Encourage Public Biogas Vehicle Fleets Through Performance Contracts

Abundant biogas resources provide an opportunity for states to increase energy independence, decrease fuel expenditures, and create good-paying jobs by retooling public fleet vehicles. Local and state governments could use alternative fuel vehicles (AFVs) powered by biogas to enhance energy security, decrease fuel costs, and stimulate demand for locally-sourced fuels. Despite these benefits, barriers such as limited experience with AFVs, inaccurate cost and benefit predictions, limited budget authority, and limited access to financing and incentives prevent governments from retooling their fleets to use alternative fuels. To overcome these barriers, state policymakers could engage in performance contracts similar to those employed by energy service companies (ESCOs). ESCOs operate on an energy performance contract (EPC) to finance and facilitate installation of energy efficiency projects in buildings. ESCOs traditionally serve governments, hospitals, universities, and schools, saving these end-users a total of $50 billion in avoided energy costs as of 2014. Pennsylvania has successfully implemented this mechanism to retool their fleets to use compressed natural gas.


The Rose Tree Media School District near Philadelphia, Pennsylvania worked with Johnson Controls Inc., an ESCO, to establish energy efficiency building performance contracts. Johnson identified an additional opportunity for savings: converting the bus fleets to use compressed natural gas. Johnson managed the conversion of diesel buses to natural gas, converted maintenance infrastructure and operations, built fueling stations, and provided staff training and transition assistance. The Rose Tree School District, which operates seventy-four school buses, is projected to save $6.5 million in fuel costs and $1 million overall on the project over a twenty-year period.


By upgrading fleets to AFVs that run on biogas, hospitals, municipalities, schools, and universities could save money, expand the state’s energy independence, capitalize on local biogas resources, and create good-paying local jobs.