 4 to 5 years.

Timescales

Bids to OLEV must be submitted by 31st October 2015. OLEV will announce winners in January 2016, with funding available from 1st April 2016. Realistically this means a successful bid is likely to put new buses on the road some time towards late 2016.

Whilst conversations to date have been based on a bid being led by Bluestar with support from EBC and SCC, there are discussions about whether this bid may be better placed as part of a wider Solent Transport bid, covering other parts of South Hampshire. The view of Officers is that either arrangement is likely to have advantages.

[1] Emissions figures from TfL data for same models of bus as the current Bluestar fleet, presented at following web address:

[2] Public data not yet available but to meet Euro 6 standards, must emit no more than 1 g/km NOx.

[3] ADL new Enviro 400 model weighs 400 kg less than the outgoing model; the CO2 reduction of this weight saving is yet to be quantified but for this comparison is conservatively estimated at 50g/km saving. The buses in the proposed bid are also micro hybrids which will result in further reduced fuel consumption and hence CO2 emissions so a 50g/km CO2 saving is probably a significant underestimate.

[4] Public data not yet available but Euro 6 also mandates an approx. 50% reduction in particulate emissions compared to Euro 5.