EPA Clean School Bus Program 2023 Rebates: What to Know and What to Watch

On September 28, EPA announced the latest round of Clean School Bus Program funding. EPA is making $500 million available through January 31, 2024 for school districts to swap out aging diesel buses with cleaner alternatives. Award recipients can receive up to $345,000 per electric school bus, with a maximum of 25 school buses. Check out our 2023 Rebates At a Glance fact sheet for details.

The last time EPA offered Clean School Bus rebates in 2022, it nearly doubled the number of electric school buses on order across the country. The 2023 rebates look to be just as impactful to communities nationwide — and to the movement to provide a #CleanRide4Kids.

Read on for five things to know, and five things to watch.

5 Things to Know

1. The rebate application is quick, easy, and non-competitive — ideal for school districts just starting their electric school bus journey. EPA rebates request minimal information about the buses to be replaced and the school district they would service. Awards are selected through a randomized lottery rather than a competitive scoring of project narratives. The rebates don’t require a minimum number of buses to be replaced, making the funding accessible for smaller fleets. For school districts that have yet to electrify, EPA rebates present an easy opportunity to buy their first electric school buses.
2. Funding is delivered upfront. While the EPA calls them “rebates,” award funds are sent to winning recipients before they have to pay for the bus or charging station. Once EPA notifies an applicant they have won a rebate, the recipient can place their order and send EPA proof of their purchase. EPA will then send the winner their awarded funds. Delivering funding upfront is a critical way to overcome the budget shortfalls many transportation departments are facing. This is especially important for low-income or historically under-resourced communities that have not had access to capital and financial resources.
3. Funding can be used for a variety of EV charging infrastructure needs. Rebate recipients can choose how much of their award they spend on the bus and how much they spend on EV infrastructure, giving them flexibility to allocate awards based on their needs. From design and engineering, trenching and wiring, labor and permitting, to telematics and charge management software, EPA rebate funding can be used for many electric school bus infrastructure projects — so long as they’re on the customer’s side of the electrical meter. Recipients can choose whether to purchase Level 2 or fast chargers, or even bidirectional chargers capable of vehicle-to-grid connections. Battery storage and renewable energy systems are also eligible. Moreover, funding can be used to install electrical capacity to anticipate future deployments, such as additional electrical conduit for later wiring.
4. Funding can be used to train and prepare workers. EPA rebates can be used to train mechanics, drivers, electricians, and other essential staff on how to successfully operate and maintain electric school buses. EPA also encourages applicants to develop workforce impact assessments that consider training needs and student and worker safety, and incorporate workers into transition planning. EPA explicitly urges school districts to present the displacing workers or lowering their wages during this transition. Properly trained and adequately resourced workers are just as vital to successful deployments as the buses and chargers.
5. EPA funding can, and should, be paired with IRA tax credits. The Inflation Reduction Act of 2022 created new tax credits that EPA rebate recipients can apply to help offset the costs of their bus and infrastructure. Through 45W, the Qualified Commercial Clean Vehicle Tax Credit, eligible applicants can receive up to $40,000 per new electric school bus purchased. Through 30C, Alternative Fuel Vehicle Refueling Property Tax Credit, eligible applicants can receive up to $100,000 per new charger. Since school districts don’t typically file taxes, they can receive these credits as a check by filing some forms with the IRS through a new system called elective payment. Stacking these opportunities allows EPA’s funding to stretch further.

5 Things to Watch

1. Speed of transition to a clean ride for kids. Under program guidelines, during the lottery EPA will first select the highest numbered application for each state that applied, without regard to fuel type. This contradicts EPA’s own findings under the 2022 Clean School Bus rebates, when over 2,000 applicants from every U.S. state requested nearly $4 billion in funding — 90% of them requesting electric school buses. EPA was able to double the total award amount to $900 million, and still nearly 1,500 school districts landed on the rebates waitlist, overwhelmingly waiting for electric school bus funding. Popular demand is clear: school districts want support to transition to electric school buses. We’re watching how EPA responds to this demand for the buses that have proven to be the best choice for children’s health, school district cost savings, and cleaner air.
2. Impact on most impacted school districts. Low-income communities and communities of color are disproportionately exposed to diesel pollution. While low-income school districts are prioritized for EPA funding, communities breathing the worst air are not, as air quality is not a consideration for funding. Additionally, disadvantaged school districts are more likely to lease, not own, their buses. Their only way to apply to the Clean School Bus Program is through their contractor. If they want to bring bus service in-house, or are otherwise unhappy with their private bus fleet, they cannot apply without finding a diesel bus to replace and scrap. We’re watching how EPA addresses these concerns that rebate funding won’t reach the communities who most need it.
3. Impact on manufacturing. The EPA Clean School Bus Program is delivering unprecedented amounts of funding to transform the U.S. school bus fleet, and manufacturers stand to benefit greatly. They’re eligible to apply for EPA rebates on behalf of school districts, and will also see electric school bus orders skyrocket as rebate recipients make procurement decisions. We’re watching how bus manufacturers meet this moment: how quickly they ramp up their production to meet demand, and when they begin to produce at the economies of scale necessary for electric school buses to reach a cost equivalent to diesel.
4. Impact on workers. These historic levels of funding are also affecting manufacturing workers, who are critical to producing school buses and are working on tight deadlines and quotas. EPA says manufacturing workers should “have high-quality jobs with family-sustaining wages and benefits, safe working conditions, and the free and fair choice to join a union.” To that end, EPA has asked manufacturers to fill out voluntary questionnaires about their workforces. Not all manufacturers have responded to the survey and not all manufacturers have been detailed in their responses. These private companies are directly benefiting from $5 billion in public funding — and we’re watching whether they take the high-road with their workers.
5. Solutions to infrastructure challenges. Despite funding a variety of infrastructure needs, EPA rebate funding stops at the customer’s side of the meter. Any upgrades needed on the utility’s side will require alternative funding, and that’s if the utility is willing. School districts are encouraged to contact their utilities about electric school buses, but their utilities are not required to help them — or even to respond. More technical support from the Joint Office of Energy and Transportation is a good first step, but utilities need to rise to the occasion, too. Electric school buses mean more revenue and a more resilient grid. We’re watching how utilities and public service regulators do to help school districts smoothly transition to electric school buses.