Funds are now available from the Volkswagen Clean Air Act Civil Settlement for ports and other government-owned transportation operators to significantly reduce NOx emissions and other pollutants by replacing outdated switching locomotives.
Some $2.9 billion is being distributed by the VW Mitigation Fund, and the money couldn’t come at a more welcome time.
A recent American Association of Port Authorities survey indicated that 80% of ports are seeking better rail access. At the same time, public agencies are looking for ways to reduce emissions from major sources—including rail operations. According to 67% of the responding ports, the biggest obstacle to getting rail projects started is “financing and financing options.”
Under the terms of the settlement, older locomotives must be rebuilt to Tier 4 standards or scrapped to be eligible for mitigation funding. Public agencies can apply for up to 100% of the project cost. The funding amounts are lower for private companies, but they can also apply for the funds.
The environmental benefits of replacing older diesel engines with the latest clean diesel models are well documented. According to a report co-authored by the Diesel Technology Forum (DTF) and Environmental Defense Fund (EDF), NOx emissions can be cut 95%—or 9 tons per year—by each Tier 4-compliant switching locomotive that replaces an older unit.
However, the estimated cost for such replacements can be prohibitive for many public agencies. The clean diesel report indicates that upgrading a switching locomotive can cost as much as $2.6 million.
In our experience, the average cost of acquiring genset locomotives is lower than the EDF report’s estimates, and in the range of $1.2 to $1.5 million. Nevertheless, the cost of acquiring gensets is still a significant barrier for many ports and other agencies, making the availability of VW Mitigation Funds a solid option.
Eligible freight locomotives that qualify for up to 100% funding for replacement include any pre-Tier 4 switcher that operates 1,000 hours, or more, annually. They can be replaced by genset locomotives, which are equipped with multiple engines that can turn on and off to reduce emissions and save fuel based on the load being moved.
Locomotives powered by new diesel engines running on alternate fuels, or all-electric switchers, are also eligible for the funds. The replacements can also be rebuilt locomotives that meet current Tier 4 standards.
Non-government owned freight switchers are eligible for up to 40% funding when new Tier 4-compliant diesels, gensets, or alternate-fuel engines are installed.
The time to get started on the replacement of older locomotives is now. The VW Mitigation Funds are significant but limited, and the deadline for applications varies by state, with some states already establishing deadlines as early as Aug. 1, 2018. The funds are distributed to and administered by the states, as well as the District of Columbia and Puerto Rico, so research should be done at that level to determine funds availability and specific procedures. Some manufacturers and suppliers of qualified locomotives are also ready to provide assistance.