An Opportunity to Clean Up Heavy Fleets

Our clean transportation transition has focused primarily on passenger cars. However, a smaller number of vehicles – medium and heavy vehicles like freight trucks, buses, and port equipment - contribute a disproportionate amount of pollution and have a significant impact on local air quality. They often operate extended hours, often in communities already suffering from higher pollution and associated health burdens. Cutting diesel near schools, along bus routes, and in port areas is a public health investment and a climate win.

The Hawaiʻi State Energy Office’s Diesel Replacement Rebate program is a tool to tackle this problem.

The Rebate

The Diesel Replacement Rebate (DRR) is a Hawaiʻi State Energy Office program that helps fleets replace existing diesel vehicles with new zero-emission vehicles. Participants must scrap the old diesel vehicles so the program guarantees real emissions reductions rather than just shifting older vehicles to another operator.

Program Features:

• Rebates of up to 45% of the total project cost, including the new vehicle and associated charging or fueling equipment.

• Focuses on medium and heavy-duty vehicles.

• Diesel vehicles must be operational, of qualifying age, and duty.

• Old vehicles must be permanently scrapped as part of the project.

• Funding is limited and provided on a first-come, first-served basis.

The program is funded through the Volkswagen Environmental Mitigation Trust and the Federal Diesel Emissions Reduction Act.  

Program Extended Through 2028

Good News! The Diesel Replacement Rebate has been running since 2021 and was recently extended through September 30, 2028, or until funds are fully expended.

Over $7 million in rebates is currently available!

Who Can Apply

This program can help operators of the following vehicles:

• Public and private school buses

• County or private transit fleets

• Shuttle and tour buses serving visitors and resorts

• Medium and heavy-duty trucks, especially those in urban or port corridors

• Airport ground support and port cargo handling equipment

For many fleets, the combination of a 45% capital rebate plus the lower fuel and maintenance costs of electric drivetrains can flip project economics from hard to justify to financially compelling.

To illustrate: A fleet looking at a $500,000 electric bus and charger could qualify for a $225,000 rebate. The remaining $275,000 can then be financed or structured through leases or infrastructure-as-a-service. This can help a fleet benefit from the lower operating costs of an electric vehicle.

How the Program Works

Here’s how the DRR project process looks:

1. An operator identifies qualifying diesel vehicles to replace.

2. The operator selects a zero-emission replacement vehicle and associated charging equipment that meet program requirements.

3. An application is submitted through the Diesel Replacement Rebate portal.

4. Once approved, the operator purchases the new vehicle, installs the charging equipment, and scraps the old diesel according to the program’s requirements.

5. Once all documentation is complete, the rebate is issued, covering up to 45% of eligible costs.

The Hawaiʻi State Energy Office has a detailed program guide with various requirements at https://energy.hawaii.gov/diesel-replacement/.

Fleet and Agency Leaders Should Act Soon

Diesel operators have an unprecedented opportunity to optimize their fleet, improve competitiveness, and enable resilience in a market where customers and regulators are increasingly focused on emissions and public health.

This program is significant because it can cover a substantial amount of the cost associated with fleet vehicle conversion. Importantly, funding is limited and distributed on a first-come, first-served basis. It also demonstrates visible progress on state climate and equity commitments.

The First Steps

Here are some practical next steps to determine if this program will benefit a fleet operator:

• Inventory the diesel fleet.

• Identify older, high-mileage vehicles operating in residential communities.

• Identify units that will need replacement in the next 3 to 5 years.

• Coordinate with utility and facilities to determine feasible charging locations, assess power availability, and potential upgrades.

• Conduct a financial analysis.

• Determine the cost of electric replacements and the installation of charging equipment (as needed).

• Apply the 45% rebate and compare the total cost of ownership of the new system against keeping the old equipment or replacing it with new diesel vehicles.

Operators should also create a transition plan that can begin with a pilot for vehicles eligible for the rebate program. The operational data from this pilot can support a broader electrification effort.

End in Mind

Hawaiʻi already has one of the highest rates of light-duty EV adoption in the country. Many owners and fleets are experiencing the many benefits of electric mobility – lower total cost of ownership, cleaner air, and a better driving experience. The next frontier is our medium- to heavy-duty diesel vehicles, e.g., buses, freight trucks, and cargo-handling equipment. This rebate program offers a pathway to transition these vehicles to more efficient, zero-emission options.

The Hawaiʻi State Energy Office’s Diesel Replacement Rebate page (https://energy.hawaii.gov/diesel-replacement/) includes the latest details, the application portal, and program guide.