Green Freight Program Applicant’s Guide: Stream 2

Introduction

Stream 2 (Repower and Replace) will be providing non-repayable contributions towards fuels switching, engine repowers, and purchase of low-carbon alternative fuel vehicles. Stream 2 of the program contributes up to 50% of the incremental cost for the purchase of low-carbon alternative fuel vehicles, or 50% of total project costs, up to a maximum of $5 million per project.

Stream 2 is a competitive process. Proposals for Stream 2 will be accepted during the 90-day Request for Proposal period, no later than November 16, 2023, at 11:59 pm EST. All proposals received will be reviewed for completeness. Those retained will be scored against the mandatory and merit criteria and the highest scoring ones will be offered funding, until all program funds are committed.

Please note: the program will not offer funding towards the purchase of zero-emission vehicles, as these fall under Transport Canada’s Incentives for Medium- and Heavy-Duty Zero-Emission Vehicles Program (iMHZEV).

This guide will outline eligible activities under Stream 2 of the program, the amount of funding available, and information on how entities can apply to and receive funding for the proposed activities.

Key objectives and outcomes

The objective of this program is to encourage Canadian companies to make data-driven investment decisions when considering energy-efficient improvements and fuel-switching for their medium and heavy-duty vehicles. Natural Resources Canada (NRCan) will provide cost-sharing contributions to help participants implement fuel-switching options.

Eligibility criteria

Program eligibility requirements

For their proposal to be considered eligible, applicants must:

• have a completed fleet energy assessment that recommends the actions proposed in their application*
• have submitted a complete proposal, including all required reference documents during the 90-day period for the Request for Proposal, by 23:59 Eastern Standard Time, November 16, 2023.

*The Applicant can independently conduct and submit a self-assessment or submit an assessment that was conducted by a third-party energy assessor on or after January 1, 2019, as long as the assessment meets the Enhanced requirements specified in the NRCan’s Fleet Energy Assessment Checklist.

Eligible applicants

An eligible applicant must be a legal entity validly incorporated or registered in Canada. This includes: 

• companies*
• industry associations
• research associations
• standards organizations
• Indigenous and community groups
• Canadian academic institutions
• provincial, territorial, regional, or municipal governments or their departments or agencies where applicable

*Not eligible: Softwood lumber companies and those that are vertically integrated with them. For more information on softwood lumber and the ongoing Canada-US trade dispute, please refer to Global Affairs Canada’s website

Eligible vehicles

To be eligible for a contribution under Stream 2, the vehicle(s) must be within the following weight classes:

Weight Class	Gross vehicle weight rating (GVWR)
Class 2B	Between 3,856 kg and 4,536 kg
Class 3	Between 4,536 kg and 6,350 kg
Class 4	Between 6,350 kg and 7,257 kg
Class 5	Between 7,257 kg and 8,845 kg
Class 6	Between 8,845 kg and 11,793 kg
Class 7	11,793 kg and 14,969 kg
Class 8	More than 14,969 kg

*Not eligible: Vans, SUVs, pickup trucks, transit buses and off-road vehicles.

Funding activities

Eligible project activities

The two types of eligible project activities are:

Program funding structure

Under Stream 2 of the program, applicants can receive a maximum of 50% of total project costs or incremental costs up to $5,000,000. The final amount of NRCan’s non-repayable contribution to an applicant under this program will be dependent on the applications received and available funding.

NRCan will provide up to 50% of the costs or incremental costs and applicants will contribute the remaining 50% as a combination of cash contributions, in-kind contributions or funding from other government sources (see Stacking of assistance).

Projects by not-for-profit organizations or provincial, territorial, regional, or municipal governments or their departments or agencies, where applicable, as well as projects with Indigenous businesses or community groups, may request an increase in the maximum amount payable by all levels of government, up to 75% of total project costs.

Program funding period

The program has allocated funds for Stream 2 projects from April 2024 to March 2027. Applicants may spread their proposed funding over this period but must ensure that spending deadlines can be met.

Stacking of assistance

Applicants are required to disclose all project funding sources, including funding from other federal, provincial/territorial, and municipal governments and industry sources, whether that funding is firm or still in negotiations.

Total funding from all levels of government (e.g., federal, provincial/territorial and/or municipal) cannot exceed 75% of the total project costs, unless the applicant is a provincial, territorial, or municipal government, or their departments or agencies, or an Indigenous organization, in which case the stacking limit is 100% of project costs.

