GAO-12-342SP: Science and the environment: 24. Diesel Emissions

Science and the environment > 24. Diesel Emissions

Fourteen grant and loan programs at the Department of Energy, Department of Transportation, and the Environmental Protection Agency and three tax expenditures fund activities that have the effect of reducing mobile source diesel emissions; enhanced collaboration and performance measurement could improve these fragmented and overlapping programs.

Why This Area Is Important

Diesel engines play a vital role in public transportation, construction, agriculture, and shipping, largely because they are more durable and reliable than gasoline-powered engines, as well as 25 to 35 percent more energy efficient. However, exhaust from diesel engines is a pervasive and harmful form of air pollution. Diesel exhaust contains air pollutants such as nitrogen oxides and particulate matter, as well as other harmful substances that affect public health and the environment.[1] Since 1984, the Environmental Protection Agency (EPA) has implemented standards that have progressively lowered the maximum allowable amount of certain pollutants, including nitrogen oxides and particulate matter, from new diesel engines by more than 98 percent. However, the most stringent standards generally apply to diesel engines and vehicles built after 2007, and EPA estimates that over 20 million older mobile sources of diesel emissions—13 million on-highway vehicles, 7 million non-road engines, and 47,000 locomotive and marine engines—continue to emit higher amounts of harmful pollutants than newer engines.[2] Programs at the Department of Energy (Energy), the Department of Transportation (DOT), and EPA address mobile source diesel emissions from these older sources by providing grants and loans for projects that, among other things, retrofit, rebuild, or replace existing diesel engines or vehicles; install devices that reduce idling of diesel engines; and convert diesel engines and vehicles to use cleaner fuels, such as natural gas or propane. From fiscal years 2007 through 2011, these programs obligated at least $1.4 billion for such projects.[3] In addition, three tax expenditures, which resulted in at least $510 million in forgone federal tax revenue in fiscal year 2010, provide incentives to reduce mobile source diesel emissions.



[1]Nitrogen oxides are regulated pollutants commonly known as NOx that, among other things, contribute to the formation of ozone. Particulate matter is an ubiquitous form of air pollution commonly referred to as soot.

[2]Non-road engines are those used in machines, such as construction equipment, agricultural equipment, and airport service vehicles.

[3]The American Recovery and Reinvestment Act of 2009 provided about $870 million of this funding. All dollar amounts reported in this analysis are in nominal dollars.

What GAO Found

As GAO reported in February 2012, federal grant and loan funding for activities that reduce mobile source diesel emissions is fragmented across 14 programs at Energy, DOT, and EPA. Thirteen of these programs provide grants, and 1 program—DOT’s State Infrastructure Banks program—provides loans.[1] Of the 14 programs, 1—EPA’s Diesel Emissions Reduction Act program—has a specific purpose of reducing mobile source diesel emissions. The remaining 13 programs focus on other goals or purposes, such as supporting energy efficiency projects or reducing petroleum use. In addition to fragmentation across three agencies, each of the 14 programs overlaps with at least 1 other program in the specific activities they fund, the program goals, or the eligible recipients of funding (see fig. below).

Overlapping Mobile Source Diesel Emissions Reduction Activities, Goals, and Eligible Recipients, by Agency and Program

Activities

Goals

Eligible recipients

Agency/Program

Retrofit vehicle or engine

Rebuild vehicle or engine

Replace vehicle or engine

Reduce vehicle idling

Use cleaner fuel

Reduce emissions

Reduce pollution in areas not meeting air quality standards

Increase energy efficiency

Reduce fuel use

State governments

Local governments

Land management agencies

Transit agencies

Federally recognized tribes

Private or non-profit organizations

Energy

Clean Cities

Energy Efficiency and Conservation Block Grant

State Energy Program

DOTa

Federal Aviation Administration

Voluntary Airport Low Emissions

Federal Highway Administration

Congestion Mitigation and Air Quality Improvement

Ferry Boat Discretionary

State Infrastructure Banks

Federal Transit Administration

Bus and Bus Facilities

Clean Fuels Grant

National Fuel Cell Bus Technology Development

Transit in Parks

Transit Investments in Greenhouse Gas and Energy Reductionb

Urbanized Area Formula Grants

EPA

Diesel Emissions Reduction Act Program

Source: GAO analysis of Energy, DOT, and EPA documents and interviews.

aIn 2011, GAO reported that fragmentation of surface transportation programs led to inefficiencies.

bThe American Recovery and Reinvestment Act of 2009 authorized this program, and the program received funding through fiscal year 2011. The program did not receive funding for fiscal year 2012 in the relevant appropriations act.

