Green Taxi Program

This case study evaluates the process and business potential of investing in hybrid and compressed natural gas (CNG) for commercial fleets.

Specifically, this study will explore the results from a project under a U.S. Department of Energy (DOE) Clean Cities grant through the American Recovery and Reinvestment Act (ARRA) to fund the purchase of 120 alternative fuel vehicles.


In 2011, the City of Chicago Department of Business Affairs and Consumer Protection (BACP) implemented the successful Green Taxi Incremental Cost Allowance Program (Green Taxi Program). Thanks to this effort, 120 new vehicles were put on the road as taxis, including 49 new hybrids and 71 CNG vehicles.

The program helped the taxi industry purchase cost-effective hybrid and alternative fuel vehicles, which moved the City closer to reaching carbon emission goals set out in the Chicago Climate Action Plan and provided passengers with trips in modern and environmentally sustainable vehicles.

In July of 2011, BACP hosted a Green Taxi Expo, bringing together car manufacturers, alternative fuel converters, and grant fund managers. The Expo was open to the public vehicle industry, allowing vehicle purchasers to have all of their questions answered in one place.

The Green Taxi Program was funded by a federal grant. The City received a Clean Cities grant through American Recovery and Reinvestment Act (ARRA) funds. The Green Taxi Program used $1 million in funding from this grant to reimburse up to a set amount of the cost of certain hybrid and alternative fuel vehicles. This was a first-come, first-served selection process for funding. The deadline was December 31, 2011, and all funds were dedicated by that date.

Hybrids were reimbursed for $2,000, which was the maximum allowed by the federal government under the grant. CNG- or propane-powered vehicles were reimbursed for up to 100 percent of the implemental cost, which is typically between $9,000 and $14,000. Electric vehicles did not qualify under this program.

The Green Taxi Program is an opportunity for the City to reach its goal to increase the number of hybrid and alternative fuel vehicles and an opportunity to make it more affordable for taxi company operators to purchase hybrid or alternative fuel vehicles. The cost savings for drivers are realized at the pump.

CNG Versus Gasoline: A Comparison

Natural gas is one of the most widely used forms of energy today. It is commonly used to heat and cool homes and businesses nationwide. In addition, more than 85,000 CNG vehicles, including one out of every five transit buses, are operating successfully today. CNG’s popularity stems, in part, from its clean-burning properties.

In many cases, CNG vehicles generate fewer exhaust and greenhouse gas emissions than their gasoline- or diesel-powered counterparts.

CNG is odorless, colorless, and tasteless. It consists mostly of methane and is drawn from gas wells or in conjunction with crude oil production. CNG vehicles store natural gas in high-pressure fuel cylinders at 3,000 to 3,600 pounds per square inch. An odorant is normally added to CNG for safety reasons.

Two types of CNG fuel systems are on the market: dedicated vehicles, which operate exclusively on natural gas, and dual-fuel vehicles, which can use both natural gas and gasoline. Auto manufacturers offer a variety of both dedicated and dual-fuel CNG vehicles, including compacts, trucks, vans, and buses.

The United States has vast natural gas reserves distributed across the country through extensive pipeline systems extending from the wellhead to the end-user. As a result, CNG is currently available at approximately 1,300 refueling stations in 46 states, and this number continues to grow. In addition, CNG vehicle owners can refuel their cars at home by installing small compressors connected directly to the homes natural gas supply.

Fueling Stations

There are three established public CNG stations in Chicago.

There are six public CNG stations within 25 miles of Chicago and eight public CNG stations within 50 miles of Chicago.


Many of the hybrid taxis that comprise the Chicago taxi fleet include vehicles made by Ford. According to Ford:

Chicago taxi drivers and their customers will soon come to appreciate the efficient beauty of Ford Escape Hybrid. As a Partial Zero Emission Vehicle(PZEV), Ford Escape Hybrid operates with ultra-clean emissions. The vehicles fuel economy in stop-and-go city driving also is 80 percent higher than a conventional Escape. In fact, the two-wheel-drive version of thehybrid SUV achieves 36 miles per gallon in city driving and up to 500 miles or more on a single tank of gas even in gridlock traffic jams.

