Providing coverage of Alaska and northern Canada's oil and gas industry
May 2018

Vol. 23, No.19 Week of May 13, 2018

AEA publishes draft VW settlement plan

Agency proposes five-years disbursement program, with specific funding for electric vehicle infrastructure and rural power supplies

Alan Bailey

Petroleum News

The Alaska Energy Authority has published a draft plan for the distribution of the $8.1 million that Alaska will receive from the class action lawsuit against Volkswagen for the company’s illegal defeating of emissions tests on its diesel engine vehicles. The funds must be spent by October 2027 on projects that result in the replacement of diesel engines in specific types of vehicles or equipment, or for equipment that supports zero emission vehicles such as electric cars.

The Alaska Energy Authority has been tasked as the lead agency in administering the distribution of the funds in the state.

AEA wants public comments on its draft plan, called the Beneficiary Mitigation Plan, by July 1. The plan sees the goals for use of the funds in the state to be the cost-effective reduction of nitrogen oxides emissions; the improvement of air quality and protection of human health; the leveraging of further funds that can increase benefits to Alaskans; and the targeting of actions that can benefit communities disproportionately impacted by air quality issues.

Emissions in Alaska

The agency’s plan says that, in part because of a high dependency on diesel engines for power generation in many parts of the state, Alaska produces more nitrogen oxides pollution in proportion to its power generation that any other state. Moreover, transportation, in particular road transportation and the operation of commercial marine vessels, accounts for a significant proportion of nitrogen oxides emissions in the state.

There has been discussion in Alaska about the potential for using some of the Volkswagen funds to support the construction of an electric vehicle charging infrastructure and to assist with the replacement of aging diesel engines used for power generation in rural communities.

“The VW fund offers a great opportunity to not only reduce emissions and improve air quality, but also a pressing reason to collaborate with our partners around Alaska, on projects such as the transition to more electric vehicles in our state,” said AEA Executive Director Janet Reiser in commenting on the AEA plan. “Alaska is cold and the distances between communities is large; for those reasons there is often skepticism about electric vehicles. However, technology is improving and the market for electric vehicles is growing. We’re most interested in hearing which projects, like these, Alaskans care most about when it comes to reducing pollution in our state.”

Five-year program

AEA proposes that the funds be disbursed over a five-year period - under the rules of the settlement, the funds must be used within 10 years, with no more than one-third used in the first year and no more than two-thirds in the first three years.

Under the draft plan, AEA proposes an expenditure of up to $1.2 million over the first three years of plan implementation on electric vehicle infrastructure. The agency also proposes $250,000 annually for five years as matching funds for state and federal funding of rural power house diesel engine upgrades.

In the first year of plan implementation, $1 million, subject to 10 percent matching funds from government entities, would be set aside for state and local government power supply projects and for projects eligible under federal diesel emissions reduction legislation. Remaining funds available in year one would be awarded to qualifying projects through a competitive bidding process.

A somewhat similar procedure would continue in years two and three. In each of years four and five, three percent of the total funding available to Alaska would be dedicated to power supply projects, with any remaining funding being made available to competitive bidding for qualifying projects.

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