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August 17, 2020   |   Diesel Technology Forum

Policy Insider

North Carolina’s $92M VW Settlement Spending Plan Delivers More Clean Air for the Dollar While Leading the Nation in Plan Performance and Benefits Analysis

North Carolina should be the standard for transparency in detailed and accurate accounting along with an “all technology on deck” eligibility approach to its first round of VW Environmental Mitigation Trust spending.

To mitigate the excess air pollution from Volkswagen non-compliant vehicles, as part of a national $2.9 billion settlement, North Carolina received $92 million in 2018. Thanks to North Carolina Department of Environmental Quality’s (NCDEQ) recent assessment of its first round of VW Environmental Mitigation Trust spending, now we know how the funds have been allocated and the results expected. This report should echo nationally well beyond the Tarheel state’s borders as their plan maximizes clean air benefits for the award dollar, thanks to practical eligibility criteria, plan transparency and accounting of benefits.

First, North Carolina takes an “all-technology on deck” approach for project eligibility to maximize air quality benefits, and provide wide latitude for truck, bus and equipment owners to choose whichever fuel and technology type best fits their needs for replacing older and higher emitting models. All technology types funded generate benefits, but based on the NCDEQ analysis, diesel options are delivering the most benefits to communities across North Carolina:  70 percent of all NOx reduction in North Carolina’s VW settlement spending decisions were provided by new diesel options.

Projects by Fuel Type

The state’s plan disclosures lead the nation in transparency when it comes to detailed benefits analysis and it provides accurate accounting of the estimated annual NOx reductions of each project funded. 

Projects by NOx Reduction

Thanks to the detailed and consistent information provided, it is also possible to determine the most cost effective and least effective technology types.  That is to say, how much NOx can be reduced for a dollar’s investment in VW Trust funds by each technology type? Where a zero-emission option is available, the details of the trust allowed states to provide higher funding allocations towards that technology.

As the chart below indicates, the most cost-effective investments include those that replace older diesel buses and trucks with new diesel options. The least cost effective are replacing older school buses with all-electric solutions. For almost $81,000 invested in North Carolina’s VW Trust, 2.6 tons of NOx emissions will be eliminated by replacing an older diesel truck with a new diesel option. By comparison, it takes $5 million to $9 million to reduce the same one ton of NOx emissions by replacing an older school bus with an all-electric option.


Tons NOx Reduced

Cost Effectiveness Ranking

Investment to Reduce 1 Ton NOx

6 Diesel Trucks




12 Diesel Trucks




1 Vocational Truck




1 Diesel Transit Bus




1 Vocational Truck




1 Electric School Bus


Bottom 5


1 Electric School Bus


Bottom 5


1 Electric School Bus


Bottom 5


1 Electric School Bus


Bottom 5


1 Electric School Bus


Bottom 5


 (SOURCE: Analysis of data provided by NCDEQ)

While states have access to these funds to improve air quality, the requirements of the trust do not require the states to provide a detailed or consistent accounting of the funds it spends on individual projects and the emission reductions generated by each project. Some states report the number of vehicles or equipment replaced but with few if any details on the technology type purchased or the anticipated NOx reduction from each. Without a detailed and transparent accounting of the spending decisions and anticipated emission reductions, estimating the benefits provided by each project across all 50 states becomes difficult. 

As states around the country continue to invest VW Trust funds in projects, North Carolina should be the standard for transparency in detailed and accurate accounting along with an “all technology on deck” eligibility approach to its program. In doing so, communities benefiting from the program can gain valuable insights into decision making and identifying  those projects that generate the greatest benefits and those that are generating the least.





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Allen Schaeffer
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