School districts receive $900M from EPA to fund electric school buses

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The Biden administration has issued the next round of funding aimed at cleaning up the country’s school bus fleet. On Wednesday, the U.S. Environmental Protection Agency awarded nearly $900 million in rebates to help more than 500 school districts buy about 3,400 clean school buses — 92 percent of them electric.

With this new round, nearly $3 billion in funding has been awarded to date from a $5 billion program created by the 2021 Bipartisan Infrastructure Law. The first round of rebates, nearly $1 billion awarded in October 2022, enabled about 370 school districts to order some 2,500 electric school buses across the country. A second round of nearly $1 billion in grants issued this January provided 67 applicants with money to buy more than 2,700 clean school buses serving 280 school districts.

Almost all of the roughly 500,000 school buses operating in the U.S. are diesel-fueled. Replacing those with clean buses could eliminate about 8 million metric tons per year of carbon emissions. Aside from their climate impact, diesel buses emit air pollution harmful to the health of the children who ride them and the communities they operate in.

“This announcement is not just about clean school buses — it's about the bigger picture,” EPA Administrator Michael Regan said in a Tuesday media briefing. “We are improving air quality for our children, reducing greenhouse gas pollution, and expanding our nation's leadership in developing the clean vehicles of the future. With increasing demand for electric school buses, we’ll see the development of new good-paying manufacturing jobs and investment in local businesses.”

Electric school buses are two to three times more expensive than their diesel counterparts but can cost significantly less to fuel and maintain over their lifespans. Meanwhile, the boost in business for the biggest U.S. school bus manufacturers, which include Blue Bird, Thomas Built, and Navistar IC Bus, as well as Canadian electric bus manufacturer Lion Electric, is expected to drive down their costs in the future, said Zealan Hoover, director of implementation for EPA programs funded by the Bipartisan Infrastructure Law and 2022’s Inflation Reduction Act.

EPA has slightly reduced the per-bus rebates for this most recent round of awards compared to the first round of rebates issued in 2022 to “put downward pressure on prices,” Hoover said. “We want to find that sweet spot of preserving equity and access, while remaining clear that we want to see cost reductions as the sector scales.”

That’s part of the EPA program’s broader goal to serve as a “bridge to a self-sustaining pace of decarbonization for the sector,” Hoover said. “Bringing down costs is certainly a challenge. But we know that the cost of electric vehicles compared to internal combustion vehicles is falling.”

There’s still a long way to go to electrify the U.S. school bus fleet. As of May, the total number of U.S. electric school buses “committed” — a figure that includes buses operating, on order, or funded to be purchased — stood at 8,820, according to data collected by the World Resources Institute’s Electric School Bus Initiative, which tracks all electric school buses, not just those funded by the EPA program. That’s 1.8 percent of the total U.S. school bus fleet — a ratio that has risen from just over 1 percent since mid-2023.

Of those 8,820 electric school buses, 3,792 are “delivered or operating” in 48 states. Another 1,572 have been ordered from manufacturers, and another 3,456 have been awarded funds for purchase.

Those numbers reflect the fact that securing the buses is a time-consuming process, one that involves placing the orders with bus manufacturers, getting the buses built and delivered, and installing the charging equipment needed to start using them.

The EPA program has had its share of hiccups since it was launched in 2022. As of late last year, 9 percent of the school districts that won awards in the first round of rebates — 36 of them — had withdrawn their plans for using the money, while 43 percent had sought and received extensions beyond an April deadline for ordering the buses.

Some of these school districts have found that they weren’t able to cover their share of the cost of the buses they’d planned to buy, Sue Gander, director of WRI’s Electric School Bus Initiative, told Canary Media last year. Others have had trouble managing the cost of the charging equipment or the utility grid upgrades required to support them.

EPA has been working with school districts and the transportation services companies that operate bus fleets for about one-third of the country’s school districts to streamline these stages of the process, Hoover said. The agency is also partnering with the federal Joint Office of Energy and Transportation to lend technical support for school districts to install charging equipment, and with WRI and other nonprofit groups such as the Beneficial Electrification League to assist low-income and rural school districts.

EPA has structured the program to serve both large school districts with ongoing electric bus programs and smaller districts just beginning to electrify their fleets, Hoover said. The winners of the grants EPA awarded in January were selected via a competitive process, and districts were permitted to apply for up to 50 buses apiece.

By contrast, the rebates EPA awarded this week and in its first round in 2022 were limited to 25 buses per district and handed out through a lottery to school districts that filled out a relatively simple one-page application. “That has allowed us to reach an incredibly diverse and representative set of school districts across the country — rural schools, tribal schools, low-income schools,” Hoover said.

EPA has also sought to prioritize lower-income and disadvantaged school districts. Of the competitive grants it awarded in January, 86 percent went to school districts in low-income, rural, or tribal communities. Rebates have been issued to rural school districts in states including Missouri, Oklahoma, Pennsylvania, Tennessee, and West Virginia, and to tribal school districts including the Red Lake Band of Chippewa in Minnesota, the Mississippi Band of Choctaw Indians, the Morongo Band of Mission Indians in California, and the Bay Mills Ojibwe Charter School in Michigan.

The streamlined application process for EPA’s first round of clean school bus rebates did lead to some problems. A December report from the U.S. Office of Inspector General found that some applicants to the EPA program didn’t provide adequate supporting documentation. Other school districts returned a collective $38 million in grants that had been awarded to third-party contractors on their behalf, even though the school districts hadn’t asked for them, the report found.

Republican members of the U.S. House of Representatives sent a letter to EPA last month demanding the agency look into these “alarming” issues. The House members also questioned the program’s emphasis on funding electric school buses “over other types of buses that are eligible for funding,” such as those that run on compressed natural gas (CNG) or propane.

Hoover emphasized that EPA has funded the kinds of buses that school districts and transportation service providers have requested. “The ratio is due to applicant choice,” he said. “We see a very strong preference for electric buses over CNG and propane buses.”

If anything, the demand for electric school buses is outstripping the supply of EPA Clean School Bus funds. Applications have been well in excess of the amount of money available in each of its rebate and grant rounds to date.

EPA recently opened the application process for the Clean Heavy-Duty Vehicles Grant Program, an Inflation Reduction Act program with nearly $1 billion available, of which two-thirds is likely to be directed to zero-emissions school buses.

It’s also looking for ways to help school districts finance electric bus purchases through the $20 billion Greenhouse Gas Reduction Fund program, Hoover said. That program, launched earlier this year, will disburse money for a network of national, state, and local financial institutions, nonprofits, and community groups to provide low-cost loans and other financial support for carbon- and pollution-reducing projects including electric vehicles, with a mandate to provide 70 percent of its assistance to low-income and disadvantaged communities.

“Zero-emissions buses will still be more expensive to purchase, but then you have savings over time from lower maintenance and operating cost,” Hoover said. “There’s going to be a lot more opportunity for school districts to get the financing they need to capture these savings as well.”