If the proposed total Canadian government assistance exceeds the limits set out above, Canada reserves the right to reduce its contribution to the project until the stacking assistance limit is met. If total Canadian government assistance exceeds the limits set out above after the project completion date, Canada reserves the right to recover the excess contribution from the applicant.

Note: The government assistance referred to in these stacking limits does not include loans from governments or Crown agencies. For example, loans to the project from governments or Crown agencies are not included in this calculation; however, if a preferential interest rate were obtained through government loans, the cost savings due to the preferential rate would be included. Clarifications will be provided on a case-by-case basis.

Eligible and non-eligible expenditures

Eligible expenditures for an approved project under the program must be directly related to, and necessary for, the implementation and conduct of the project and will include:

• professional services
• capital expenses
• GST, PST, and HST

Costs not considered eligible expenditures under this program will include:

• in-kind contributions*
• costs incurred outside the eligible expenditure period, including those for preparing this application

*In-kind contributions from the applicant and its partners count towards the total project costs. If you choose to include in-kind support as part of the total project costs, it must be verifiable and directly in support of the project. Eligible in-kind contributions are limited to:

• installation of equipment
• driver training

Further details are available in Appendix 1 of this guide.

Eligible expenditure period

The eligible expenditure period for the proposed project begins after the signature of a contribution agreement (CA) between NRCan and the applicant. Any expenditures incurred before the signature fall outside of the eligible expenditure period and are not reimbursable.

In all cases, until both parties sign a contribution agreement, there is no commitment or obligation on the part of NRCan to make any financial contribution to any project, including any expenditure incurred or paid prior to the signing of such a contribution agreement.

How to apply

Proposal process

Those applying to Stream 2 of the program must complete an application package. It must be submitted through NRCan’s web form. Applicants are required to submit a single copy of the application package by 23:59 Eastern Standard Time, November 16, 2023.

A complete application package (proposal) consists of:

• the completed application form
• the completed supporting documentation:
  • a copy of a completed green freight assessment
  • a quote for the proposed activities
  • proof of funding, and supporting documentation for all assertions
• a signed and dated attestation from a duly authorized officer of the applicant’s organization

Any supporting documentation must be saved as PDF documents and must also accompany the application submitted through NRCan’s web form, unless supporting documentation exceeds the maximum file size. The maximum size of attachments to NRCan’s web form is 10 MB. If an applicant’s electronic submission exceeds that maximum, the applicant may forward its additional attachments by e-mail with the project name and applicant's name in the subject line.

Applicants must submit their additional documentation by e-mail at: freightassessment-evaluationdeflotte@nrcan-rncan.gc.ca.

To fully assess the project, NRCan requests that all additional material in support of the project proposal be restricted to only that directly relevant to the project.

The submission of an application creates no obligation from NRCan to provide funding for the proposed project.

Complete the application form

Service standards

When an application has been submitted, a notification will be sent by the program acknowledging its receipt. You should not consider your application as successfully received until you receive the acknowledgment notice from the program.

NRCan is not responsible for the security of the application during e-mail transmission.

After you apply

Project evaluation: due diligence and risk framework

Each project proposal, which consists of the application form and all required documents, will be reviewed for completeness and assessed against mandatory criteria. Project proposals that do not meet all the mandatory criteria will not be given further consideration.

The project proposals that meet the mandatory criteria outlined in the table below will then be assessed, rated against the merit criteria by a review committee composed of panel members, with relevant areas of expertise. NRCan will then issue funding decisions. Please note that only the highest scoring project proposals will be offered funding until all program funds are committed. Unsuccessful project proposals will receive letters of regret and successful applications will receive Letters of Conditional Approval.

Project proposals that have been conditionally recommended for funding will undergo a due diligence assessment, which could include a confirmation of the specifics provided in the project proposal documents. This assessment will look at the financial strength of the applicant as well as their ability to complete the project. NRCan may request that the applicant provide confirmation or clarification to support their project proposal and due diligence assessment. An independent firm may be contracted to support the program with this process. If in-depth financial analysis is required, NRCan will inform the applicant and provide details on next steps. The findings from the due diligence process will be considered in NRCan’s ability to enter into a contribution agreement with an applicant for the proposed project. The final selection decision remains at the sole discretion of NRCan.

