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Obtaining funding for clean transportation projects in North America: Q&A with GNA Senior Vice President Joe Annotti

29 March 2022 Kevin Adler

Consulting firm Gladstein, Neandross & Associates (GNA), based in Santa Monica, California, has helped vehicle fleet operators, original equipment manufacturers (OEMs), infrastructure providers, and technology developers secure more than $1 billion in funding in the advanced transportation technology and alternative commercial fuel arenas. New infusions of federal and state funding are accelerating the fleet transition.

In this Q&A, Net-Zero Business Daily by S&P Global Commodity Insights speaks with GNA Senior Vice President and Partner Joe Annotti about strategies for seeking funding, what funders are looking for, and where opportunities are growing.

Net-Zero Business Daily: What types of companies or organizations come to Gladstein, Neandross & Associates?

Annotti: GNA's resume of end-user clients and partners comprises some of the largest and most aggressive and progressive alternative fuel vehicle adopters and promoters. Our clients run the gamut from fleet operators and governmental organizations to nonprofits and environmental groups. Our services really span and support a wide range of organizations involved in commercial transportation.

Net-Zero Business Daily: What help are they seeking?

Annotti: More and more fleet operators are either pursing internal sustainability goals or preparing for regulatory compliance. The $1 billion in transportation incentive funding that GNA has secured for such clients has led to the purchase of over 8,600 medium- and heavy-duty vehicles and nearly 230 charging and low-emission fuel stations. GNA has also secured funding for numerous pre-commercial projects that have helped OEMs and technology developers secure much needed RD&D [research, development and demonstration] funding.

GNA also helps with ambitious, integrated projects like the Joint Electric Truck Scaling Initiative in Southern California, which will be deploying 100 battery-electric trucks on drayage and regional haul routes. This world-class project will be the largest of its size worldwide and will establish the precedent for how fleets can deploy ZEVs [zero-emission vehicles] at-scale.

Net-Zero Business Daily: Tell us about Gladstein, Neandross & Associates.

Annotti: GNA works with business, government, and communities to expand markets for environmentally friendly products and services. Scouting and securing access to public grants, incentives and other funds to assist the technology research, development, and deployment has been a critical element of our and our client's success over the years.

Our company brings a 28-year history and a team of approximately 80 professionals with in-depth technical, legislative, policy, marketing, outreach, and market development expertise in the advanced transportation technology and alternative commercial fuel arena. While we have enjoyed a wide range of success on several different projects on behalf of our clients, we are especially proud of our grant writing and resource procurement efforts. GNA has been involved in the development and passage of legislation and policies that have resulted in hundreds of millions of dollars in grant funding being directed to vehicle and equipment deployment, and fueling infrastructure development.

Net-Zero Business Daily: Is now a good time to get funding for clean transportation?

Annotti: Never better! There's funding in every state and at the federal level for a wide range of projects—vehicle deployments, infrastructure, fuel production, etc. In particular, we're seeing a lot of activity from a subset of states, including California, Texas, New York, New Jersey, and Pennsylvania. Those states have major metro areas with more traffic and thus are aggressively prioritizing emission reductions, including via both vehicles and infrastructure because they are mandated to meet goals for criteria pollutants including ozone attainment and NOx attainment.

We are at a moment in time when incentives are key to help clean vehicle technologies get closer to price parity with baseline technologies such as diesel, and funding agencies know incentives are critical to market penetration of clean vehicles, which we need to see at-scale as we make progress towards a more sustainable transportation sector.

Net-Zero Business Daily: On the consumer level, battery-electric vehicles (BEVs) reached a record 6% of new car sales in the US in the fourth quarter of 2021. Do you see funding opportunities for fleets to transition to BEVs?

Annotti: There is an upward trend for BEVs and, increasing, oil prices are surely helping drive consumer interest. While GNA doesn't engage in the light-duty car segment, we are seeing similar trends in the medium- and heavy-duty space in which we specialize. There are several drivers of this trend, but none more important than sustainability and regulations. More and more companies are making commitments to sustainability goals, which most often focus on GHG reductions. These companies control huge volumes of freight, so the implications of these sustainability goals on transportation is enormous.

The other side of the coin is the regulatory landscape. Key regulations like the Advanced Clean Trucks Rule in California are going to make a huge impact on the transportation landscape, as it [and others like it] mandate increasingly stringent ZEV sales goals.

With those twin drivers in place, we see the availability of funding and the need for it at an all-time high. Funding agencies are putting out solicitations for BEVs, but the incremental cost for BEVs is still relatively high compared to other clean transportation technologies, so the agencies realize incentives are needed to assist new technologies. Also related to BEVs, funding from utilities is increasing across the nation, which can take many forms including fleet-friendly charging rates, demand charge waivers, or infrastructure incentives and rebates.

