Federal Funding for Compressed Natural Gas, Hydrogen, and Clean Diesel Buses

Subject Infrastructure
Year 2024
Status Adopted - Active
Sponsor - Mover
Red Deer, City of
Sponsor - Seconder
Innisfail, Town of
Active Clauses

IT IS THEREFORE RESOLVED THAT Alberta Municipalities advocate to the Government of Alberta to work with the Government of Canada to return to a federal funding program that accepts purchases of compressed natural gas, hydrogen, and clean diesel buses until 2035, which will allow municipalities to transition their fleets in an efficient and realistic manner.

Whereas Clauses

WHEREAS with the announcement of the Zero Emission Transit Fund, beginning in 2022 the Government of Canada’s funding program for municipal transit has been changed to only allow eligible purchases of hydrogen and electric buses;

WHEREAS hydrogen and electric bus manufacturers do not have the capacity to meet the demand of municipal fleet replacement with confirmed delivery times exceeding two years from date of purchase;

WHEREAS the impacts on the electrical grid and costs of upgrading building infrastructure to support new electrical demand are unknown;

WHEREAS significant technological advancements have made compressed natural gas (CNG) and clean diesel environmentally friendly solutions;

WHEREAS restrictions on municipal access to buses would decrease the service level of transit that municipalities offer, reducing the access for many residents to employment and community; and

WHEREAS restrictions on municipal access to buses would lead to an increase in personal vehicles on the road, increasing the level of emissions.

Resolution Background

Many municipalities who provide public transit have taken advantage of previous programs such as the Green Transit Incentives Program (GreenTRIP) and the Public Transit infrastructure Fund Program (PTIF) in past years to replace diesel-based transit fleets with greener options. Significant investments were also made to construct, and service specialized fueling stations.

Transitioning to zero emission transit is a laudable goal. However, the timetable is too short for municipalities to transition without significant challenges that will be borne by their residents and taxpayers.

The current electric and hydrogen bus procurement process makes it difficult for smaller and mid-sized municipalities to fill their orders and receive buses. They are competing with major urban centres across North America. Current delivery times are beyond two years and puts fleet replacement at risk.

Additional fleets would be required to maintain service levels at current schedules, as municipalities would require two electric buses to every CNG bus. Due to the requirement of charging times throughout the day, buses would have to come off their regular service just to charge, requiring a backup bus to cover the service.

CNG and clean diesel burn significantly cleaner than previously used fuel sources. While they are not zero emission, they still significantly reduce emissions when compared to previous diesel options. Additionally, CNG and clean diesel buses cost significantly less than electric or hydrogen buses. Currently, CNG buses can be purchased for approximately $850,000, whereas electric buses cost approximately $1,800,000 to $2,000,000 and hydrogen buses cost approximately $1,500,000 to $1,700,000.

The environmental impact of transit is well established. Reducing the number of available buses has several major impacts on municipalities. First, it forces even more difficult choices between service levels and taxpayer supported costs. The reality is that fewer people will be able to access public transit if transitional funding of CNG and clean diesel buses is not restored. In addition, the environmental effects would be a net negative, as more people will be driving personal vehicles in municipalities who cannot afford electric buses.

The Government of Canada has committed to net-zero emissions from fossil fuels by 2035. Electric and hydrogen buses are a part of reaching that target. However, the public good provided through public transit is at risk of being diminished by moving too fast. A target of 2035 to transition public transit fleets is a more reasonable approach that can still achieve the desired outcomes without unduly burdening taxpayers.

Government Response

A response was received from Alberta Transportation and Economic Corridors in December 2024. The response highlighted federal support for transit projects through the Canada Public Transit Fund and the Zero Emission Transit Fund.

Alberta Municipalities notes

ABmunis’ Rating of the Government’s Response

Intent partially met – further action will be taken at a medium level of engagement.

ABmunis’ Notes and Actions
While the Zero Emission Transit Fund does not support the purchase of CNG or Clean Diesel Buses, the Canada Public Transit Fund does allow for the purchase of these buses if the municipality is already invested in this type of bus and is planning to transition to a lower emission alternative in the coming years. ABmunis will continue to promote the Canada Public Transit Fund as a viable opportunity for the purchase of CNG, hydrogen and clean diesel buses.