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With Virginia Governor Ralph Northam's signature on 19 March,
Virginia became the 15th state, alongside the District of Columbia,
to adopt a zero-emissions vehicle (ZEV) mandate and impose stronger
GHG emissions standards than the federal government on US
automakers.
Under Section 177 of the US Clean Air Act, California has been
allowed to impose tougher motor vehicle emissions standards than
the rest of the nation. Invoking that authority, California set up
a ZEV program that requires EVs or transitional EVs, such as
plug-in hybrids, make up 22% of each automaker's new in-state
vehicle sales by 2025. By model year 2035, 100% of light-duty
vehicles would have to be EVs.
States can apply for a waiver from the US
Environmental Protection Agency (EPA) to set the same standards as
California.
Colorado, Connecticut, Delaware, Maine, Maryland, Massachusetts,
New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont,
and Washington already have received waivers from EPA. Assuming
Virginia's waiver is approved by EPA, IHS Markit estimates 35% of
US new car sales would be covered by the California standards.
IHS Markit forecasts that sales of EVs are set to exceed a 3.5%
overall market share in 2021 and climb to more than 10% in 2025.
More than 100 new EV options are expected to launch between 2021
and 2025, it said in a recent report.
President Donald Trump opposed California's ZEV program, and
during his administration EPA and the National Highway
Transportation Safety Board issued the Safer Affordable Fuel-Efficient
(SAFE) Vehicles Act in September 2019 to strip California's
authority. The Sierra Club and Earthjustice sued to stop the new
regulation. In February 2021, with President Joe Biden ordering a
review the SAFE Vehicles Act, a federal court agreed to suspend the
lawsuit.
Now, with a presidential administration and EPA that are more
favorable to ZEVs, the question is whether Virginia's action is the
start of a wave of additional waiver requests.
"The clean transportation future is here, and Virginia has
answered the call for cleaner vehicles. Momentum is building across
the nation as more and more states and territories move forward
with bold, life-saving policies to accelerate electric vehicle
adoption and reduce dangerous transportation pollution," said
Rebekah Whilden, campaign representative with the Sierra Club's
Clean Transportation for All campaign.
"It is certainly possible, if not likely, that more states will
join over time," said IHS Markit Research and Analysis Director CSE
Mike Fiske. "Depending on the type and severity of regulation that
the federal government develops, we may see additional states
opting for a more stringent standard."
Indicative of the surging momentum, California Senators Dianne
Feinstein and Alex Padilla, both Democrats, sent a letter to Biden on 22 March
to ask him to restore California's Section 177 authority and to set
stronger national standards as well. "We believe the national
baseline should, at an absolute minimum, be built around the
technical lead set by companies that voluntarily advanced their
agreements with California. We also urge you to follow California's
lead and set a date by which all new cars and passenger trucks sold
be zero-emission vehicles," they wrote.
Biden has made it clear that he supports an expansion of EVs,
especially the infrastructure needed to give buyers confidence that
they will be able to conveniently and quickly recharge their
vehicles. Biden has promised to install at least 500,000 new EV
chargers (at about 28,000 charging stations) across the nation.
On 2 March, National Climate Advisor Gina McCarthy and other
senior administration officials held a meeting with CEOs from EV
charging infrastructure companies. "The officials and EV charging
infrastructure leaders agreed it was important to encourage
collaboration across the government, automotive industry, and other
sectors involved in vehicle electrification as the country aims to
lead the world in a clean energy revolution while supporting the
economic recovery and creating good-paying, union jobs," the White
House said in a statement.
Virginia
Virginia's legislature passed three pro-EV bills in a special
session last month. House Bill 1965, which would
seek the Section 177 waiver starting with model year 2025, passed
the Senate on a 21-15 vote and the House of Delegates by a margin
of 55-44.
According to a legislative analysis, the bill phases in
requirements over the next few years. At least 8% of vehicles sold
in Virginia are mandated under the new law to be electric or hybrid
electric by model year 2024, with that percentage increasing in the
following year to 22%.
