2013 Guide to Government Incentives for Fuel-Efficient Commercial Trucks

by

Managing Editor, Software Advice

The benefits of increased fuel economy in your heavy-duty truck fleet are numerous–and so are the equipment costs. And now, there are government financial incentives to help you fit new trucks and equipment upgrades into your budget.

To that end, we’ve put together this comprehensive guide to provide all of the information and resources you need to get started. It explains the benefits of implementing fuel-saving technologies, the types of financial incentives available, eligibility requirements and how to start the process to obtain funds. It also provides a comprehensive breakdown of all programs offered at a federal, regional and state level, complete with important details, contact information and where you can learn more.

Benefits
Types of Incentives
Who Qualifies
How to Apply
Federal Incentive Programs
Regional Incentive Programs
State Incentive Programs
Additional Resources

Benefits of Fuel-Efficient Fleets

When speaking to buyers evaluating transportation management and dispatch systems, a commonly requested application is a module to better mange fuel costs. But while fuel management technology can help control fuel spend for some organizations, it may simply be time to sunset older, inefficient trucks.

A fuel-efficient truck fleet lessens negative impacts on the environment, improves your company image and, most importantly, boosts your bottom line. A November 2012 Carbon War Room report found that purchasing new or retrofitting existing trucks with fuel-saving technologies can cut fuel costs by 30 percent and result in savings of up to $167,000 per vehicle over 10 years.

This report also found that employing a full suite of fuel-saving technologies generates annual fuel savings of $26,400 per tractor-trailer. When you consider that the upgrades pay for themselves in fuel savings in just 18 months, you have numbers you can’t ignore.

Don’t forget the non-financial perks fuel-efficient trucks afford. The same report estimates that Class 8 road freight emissions will increase by 29 percent in the next decade, releasing four gigatons of CO2 greenhouse gases (GHGs) in the process. With shippers and consumers increasingly concerned with the environmental impact of their goods, curbing your fleet’s GHG output and “greening” your image could give you an important edge over your competition.

Furthermore, the Environmental Protection Agency (EPA) has adopted GHG emissions regulations, so it’s in your best interest to bring your emissions output in line with new standards to avoid non-conformance penalties.

The long-term cost benefits of adopting fuel-efficient fleets are clear. But adding up the cost of a new tractor-trailer, top-of-the-line battery, aerodynamic fairings, advanced cruise control and a fuel-efficient transmission brings the price tag to nearly $130,000 per truck — a hefty upfront cost and tough sell for buyers.

Types of Incentives

Incentives are available at federal, regional and state levels. There are five types of incentives to assist you with purchasing fuel-saving upgrades:

1. GRANTS require the most paperwork and planning, but provide significant funding — sometimes up to 100% of project costs. Most grant programs require progress reports and recordkeeping after funds are awarded. As long as your project and records are in compliance, the funds don’t need to be repaid.

2. REBATES AND VOUCHERS are available when you purchase a specific vehicle or piece of equipment and use it for a specific purpose by a specific date. For example, if you purchase tires designed to decrease rolling resistance, be sure the brand is accepted by the rebate or voucher program. You may need to provide receipts, purchase orders, and original equipment manufacturer (OEM) certificates.

3. LOW COST LOANS help smaller companies with less-than-perfect credit ratings obtain financing for heavy-duty vehicle fuel-efficiency projects by offering low interest rates and down payments. You must pay back the funds you receive, plus interest and fees, within a specified timeframe.

4. TAX CREDITS directly reduce your tax liability. Many states offer alternative fuel vehicle (AFV) tax credits when you purchase or convert a vehicle to operate on an alternative fuel. Credits are typically available one time per vehicle and range from a few hundred to a few thousand dollars. These credits are then claimed on your tax return. You don’t need to supply receipts and purchase orders to the IRS when you file, but do retain them in your records, should the IRS request them.

5. TAX EXEMPTIONS are available at the point of purchase on qualified items, such as fuel and idle reduction equipment. You aren’t required to file paperwork to receive a tax exemption, but it’s good practice to retain receipts and purchase orders for your records.

Who Qualifies for Financial Incentives

To take advantage of funding opportunities, you must meet eligibility requirements. Incentive programs commonly stipulate the following:

  • Vehicle type
  • Fuel type
  • State or region of operation
  • Vehicle weight limit
  • Fleet size
  • Company revenue

Let’s look at the Texas Natural Gas Vehicle Grant Program as an example. Let’s say you want to add a new truck to your fleet. You operate out of Williamson County, Texas; 90 percent of the truck’s power is provided from compressed natural gas (CNG); the GVWR is 14,000 pounds and over 75 percent of miles will be accrued on Texas roads. Your truck is eligible for this incentive if it will replace an old truck in the same weight class, which you must destroy within 90 days of receiving funds.

