State and Regional Incentives for Emissions Reductions in Transportation

The last post examined San Diego’s regional plans for reducing GHGs. Transportation demand and system management strategies, reduced conventional vehicle miles traveled, and a substantial increase in zero emission vehicles (ZEVs), along with state and federal transportation policy changes, are all necessary at an ambitious level to achieve California GHG reduction goals of 80% by 2050. In the following post, I’ll examine how incentive programs achieve GHG reduction goals.

California has a number of vehicle incentive programs to encourage the adoption of low carbon vehicles. These offer an important complement to substantial federal incentives. Present federal incentives include a tax credit of $2,500 to $7,500 for electric vehicles and 10% of the purchase price for zero emission motorcycles and neighborhood electric vehicles. California’s Clean Vehicle Rebate Project (CVRP) provides up to $5,000 for hydrogen fuel cell vehicles, $2,500 for battery electric vehicles (BEVs), $1,500 for plug-in hybrid electric vehicles (PHEVs), and $900 for electric motorcycles and neighborhood electric vehicles (NEVs). In more disadvantaged and polluted areas, the state has a Public Fleet Pilot Project for public agencies instead of CVRP. This increases the rebate to $15,000 for fuel-cell vehicles, $10,000 for BEVs and $5,250 for PHEVs. Another state incentive, focusing on hybrid and electric trucks and buses, is the California Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP). HVIP vouchers range from $8,000 to $45,000 for the purchase of hybrid or electric trucks or buses. California also grants carpool lane access to electric vehicles. Finally, air quality management districts may offer vehicle incentives. Some of these are stackable with state and federal incentives.

Regional PEV purchase incentives vary considerably, even in-state. In California, the Bay Area Air Quality Management District (BAAQMD) and the San Joaquin Valley Air Pollution Control District (SJVAPCD) offer good examples. Through its Drive Clean! Rebate Program, the SJVAPCD offers a $2,000 rebate for the purchase or lease of PHEVs and $3,000 for BEVs, as well as $1,000 for residential charging station installation and up to 50% of public charging station equipment and installation costs. The region’s New Alternative Fuel Vehicle Program offers up to $20,000 per vehicle purchased by a public agency and up to $100,000 annually per agency. A third incentive is the HVIP “Plus-Up.” The San Joaquin Valley offers up to $30,000 more beyond the state-issued HVIP. Finally, several cities in the region are eligible for the statewide PACE HERO Financing program offered by Renovate America. Financing supports the purchase and installation of permanent energy efficiency and renewable energy products, including electric vehicle chargers.

The BAAQMD offers a similar array of plug-in electric vehicle (PEV) purchase incentives, but with different qualifications and funding amounts. The Electric Vehicle Project (EVP) for Business Fleets offers $400 for PHEVs and $700 for BEVs, and the EVP for Public Fleets offers $1,000 for PHEVs and $2,000 for BEVs. The vehicle buy back offers residents $1,000 for replacing model year 1994 vehicles and older. In 2015, the BAAQMD also began a regional electric vehicle supply equipment (EVSE) Charge! program, which offers funding for charging stations along high-traffic transportation corridors. Charge! provides up to $20,000 for direct circuit (DC) fast charger installation, as well as funding for charging stations at workplaces and multi-unit dwellings.

The Association of Bay Area Governments and the Metropolitan Transportation Commission have created a long-range PEV Readiness Plan. With goals of addressing climate change and transportation, it also outlines a number of PEV incentive programs. The Plan includes a $25 million Clean Vehicles Feebate Program; a $120 million Vehicle Buyback and PEV Purchase Incentive; and the $80 million Regional EVSE Charge! Network. The Feebate Program is proposed to begin in 2020 and would charge vehicle purchasers a fee for vehicles that exceed a carbon emissions standard. Revenue collected would be rebated to purchasers of vehicles that have carbon emissions below the standard. The Vehicle Buyback and PEV Purchase Incentive would offer $1,000 for PHEVs and $2,000 for BEVs. Beginning in 2015, the EVSE Charge! program offers incentives of $250 for Level 1 charging stations and $2,100 for Level 2 charging stations. Other comprehensive goals of the Bay Area Plan include improving building code standards for EVSEs; helping to develop statewide PEV readiness guidelines, multi-unit dwelling and workplace guidelines; helping to expedite EVSE permitting; creating a business calculator for EVSE ownership; and creating a monitoring program for adoption of medium- and heavy-duty PEVs in fleets.

