Investing in Greener Fleets During Tough Times
Eco-friendly fleets aren't all stalled, but they've shifted to a lower gear.
Oklahoma State University -- the institution so closely associated with alternative energy advocate T. Boone Pickens that its stadium bears his name -- is hoping to revolutionize Oklahomans’ fuel consumption with the opening of a new $1 million fueling station for compressed natural gas (CNG), which is cheaper and cleaner than gasoline and is in abundant domestic supply. The station will serve OSU’s 18 transit buses and 20 other CNG-powered vehicles, but it’s also open to the public in hopes of increasing citizens’ use of the alternative fuel. Eventually the university wants to convert another 100 vehicles. The effort won’t be cheap: Converting a light-duty, gas-powered vehicle to CNG can cost $10,000 to $12,000. Retrofitting a heavy-duty vehicle like a garbage truck could cost up to $50,000.
What’s happening at Oklahoma State isn’t the norm in the public sector right now. While states and cities across the country have experimented with a variety of vehicles powered by alternative fuels such as natural gas, propane, electricity and biofuels, governments now are putting the brakes on eco-friendly fleets. “Everybody, I think, is struggling with how to cover the cost of any kind of sustainable or green initiative they might have,” says Chris Hoffman, manager of transportation services at OSU and president of the National Conference of State Fleet Administrators. “There’s just no budget for it.”
The higher upfront costs of greener fleets can make them a tough sell even in a prosperous economy. Current fiscal straits have made governments even less likely to invest in higher-efficiency vehicles and the infrastructure necessary to support them. Still, a handful of cities are moving ahead with investments in greener fleets. Others are finding new, inexpensive ways to make their existing fleets more fuel efficient. At a time when every dollar counts, some cities see greener fleets as a practical way to trim the budget by cutting fuel costs; others see them as a waste of money.
During lean times, equipment replacement is one of the first expenditures that governments will cut or delay. For many places, that means the purchase of any vehicles -- much less those that run on alternative fuels -- is not an option. A survey last year by the International City/County Management Association found that fewer than half the responding local governments increased their purchase of fuel-efficient vehicles. About 24 percent purchased hybrid vehicles, but just 8.5 percent bought CNG vehicles, and only 5.3 percent installed electric vehicle charging stations.
There’s even less outside funding available for localities buying green vehicles, now that the American Recovery and Reinvestment Act has expired. And as Washington crafts its fiscal 2012 budget, local grants have been targeted in an effort to reduce the deficit. “The stimulus money put a lot of people over the top and gave them the wherewithal to do these things, and the stimulus money is gone now,” says Tom Johnson, founder and author of the 100 Best Fleets contest, published each year in Government Fleet magazine. Groups representing state and local governments are fighting to save the Energy Efficiency and Conservation Block Grant, the part of the stimulus bill that provided $3.2 billion in funding for projects that reduced fossil fuel emissions and improved vehicle efficiency, among other green initiatives.
While other state and federal grants exist for green fleets, cities are so strapped for cash they often can’t even afford the small investment they must make to be eligible, says Steve Riley, automotive director for the city of Coral Gables, Fla., and author of the annual Government Green Fleet contest, which recognizes localities that implement sustainable vehicles and policies. “It’s gotten to a point now that even if they can get the grant, they can’t afford the 20 percent match.”
Not every city is scaling back on the push for a greener fleet. In some places, fuel efficiency has become so ingrained in government budgeting that local residents see sustainability as a priority, regardless of the tough economy. In Culver City, Calif., for example, about 85 percent of the city’s medium- and heavy-duty vehicles run on CNG. The city spends $2 million less on annual fuel costs than it would with gas-powered vehicles (although that figure doesn’t include the $2.7 million in city funds for building and enhancing a CNG refueling station). According to the city’s fleet manager, Paul Condran, the investments in CNG infrastructure were actually a political boon, thanks to the accolades Culver City has won for being a leader in the green fleet movement.
Since 2007, Seattle has purchased a Toyota Prius hybrid whenever it needs a new consumer-grade vehicle, says Chris Wiley, the city’s acting fleet administration manager. That move has saved the city money on fuel and maintenance cost. “The Seattle constituency demands it,” Wiley says. “It’s a liberal town, very focused on the environment. It’s expected.”