With any program, carefully read the full details to determine your eligibility.

How to Apply

If your records are organized and easy to collect, the application process is a simple four step process:

  1. Choose a federal incentive from the list below, or search the Alternative Fuels Data Center (AFDC) database to find incentives available in your state.
  2. Confirm your project or purchase meets all eligibility requirements.
  3. Gather necessary documentation.
    1. Most grant, rebate/voucher, and loan programs require:
      • Completed application forms
      • Application fee (if required)
      • OEM certifications
      • Financial records
      • Project/equipment descriptions
      • Other required form or documentation
    2. To claim a tax credit or exemption, you may need:
      • Purchase orders and receipts
      • Certificates
      • Special licenses
  4. Submit your application or claim according to program instructions.

For grants, rebates and loans, it’s important to confirm approval of your funding request before making vehicle and equipment purchases.

It’s also important to note that some grant programs require follow-up documentation, such as proof of destruction of an old truck or mileage records for a specified amount of time. Be sure you supply all necessary follow-up records to keep your project in compliance and good standing with the program.

Fleet Incentive Programs

Locate available financial incentives below. For complete incentive details, follow the link or contact the program’s administrator.

You can also search for government incentives here.

Federal Incentive Programs

ProgramDetailsTypeContact
National Clean Diesel Campaign (NCDC)Grant funding for idle reduction, clean fuels, vehicle replacements and other strategies that reduce human exposure to diesel exhaust.GrantJennifer Keller
202-343-9541
Contact by email
SmartWay Finance ProgramsEPA-backed program offering loans to help small trucking companies reduce fuel costs and emissions. Incentives available at federal, regional, and state levels.Grants, Rebates, and Loans734-214-4767
Contact by email
Community Development Transportation Lending Services (CDTLS)Provides financing for the purchase of retrofitted trucks and idle reduction technologies. Backed by EPA-funded SmartWay Finance Program.Loan202-415-9682 or 800-891-0590 ext. 710
Cascade Sierra Solutions Revolving Loan FundNationwide low-cost financing options for equipment upgrades and truck replacement. Back by EPA-funded SmartWay Finance Program.Loan541-302-0900 or 866-345-3390
Alternative Fuel Excise Tax CreditAlternative fuels sold for use or used to operate a motor vehicle earn a tax credit of $0.50 per gallon.Tax CreditExcise Tax Branch
IRS / Office of Chief Counsel
202-622-3130
irs.gov
Idle Reduction Technology Excise Tax ExemptionQualified onboard idle reduction devices and advanced insulations, and their installation, are exempt from federal excise tax.Tax ExemptionExcise Tax Branch
IRS / Office of Chief Counsel
202-622-3130
irs.gov

Regional Incentive Programs

RegionProgramDetailsTypeContact
Houston - Galveston - BrazoriaHouston-Galveston Area Council Bridge Loan Program to Support Clean DrayageFinancing for replacement of heavy-duty diesel trucks operating in ports and distribution centers. Backed by EPA-funded SmartWay Finance Program.Loan832-681-2588
Contact by email
Mid-Atlantic PortsMid-Atlantic Dray Truck Replacement ProgramProvides rebates for replacement of trucks operating in ports of Virginia, Baltimore, Wilmington and Philadelphia. Backed by EPA-funded SmartWay Program.RebateMedessa Burian
301-405-7371
Contact by email
Sacramento Federal Ozone Nonattainment areaSacramento Emergency Clean Air & Transportation Grant ProgramProvides grants to offset the cost of heavy-duty vehicle upgrades and exchanges.GrantKristian Damkier
916-874-4892
Contact by email
San Joaquin Valley Air Pollution Control DistrictTruck Voucher ProgramProvides funds to replace heavy-duty diesel trucks with new, lower-emission trucks.Voucher559-230-5858

