As the energy transition picks up steam across the UnitedStates, national and state level bodies have created decarbonization technology incentives to encourage companies to implement sustainable practices. We’ve compiled a list of carbon reduction incentives you can take advantage of this year to save on fleet hybridization and electrification!
Three Incentives Types to Consider
Alternative Fuel Vehicles (AFVs) run on electricity, hydrogen, propane blends, or natural gas. Several states have developed decarbonization incentive programs to encourage the use of these vehicles and fuels over traditional gasoline or diesel vehicles. These carbon reduction incentives, which are often related to the cost of these fuels or the cost to convert vehicles to run on these alternative fuel types, can be used to offset the expense of fleet conversion. Here are a few of these incentives available today:
● Alternative Fuel “AFV” Tax Exemption (AZ): Provides Tax exemptions on both alternative fuels and the equipment needed to convert vehicles to run on these fuels.
● AFV Conversion TaxCredit (MT): Businesses that convert their vehicles into AFVs are eligible for a tax credit of up to 50 percent of the equipment and labor cost required to convert each vehicle. It is only available the year the vehicle is converted but also extends to fuel blends containing at least 85 percent alcohol.
● Alternative FuelVehicle (AFV) and Fueling Infrastructure Loans (NE): Provides loans up to $500,000 to replace conventional vehicles with AFVs, purchase new AFVs, convert to AFVs, or build fueling stations.
● AFV Conversion andInfrastructure Tax Credit (D.C.): A 50percent tax credit on labor and equipment costs to convert a conventional vehicle into an AFV. Capped at $19,000 per vehicle.
The Federal government also offers various grants and incentives that can help ease the costs of sustainability projects. These carbon reduction incentive programs are often targeted at specific industries, types of organizations, or types of locations. Here are some of the prominent examples:
● PublicTransportation Innovation Program: A grant program available to all levels of government organizations, public transit organizations (public, private, and non-profit), and higher education institutions to assist in the development and deployment of low or zero-emission vehicles for public transportation.
● Ports Initiative: Facilitated by the EPA, this is an incentives-based program that provides funding to port authorities and public entities to replace or convert older diesel engine vehicles to newer/cleaner technologies and fuels.
● CongestionMitigation and Air Quality (CMAQ) Improvement Program: Provides funding to State level Departments ofTransportation, local governments, and transit agencies, to meet the requirements of the Clean Air Act. Eligible activities include congestion relief, transit improvements, diesel retrofits, AFVs and infrastructure, and medium/heavy duty vehicle zero-emission programs.
State level grants and loans often focus on specific decarbonization technologies and target particular industries. They also may include incentives based on specified measurements of a vehicle conversion. Here are a few examples:
● Alternative Fuel and Idle Reduction Revolving Loan Program for Public Entities: Offers loans to local government agencies and education institutions (up to $500,000 per school system) that may cover the incremental or full costs of converting to AFVs.
● CommercialElectrification Rebates: Offers a 10-cent rebate per annual kilowatt-hour of battery-powered energy added to each piece of machinery or equipment in a custom electrification project. Applies to medium and heavy-duty equipment such as forklifts, truck refrigeration units, and charging bays.
● Idle ReductionTechnology Loans: Loans offered for organizations to use IdleReduction technology to meet or exceed environmental regulations.
● Conversion toAlternative Fuel Grant Program: Enables businesses who convert their vehicles to AFVs to apply for a $2,500 grant per conversion.
An Example withStealth Power
To demonstrate how these carbon reduction incentives might be used with Stealth Power’s solutions, we’re going to lay out an example with the Solar Investment Tax Credit or Solar ITC. This year the dollar-for-dollar credit will cover 26 percent of any investment a business makes in solar equipment for their company or fleet. This percentage will drop to 10 percent in 2024 so now is the best time to take advantage of the credit. However, the projects that begin construction this year will still receive the full 26 percent, as long as they are operational by 2027.
For Stealth Power clients, the Solar ITC can have a notable impact on your ROI as solar options are available with any of our vehicle or mobile power systems. This means that other integrated system components, such as our energy modules and auxiliary heat or A/C, qualify for the credit. For example, you can apply the credit to the energy module size of up to five times the total power rating of the solar panel system, and to the entire cost of an added heating system if it is being powered by the energy module and solar. For example, if you purchase a 5kW Vehicle Power System with 1kW of solar and auxiliary heat for $15,000, you would be able to apply the 26 percent tax credit to the entire system and qualify for $3,900 in tax credits.
As you can see, there are many incentives presently available to help cover the expense of sustainability projects. With infrastructure bills on the horizon, there is likely to be even more funding available and a wider range of incentive options to help various industries convert their fleets and reduce their carbon footprint.