How does a city become resilient? With more communities facing climate impacts, including more severe storms, heat waves, and sea level rise, it’s a question many city planners are struggling with. And it’s a question best answered through collaborative efforts.
To move its resilience planning forward, the City of Providence brought together state officials, city departments, local businesses, universities, hospitals, utilities, and others for a two-day workshop facilitated by C2ES. At the workshop, AECOM and IBM led city and community officials through the Disaster Response Scorecard where participants discussed the risks they face, strategies in place or needed to lessen those risks, and how they can respond now and in the future to minimize loss of life and damage to critical infrastructure.
Providence has already seen rising sea levels and increased flooding. In Rhode Island, sea level could rise as much as 2 feet by 2050 and 7 feet by 2100. The Third National Climate Assessment says the region will experience heat waves, more heavy downpours, and more coastal flooding.
With its extensive waterfront, Providence is on the frontlines of climate change. As Mayor Jorge Elorza told the Providence Journal, “We simply can’t afford to kick the can down the road. By planning ahead we can make wiser investments … to minimize our risk and enhance resilience.”
Cities like Providence are one of many working to strengthen their resilience to climate change now, rather than waiting for a disaster to occur. C2ES held a similar exercise with the City of Anchorage, and will soon hold resilience workshops with Kansas City, MO, Miami Beach, FL, and Phoenix, AZ.
Cities across the U.S. are looking to change how they prepare for and respond to extreme weather and climate change impacts. Strategies to improve resilience include:
- Working with community leaders. Cities are working together with diverse community groups to raise citizens’ awareness of climate change and extreme weather. For example, Providence recently held a workshop with faith-based organizations on hurricane preparedness.
- Partnering to pool resources. The adage “There’s strength in numbers” holds true. Through memorandums of understanding, cities are partnering with their local businesses and non-profits to prepare for and respond to extreme weather. Some businesses are funding collaborative resilience efforts. PG&E will award $1 million to local governments in their utility territory that propose resilient solutions, focused on disadvantaged communities, that others can replicate.
- Visualizing and combining information and data. Mapping of climate change risks can help people understand vulnerabilities. The Rhode Island Coastal Resources Management Council has mapped sea level rise, storm surge, and other risks to coastal communities in the state.
- Developing innovative solutions. The City of Hoboken, N.J., which experienced devastating flooding during Hurricane Sandy, is partnering with BASF to build a park and parking garage that can double as floodwater storage. Once finished, it could hold at least 1 million gallons of excess water.
Innovative solutions like these could help communities improve their resilience to climate change and extreme weather events, and C2ES will continue to share new approaches and best practices
With up to 70 percent of total global emissions originating within the boundaries of cities, local governments are at the center of the fight against climate change.
One area where local governments are stepping up to meet this challenge is the building sector, which offers a variety of opportunities to reduce energy demand. Local governments have long sought to improve energy performance among new buildings, however, new buildings aren’t replacing older ones at a fast enough rate to put a noticeable dent in commercial building energy use. In response, cities are working to improve the performance of the existing commercial building stock.
The new C2ES brief, Local Climate Action: Cities Tackle Emissions of Commercial Buildings, explores four commercial building policy strategies that leading cities are adopting: energy use benchmarking and disclosure mandates, retro-commissioning, retrofitting, and requirements for building upgrades to meet current codes. The brief offers examples of how these policies are developed, structured, and implemented. We looked at several examples in an earlier blog post.
These policies are showing promise for reducing emissions in cities that adopt them. For example, New York City is pursuing a suite of building actions, including a local law that requires buildings greater than 50,000 square feet to ensure all lighting systems meet current city standards in common areas and non-residential tenant spaces greater than 10,000 square feet by 2025. Those non-residential spaces must also be sub-metered, and energy use disclosed to tenants. The city intends to extend the policy to include buildings between 25,000 and 50,000 square feet. The move is expected to reduce annual emissions by about 60,000 metric tons of carbon dioxide (MtCO2e) and cut energy costs by $35 million annually.
As we reviewed these four policy categories, two conclusions became clear:
- Although policies like New York’s retrofitting requirement are not common in U.S. cities, replicating them broadly could provide widespread co-benefits in our communities and possibly contribute measurable greenhouse gas reductions at the national level.
