LITTLE ROCK, AR – The Arkansas Energy Office on Aug. 5 announced the launch of the Compressed Natural Gas Conversion Rebate Program, which provides an incentive for fleets to purchase or convert their Arkansas-licensed vehicles to compressed natural gas (CNG).

Approximately $2.2 million will be made available through the American Recovery and Reinvestment Act (ARRA) and administered by the Arkansas Energy Office (AEO). Rebates are available on a first-come, first-served basis until December 2011 or until funds are depleted, whichever comes first.

AEO is a division of the Arkansas Economic Development Commission (AEDC). 

"One of the hurdles to increasing the use of alternative fuels is building or converting infrastructure to make these fuels economically feasible,” Governor Mike Beebe said. "This program will encourage use of less expensive American fuel that helps Arkansas's economy. Making compressed natural gas a more viable option for vehicle fleets can also reduce our dependence on foreign oil."

Through the program, rebates of 50 percent of the conversion cost -- or the incremental cost of purchasing new CNG vehicles -- would be given directly to fleet operators following the conversion to, or purchase of, compressed natural gas vehicles. Rebate amounts depend on the cost of conversion or incremental cost of a CNG vehicle, but rebates cannot exceed $25,000. To ensure rebates are available for multiple fleets, no single entity may receive more than 20 percent of the CNG rebate fund.

CNG conversion kits must be installed according to National Fire Protection Association (NFPA) standards and be certified by the Environmental Protection Agency (EPA) and must comply with EPA requirements for vehicle conversions. Eligible entities include cities, counties, school districts, and private fleets of at least 10 vehicles. A minimum of four vehicles in the fleet must be converted. Eligible vehicles are light vehicles, medium- and heavy-duty vehicles, traditional mass transit buses, and school buses.

In addition to the $2.2 million in ARRA rebate funds, the AEO is also dedicating $470,000 toward the development of at least two CNG refueling stations to further develop CNG infrastructure in the state. The $470,000 will be provided through $400,000 in remaining Oil Overcharge Funds and $70,000 provided from Senate General Improvement Funds. 

The AEO will partner with public and private entities on the installation of the two stations. The office is currently accepting applications based on factors such as overall impact, leveraged funds, energy and emissions reductions and job creation.

Applications and complete information are available from the Arkansas Energy Office.