The US Environmental Protection Agency (EPA) has allocated about $20m to establish clean diesel projects to reduce pollution from the nation's existing fleet of diesel engines.
The projects will also receive about $9m through direct state allocations.
EPA estimates that for every $1 spent on clean diesel funding up to $13 of public health benefit is realized.
EPA Office of Air and Radiation assistant administrator Gina McCarthy said technology has evolved to make diesel engines more efficient and cleaner than ever.
"These grants enable owners of older diesel vehicles to make investments that modernize their vehicles while making the air in their communities cleaner and healthier to breathe," McCarthy said.
The initiative is the first competition since the diesel emission reduction program was reauthorized in the last year.
By reducing diesel emissions in areas that have significant air quality issues the program can have a direct impact on community health, the agency said.
EPA has standards in place that make new diesels around 90% cleaner.
The clean diesel projects can reduce air pollution from older school buses, transit buses, heavy-duty diesel trucks, marine engines, locomotives, and other diesel engines.
The closing date for receipt of proposals is 4 June 2012.