States encourage use of alternative fuels
As state and local governments become involved in global efforts to protect the environment, many of them are buying vehicles that run on alternative fuels and are encouraging residents to do the same. But, those fuels — such as biodiesel, compressed natural gas (CNG), liquefied natural gas, propane, and ethanol — are more expensive than regular diesel and gasoline, and the vehicles are more expensive than conventional models. So, governments are tapping a variety of federal and state grants to help offset that cost and are creating tax incentives for residents.
Arlington County, Va., has been trying to reduce air pollution and cut petroleum fuel consumption. When the county converted its 1,200 vehicles to alternative fuels in 2002, minimizing the economic impact on the county’s budget was very difficult, according to Fleet Equipment Chief Ric Hiller.
All diesel-powered vehicles in Arlington’s fleet — including trucks, school buses and heavy equipment — use B20 biodiesel fuel, a mix of 20 percent soybean oil and 80 percent regular diesel fuel. Though using B20 reduces the county’s total petroleum consumption by about 100,000 gallons a year and cuts exhaust emissions by 20 percent, it costs 25 cents a gallon more than pure diesel, Hiller says.
In 2005, the Virginia Division of Energy gave Arlington County a $200,000 grant to convert its school buses to alternative fuels. In addition, Hiller says, the county gets a percentage of a federal rebate of $1 per gallon of pure biodiesel. “It doesn’t totally eliminate the extra cost we pay, but it sure helps soften the economic [impact],” he says.
The county also received $150,000 in state and federal grants toward the cost of building a $400,000 CNG fueling station. Arlington County owns 29 CNG-powered transit and school buses, each of which cost $50,000 more than regular buses, but Hiller says the county receives grants to defray that extra expense.
Along with the incentives it offers to local governments, Virginia is requiring state agencies to use AFVs when feasible, beginning next year. Each agency will receive extra money to cover the costs. The secretary of administration will report on each agency’s progress toward achieving the goal to the state’s General Assembly.
In March, Colorado’s legislature began requiring biodiesel use in more than 300 state-owned vehicles where the fuel is available, as long as it costs no more than 10 cents per gallon above the cost of typical diesel fuel. The law also put hundreds of additional government vehicles under the state fleet manager’s jurisdiction, making those vehicles subject to the biodiesel requirement. Also, the state issues income tax credits to residents who purchase an AFV or convert a vehicle to use alternative fuels.
South Carolina also offers several tax incentives to residents to buy AFVs, including an income tax rebate for flexible fuel vehicles that run on E85. “This new income tax credit in South Carolina is worth 20 percent of the current federal credit, which varies by vehicle make, model and year,” says Mitch Perkins, director of the South Carolina Energy Office’s energy program.
Portland, Ore., has issued an unfunded mandate requiring all residential garbage and recycling haulers to use B20 beginning in March 2007. As a result, the city’s sanitation department will have to find money in its regular budget to make the change, and private companies that want to enter the market will be required to use B20 and will have to pay for any extra costs that they incur.
Portland also requires that all diesel sold in the city limits contain a minimum 5 percent biodiesel, says Dan Saltzman, the city’s commissioner of sustainable development. “These are some fairly easy changes we can make that keep the air cleaner for children and reduce greenhouse gases,” he says.
Sean Kilcarr is senior editor for American City & County’s sister publication, FleetOwner.