- A larger energy transformation is needed to achieve the aggressive community emissions targets cities have set, and that won't happen without stronger collaboration.
While a number of federal programs provide cities with technical assistance and funding, additional support could be provided by U.S. states and businesses in the form of complementary programs, private investment, and active engagement in policy development. We’ve already seen more of this kind of collaboration through initiatives like the City Energy Project. The increasing number of businesses publicly committing to climate goals indicates there are many more opportunities.
In addition, the Clean Power Plan requires states to meaningfully reduce emissions from the power sector. Properly designed, state implementation plans for the Clean Power Plan could incentivize utilities and commercial building operators to improve the performance of the building stock.
If the actions of New York City, Seattle, and others are any indication, local governments have the potential to enact policies that foster climate action. These key players must continue taking bold actions to help create a policy environment across the country that promotes high-performing buildings, no matter when they were built.
Local Climate Action:
By Todd McGarvey and Amy Morsch
|Photos by Dennis Schroeder / NREL, Iberdrola Renewables, Inc., U.S. Department of Energy|
Wind and solar power were once considered expensive and were not widely deployed. Today, skeptics say the same about technology to capture, use and store carbon dioxide emissions (CCUS or carbon capture).
So what lessons can we draw from the experience of the wind and solar industries as they’ve become more mainstream to facilitate a faster and broader deployment of carbon capture technology?
The cost of wind energy has declined by more than 60 percent since 2009 and average nameplate capacity increased 180 percent between 1998-99 to 2015. These improvements have led to an installed wind capacity of 74,821 MW in the United States, enough electricity to power nearly 20 million average U.S. homes every year.
These wind energy milestones in cost reduction, performance improvements, and scale of deployment were supported by the Production Tax Credit (PTC), a federal deployment incentive. It’s reasonable to assume that the PTC would have been even more successful if it had been maintained consistently instead of experiencing periods of uncertainty regarding its fate, leading to boom-and-bust wind power development cycles.
Ongoing federal research and development (R&D) also spurred improved wind industry technology. For example, in 2007, the National Renewable Energy Laboratory initiated the Gearbox Reliability Collaborative in response to industry-wide technology challenges. That research led to improved gearbox designs, reducing the overall cost of wind energy and showing how collaborative industry efforts and federal support for R&D can resolve performance challenges.
Solar photovoltaic (PV) technologies experienced similar dramatic cost declines due to economies of scale and improved manufacturing and performance. The cost of utility-scale solar has fallen more than 54 percent since 2011. The efficiency of all PV cells steadily improved between 1975 and 2010, supported by multi-decade R&D programs like the Department of Energy’s Thin Film PV Partnership.
These cost declines and performance improvements were facilitated by the Investment Tax Credit, another federal deployment-focused incentive, and the Section 1603 Treasury program, a federal loan guarantee mechanism to support project financing. Strong state policies like the California Renewables Portfolio Standard enabled developers to enter into above-market power purchase agreements. The experience of utility-scale solar PV demonstrates that overlapping policies are essential to achieve financing for first-of-a-kind projects.
Lessons for carbon capture
We can draw three key conclusions from wind and solar energy’s experience:
- Stable, long-term deployment incentives that build on previous public and private investments in technology research, development and demonstration (RD&D) are essential to facilitate a large volume of projects;
- As more projects are deployed, costs are reduced through economies of scale, learning from experience, and technological innovation;
- Ongoing government support for RD&D can deliver cost reductions by supporting innovation and overcoming performance challenges.
In contrast to wind and solar, the U.S. lacks an effective federal incentive for commercial deployment of CCUS—despite being a world leader in public and private RD&D for early stage technology demonstration. Fifteen commercial-scale CCUS projects are operating globally; eight of those are in the United States. But that’s not nearly enough to meet our mid-century climate goals.
Carbon capture can be used at coal- or natural gas-fired power plants, which are baseload generation resources. It’s also the only way to reduce carbon emissions from some industrial plants, such as facilities producing chemicals, steel, and cement. Also, over the long-term, we’ll need to integrate biomass energy systems with carbon capture (BECCS). Combining the capture of photosynthetic carbon from biomass with CCUS can enable negative emissions.
