Fuel Transformation Program supports replacement of diesel-powered equipment and transportation, with some projects eligible for up to 100% funding
By The Michigan Department of Environment, Great Lakes, and Energy
LANSING, Michigan – The Michigan Department of Environment, Great Lakes, and Energy (EGLE) is announcing the release of the Fiscal Year 2026 Fuel Transformation Program (FTP) Request for Proposals (RFP), a major funding opportunity aimed at reducing diesel emissions and accelerating the transition to cleaner transportation technologies across the state.
Funded through the Volkswagen Environmental Mitigation Trust, the program will support the replacement or repowering of diesel trucks, buses, maritime vessels, locomotives, and other equipment, as well as the installation of shore power systems at ports. These investments will help reduce harmful air pollutants and improve public health in communities across Michigan.
“Reducing diesel emissions is one of the most impactful steps we can take to improve air quality and protect public health,” said EGLE Director Phil Roos. “This program provides significant resources to help organizations transition to cleaner, more efficient technologies while supporting economic growth and innovation across Michigan.”
Program focus and priorities
The FTP prioritizes projects that significantly reduce emissions from diesel-powered vehicles and equipment while accelerating the adoption of zero-emission and alternative fuel technologies. Priority will be given to projects that:
- Achieve the greatest reductions in nitrogen oxides and fine particulate matter (PM2.5).
- Improve air quality in heavily populated areas, freight corridors, and ports.
- Advance adoption of zero-emission and alternative fuel vehicles and equipment.
- Demonstrate strong partnerships and collaboration.
- Leverage additional funding sources, including federal and private investments.
- Support Michigan’s climate and economic development goals.
Funding details
EGLE expects approximately $28 million in total funding to be available through this competitive grant program, with individual awards ranging from $50,000 to $5 million.
Funding is available for a wide range of eligible project types, including:
- Replacement of diesel school buses, transit buses, and freight trucks.
- Repowering or replacement of freight switcher locomotives.
- Upgrades to ferries, tugboats, and marine engines.
- Installation of Great Lakes vessel shore power systems.
- Electrification of airport ground support equipment, forklifts, and cargo handling equipment.
Funding levels and required cost share vary by project type, technology, and ownership category. Some projects – particularly those involving government-owned vehicles or all-electric replacements – may be eligible for up to 100% funding.
All awards are issued on a reimbursement basis, requiring grantees to pay project costs up front and submit documentation for reimbursement.
Eligibility
Eligible applicants include both public and private entities located in Michigan.
Projects must involve the replacement or repowering of eligible diesel vehicles, engines, or equipment, which must be permanently decommissioned as part of the project. New equipment must continue to serve a similar function and operate within Michigan for at least five years following project completion.
Application timeline and requirements
Applications will be accepted first-come, first-served until all funding has been awarded.
Applicants must submit a complete proposal, including required application materials, budget documentation, and a fleet data sheet.
About the Fuel Transformation Program and Michigan’s climate and air quality goals
The FTP supports the MI Healthy Climate Plan and Michigan’s broader efforts to reduce emissions, improve air quality, and transition to cleaner energy systems. By targeting high-emission diesel sources, the program delivers significant environmental and public health benefits while supporting long-term economic growth.
Program materials including the RFP and application forms are available online. For more information or to submit questions about the program, contact Dan Zbozien at ZbozienD@Michigan.gov or 517-290-5722.
