Facing the Financial Specter of Upgrading Your Equipment’s Exhaust System? Do Your Homework Before You Act

Bringing older equipment up to current clean-air standards can be costly. Explore options, grants and tax incentives before you choose an approach

By Leonard Toenjes

Q: I own a fleet of diesel-based construction equipment—most of it well over 10 years old—as part of my contracting business. A lot of the equipment belches black clouds of smoke. When I have the money, I try upgrade with new machines, but they’re costly. I assume I can get tax breaks for retrofitting my existing gear with new engines. What are the financial advantages of greening my machines or how do I go about finding out about the financial advantages?

A: I think the time for action on your part may be coming closer than you think. Your retrofitting may be more of a requirement than a choice. A problem in urban areas that do not meet clean air standards is “fine particulate matter,” defined as particles with a diameter of 2.5 micrometers or less (PM2.5). A major source of PM2.5 emissions in urban areas is diesel-engine exhaust. Many environmental groups estimate that this costs more than $100,000 per ton in health costs. It is further asserted that approximately one third of diesel emissions are due to on-road vehicles and about two thirds are due to off-road equipment, such as construction equipment.

At the federal level, there are a variety of resources to check. Start with the Environmental Protection Agency at http://www.epa.gov/otaq/retrofit/. EPA has a National Clean Diesel Campaign that is mostly aimed at manufacturers, but should provide you some insight into the requirements surrounding these issues.

Leonard Toenjes is president of the Associated General Contractors of St. Louis. He can be reached at 314-781-2356 or ltoenjes@agcstl.org. Visit the organization’s Web site at www.agcstl.org.

California has been the most aggressive state in addressing this issue as it relates to construction. Most people in the construction industry who are concerned with the retrofit issue are keeping a close eye on the legal and regulatory developments in California. The California Air Resources Board (CARB) is the agency overseeing this. You can visit its website at http://www.arb.ca.gov/homepage.htm. A series of regulations and requirements are being promulgated by this agency, which is having a major impact on the ability of construction companies utilizing diesel-powered equipment to perform their work and stay in compliance. This activity is being watched very closely with the concern that very strict regulations will spread across the rest of the U.S. As you stated in your question, there are significant costs involved.

Both federal and statewide agencies are beginning to offer the financial incentives you mentioned. For example, the state of Oregon has a grant or tax credit program. To qualify, a contractor would equip a diesel engine with new aftermarket emissions reducing parts or technology that meets the state threshold, reduces diesel particulate matter emissions by 25% or more and uses the most effective passively-regenerated-emission-control technology available for the retrofitted equipment and specific application. Recently, EPA issued a series of grants to local non-profit agencies for many of the same purposes. Check with your local EPA office or state environmental agency for such grant or tax credit opportunities.