The effects of climate change, such as rising temperatures, sea level rise, and extreme weather events, are already causing significant disruptions and damage to critical infrastructure, human health, property, and the well-being of society.
These impacts are expected to worsen over time, and failure to act could lead to substantial economic costs, including an estimated $2.2 trillion annual loss in Federal revenue (in 2022 dollars) and a 10 percent reduction in U.S. GDP growth potential by 2100.
The transportation sector is the largest source of greenhouse gas emissions in the United States, accounting for about 29% (or one-third) of total emissions.
In response, the U.S. has made substantial progress in decarbonizing its transportation sector. In 2023, the Federal Administration released a national inter-agency strategy to cut all greenhouse gas emissions from the transportation sector by 2050.
Congress has also been proactive in efforts to decarbonize transportation. The CHIPS and Science Act, the Infrastructure Investment and Jobs Act (IIJA), and the tax credits and funding provided by the Inflation Reduction Act have significantly increased resources for transportation infrastructure and decarbonization.
Of the $660 billion in transportation funding that the 2021 Bipartisan Infrastructure Law (BIL) authorized for DOT over a five-year period, $27 billion is specifically for programs to reduce GHG emissions, including the Carbon Reduction Program ($6.4 billion), National Electric Vehicle Infrastructure program ($5 billion), Low or No Emission Bus Program ($5 billion), Congestion Relief Program ($250 million), Reduction of Truck Emissions at Port Facilities Program ($400 million), Transportation Alternatives Set-Aside ($7.2 billion), and Transit Oriented Development Planning Program ($68 million). In addition, the IRA established a $2 billion Low Carbon Transportation Materials Program.
These investments are already positively impacting the country by reducing harmful emissions, improving air quality, saving consumers money, offering more transportation options, and strengthening U.S. manufacturing and supply chains. However, while substantial progress has been made, the opportunity to fully capitalize on these federal investments is quickly narrowing.
Here’s a look at some of the key areas where the U.S. is advancing in decarbonizing the sector and the opportunities to continue its efforts:
1. On-Road Sector:
Government incentives, such as federal tax credits and state-level rebates, have encouraged consumers to purchase EVs. Major automakers are also ramping up EV production, committing to transitioning their fleets to electric models in the coming decades.
The Federal Highway Administration is actively expanding clean infrastructure for electric vehicles (EVs) and hydrogen alternative fuel corridors through initiatives like the National Electric Vehicle Infrastructure (NEVI) Formula Program and the Charging and Fueling Infrastructure (CFI) Discretionary Grant Program.
Additionally, the Joint Office of Energy and Transportation introduced the National Zero-Emission Freight Corridor Strategy in March, which aims to prioritize investments, planning, and deployment for medium—and heavy-duty vehicle fueling infrastructure to advance zero-emission freight along the nation’s corridors.
Here are some decarbonization programs for the on-road sector: Clean Heavy-Duty Vehicle Program; Domestic Manufacturing Conversion Grants; Carbon Reduction Program (CRP); National Electric Vehicle Infrastructure (NEVI) Formula Program; Charging and Fueling Infrastructure (CFI) Discretionary Grant Program; and Low or No Emission Vehicle Program.
2. Maritime Sector:
Decarbonizing maritime shipping will require the adoption of vessels that utilize zero and near-zero greenhouse gas (GHG) emission fuels and technologies, which are currently under development. To foster the growth of sustainable maritime fuels, the Maritime Administration (MARAD) intends to collaborate with stakeholders, support pilot and demonstration projects for alternative fuels and ship construction, and lead efforts toward both domestic and international low and zero-carbon fuel standards.
The Department of Transportation (DOT), in partnership with the Department of Energy (DOE) and the Environmental Protection Agency (EPA), is developing a comprehensive port decarbonization strategy. This strategy aims to coordinate funding efforts from various DOT, EPA, and DOE programs in accordance with legal guidelines.