In addition, GAO identified three tax expenditures—biodiesel producer tax credits, a diesel fuel emulsion excise tax credit, and an excise tax exemption for idling reduction devices—that provide incentives for owners and operators of diesel engines and vehicles to reduce emissions.[2] GAO found overlap among the qualifying activities for the excise tax exemption for certain vehicle idling reduction devices and programs that fund idling reduction activities because the excise tax exemption and these programs all provide incentives to use idle reduction devices to reduce diesel emissions. According to Department of the Treasury estimates, in fiscal year 2010, the biodiesel tax credits resulted in $510 million in forgone federal tax revenue.[3] The Department of the Treasury estimates did not include forgone revenue from the diesel fuel emulsion excise tax credit or the excise tax exemption for idling reduction devices because the department does not report estimates for tax provisions that result in forgone excise tax only.

GAO also identified several instances of duplication where more than one program provided grant or loan funding to the same recipient for the same type of activities.[4] In one case, a state transportation agency received $5.4 million from DOT’s Transit Investments in Greenhouse Gas Emissions Reduction program to, among other things, upgrade 37 diesel buses to hybrid diesel-electric buses, $3.5 million from DOT’s Congestion Mitigation and Air Quality Improvement program to replace diesel buses with four hybrid diesel-electric buses, and $2.3 million from DOT’s Clean Fuels Grants program to replace four diesel buses with hybrid electric buses. In another case, a nonprofit organization received $1.1 million from EPA’s Diesel Emissions Reduction Act program to install emission reduction and idle reduction technologies on 1,700 trucks, as well as $5.6 million from a state infrastructure bank established under DOT’s program to equip trucks and truck fleets with emission control and idle reduction devices.

Even with duplication among the programs, several factors make it difficult to precisely determine whether unnecessary duplication exists. First, when different programs fund the same diesel emissions reduction activities, it is not necessarily wasteful. For example, a transit agency could use funds from two different programs to replace two separate fleets of aging diesel buses. Second, grant recipients may leverage funding from more than one program to support the full cost of diesel emissions reduction projects. In some cases, grant recipients have used funding from multiple agencies, in addition to local matching funds, to support the cost of large projects that include multiple diesel emissions reduction activities. GAO previously reported that leveraging is generally recognized favorably by public and private sector officials, but leveraging funds from multiple agencies can be inefficient because agencies may incur costs for duplicative administrative activities.[5] Third, agencies were often unable to provide information necessary to determine whether and to what extent unnecessary duplication exists among the programs. For example, several agencies reported that they do not track costs for administrative functions at the program level.

The overall effectiveness of federal funding for activities that reduce mobile source diesel emissions may be limited because agencies generally do not collaborate. According to Energy, DOT, and EPA officials, the three agencies consult one another on broad issues such as available emissions reduction technology or emissions standards, but these efforts do not involve collaboration on diesel-related issues. This is partially due to the differing purposes and goals of each program, which often do not directly relate to reducing diesel emissions. However, GAO previously reported that, although federal programs have been designed for different purposes or targeted for different population groups, coordination among programs with related responsibilities is essential to efficiently and effectively meet national concerns.[6]

GAO also previously reported that uncoordinated program efforts can waste scarce funds, confuse and frustrate program customers, and limit the overall effectiveness of the federal effort. A focus on results as envisioned by the Government Performance and Results Act implies that federal programs contributing to the same or similar results should closely coordinate to ensure that goals are consistent, and, as appropriate, program efforts are mutually reinforcing.[7] Also, the GPRA Modernization Act of 2010 established a new, cross-cutting, and integrated framework for achieving results and improving government performance.[8]

In addition, few agencies collect performance information on their diesel emissions reduction activities. Specifically, EPA collects performance information on the amount and type of diesel emissions reductions each project achieves, Energy’s three programs and three of DOT’s programs collect some performance information related to diesel emissions reductions, and the remaining seven DOT programs do not collect performance information related to diesel emissions. This is partially because 13 of the 14 programs that fund these activities have purposes other than reducing diesel emissions. However, the information that would result from enhanced collaboration and outcome measurement is needed to determine if fragmentation, overlap, and duplication have resulted in ineffective or inefficient programs.



[1]Under DOT’s State Infrastructure Banks program, states may use allocated federal transportation funds to capitalize state infrastructure banks, which in turn provide loans and other nongrant financial assistance to eligible projects.

[2]Biodiesel fuel is an alternative to petroleum-based transportation fuel. U.S. biodiesel is made from soybeans and other plant oils, such as cottonseed and canola; animal fats, such as beef tallow, pork lard, and poultry fat; and recycled cooking oils. A diesel fuel emulsion is a mixture of diesel, water, and additives.

[3]The biodiesel tax credits include an income tax credit, as well as an excise tax credit for the production and use of biodiesel.

[4]GAO did not determine whether the federal agencies that provided this funding were aware of each other’s actions.

[5]GAO, Leveraging Federal Funds for Housing, Community, and Economic Development, GAO-07-768R (Washington, D.C.: May 25, 2007).

[6]GAO, The Government Performance and Results Act: 1997 Governmentwide Implementation Will Be Uneven, GAO/GGD-97-109 (Washington, D.C.: June 1997).

