Home E Diesel Retrofit E Funding


Because diesel engines can last up to 20 to 30 years or longer, it will take many years before the bulk of the existing diesel engines may be retired and be replaced with diesel engines that meet more stringent emissions standards. Therefore, it is important to provide incentives for these in-use engines to be retrofitted with emission control devices or be replaced. There are many available sources to fund diesel retrofit projects. Funding sources include federal, state and local programs.

Below is a list of major potential retrofit funding sources currently available in the U.S. and Canada. (Note: This list will be updated periodically.)

Federal Funding


As part of the Energy Policy Act of 2005, the Diesel Emissions Reduction Act (DERA) authorized funding of up to $200 million annually in the U.S. EPA’s budget for FY 2007 through FY 2011 to help reduce emissions from the existing diesel fleet. Congress appropriated funds for the first time under this program in FY 2008 in the amount of $49.2 million. In addition, $300 million was appropriated under the American Recovery and Reinvestment Recovery Act of 2009, $120 million was appropriated for FY 2009-2010, and $49.9 million for FY 2011. As stipulated under DERA, 70% of DERA funds are to be used for national competitive grants, with the remaining 30% allocated to the states.

Under DERA, EPA has developed four programs:

  • The National Clean Diesel Funding Assistance Program awards competitive grants to fund projects that implement EPA- or ARB-verified and certified diesel emission reduction technologies.
  • The National Clean Diesel Emerging Technologies Program awards competitive grants for projects that spur innovation in reducing diesel emissions through the use, development, and commercialization of emerging technologies. Up to 10% of the national funds may be spent on emerging technologies.
  • The SmartWay Clean Diesel Finance Program issues competitive grants to establish national low-cost revolving loans or other innovative financing programs that help fleets reduce diesel emissions.
  • The State Clean Diesel Grant Program allocates funds to participating states to implement grant and loan programs for clean diesel projects. Base funding is distributed to states using a specific formula based on participation and incentive funding is available for any states that match their base funding.

On January 4, 2011, President Obama signed legislation reauthorizing DERA grants to eligible entities for projects that reduce emissions from existing diesel engines. The bill authorizes up to $100 million annually for FY 2012 through FY 2016 and allows for new types of funding mechanisms. EPA received $30 million in DERA funding for FY 2012. EPA’s FY 2013 budget proposal includes $15 million for DERA.

For more information about EPA DERA funding, go to: epa.gov/cleandiesel/grantfund.htm.

Federal Aviation Administration

The Voluntary Airport Low Emissions (VALE) Program is a national program to reduce ground emissions at commercial airports located in designated air quality nonattainment and maintenance areas. The VALE Program allows airport sponsors to use the Airport Improvement Program (AIP) and Passenger Facility Charges (PFCs) to finance low emission vehicles, refueling and recharging stations, gate electrification, and other airport air quality improvements. For more information, go to: www.faa.gov/airports/environmental/vale/.

Federal Highway Administration

The Congestion Mitigation and Air Quality Improvement Program (CMAQ) provides funding to state departments of transportation, metropolitan planning organizations, and transit agencies for surface transportation and other related projects that improve air quality and reduce congestion. Funding is available for areas that do not meet the National Ambient Air Quality Standards (NAAQS) as well as former nonattainment areas that are now in compliance (maintenance areas). Priority is given to diesel retrofits and other cost-effective emission reduction and congestion mitigation activities that provide air quality benefits. For more information, go to: www.fhwa.dot.gov/environment/air_quality/cmaq/.

U.S. Department of Energy

DOE’s Clean Cities Program promotes alternative fuels and vehicles, fuel blends, fuel economy, hybrid vehicles, and idle-reduction. In addition to financial assistance for projects, Clean Cities maintains a database of state and federal assistance. For funding opportunities for Clean Cities projects, go to: www1.eere.energy.gov/cleancities/financial_opps.html.

Supplemental Environmental Projects

U.S. EPA enforcement settlements under the Clean Air Act (called “Supplemental Environmental Projects”) are an important source of funding for diesel retrofits. On June 30, 2008, former President Bush signed into law legislation passed by Congress that allows EPA to again use funds associated with SEPs for diesel emission reduction projects.


