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Economics and Reduced Emissions Drive Growth of Alt Fuel Use

Posted on August 10, 2010 by Thi Dao, Assistant Editor

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[IMAGE]fuel.jpg[/IMAGE]In addition to the obvious environmental benefits, reduced operating costs and government incentives have spurred the increased use of alternative fuels in the transit industry.

As the government mandates stricter emissions regulations in an effort to improve air quality, many transit agencies have turned to alternative fuels. According to Washington D.C.-based NGVAmerica, an organization that advocates for greater use of natural gas vehicles, roughly 14 percent of transit buses currently on the road run on natural gas. Demand is growing, says Stephe Yborra, the organization's director of market development. Natural gas engines are now specified for about 25 percent of all new bus orders.

Improved Engine Technology

Yborra cites natural gas engine performance and the "three Es" — emissions, energy security and economics — as the key drivers for this growth. "Natural gas engine technology has improved tremendously over the last five to 10 years," Yborra says. "It's state-of-the-art, proven and highly reliable. In fact, it's now recognized by many in the transit industry as being the new benchmark that every other technology has to meet."

In addition to being cleaner, quieter and delivering performance equal to or better than their diesel counterparts, Yborra says natural gas buses are easier to maintain than diesel buses, which have had to incorporate complex exhaust aftertreatment systems to meet emission requirements, such as particulate traps, urea storage and injection systems, and ­related sensors.

He points out that heavy-duty natural gas engines complied with 2010 EPA regulations governing emissions of nitrogen oxides (NOx) and particulate matter three years before the 2010 regulations came into effect. "The cost of complying with the EPA's ever-tightening emissions requirements for heavy-duty engines has increased not only the cost of diesel buses, but also the cost to operate and maintain them," says Yborra. "Natural gas buses, which start with an inherently cleaner fuel, have a far less complicated and maintenance-free exhaust system."

Transit agencies looking to switch to alternative fuels or expand their alternative-fuel fleet and infrastructure can save on operating costs while meeting government regulations.

Funding Opportunities

To fund the higher cost of alternative fuel vehicles and infrastructure, several federal incentives are available, and states may have their own programs. The federal program, TIGGER (Transit Investments for Greenhouse Gas and Energy Reduction), appropriates $75 million to transit agencies for capital investments that help reduce energy consumption and greenhouse gas emissions. In addition, the Clean Fuels Grant program allots $81 million to assist non-attainment areas in achieving the National Ambient Air Quality Standards for ozone and carbon monoxide ­emissions.

According to Yborra, Congress enacted two income tax credits in 2005, one for the incremental cost of vehicles and the other for the purchase of fueling equipment. Although a tax-exempt transit agency can't directly take advantage of these income tax credits, the seller can take the credits and pass them along to the transit agency by lowering the cost of the vehicle or ­fueling equipment.

The federal tax credit of 50 cents per gallon or gasoline gallon equivalent (GGE) of alternative fuels pumped expired at the end of 2009, but an extension is in reconciliation as of this writing, to be extended until the end of the year and retroactive to the beginning of the year.

Some alternative fuel suppliers, such as Clean Energy, have a dedicated grants department familiar with both federal and state programs to help ­customers attain grant funding.

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