Ford Escape Hybrid taxis are already in service in New York and San Francisco. The hybrid taxis contribute to improved air quality and provide substantial gas savings for the taxi companies.

Many Ford hybrid taxis in San Francisco now have more than 100,000 miles. Some drivers say they’re saving $50 to $75 per week by driving an Escape Hybrid. In New York, Taxi and Limousine Commission officials are estimating the annual fuel savings for each driver will amount to tens of thousands of dollars every year.


Alternative Fuel Rebate Program

The Illinois Alternate Fuels Rebate Program provides a rebate for 80 percent of the incremental cost of purchasing an AFV (up to $4,000), 80 percent of the cost of converting a conventional vehicle to an AFV using a federally certified conversion (up to $4,000), and for the incremental cost of purchasing alternative fuels.

Eligible fuels for the program include E85, fuel blends containing at least 20 percent biodiesel (B20), natural gas, propane, electricity, and hydrogen. A vehicle may receive one rebate in its lifetime. Only AFVs purchased from an Illinois-based company or vendor are eligible, except for heavy duty specialty vehicles not sold in Illinois. To qualify for a fuel rebate, the entity or individual must purchase the majority of E85 or biodiesel fuel from Illinois retail stations or fuel suppliers.

The E85 fuel rebate is up to $450 per year (depending on vehicle miles traveled) for up to three years for each flexible fuel vehicle that uses E85 at least half the time. The biodiesel fuel rebate (for B20 and higher blends) is for 80 percent of the incremental cost of the biodiesel fuel, as compared with conventional diesel. Rebates are part of the Illinois Green Fleets Program and are available to all qualified Illinois residents, businesses, government units (except federal government), and organizations located in Illinois.

Fast Lane Airport Access

In August 2011, the Chicago Department of Aviation (CDA) launched apilot program at both O’Hare and Midway International Airports designed to encourage taxi operators to fuel their vehicles with CNG instead of traditional gasoline. As a result, between August and December 2011, nearly 8,000 trips were made by CNG cabs at O’Hare, while Midway experienced similar totals.

The City of Chicago’s BACP Department extended the program on January 6, 2012. Today, approximately 20 CNG cabs now operating at the airport on a daily basis.

The CDA’s Green Taxi Pilot Program gave participating taxis preferential access to O’Hare and Midway terminals by allowing CNG taxis to use the short trip lanes that are typically used for wheelchair-accessible vehicles. This new process reduced wait times for taxis to pick up fares.

CNG taxis have traditional car engines that have been converted to run 100 percent on CNG, which is a cleaner fuel than traditional gasoline. The CDA program complemented the City of Chicago’s Green Taxi Program.

The Green Taxi program was a tremendous success, said CDA Commissioner Rosemarie S. Andolino. Under the leadership of Mayor Rahm Emanuel, the City of Chicago and the Chicago Department of Aviation are deeply committed to not only incorporating sustainable practices at our airports but also to encouraging our airport partners to embrace and implement environmentally friendly business practices.

Pricing and the Taxicab Industry

The CNG market is more stable than the gasoline market. CNG generally costs 15 to 40 percent less than gasoline or diesel. CNG requires more frequent refueling, however, because it contains only about a quarter of the energy by volume of gasoline. In addition, CNG vehicles cost between $3,500 to $6,000 more than their gasoline-powered counterparts. This is primarily due to the higher cost of the fuel cylinders. As the popularity and production of CNG vehicles increases, vehicle costs are expected to decrease.


Proper training is required for all maintenance personnel working on CNG vehicles. The oil in a CNG vehicle does not need to be changed as frequently, because CNG burns more cleanly than gasoline, producing less deposits in the oil.



This material is based upon work supported by the Department of Energy under Award Number DE-EE0002541.

This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name,trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United?States Government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof.

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