November 8, 2016 12:20 PM, EST

Heavy-Duty Diesel, Natural-Gas Engine Advocates Vie for Share of VW Emissions Settlement

Luke Sharrett/Bloomberg News

Advocates of heavy-duty engines powered by diesel or natural gas are separately vying for a share of the windfall directed at nitrogen oxide mitigation in all 50 states after recent judicial approval of the federal government’s multibillion dollar settlement with Volkswagen AG. At issue was years of excessive emissions from some of VW’s vehicles.

“Competition for settlement dollars in each state has already started in earnest,” said Glen Kedzie, energy and environmental counsel at American Trucking Associations.

A federal judge Oct. 25 approved the terms of the $14.7 billion settlement that came after it was shown VW at times intentionally used software to defeat emissions controls in about 500,000 vehicles from 2009 to 2015, which increased NOx emissions beyond the regulated limits.

As part of the overall settlement, $2.7 billion will fund NOx mitigation strategies in all 50 states, based on the number of polluting VWs operated there. A court-appointed trustee will manage the fund, and states will decide how to spend their share.

“The VW settlement affords a tremendous opportunity for states to provide financial assistance to replace older diesel trucks with newer, lower-NOx emitting diesel or natural-gas vehicles,” Kedzie said.

Six states will receive about 40% of the funds. California is set to receive $381 million, Texas $191 million, Florida $152 million, New York $117 million, Pennsylvania $110 million and Washington $103 million, according to the settlement.

Vying for the funds could get messy, one diesel advocate suggested, noting that marine and rail projects will be eligible, too.

“I don’t want to call it a food fight but there is going to be a lot of posturing amongst different technologies and their folks about which is the best thing,” said Allen Schaeffer, executive director of the Diesel Technology Forum, which termed it one of the largest settlements of its kind.

VW will put the money in over three years, and the first check for $900 million will come in November, and then annually until the full amount is paid, said Matthew Godlewski, president of Natural Gas Vehicles for America.

The first projects should be taking shape in about a year, he said.

“Any way you cut this, this is going to be a substantial opportunity for the natural gas vehicle industry to be part of this and sell more engines, build more stations, more dispensers, more compressors,” Godlewski said. “This is going to be a good boost to the industry over the next 10 years as these monies are spent.”