U.S. and Canadian Governments Provide Resources and Incentives to Operate an Energy-Efficient Fleet
May 5, 2013
May 5, 2013
Trucking is a $37-billion industry in Canada. The U.S. trucking industry is about ten times the size of Canada’s trucking industry. In 1998, almost half of the industry’s registered trucks in Canada were heavy-duty vehicles weighing more than 15 000 kg (33 000 lbs.) in gross vehicle weight (GVW). They were used primarily to transport freight between urban centres across Canada and to transport goods between Canada and the U.S. and Mexico.
The same study showed that forty-one percent of the energy consumed to transport freight in Canada was used by heavy-duty trucks, and the commercial road transportation sector produces 19 percent of the total emissions in Canada. Carbon dioxide (CO2) is the principal greenhouse gas (GHG) that contributes to the global problem of climate change.
A fuel-efficient truck fleet lessens negative impacts on the environment, improves a company’s image and, most importantly, boosts a its bottom line. A November 2012 Carbon War Room report found that purchasing new or retrofitting existing trucks with fuel-saving technologies can cut fuel costs by 30 percent and result in savings of up to $167,000 per vehicle over 10 years.
The long-term cost benefits of adopting fuel-efficient fleets are clear. But adding up the cost of a new tractor-trailer, top-of-the-line battery, aerodynamic fairings, advanced cruise control and a fuel-efficient transmission brings the price tag to nearly $130,000 per truck — a hefty upfront cost and a tough sell for buyers.
This report also found that employing a full suite of fuel-saving technologies generates annual fuel savings of $26,400 per tractor-trailer. When you consider that the upgrades pay for themselves in fuel savings in just 18 months, this is a powerful incentive to obtain and utilize these technologies.
The Canadian and U.S. governments recognize the importance of energy efficiency and the need for resources and subsidies to make it happen.
Types of Incentives
Incentives are available at federal, regional, provincial and state levels. There are five types of incentives to assist with purchasing fuel-saving upgrades:
1. GRANTS require the most paperwork and planning, but provide significant funding — sometimes up to 100% of project costs. Most grant programs require progress reports and recordkeeping after funds are awarded. As long as your project and records are in compliance, the funds don’t need to be repaid.
2. REBATES AND VOUCHERS are available upon the purchase a specific vehicle or piece of equipment and use it for a specific purpose by a specific date. For example, if a company purchases tires designed to decrease rolling resistance, the brand must be accepted by the rebate or voucher program. The purchaser needs to provide receipts, purchase orders, and original equipment manufacturer (OEM) certificates.
3. LOW COST LOANS help smaller companies with less-than-perfect credit ratings obtain financing for heavy-duty vehicle fuel-efficiency projects by offering low interest rates and down payments. The borrower must pay back the funds receives, plus interest and fees, within a specified timeframe.
4. TAX CREDITS directly reduce tax liability. Many states offer alternative fuel vehicle (AFV) tax credits when you purchase or convert a vehicle to operate on an alternative fuel. Credits are typically available one time per vehicle and range from a few hundred to a few thousand dollars. These credits are then claimed on your tax return. You don’t need to supply receipts and purchase orders to the IRS when you file, but do retain them in your records, should the IRS request them.
5. TAX EXEMPTIONS are available at the point of purchase on qualified items, such as fuel and idle reduction equipment. In the U.S., the purchaser is not required to file paperwork to receive a tax exemption, but it’s good practice to retain receipts and purchase orders for your records.
Who Qualifies for Financial Incentives
To take advantage of funding opportunities, a company must meet eligibility requirements. Incentive programs commonly stipulate the following:
• Vehicle type
• Fuel type
• State or province or region of operation
• Vehicle weight limit
• Fleet size
• Company revenue
In Canada the incentive programs are administered by Natural Resources Canada. Here is a link to the incentive programs in each province.
It should be noted that in addition to grants and loans, Natural Resources Canada’s ecoENERGY Efficiency for Vehicles program aims to reduce energy use and emissions from transportation in Canada by offering fuel efficient driver training, providing energy information to vehicle consumers, and encouraging freight companies to make their operations as energy efficient as possible. To learn more about their FleetSmart (http://fleetsmart.nrcan.gc.ca/index.cfm) and SmartDriver Training programs (http://fleetsmart.nrcan.gc.ca/index.cfm?fuseaction=fleetsmart.smartDriver), click on the links supplied.
SmartWay links Shippers and Carriers to Reduce Greenhouse Gases
The SmartWay Transport Partnership is an innovative partnership between public and private stakeholders with the shared goal of saving fuel and reducing greenhouse gases and air pollution from the freight transportation supply chain. It works by linking shippers with an interest in greening their supply chains with SmartWay-recognized fuel-efficient carriers (truck carriers, multi-modal carriers and logistics companies). Other organizations with an interest in greening the freight transportation supply chain can participate as SmartWay Affiliates or Community Members.Originally launched by the United States Environmental Protection Agency in 2004, SmartWay has been administered in Canada by Natural Resources Canada (NRCan) since 2012. Here is a link to an upcoming SmartWay workshop in Canada.
Clearly, energy efficiency has become and will continue to be a key strategy for both shippers and carriers in the years ahead. Hopefully these tools and resources will add to everyone knowledge base and cause more companies to increase their efforts in this critical component of their business.
Dan Goodwill, President, Dan Goodwill & Associates Inc. has over 30 years of experience in the logistics and transportation industries in both Canada and the United States. Dan has held executive level positions in the industry including President of Yellow Transportation’s Canada division, President of Clarke Logistics (Canada’s largest Intermodal Marketing Company), General Manager of the Railfast division of TNT and Vice President, Sales & Marketing, TNT Overland Express.
Goodwill is currently a consultant to manufacturers and distributors, helping them improve their transportation processes and save millions of dollars in freight spend. Mr. Goodwill also provides consulting services to transportation and logistics organizations to help them improve their profitability. All posts by Dan Goodwill