The Sierra Club said the legislation is necessary for the state
to meet its net-zero emissions goal for 2050, signed into law by
Northam in April 2020. "Transportation accounts for the greatest
share (48%) of greenhouse gas emissions in Virginia, and associated
air pollution from cars and trucks is also an immediate health
risk," noted the Sierra Club in a statement after the bill was
passed.
Also in February, the legislature passed two other bills to
incentivize the shift to EVs, but with gaps that have left the
state's auto dealers wary. The first of these was HB 1979, which
provides a $2,500 point-of-sale rebate for Virginians purchasing
new, used, or leased ZEVs (and an additional $2,000 for low- and
moderate-income buyers). Also, HB 2282 directs the State
Corporation Commission to investigate how to pay for an estimated
$700-$750 million needed to develop ZEV charging infrastructure and
to provide policy recommendations to increase EV use.
HB 2282 was signed on 19 March, and Northam has until 31 March
to sign HB 1979.
The problem, explained Jeff Kelley, spokesperson for the
Virginia Auto Dealers Association, is that neither HB 1979 nor HB
2282 are funded. Although the dealers association supported the
three bills as a package, Kelly said the group is concerned about
the impact on car buyers and dealers absent funding to support the
transition. "We have two years to work on the funding issue," he
told IHS Markit.
Broader look
To help implement its new vehicle program, Virginia could join
the Transportation and Climate
Initiative Program (TCI-P), an emissions trading program
started in December 2020 by the District of Columbia, Connecticut,
Massachusetts, and Rhode Island. Those states will now require
large gasoline and diesel fuel suppliers to purchase allowances
correlating to GHG emissions, and they estimate that the initial
revenue will be $300 million per year. This will be invested by the
jurisdictions "in equitable, less polluting, and more resilient
transportation," the states said in a joint statement.
By reducing the number of allowances each year, the states say
they will cut vehicle emissions by 26% from 2022 to 2032.
Over time, other states in the California EV program are
expected to join, the founding members said.
The TCI-P is just of many forces accelerating production and
sales of EVs. Ford, General Motors, Volvo, and Volkswagen have each
announced targets of either 2030 or 2035 for phasing out sales of
gasoline-powered new light-duty vehicles.
Automakers take a global approach to investment in research and
development and work on new vehicle lines, Fiske explained. The
future is clear about what types of vehicles will be expected by
the public and by regulators. "Emissions and climate-focused
regulations are the driving force, to be sure. And while California
may be leading the charge in the US, the US is still far behind
other global regions," Fiske said.
"Particularly among foreign automakers, the regulations coming
out of the EU and China are already more stringent than what we see
in the Americas and are a more significant consideration," he said.
"As [Original Equipment Manufacturers] are planning future product
development and lifecycles, they are carefully weighing the costs
and benefits of another generation of internal combustion
engine-based [ICE] product against EV-based (or flexible EV/ICE)
platforms. In other words, are they better off planning for an EV
future or investing in ICE technology that has a limited shelf
life?"
Growth in EV sales could be a positive feedback loop, he said,
as greater familiarity with the vehicles and more charging
infrastructure incentivizes greater sales. And it won't just be in
states adopting California's plan. "Aside from any regulation
forcing EV and PHEV [plug-in hybrid EV] sales, we expect the most
significant growth of electrification to occur in the states where
sales have not yet been forced. As we see significant portions of
domestic vehicle production transitioning towards electrification,
we will see a natural increase of national EV penetration rates,"
Fiske said.
EVs are now being seen as part of the next wave of American auto
manufacturing as well. Cleveland media outlets reported that on 12
March, the United Auto Workers (UAW) union sent a letter to Ford
management opposing an announcement that Ford will build a new
factory in Mexico to manufacture the electric version of its iconic
Mustang muscle car, rather than retool a plant in Avon Lake, Ohio.
Ford said in 2019 it would invest in "next generation" vehicles at
the Ohio factory, according to the letter, which UAW said should be
electric vehicles. "We expect the company to honor its contractual
commitments to this membership and when it fails to do so we will
take action," UAW wrote.
The UAW produced a white paper with its
recommendations for improving American competitiveness in
manufacturing EVs.
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