EV programs run out of cash. What can states do?

Source: By David Iaconangelo, E&E News reporter • Posted: Tuesday, July 30, 2019

States around the country are scrambling to enact legislation and address backlogs as electric vehicle programs run out of money.

The most recent example is Massachusetts, where lawmakers are trying to rescue the state’s incentives for electric vehicle sales after drivers burned through a program that dealt out more $30 million in recent years.

A climate resilience bill passed last week by the state House contains an amendment that would replenish the dwindling coffers of the Massachusetts Offers Rebates for Electric Vehicles program with an additional $30 million.

Last month, the administration of Republican Gov. Charlie Baker said that it would stop accepting applications for the existing $1,500 rebate in late September, irritating environmentalists, who wanted the state to make more money available (Climatewire, June 27).

Similarly, in Maryland, Republican Gov. Larry Hogan and legislators agreed this spring to fund $6 million in EV rebates, after the previous $3 million pot was snapped up within six months.

But after the new fiscal year began, on July 1, buyers took just one week to claim all $6 million of the newly available incentives.

In California, officials said in early June that new rebate applicants would be added to a waitlist, with the exception of those eligible for certain lower-income rebates. Proposed fixes emerged a month later in the state Assembly, one of which would triple the claimable rebate to $7,500 per buyer — the same size as the federal tax credit.

Clean transportation advocates say that when the programs run out of funds, it’s because they’re working.

“Once we get to a tipping point where there’s mass adoption, we won’t need these incentives, but we’re still in the early days,” said Gina Coplon-Newfield, clean transportation campaign director for the Sierra Club. “When you create incentives, people’s attention piques.”

As is the case with the federal EV tax credit, critics see state incentives as a costly subsidy for wealthier consumers, a line of argument that has won out in some places.

In 2015, for example, Georgia’s Legislature passed a transportation overhaul that terminated a $5,000 credit for EVs, which buyers at one point could have combined with the $7,500 federal credit.

“Is it really good state policy to pay $50 million per year to let a select group of 10,000 or more individuals drive a particular type of car for free or almost free?” state Rep. Chuck Martin, the Republican sponsor of the law, wrote in a 2015 op-ed.

The overhaul in Georgia also imposed an annual $200 registration fee on EV drivers. In the months after the law was enacted, monthly sales plummeted as far as 90% year over year, according to statistics from the Alliance of Automobile Manufacturers.

“Consumers and auto dealers need certainty,” said Coplon-Newfield. “They want to know these are ongoing programs that have stable sources of funding. And when these programs come in and out of existence, reliability becomes a real issue.”

RGGI connection

In Massachusetts, new funding for the rebate still needs to pass in the Senate, then earn the governor’s signature.

“I would not expect any such action to occur until the fall at the earliest,” Sen. Anne Gobi, a Democrat who chairs the chamber’s Joint Committee on Environment, Natural Resources and Agriculture, said in an email to E&E News.

At present, the EV rebate is funded by Massachusetts’ share of the Regional Greenhouse Gas Initiative, a nine-state program that taxes the power sector for pollution.

The governor wants to refund the rebate by taking money from other RGGI energy programs. Legislators have rejected that idea, prompting Baker’s announcement that the rebate would no longer be available.

The House bill would pay for the EV rebate and other programs differently: by floating a bond, adding to the state’s debt.

It would increase the existing rebate to as much as $5,000 and restrict it to zero-emissions vehicle models with a sticker price of $40,000 or less.

Overall, the bill would authorize the state to borrow $1.3 billion for a wide range of climate mitigation and clean energy programs.

Under the House plan, $125 million would go toward other electric vehicle programs, including $90 million for electric buses and other heavy vehicles.

Baker has also introduced his own version of the climate overhaul, sans EV rebate.

“The administration will review any legislation that reaches the governor’s desk,” said a spokesperson from the state’s Executive Office of Energy and Environmental Affairs.