Report Highlights Propane and Electric TCO for School Bus

School buses were but one, smaller focus of the ACT Expo 2026 State of Sustainable Fleet report, which shows diesel remains a viable solution

By Ryan Gray

May 4, 2026

ACT Expo 2026 kicked off on May 4 in Las Vegas, Nevada.

LAS VEGAS – As the school bus industry awaits the return and final awards of the Clean School Bus Program, propane and battery-electric continue to offer the most consistent operational cost savings.

That was the verdict of the 2026 State of Sustainable Fleets report produced by TRC Clean Transportation Companies and released this morning at the opening of ACT Expo. The published conclusions are derived from a national survey of light-, medium- and heavy-duty fleet operators across not only the school sector, but transit, refuse, delivery, freight, utility, municipal, and private contractors. The report also relied on industry interviews, market data, policy and funding analysis, and lifecycle and cost analysis.

Propane autogas — including renewable propane, which ACT News and the Propane Education and Research Council previously reported is projected to reach 300 million gallons produced by 2030 — and electric arrive at lower total cost of ownership in different ways, the report highlights.

Propane school buses traditionally cost about 10 percent more upfront to purchase than diesel counterparts. The price of EPA’s new rule expected to be updated next month would have resulted in additional costs of $8,000 to $18,000 for each new diesel vehicle. Discussions at last month’s STN EXPO East provided similar figures. But depending on how the pending 2027 federal NOx regulations update is rewritten, increased costs tied to diesel warranties and end-of-life provisions could be cut in half, according to a panel Monday morning on EPA27, with speakers Andrea Lukas of Cummins and David Hillman of International.

The speakers noted that the low NOx requirement of 0.035 g/brake-hp-hr remains with the effective date of Jan. 1, 2027 still ineffect. The separate issue of GHG and the prior regulation in effect mandating the use of battery-electric in California Air Resources Board states to be addressed with the new rule.

Daily operations are more immediately impacted by fuel prices amid the Iran war. The survey found that Midwest school districts were paying $1.31 to $1.90 per gasoline gallon equivalent, or 47- to 63 percent less than gasoline, to fuel their propane school buses. The U.S. Department of Energy said private propane fueling nationwide averaged $2.91 per GGE in January 2025.

Meanwhile, diesel prices at the pump fell $0.05 to a national average of $5.35 per gallon and gasoline increased by 7 cents to $4.12 per gallon, according to the U.S. Energy Information Administration. The State of Sustainable Fleets report found that propane Autogas delivers 50-percent lower daily fuel costs than diesel and 40 percent lower than gasoline.

Overall, 39 percent of the fleets surveyed recovered operational costs savings compared to vehicles replaced by propane.

In terms of GHG emissions, the responding fleets reported that propane offered a 59-percent reduction in California compared to gasoline. Like battery-electric, propane emits zero pounds of sulfur dioxides, according to the U.S. Department of Energy’s AFLEET data. However, that is where the similarities to propane end.

Electric school buses of course emit nothing from the tailpipe. In fact, they don’t have tailpipes. Electricity for charging in California offered a 59-pecent reduction in lifecycle GHG emissions last year compared to diesel. Propane, while reducing NOx by over 90 percent compared to diesel (including biodiesel blends and renewable diesel), emits nearly 640 percent more CO2. It emits slightly higher PM10 than diesel and same levels of PM2.5, the especially fine particles of soot that are most dangerous to children.

**Comparative chart of emissions by fuel type. Source: U.S. Department of Energy AFLEET, via World Resources Institute Electric School Bus Initiative.**

Tips for Making Battery-Electric Work

The report forecasts that medium- and heavy-duty electric vehicle registrations — which set a record last year — will fall in 2026 due to the loss of the EV tax credits and “pivots announced by manufacturers.”

