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Alternative Fuels

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Diesel Fuel


Diesel fuel and heavy duty diesel engines have been widely used in the transportation sector. All highway diesel fuel now requires a reduction in the sulfur content of the fuel to 15 parts-per-million (ppm). Diesel fuel is derived from petroleum. It is composed of about 75% saturated hydrocarbons, and 25% aromatic hydrocarbons.


  • Well established technology and has a sizable market in the  transportation sector, including transit.
  • Current diesel transit buses have the lowest life cycle costs.
  • The distribution and maintenance infrastructures are already in place  and the fuel is widely available.


  • Current technology does not meet 2010 EPA emissions standards.
  • Relies on imported oil and it is not a renewable source.
  • Diesel typically has higher tailpipe emissions than alternative fuels or clean propulsion vehicles.
  • Lower fuel economy than hybrid diesel-electric propulsion bus.

More Detail

  • Diesel buses need additional exhaust emissions equipment to meet the 2007 emissions standards, but the cost is not a significant factor (about 0.5% of the total vehicle cost).
  • Manufacturers have expressed concern about the significant challenges needed to meet 2010 EPA emissions standards.
  • Fischer-Tropsch diesel is a synthetic diesel fuel made from coal, natural gas, or biomass feedstock via the Fischer-Tropsch process.  The fuel has the same property regardless of the feedstock and no engine modifications are required. 
  • This new ultra low sulfur diesel (ULSD) regulation applies to all diesel fuel, diesel fuel additives and distillate fuels blended with diesel for on-road use, such as kerosene, however, it does not yet apply to locomotives, marine, or off road uses. By December 1, 2010, all highway diesel will be ULSD. Non-road diesel will transition to 500 ppm sulfur in 2007, and to ULSD in 2010.
  • The EPA mandated the use of ULSD fuel in model year 2007 and newer highway diesel fuel engines equipped with advanced emission control systems that require the new fuel. These advanced emission control technologies will be required for marine diesel engines in 2014 and for locomotives in 2015.


Description Biodiesel is a renewable fuel that is manufactured from domestically produced oils such as soybean oil, recycled cooking oils, or animal fats.  The most common biodiesel blend is B20 (20% biodiesel and 80% diesel). Other blends such as B5 or B2 are used as well, but in a limited form.


  • B20 or lower biodiesel blends can be operated in most any diesel engine with little or no modifications.
  • Lower tailpipe emissions of particulate matters (PM), non-methane hydrocarbons (NMHC) and carbon monoxide (CO) than diesel.
  • No major infrastructure upgrade needed.
  • Biodiesel superior lubricating properties can reduce wear in fuel injection systems.
  • Provides better fueling flexibility to transit agencies in switching between diesel and biodiesel.


  • Contains less energy per gallon than conventional diesel. The energy content per gallon of neat biodiesel (B100) is approximately 11 percent lower than that of petroleum diesel.
  • Modest increase in nitrogen oxides (NOx) emissions, depending on the source of the biodiesel. Further testing is in progress.

More Detail

  • By weight, 10% or more of B100 is oxygen. The presence of oxygen improves combustion and reduces particulates, hydrocarbon, and carbon monoxide - but tends to increase nitrogen oxides.
  • Biodiesel can be incompatible with older fuel system seals, may also loosen deposits of that settle from petroleum diesel over time, and these loosened deposits can clog fuel systems.
  • Biodiesel tends to have lower performance and reliability in colder climates due to its forming wax crystals at a higher temperature than petroleum diesel.
  • An exact number of biodiesel fuel vehicles in transit are uncertain, because of the fueling flexibility to the transit agencies.

Hybrid-Electric Propulsion

Description Hybrid-electric buses are powered by a combination of an engine with an electric motor and energy storage system.  The engine may work with the motor with both providing power directly to the wheels (parallel hybrid), or the engine may be used only to operate an electric generator while an electric motor provides all the power to the wheels (series hybrid).  Hybrid buses increase fuel economy by using the electric motor as a generator to slow the bus, capturing and re-using braking energy.  Hybrids also allow the engine to operate more efficiently.  In the last 5-10 years, several hybrid-electric bus models have been commercialized.  Most hybrid buses are diesel-electric (and could operate on biodiesel), however a small but increasing number are gasoline-electric.  


