How to Find Available Money for Your Fleet

With the surge of interest in greenhouse gas emissions, carbon footprints, and mitigating the environmental impacts of fleet operations, the use of alternative-fuel and advanced technology vehicles, such as hybrid-electric (HEV) and plug-in hybrid electric (PHEV), has become much more prevalent. In fact, for some fleet operations (such as those falling under EPAct regulations), the purchase of alternative-fuel vehicles (AFVs) in specific percentages is mandated by the federal government. Recent surveys have also confirmed that fleets are voluntarily purchasing clean air alternative fuel and advanced technology vehicles in record quantities.

Unfortunately, with very few exceptions, such as flex-fuel vehicles (FFVs) capable of operating on gasoline or E-85 ethanol, alternative-fuel and advanced technology vehicles require a larger capital outlay to procure. Simply put, clean air vehicles cost more than their gasoline-powered counterparts.

Determining how to pay for these typically more expensive clean air vehicles has also consistently been identified as a growing concern for fleet managers overseeing cash-strapped fleet operations. But there is a silver lining contained within the current economic cloud. Despite the floundering economy and budget woes in general, a record amount of grant and incentive funding for clean air vehicles has also been made available. For example, in 2009 the federal Department of Energy (DOE) made nearly $300 million of American Reinvestment and Recovery Act (ARRA) funding available through the Clean Cities program. This single grant funding opportunity is responsible for putting more than 9,000 alternative-fuel and energy-efficient vehicles on the road and establishing 542 refueling stations across the country.

Become Familiar with the Process

Now more than ever, it is essential for fleet managers to be able to identify and successfully seek out all available funding sources for vehicle acquisitions. It can be challenging to remain abreast of all current clean air vehicle grant funding opportunities, but with a little effort and some networking, the undertaking may be greatly simplified. The objective is to become aware of emerging grant funding opportunities early in the process in order to have time to produce a quality proposal. A good strategy is to focus only on those grants that will definitely benefit your organization and also offer a reasonable opportunity for success. In order to do all of this efficiently, fleet managers must become familiar with grants in general.

There are two main types of grant funding awarded: competitive and formulaic. A competitive grant is a grant for which multiple applications are solicited, which then compete against each other for award. Typically, competitive grants will have specific criteria that allow proposals to be compared to each other and evaluated in order to select the most qualified application(s) for the award.

Formulaic grants, also known as block grants, are not competitively evaluated but are distributed proportionally amongst applicants based upon an established formula or criteria. Under a formulaic grant program, all qualified applicants receive a percentage of the total award. A commonly used criterion for award of formulaic grants is population size.

Fleets have historically concentrated on applying for competitive grants, but there has been a trend lately of fleets accessing formulaic/block grant funds awarded to their community. While the lion’s share of fleet grant funding will be provided through competitive grants, a savvy fleet manager will also learn about any formulaic/block grants coming into their organization to be ready when opportunities arise to take advantage of them. This article will focus on competitive grant funding sources.[PAGEBREAK]

Finding Funds

There are three main categories of funding sources for clean air and advanced technology vehicles: federal, state, and local.

Federal Grant Funding. When it comes to grant opportunities, the federal government is by far and away the largest and most consistent source of funding. This holds true for alternative-fuel and advanced technology vehicles, fuel, and infrastructure projects. Many federal agencies offer funding opportunities, but the majority of funding for clean air vehicle and transportation related projects comes from a handful of federal agencies.

The Department of Energy (DOE), Department of Transportation (DOT), Environmental Protection Agency (EPA), and United States Department of Agriculture (USDA) all offer ongoing funding opportunities for clean air vehicle and transportation projects. Each of these agencies has information on their clean air vehicle funding opportunities available on their respective Web pages.

DOE (www.energy.gov): Provides clean air vehicle and fuels grants from programs and offices such as Clean Cities, Vehicle Technologies Program, State Energy Program, Energy Efficiency and Conservation Block Grant Program, etc.

DOT (www.dot.gov): Provides grant funding for lowering vehicle emissions and reducing greenhouse gas emissions through programs and offices such as the Federal Transit Administration (FTA), the Federal Highway Administration (FHWA), and the Transportation, Community, and System Preservation Program (TCSP). Of particular note is the Congestion Mitigation and Air Quality Improvement (CMAQ) program administered by the FTA and FHWA through state DOTs and Metropolitan Transportation Organizations (MPO).