Elsewhere, the movement is gaining steam because city leaders are successfully persuading voters that green vehicles are money savers, despite their initial costs. In Austin, Texas, more than half the fuel burned by city vehicles is alternative fuels, says Gerry Calk, the city’s fleet officer. “It’s expensive up front, but if you can invest in the infrastructure of a CNG station, that’s going to reduce your [fuel] price by 50 cents a gallon or a dollar a gallon,” Calk says. “Eventually it will pay for itself. You sometimes have to bite the bullet up front to realize those savings in the long run.”
Those who do wish to build green fleets must be able to determine exactly how much they’ll save by using alternative fuels and know when those savings will occur in order to have an effective program, says Culver City’s Condran. “You have to walk the walk and know the numbers.”
Even in places where the political will or budget doesn’t exist for investments in greener vehicles or new fueling stations, cities are finding inexpensive ways to green their fleets. Ensuring proper tire inflation, performing preventive maintenance and prohibiting extended idling are tried-and-true ways to reduce fuel use, says John Cantu, equipment services director for Maricopa County, Ariz. Localities, including Maricopa, also are taking steps to make their vehicle maintenance shops more sustainable by purchasing environmentally friendly products to clean parts and oil spills; using machines to recycle transmission oil and antifreeze; and selling engine oil to companies that recycle the product.
The concept of “right-typing” vehicles -- buying the right car for the right job -- is also increasingly popular. While administrators in emergency services or utilities may view a large, eight-cylinder truck as the most desirable vehicle, they don’t need it if they aren’t hauling equipment. Department administrators in some governments are now being issued the tiny Smart-brand automobiles, which are powered by gasoline but are nearly as fuel-efficient as a Toyota Prius hybrid and cost almost half as much. Tom Johnson, who runs the Best Fleets contest, says more localities are also restricting the ability of employees to take their work vehicles home, which saves on fuel costs. “We’re going to go green,” Johnson says. “But we’re doing it in different ways.”
Of course there’s still a debate as to whether green fleets make fiscal sense. In a 2010 survey from the National League of Cities, 33 percent of respondents said that the recession made them more willing to invest in going green, ostensibly to save money on energy costs. But even more respondents -- 38 percent -- said the recession made them less likely to invest in green efforts. “Too often we hear from elected officials, ‘Isn’t it great to be green? We’re going to save a lot of money being green,’” says Kelly Reagan, the fleet administrator for Columbus, Ohio. “That’s not true. More often than not, it costs money to be green.” Reagan warns colleagues not to oversell green vehicles by making unrealistic promises of fuel savings, since the upfront costs of the technology -- at least right now -- often outweigh the eventual savings on fuel.
But Reagan isn’t a critic of green investment. In fact, he’s an advocate for environmentally sensitive fleets, despite their costs. His city is spending $3.5 million on a CNG fueling station that will launch in October to serve Columbus’ growing fleet of green vehicles. Eventually there will be six city-owned stations throughout Columbus to serve both the government and the public. Reagan says cities interested in green fleets should pursue the projects not because they’ll save money but because they’re the right thing to do. By being candid about costs and using green technology because of its environmental benefit -- and not necessarily its economic benefit -- leaders can avoid being disappointed with the outcome.
“Even in good times, it makes it sometimes challenging, when you’re using public money, to demonstrate the benefits of using a technology that may be more expensive,” says Ron Lindsey, fleet services manager of San Bernardino County, Calif. Lindsey’s community has about 260 hybrid vehicles in its fleet. In some ways, hybrids are the least sexy of the green vehicles right now, because they’re no longer cutting-edge. But they’re also the most proven and the most affordable. And hybrids don’t require separate infrastructure investments like a fueling station or a CNG conversion. Though San Bernardino County has a plan to invest in alternative fuel vehicles, it’s been slow to implement it due to tremendous upfront costs, Lindsey says, and the county likely wouldn’t be moving forward with that plan even if the economy were in better shape.
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