While first-of-a-kind, commercial-scale CCUS projects are expensive, we know that as more projects come online, they will become cheaper. SaskPower estimates it could cut costs by up to 30 percent on the next unit to be retrofitted following its current experience operating the world’s first commercial-scale, coal-fired power plant carbon capture project. Developers are exploring novel approaches, including the Exxon and Fuel Cell Energy partnership and the Exelon-supported NET Power project, that have the potential to reduce costs still further.
It’s essential to extend and expand tax incentives for carbon capture, update state laws to include CCUS technology in clean energy standards, and fund continued carbon capture RD&D, among other things, if we are going to reach our emissions-cutting goals.
|Innovation to Power the Nation (and the World): Reinventing our Climate Future event held at the Carnegie Institute of Science Auditorium. Keynote remarks by Michelle Lee, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office; and panelists including: Dr. Jayant Baliga, Dr. Kristina Johnson, Nathan Hurst, Bob Perciasepe and moderated by Amy Harder.|
Energy, business and policy experts agree: Current technologies aren’t enough to keep the world from warming more than 2 degrees Celsius by 2100, the ambitious goal of the Paris Agreement. We will need innovation to fill the gap.
Where do we need breakthroughs? What do we need do more, do differently or do faster to evolve our energy system to be efficient, dependable and low-carbon? What policies would help drive the innovation we need?
These are some of the questions that guided a recent discussion C2ES helped organize at the Carnegie Institution for Science.
U.S. Patent and Trademark Office Director Michelle K. Lee opened the conversation by emphasizing the importance of innovation to face the challenges posed by climate change. “History has shown us there are few challenges that innovative minds cannot overcome,” she said.
Here are some of the highlights of the discussion, which you can watch here:
We can vastly improve energy efficiency
Dr. B. Jayant Baliga, an inventor with 120 patents and a professor at North Carolina State University, sees an enormous opportunity to improve energy efficiency, not necessarily through new inventions, but by more widely using some of the technologies we already have.
One of Baliga’s inventions, the insulated gate bipolar transistor (IGBT), dramatically improves efficiency in power flow in everything from appliances to cars to factories, saving an estimated 100 trillion pounds of carbon dioxide emissions.
Using variable speed motor drives that take advantage of IGBTs can improve efficiency by 40 percent, but only about half of U.S. motors run on these drives, compared with nearly 100 percent in Europe, Baliga said. With two thirds of U.S. electricity used to run motors, the energy savings could be enormous.
Lighting consumes about a fifth of electricity in the U.S. Going from incandescent bulbs to CFLs reduces energy use 75 percent. But in the U.S., only 2 billion out of the 5 billion light sockets have CFL bulbs in them, Baliga said. “We need some encouragement for people to use these kinds of lights,” he said.
Business plays a crucial role
Businesses understand the importance of climate change for both their operations and customers. Nate Hurst, Chief Sustainability & Social Impact Officer at HP, said companies should examine their operations and supply chains to drive energy efficiency, and also make products that are as energy efficient as possible.
HP, along other multinational companies, recently pledged to power global operations with 100 percent renewable energy, with the goal of 40 percent by 2020. The company also announced a new commitment to achieve zero deforestation also by 2020, which means all HP paper and paper-based packaging will be derived from certified recycled sources.
Companies need to diversify their energy sources, but the biggest challenge is price. Hurst suggested government incentives and tax credits can play a role in bringing alternative energy prices down.
Policy is needed at the federal, state and city level
C2ES President Bob Perciasepe said policies to recognize the costs of greenhouse gas emissions, such as a price on carbon, can stimulate innovation. Cities, states and businesses are pressing forward with policies and actions to save energy and expand clean energy. C2ES recently launched an alliance with the U.S. Conference of the Mayors to bring businesses and cities together to speed deployment of new technologies.
One area where more innovation is needed is carbon capture, use and storage. “We know how to do it, but we have to find cheaper ways to do it,” Perciasepe said. “And we have to find ways to use carbon, not just shove it all back into the earth.” For example, the Ford company is testing ways to capture carbon emissions from its manufacturing plants to make plastic for use in the interior of cars.
Hydropower can play a key role
Dr. Kristina Johnson, an electrical engineer and former Undersecretary for Energy at the Department of Energy, said it’s crucial to find new ways to use renewable energy. Her company, Cube Hydro Partners, acquires and modernizes hydroelectric facilities and develops power at unpowered dams.
