In September 2018, the California Air Resources Board (CARB) approved several significant changes to California’s Low Carbon Fuel Standard (LCFS) that will take affect on January 1, 2019.  The LCFS is California’s “cap and trade” regime for transportation fuels, where fuels are assigned a Carbon Intensity (CI) that varies depending on their feedstock and how they are produced or manufactured. Producers of fuels with a CI under the annual cap (for 2018, 93.55 grams of CO2 equivalent per Megajoule) earn credits while producers of higher-carbon fuels like gasoline and diesel incur deficits and are required to buy offsetting credits to meet the annual average CI value. Credits are bought and sold in the secondary market, and the current LCFS credit price of nearly $200/Metric Ton is driving the development of many facilities that are able to produce transportation fuels with low CI scores.Read More
On June 20, 2018, the Multi-State Zero Emission Vehicle (ZEV) Task Force released an Action Plan designed to accelerate the adoption of electric vehicles in the United States. The Action Plan presents 80 strategies and recommendations for states, automakers, charging and fueling infrastructure companies, utilities, and other partners to achieve rapid ZEV market growth in five core areas:
- consumer education and outreach;
- charging and hydrogen fueling infrastructure;
- consumer purchase incentives;
- light-duty fleets; and
The Action Plan’s recommendations reflect transportation-focused efforts to combat climate change for the future. By promoting the adoption by mainstream consumers of ZEVs, which include plug-in hybrid, battery electric, and hydrogen fuel cell vehicles, the goal is to achieve “near-and long-term” greenhouse gas (GHG) reduction targets that have been implemented in various states.
The Multi-State ZEV Task Force includes nine states—California, Connecticut, Maryland, Massachusetts, New York, Oregon, Rhode Island, Vermont, and New Jersey that collectively comprise one-third of the U.S. vehicle market. The Task Force was formed in 2013 under a Memorandum of Understanding (MOU) signed by the Governors of California and the initial seven states that adopted California’s ZEV regulations, which are more stringent than the federal vehicle emission standards. New Jersey joined the Task Force in 2018.
The Multi-state ZEV Task Force released its first Action Plan in May 2014 to support the implementation of the states’ new ZEV regulations. The 2014 Action Plan focused on eleven key initiatives, including adopting financial incentives and education programs that have been implemented by various states.
II. The New Action Plan
The new Action Plan builds on the early successes of the 2014 Action Plan by “redoubling state efforts” and “establishing clear priorities for action for the next critical period in the evolution of the market.” Promoting transportation electrification promises to deliver “substantial energy security and economic benefits as cleaner electricity derived from renewable energy and other low-carbon sources replaces imported gasoline and diesel as transportation fuels.”
Among the 80 ideas, key recommendations from the five priority areas include the following:
Consumer Education and Outreach
- States should support local grass roots efforts to increase consumer experience with ZEVs, such as ride and drives, rental programs, and pop-up ZEV show rooms.
- Automakers and dealers should increase brand-specific advertising as new ZEV models become available and fund brand-neutral consumer awareness campaigns, such as Drive Change. Drive Electric.
- Utilities should include funding for consumer education in transportation electrification program proposals submitted to public utility commissions (PUCs).
Charging and Hydrogen Fueling Infrastructure
- States should develop plans to guide the deployment of electric vehicle supply equipment (EVSE) to support the broad portfolio of charging needs at home, work, around town, at destination locations, and on the road.
- States should open PUC proceedings to consider alternative demand charge rate designs, waivers or other options for public charging to provide the least burdensome price signals to EVSE hosts.
Consumer Purchase Incentives
- States should collaborate with automobile manufacturers, dealers, utilities, other parties to advocate for the continued availability of federal tax credits.
- States should continue to offer and promote existing state rebates, income tax credits, and sales and excise tax exemptions.
- Automakers and dealers should continue to engage with state and local ZEV and EVSE incentive programs regarding monetary and non monetary incentives such as preferential parking, discounted tolls, and High Occupancy Vehicle lane access.
- States should advance the electrification of public fleets by offering financial incentives to state and local government fleets for acquisition of ZEVs and EVSE.
- Fleet Manager Associations should provide information and guidance to members about the benefits of ZEVs and charging/fueling technologies and costs through ZEV-focused information sessions and trainings.
- States should highlight dealerships with successful ZEV practices and engage with dealers through the Task Force Dealership Workgroup to identify collaboration opportunities that could support sales.
- Dealerships and dealership associations should commit to increasing ZEV sales by identifying and adopting best practices to overcome the challenges of selling ZEVs to new consumers.
The full Multi-State Zev Action Plan is provided here. K&L Gates lawyers will continue to monitor these developments as the United States rolls to a cleaner transportation future.
Congress will continue its review and oversight of automotive and energy issues this week. On Tuesday, May 8, the House Energy and Commerce Subcommittee on Environment will hold a hearing entitled “Sharing the Road: Policy Implications of Electric and Conventional Vehicles in the Years Ahead”.
The Subcommittee, chaired by Congressman John Shimkus (R-Illinois), has invited a diverse set of witnesses to provide testimony on the wide range of issues, opportunities and challenges facing consumers, automakers, utilities and other stakeholders.
According to a subcommittee memo, the following issues may be examined at the hearing:
- The reasons for the current growth in EVs and expected future trends in electrification.
- The policy implications of increasing EV market penetration.
- The impact of EVs on fueling infrastructure and on the nation’s electrical grid.
- The response of liquid fuel providers and automakers to changing market trends.
- The consumer impacts of changing trends in transportation fuels and vehicles.
Another likely topic is the federal tax credit of up to $7,500 on the purchase of a plug-in electric vehicle, depending upon the size of the vehicle and its battery capacity. During last year’s Congressional debate on tax reform, the credit was preserved despite opposition from some House Republicans. However, the incentive begins to phase out after each manufacturer sells 200,000 electric vehicles. Many automakers may hit the limit this year. A group of 36 utilities cosigned a letter in March urging Congress to modify the credit and eliminate the cap. Pacific Gas & Electric was a signatory and its CEO is one of the witnesses for tomorrow’s hearing.
Other witnesses will offer important perspectives and data on the current marketplace and outlook for EV adoption. Additionally, there will be debate surrounding the existing policy and regulatory structures at the state and federal levels and what changes or modifications should be considered.
Offering a new approach on electric vehicles (EV) integration in the power grid, Massachusetts utility National Grid has proposed a “make ready” solution for EV charging stations in its service territory. In essence, the utility proposes to prepare the infrastructure to support the development of EV charging stations but does not propose to own the charging infrastructure itself. This approach may appease some of the opposition mounted in other states where utilities have sought to own both the infrastructure necessary to support EV charging stations and the charging stations themselves. National Grid’s proposal is pending before the Massachusetts Department of Public Utilities (DPU).
If the DPU approves National Grid’s EV charging proposal, National Grid may take important steps in developing the infrastructure necessary to support Massachusetts’ planned expansion of the Commonwealth’s EV fleet. And, if approved, this program allows the company to position itself as a leader in the race to integrate EVs into the electricity grid.