@VotingMattersCA Politics California has positioned itself as a global leader in environmental protections and policies. In the past, the State has implemented stringent rules including vehicle pollution control devices and tough vehicle fuel efficiency standards that the rest of the U.S. would come to adopt as well. However, approximately 39% of carbon dioxide emissions within California are currently being generated from gasoline or diesel fueled vehicles (mercurynews.com, 2018).
In 2018 former California Governor Jerry Brown issued an executive order calling for 5 million zero emissions vehicles (ZEVs) to be put into service and ordering construction of 250,000 charging stations statewide by 2030. The cost of Brown’s plan is estimated to cost $2.5 billion (mercurynews.com, 2018) and includes expansion of a current State program that provides tax credits for purchasers of ZEVs. As Brown’s gubernatorial term was coming to an end, Gavin Newsom campaigned for the Office of the Governor on a platform that included a plan to reduce green house gases primarily by an “overhaul of the transportation sector” (Newsom, 2017). Newsom was elected into office in November 2018, and immediately set an agenda that included implementing Brown’s executive order. Given the cost of Ex-Governor Brown’s plan, there is no shortage of critics that question whether Newsome should continue down the same road as Brown. Some critics question whether ZEV incentives really do spark ZEV sales or reduce greenhouse emissions. When Ex-Governor Brown issued his executive order, his plan was to raise an additional $1.6 billion of funds in support of ZEVs through the State’s carbon cap and trade auction, and another $900 million through a continuation of a clean air bill that assesses and collects a $2 vehicle registration fee. These fees would then flow into the budget for California’s Air Resources Board (ARB), among others. ARB revenues would be for clean air projects, including additional funding for rebates given to the purchasers of ZEVs through the California Vehicle Rebate Program (CVRP) administered by the ARB. The CVRP was created in 2009 with the mandate to provide financial subsidies for cleaner air vehicles including Plug-in Hybrid Electric Vehicles (PHEVs) that initially run on electricity only before consuming fossil fuels, and vehicles that can operate with out using any fossil fuels, primarily Hydrogen Fuel Cell Electric Vehicles (FCEVs) and Battery Electric Vehicles (BEVs). BEVs account for 59.6% of all rebates issued by the CVRP, while PHEVs purchases have accounted for 38.2% of rebates, and FCEVs receiving 1.7% of CVRP rebates (cleanvehiclerebate.org, 2019). The CVRP is primarily funded from income generated from the state’s carbon dioxide cap and trade auction program and deposited into the GGRF, the Greenhouse Gas Reduction Fund (Legislative Analyst Office, 2018). To date, the GGRF has accounted for approximately $497.7 million of the $639.3 million total subsidies handed out by the State. Additional funding for clean air vehicle subsidies is provided within Assembly Bill (AB) 118, California Alternative and Renewable Fuel, Vehicle Technology, Clean Air and Carbon Reduction Act of 2007.AB 118 created the Air Quality Improvement Program, called for its administration by the California Air Resources Board (CARB), and funded the program by mandating increased smog abatement and vehicle registration fees. CARB has contributed about $115.4 million in subsidies to date. Assembly Bill (AB) 118 also established the California Energy Commission's Alternative and Renewable Fuel and Vehicle Technology Program. Both AB 109 in 2008 and AB 8 in 2013 legislatively modified AB 118. Collectively, the statutes appropriate $100 million to the California Energy Commission (CEC) for projects that aim to reduce greenhouse gas emissions within the State. Most relevantly, the CEC has contributed $23.1 million for rebates of ZEVs and is partnering with manufacturers of ZEVs to create a comprehensive network of ZEV charging stations. The sales of ZEVs nationwide are increasing in proportion to cars consuming fossil fuels due to a combination of Federal, State, and local utilities rebates that have driven down the cost of clean air vehicles to the point where they are competitively priced with other vehicles that consume fossil fuels. California also partners with ZEV manufacturers to build charging stations, and has offered other incentives for ZEV owners such as access to High Occupancy Vehicle (HOV) lanes and desirable parking spots. The rebates, along with these other incentives, have dramatically accelerated ZEV sales within California. ZEV purchases now account for approximately 5% of all new, light vehicle sales in the State, about four times higher than the national average of 1.2% A combination of Federal, State, and local utilities ZEV rebates can have a profound effect on reducing the cost of ZEVs and thereby increasing unit sales. Purchasers of BEVs in California can, for example, qualify for $2,500 rebates in the form of a tax credit if they earn no more than $150,000 in the tax year when the BEV was purchased. ($4,500 for individuals earning less than $36,420 with the income ceiling increasing based on household size.) A purchaser of a brand new BMW i3 BEV that is offered for sale for $40,000 will receive a Federal tax credit of $7,500, a State rebate between $2,500 or $4,500 (dependent on income thresholds), and an additional credit from their local utility company that typically is valued around $500 in bill credits or in free charging equipment. The combination of credits effectively reduces the price of the BMW i3 by $10,500 and by $12,500 for lower income individuals. There is plenty of opposition to the ZEV rebate program. Opponents