“When we built our first little power plant in an existing dam, it cost less than $20 million, but it was the equivalent of having planted a million fully grown trees in the rainforest, which would have been a billion dollars,” she said. Hydropower can help provide constant energy to fill in for wind and solar power, she said.
Other areas where innovation would boost clean energy would be small modular nuclear reactors, although more work needs to be done on handling the waste, and an economic way to store or reuse emissions from fossil fuel plants, she said.
The last question asked by moderator Amy Harder of The Wall Street Journal was: What is the most important invention society needs to make and bring to scale to address the challenge of climate change?
What our panelists said:
- A visionary new source of power,
- Enhanced versions of the sources already known, such as ocean currents or solar power,
- The right economic incentives to scale the solutions we already have, and
- New materials that can be reused and recycled without compromising quality.
Climate change is causing longer and hotter heat waves that take a toll on public health and on a community’s economy, prompting some local governments to take action.
Heat can be deadly. From 2006-2010, exposure to extreme heat resulted in 3,332 U.S. deaths. The elderly and the poor are among the most vulnerable due to pre-existing health issues and limited access to air conditioning. But young outdoor enthusiasts are also at risk. Five hikers died during a heat wave this summer in Arizona, where it got as hot as 120 degrees F.
Heat waves are not only dangerous, they’re also expensive. Extreme heat can damage crops and livestock, reduce worker productivity, drive up energy costs, and increase demand for water resources. A 2011 heat wave and associated drought in the Southwest and Southern Plains cost $12.7 billion.
A hotter, drier Southwest
While it’s hard to determine how climate change influences individual extreme weather events, we do know climate change exacerbates both their frequency and intensity.
In the Southwest, residents are expected to see an additional 13 to 28 extremely hot days (temperatures of 95F or hotter) by mid-century, and 33 to 70 additional days by the end of the century. Higher temperatures will also exacerbate droughts and fire cycles.
How to prepare
The Southwest region has already taken steps to prepare for the impacts of more extreme heat. This is especially critical for urban areas, where stretches of heat-absorbing concrete and asphalt create a heat island effect, increasing temperatures in some cities by up to 15 degrees above surrounding areas
In Southern California, the city government in Chula Vista is working to implement 11 strategies to help adapt to the impacts of climate change. They include using reflective or “cool” paving and roofing to reduce the urban heat island effect, and amending building codes to incentivize water reuse and lower demand for imported water.
In Arizona, the city of Phoenix’s Water Resource Plan includes short- and long-term strategies to deal with water shortage scenarios, including monitoring supplies and managing demand, developing increased well capacities for water storage, and coordinating with neighboring counties to secure additional water resources.
A council of local governments in Central New Mexico is working to determine the impacts of heat waves on infrastructure, including the role of extreme heat in degrading asphalt and pavement, and what types of pavement materials are most resilient to extreme heat.
Early efforts to improve climate resilience can help a community prepare for costly extreme weather events and more quickly bounce back from them. Local governments like the cities of Phoenix and Chula Vista and those in New Mexico are demonstrating strong leadership that can be an example for others. Coordinating with partners in state government and the business community, including through the C2ES Solutions Forum, can ensure local governments’ resilience plans provide maximum protection against the heat waves of the future.
Governments, businesses and universities are focusing increasing resources and attention on what is now our nation’s largest generation, millennials.
Generally defined as those born between 1982 and 2000, millennials now represent the largest share of the American workforce. They’re more educated than prior generations. They’re more culturally diverse. And they’re more socially conscious.
How will this millennial generation shape our climate and energy future? Consider just two observations about how millennials want to live and get around -- housing and transportation.
A study found more than 6 in 10 millennials prefer to live in mixed-use communities. They’re more interested in living where amenities and work are geographically close. More than a third of young people are choosing to live as close as 3 miles from city centers.
As for transportation, millennials drive less than other generations. They’re opting for walking, biking, car-sharing or public transit. From 2001 to 2009, vehicle-miles traveled dropped 23 percent for 16- to 34-year-olds.
These preferences point to a future that is low-carbon and more sustainable. Dense urban living and mixed modal transportation options can result in reduced greenhouse gas emissions. A 2014 report from the New Climate Economy notes that “more compact, more connected city forms allow significantly greater energy efficiency and lower emissions per unit of economic activity.”
