The US school bus system, with almost half a million buses, is the country’s most extensive mass transit system, carrying over 21 million children to school daily. This post explores the opportunities that electrifying this vast fleet presents for states and electric utility companies to achieve positive health, environmental, and economic development outcomes.
Health impacts of diesel school buses
A primary motivation for electrifying school buses is the health of the 21 million children who ride buses to school each day. Also, many other commuters and communities live along high-traffic corridors where the buses go by.
Diesel exhaust, a known carcinogen, poses significant health risks, including respiratory issues and cognitive development impacts. Over 90 percent of school buses run on diesel fuel, exposing children to these risks daily. The negative health impacts of diesel buses don’t stop with the children riding these buses. Diesel air pollutants from buses also collect in the air around schools, and because these buses primarily travel through residential areas, the emissions affect individuals where they live.
Moreover, underserved communities face a disproportionate share of air pollution and other harms associated with diesel emissions.
Electric school buses as a solution
Electric school buses offer substantial health and environmental benefits. They produce zero tailpipe emissions, significantly reducing children’s and adults’ exposure to harmful pollutants. Electric school buses also lower the greenhouse gas (GHG) emissions associated with transportation. According to the US Environmental Protection Agency, the nation’s transportation sector accounts for 28 percent of GHG emissions. Electric school buses emit less than half of the GHGs per mile compared to diesel buses on average. Additionally, emissions associated with energy generation are declining as states move toward renewable energy sources.
Replacing all diesel school buses with electric school buses could avoid approximately 8 million metric tons of GHGs annually, equivalent to removing two million cars from the road.
Economic benefits of electric school buses
Electrifying school buses can lead to long-term savings for school bus operators. On average, fuel costs for electric school buses are 50 percent less than diesel buses, and maintenance costs can be up to 40 percent lower. Operators can maximize savings with off-peak charging and vehicle-to-grid technologies, which allow buses to deliver power back to the grid during high-demand periods.
Implementing vehicle-to-grid technologies also has benefits for utilities. By delivering power back to the grid during peak demand, they can help lower infrastructure investments and decrease the need for costly grid upgrades.
Federal incentives for electric buses
Federal legislation like the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA) supported electric school bus deployment through programs like the Clean School Bus Program, the Clean Heavy-Duty Vehicles Program, and tax credits offered on the purchase of electric school buses and infrastructure. The Clean School Bus Program allocates $5 billion over five years for electric school buses, with nearly $3 billion already awarded to fund approximately 8,500 replacements. The Clean Heavy-Duty Vehicles Program provides $1 billion to replace existing non-zero-emission Class 6 and 7 vehicles with zero-emission alternatives, with about 70 percent of the funding for school buses. Additionally, eligible entities can claim tax credits on electric school buses and infrastructure through mechanisms like elective pay and the Qualified Commercial Clean Vehicle Credit.
In January 2025, President Trump issued Executive Order 14154, which temporarily paused disbursing funds under the IIJA and IRA, including funding for the EPA’s Clean School Bus Program. While funds already obligated to school districts are unlikely to be reclaimed by the federal government, the pause may impact other school districts that had wanted to apply to the program.
Utilities’ role in electrifying school buses
Electric school buses offer significant advantages for utility companies by effectively managing grid load. These buses can store energy during off-peak periods and discharge it back to the grid during peak demand times. This capability helps utilities avoid reliance on costly and environmentally harmful peaker plants to meet electricity needs.
Utilities are keen on exploring these benefits. They promote electric school buses in their service territories by assisting school bus operators in understanding the process of requesting new utility services, including associated timeframes and costs.
Many utilities offer incentive programs to customers who intend to electrify their fleets. Incentive programs can help address high upfront costs, as seen in Dominion Energy’s partnership with Virginia school districts to provide 135 electric school buses.
Utilities are piloting electric school buses as “batteries on wheels” through managed charging and vehicle-to-grid technologies. Managed charging for electric school buses involves controlling the timing and power level of charging to optimize benefits for both the customer and the electric grid. Vehicle-to-grid technologies enable the buses to send stored energy back to the power grid, helping to stabilize and support it while helping school districts generate revenue from the buses while they are parked.
