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Five Steps States Can Take to Promote Electric Cars

WSJ Energy Expert Bill Ritter says states have increased resources and opportunities this fall to develop legislation supporting electric vehicles.   Click here for blog article.

Former Colorado Gov. Bill Ritter Jr. is director of the Center for the New Energy Economy at Colorado State University, and the author of “Powering Forward: What Everyone Should Know About America’s Energy Revolution.”

This year for the first time since 1979, emissions from the transportation sector surpassed the electricity sector to become the No. 1 source of greenhouse gas emissions in the U.S. While the carbon emissions of the electricity sector in the U.S. have been rapidly declining in recent years, transportation sector emissions continue to rise. However, a series of events this fall open opportunities for states to begin to transform the U.S. transportation sector toward reduced emissions and lower cost for consumers, all fueled by American resources.

At the end of October, a U.S. district judge approved a settlement with Volkswagen over the diesel cheating scandal.  Two thirds of the $14.7 billion settlement will go directly to Volkswagen owners in the form of rebates. However, $4.7 billion will go toward emissions reductions. Of that $4.7 billion, $2 billion will be managed by VW and deployed nationwide. The remaining $2.7 billion is going to managed by states and includes investment in electric charging infrastructure as well as conversion of heavy-duty diesel vehicles such as transit buses.

In November, the Obama administration announced its plan to establish charging infrastructure across the country through the creation of nearly 25,000 miles of highway corridors across 35 states. On these corridors, the federal government will partner with states and the private sector to build out charging infrastructure for electric vehicles every 50 miles.

The turning point for electric vehicle adoption is addressing consumer “range anxiety.” People understandably want to be sure their cars can take them where they want to go. The solution is a combination of both longer-range vehicles and greater availability of charging infrastructure.

This fall we will see the introduction of the $37,500 all-electric Chevy Bolt ($30,000 after federal tax incentives) with a range of 240 miles. The Tesla Model 3 with a range of 215 miles and a price tag in the mid-$30,000 range should begin production in 2017.

These vehicles provide a more than doubling of the mass-market electric vehicle range available today. While vehicle manufacturers are clearly stepping up to their side of the bargain, state leaders need to focus their efforts on building out the charging infrastructure necessary to meet the demands of this growing market.

There are five things states can do in the coming year to turn the vehicle emissions curve around:

1. Lower vehicle and charging costs with tax credits. States can implement a suite of tax credits for home and work charging infrastructure as well as electric-vehicle purchases. Most charging is done at home and the decision to purchase an electric car is often tied to the availability of workplace charging infrastructure. Vehicle tax credits should be transferrable, so dealers can deduct their value from the initial price of the vehicle (as they do with the federal tax credit).

2. Establish a state plan for EV Infrastructure investment. Unlike fueling of gas vehicles, which requires us to go where the fuel is, EV charging can be located where we are already going. Public hot spots – like grocery stores, shopping areas, public parking, recreation centers – all offer opportunities for charging that fit into our daily lives. A study by Idaho National Labs identified home, work, and public hot spots as the best places for investment in charging infrastructure.

3. Develop a vehicle electrification strategy for their allocation of VW Settlement money. This means not only implementing the above-mentioned state EV infrastructure plan, but also establishing public/private partnerships to leverage private capital investment in charging infrastructure. States should also partner with the federal government as they develop their national network of charging infrastructure.

4. Allow utilities to earn a rate of return on installation of charging infrastructure and implement “time of use” rates to further drive down the costs of evening charging. Utilities – and public utility commissions – need to expand their view of service to include vehicle charging. This may require legislation to specifically authorize and establish the expansion of charging infrastructure as a core purpose of the utility.

5. Adopt Zero Emission Vehicle (ZEV) standards. A special provision in the Clean Air Act allows states to follow either the federal vehicle requirements or adopt California’s vehicle standards which require more ZEVs beginning in 2018, ramping up to a requirement that 15% of new vehicle sales in 2025 be ZEVs.  To date, nine other states have adopted the California standards.

The nation’s political leaders have a once-in-a-generation opportunity to facilitate the transformation of an entire sector of our economy toward one that is cleaner, powered by American jobs, and more cost-effective for consumers. However, this will take vision, a commitment to action and a recognition of the opportunities and barriers toward broad scale electric vehicle adoption.

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