November 20, 2017
The latest draft spending plans from the CEC and CARB maintain the status quo for funding NGVs in 2018. With more than $30 million of unspent NGV incentives, the CEC wants to defer allocating more funds to natural gas transportation projects. At the same time, CARB has decided not to increase incentives for low-NOx natural gas engines in its 2017–2018 funding plan, which allocates $188 million to clean transportation incentives.
“This is not a time to let support for natural gas vehicles stagnate,” said Coalition President Thomas Lawson, noting that two drivers for increased funding are the continued rising cost of gasoline and the release next spring of the Cummins Westport 11.9-liter near-zero-NOx engine. “We as an industry need to work with the CEC and CARB to make these incentive programs more successful and to allocate funding appropriately.”
The combined NGV incentive amount from both agencies currently stands at $218 million. But because CARB and the CEC award incentives on a first-come, first-served basis, industry stakeholders are concerned that the NGV funding will be spent entirely on smaller engines before the new heavy-duty engine is available.
CEC Is Rolling Over Unspent Funds
The CEC’s Natural Gas Vehicle Incentive Project (NGVIP) has $11.9 million in unspent funds, according to the 2018–2019 Investment Plan Update for the Alternative and Renewable Fuel and Vehicle Technology Program (ARFVTP or SB 118). The NGV incentive allocation has another unspent $19.7 million from 2016 and 2017. Natural gas infrastructure funding remains underutilized, too. That pot has $4.4 million from 2016 and 2017 waiting to fund new projects. The CEC will not propose further allocations for NGVs until that money is spent.
“Defunding the NGVIP is a shortsighted solution that sends the wrong signal. The program should be fully funded while stakeholders and CEC staff work on developing a plan to improve the program,” said Lawson.
In its draft plan, the CEC noted that, despite initially strong demand for NGV incentives, fleets have spent them slower than expected—as of July 2017, the NGVIP had provided only $9.9 million—possibly because of the unusually low cost of diesel fuel in the last few years. As a result, CEC staff are reevaluating appropriate future incentive levels, assessing when NGVs can grow in the market without subsidies and how to best use natural gas fuel in the medium- and heavy-duty truck market.
“Fleet owners must be facing a set of hurdles that prevent them from fully utilizing these programs—we need to find out what they are,” he added. “The agencies are more likely to improve the programs if they hear directly from end users.”
To that end, the Coalition has recommended that CEC staff meet with representatives from the NGV industry to develop an improvement plan for the long-term success for the program, which the final SB 118 investment plan for 2018 should include.
Natural gas infrastructure incentive programs are currently underperforming at a rate similar to the rates for NGVs. The agency offered $3.5 million to public K–12 schools, but received just four applications. The three eligible projects received a mere $1.5 million combined.
Still, the CEC remains positive about NGVs, noting in the draft plan that the Cummins Westport near-zero-NOx engine running on RNG can reduce a truck’s emissions to levels near or equal to those of electric vehicles.
The CEC plans to release a revised draft of the SB 118 funding plan by Jan. 10, 2018, and then hold a second advisory committee meeting in the first quarter of the year.
CARB Funding Plan Proceeds Unchanged
CARB moved forward on its final proposed Fiscal Year 2017–18 Funding Plan for Clean Transportation Incentives without making any of the changes the Coalition recommended for the previous draft. These included creating an equal baseline for incentives across technologies, incorporating NGVs in all areas of funding, and increasing voucher amounts to decrease the up-front capital costs of switching to NGVs.
“It’s unfortunate that CARB chose not to incorporate the concerns of the NGV industry in the draft,” said Lawson. “We still have the same valid concerns, particularly with [regard to] having sufficient funding all year for both the 8.9-liter and 11.9-liter near-zero natural gas engines.”
Like the CEC, CARB is leaving options open to further fund NGV incentives in the future. The draft plan acknowledges the entrance of the heavy-duty near-zero-NOx engine into the market next spring, calling it a “new growth area for heavy-duty incentives.”
CARB’s plan is closer to finalization than the CEC’s—CARB will vote to approve it in mid-December—so Lawson is calling on Coalition members and other stakeholders to prepare for increased engagement with both agencies in 2018.
Photo ©Westport Innovations, used by permission