For example, the Cajon Valley Union School District in California partnered with San Diego Gas & Electric to incorporate seven vehicle-to-grid-capable electric school buses. The buses are enrolled in the Emergency Load Reduction Program (ELRP), earning $2 per kilowatt hour for energy sent back to the grid during emergencies.
Innovative rate designs can incentivize charging behaviors that minimize system impacts and benefit operators and utility companies. Rate structures can offer lower prices for customers who charge during off-peak hours, typically overnight, when electricity demand is lowest. This encourages school districts to charge buses when stress on the electric grid is minimal, reducing the need for costly infrastructure upgrades to meet demand.
By incentivizing charging outside peak usage periods, utilities can help school districts avoid demand charges (i.e., higher costs associated with increased power usage during specific time intervals). Shifting demand off-peak prevents significant cost increases for operators while managing grid load for utilities. (Learn about the impacts of demand charges in our previous post.)
State role in advancing school bus electrification
State governments have recently taken significant steps to advance school bus electrification. Seven states have enacted legislation adopting zero-emission school bus transition requirements with varying timelines.
- New York enacted the first statewide school bus electrification mandate in 2022, requiring all new school bus purchases to be zero-emissions by 2027 and all school buses to be electric by 2035.
- California passed AB-579 in 2023, requiring all new school bus purchases to be zero-emission by 2035.
- Delaware introduced legislation in 2023 requiring 30 percent of all school bus purchases to be electric by 2030.
- Connecticut, Maine, Maryland, and Washington have followed suit with statutory requirements for school bus electrification.
These states cover about a fifth of the country’s school bus fleet, and a quarter of the country’s riders would benefit from this transition.
In the Midwest, Michigan has a non-binding goal in the Michigan Healthy Climate Plan to transition to 100 percent of school buses sold to be electric by 2030. Colorado and Washington, D.C., also have non-binding transition goals, aiming for 100 percent zero-emission buses on the road by 2035.
Many states have gone further and supported the transition to electric school buses with funding programs. In 2023 alone, states approved $238 million in new support for electric school buses. This included the development of a $13 million Electric School Bus Grant program in Minnesota and a historic $125 million funding program for electric school buses in Michigan.
California led the way in electrifying school buses with its Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP), which started in 2010. The project has funded 1,213 bus commitments to date. In 2024, the state announced it would further its lead in having the cleanest school buses in the nation by adding 1,000 new zero-emission school buses on the road with a $500 million Zero-Emissions School Bus and Infrastructure (ZESBI) program. This is one of the many programs the state has introduced to support school bus electrification over the years.
Additionally, 28 states have utilized their Volkswagen Clean Air Act Civil Settlement funds to invest in 706 electric school buses.
Ramping up efforts to electrify school buses amid federal uncertainty
The US has nearly 5,000 electric school buses on the road, and school districts have committed to adopting 12,241 electric school buses, thanks to the generous support from the federal government, state governments, and utilities. Many of the commitments have been funded by the EPA’s Clean School Bus Program.
The current administration intends to roll back transportation electrification initiatives, which could include programs like the Clean School Bus Program. The rollback of these programs takes away significant financial opportunities to electrify school buses nationwide and improve the health of children across the nation.
While there is uncertainty about the future support from the federal government, states and utilities have an opportunity to step up their efforts and continue electrifying the US school bus fleet. Indeed, several states and utility companies have already been leading the way, improving children’s health, reducing environmental impacts, and achieving significant economic and grid benefits in the process.
Other states can follow the example of the states mentioned in this post and enact legislation that sets clear timelines for transitioning to electric school buses. States can also pair these goals with funding and incentives to support the purchase of electric school buses and the necessary charging infrastructure.
Utilities should also utilize the findings and best practices emerging from pilot programs to develop and offer incentive programs, innovative rate designs, and technical assistance to help school districts navigate the process of electrifying fleets and make it financially viable.
To learn more about how GPI is engaging on school bus electrification, check out Drive Electric Minnesota’s policy platform or contact us at [email protected]. Drive Electric Minnesota is facilitated by GPI.