EPA (www.epa.gov): Provides clean air vehicle grant funding through its National Clean Diesel Campaign and Diesel Emissions Reduction Act (DERA) programs. These are typically oriented toward heavy-duty and off-road diesel equipment projects. The EPA also provides innovative financing options to fleet customers through its SmartWay Clean Diesel Finance program. The EPA may have additional funding and incentive options at the state or regional level.

USDA (www.usda.gov): While not historically considered a source of vehicle or transportation funding, the USDA has recently become a consistent source of certain types of clean air vehicle and fuel grant funding. The USDA provides funding opportunities for agriculture-related transportation projects such as those involving biofuels. Biofuels include ethanol, biodiesel, and biogas, including biomethane. Biomethane is natural gas derived from organic sources such as cow manure or decomposing landfill waste materials.

State Grant Funding. The federal government may reign supreme as the champion source for clean air vehicle grant funding, but many states have developed aggressive grant funding programs over the past few years. While each state has different grant funding sources, the designated State Energy Office (SEO) is typically the largest clean air vehicle grant funding source in each state. To make it easy to identify each state’s SEO, the National Association of State Energy Officials (NASEO) publishes a directory of State Energy Offices online. The federal DOE’s Alternative Fuels and Advanced Vehicles Data Center (AFDC) also publishes a Web-based map that allows users to click on any state in the country to get information on alternative and clean air vehicle incentives and funding sources. There is a multitude of state-level funding programs for clean air vehicle and transportation projects, but visiting these two websites will provide the starting points for any fleet manager interested state-level funding programs.

Keep in mind some states may have formal incentive and funding programs established in addition to the SEO. An example is found in the State of California, where the Energy Commission is the designated SEO, but the Air Resources Board is also an established and consistent source of clean air and advanced technology vehicle funding.

And finally, at the state level there may also be additional EPA funding activity from individual EPA regions. Beyond the nationwide EPA clean vehicle funding programs, EPA offers regional and targeted funding opportunities through its 10 regional offices. The best bet to ensure that no funding opportunities are missed is to monitor EPA funding opportunities through your local EPA region.

Local Grant Funding. Local grant funding sources typically offer the widest variety of funding opportunities and normally enjoy streamlined application and review processes when compared to the state and federal funding programs. Local agencies usually offer less complex and more straightforward reporting requirements. Consequently, many fleets choose to apply for clean air vehicle funding only from local agencies. This makes sense from a practical standpoint because the local agency staff tends to live and work in your community and can be more inclined to support and fund your projects. However, each locality will have varying numbers of grant funding sources, and the funding may be made available at much smaller levels than from state or federal sources.

The two primary clean air vehicle and transportation project funding sources at the local level are Metropolitan Planning Organizations (MPO) and Pollution Control Districts. MPOs are federally mandated transportation policy-making organizations. MPOs will be found in any urbanized area with a population base greater than 50,000 residents. Federal funding for transportation projects and programs are channeled through these organizations to the local area. An easy way to identify an MPO is to visit the website directory published by the Association of Metropolitan Planning Organizations (AMPO). At the AMPO website, each state’s respective MPO is identified, neatly organized, and contact information is provided.

In addition to falling under the jurisdiction of an MPO, many localities will also have a designated Pollution Control entity. The names range widely, from titles such as Pollution Control Agency, Air Pollution District, or even Air Quality Management District, but the intent and purpose are similar. These local Pollution Control entities are consistent sources of clean air vehicle funding. The best way to identify your local Pollution Control authority is to do an Internet search or query state level agencies. For example, in California, the Air Resources Board maintains a local air district directory that identifies the various Air Quality Management Districts and Pollution Control Districts and the territories for which they are responsible.

Additional Funding Sources. In addition to the standard federal, state, and local funding sources, clean air vehicle and transportation projects may also be eligible for funding from other less traditional sources such as corporate philanthropic initiatives, and entities dealing in carbon/pollution offsets.

Meaning literally “as near as possible,” cy-pres grant funding is becoming more prevalent these days. These funds are derived from legal settlements such as class action lawsuits where it may not be feasible or practical to distribute the settlements to the class members. Cy-pres funding made available for clean air projects typically comes from cases where a party has been found liable for damages to the environment, such as an oil or chemical spill. Beyond the damages caused to those directly affected by the actual act, the government sometimes also recovers punitive damages from the plaintiff. The punitive damage award may then be made available for projects that can help offset damage to the environment. These are the most difficult types of grants to become aware of because the source and frequency cannot be predicted.

