32 SEPTEMBER 2024 WorldWide Drilling Resource® Drilling Into Money Not Boring by Mark E. Battersby Funding Transitioning Green Thinking about joining many within the drilling industry who are adding electric or zero emission vehicles to their fleets? Today, just about every commercial vehicle and chassis manufacturer offers an electric option, but whether transitioning to an electric or zero emission fleet makes sense economically depends on a number of factors - especially cost and financing. On the government front, the Bipartisan Infrastructure Law and the Inflation Reduction Act provided funding for vehicle electrification, particularly for medium- and heavy-duty trucks and charging infrastructure. Many drilling operations that purchase electric or zero emission vehicles can claim a Commercial Clean Vehicle tax credit - a direct reduction of their tax bill rather than a deduction - thanks to the tax law’s 45W rules. The credit amount is the lesser of the following amounts: j 15% of the vehicle purchase price for plug-in hybrid electric vehicles (PHEB) j 30% of the vehicle purchase price for electrical vehicles (EVs) and fuel cell vehicles (FCEVs) Whether for one vehicle or the more than five vehicles the Internal Revenue Service labels as a “fleet,” improvements are necessary to support those “green vehicles.” Fortunately, installing vehicle refueling and recharging property in the drilling operation may be eligible for the Alternative Fuel Vehicle Refueling Property Tax Credit equal to 6% for each item, with a ceiling of $100,000. While tax credits are effective at reducing the cost of taking advantage of technology advances and complying with increasing regulations, financing the transition remains key. Financing EVs or zero emission vehicles (ZEVs) can take various forms including: - Loans with low or no interest offered by states. - Loan guarantees from federal and state programs. - Funding from public sources in the form of grants and credit vouchers to help offset the cost of electrification, both for vehicles and for the charging infrastructure. - Private partners, such as those offering electric truck leasing or financing, can help in avoiding the large capital outlays required to convert to an EV fleet. - Dealer financing. More and more dealers are entering the all-electric vehicle market in response to more business owners and fleet managers adding commercial electric vehicles to their group. Transitioning to single EVs, ZEVs, or PHEVs or fleets can be costly. Fortunately, utilizing a mix of tax credits and deductions, as well as traditional and nontraditional funding can help every drilling contractor and business owner successfully reduce costs and economically finance their transitions. Mark Mark E. Battersby may be contacted via e-mail to michele@worldwidedrillingresource.com
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