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April 14, 2020   |   Diesel Technology Forum

Policy Insider

COVID-19 Stimulus Package Can Help Manufacturing and Clean Air

Congress is very likely to consider other stimulus measures to keep the economy moving in the longer term, to include a federal infrastructure spending plan to boost recovery and address critical needs.


As many of us head into the second month of “shelter in place” orders due to the Coronavirus pandemic, Congress has responded with a series of stimulus measures designed to help businesses stay afloat, pay workers and provide financial assistance to those that are out of work through the CARES Act. According to recent reports, the Small Business Administration that manages the $350 billion loan program, has received applications totaling 70 percent of appropriated funds as more than 16 million U.S. workers filed for unemployment benefits.

While the CARES Act is designed to respond to the immediacy of the problem, Congress is very likely to consider other stimulus measures to keep the economy moving in the longer term, to include a federal infrastructure spending plan to boost recovery and address critical needs. Beyond infrastructure, Members of Congress are rumored to consider a boost in spending for the Diesel Emission Reduction Act (DERA) that provides the owners of older vehicles and equipment with incentive funds to replace or repower older equipment with new cleaner models. Boosting funding for the program in a time of national economic crisis is nothing new. In 2009, Congress through the American Recovery and Reinvestment Act (ARRA) provided $300 million in additional DERA funding – three times the authorized level of spending – to help replace over 17,000 vehicles and equipment to generate more than 102,000 tons of NOx reduction. The DERA program is one of the most cost-effective clean air programs, and additional spending will prove beneficial to truck, engine and equipment OEMs with additional demand to spark shuttered assembly facilities and employment.

Congress may also consider suspending the federal excise tax on new truck and trailer purchases. Commercial truck owners looking to replace older equipment today pay a 12 percent federal tax on the value of a new vehicle and the tax is estimated to add an additional $22,000 on top of the purchase price of trucks and trailers. The tax is a leading variable that explains the relatively slow turnover in the nation’s trucking fleet, particularly among independent owner-operators. A suspension of the tax may help spark new truck sales providing relief to truck makers and dealers while generating clean air benefits. According to research commissioned by DTF, replacing a single older Class 8 truck with a new diesel model sitting on a dealer lot today, can reduce NOx emissions by 2.3 tons and greenhouse gas emissions by over nine tons. As just over half of the nation’s commercial vehicle fleet is of an older generation of technology, and suspension of the FET can help get new cleaner trucks in service helping to deliver for the economy and reduce emissions in the communities where they operate.

A significant investment in federal infrastructure spending programs may be beneficial to truck, engine and equipment makers as well. More funds for infrastructure projects boosts demand for equipment to complete these jobs, commercial vehicles to deliver materials and well-trained, well paid mechanics to keep this equipment in operation. The U.S. Department of Labor estimates that there are over 250,000 diesel mechanics across the country earning wages that are above the national average. 

NEW DERA Infographic

 



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Key Contact

Ezra Finkin
Director, Policy
efinkin@dieselforum.org
301-668-7230

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