Millennial demands are influencing other sustainability topics, too. A Rock the Vote poll earlier this year found 80 percent of millennials want the United States to transition to mostly clean or renewable energy by 2030. An earlier poll from the Clinton Global Initiative found millennials care more than their parents’ generation about the environment and would spend extra on products from companies that focus on sustainability.
These facts indicate that this generation of 75.4 million people (in just the United States) wants to live differently than previous generations. Energy policies and technology habits will need to change to keep pace.
Government is paying attention, with President Barack Obama calling on millennials to tackle the challenge of climate change. Businesses, like energy providers, are working to deliver service in a seamless and more socially connected way. And universities are offering more sustainability-focused programs than ever before. The Association for the Advancement of Sustainability in Higher Education (AASHE)’s program list is growing, and university presidents are being asked by students to join the Climate Commitment to reduce emissions and improve resilience to climate impacts.
While millennials wield huge influence, the real power of change will come from all generations working together to develop innovative solutions and implement pragmatic policies to shape a low-carbon future and environmentally stable and economically prosperous planet for all who will inherit it.
Webinar: Financing Climate Resilience – What Are Our Options?
Extreme weather events and disasters are already damaging assets, disrupting supply chains, reducing productivity and revenues, and destroying livelihoods. Projected climate impacts will also likely hit the creditworthiness of companies, posing risks to financial institutions and may affect companies' credit ratings. The need to update infrastructure provides an opportunity to build in climate resilience.
This webinar explores options for financing resilience and features an interactive discussion with experts in the field about opportunities and potential challenges.
July 21, 2016
Noon – 1:30 p.m. ET
Managing Director for HUD Programs (Office of Recovery), New Jersey Energy Resilience Bank
Founder & CEO, re:focus partners
Science Fellow and Resilience Project Coordinator, Center for Climate and Energy Solutions
Fatima Maria Ahmad
Solutions Fellow, Center for Climate and Energy Solutions
Shalini Vajjhala is founder & CEO of re:focus partners, a design firm dedicated to developing integrated resilient infrastructure solutions and innovative public-private partnerships, including the RE.invest Initiative and the RE.bound Program. Prior to starting re:focus, Ms. Vajjhala served as Special Representative in the Office of Administrator Lisa Jackson at the U.S. EPA, where she led the U.S.-Brazil Joint Initiative on Urban Sustainability, EPA Deputy Assistant Administrator in the Office of International & Tribal Affairs, and Deputy Associate Director for Energy & Climate at the White House Council on Environmental Quality. She joined the Obama administration from Resources for the Future, where she was awarded a patent for her work on the Adaptation Atlas. Ms. Vajjhala received her Ph.D. in engineering & public policy and Bachelor of Architecture from Carnegie Mellon University.
Katy Maher is a Science Fellow and Resilience Project Coordinator at the Center for Climate and Energy Solutions (C2ES). She contributes to C2ES’s efforts to assess and communicate the current state of knowledge regarding climate change and its impacts, and to promote actions that strengthen climate resilience. Ms. Maher has more than eight years of experience supporting climate change impacts and adaptation projects. Prior to joining C2ES, she worked for ICF International assisting a range of clients – including the U.S. Environmental Protection Agency, Federal Highway Administration, U.S. Agency for International Development, and state and local governments – in assessing climate change risks and developing adaptation solutions. Ms. Maher also served as Chapter Science Assistant for the Social, Economic and Ethical Concepts and Methods chapter of Working Group III’s contribution to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change.
Fatima Maria Ahmad is a Solutions Fellow at the Center for Climate and Energy Solutions (C2ES) where she co-leads the National Enhanced Oil Recovery Initiative with the Great Plains Institute. Ms. Ahmad focuses on financing opportunities and policy support for emerging energy technologies, including carbon capture, use, and storage (CCUS). In a volunteer capacity, Ms. Ahmad is the Co-Chair of the American Bar Association Section of International Law International Environmental Law Committee and is the Women’s Council on Energy & the Environment Vice-Chair for Membership.