[7]The Government Performance and Results Act (GPRA) of 1993, Pub. L. No. 103-62 (1993).

[8]Pub. L. No. 111-352 (2011).

Actions Needed

To help ensure the effectiveness and accountability of federal funding that reduces diesel emissions, the Secretaries of Energy and DOT as well as the Administrator of EPA should

  • consistent with existing law, establish a strategy for collaboration in reducing mobile source diesel emissions.

This strategy should help agencies (1) determine the performance measures needed, as appropriate, to assess the collective results of federal funding for activities that reduce diesel emissions and (2) identify and address any unnecessary duplication, including the effects of the relevant tax expenditures, among other things. In undertaking this effort, agencies could also assess opportunities for administrative cost savings. GAO will monitor the agencies’ efforts on these issues.

How GAO Conducted Its Work

The information contained in this analysis is based on findings from the report listed in the related GAO products section. To determine the total amount of federal funding for mobile source diesel emissions reduction activities in fiscal year 2010, GAO obtained and analyzed funding data from Energy, DOT, and EPA. See page 347 of the PDF version of this report (appendix III) for a list of the programs GAO identified that may have similar or overlapping objectives, provide similar services or be fragmented across government missions. Overlap and fragmentation may not necessarily lead to actual duplication, and some degree of overlap and duplication may be justified.

Agency Comments & GAO Contact

GAO provided a draft of this report section to Energy, DOT, and EPA.

Energy provided technical comments, which were incorporated as appropriate. In its comments, Energy questioned several of the findings but agreed with the action needed that GAO identified. Specifically, Energy stated that the findings mischaracterize the agency as having a statutory responsibility for diesel emissions reductions. The findings do not contain such a statement. Rather, they identify 14 programs, including 3 Energy programs, that fund activities with the effect of reducing diesel emissions and state that programs with related responsibilities should coordinate their efforts. Energy also stated that the findings mischaracterize Energy as not collaborating with other government agencies. The findings state that Energy collaborates with other agencies on broad issues but does not collaborate on diesel-related issues. In addition, Energy stated that the findings mischaracterize the agency as sharing redundant national goals with DOT and EPA. The findings do not discuss Energy's national goals, their relationship to those of other agencies, or whether they are redundant. Rather, the findings (1) focus on Energy programs that fund activities that result in diesel emissions reductions and (2) demonstrate that these programs share similar goals with DOT and EPA programs that fund the same activities. Specifically, each of these programs shares some goals, such as reducing emissions, increasing energy efficiency, and reducing fuel use.

DOT did not provide comments on the draft findings. In its comments on a draft of the February 2012 report, DOT questioned several of the report's key findings and the report's recommendation that Energy, DOT, and EPA establish a strategy for collaboration among their programs that reduce mobile source diesel emissions. Specifically, DOT stated that GAO inaccurately described the Federal Transit Administration’s programs as funding diesel emissions reduction activities. The report identifies Federal Transit Administration activities that reduce diesel emissions, including replacing existing diesel vehicles and installing devices that reduce idling of diesel engines, and identifies six Federal Transit Administration programs that fund these same activities. In addition, DOT questioned the evidence underlying our finding of fragmentation among the federal programs within our review. DOT stated that GAO identified independent programs with varying objectives that, in some cases, include similar activities. As GAO reported, fragmentation occurs when more than one federal agency, or more than one organization within an agency, is involved in the same broad area of national need. The report clearly identifies fragmentation, overlap, and duplication among the 14 federal programs that fund diesel emissions reduction activities. Consistent with our established definition of fragmentation and our evidence, GAO stands by its finding that federal grant and loan funding for activities that reduce diesel emissions is fragmented across 14 programs.

Regarding GAO’s recommendation that Energy, DOT, and EPA establish a strategy for collaboration among their programs that reduce mobile source diesel emissions, DOT agreed that collaboration can be useful but questioned its usefulness in this context. As GAO reported, while the programs GAO reviewed have been designed for different purposes, coordination among programs with related responsibilities and that fund the same activities is essential to the efficient and effective use of resources. Further, uncoordinated programs can waste scarce funds and limit the overall effectiveness of federal spending. GAO therefore continues to believe that the recommendation is warranted. DOT also stated that the report does not effectively demonstrate that the recommended action will produce cost-effective investments appropriate for DOT that do not potentially duplicate efforts elsewhere in the government. GAO continues to believe that establishing a strategy for collaboration is an appropriate investment that would help ensure the effectiveness and accountability of federal funding for activities that reduce diesel emissions. As the report notes, such a strategy should help agencies identify and address any unnecessary duplication.

EPA did not provide specific comments on the draft findings. However, in commenting on a draft of our February 2012 report, EPA stated that it agreed with GAO’s findings and relevant recommendation.

For additional information about this area, contact David C. Trimble at (202) 512-3841 or trimbled@gao.gov.