Fleets interested in purchasing hybrid vehicles can take advantage of several government grants and tax credits available this year to help offset the additional costs associated with the vehicles.
Fleets interested in purchasing hybrid vehicles can take advantage of several government grants and tax credits available this year to help offset the additional costs associated with the vehicles.
The Energy Policy Act of 2005 included several programs that can benefit fleets, including the Diesel Emission Reduction Act (DERA), a voluntary grant and loan program administered by the Environmental Protection Agency, and tax credits from the Internal Revenue Service.
Enesta Jones, EPA spokeswoman, said EPA has already awarded millions of dollars in grants through DERA and more funding opportunities will be announced in June. “It is intended to help fund efforts to reduce diesel emissions from the existing fleet,” she explained.
The program awarded $50 million in 2008, and the American Recovery and Reinvestment Act — the February stimulus plan — added another $300 million, but that money will have been committed by the time this issue is read. To ensure the ARRA’s goals were reached quickly, the EPA accepted grant applications only from March 17 to April 27.
Where to Go for Funds
Under DERA, private and public fleets can apply for funding in partnership with regional, state or local agencies with jurisdiction over transportation or air quality, such as a Department of Natural Resources or Air Pollution Control.
Fleets also can partner with nonprofit organizations that provide pollution reduction programs or education, such as the Environmental Defense Fund. Funding covers up to 25% of the cost of a new hybrid truck, and fleets can purchase multiple trucks.
To help simplify the application process, industrial manufacturer Eaton Corp. established a program to assist fleet owners in applying for DERA grants. Dontia Warren, market development manager for Eaton’s Hybrid Power business unit, told Light & Medium Truck there was significant fleet interest in the most-recent round of DERA grants.
“We are seeing a mix of current and new customers as well as large and smaller fleets,” she said.
The Environmental Defense Fund also is working directly with fleets. “We know fleet managers are busy folks, so we’ve hired an additional consultant who is aggregating fleet [requests] and we will help with the application process,” said Rachel Beckhardt, project manager for EDF. She added that this is a perfect opportunity for smaller fleets.
“It seems very complicated, but it’s not,” she said.
Both the EDF and Eaton were successful in getting DERA funding for fleets in 2008. “We want to continue to offer this service to fleets interested in purchasing hybrids moving forward,” Warren said.
DERA funding does come with additional steps. Grant recipients file quarterly mileage and fuel reports with EPA for several years and have to take one truck out of service for each grant they receive. And, they must destroy the engine.
“Fleets can sell the chassis, they can sell the scrap metal, but they have to scrap the engine,” Beckhardt said. “The point is to reduce diesel emissions, not to export them somewhere else.”
The savings could make it worth the extra steps involved. Warren explained that by combining the DERA funding with an IRS tax credit and the fuel and operating savings of a hybrid versus a conventional diesel truck, the cost of a new diesel hybrid truck could be about the same as a conventional new truck over a five-year period.
Through the IRS’s Alternative Motor Vehicle Credit program, fleets can receive tax credits for qualified alternative fuel motor vehicles and heavy hybrids over 8,500 pounds. Tax credits range from $3,000-$12,000, depending on the vehicle, and are available until Dec. 31. Eligible vehicles may be either new, original equipment or used vehicles that are repowered to use an alternative fuel.
Several manufactures’ vehicles are eligible for the tax credit, including Azure Dynamics, Freightliner Trucks, International Truck & Engine Corp., Kenworth Truck, Navistar, Peterbilt Motors Co. and Workhorse Custom Chassis.
Beckhardt said the EDF has been working to extend the tax credit, and would like to see Congress established a fixed credit that would eventually phase out as more hybrids are produced, just as it did with passenger vehicles.
For more information on tax credits for hybrid vehicle purchases, visit www.irs.gov/businesses/article/0,,id=175456,00.html.
To learn more about the Diesel Emission Reduction Act and additional funding opportunities, visit www.epa.gov/cleandiesel or www.edf.org/hybridincentives.
To contact Eaton directly, e-mail DERAFunding@Eaton.com.
Article by Mindy Long in Light & Medium Truck, May 2009