3.5 Address Transportation Finance Concerns with PEVs
Reason for action
Electric vehicles operating in all-electric mode do not pay the motor fuels tax, which comprise a large share of DOT budgets. Many transportation budgets are facing significant revenue shortfalls due largely to inflation and increases in fuel economy. However, the motor fuel tax revenue lost from electric vehicles will remain negligible for the foreseeable future, and new taxes on electric vehicles could harm vehicle adoption. DOTs must identify finance policies and opportunities in piloting new financing mechanisms that encourage vehicle innovation while alleviating the criticism that PEV drivers do not pay their fair share.
Implementing the action
- Identify policies that balance the desire to encourage innovation and the need to maintain the transportation system. New taxes or registration fees make electric vehicles more expensive, and can slow vehicle adoption. Even after a fee or tax is imposed, publicity and debate around an electric vehicle’s “fair share” may damage the public image of electric vehicles. Moreover, policies that impose taxes specific to electric vehicles run the risk of continually chasing the next vehicle technology (e.g., hydrogen fuel cell vehicles), and will not address the larger revenue shortfalls unrelated to PEVs.Spotlight: Oregon DOT is currently conducting a Road Usage Charge pilot program in lieu of a gas tax, and has conducted a similar program in the past. Spotlight: Washington is creating a policy analysis of a Road User Charge system, with an eye toward developing a feasible system to collect fees from drivers based on miles traveled.
- Look for opportunities for electric vehicles to pilot new transportation finance mechanisms without damaging the PEV market. For example, advanced technology in PEVs may make it easier implement on-board finance mechanisms like a vehicle miles traveled fee. A state government could offer additional incentives for electric vehicle drivers if they agree to participate in a pilot program to demonstrate new finance mechanisms.
- Explore innovative mechanisms for assuring a revenue stream to the government. For example, as first explained in Action 2.15, leasing highway rights-of-way and selling carbon offsets and renewable energy certificates from renewable energy projects can create a revenue stream to the DOT. Spotlight: Oregon’s solar highway developed in partnership with Portland General Electric (PGE) produces solar renewable energy certificates, which are retired on behalf of PGE’s customers. Under different ownership structures, these certificates could be sold to generate revenue for Oregon DOT.
Over time, different policies and pilot programs can inform how alternative fuel vehicles fit into the broader transportation finance picture, and more broadly, a national model for transportation finance.