Thursday, September 18, 2014
Inside Cal/EPA - 03/29/2013

Air Board Fears Weak ZEV Plans In Key States Could Undermine Program

Posted: March 28, 2013

California air board officials are growing concerned that 10 states that have adopted the board's aggressive zero-emission vehicle (ZEV) regulations may not be actively aiding compliance with the rules through incentive programs to encourage vehicles sales and fueling infrastructure, which they fear could ultimately hamper the success of the Golden State's program.

The California rules -- which require automakers to ramp up the sale of ZEVs in the coming years to reach 1.4 million plug-in electric vehicles, pure battery-electric vehicles (BEVs) and hydrogen fuel cell vehicles (FCVs) by 2025 -- are a cornerstone of the state's strategy to reduce greenhouse gas (GHG) emissions in the short- and long-term. The 2025 vehicle sales requirement amounts to about 15.4 percent of total new car sales that year.

Officials have said that the 10 other states are significant on a national scale because collectively they would offer for sale three times the number of ZEVs that California will market under the regulatory program. In addition, California represents about 11 percent of the new vehicle sales market, and the ZEV states represent about another 17 percent, according to sources. As a result, nearly 30 percent of the U.S. market would be covered by the ZEV rule.

Ten states have adopted the California regulations under section 177 of the Clean Air Act, which allows other states to adopt California's stricter-than-federal motor vehicle standards. The states are Connecticut, Maine, Massachusetts, New Jersey, New York, Rhode Island, Vermont, Maryland, New Mexico and Oregon.

During a March 21 meeting of the California Air Resources Board (ARB), which administers and enforces the ZEV regulation, board member Dan Sperling said he is quite concerned that if the 10 "section 177" states "falter" in their implementation and enforcement of the ZEV regulations, it could undermine California's entire mandate. This is true not merely in terms of strict compliance with individual state regulations, "but much more so in terms of creating that market" across the country, Sperling said.

If car companies lack a sufficient market for ZEVs across the U.S., "it means the price of the ones that do sell in California will be much higher," meaning that it is likely that the companies would not sell as many of the vehicles envisioned by ARB, Sperling said.

ARB should "put this [issue] at the highest priority . . . we need to figure out what we need to do and can do to support all those other states," Sperling added.

Alberto Ayala, ARB deputy executive officer, told Sperling that ARB staff shares his concerns regarding whether the 10 other mostly Northeastern states are pursuing programs to help companies install technologies required to accommodate ZEVs required to meet the rules.

Ayala said ARB is "implementing new actions so we can re-energize the ZEV alliance the board has had with those states for many years." Ayala also said that ARB and Brown administration officials are "contemplating and actively pursuing" a plan to press the 10 states to develop "action plans" similar to what California adopted late last year.

"What we want to make sure of is that we are tracking, are helping and engaged . . . in what is happening not only in California but also, and perhaps most importantly, outside of California," he said.

Officials need to see "economies of scale" in terms of ZEV vehicle and infrastructure development nationally and internationally, Ayala said. "It's also critical because we all know the ZEV mandate is already becoming a fracture point in discussions with industry."

California officials late last year approved a "2012 ZEV ACTION PLAN -- A Roadmap toward 1.5 Million Zero-emission Vehicles on California Roadways by 2025," which was drafted by Gov. Jerry Brown's (D) Interagency Working Group on ZEVs. The report defines ZEVs as including three types of vehicles: pure battery-electric vehicles, plug-in hybrid vehicles that can use either gas or electricity for power, and fuel-cell vehicles.

The report recommends agencies work on a feasibility study for an "alternative vehicle registration and/or sales tax for ZEVs that would result in an equivalent registration or tax as conventional vehicles of similar size and model types." While the report does not elaborate on this recommendation, an environmentalist said last year it essentially means that the sales tax for a ZEV would be calculated after federal and state tax credits are applied.

For example, if the federal $7,500 tax credit and the California $2,500 tax credit are applied to a ZEV priced at $39,000, the sales tax for the car would be based on a retail price of $29,000. Consequently, the state registration fees would also be lower because they are based on the sales price of the vehicle.

The report also encourages California agencies to complete a feasibility study to "evaluate transportation funding sources that ensure equity between all fuels and continue to encourage vehicle efficiency. . . . The existing gasoline tax that provides transportation funding is not sufficient for required program costs, and does not include alternative fuels."

An ARB spokesman says there was a meeting on ZEVs last week that involved officials with the section 177 states, but did not elaborate on discussions. A follow-up conference call among the officials was scheduled for March 21, the spokesman says. "As we head toward the beginning of compliance with the 2017 ZEV regulations there are ongoing conversations about how to ensure the regulations unfold smoothly and to help put all parties in the best situation possible," the spokesman adds.

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Inside Cal/EPA - 03/29/2013, Vol. 24, No. 13