With growing pressures to reduce emissions, cut costs and transition to zero-emissions vehicles, public transit agencies are at a pivotal point when considering the future of their operations. Clean fuel standard (CFS) programs offer a way for transit agencies to lower the TCO of their fleet while transitioning to zero-emissions vehicles (ZEVs).
What are the Clean Fuel Standards
Clean fuel standards are state specific market-based incentive programs designed to reduce the carbon intensity (CI) of the fuel pool while offering financial incentives to companies that take action to reduce their transportation-related emissions. Currently, there is an active federal program in Canada and provincial or state programs in British Columbia, California, Oregon, and Washington state, with ten more US states in legislative discussions to launch additional programs in the near future.
These standards are designed to play a crucial role in a broader effort to take urgent action on climate change, improve air quality for communities and accelerate the adoption of zero-emission vehicles (ZEV).
Revenue Opportunities from the Clean Fuel Standard Programs
One of the primary benefits of clean fuels programs is the potential for fleet operators to earn ongoing revenue from the operations of zero-emissions vehicle fleets. The primary way most fleet operations achieve this is by generating credits through the use of low-carbon fuels, most commonly via electric vehicles or other clean fuels such as green hydrogen or renewable natural gas (RNG). Credits can then be sold to obligated parties, primarily fossil fuel producers through the respective markets.
Transit agencies across North America are beginning to appreciate the revenue potential of these clean fuels programs and are identifying ways to harness the opportunity to further their transition to zero-emission fleets.
Transitioning to Electric Vehicles
Clean fuel programs often go hand in hand with fleet efforts to transition to electric vehicles, including for transit agencies. As public transit agencies look to reduce emissions and operational costs, electrification continues to prove to be the ideal solution. In fact, zero-emission buses (ZEB) deployments have grown over 100% since 2018 with that number expected to rise exponentially in coming years. Across North America, mandates are being put in place setting new requirements and ZEB implementation milestones. For example, California will require all new buses purchased to be zero emission by 2029, and by 2040 all public transit agencies must transition to 100% zero-emission bus fleets.
Similarly, Canada’s target is 20% of new sales by 2026 and 60% of new sales for zero-emission medium and heavy-duty truck and bus fleets by 2030.
By aligning with clean fuels programs, transit agencies can position themselves to begin utilizing the earned revenue to further advance their transition to electric, not only enhancing their internal climate efforts but also positioning them as a sustainability leader in public transit.
Overcoming Challenges
For many transit agencies, the benefits of CFS programs are clear, but many struggle to understand the process, leaving many unsure of where to begin. To address this, agencies can:
- Work with clean fuel program advisors: By partnering with companies that specialize in clean fuel standards, such as 3Degrees, you can leverage industry expertise and typically begin earning revenue much quicker. Additionally, a seasoned partner will be able to maximize credit monetization to ensure your organization is set up for optimal earning potential.
- Understand eligibility: Eligibility requirements for transit agencies can vary depending on the specific program, location and regulatory authority overseeing the CFS. Common eligibility requirements include location, fleet type, carbon intensity and reporting capabilities. Your CFS advisor will be able to guide you through the eligibility and registration process.
- Monitor regulatory updates: Stay current with evolving CFS regulations at the federal, state, and local levels. Timely action can often lead to greater financial incentives for your organization.
Sign up for the 3Degrees’ quarterly transportation market report to stay abreast of the latest developments in local CFS programs, and strategies for transportation decarbonization, as well as inform you of the ever-changing regulations that are shaping the industry.
Benefits Beyond Revenue
While the ability to create additional revenue is an influential motivator, the advantages of adapting clean fuel programs to your transit agency extend far beyond monetary benefits. Transit agencies also enjoy:
- Improved brand image: By demonstrating a commitment to the environment your agency is in the best position to boost public perception and foster community support.
- Reduced operational costs: Zero-emission buses have proven to result in lower operating costs in the long term for transit agencies.
- Alignment with broader goals: Sustainability efforts align with broader agency goals related to environmental responsibility, social equity and economic efficiency.
The opportunity to take action
Clean fuel standards programs provide an opportunity for transit agencies to not only rapidly transition to ZEVs but also reduce their impact on the environment, lower operational costs and even earn additional revenue. There is now a clear path for agencies to take to get started.
At 3Degrees, we are committed to supporting transit agencies on their journey toward more sustainable transportation. We have worked hand in hand with fleets across North America, and understand that the process of getting started can often be daunting, which is why we offer complimentary evaluations to help navigate any confusion and determine what opportunities are currently available.
If you’re interested in exploring clean fuel opportunities, transitioning to zero-emission transit, or learning more about the benefits of clean fuel standards, we invite you to reach out to us here. Together, we can create a more sustainable and prosperous future for public transportation.