States will need coordination, creativity to meet electric vehicle goal

Eight states have given a big boost to zero emission vehicles by agreeing to support putting 3.3 million on the road by 2025. California, Connecticut, Maryland, Massachusetts, New York, Oregon, Rhode Island, and Vermont together account for about a quarter of the auto market, so their commitment is significant. 

To reach their goal, these states will need to learn what policies and actions are most effective at driving sales of zero emission vehicles (ZEVs), starting with electric cars.

Two early lessons are evident from our ongoing work in this area: Stakeholder coordination is critical, and creative policy solutions are needed. The memorandum of understanding the governors signed last week will foster an environment for both.

The rollout of electric vehicles, the first ZEV available to the masses, shows that deploying a transformative technology in the passenger vehicle market is challenging, but doable. Analysts offered rosy forecasts for sales of the Chevy Volt and Nissan LEAF when they debuted. The vehicles have won industry and safety awards and were helped by incentives like the federal tax credit of up to $7,500. More than 140,000 electric vehicles have hit U.S. roads in the last three years, and there are now more than 6,500 public charging stations. Still, electric vehicles make up less than 1 percent of the overall market, so cracking the code on the mainstream American car-buyer has been elusive.

The agreement calls for coordination across government on actions and policies, because no single blueprint exists that spells success for electric vehicles. Letting electric vehicles use high-occupancy vehicle (HOV) lanes will likely help sales in congested California, but probably not in Utah. In Georgia, a $5,000 electric car tax credit combined with HOV access has helped make Atlanta the third most popular market for the Nissan LEAF. In another example, a financial incentive for a charging station at home might not help someone who lives in an apartment building. States will need to tailor their policies and activities to each metropolitan region's infrastructure and travel patterns.

Many policy ideas are laid out in the consensus Action Plan created by the PEV Dialogue Group, a group of automakers, electric utilities, non-profits, and others C2ES convened to help integrate plug-in electric vehicles into the U.S. grid. Following the release of the Action Plan, we worked with eight state transportation departments on an interactive planning tool that helps states chart a path for getting more of these vehicles on the road.

The agreement also calls for states to evaluate the need for electric vehicle incentives and pursue them “as appropriate.” The likelihood of large new public investments in electric vehicles or charging infrastructure is very small, so a key to success will be leveraging existing public subsidies and targeting new ones. Policymakers should look for creative financial solutions, like the Connecticut Clean Energy and Investment Authority, that provide greater public benefits at a lower cost to the government. This will make scaling a national ZEV market more efficient.

Recognizing the need for more of these creative financial solutions, C2ES has begun a new two-year initiative to develop innovative models for financing alternative fuel vehicles and infrastructure.

A long-term commitment by all involved will be necessary because the success of electric vehicles, and eventually hydrogen fuel cell vehicles, is far from guaranteed. Petroleum-powered vehicles have a 100-year head start and are constantly improving their environmental footprint, thanks mostly to federal greenhouse gas and fuel economy standards. Even though there are 14 models of electric vehicles available today, they don’t cover major segments of the auto market like crossovers and minivans.

These eight states have indicated they will support the technology as it develops and is able to appeal to the broader auto market. Their agreement is an important step because transportation is responsible for more than a quarter of U.S. greenhouse gas emissions, and 60 percent of transportation emissions come from passenger vehicles.

The challenge will be for these states to formulate comprehensive plans that can adapt to changing needs, as stakeholders learn which policies and activities work best to accelerate ZEV sales. Other states will also have to take similar steps if we are to achieve a low-carbon future for passenger vehicles.