Proposition 1B Goods Movement Emission Reduction Program

The $1 billion Proposition 1B Goods Movement Emission Reduction Program is a partnership between ARB and local agencies (like air districts and seaports) to reduce air pollution from freight movement along California’s trade corridors. Local agencies apply to ARB for funding, then those agencies offer financial incentives to owners of equipment used in freight movement to upgrade to cleaner technologies (primarily retrofit and replacement). Projects funded under this program must achieve early or extra emission reductions not otherwise required by law or regulation. Proposition 1B also includes $200 million for retrofitting and replacing school buses.

Carl Moyer Memorial Air Quality Standards Attainment Program

The Carl Moyer Memorial Air Quality Standards Attainment Program (Carl Moyer Program) provides funding opportunities for the incremental cost of cleaner than required trucks, engines, and equipment (through repowers, replacements, retrofits). The Carl Moyer Program is implemented through the cooperative efforts of the ARB and local California air pollution control/air quality management districts. Every year, ARB distributes State funds to participating districts. The districts follow ARB Carl Moyer Program Guidelines to select, fund, and monitor specific clean air projects in their areas. The Carl Moyer Program is funded at $141 million per year through 2015. For more information on the Carl Moyer Program, go to: www.arb.ca.gov/msprog/moyer/moyer.htm.

Sacramento Emergency Clean Air and Transportation (SECAT)

  • Created a partnership between local government, clean air professionals, local businesses, & manufacturers
  • Pays to retrofit existing engines with newer, cleaner-burning ones, or contribute to the cost of a newer, cleaner vehicle.
  • Funded through state budget and CMAQ
  • www.4secat.net

British Columbia

On June 6, 2007, the British Columbia government introduced measures requiring all older commercial diesel trucks to install an emission control device (diesel oxidation catalyst or equivalent) by 2009 to reduce diesel emissions in the province. The regulation affects MY 1989-1993 commercial and government-owned trucks and weighing 5,000 kilograms (11,000 lbs) or more. Recreational vehicles, construction equipment, and unlicensed nonroad vehicles are not affected by this regulation. For more information, go to: www2.news.gov.bc.ca/news_releases_2005-2009/2007ENV0070-000749.htm, or contact BC’s Environmental Quality Branch at (250) 387-3205 or eqb@victoria1.gov.bc.ca.

On January 23, 2008, British Columbia’s Environment Minister Barry Penner announced a $1.1-million investment by the British Columbia government to reduce emissions from all diesel school buses in the province. There are an estimated 1,200 district-owned school buses in British Columbia. Of these, 345 have already been retrofitted with DOCs through an Environment Canada program. The B.C. government’s program will complete the retrofitting of the remaining buses. The school bus retrofit program is expected to be completed by the end of 2009. For more information on the school bus announcement, go to: www.env.gov.bc.ca/pac/airquality.htm.


In July 2007, Connecticut passed a bill that includes funds aimed at retrofitting every school bus in the state. The bill provides $10 million from the state surplus over a two-year period for the retrofit of model year 1994 to 2006 school buses. Summary of the Connecticut Clean School Bus Program: 1) retrofits each bus with either a Level 1, 2, or 3 device; 2) MY 2003 to 2006 school buses will be equipped with a Level 3 device if the bus is capable of operating with a Level 3 device; 3) provides a closed crankcase filtration system on every school bus that will be retrofitted; and 4) requires the Connecticut DEP to establish a “School Bus Emissions Reduction Program” to provide grants to municipalities and school boards to reimburse them for the retrofits, and assist municipalities and school boards with implementation. Invitation to school districts to apply for FY 2009 funds was issued at the end of November 2008. For more information, go to: www.ct.gov/dep/cwp/view.asp?a=2684&q=396142&depNav_GID=1619.


On May 14, 2008, Georgia Governor Sonny Perdue (R) signed the FY 2009 state budget, which included $250,000 for school bus retrofit projects. The funds will be available to financially constrained school systems in the Atlanta area’s 20 nonattainment counties. A 20% match in cash or in-kind services is required to access the CMAQ funds. For more information about this funding opportunity, go to: adoptabus.org, or contact Stacy Allman (404/363-7033) or William Cook (404/363-7031) at the Georgia Environmental Protection Division.