In 2022, the Port Infrastructure Development Program allocated $653 million to fund 41 projects across 22 states and one territory. These projects focus on reducing GHG emissions, supporting the deployment of clean energy, and minimizing environmental impacts. Among these initiatives are the procurement of battery-electric yard equipment and associated charging infrastructure, the installation of microgrids and solar panels, and the development of scalable plans for transitioning ports and local maritime industries to zero-emission technologies.
In addition, the U.S. is working with international partners on a zero-emission shipping mission, with the goal of demonstrating commercially viable zero-emission ships by 2030. The U.S. plans to unveil a maritime decarbonization action plan later this year.
Here are some maritime sector programs: Clean Ports Program, Marine Highway Program, Reduction of Truck Emissions at Port Facilities Program, Passenger Ferry Grant Program, and Electric or Low-Emitting Ferry Pilot Program.
3. Aviation Sector:
The Federal Aviation Administration (FAA) released its Aviation Climate Action Plan in 2021, outlining a comprehensive, government-wide strategy for decarbonizing the aviation sector. Additionally, Congress recently passed the Hydrogen Aviation Strategy Act as part of the FAA reauthorization, mandating the agency to develop a strategy for the safe use of hydrogen in civil aviation.
Other decarbonization programs in the aviation sector are the FAST-SAF Grant Program and the FAST-TECH Grant Program.
4. Advancements in Alternative Fuels:
There is ongoing research and development into alternative fuels, such as biofuels, hydrogen, and renewable natural gas. These fuels have the potential to reduce emissions from sectors where electrification is challenging, such as aviation, maritime, and heavy-duty trucking.
Also, in October 2023, the Federal Government announced $7 Billion For America’s First Clean Hydrogen Hubs, aiming to accelerate the commercial-scale deployment of low-cost, clean hydrogen as an alternative source of energy and the creation of networks of clean hydrogen producers, consumers, and infrastructure.
Alongside promoting the decarbonization of the transportation sector, the federal government is also investing in clean energy manufacturing supply chains and creating well-paying jobs. The U.S. Department of the Treasury has been gathering feedback and formulating regulations and guidance on eligibility for federal clean energy tax incentives in the transportation sector to ensure these incentives are accessible and clear to eligible taxpayers.
2025 and Beyond: What’s Next?
The transportation sector must rapidly strengthen its workforce, supply chains, and critical infrastructure to achieve decarbonization goals. Given this sector’s interconnected nature, coordinated planning across regions involving both public and private stakeholders is essential. Funding, investment, and legislative efforts should prioritize technologies and fuels that offer the highest decarbonization potential while minimizing environmental impacts.
Below are the opportunities for driving further reductions in the U.S. transportation GHG emissions (DOT, 2024):
Federal Actions
A well-structured federal clean fuel standard covering the entire transportation sector could drive the development of low-carbon energy carriers—such as electricity, liquid fuels, and gaseous fuels—needed for comprehensive decarbonization.
Additional policies could include clean fuel mandates, production subsidies, measures to enhance the supply of climate-friendly feedstocks, and initiatives to accelerate the commercialization of emerging decarbonization technologies through research and development funding. These federal policies would likely inspire related policies and investments at the state and local levels.
State and Local Actions
State and local governments and community leaders have a crucial role in ensuring that transportation projects not only reduce emissions but also deliver local environmental and health benefits, with a strong focus on equity. State leadership is especially vital for supporting workforce development and coordinating efforts across communities to develop innovative approaches to meet community needs.
States are enhancing these efforts with their own electrification and decarbonization plans, roadmaps, policies, and regulations promoting advanced clean trucks and collaborative initiatives.
Project developers should actively listen to community input when designing projects and explore innovative communication methods with stakeholders, fostering transparency. This could include engaging beyond required public involvement processes, such as sharing real-time emissions data with local communities through innovative technologies that provide emissions inventory and action plans.
While significant efforts are still needed to meet U.S. emissions reduction targets, there is a clear path forward with many viable options and ongoing initiatives already making progress.
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