The DfT has introduced a number of policies to encourage the uptake of LCEB in England, implemented through the Bus Service Operators Grant and the Green Bus Fund.
Bus Service Operators Grant (BSOG)
The Bus Service Operators Grant (BSOG) was reformed in April 2009 introducing measures to encourage improvements in fleet fuel efficiency and provide a level playing for low carbon emission buses.
BSOG Fleet Fuel Efficiency
In the 2009 Budget a reform to BSOG was introduced so that bus operators would only be able to receive an increase in their grant if they achieve fuel efficiency improvements. The measures allow bus operators to receive a 3% increase in the BSOG rate from the first of April 2010 if they able to achieve at least a six per cent improvement in their fuel efficiency over a two year period. The measures are intended to incentivise fuel efficiency in bus fleets operating in England.
BSOG LCEB Incentive
In addition the DfT introduced from April 2009, bus operators can receive an additional payment of six pence for each kilometre they operate with low carbon buses. This payment is intended to level the playing field for operators of LCEBs by providing them with an equivalent level of BSOG to that which they would have received had they operated a standard diesel bus. DfT have stated that they expect that any future changes to the BSOG regime would aim to maintain this level playing field.
Green Bus Fund
In June 2009 the DfT announced the Green Bus Fund, which would provide £30m over two years to encourage the purchase of low carbon buses. The fund is part of the Department's wider strategy to encourage a radical shift to low carbon transport. The fund is available for bus operators and councils to bid for money which they can then use towards the additional up front cost of buying low carbon buses.
Currently, due to low production volumes, the manufacturer of low carbon buses suffers from poor economic of scale. As more low carbon buses are produced and sold, costs are expected to reduce significantly. The Green Bus Fund is intended to encourage the development of bus technology and stimulate the market for low carbon buses.