Bruce Ciallella is currently the Managing Director for HUD Programs (Office of Recovery). In this role, he oversees the Hurricane Sandy recovery effort for the New Jersey Economic Development Authority (EDA). His role includes managing the Stronger NJ Business Grant Program, the Stronger NJ Business Loan Program, the Neighborhood Community Revitalization Program, and the Energy Resilience Bank. Prior to joining the EDA, Mr. Ciallella served as Deputy Attorney General for the state of New Jersey representing the EDA and New Jersey Housing and Mortgage Finance Agency in various legal matters, including but not limited to the creation of various Hurricane Sandy programs. Furthermore, before joining the state, Mr. Ciallella was a market maker on the floor of the NASDAQ OMX PHLX trading in the oil service, homebuilder, and gold and silver sectors.
When it comes to carbon capture, innovative technology exists, but the financial and policy support needed to accelerate its deployment is lacking.
At a recent Carbon Capture, Utilization & Storage (CCUS) Conference attended by leaders of industry, federal and state agencies, and environmental organizations, one theme that emerged is the importance of policy parity with other low- and zero-carbon energy technologies like wind and solar to advance widespread deployment of CCUS technology.
We know that CCUS technology is essential to meet our mid-century climate goals. In fact, without CCUS, mitigation costs will rise by 138 percent.
Exchange Monitor, the organizer of the CCUS conference, noted that it is “an extremely important technology, enjoying a bit more spotlight on the heels of the Paris climate change agreement.” Many nations specifically referenced CCUS technology in their Nationally Determined Contributions to the agreement, including Canada, China, Norway, Saudi Arabia, the United Arab Emirates, and the United States.
Even as nations diversify their energy portfolios, fossil fuels are expected to serve 78 percent of the world’s energy demand in 2040. The most recent Energy Information Administration analysis suggests that global energy consumption is expected to rise 48 percent over the next 30 years.
Clearly, there will be a need for CCUS technology to be widely deployed, in both the power and industrial sectors. Industry, including refining and chemicals, steel, and cement production, contributes roughly 25 percent of global emissions and there are no practical alternatives to CCUS for achieving deep emissions reduction in this sector.
CCUS project development is not on track, however. The most recent International Energy Agency (IEA) Tracking Clean Energy Progress report notes: “No positive investment decisions were taken on CCUS projects, nor did any advanced planning begin in 2015, resulting in a fall in the total number of projects in the development pipeline.”
Since a project can take five to 10 years from conception to operation, financial and policy support is critical now, the EIA adds. The report concludes: “As with other low-carbon technologies, the market for CCS projects in most regions will be created by policy and regulation.”
That conclusion was echoed at the conference by Dr. Julio Friedmann, the Senior Advisor for Energy Innovation at the Lawrence Livermore National Laboratory and former Principal Deputy Assistant Secretary for Fossil Energy at the U.S. Department of Energy. He said the financing challenge for CCUS projects “is fundamentally a policy issue; this is not a technology issue.” Barry Worthington, Executive Director of the U.S. Energy Association, emphasized at the conference that “providing identical fiscal tools for all no-carbon/low-carbon technologies reduces market distortion.”
Policies that would accelerate the deployment of CCUS technology include:
- Stronger federal and state incentives for carbon dioxide enhanced oil recovery (CO2-EOR)
- The inclusion of CCUS technology in state clean energy standards
- Funding for continued CCUS research, development, and demonstration
- A price on carbon
These policies would help overcome the barriers that innovative CCUS projects face, such as higher cost and higher perception of risk by investors. The cost reductions and performance improvements experienced by the wind and solar energy industries demonstrate that these kinds of policies (tax incentives, renewable portfolio standards, etc.) can accelerate the deployment of low- and zero-carbon energy technologies.
What policy parity means is sustained public sector support through the process of achieving a declining cost curve: from deploying initial first-of-a-kind CCUS technologies in both power and industrial applications to driving deployment of next-of-a-kind projects. It also means sustaining R&D on CCUS technologies so that low- and zero-carbon energy technologies are ultimately competitive without incentives.
As more CCUS projects come online, opportunities for cost reductions become apparent. SaskPower estimates it can save up to 30 percent on future CCUS units at the Boundary Dam power plant.
Finally, there is significant support for accelerated deployment of CCUS technology. C2ES co-convenes the National Enhanced Oil Recovery Initiative, which is a broad and unusual coalition of executives from the electric power industry; state officials; and environmental and labor representatives, all of whom support improved policy for CCUS technology in the United States. Based on our experience, and as expressed at the conference, policy parity needs to be an essential component of future federal and state efforts on climate to meet our agreed-upon goals and to match the growing need for CCUS technology.
