States Ramp up Attacks on Incentives for Electric Vehicles

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As federal support for electric vehicles (EVs) is expected to wither under the Trump administration, state-level policies will play the biggest political role in how quickly battery powered motors replace the internal combustionย engine.

Yet, at this critical moment when state governments should be supporting zero-emission vehicles, many states are cutting their incentives, while others are penalizing EV driversย outright.

In a recent article for Theย New York Times, Hiroko Tabuchi explores a number of efforts underway in state capitals across the country that are making the transition to electric cars a steeper uphillย climb.

These speed bumps take two main forms: 1) the canceling of tax credits that support EV sales and leases, and 2) new registration fees that disproportionately penalize battery-poweredย vehicles.

These legislative attacks on EVs bear the fingerprints of Big Oil, which sees the electrification of the transportation sector as the biggest single threat to the oil industry. Groups funded by the likes of ExxonMobil and the Koch brothers are supporting the measures, and in some cases, even writing theย bills.

State Financial Support for EV Salesย Slacking

Over the past decade, nearly half of all of the states and the District of Columbia have had some kind of financial incentive for EV sales on the books โ€” typically in the form of an income tax credit or a straight-up rebate. But this support is fading, as some states cancel the incentives and others let themย expire.

Today, only 16 states (plus the District of Columbia) still offer tax credits or rebates, and at least two states are voting in the current legislative session on whether or not to extend or repeal theย benefits.

In Utah, a bill that would have extended the stateโ€™s EV tax credit (of up to $1,500) through 2021 was just voted down, failing by a single vote. Meanwhile, in Colorado, which had offered the countryโ€™s most generous EV incentive,ย legislators will soon vote on a bill that would cancel the $6,000 tax credit for purchasers of EVs.

As Tabuchiย noted:

โ€œThe measure in Colorado has been backed publicly by Americans for Prosperity, an advocacy group founded by the conservative billionaire brothers David H. and Charles G. Koch, whose wealth is founded on their petrochemicalsย empire.โ€

The rollback of sales incentives has come at the same time as many states are introducing new fees that directly penalize plug-in owners for their choice to drive zero emission vehicles that charge off the local electricย grid.

Registration Fees for EVs

Coming into the 2017 state legislative sessions, ten states impose extra fees to register electricย vehicles.


Credit:ย National Conference of Stateย Legislatures

This year, policymakers in nine states have introduced legislation that would charge a higher rate for EV registrations than for conventional internal combustion vehicles. (Another state, Illinois, is debating a bill that would raise the EV registration rate, which is currently lower, to match gas-poweredย vehicles.)

Kansas and Indiana are both debating a $150 annual fee. Montana started out with a bill featuring a $300 annual fee, but that wasย negotiated down to $95 per year, which passed their house and has moved into the state senate. New Hampshire, South Carolina, Minnesota, Arizona, and even California have some sort of EV fee windingย through theย legislature.

Proponents of higher EVย fees say that they are necessary to ensure that plug-in cars pay their fair share for the roads. Typically, and universally within the United States, highway funds are raised from revenue from gasoline taxes. Because EV drivers donโ€™t buy gas, they arenโ€™t chipping in for those highway funds, the argumentย goes.

However,ย the Sierra Clubโ€™s Electric Vehicles Initiative director, Gina Coplon-Newfield, told DeSmog that this argument fails the tests of basic math, saying, โ€œWhen you look at the financial numbers, they donโ€™t add up atย all.โ€

First of all, Coplon-Newfield notes, โ€œconventional vehicles have become far more efficient,โ€ and arenโ€™t consuming as much gasoline, and therefore arenโ€™t generating as much revenue for the highway funds. Second, โ€œgas tax charges have not been in sync withย inflation.โ€ย 

Coplon-Newfield gives the example of North Carolina, where the state is hoping to raise millions for their highway fund. If you raised the gas tax by one cent per gallon, the state would raise an extra $7.5 million. Contrast that with the total revenue raised from EV registration fees in 2014: $440,000. Even if the state is registering three times as many EVs today, itโ€™s still millions short of theย goal.

There are other reasons that EVs should be given a break on registration fees โ€” they actually cause less road damage given their light weight, and improve air quality and benefit public health because they don’t haveย tailpipes.

Georgia: A Cautionaryย Tale

For a look at what happens when a state both kills incentives and starts charging EV drivers extra fees, you only have to look toย Georgia.