On November 17, 2008, the Maryland State Highway Administration (SHA) settled a suit filed by Environmental Defense Fund over construction of the Intercounty Connector by agreeing to public health benefits, including the retrofit of school buses, to offset the impacts of air pollution generated by the highway. Under the settlement, SHA will provide up to $1 million to retrofit diesel school buses in Montgomery County with emission control devices and will work with the county school system to develop a program to reduce idling. For more information on this settlement, go to: www.marylandroads.com/information/newsrel/oc/newstxt.asp?filename=08_11_17.76.z.


On June 12, 2008, Massachusetts Governor Deval Patrick (D) announced the launch of MassCleanDiesel, the nation’s first fully funded statewide program designed to reduce air pollution from school buses. All eligible diesel-powered school buses will be retrofitted with emission control devices at no expense to bus owners. The retrofit devices will be installed using $16.5 million in state and federal funds. This plan to retrofit about 5,500 school buses in the state by 2010 is part of a deal made nearly two years ago between the state Executive Office of Transportation and Public Works and the Department of Environmental Protection to offset air pollution from the Big Dig. School buses will receive: 1) either a DPF, a FTF, or a DOC, and 2) a closed crankcase ventilation (CCV) filter. For more information on the MassCleanDiesel program, go to: www.mass.gov/eea/agencies/massdep/air/grants/masscleandiesel-clean-markets-program-grants.html.

New Jersey

On September 7, 2005, the New Jersey Department of Environmental Protection (NJDEP) enacted the Diesel Risk Reduction Law. The law requires the NJDEP to promulgate rules designating required reductions in particulate matter emissions and choices of Best Available Retrofit Technology (BART) available to owners of regulated vehicles and regulated equipment to meet the required reduction at a reasonable cost. On December 18, 2006, the NJDEP published the proposed rules.

  • Goal of reducing PM by 20% from on-road and off-road vehicles across the state over 10 years.
  • Mandatory PM retrofit program funded by state corporate business tax (10 years/$160 million in state funding).
  • Targets commercial buses, refuse haulers, school buses, diesel trucks with “best available retrofit technology” (to be determined by DEP).
  • State/local/public school contracts must use off-road equipment utilizing best available retrofit technology.
  • Mandates use of ULSD in both on-road and off-road vehicles starting on June 1, 2006.
  • Rule will require installation of closed crankcase ventilation systems or tailpipe retrofit devices on school buses, solid waste collection vehicles, publicly-owned commercial buses, privately-owned commercial buses, and publicly-owned on-road vehicles and off-road equipment.

For more information on NJ’s clean diesel program, go to: www.stopthesoot.org.

In August 2008, the NJDEP created the NJ Clean Construction Program, which is a program to pay for the cost and installation of pollution control devices on construction vehicles used in New Jersey. NJ’s Clean Construction Program will fund retrofits on construction vehicles that are privately or publicly owned and used on projects funded by the New Jersey Environmental Infrastructure Trust (NJEIT). NJEIT typically funds construction projects such as water lines and wastewater treatment facilities. For more information on this program, go to: www.stopthesoot.org/clean2.html.

New York

New York City:

  • NYC Local Law 77 mandates use of construction equipment with ULSD and best available retrofit technology for city projects.
  • NYC mandates use of ULSD and best available retrofit technology for all city-owned diesel vehicles (phase-in started in 2007), contract school buses (50% by September 2006; 100% by September 2007), contract refuse haulers (March 2006), contract sight-seeing buses (January 2007).
  • Link to legislative language: www.nyc.gov/html/dep/pdf/local_law_77.pdf
  • Handbook for understanding Local Law 77: www.nyc.gov/html/ddc/downloads/pdf/lowsulfur.pdf

Metropolitan New York City:

  • New York City area counties (Nassau, Putnam, Rockland, Suffolk, and Westchester) adopted New York Metropolitan Air Quality Initiative on October 12, 2006.
  • Agreement to retrofit, retire, and replace diesel engines; create cleaner fleets of municipal vehicles, adopt cleaner fuels, and invest in pollution reduction technologies.

NY State retrofit legislation signed by Gov. Pataki on August 16, 2006; public hearings held at end of November 2008.

