Shift in policy undermines Chicago’s green taxi program

Natural gas cabs sit idle after incentive expires

March 22, 2013

Since Chicago Mayor Rahm Emanuel came to office, his administration has boasted of its greener taxi fleet, with roughly half of the vehicles now running on alternative fuels. It’s a credential he again touted at a recruitment fair for taxi drivers at Olive Harvey College last month, focusing particularly on cars that run on compressed natural gas, or CNG.

“And about the number of CNG cars — cabs that are being driven by CNG fuel — is up 1,000 percent,” Emanuel said. “That is the equivalent of 8 million gallons of gasoline each year less used, and the equivalent of taking 22 thousand cars off the roads of the city of Chicago.”

The mayor went on to say the progress has made the environment cleaner and the taxi fleet modern.

Chicago’s fleet of CNG-enabled taxis was expanded with the help of a federal grant, which distributed subsidies to cover the cost of converting conventional cabs to CNG technology. Cab companies and owners also received full financing to purchase those cars from Clean Energy Fuels, a natural gas company. All told, the incentives brought 330 CNG cabs into the city’s fleet.

It’s not clear, though, whether the effort is making Chicago greener — mostly because many of the vehicles now sit unused. A recent visit to a holding lot for a cabs confirms what many taxi companies are saying: They bought the cars, but nobody’s driving them. At a muddy plot on Chicago’s far North Side, 34 of 40 unleased cabs sitting there carried the telltale blue diamond sticker on the back, with “CNG” in the center.

It’s the same story in Khaled Mahmoud’s garage on Chicago’s Northwest Side. “In the weekdays about 20 percent are leased out, and on the weekend, about forty percent, forty to forty-five percent [are] leased out,” Mahmoud said, walking through the rows of unleased CNG cabs that sat in his converted warehouse on a Monday morning. Mahmoud’s company, Chicago Taxi Medallion Management, bought almost 100 CNG cabs, making his one of the largest CNG purchases by a single buyer in Chicago.

Mahmoud said things haven’t always been this slow. Before the start of this year, it was almost impossible to find a single CNG cab sitting idle, unless it was in his shop for repairs. “The drivers were liking these cars and they were leasing them all of the time because of the front of the line,” he said, referring to the city’s incentive program for CNG cab drivers.

The incentive program, launched as a six-month pilot in August of 2011, allowed CNG cab drivers to cut to the front of the line in the taxi corral at O’Hare and Midway airports. Normally, cab drivers wait between two and four hours in the airport holding lots before it’s their turn to drive up to a terminal to pick up a fare. Since airport fares are among the most lucrative a cab driver might find in the day (about $35), the incentive induced many drivers to lease CNG vehicles.

The pilot program was so successful with drivers that the city renewed it twice before realizing that it caused problems, too. “With the airport incentive we had drivers who were deadheading back and forth to the airport,” said Jennifer Lipford, spokesman for the City of Chicago’s department of Business Affairs and Consumer Protection. “There’s nothing green about deadheading back to the airport with an empty cab.”

Lipford added that CNGs were crowding the airport, with the vehicles backing up all the way down Bessie Coleman Drive near O’Hare. Drivers of non-CNG vehicles also protested, saying they ended up waiting longer than ever before they were allowed to pick up fares. As a result, the city allowed the incentive program to expire on the last day of 2012.

“You know, it’s amazing how the drivers can change their decision in one minute,” said Mahmoud. “You tell them ‘I have a hybrid car,’ ‘No, I don’t want to drive hybrid, I want CNG because of the front of the line.’ Come December 31st after the middle of the night, they were dropping the CNG cars like rain, and they (were) switching to hybrid cars.”

Mahmoud said without the airport incentive, cab drivers are turned off from driving CNGs because the vehicles have several drawbacks. First, there are only two fueling stations within the city limits, which makes it difficult for drivers to plan their day. Second, the CNG vehicles get worse fuel mileage than hybrids.

Lipford said the airport incentive was always intended to be temporary, and that cab companies made the mistake of selling drivers on the wrong incentive. “The cab industry has been pushing that as ‘Here’s why you rent the CNG,’ instead of the $2.66 a gallon,” she said, referring to the price of natural gas. “I don’t see a bigger incentive than the fact that CNG has remained steady at $2.66 gas gallon equivalent for the last several years.”

But Mahmoud and other cab companies said cheap gas hasn’t been enough of an inducement to get drivers into those cars. Mahmoud has even discounted what he charges drivers to lease CNGs, but still, they sit idle in his lot. Meanwhile, Mahmoud is paying back loans on them to Clean Energy Fuels, which financed their purchase. Clean Energy representatives declined to be interviewed for this story.

Mahmoud said if there’s no solution forthcoming in the next few months, he will look at selling the cars.

Odette Yousef is WBEZ’s North Side Bureau reporter. Follow her at @oyousef.