JUICE: Clean Car & Air Chaos

25 Jun 2019

If President Donald Trump follows through on his threat to yank California’s authority to enact automotive emissions and fuel efficiency standards that are tighter than federal requirements, the work of the Golden State and utilities here to promote electric vehicles and develop charging infrastructure will be jeopardized.

Not only will California’s climate change goals be threatened, but so will the de-carbonization efforts of 13 other states and the District of Columbia, which have adopted California’s clean car standards. The reality is that California will face increasing difficulty meeting its greenhouse gas reduction goals without the clean car standards, or some alternative tack, because half of its climate emissions come from cars and other mobile sources.

Some seem to believe the state’s goals are protected by former Gov. Jerry Brown’s executive order directing that 5 million plug-in and other alternative cars be on state roads by 2030. This announcement, made in January 2018, called for $2.5 billion to install 250,000 electric vehicle charging stations and 200 hydrogen fueling stations in California by 2025.

The California Energy Commission and the utilities, as directed by the Public Utilities Commission, have and continue to make huge investments in EV charging infrastructure to promote electric cars and trucks. Just last year, for example, the CPUC approved spending $750 million of ratepayer money for EV infrastructure investments by the three investor-owned utilities. The Los Angeles Department of Water & Power and other public utilities also have made major investments in EV chargers.

However, the crux of the matter is that last year’s gubernatorial executive order and associated charging investments do not drive the biggest players in this clean car game: the automobile manufacturers. Their clean car investments are largely a result of California’s and other states’ more stringent emissions limits under the Clean Air Act, which Barack Obama adopted at the national level. It’s those standards, which require increasing EV sales to achieve tailpipe emission reductions, that are driving automakers.

The 40-year old federal waiver authority allowing tighter California standards specifically has forced the auto industry to develop new cleaner vehicle technologies, including the development of the breakthrough catalytic converter.

The California Air Resources Board’s Zero Emission Vehicle program also is based on the Clean Air Act waiver now in question.

Under the waiver, California is seeking to increase gas mileage standards to 54.5 miles per gallon by 2025. Trump, however, wants to freeze the standard at 2020 levels, 37 mpg, and take away the state’s power to enforce more stringent tailpipe emission rules.

The billion dollar question is the extent of damage that would do to both state and utility charging infrastructure investments and to air quality.

Gutting California’s mileage/tailpipe emission standards could largely strand a lot of those infrastructure investments and harm utilities’ bottom lines, the extent of which is hard to predict.

Southern California Edison, for example, acknowledged the concern. Katie Sloan, Edison’s director of eMobility, said the utility was continuing to monitor the situation to “understand its implications.”

Private utilities, in particular, have been banking on big boosts in revenue from projected investments in both chargers and distribution system enhancements needed to meet the increasing demand for power from a growing number of electric vehicles. A potential loss in expected income would be dire, especially for two of the three private utilities facing massive wildfire liabilities.

Will the rating agencies further downgrade their credit ratings? (A bond-backed wildfire victims’ compensation fund appears in the works, but it is a moving target at this point.)

Many may recall the controversy in 2007 during the Bush Administration when it revoked California’s Clean Air Act waiver. The state could not implement then Assemblymember Fran Pavley’s AB 1493, the clean car act. In 2008, Obama was elected President and California’s waiver authority was reinstated.

The current controversy over the waiver does not stem from legal challenges by the car makers to California mileage standards as occurred previously. Instead, most automakers actually oppose the chaos Trump is creating by threatening California, which will surely lead to years of lawsuits by California, other states and air quality advocates. That won’t be good for automakers’ business and they know it.

Yet, at the same time, the car manufacturers don’t want to be forced to sell EVs across the nation, including in states where gas prices are nearly half of what they are in the Golden State.

Just last week, for example, the House Energy & Commerce Committee was told by the Alliance of Automobile Manufacturers that sales of clean cars are low, about 4 percent of total sales, according to David Schwietert, the alliance’s  interim president. Affordability, safety and reliability, he said “rank much higher than fuel economy.”

Looking ahead, it’s useful to know that the Japanese symbol for chaos also means opportunity. Indeed, California could conceivably turn Trump’s chaos into opportunity by moving past the old paradigm and battles over the individual auto. Instead of going full steam ahead on charging infrastructure for cars, California could invest much more on expanding and electrifying public transportation. One need only spend time in Europe or Asia to see how efficient and comfortable it can be.

The air becomes cleaner, utility revenues increase through investments in the facilities needed to supply more electricity for public transit, and the roads become less congested.

The Editors

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