  • May increase fuel economy by up to 40% or more.
  • Uses existing fueling infrastructure.
  • Requires minimal maintenance facility changes.
  • Likely reduction of brake system maintenance frequency and costs.
  • Generally lower emissions of both regulated pollutants and greenhouse gases.
  • Electric motors produce full rated torque from zero speed resulting in superior acceleration.
  • Passengers and bus operators like hybrid buses – good for ridership and community acceptance.


  • Significant capital cost premium (currently over 60% relative to diesel buses, though that may come down).
  • Potential fuel economy advantages may not be realized if the route has relatively high speeds and few hills or stops, or if drivers do not consistently use techniques to maximize fuel economy.
  • Depending on the particular battery technology used, the operating profile, and how they are maintained, hybrid system batteries may need replacement from one to three times during the useful life of a hybrid bus, at a lifetime cost per bus estimated at $40,000 to $75,000.

More Detail

  • Hybrid buses are still relatively new.  No hybrid buses have completed a full 12-year useful life.
  • Hybrid technologies are still maturing faster than diesel technologies, and sales volumes are increasing.  Therefore, the cost differential between hybrid and conventional buses is likely to shrink, but it will not disappear.  It will probably take a significant increase in fuel costs and/or a breakthrough in battery (or other energy storage) technology to make hybrid buses fully cost-competitive with diesel buses on a life-cycle basis.
  • “Hydraulic hybrids” that use reversible hydraulic motor/pumps and store energy in compressed fluids rather than batteries are being developed (and demonstrated in delivery trucks).  Hydraulic hybrids are still in the development stage, but with further work may offer much of the advantages of hybrid-electric buses at a significantly lower cost.
  • Plug-in hybrids are a special type of hybrid-electric bus with larger batteries that can be recharged by plugging into the electrical grid.  Plug-in hybrids can operate for tens of miles on battery power, allowing the engine to be shut off for a significant part of the operating day. 

Natural Gas

Description Natural gas comes in two forms: compressed (CNG) and liquefied (LNG).  If the gas is compressed, it typically comes through a utility pipeline.  If the gas is liquefied, it is typically delivered by truck.  Most of the natural gas transit vehicles in the U.S. use CNG. Natural gas vehicles are clean burning and produce significantly fewer harmful emissions than gasoline or diesel; the emissions characteristics between CNG and LNG are the same.  


  • Natural gas is domestically produced and widely available.
  • CNG is the most widely used alternative fuel in transit bus fleets and transit agencies are comfortable with the technology.
  • Per unit of energy, natural gas contains less carbon than any other fossil fuel, and thus produces lower carbon dioxide (CO2) emissions.
  • CNG buses meet 2007 EPA emission standards with little additional cost.
  • Manufacturers plan to release advanced 2007 CNG bus engine technology that meet 2010 EPA NOx emission standards of 0.2 g/hp-hr.


  • CNG requires fueling and maintenance facility modification.
  • CNG facilities incur an additional electrical cost to power the compressors used to compress the natural gas.
  • Natural gas transit vehicles use spark ignition engines, which have lower thermal efficiency than compression ignition (diesel).
  • Natural gas transit vehicles have a significant fuel economy penalty compare to diesel (approximately 12%).

More Detail

  • Natural gas primarily consists of methane (around 90%), with small amounts of ethane, propane and other gases. Methane is the simplest hydrocarbon molecule made up of one atom of carbon and four of hydrogen (CH4). It is lighter than air and burns almost completely, with by-products of combustion being carbon dioxide and water.
  • CNG and LNG vehicle range generally is less than that of comparable gasoline- and diesel-fueled vehicle because of the lower energy content of natural gas.