State Incentive Programs

StateProgramDetailsTypeContact
ArkansasAlternative Fuel Vehicle RebatesRebates for 50% of the cost to convert to hydrogen fuel, CNG, LNG, or propane, up to $4,500.Rebate800-558-2633
Contact by email
Environmental Loans for Small BusinessSmall business loans at 80% prime interest rate for heavy-duty trucking for pollution control measures.LoanAndrea Hopkins
501-682-0820 or 888-233-0326
CaliforniaHybrid Truck and Bus Voucher Incentive ProgramVoucher program up to $45,000 to reduce purchase cost of heavy-duty HEVs and ZEVs.Rebate888-457-4847
Carl Moyer Air Quality Standards ProgramProvides grants for projects to reduce heavy-duty vehicle emissions.Grant866-6DIESEL
Contact by email
Goods Movement Emission Reduction ProgramGrants to reduce emissions from heavy-duty freight movement.Grant916-444-6637
Contact by email
ColoradoAlternative Fuel, Advanced Vehicle, & Idle Reduction Technology CreditTax credit up to $6,000 for purchase of idle reduction technology.Tax CreditJohn Doty
303-205-8211 ext. 6889
Contact by email
ConnecticutConnecticut Clean Fuel ProgramFunding for municipalities to purchase alternative and clean fuel vehicles.Grant860-594-2807
Contact by email
GeorgiaAlternative Fuel Vehicle Tax CreditTax credit up to $2,500 for purchase or conversion of alternative fuel vehicle.Tax CreditJames Udi
404-363-7046
Contact by email
KansasAlternative Fuel Vehicle Tax CreditCredit for 40% of the conversion cost for qualified AFVs from $4,000-$40,000, based on GVWR.Tax Credit785-368-8222
Contact by email
LouisianaAlternative Fuel Vehicle Tax CreditCredits available for the purchase or conversion of an alternative fuel vehicle. This program is accepting applications, but payouts are currently on hold.Tax Creditrev.state.la.us
MinnesotaSmall Business Environmental Improvement and Auxiliary Power Unit Loan ProgramOffers small businesses low-interest loans up to $50,000 for the purchase of idle reduction technology.LoanMike Nelson
651-757-2121
Contact by email
MontanaAlternative Fuel Vehicle Conversion Tax CreditAn income tax credit up to 50% of the cost to convert vehicle to operate on qualified alternative fuel.Tax Credit866-859-2254
NebraskaDollar and Energy Saving ProgramLow-cost loans for alternative fuel vehicle projects up to $750,000.Loan402-471-2867
New YorkHeavy-Duty Alternative Fuel Vehicle Voucher Incentive ProgramIncentives up to $40,000 for qualified alternative fuel vehicle projects.VoucherTom Brotherton
303-825-7550 ext. 1
Contact by email

David Kantor
626-744-5611
Contact by email
OklahomaAlternative Fuel Vehicle Tax CreditA one-time credit of 50% of the incremental cost of purchasing or converting an AFV operated vehicle.Tax Credit
Alternative Fuel Vehicle LoansProvides 3% interest loans to private and non-profit firms to convert vehicles to operate on alternative fuel.LoanCarolyn Sullivan
405-815-5347
Contact by email
State Energy Loan ProgramOffers low-interest, fixed rate loans for energy conservation projects.Loan503-378-4040
Contact by email
TexasNGV Grant ProgramProvides funding to encourage heavy-duty vehicle owners to repower or replace with natural gas.GrantColin Donovan
512-239-1984
Emissions Reduction Incentive Grants ProgramProvides grants to offset the cost of emissions reduction projects for high-emitting mobile diesel vehicles.Grant800-919-8377
Low Emissions Alternative Fuels Equipment Initiative ProgramOffers incentives for buyers to replace internal combustion equipment with alternative fueled equipment.The latest grant round from ended in December 2012, but you can sign up for notification of future rounds.GrantHeather Ball
512-463-7359 or 800-61-CLEAR
Contact by email
WashingtonIdle Reduction Tax IncentivesSales & use tax exemptions for parts and labor to enable heavy-duty diesel trucks to accept power for onboard electrification systems.Exemptiondor.wa.gov
WisconsinDiesel Truck Idling Grant ProgramReimburses up to 50% for the purchase and installation of idling reduction equipment. As of 04-15-13, this program is not accepting application, but you may sign up to be notified when funding is available.GrantJean Beckwith
608-261-2517
Contact by email

Additional Resources

  • To learn about heavy-duty fuel economy and emissions standards effective in 2014, go here.
  • To calculate your fleet’s emissions and set emissions goals, go here.
  • To read about trends in truck fleet management, go here.
  • To learn about Clean Cities programs helping fleets and consumers reduce petroleum use, go here.
 
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