view the rebates as a waste of the State’s treasury. They argue that the tax credits are unequally handed out in favor of the wealthy. Others believe that the rebates are not effectively reducing pollution because their electricity is substantially generated from coal-fired power plants. Those supporting ZEV rebates counter thatthe rebates were created to incentivize potential buyers to purchase clean air vehicles for the purpose of targeting green house gas emissions. Each clean air vehicle that is purchased replaces a vehicle that would be adding climate-changing CO2 gases into our atmosphere. Proponents argue that even though the distribution of rebates among income levels may not be equitable, at least something is being done to combat climate change. Revisions to the qualifying income schedule can be debated later. Additionally, the wealthiest citizens don’t qualify for a rebate, while those earning modest incomes receive an additional $2,000. Rebate supporters add that it is less important who receives the rebate as long as additional units of vehicles consuming fossil fuels are taken out of service. In response to the pollution created from fossil-fueled power plants that most ZEVs rely on, they point out that it is easier to regulate a few power plants than millions of gas and diesel powered vehicles and that renewable power is making up a greater proportion of our electrical consumption every year. The current ZEV rebate program has been remarkably effective. Approximately 48% of all ZEVs sold nationwide have been sold in California (EVadoption.com, 2018) and 285,000 rebates have been issued by the CVRP (cleanvehiclerebate.org, 2019). The estimated total of all ZEVs sold is California, including by individuals not qualifying for rebates, is estimated at between 315,000 (Newsom, 2017) to 512,000 (arstechnica.com, 2018). The total number of ZEVs sold is higher than the amount of rebates given out because many buyers were over the income ceiling. However, buyers over the income ceiling can still take advantage of other State incentive programs like the ability to travel in HOV lanes, a huge incentive in the traffic-choked State. Still, most ZEV purchasers are primarily motivated by the State rebate. According to an online survey available on the cleanvehiclerebate.org website, 74% of the 19,500 respondents cited the State rebate as an extremely important, or very important, factor in their decision to purchase their clean air vehicle. In particular, sales of BEVs are increasing at a faster rate than PHEVs due to advancements in battery technology that allows for them to travel at greater distances and new BEV models from manufacturers that are driving prices lower. But how effective have California’s rebates been in reducing climate-changing gases such as CO2? According to the Federal Environmental Protection Agency, the average automobile powered by fossil fuel ejects 4.6 metric tons of CO2annually into our atmosphere (EPA.gov, 2017). It’s not easy to measure the cumulative amount of CO2that has been prevented from entering our environment, but we can still try. Plug-in Hybrid Electric Vehicles such as the Toyota Prius should not be used in our calculations because they consume gas after their batteries lose their charge. Though PHEVs still contribute to CO2reduction, it is impossible to know the extent of their contribution. Therefore, we will consider only BEVs, the fastest growing segment of ZEVs and accounting for approximately 60% of all ZEV sales. A total of 168,135 BEV purchasers applied for rebates beginning January 2011 until September 30, 2018. By multiplying the number of rebates applied for each month, then assuming that each BEV is still in service and being driven, roughly 6.24 million metric tons of CO2 have been prevented from polluting the air we breathe. Clearly, both California ZEV rebates and incentives are an effective tool to drive ZEV sales and ought to be continued towards the goal of accelerating sales of clean air vehicles. The State’s Air Resources Board is now currently reviewing a proposal that would increase the State’s base ZEV subsidy from $2,500 up to $4,500 and change the income eligibility requirements so that the subsidies are widely available to low-income individuals. It is imperative that the subsidy amount is increased in order to put 5 million BEVs into service in California for the goal of decreasing green house gasemissions. California has shown the rest of the U.S. that meaningful rebates and incentives effectually reduce greenhouse gases. In the past, other states and our Country have followed California’s example of environmental leadership. You can help slow climate change through political participation. Remember, @Voting_Matters wants to remind you that voting matters on all voting matters! Vote for candidates like Governor Gavin Newsom, who supports reducing green house gases through an expansion of ZEV rebates and other incentives. In addition to voting, get active! Speak with other people about the importance of zero emission vehicles and their role in reducing green house gases. Send emails to your political Representatives asking them to support ZEV rebates for everyone. If you don’t know who your Representatives are, reply to me and I will send you their contact information. Please look for my upcoming blog where I will compare the effect of California’s program of ZEV rebates to other states that offer modest, or no rebates, for zero emission vehicle buyers.
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AuthorUndergraduate student generated content. Blog posting and updating done by Kristina Flores Victor, Assistant Professor of Political Science at CSUS Archives
March 2020
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