Incentive Program Current and Expected Accomplishments

Both the BAAQMD and the SJVAPCD electric vehicle incentive programs align with their regional PEV readiness plans to meet statewide ZEV adoption goals. They have already yielded several achievements and can expect more as their ZEV and other transportation initiatives continue. Program success can be measured in various ways.

Four of the five most ozone polluted cities in the country are in the San Joaquin Valley, so expected economic and health improvements of ZEV adoption in the SJVAPCD are especially important proxies of success. As noted in a report on the environmental benefits of regional PEV adoption, a study at California State University, Fullerton, found that there are 812 particulate matter (PM)-related deaths in the San Joaquin Valley annually. By attaining federal ozone and PM standards, largely through reduced emissions from conventional vehicles, the study estimates that residents could save $5.73 billion in economic costs and $2.5 billion in medical costs and mortality annually. Additionally, as noted in the same report, high ozone levels have been shown to inhibit plant growth, and the San Joaquin Valley’s economy is centrally dependent on agriculture.

In the SJVAPCD, the increase of rebates and charging stations are other useful proxies of success for ZEV incentives. By August 2015, over 2,600 rebates had been processed by Clean Vehicle Rebate Project (CVRP); the Drive Clean! program had approved 2,094 rebates worth $5.8 million, with 450 more expected by the end of 2015; The New Alternative Fuel Vehicle Program had disbursed 906 rebates totaling $14.3 million, with 122 more expected by the end of 2015; and by July 2015, the HVIP program has processed 281 vouchers for a total of $7.3 million. Additionally, from 2013 to 2014, the HVIP Plus-Up disbursed 109 rebates totaling $2 million. While the growth in ZEV purchases can’t be attributed to any one incentive alone, it does indicate that incentives have likely helped. According to a 2013 California Plug-in Electric Vehicle Driver Survey, 91% of San Joaquin Valley respondents said the state rebate was an important motivation for buying a PEV, with 68% claiming it was “very” or “extremely” important. As for increasing the availability of public charging stations, according to a Center for Sustainability report on San Joaquin Valley PEVs, there were 38 public Level 1 and 2 and 7 public direct current (DC) fast chargers in the San Joaquin Valley in November 2013. By July 2015, the user-generated website Plugshare.com listed 128 public Level 1 and 2 chargers and 12 public DC fast chargers. Thus, SJVAPCD’s EVSE Charge! program seems to be influential in expanding the charging station network.

SJV EV

Source: Center for Sustainable Energy, 2013.

The BAAQMD shows a similar increase in PEV adoption and an expected increase in charging station installation. According to a 2010 U.S. automotive market study by Deloitte, 70% of consumers cite price as the main consideration for buying a PEV. They believe that price should be cost competitive with non-PEV models. There were 13,000 PEVs in the BAAQMD in 2013, and over 44,000 by August 2015, according to the Bay Area PEV Readiness Plan and the CVRP. PEV adoption is increasing quickly in the region, and incentives will be key to maintaining adoption trends. From HVIP’s inception through July 2015, residents in the BAAQMD have received 464 incentives for a total of $15.5 million, and the Vehicle Buyback and PEV Purchase Incentive is expected to encourage adoption of 50,000 vehicles. Regarding charging stations, as of July 2015, Plugshare.com listed 842 public Level 1 and 2 charging stations and 97 public DC fast charge stations throughout the air district. With the average Bay Area commute distance being 13 miles, more local charging stations should substantially increase the ratio of electricity-powered miles to gasoline-powered miles traveled by PHEVs. Plus, the Charge! EVSE program stipulates that 20% of DC fast chargers will be installed in “Impacted/Environmental Justice” designated communities. Combined, these steps can be expected to foster widespread PEV adoption across income levels.

The Bay Area’s PEV Readiness Plan suggests its initiatives will produce numerous GHG reduction benefits. Its Clean Vehicles Feebate Program is expected to reduce per capita emissions reductions 0.7%, its Vehicle Buyback and PEV Purchase Incentive is expected to reduce per capita emissions reductions 0.5%, and its Regional EVSE Network is expected to reduce per capita emissions reductions 0.3%.

California regional incentive programs offer varying levels and types of financial support for ZEV purchase and EVSE installation. Some can be coupled with state and federal incentives; some are designed to particularly benefit businesses, fleets, multi-unit housing or low-income communities; and some are targeted at heavy-duty vehicles. In the next post, I’ll discuss why a ZEV incentive program may be particularly useful for the San Diego region to meet its regional and state GHG emission reduction goals for 2050. How many ZEVs are presently in the region? How many more would be needed to meet state goals? What are the current incentives, and are there any unique opportunities or challenges for the San Diego region?

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