Retrofit diesel equipment

The federal government is trying a new approach to reduce emissions from diesel engines. Two major pieces of recently signed federal legislation — the Energy Policy Act of 2005 and the U.S. Highway Act of 2005 — both set the stage for significant emission reductions by adding particulate filters, oxidation catalysts and other aftertreatment technologies to existing trucks and off-highway equipment.

Unlike previous federal initiatives, the new laws do not call for regulatory programs forcing manufacturers to reduce emissions from new equipment. Instead, they create funding programs to help equipment owners offset the cost of adding aftertreatment devices to their equipment or repowering the equipment with new, low-emission engines.

“This represents the first time in the retrofit world where there is something in place to receive substantial funding specifically for retrofitting,” says Allen Schaeffer, executive director, Diesel Technology Forum, a national clearinghouse on diesel issues. “EPA has had line items in the budget before and has had some supplemental funding that was used for retrofit programs, but this is the first time there will be a steady stream of funds.”

How much funding will be available remains to be seen. The energy legislation, which was signed by President Bush in August, calls for spending $1 billion on retrofit programs over the next five years — or up to $200 million per year. The money, however, is not guaranteed. Funding for each year of the five years won’t be determined until Congress considers the annual appropriations bills that establish budgets for federal agencies, which means funding may vary depending on the size of the deficit, tax revenues and other government priorities.

Nonetheless, the program is significant. “It is a very broad program with a wide range of opportunity for both on-highway and off-highway,” says Schaeffer. “It also gives priority to non-attainment areas for carbon dioxide and particulate matter.”

Seventy percent of the funds will be spent on nationwide retrofit programs; the remaining 30% will be used to help fund state programs. Given its national emphasis, the EPA program is more likely to be utilized by national, on-highway fleets, as well as contractors that operate in several states.

More retrofit funding for highway bill

Local highway contractors are more likely to benefit from the U.S. Highway Act of 2005.

The legislation gives contractors access to a pool of more than $1.5 billion per year that Congress sets aside for projects designed to reduce congestion or improve air quality. This is significant because many states and municipalities have forced highway contractors to “voluntarily” retrofit their equipment in order for them to bid on government projects.

The highway bill gives contractors access to Congestion Mitigation and Air Quality Improvement (CMAQ) funding, which will total $8.6 billion over the next five years. Federal highway legislation has included CMAQ funding since the 1990s, but the money has typically been used on entrance/exit ramps, carpooling lanes and mass transit projects.

The new legislation acknowledges studies showing that retrofitting existing diesel equipment is a very cost-effective way to reduce emissions. For example, spending $5,300 to repower a piece of off-highway equipment will achieve the same amount of emission reductions as spending $126,000 on a vehicle powered by alternative fuel or spending $23,000 on a (successful) program to encourage ride-sharing.

Lawmakers’ focus on existing equipment is a tribute to one of the most important features of diesel engines — their durability. Because they have an operating life that can extend 20 to 30 years, regulators know it will take decades for new “clean diesel” engines to saturate the market. By offering financial incentives, lawmakers hope they can reduce enough emissions so they don’t have to implement more stringent regulations to meet air quality standards.