Just three years ago, Georgia was an unlikely national leader in electric vehicle sales, boosted by one of the nationโ€™s most generous state-level EV tax incentives that offered drivers a tax credit of up to $5,000 when buying a plug-in vehicle. By early 2014, Georgia trailed only California in EV registrations. Then, in January 2015, a new measure slipped into the stateโ€™s $1 billion transportation bill which killed the credit, and added another $200 annual fee for EVย drivers.

Electric car sales immediately fell off aย cliff.

Overall EV sales dropped by 90 percent, and sales of the Nissan LEAF are off nearly 95 percent,ย according to Don Francis, the coordinator of Clean Cities-Georgia and executive director of the Partnership for Cleanย Transportation.

Hereโ€™s how Atlanta Magazine described the history of the legislation:

โ€œIn January 2015, state Representative Chuck Martin, an Alpharetta Republican, introduced a bill to kill the state credit partly on the argument that it gave electric vehicles an unfair advantage over other low-emission cars such as the Chevrolet Volt. Martinโ€™s measure got lumped into the $1 billion transportation bill, which raised the stateโ€™s gas tax to pay for road improvements. As if that werenโ€™t enough, lawmakers slapped electric vehicle owners with an additional $200 annual fee on the logic that it wasnโ€™t fair to make drivers of gas-powered vehicles bear the entire cost of road maintenance. When the new laws went into effect on July 1, the emerging electric vehicle market was immediately eviscerated. Statewide registrations plummeted from 1,338 in June to 115 inย October.โ€

But thereโ€™s more to the story. Martinโ€™s had introduced a similar bill a year earlier, and Martin is an active member of the American Legislative Exchange Council (ALEC), a Koch-funded entity that pushes fossil fuelโ€“friendly agendas through stateย legislatures.

As the Center for Media and Democracy has noted, debates about Kochโ€™s anti-EV agenda occured at a recent ALEC‘s annualย meeting:

โ€œAt the American Legislative Exchange Council (ALEC) meeting in Scottsdale, Arizona in December 2015, the Energy, Environment, and Agriculture Task Force heard a presentation on ‘State and Federal Subsidies for Electric Vehicles,’ then voted on a resolution to discourage states from providing subsidies, the ‘Resolution Regarding Subsidies for Electric Vehicles.’ The Kochs have long funded ALEC. Koch Industries has had a seat on ALECโ€™s ‘Private Enterprise’ย board for years, while Koch network entities like Freedom Partners, Americans for Prosperity, and Koch-funded ‘think tanks’ have seats on a number of task forces where they get a vote onย bills.โ€

Meanwhile, also in 2015, Georgia started charging EV drivers extra registration fees. The extra $200 per year to register the vehicle probably doesn’t have the impact of losing the $5,000 tax credit. But it sure doesn’tย help.

As evidenced in the registration numbers pictured in the chart above, Georgia is no longer a national leader in electric car sales. In Georgia, and nationwide, the transition to electric cars seemsย inevitable. It just might take a decade or two longer if left to market forces alone. In terms of public health and the climate, those years shouldn’t beย wasted.

As Coplon-Newfield put it, โ€œNow is the time to be incentivizing, not penalizing, electricย vehicles.โ€

Main image:ย Nissan Leaf at a public charging station in front of San Francisco City Hall. Credit:ย Mario Roberto Durรกn Ortiz,ย CC BYSAย 4.0

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Ben Jervey is a Senior Fellow for DeSmog and directs the KochvsClean.com project. He is a freelance writer, editor, and researcher, specializing in climate change and energy systems and policy. Ben is also a Research Fellow at the Institute for Energy and the Environment at Vermont Law School. He was the original Environment Editor for GOOD Magazine, and wrote a longstanding weekly column titled โ€œThe New Ideal: Building the clean energy economy of the 21st Century and avoiding the worst fates of climate change.โ€ He has also contributed regularly to National Geographic News, Grist, and OnEarth Magazine. He has published three booksโ€”on eco-friendly living in New York City, an Energy 101 primer, and, most recently, โ€œThe Electric Battery: Charging Forward to a Low Carbon Future.โ€ He graduated with a BA in Environmental Studies from Middlebury College, and earned a Masterโ€™s in Energy Regulation and Law at Vermont Law School. A bicycle enthusiast, Ben has ridden across the United States and through much ofย Europe.

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