Yellow continues to go green as school districts across the country modernize fleets with the latest alternative fuel technologies, to support cleaner air for students and the neighborhoods where they live. Through expanded offerings in bio- and renewable diesel, ultra-clean propane and natural gas, and battery electric offerings that eliminate tailpipe exhaust, owners and operators have options to support their sustainability initiatives in an economic fashion.
From traditional bus manufacturers to startups and new market entrants, manufacturers are offering near- or zero-emission school buses and showing no signs of slowing down. Shifting incentives and regulatory landscapes have not dimmed the prospect of the school bus industry’s clean transportation future.
The Changing Chess Board of School Bus Manufacturers
Original equipment manufacturers like Blue Bird, IC Bus, Thomas Built Buses, Collins and Micro Bird offer diversified product portfolios, including options for near-zero and zero-emission school buses. Market competition, specifically in the all-electric space, has increased with companies like RIDE, GreenPower Motor and others entering the market with zero-emission solutions.
Up until last year, trends showed that the silver bullet solution of zero emissions would be the favored choice for the school bus market. Indeed, many schools have successfully deployed battery electric fleets and are having favorable operational results. However, recent economic, political and customer demand changes have started telling a different story — diversified product lines give consumers the flexibility to find the right solution.
One of the most telling signs for electric vehicles was the slate of bankruptcy announcements, from onetime industry darlings like Lion Electric on the school bus side and Nikola Corporation on the heavy-duty truck side. Further, the fate of unprocessed orders and recently delivered assets — and the deleterious impacts of grant funding pauses — would seem to indicate that a diversification in product offerings could be a viable risk mitigation strategy during times of market uncertainty.
Incentive Structures Expected to Change for School Buses
The EPA’s Clean Schol Bus (CSB) Program has served as the primary incentive for alternative fuel school buses over the last three years. Indeed, since 2022, CSBP funding has supported over 1,300 school districts to deploy over 9,000 alternative fuel school buses. The Diesel Emissions Reduction Program (DERA) has also funded more than 3,000 clean diesel and alternative fuel school buses since 2012.
Though many diesel replacement funding programs across the country use cost-effectiveness to evaluate projects and funding levels, the school bus market has often seen a flat rate or voucher-style incentive. Most recently, the EPA set the voucher for battery electric buses at more than $300,000 per unit. With increased scrutiny on federal incentives and their effectiveness, the incentives landscape will likely move away from these flat rate structures.
Beyond the EPA’s initiatives, several states have prioritized the transition to diesel alternatives by creating grant programs that offset the upfront investment for the buses and required infrastructure. California’s most recent incentive, the Zero Emission School Buses and Infrastructure (ZESBI) Program, aligns with similar initiatives in Colorado, New Jersey, and New York that promote all-electric options. Michigan, too, prioritizes clean school buses, though its program includes eligibility for all-electric and near-zero emission options. In total, these state-level programs may drive as much as $1 billion in aggregate incentives to the alternative fuel school bus market.
Aligning with President Donald Trump’s executive orders and the focus on domestic energy, several alternative fuels seem primed to gain (or perhaps regain) momentum — renewable diesel/biodiesel, natural gas, and propane. Hardly a new technology, propane in particular has served as a clean transportation industry stalwart for decades, lauded by its fleet adopters for its ability to provide affordable, efficient, and accessible clean transportation. More and more school districts, businesses and transit agencies may review the viability of these domestically produced alternative fuel options as a means of affordably diversifying fuel supply.
Shifting the Lens: Finding Market Drivers in a New Administration
The slate of recent executive orders has introduced a new set of agendas, initiatives and motivators. While the market continues to absorb and assess the potential implications, one element stands out in stark contrast, the short-term funding landscape holds plenty of uncertainties. From the status of existing EPA programs to the planned use of funds from the Investing in Infrastructure and Jobs Act and the Inflation Reduction Act, there is still much to understand about where future federal funding may come from for alternative fuel school buses. However, as noted above, state funding programs offer a viable solution.
Beyond incentives, additional motivators for going green include regulatory mandates and carbon credit programs. In California, Assembly Bill 579 requires school districts to purchase zero-emission buses starting in 2035, and other states such as New York and Washington have proposed or approved similar measures. The portfolio of states with carbon credit programs grew from three to four with the addition of New Mexico.
Now, New Mexico as well as California, Washington and Oregon are generating revenue for fleet operators and creating additional interest in battery electric projects.
Final Thoughts
America’s yellow school buses have made considerable strides to improve performance, air quality and safety, and these trends are expected to continue well into the future. Challenges and opportunities abound though, as market drivers, political and policy motivations, and sustainability trends continue to shift. Upcoming announcements at the Federal and state levels will be telling as to how the school bus market will need to adjust priorities and continue the adoption of alternative fuel technologies.
Upcoming Events
Trying to stay on top of the changing policy and funding landscape? Look to STN’s events over the next few months as well as ACT Expo as critical opportunities to hear directly from funding agencies, fellow school districts deploying alternative fuel buses, and manufacturing partners. ACT Expo, the largest advanced commercial vehicle technology showcase in North America, offers just that, a four-day conference bringing together the leading alternative fuel manufacturers, infrastructure providers and fleet operators. Editor’s note – School Transportation News is an official media sponsor of ACT Expo.
ACT Expo, which returns to Anaheim, California, this spring, will host a school bus sector session on April 30 for transportation directors to learn more about this ever-changing landscape. STN EXPO’s Green Bus Summits, occurring in Charlotte, North Carolina on March 23-24 and in Reno, Nevada on July 13-14, offer similar content around policy and incentives.
Joe Annotti is the senior vice president of incentives for the TRC Clean Transportation Solutions, the organizer of ACT EXPO. He presents the session “State of Green Schools Buses” at STN EXPO East in on March 23.
