Voucher Incentive Programs:
A Tool for Zero-Emission Commercial Vehicle Deployment
As governments and industry work to accelerate the replacement of diesel engines with zero-emission technology at the pace required by science-based climate targets, the voucher incentive program (VIP) has proven to be a powerful tool to establish viability of zero-emission trucks and buses. This white paper offers a deep dive into the VIP model and how it ensures faster adoption of zero-emission trucks, buses, and other commercial vehicles through direct and upfront reductions in purchase price.
This paper outlines the basic steps in an effective VIP and success stories across the country that exhibit the core strengths of the VIP model: design simplicity, transparency and certainty of outcome, and flexibility/adaptability. It also highlights lessons learned and recommendations from the jurisdictions where the VIP model has been implemented, providing insights on how to make vehicle acquisition easier and more affordable and how to seamlessly integrate funding requirements to produce a simple, stable, and successful program.
Several key takeaways include:
- With the passage of the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), states now have much greater access to dollars that can be used to structure and run their own VIP and other incentive programs. Nonetheless, to meet the scale of emissions reductions required and to comply with IIJA match funding requirements, governments will need to bring their own sources of funding to the table as well.
- Tax credits alone are not the preferred tool for speeding commercial vehicle transformation; however, a tax credit combined with a VIP would be highly effective and might allow the purchase incentive to be spread across more vehicles than if it were operating alone.
- VIP designs can be highly customized to allow program planners to express preferences for clean air goals, invest in targeted communities, and evolve to add new technologies. The VIP model can flexibly accommodate a wide range of policy objectives and funding sources.
- As of the end of January 2023, current VIP programs and their ongoing investments have together spurred the purchase of over 15,000 clean vehicles and equipment—more than 9,000 of which (60 percent) were zero-emission. Based on a documented ability to leverage $3 in additional investment for every $1 of voucher funds, these programs have also driven more than $5.1 billion in economic activity. When currently available funds are included, these programs are on track to push forward more than $9.6 billion in clean tech activity once all currently available funding is reserved.
- VIPs are just one critical part of what comprises a larger transition to clean commercial vehicles. VIPs work best when implemented in concert with complementary efforts to help fund and streamline infrastructure installation, provide fleet planning assistance, and empower workforce development.