If the project proposal is successful and the due diligence assessment results are suitable, the applicant will then be invited to initiate the negotiation of a contribution agreement. The findings from the due diligence assessment could determine risk mitigation strategies that will be included in the contribution agreement (for example, percentage of risk holdback).

Mandatory criteria

The mandatory criteria table below lists all the eligibility requirements and the documentation required to demonstrate the that the applicant’s project is eligible to proceed to the next step, which is the assessment against the merit criteria.

Projects must:
1	Meet the program, applicant and vehicle eligibility requirements (see Eligibility criteria)
2	Meet one or both project activity definition (see Eligible project activities)
At the proposal stage, the applicant must:
3	Demonstrate at least 50% secured funding for the total cost of the project. Applicants must provide NRCan with evidence that at least half of the funds to be covered by non-NRCan sources are available and have been secured. They must demonstrate that they have secured 50% of the cost portion for which they are responsible for, by including a copy of at least one of the following: signed letter of attestation from CFO confirming how the project will be funded most recent balance sheet most recent financial statements bank statements from 2023 signed loan agreement that mentions the project letter of confirmation stating firm funding signed by the investor and mentioning the project resolution from the governing council that funds are available for the project Note: prior to the signing of a contribution agreement, NRCan will require demonstration of full project funding.
4	Demonstrate engagement with an equipment and/or vehicle supplier; applicants must demonstrate that they have engaged the supplier with a quoted estimate of their project costs including delivery date of the equipment. Supplier must have demonstrated to the applicant that they have adequate supply to meet the requested demand for technology and equipment. For fuel-switching activities, applicants must provide the diesel equivalent in order to quantify the incremental cost.

Merit criteria

Only proposals that meet the mandatory criteria listed above will be reviewed and assessed against our merit criteria.

The table of merit criteria below lists all the other required information, supported by documents when applicable, that the review committee will need to assess, score, and rank the project proposal.

Only the highest scoring project proposals will receive funding until all program funds are committed.

1. Organization information
1	Company experience: The level of experience of the company will be considered. In order to confirm that information, the number of years it has been in operation must be included. Employee composition: NRCan encourages projects that demonstrate a diverse workplace. Merit points will be awarded to applicants who demonstrate a larger percentage of Indigenous and women employees staffed in non-administrative roles. Business operations: Applicants must indicate the percentage of kilometres their fleets travel within Canada. Merit points will be awarded to applicants demonstrating their fleets travel 50% or more of their kilometres in Canada. Fleet profile: Provide an overview of your fleet.
2. Project description
2.1	Describe your project. What do you plan to achieve from this project? Please describe why you are applying for Phase 2 funding. Applicants must demonstrate that the proposed project will result in reduced diesel consumption and improve certain aspects of their fleet. Information should be provided regarding the existing weakness within their fleet.
2.2	Does your organization participate in or lead any fuel/GHG reducing sustainability initiatives (e.g., SmartWay Transport Partnership, SmartDriver, Custom Driver Incentive Programs etc). Please describe your organizations activities within their sustainability initiatives, and a brief overview of the results thus far.
2.3	What equipment/devices/vehicles/training are you proposing to purchase in your application. Please reference the page numbers in your fleet energy assessment.
3. Outcomes and benefits
3.1	What is the estimated fuel savings in litres for the proposed investment(s)?
3.2	What is the expected reduction of greenhouse gas emissions from the proposed investments?
3.3	Are there any other direct or indirect outcomes to the benefits of this project? Applicants must demonstrate that the proposed project will have a direct (e.g., revenues, operating and maintenance costs, profitability) and indirect (e.g., job creation, greater demand from consumers) economic impact and/or any other impact (social, socio-economic, environmental, visibility, adoptions of electric trucks, awareness). Merit points will be awarded to proposals that demonstrate other potential benefits associated with their project.
4. Timelines
4.1	Provide a reasonable timeline for your project which identifies the key milestones for the project, and the timelines of expected expenses.
5. Feasibility plan
5.1	Please provide a brief feasibility plan. Is there a robust fuelling network to support your use of alternative fuels? If yes, please provide the station names. If there is no fuelling network, are you engaging with utilities and/or considering future investments in on-site or off-site refuelling infrastructure? Alternatively, please describe how you intend to source the fuel in question. Are there any issues in servicing the new alternative fuel trucks in the area you are based?
6. Reporting requirements
6.1	Please specify how your organization currently tracks its fuel consumption metrics (telematics, manual, or specify the type of electronic management device and its capabilities). Please explain how your organization plans to track the GFP-funded fleet’s fuel consumption. Merit points will be awarded to applicants that can demonstrate the ability to report on program indicators with greater accuracy.
7. Detailed funding information
7.1	Have you received, or plan on receiving, funding from other public sources (e.g., other federal government departments, provincial departments) for this project?