Many corporations and private parties are interested in preserving the environment and may also offer funding for clean air vehicle projects. These sources are typically very interested in maintaining and promoting their image as “good” corporate citizens. You may be surprised at the scope and magnitude of funding available from these sources. Some examples of recent corporate clean air vehicle philanthropic opportunities include AAA’s Greenlight Initiative and Google’s RechargeIT and Google.org programs.

While not yet mainstream, a growing industry of businesses sell carbon and pollution offsets to fleets and consumers. The business model is built around the concept that organizations or individuals desiring to reduce their carbon impact on the environment may purchase offsets to cancel out their carbon use. The money used to purchase these offsets is then made available to fund carbon reduction projects. While fleet-specific projects have not yet become commonplace under this practice, it is definitely a burgeoning industry with unlimited growth opportunities. It would be wise to monitor fast-moving companies in this industry such as TerraPass and Carbonfund.org to see if and when opportunities for funding of clean air vehicle and fuels projects develop in your area.[PAGEBREAK]

Stay Informed

As discussed, several types of grant funding are available from a multitude of different sources. Remaining apprised of and informed on clean air vehicle funding opportunities can be intimidating and confusing to even the most experienced fleet manager due to the dizzying array of funding sources. However, simple techniques can be employed to stay informed of 90 percent of the grant opportunities out there.

By connecting with just a handful of organizations, a fleet manager can avoid having to identify and monitor each of the individual organizations offering specific clean air vehicle funding and incentives. In fact, with a small amount of participation and signing up for e-mail notifications, electronic newsletters, and RSS feeds to some of the organizations discussed, it is possible to have notices of the vast majority of funding opportunities conveniently delivered via e-mail.

The federal DOE is well aware of the challenges faced by fleets seeking to explore alternative-fuel and advanced technology vehicle options. To assist fleets and other interested parties in reducing, replacing, and eliminating petroleum consumption at the local level, DOE created the Clean Cities program in 1994. This organization is directly in the forefront of the alternative fuel and advanced technology industry. With more than 90 coalitions nationwide, there is likely a local Clean Cities Coalition nearby that may be tapped for assistance. Clean Cities provides updated information of vehicle, fuel, and infrastructure options as well as any possible funding opportunities that may become available. Most Coalitions offer an e-mail subscription service. Some Coalitions, such as the East Bay Clean Cities Coalition, have detailed clean air vehicle funding Web pages. This particular coalition separately identifies each federal, state, and local funding source available in its region and makes this information available in a single location.

Each agency typically publishes advance notice of upcoming funding opportunities and also posts the solicitations on their respective websites. Most grant-providing agencies also conduct grant workshops or webinars designed to inform interested parties and potential applicants about the grant opportunity and also to assist with preparation of proposals where permissible. If a grant-providing agency holds a workshop or seminar, rest assured it will be the best source of information available on that particular grant. It is also important to become familiar with the specific staff responsible for the incentive programs within these organizations as these individuals will have some of the most pertinent and current information on the grants and incentives available. It is helpful to develop these local agency contacts not just as resources for questions related to their specific proposals, but also for assistance with larger issues such as identifying likely partners for joint proposals, providing supporting data for proposals, or even reviewing a proposal that is being submitted to another agency.

With numerous alternative-fuel vehicles and fuels, as well as hybrid, plug-in hybrid, and other advanced technology clean air vehicles on the market today, a correlating funding source is bound to exist or be in the works. While the grant funding or incentives may not completely offset the entire incremental cost versus purchasing a standard vehicle, the sting of purchasing higher-priced clean air vehicles may be alleviated by pursuing grant funding and incentives.

The numerous types and sources of clean air vehicle grant funding can at first seem intimidating or bewildering, but rest assured there is plenty of advice and guidance out there to assist fleet managers through the purchase of new and unfamiliar technology. The guidelines presented here should provide the basic resources needed to get any fleet manager started down the path toward submitting a winning clean air vehicle grant proposal.

About the Author

Richard Battersby is director of fleet services at the University of California Davis. He can be reached at [email protected].[PAGEBREAK]

Locate Information on the Web

An abundance of resources for finding available grants and funding is available online. The following are just a few websites to explore:

Alternative Fuels and Advanced Vehicles Data Center

(State Incentives and Laws): www.afdc.energy.gov/afdc/laws/state

Association of Metropolitan Planning Organizations

(MPO Directory): www.ampo.org/directory

Bureau of Transportation Statistics: www.bts.gov/external_links/government/metropolitan_planning_organizations.html

Clean Cities Coalitions: www1.eere.energy.gov/cleancities/coalitions.html

Federal Business Opportunities: www.fbo.gov

Grants.gov: www.grants.gov