Volkswagen’s $14.7-billion U.S. settlement of its diesel emissions cheating scandal will translate into a financial windfall for green trucking.
About $2.7 billion of the settlement with federal and California regulators is earmarked for an environmental remediation fund largely focused on replacing older, dirtier diesel trucks, buses and stationary equipment.
In the late June settlement, VW also agreed to spend $10 billion to buy back nearly 500,000 diesel vehicles it rigged to illegally pass federal emissions tests. An additional $2-billion fund will promote the sale of zero-emissions vehicles.
“This money will have some big benefits,” said Bill Van Amburg, senior vice president at Calstart, a Pasadena, Calif., organization that promotes green truck technologies. “If you clean up just one big truck, you’re offsetting the pollution created by a lot of smaller cars.”
The settlement is crafted to offset the smog-forming oxides of nitrogen, or NOx, emissions from the 2.0-liter diesel vehicles sold by Volkswagen during the 2009 to 2015 model years, according to Gina McCarthy, director of the U.S. Environmental Protection Agency. Emissions from the cars were as much as 40 times above legal limits. The emissions are linked to lung and heart disease and other health problems, regulators said.
The $2.7 billion in remediation funds will be spread among all 50 states, the U.S. territories and Indian tribal lands. The disbursement will be based largely on the number of diesels sold in each jurisdiction.
California will receive the largest cut, including $380 million to replace older high-polluting heavy-duty trucks and equipment with zero- and near-zero-emissions trucks and equipment.
Another $800 million will provide financial incentives and other programs to encourage the use of zero-emission vehicles, according to the California Air Resources Board.
Worried that states will divert the funds to uses that don’t effectively reduce pollution, government regulators have crafted a specific “checklist” for how each jurisdiction can spend the money, an EPA spokesperson told Trucks.com.
The funds can be used for 10 types of expenditures. Ports will get access to money to replace stationary diesel power units – such as generators and cargo cranes – with cleaner equipment.
The ports in Long Beach and Los Angeles – which make up the nation’s largest port facility – are expected to be big recipients. Both the California Air Resources Board, or CARB, and Calstart have pushed for the replacement of older trucks used at the ports with newer, cleaner vehicles.
Modern trucks are significantly cleaner than those of the 1990s, Van Amburg said.
A 2007 EPA mandate introduced particulate traps to block emissions. Trucks meeting regulations established in 2010 produce about 90 percent less NOx than vehicles built in the 1990s.
Trucks generate about 40 percent of the NOx produced in the U.S. Any upgrades could have a significant impact, regulators said.
Other transport vehicles also will use the VW money, said Stanley Young, a CARB spokesman.
“The early thinking is that we will start by cleaning up school buses,” Young said, with an emphasis “on small school districts in rural areas that simply don’t have the funds to upgrade their buses. This will help get the kids into much cleaner buses.”
Additional funds might be made available to truck fleets and even individual owner-operators, Young said.
CARB will be open to requests from a variety of potential recipients. It will “score them and give the money out to those who made the best case,” Young said.
As it did for California, it will likely take time for the various states to work out plans to use the remediation funds.
It will be months before the money becomes available. A 30-day period for public comment is now underway. The settlement requires final approval from U.S. District Court Judge Charles Breyer. Observers don’t expect the cash to begin flowing until early autumn, at the earliest.
Meanwhile, California officials and federal authorities – including the EPA, the Federal Trade Commission, the U.S. Justice Department and CARB – continue to negotiate a second settlement with Volkswagen to cover about 85,000 VW, Audi and Porsche vehicles equipped with a 3.0-liter diesel engine that was rigged to pass emission tests.
Although the negotiations are covered by a court-issued gag order, observers expect the eventual deal to contain additional funds for clean-air programs.