Net-Zero Business Daily: Can you share a couple of "lessons learned" from the hundreds of organizations you've supported?

Annotti: Fleet operators can very easily get overwhelmed by the sheer volume of funding opportunities. At any given point, GNA's team is tracking over 500 different incentive programs across the US and Canada. That can be very daunting to newcomers in the incentives space. Thus, we advise a refined, targeted approach to start. Understand the landscape, find the right fit on a couple early projects, and secure funding early. With that initial grant experience secured, our customers have a much better awareness of the funding process and can expand their review of additional programs.

Net-Zero Business Daily:How do you help an organization find the appropriate scale of a project that meets its goal and capabilities, but also fits existing funding opportunities?

Annotti: Organizations of all sizes apply for funding, and so funding applications can be modest, such as a fleet operator simply trying to purchase a few electric transit vans, while other organizations are trying to roll out a large, national fleets of Class 8 trucks. In some cases, there are funding carve-outs for specific types of operators, such as with California's HVIP funding [Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project] in which they have set aside funds for small fleet operators. Success depends on understanding the many funding sources, the goals, and targets for those programs, and then applying for the ones best matched to your specific project and goals.

Net-Zero Business Daily: What are common mistakes to avoid?

Annotti: Applicants often underestimate the resources needed to apply for grant funding. Even the most straightforward of voucher incentive programs, like HVIP in California or NYT-VIP in New York, can take dozens of hours of staff time to assemble the required documentation. We've seen plenty of projects fall by the wayside because the required signatory was unavailable on application day! It's the little things that most regularly derail grant applications.

Net-Zero Business Daily: It seems like more funding is available now than ever before. If so, does that help newcomers?

Annotti: Yes, the level of funding and the number of programs, and the dollar amounts in those programs are increasing. Access for newcomers depends on the program; for example, some of the more competitive funding programs favor those applicants with experience in deploying alt fuel or zero emissions projects. You'll compete better if you have experience with these technologies. But newcomers are benefitting from overall increases in infrastructure and truck funding.

In some regions, utilities will help smaller fleets with fewer resources in the funding application progress. One we're very familiar with is Southern California Edison (SCE)'s Transportation Electrification (TE) Advisory Services Grant Assistance Program, which helps medium- and heavy-duty fleets apply for competitive funding opportunities to reduce the cost of purchasing EVs, with a focus on hands-on support for small and mid-sized commercial fleets. The rationale is that state and local grants for EVs are often a complex and highly competitive process that most small fleets can't afford. SCE's Grant Assistance Program connects fleets with dedicated funding experts to walk them through this process step-by-step, ensuring they apply to the right funding program and that their application is complete and competitive, at no charge.

It bears mentioning that many utility companies also are providing incentives that pay for charging infrastructure installation, which can be a relatively straightforward funding source to tap.

Net-Zero Business Daily: What's the typical range of matching funds that is expected?

Annotti: For vehicles, funding usually maxes out at the price delta between the cost of a baseline vehicle, such as diesel, compared to the cost of a clean vehicle technology. So, effectively the "match" is the cost of the baseline vehicle, in many scenarios. For infrastructure, 50% match is a typical number. Projects that provide more cost share or lower costs will be more competitive in the eyes of the funding agency.

Net-Zero Business Daily: What are good resources for more information?

Annotti: GNA's Funding 360 program is a great resource, of course. You can also sign up to receive information from listservs that the funding agencies use to communicate their programs, which announce when funding or application opportunities will open up. There will also be a funding workshop at ACT Expo coming May 9-12 in Long Beach, California.

Net-Zero Business Daily: How does the future look for funding?

Annotti: The future is bright for clean transportation incentives. [In the US,] we have a very robust $3 billion annual market for clean transportation incentives—and that is BEFORE the 2021 Infrastructure Investment and Jobs Act funding is accounted for. Moving ahead in 2022, we're going to see an aggressive jump in funding for the infrastructure components of zero-emissions projects. The trucks and buses will continue to see healthy investments, but government agencies are increasingly upping the ante on the infrastructure side of clean transportation projects.

Net-Zero Business Daily: What would you like to see to make obtaining and using clean transportation funding even better?

Annotti: We would like to see long-range trucking receive more funding focus. A very large percentage of emissions and miles traveled are from long-haul trucks, which do not follow geographic boundaries, but agencies often place geographic restrictions on operations, such as a requirement that 90% of the operations for a funded truck must be in a particular state. Those trucks aren't being transitioned to clean technologies because the grant funding generally isn't geared to wide geographies. Telematics are widely used now and can increasingly be a solution to provide the agencies with data so they know truck travel patterns and can disperse grant funding accordingly, and that may help address this opportunity on a larger scale.

Posted 29 March 2022 by Kevin Adler, Chief Editor

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.


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