Still, EVs show improving TCO. Fifty-seven percent of the fleets surveyed reported operational cost savings on medium-duty electric vehicles compared to the vehicles they replaced. The biggest savings occur on routes that fit electric duty cycles, managing vehicle charging and limiting maximum loads. For example, the report found that fleets can also save 30 percent by shifting to off-peak charging cycles, and doubling or tripling charging windows can cut capital and fueling costs by more than half.

Additional best practices include right-sizing charging equipment, maximizing charging windows and charging multiple vehicles per station.

Costly charging infrastructure remains a challenge, but funding assistance continues, despite the termination of the federal EV credit. The report cited a $6 billion investment by electric utility member companies of the Edison Electric Institute to support charging infrastructure through consulting services, customer rebates, make-ready infrastructure, and end-to-end charging solutions.

Overall, 54 percent of the fleets surveyed said the plan is to increase usage of EVs in the next two years. In the school bus sector, the report cites S&P Global Mobility data showing that 2,289 new electric school buses were registered last year, a 59-percent increase from 2024.

The U.S. Environmental Protection Agency had yet to announce the latest and final funding opportunities under the five-year, $5-billion Clean School Bus Program at this writing. But the remaining $2.7 billion to be awarded will result in more electric school bus orders over the coming years, as well as propane and likely diesel. In addition to California and New York, which have large funding programs to try and meet their mandates that school buses be all-electric over the next two decades, the report cites increased state funding elsewhere, such as new programs in Illinois, Michigan, New Jersey and New Mexico.

Despite the Lion Electric bankruptcy and consolidation of operations to solely serve Quebec, the State of Sustainable Fleets reported positive news for electric school bus manufacturing. It cited Blue Bird’s all-time record revenue and profit posted in the fourth quarter and full year of 2025. Thomas Built Buses also announced its first Type D electric school bus, which is now available to order. IC Bus continues manufacturing and selling its CE Series electric and is offering bundled consulting, financing and maintenance services.

Diesel Continues On

The State of Sustainable Fleets report cited an American Trucking Associations blog in November that the EPA Clean Trucks Plan, which was set to reduce NOx by more than 80 percent and PM by 50 percent for 2027 model year engines, will remain largely unchanged.

A final rule was expected this spring but no announcement had been made at this writing.

“All major manufacturers have developed at least one HD engine capable of meeting those requirements,” the report states.

The report at ACT Expo suggests the final rule may remove warranty and useful life provisions that are expected to increase new diesel vehicle costs in the range of $8,000 to $18,000, with the Cummins-International session earlier Monday again indicating those figures could be less. The new final rule from EPA will eventually result in more specific cost figures.

Still, a “pre-buy, no-buy” dynamic is expected this year and next. The report states that manufacturers are already selling out new build slots for the third and fourth quarters of 2026.

As the industry awaits the Clean School Bus Program announcement and its expected incentives for using biodiesel and renewable diesel, the report found 56 percent of fleets used one of these drop-in fuels, more than double the number from 2023. Twenty-one percent reported utilizing both biodiesel and RD.

Benefits of using RD, the report confirmed, are improved cold-weather performance over biodiesel and fewer diesel particulate filter changes while realizing maintenance savings of approximately $0.015 to $0.02 per mile.

What About CNG, Hydrogen and … Hybrids?

The report also covered CNG, hydrogen and hybrids. But CNG is no longer manufactured as an option for the school bus sector, and hydrogen as yet to be offered as a viable power plant. The school bus industry did test the applicability of hybrids a decade ago and shortly thereafter abandoned those efforts. But hybrid is showing some promise for tractor-trailer trucks, the report notes.

“Adoption of a new technology is almost always driven by a combination of regulation, economic savings and incentives,” Patrick Couch, senior vice president of technical services for TRC Clean Transportation Solutions, told School Transportation News last week. “For hybrid technologies, OEMs will be focused on high-fuel use applications and applications where they are allowed by regulations and operationally more suitable than alternatives. School buses may be a secondary or tertiary focus for hybrid product offerings.”