Electric Vehicles and the Need for Public Policy

This post was written with Cynthia J. Burbank, National Planning and Environment Practice Leader at Parsons Brinckerhoff.  It first appeared in the National Journal Transportation Experts Blog in response to the question: What should transportation departments do for electric cars?

The call for the government to act to promote plug-in electric vehicles (PEVs), and all clean alternative fuels for that matter, is to correct the clear market failures that exist in today’s petroleum-based transportation sector.

Historically, petroleum has been a key driver in the growth of the economy and development of nations worldwide. Gasoline and diesel fuel’s impressive energy density, portability, and low production cost made it the fuel of choice for nearly a century. All the while there have been costs, although they haven’t always been obvious. Petroleum’s impact on climate change and U.S. energy security, and the risks of drilling, result in real and significant costs to society, and currently the price of petroleum does not include those externalities.

For climate change, the true costs to society are not fully known, but what is clear is that those costs will be significant and borne by all of society and not just those that are consuming petroleum -- unless action is taken. Furthermore, the U.S. has experienced the tribulations associated with energy security for decades beginning with the oil embargo of 1973 by OPEC. When the true costs of a product are not revealed by the market price, basic economics tells us to price that externality through public policy. This price is the primary role of government here.

However, transportation is such a complex system that correcting the price alone will not resolve these market failures. Government must do more to counterbalance the pervasive fueling infrastructure that we have built over the last century to support gasoline and diesel as well as the inertia of consumers’ uneasiness with change. This is where U.S. DOT and state transportation departments can help.

Transportation departments and state governments more broadly can incentivize the purchase and use of PEVs through a number of policies under their influence or control, such as HOV access, reduced tolling fees, parking privileges, public charging infrastructure support, public education, tax incentives, and transportation planning analyses that highlight the effects of increasing PEVs – as opposed to not taking action.

It will likely take decades to transition away from petroleum, but the sooner this transition begins, the sooner technological advancements in batteries, electrical grid management, and other technologies and practices related to PEVs can reach the marketplace. States can play a pivotal role in correcting the historical petroleum market failures and accelerating this transition.

Nick Nigro is a Solutions Fellow. Cynthia J. Burbank is National Planning and Environment Practice Leader at Parsons Brinckerhoff.