Clean Transportation Stimulus has Billions of Dollars Available

April 23, 2020

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Stimulus funding has and will continue to flow into America’s struggling economy. While federal stimulus funds have not yet directly targeted the clean transportation market, plenty of other incentives continue to stimulate this sector. To help understand the potential implications of stimulus funding on the clean transportation market, we don’t have to look any farther back than 2009’s American Recovery and Reinvestment Act (ARRA).

Lessons Learned from ARRA

Of the $800 billion ARRA funds, DOE and EPA were each tasked with allocating $300 million to clean vehicle projects. The combined $600 million were designed to fund “shovel-ready” projects that would immediately create and retain American jobs–time was of the essence.

While federal stimulus funds have not yet targeted clean transportation, plenty of other incentives continue to stimulate this sector.

Indeed, the EPA’s $300 million portion saw huge levels of interest–600 applicants requested more than $1.7 billion. Of these, EPA funded 160 projects that saw deployments of nearly 30,000 trucks, buses, and pieces of non-road equipment. Moreover, it created or retained 3,000 jobs generated as much as $4.9 billion in health benefits. DOE’s portion of the funds generated comparable outcomes.

The lessons learned though are not in the results, but in the actions taken to garner those results. A lighthouse example of such action is along the I-15 corridor between Southern California and Salt Lake City. UPS, long a stalwart of sustainability, took a substantial step to further that goal by using ARRA funds to deploy 150 Class 8 LNG tractors and three (3) fueling stations on this critical trade route. This was UPS’ first major push into Class 8 natural gas trucks, representing a 15-fold increase in its use of the technology. Fast forward to 2020 where UPS runs 3,500 natural gas trucks in its U.S. operations, fueled by the largest renewable natural gas fuel purchase to date with the recently announced 170-million-gallon equivalent fuel purchase commitment.

The ARRA program was a stimulus in every sense; UPS’ natural gas tractor fleet grew from 10 to 150 units, which recently surpassed an incredible 3,500 units–all of which has been an important springboard for the major truck OEMs now offering natural gas tractors in their product lineup.

To understand the benefits of stimulus funding on the clean transportation market, we only have to look to 2009’s American Recovery and Reinvestment Act (ARRA).

In addition to UPS, there are dozens of other similar examples throughout the U.S. of how the ARRA program left a lasting imprint on the growth of the nation’s clean transportation sector. Advanced clean transportation products were built, deployed and operated on a scale not previously seen. Most of these products not only continue to be available from leading OEMs but have been the basis for further product development.

So, with such demonstrated success, can it happen again as the U.S. injects trillions of dollars of stimulus funding into the economy?

$2.925 Billion in VW Funds Hitting the Road

Though the current lineup of federal stimulus funds will not be directed towards clean fuel vehicles, there remain extraordinarily strong opportunities to inject much needed cash into the advanced clean transportation sector. This owes to the timing of the roll out of the $2.925 billion Environmental Mitigation Trust, created via the Volkswagen “Dieselgate” Settlement, combined with hundreds of millions of dollars in state-level funding.

In 2019, more than $200 million in VW settlement money was awarded to fleets to deploy 3,000 vehicles and pieces of equipment–these funds are now hitting fleets’ accounts in these early days of economic recovery. This initial displacement of VW funds is on par with the respective EPA and EPA ARRA clean transportation funding but represents a mere 7% of the total VW funding pot; with another $2+ billion coming in forward years. While the VW program is not supposed to be an economic stimulus, the roll out of this massive funding program could not be better timed.

The current roll out of $2.925 billion in VW Funds could not be better timed.

Aside from VW, hundreds of millions of dollars continue to flow from state-level programs as well. California leads the charge with several $20-$50 million clean vehicle programs scheduled to be released in 2020. California also continues to prepare for a November 2020 infusion of $150 million into its popular HVIP program.

These grant programs are further bolstered by hundreds of millions of dollars in funding and incentives now being offered by the state’s three investor-owned utilities–PG&E, SCE, and SDG&E–to accelerate the use of EVs in the commercial fleet sector. And incremental to these programs, California’s LCFS program remains a strong opportunity for accessing ongoing fuel credits to further improve project economics.

Billions Now Available, If you Know Where to Look

While the array of incentives don’t have comparable visibility to the current federal stimulus programs, they do provide the clean transportation sector with opportunities well beyond what was seen from ARRA. The key is simply knowing where to look, and how to piece these programs together to yield the economic and environmental benefits that such projects can provide. As UPS, and many other fleets around the U.S. have demonstrated, an initial shot of stimulus-funding–taken during a period of economic downturn–can provide long-lasting and sustainable results to the bottom line and the environment.

GNA tracks more than 500 local, state and federal incentive programs, in addition to utility incentive programs throughout the U.S. GNA has secured more than $650 million in incentive funding for its customers and projects via the submission of more than 500 funding applications.