Contribution agreement

Following project selection, successful applicants will be notified and be invited to begin negotiating a contribution agreement. The project cannot begin and no expenditures can be incurred or paid until both NRCan and the applicant sign a contribution agreement.

Additionally, unsuccessful applicants will be notified and offered the opportunity to receive formal feedback on their project proposals. Refer to Appendix 2 for more information on the contribution agreement process.

Contact us

During the application period, program employees and review committee members are not at liberty to meet with applicants, discuss program details, or answer specific questions related to their projects. All other questions may be submitted by e-mail at: freightassessment-evaluationdeflotte@nrcan-rncan.gc.ca.

Appendix 1: Costing memorandum

Definitions:

In-kind support: a cash equivalent contribution in the form of an asset (Asset in this section means a useful and valuable good, service or other support provided to the project) for which no cash is exchanged but that is essential to the project and the proponent would have to purchase on the open market or through negotiation with the provider if the proponent did not provide it. 

Low-carbon fuel: fuels that emit fewer green house gas emissions than fossil fuels (e.g. renewal natural gas, biodiesel, etc.). The Program requires new vehicles to be fueled by a minimum average blend of 40% renewable or non-fossil fuels. The average applies to the time of the first refueling until March 31, 2027.

Off-road vehicle: A vehicle designed primarily for recreational use or for the transportation of property or equipment exclusively on undeveloped road rights of way, marshland, open country, or other unprepared surfaces. 

1. Professional services

Professional services are defined as costs for the purchase of additional support required for the completion of the project. Those costs can cover the following types of services: technical; management; contracting; engineering; construction; installation, testing and commissioning of equipment; data collection; logistics and maintenance. The amount eligible from a sub-contractor, a consultant or service provider shall be the actual contract amount, and a copy of the contract must be kept on file.

2. Capital expenses

Capital expenses are defined as an expenditure that results in an enduring benefit, as required by the project. They can include, but are not limited to, the purchase of fuelling equipment, costs associated with site preparation and networking equipment; however, land is not considered an eligible expenditure under this program. The retrofitting or upgrading of existing capital assets is included under this heading.

3. GST, PST and HST

Any taxes claimed must always be net of any tax rebate to which the proponent is entitled.

4. Guide to In-kind Support

Proposed In-kind contributions that are deemed acceptable by NRCan officials must be supported by a formal commitment from the proponent to provide them prior to any commitment on program funding to the proposed project being made.

Eligibility of In-kind Contributions:

• the contributed asset must be from one of the categories identified below under the heading, “Categories of Eligible In-Kind Support.”
• it must be essential to a projects’ success and would otherwise have to be purchased by the proponent
• its value must be determinable and verifiable
• its valuation must be confirmed by NRCan, and agreed upon by the proponent and NRCan

Assessing the value of In-kind Contributions:

Two different approaches to the valuation of In-kind support are possible:

• using the fair market value, as described above
• using the incremental cost, that is, the cost to the proponent or its partners and collaborators of providing the contributed asset over and above normal operating costs

Appendix 2: Contribution Agreement details

The information below is provided for informational purposes only. The final terms and conditions will be set out in any Contribution Agreement that the parties sign.

Claim for reimbursement

Contribution Agreements (CA) will set out the required terms for payments, which will be made to reimburse proponents once costs have been incurred and a claim for payment has been submitted. No advance payments will be made through this program.

A holdback could be applied to all NRCan payments which will only be released when the proponent completes all project activities and NRCan considers those activities acceptable. To ensure appropriate project oversight, an additional percentage of the contribution may be withheld until all conditions of the Contribution Agreement have been met.

Reporting requirements

During projects, proponents will be required to submit one Progress Report and one Final Report.

The Progress Report is six months after the Agreement is signed. This report will inquire about the progress of the project. NRCan will provide the Progress Report template to proponents well in advance for completion.