The state of New York has passed a budget that includes a new EV purchase incentive that will provide up to $2,000 for eligible buyers of an all-electric vehicle, a plug-in hybrid EV, or a hydrogen fuel cell vehicle. Meanwhile in Minnesota, legislators have been considering an EV purchase incentive.
The CEO of the Freedom Foundation of Minnesota criticized EV purchase incentives as “a reverse Robin Hood scheme,” without the green tights, that takes money from the many (taxpayers) and subsidizes the purchases of the few (elites who buy EVs). How accurate is the assertion that the wealthy benefit the most from purchase incentives?
A free EV data tool from the New York State Energy Research and Development Authority can provide some insight. Developed with support from C2ES, EValuateNY gives users access to wide-ranging data sources from New York State’s EV market and allows easy comparisons of the factors that affect EV sales. You can find more about the tool in a previous blog post.
Our initial assessment, examining the period before the purchase incentive program has been implemented, shows that the EV market extends well beyond New York’s wealthiest counties.
Using the U.S. Census Bureau’s data on median household income by county, we established three income brackets to compare wealth between counties. Next, we broke down EV registrations by county and income bracket from the beginning of the EV market (2010) to the most recent data in EValuateNY (2014). The results show that counties with high median incomes account for slightly less than half the state’s total EV registrations.
Figure 1: Distribution of EVs by Income Bracket and County (2010-2014)
Therefore, EVs are not solely purchased in high-income counties, though households with high incomes are found in each county. However, EV registrations in three high-income counties (Suffolk, Nassau, and Westchester) account for more than 43 percent of the state’s total registrations, but only about 22 percent of the population. Clearly, these high-income counties have a higher rate of EV registrations. To dive deeper, we used EValuateNY to plot the rate of EV purchases per 1,000 vehicle registrations by county and income level, shown in Figure 2. Using a rate of EV purchases helps eliminate other factors that may affect the data, such as population or the rate of vehicle ownership. We also added the total number of EV registrations as the size of the bubble representing each county.
Figure 2: Household Income with Rate of EV Purchases and EV Registrations by Income Bracket and County (2010-2014)
This chart indicates that income may have a positive effect on the rate of EV registrations. High-income counties’ rate of EV purchases per 1,000 vehicles is higher than the range of low-income counties. With some notable exceptions, it’s also higher than the range of medium-income counties.
EValuateNY helped establish two findings[i] about the effect of income in New York State’s EV market:
1. Counties with low and medium median incomes make up more than half of the market; and
2. Residents of high-income counties may be more likely to purchase an EV than residents of low- and medium-income counties.
So, would New York’s forthcoming purchase incentive rob from the poor and give to the rich? This could not be entirely true, since more than half of all registered EVs are in low- and middle-income counties, and residents in these counties would arguably benefit more from $2,000 than residents from high-income communities. However, there may be some validity to the argument that on an individual basis, residents of high-income counties would benefit more from the purchase incentive because they may be more likely to buy an EV.
From a policy perspective, the purchase incentive is designed to promote EV deployment, reduce greenhouse gas emissions, and invest in the state’s economy. The program is not designed with any specific social equity goals, but New York legislators could address any potential wealth disparity by instituting an income cap, as California recently did.
The value of purchase incentives in spurring the EV market should not be lost in the discussion of income, though. A recent report by the Stockholm Environment Institute highlights the need to reduce EV price premiums as a means of encouraging consumer adoption. The effect of purchase incentives on state EV markets has been demonstrated over the past year after Georgia eliminated its $5,000 all-electric vehicle tax credit, and EV sales fell sharply.
New York State’s purchase incentive is a helpful tool for putting more electric vehicles on the roads. All New Yorkers, not only the wealthy, benefit from the reduced greenhouse gas emissions from having EVs using some of the least carbon-intensive electricity in the nation.
[i] The strength of any correlation is difficult to establish, as EValuateNY’s user interfaces are designed to provide high-level insights. A regression analysis that provides confidence intervals may be required to better understand the significance of income on counties’ rate of EV uptake. Users may conduct advanced analyses by directly accessing EValuateNY’s databases.