Fuel Cell Power

Description Fuel cells produce electricity continuously and directly, through a chemical reaction. Individual fuel cells are combined into “fuel cell stacks” to provide sufficient power in a single circuit.  There are currently several different types of fuel cells under development, which can run on a variety of fuels.  Hydrogen fueled Proton Exchange Membrane (PEM) Fuel cells are the most common in transportation applications. Hydrogen and ambient oxygen are fed into opposite sides of the fuel cell, separated by a membrane (the PEM), forcing a flow of electrons through an attached circuit to complete the reaction of hydrogen and oxygen into water.

PEM FUEL CELL Electrical Currents of Anode, Electrolye and Cathode depicting fuel in and excess fuel out. Air in water and heat out.


  • “Zero-emissions vehicles”: Hydrogen fuel cells emit only water and excess (unreacted) fuel, with no carbon or greenhouse gas footprint at the point of use.
  • Hydrogen can be produced through multiple pathways, including the electrolysis of water (improving energy security and independence).
  • Noise and vibration from the fuel cell are negligible and are produced by accessories (mainly air conditioning).


  • Fuel cells provide a constant amount of power, requiring vehicles to include additional onboard electrical storage (as a hybrid-electric vehicle) to meet peak load and optimize vehicle range and fuel efficiency.
  • Hydrogen storage capability is a major limiting factor in fuel cell development, affecting vehicle range and fueling infrastructure. 
  • Fuel cell vehicles are still in the developmental stage, with the latest buses costing from $1.5 M to $3.5 M (up to 10 times the cost of an equivalent diesel bus).
  • Significant investment required to develop hydrogen fueling infrastructure.

More Detail

  • Since fuel cells are still being developed, costs are likely to change dramatically in the future (National Fuel Cell Bus Program goal to lower cost of a fuel cell bus to less than 5 times that of a commercial bus by 2015). 
  • Currently, the most cost effective method of producing hydrogen is natural gas reformation, which emits regulated pollutants (including greenhouse gases).
  • Fuel cells produce electricity, requiring electric motors, which can take advantage of hybrid-electric technologies (such as energy recovery during braking).
  • Fuel cells also have potential for application as auxiliary power units (APU’s).
  • National Fuel Cell Bus Program (NFCBP) authorized $49 M over four years to facilitate the development of commercially viable fuel cell bus technologies and related infrastructure ($11.25M in FY06, $11.5M in FY05).
  • Over $10 M was provided in additional fuel cell research funding by FTA in FY05 and FY06 ($6.94 M and $3.96 M, respectively)
  • There are currently fewer than 10 fuel cell prototype buses operating in demonstration projects throughout the United States.
  • The National Fuel Cell Bus Program will add 12 prototype fuel cell buses to the national demonstration fleet.


Alternative Fuels and Propulsion Vehicle Incentives



Many Federal and State incentives and laws are designed to encourage the purchase of alternative fuel vehicles.  Federal incentives range from tax credits to grant programs.  Transit agencies purchasing new qualified alternative fuel vehicles will likely be eligible for several incentive programs.  A selection of major programs is included below, along with links to other sources of information.  Transit agencies should consult the provided IRS, EPA and Department of Energy sites for complete lists of incentives.

The major FTA administered incentive program is the Clean Fuel Grant Program.  This program (Section 5308, U.S.C. 49) was developed to assist non-attainment and maintenance areas in achieving or maintaining the National Ambient Air Quality Standards for ozone and carbon monoxide (CO) and to support emerging clean fuel and advanced propulsion technologies for transit buses.  To date, the Clean Fuel Grant Program has not been provided discretionary funding.

Links and Resources

Federal Transit Administration:

Environmental Protection Agency:

Department of Energy:

Internal Revenue Service:

Related Reports

Contact Information

For additional information about the Clean Fuels Grant Program, contact the FTA Office of Program Management: (202) 366-2053.

For more information about clean fuels in the transit industry, contact our Office of Research, Demonstration and Innovation at (202) 366-4052.

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Commitment to Accessibility: DOT is committed to ensuring that information is available in appropriate alternative formats to meet the requirements of persons who have a disability. If you require an alternative version of files provided on this page, please contact