The funding available for low-emissions fossil-fueled projects, by contrast, exceeded the amount sought by applicants, leaving a small amount unspent, said Chris Rall, outreach director for T4A. While his group hasn’t analyzed the latest round of funding yet, “we hypothesize there will be more applications for low-emissions projects because there are incentives for agencies to do that,” he said.
“A lot of them are still going to make that choice to get their fleets a little bit cleaner and to replace buses,” potentially locking them into a decade or more of using fossil fuels instead of switching to zero emissions, he said. “It’s a major challenge for transit agencies to get the fueling infrastructure they need to transition their fleets.”
Public funding does help transit agencies be able to afford to replace older, more polluting buses with less-polluting fossil-fueled options, said Nate Springer, vice president of market development for transportation-consulting firm GNA. Compressed natural gas buses have been on the roads for decades, he noted. The technology is “mature, it’s available, it’s proven by transit agencies, and it cuts air pollutants dramatically” compared to diesel buses.
On the other hand, government funding is also meant to “help seed a new market,” Springer said. “It allows fleets and transit agencies to take some risks,” working around the constraints of tight capital and operating budgets to deploy newer technologies.
Battery-electric and hydrogen-fuel-cell-powered buses still cost about 150 to 200 percent more than diesel-fueled buses, he said. They also require extensive charging or fueling infrastructure that’s now hard to come by, as well as a workforce that’s trained to operate and maintain them, Springer added. “The next role of funding is, how do you incentivize early adopters, which do have budget limits, but also aggressive clean air and climate goals,” to overcome those constraints, he said.
The right combination of upfront and long-term incentives can bring electric buses to cost parity with fossil-fueled buses in terms of their total cost of ownership over their useful lifetime, Springer noted. “You should be able to save on electricity with managed charging, so your fueling costs go down. You should be able to save on maintenance once your teams become effective at it.”
Stacking the incentives to make electric buses pay off
California, which has lucrative state incentives and stringent zero-emissions transportation policies, has been the primary test case for electric transit bus economics. California leads the country in electric transit buses, with nearly 2,000 as of September 2022, more than four times the number deployed in second-ranking New York, according to Calstart.
The Antelope Valley Transit Authority, which serves north Los Angeles County, is one example of how a combination of incentives and electric bus economic fundamentals can pay off.
AVTA completely converted its fleet to 87 electric buses in 2021 using $52 million in federal funding, $44 million from California programs, $460,000 from local sources and $8 million in capital reserve. Charging with electricity at its purpose-built depots has halved its fuel costs compared to diesel fuel, and incentives from California’s Low Carbon Fuel Standard have flipped those fuel costs to a credit of 15 cents for every mile driven, Esteban Rodriguez, the agency’s director of operations and maintenance, told Canary Media last year.
Achieving these benefits requires transit agencies to scale up their electric bus fleets, said Jarrett Stoltzfus, senior director of government relations at Proterra, a major U.S.-based provider of electric buses, batteries and EV chargers. The expansion of federal funding has “led transit agencies to think less in terms of a one-off, one-time deployment, and more about what their plan to scale up their fleets looks like in the long term,” he said.
The Federal Transit Administration’s grant programs also support the charging infrastructure, workforce training and fleet-management planning needed to make a successful transition to an electric bus fleet, he noted. Buses are “kind of the beachhead” for medium- and heavy-duty vehicle electrification, he added, whether that’s transit buses or the school bus fleets vying for a portion of $5 billion in federal funding and state and local grants and incentives to make the switch to zero-emissions vehicles.
But requiring the federal government’s chief funding program for electric transit buses to spend 25 percent of its funding on fossil-fueled buses “kind of distorts the natural trajectory we’re already heading in,” Stoltzfus said. “A quarter of the funds every year are set aside for a category that has lower demand.”