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Introduced Freight RAILCAR Act Gives Tax Incentives to Retrofit

In August, a bipartisan group of House lawmakers introduced legislation to offer freight railcar owners across the country time-limited tax credits for investments in safer and greener freight railcars, whether they are new or refurbished.

Freight railcar owners will be able to claim a 50 percent tax credit for capital expenditures on equipment or technology enhancements that improve the fuel efficiency and/or emission standards compliance of their railcars.

The Freight RAILCAR Act (H.R. 8082) aims to bring sustainability faster to an industry that historically has been slow to reduce its dependency on fossil fuels.

In 2016, the transportation sector overtook the electricity sector to become America’s biggest source of anthropogenic greenhouse gases, which include nitrogen oxides.

Trucks and locomotive trains, which are the biggest movers of freight across the country, are also the biggest emitters of nitrogen oxides because of their heavy reliance on diesel fuel.

Cold chain transportation, which comprises an estimated 500,000 plus refrigerated railcars and trucks operational in America today, release 7.6 million kilograms of diesel particulate matter and 76 million kilogram of nitrogen oxides into the environment each year.

The Freight RAILCAR Act could help to cut diesel pollution by encouraging refrigerated railcar owners to replace their diesel systems with more environmentally friendly technologies that meet even strict emissions standards like the California Air Resource Board (CARB) regulations.


Photo by Jack Sloop on Unsplash

Existing Incentives for Retrofitting

This new legislation complements existing legislation, such as the Solar Investment Tax Credit (ITC) and the 2005 Diesel Emissions Reduction Act (DERA), that already provide federal and state-level incentives to reduce diesel engine pollution.

The ITC, which Congress first enacted in 2006 and extended in 2015, is a federal tax credit for investments in residential and commercial solar power generation systems. The credit steps down according to a set schedule from 30% in 2019 and is set to expire in 2022 unless Congress extends it again.

Under DERA, the EPA’s Office of Transportation and Air Quality provide annual grants to eligible states and territories to fund diesel engine retrofits and replacements with low-emissions power sources. Funding can cover up to 60 percent of the cost (labor and equipment) of such a replacement.

Essentially, the introduction of the Freight RAILCAR Act is indicative of a mood in Congress for eco-friendly legislation to be part of any new coronavirus recovery legislative package.

According to the D.C.-based Environmental and Energy Study Institute (EESI), a total of 142 bills were introduced in Congress between March and July this year to address environmental and energy issues.

Apart from H.R. 8082, there was H.R. 7516, which was introduced to advance innovation in and deployment of zero-emission electricity technology. Another key bill was S. 4060/H.R. 7303, which is known as the “Open Back Better Act of 2020”; it would provide additional funds for Federal and State facility energy resiliency programs.


How You Can Benefit from the Tax Incentives


Texas-based PolarPanel is a cleantech startup that retrofits refrigerated railcars and trucks with solar power/battery hybrid refrigeration technology. This technology will not only help cold chain players save on associated diesel costs, but will also help reduce emissions from their fleet.

Refrigerated unit owners could invest in the company’s technology enhancements to benefit from legislation like H.R.8082 and DERA.


Contact PolarPanel at info@polarpanel.co or use our Contact Form to learn more about what transport refrigeration solutions we can offer.

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