The Final Report is due at the very end of the project. The submission of this report will result in the release of the CA stipulated holdback, and the successful completion of the project. NRCan will provide the Final Report template to proponents well in advance for completion. Proponents are to report on the following fuel metrics for fleets:

• unit numbers and In-service dates
• metrics on retrofitted tractor fuel use, kilometres driven, idle time and engine time since the start of the project
• metrics on fuel use, kilometres driven, idle time and engine time for new alternative fuel trucks since the start of the project
• metrics on tractors pulling retrofitted trailers such as fuel use and kilometres driven (if applicable)
• small datasets from existing fleet to establish a baseline and comparable (3-5 tractors outside of the Implementation project representative of fleet)
• duty cycle information on retrofitted tractors as well as new alternative fuel trucks
• information related to fleet investments, maintenance, training and communications

Audits

Proponents under this program may be audited one or several times either on the project Completion Date or at NRCan’s discretion during the project. Auditors may contact and visit each proponent on site at the beginning of the Project to explain the recipient audit process and review project financial controls.

Other terms and conditions

Risk framework

Once a project is selected for funding, NRCan will conduct a risk assessment of the proponent and its project.

The result (risk level) of an assessment could determine the eligibility for funding and may determine monitoring strategies, for example, monthly progress reports, a higher percentage holdback on payment claims or site inspections.

Any monitoring strategies or requirements resulting from a risk assessment will be outlined in the Contribution Agreement the parties will sign.

Official languages

Applicants are encouraged to communicate with NRCan in the official language of their choice. NRCan reviews and assesses applications and project materials in both official languages.

In all cases, the proponent must publicly acknowledge NRCan’s support for the project in all project-specific communications products. NRCan may request that such acknowledgment include text in both official languages.

Conflict of interest

Current or former public servants or public office holders are required to avoid conflict of interest situations while employed by the federal government, and for a period of time following their service.

The applicant must acknowledge that any individuals who are subject to the provisions of the Conflict of Interest Act, the Values and Ethics Code for the Public Sector, the Conflict of Interest Code for Members of the House of Commons, any applicable federal values and ethics code or any applicable federal policy on conflict of interest and post-employment, shall not derive any direct benefit resulting from this application unless the provision or receipt of such benefit is permitted in such legislation, policy or codes.

M-30 Law (for Quebec organization only)

The Act Respecting the Ministère du Conseil exécutif (M-30) may apply to an applicant in the Province of Quebec. Applicants may be required to complete an additional information form and, if they are subject to the requirements of the Act, to obtain written authorization and approval from the Government of Quebec prior to execution of any Contribution Agreement. NRCan will follow-up with the applicant during the application assessment, as required.

Privacy notice

The Access to Information Act (the “Act”) governs the protection and disclosure of information, confidential or otherwise, supplied to a federal government institution. This Act is a law of public order; as such the Government of Canada, including NRCan, cannot contract out of it.

Paragraph 20 (1) (b) of the Act states that: a government institution [such as NRCan] shall refuse to disclose any record requested under the Act that contains financial, commercial, scientific or technical information that is confidential information supplied to a government institution by a third party and is treated consistently in a confidential manner by the third party.

Pursuant to Paragraph 20 (1) (b) of the Act, NRCan will protect the applicant’s confidential information supplied to NRCan from disclosure if:

1. the applicant’s information supplied to NRCan contains financial, commercial, scientific or technical information; and
2. the applicant consistently treats such information in a confidential manner

For more information on this subject, a careful reading of the entire section 20 of the Access to Information Act is strongly encouraged.

Business information

NRCan may collect, use and share an applicant’s documentation prepared in the administration of the program. NRCan will use and share this information for the purposes of assessing and reviewing the eligibility of the applicant and the proposed project with:

• other NRCan programs and/or branches;
• other departments or agencies of the Government of Canada; and
• other levels of government in Canada

The information may be shared with the parties mentioned above, or disclosed to third parties, for the purpose of:

• administration, including audit and evaluation of the program;
• surveying the applicant’s experience with NRCan;
• audit, analysis and risk assessment of the applicant and/or the project; or
• determining the possible availability of funding for the applicant’s project under another program or initiative

NRCan publishes a list of successful projects on Government of Canada websites. This list would include the name of the proponent, the project name, and the amount of the contribution.

NRCan may also publicize this information, along with a description of the project, in:

• project funding announcements or other promotions
• in other government documents, including public reports on the progress of government initiatives