It’s been six years since Volkswagen and the EPA agreed to a multiple-part Clean Air Act violation settlement. This updated article explores how Southeastern states have put these funds to use.

Guest Blog | April 21, 2022 | Clean Transportation, Electric Vehicles, Energy Policy

This blog post was written by SACE’s former Electric Transportation Equity Manager, Patrick King.

In 2016, Volkswagen and the EPA agreed to a multiple-part settlement due to the illegal installation of ‘defeat devices’ on VW’s diesel engines that violated the Clean Air Act. The settlement established two programs that offer emissions reduction opportunities for states:

1. A Zero Emissions Investment Commitment of $2 billion over ten years to increase the use of zero-emissions vehicle (ZEV) technology in the U.S. The program is being administered by Electrify America, a newly formed subsidiary of Volkswagen Group of America (VW).
   
2. An Environmental Mitigation Trust Agreement (EMT) of $2.7 billion designed to reduce nitrogen oxide (NOx) emissions where cheating VW diesel vehicles operated. Funds are allocated among beneficiaries (states, tribes, and certain territories) based on the number of impacted VW vehicles in their jurisdictions.

Under the EMT, states were required to designate a lead agency to prepare and submit to the Trustee (Volkswagen via Wilmington Trust) a Mitigation Plan to receive funds. Eligible projects include:

• Replacing or repowering older diesel engines (large trucks, buses, freight switchers, ferries/tugs, medium trucks, etc.) with new diesel, alternate fueled engines, or all-electric engines;
  
• Replacing diesel vehicles with new, alternate-fueled, or all-electric vehicles;
• Installing charging infrastructure for light-duty electric vehicles (up to 15% of the funds can be spent on this).

Alabama

Since 2020, Alabama’s Department of Economic and Community Affairs (ADECA) has awarded over $15 million to various alternative fuel projects aimed at reducing NOx emissions in the transportation sector. To date, projects for various fuel types have received grant funding in 3 separate rounds of distribution. In June 2021, $4.1 million was awarded to help finance the installation of electric vehicle charging stations at fueling stations near interstates and other major highways and corridors in central and north Alabama. According to the state’s Electric Vehicle Infrastructure Plan, the I-20 corridor from the Alabama-Georgia border to Tuscaloosa was designated as a priority “because of its link to Atlanta and because that area of Alabama, which includes the populous Jefferson County metro area, has the highest concentration of electric vehicles in the state.” You can read more about the awarded grants here. 

Funds remaining: $10M

Florida

Receiving the largest share of VW Settlement Funds in our region, Florida’s Department of Environmental Protection has diligently used funding for many projects in the state. Following the funding distribution listed in the state’s Beneficiary Mitigation Plan (BMP):

• 70% was put towards electrifying buses
• 15% was used as the state’s match to EPA funding for the DERA State Grant Program, 
• 15%, the maximum allowed, went to light-duty charging infrastructure for EVs.

To date, the department has awarded $136 million to various projects. The agency recently announced a Notice of Funding Availability (NOFA) for $59 million to aid public transit agencies in replacing eligible diesel buses with electric. You can read more about other ongoing initiatives here.

Funds remaining: $30M

Georgia

100% of VW Funds in Georgia were allocated to transitioning transit buses to diesel and electric vehicles in the Atlanta metro region. Thus far, The Governor’s Office of Planning and Budget, the lead agency charged with developing Georgia’s Plan and allocating funds, has awarded $38 million in replacing diesel-fueled buses with newer fossil fuel models, and has deployed 75 of these vehicles. Reporting from 2020 reveals that the agency has yet to order any all-electric vehicles for its terminal-to-terminal transit buses serving the Hartsfield-Jackson Atlanta International Airport project. The state’s latest (2020) semiannual report can be found here.

Funds Remaining: $24.7M

North Carolina

Having arguably the most varied BMP in the Southeast, North Carolina’s plan was initially planned to be implemented in 3 phases but has been restructured into 2 phases, led by its Department of Environmental Quality (DEQ). Phase 1 awarded $30 million to various projects across the state, including school and transit bus replacement, clean heavy-duty equipment, and Zero Emission Vehicle infrastructure programs. Phase 2 invests the remaining $67 million in programs to reduce pollution impacts through incentivizing ZEVs and outreach to historically under-resourced counties. Find out more about the state’s current funding opportunities here.

Funds Remaining: $14M

South Carolina

In 2019, South Carolina’s Department of Insurance was designated as the lead agency to distribute its VW settlement funds. In 2 separate rounds, the agency awarded all of the state’s allocated funds toward school and transit bus replacement programs. The largest awardee was the Department of Education which put the funds towards purchasing propane school buses and fueling stations. About 6% of allocated funds went towards purchasing electric transit buses and charging infrastructure. You can find the state’s BMP and information about the funding awards here.

Funds Remaining: $0

Tennessee

Tennesse’s finalized BMP was released in late September 2018 and outlined how the state would prioritize environmental mitigation projects. Led by the state’s Department of Environment and Conservation, the agency will seek project solicitation in the following order:

• Class 4-8 School Buses;
• Class 4-8 Shuttle and Transit Buses;
• Class 4-7 Local Freight Trucks, Class 8 Local Freight Trucks, and Port Drayage Trucks;
• Light Duty ZEV Supply Equipment.

Project solicitation will continue until all eligible project funds are exhausted and so far almost $29 million in funding has been awarded. Most recently $5 million went towards building out the state DCFC Fast Charging network. The BMP will continue to be updated to reflect changes in funding allocations and other modifications. You can find more information on the state’s BMP here and sign up for periodic updates here.

Funds Remaining: $17M

The Southern Alliance for Clean Energy has and continues to advocate that VW Settlement funds be allocated for all-electric transportation solutions as well as maximizing the 15% allowable carve-out for electric vehicle charging infrastructure. States in the Southeast also have the ability to pair their remaining funds with incoming federal dollars from programs, such as the National Electric Vehicle Infrastructure (NEVI) Formula Program within the Bipartisan Infrastructure Law (BIL) and maximize their efforts. Programs like NEVI and others that carve out funding for electric transportation present states with an opportunity to proactively build out an infrastructure network that will help facilitate the needed transition to electrification.

Electrify the South​ is a Southern Alliance for Clean Energy program that leverages research, advocacy, and outreach to promote renewable energy and accelerate ​the ​equitable ​transition to ​electric transportation throughout the Southeast. Visit ElectrifytheSouth.org to learn more and connect with us.