  • Requires use of ULSD and “best available retrofit technology” on all state-owned, operated, or leased on-road or off-road heavy-duty vehicles.
  • Implementation: 33% by 12/31/2008, 66% by 12/31/2009, 100% by 12/31/2010.
  • For more information, go to: www.dec.ny.gov/regulations/47297.html.

North Carolina

The NC Department of Environment and Natural Resources, Division of Air Quality (DAQ), provides incentive funding for projects that reduce diesel emissions from on- and/or off-road vehicles. For more information, go to: daq.state.nc.us/motor/ms_grants/.


The Diesel Emission Reduction Grant Program is currently administered jointly by the Ohio Department of Transportation (public sector projects) and the Ohio Environmental Protection Agency (private sector projects). For more information, go to: www.epa.ohio.gov/oee/EnvironmentalEducation.aspx.

The Ohio EPA Clean Diesel School Bus Fund Retrofit Program offers grants up to $300,000 to retrofit diesel school buses with pollution control equipment and idle reduction equipment. For more information, go to: www.epa.ohio.gov/oeef/schoolbus.aspx.


In August 2007, Oregon signed a bill (HB 2172) that provides incentives for replacing and retrofitting diesel engines in Oregon’s school buses, trucks, construction equipment, and farm vehicles. Specifically, the Clean Diesel bill will provide $9 million in grants, loans, and tax credits to retrofit, rebuild, or replace older diesel engines, and to reduce diesel idling. The incentives will be available to all private and public entities that operate diesel engines. For more information on Oregon’s Clean Diesel Initiative, go to: www.deq.state.or.us/aq/diesel/initiative.htm.


On June 19, 2007, the Clean Air Task Force, Clean Water Action, the Group Against Smog and Pollution, and the Heinz Endowments announced the establishment of the Pittsburgh Healthy School Bus Fund. The rebate program provides funds to retrofit pre-2007 engine buses serving the Pittsburgh school district with both a DPF and a CCV system. For more information on the program, go to: www.DieselRetrofitRebate.org.

Rhode Island

In July 2007, Rhode Island passed a bill aimed at retrofitting every school bus in the state. The bill is similar to the school bus retrofit bill in Connecticut (see Connecticut above).  Known as the 2007 Diesel Emissions Reduction Act, the bill says, by 2010, all Rhode Island school buses will be equipped with advanced pollution control technology to help reduce children’s exposure to diesel fumes.

In April 2009, the RI Department of Environmental Management received $1.73 million in American Recovery and Reinvestment Act funding through the U.S. EPA for the RI Clean Diesel Program: www.dem.ri.gov/news/2009/pr/0415091.htm.

2010 Diesel Emissions Reduction Act – Requires heavy-duty vehicles contracted on behalf of the state with federal monies to be equipped with pollution control devices, reimbursable through project funds starting in 2013; adhere to the state anti-idling law, limiting idling to 5 munites; and be fueled with cleaner burning ultra-low sulfur diesel fuel (ULSD).


Texas Clean School Bus Program – The Texas Clean School Bus provides reimbursement for Texas school districts to install emission control devices on diesel school buses. For more information on the Texas Clean School Bus Program, go to: www.texascleanschoolbus.org.

Texas Emissions Reduction Plan (TERP) – TERP provides significant incentive funds for NOx emission reductions from Dallas-Fort Worth, Houston-Galveston, and other east Texas ozone non-attainment areas. TERP is funded from various vehicle/equipment registration surcharges. Under TERP, New Technology Research & Development grants are available to help commercialize technologies (e.g., costs of demonstration programs or retrofit verification efforts). For more information on TERP, go to: www.tceq.state.tx.us/implementation/air/terp/.


In 2007, the Utah Division of Air Quality started the Utah Clean School Bus Project in conjunction with the Utah Office of Education, local school districts, county and municipal governments, as well as community and non-profit organizations. For more information, go to: www.cleandiesel.utah.gov/schoolbusretrofit.html.


Since 2003, the state of Washington has operated a statewide, state-funded, voluntary school bus retrofit program. For more information, go to: www.pscleanair.org/programs/dieselsolutions/buses/default.aspx.


The Wisconsin Department of Natural Resources administers several clean diesel grant programs. For more information, go to: dnr.wi.gov/Aid/CleanDiesel.html.