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California Alternative Fuels Funding Offers Mixed Message for Natural Gas

After spending millions to promote alternative transportation fuels for the past decade, a California Energy Commission (CEC) staff plan released Wednesday reduced funding allocations for natural gas, but it still touted heavy duty applications when renewable natural gas (RNG) is the preferred fuel.

Mandated and refined by various state laws over the past 10 years, the Alternative and Renewable Fuel and Vehicle Technology Program (ARFVTP) administered by the CEC has distributed $757 million to 600 projects for a broad spectrum of fuels and technologies.

The updated plan calls for providing $95.2 million in funding for 2018-19, but it includes no funds for natural gas vehicles (NGV) or NGV-fueling infrastructure, which in the past had collectively received nearly $100 million.

However, RNG, aka biomethane, along with ethanol, biodiesel and others are to receive $25 million to produce low-carbon fuels. It historically collected $60.9 million in CEC grants.*

Funds are provided to  various public and private-sector entities, including municipalities, universities, private companies and other organizations to advance alternative fuel technologies.

In the past 10 years the CEC has allocated $132.2 million for 65 hydrogen fueling stations and $79.9 million for more than 7,600 electric vehicle (EV) charging stations, compared to $21.9 million for 64 NGV fueling stations. The updated funding plan calls for $20 million each for EV and hydrogen fueling infrastructure while nothing is allocated for NGVs.

CEC staff noted that there are $4.4 million in NGV infrastructure funds carried over from the fiscal year 2016-17 and 2017-18 budgets that may be used in 2018-19.

In addition, "future projects” to pair RNG infrastructure with NGVs using low nitrogen oxide (NOx) engines “may be funded from another source,” said CEC project manager and principal report author Jacob Orenberg.

"Given the low demand for funding in the prior natural gas infrastructure solicitation and the high level of unencumbered funds, CEC staff does not propose additional funding for natural gas fueling," he said.

Funding Incentives for fleet operators to purchase NGVs were not included for the upcoming fiscal year because of a combination of factors, including narrowing fuel cost differences between compressed natural gas and diesel, as well as the availability of funding for low-NOx NGV trucks and buses from the California Air Resources Board (CARB).

"Additional funding for NGV purchases could return in fiscal year 2019-20," a CEC spokesperson said. "The Natural Gas Vehicle Incentive Project is still providing incentives using ARFVTP funds, and additionally $19.7 million is still available from the past two fiscal years for NGV incentives."

Low-NOx NGVs are eligible for incentive funding from the $188.8 million at CARB under its Clean Truck and Bus Voucher project. There are also incentive funds for gas through the Carl Moyer Memorial Air Quality Standards Attainment program administered by regional air pollution districts in the state.

*Correction: In the original article, it was incorrectly reported that renewable natural gas (RNG) fuel sources would receive $25 million total in state funding for 2018-19. In fact, RNG sources would share the funding with other alternative fuels. NGI regrets the error.

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