New EV Tax Rules
The Treasury Department published a proposed rule (April 17) with new requirements on critical mineral and batter components that will affect electric vehicle (EV) purchases from this point forward (i.e., April 18). Treasury initially announced the requirements at the end of March.
There has been some concern that the new requirements could undermine efforts to get more EVs more quickly on US roads. But the restrictions, along with other measures intended to advance US manufacturing, were necessary to build adequate legislative support to ensure passage of the 2022 Inflation Reduction Act (IRA), the law that extended and expanded production and purchasing tax credits, and other incentives. The IRA set the requirement parameters that guided the specifics of the now published rule.
The core EV provisions include
Consumers are eligible for up to a $7,500 tax credit per EV, for individuals earning no more than $150K, $300K for joint filers, and $225K for heads of households. Used vehicles purchased from a licensed dealer for $25,000 or less, may also be eligible for up to a maximum credit of $4,000, though tied to lower income limits.
For an EV to be eligible for the full credit during the current fiscal year (2023), 50% of battery components must be manufactured in North America. Another 40% of critical minerals must be extracted, processed, and/or recycled in the US or in a country where the US has a free trade agreement. If just one of these two standards is not met, then tax credit eligibility is limited to half the full credit, or $3,750.
In addition to input content standards, the rules include two other key manufacturing standards: that “final assembly” of vehicles must occur in North America, and that the Manufacturer Suggested Retail Price (MSRP) must not exceed $80K for vans, sport utility vehicles and pickup trucks, and $55K for all other vehicles.
More on this topic here.
Long-term Auto Emissions Standards Rule
The Biden Administration announced an EPA rule (April 12) that proposes new long-term car and truck auto emissions standards at levels intended to accelerate the US manufacturing and purchase of electric vehicles (EVs).
Under the proposal, emissions standards for light-, medium-, and heavy-duty vehicles (i.e., most cars and trucks) will begin to increase for the 2027 model year. Current standards cover model years 2023-2026. As higher standards are phased in, EPA believes that manufacturers will be unable to meet the standards without a majority shift of production emphasis to electric vehicles.
EPA calculates that under the proposed new standards, EVs could account for 67% of light-duty vehicle sales and 46% of medium-duty vehicle sales by the 2032 model year. Greenhouse gas emissions will drop 56% compared to expected levels for the 2026 model year for light-duty vehicles, and 44% for medium-duty vehicles.
The EPA is also proposing more stringent standards for “vocational vehicles” (e.g., delivery trucks, refuse haulers, public utility trucks, transit, shuttle, school buses, etc.) and tractors, though these would not be as sweeping as the proposed car and truck changes given the unique challenges of converting such vehicles to clean fuels and electricity.
At least with respect to the higher standards for cars and trucks, there is concern about the significant challenges of converting the majority of US car and truck manufacturing to electric vehicles, and also attracting consumers to such products.
That being the case, an argument can be made that the only way to convert the US to a majority electric vehicle fleet is to push for change through a combination of aggressive laws, rules and incentives. Otherwise, the conversion may take too long to complete given global warming concerns.
The proposal will be open for public review and comment. There is no certainty on a time frame for finalizing higher standards, though the process is likely to extend into next year at a minimum.
Federal Charging Station Standards
The Department of Transportation announced its final rule (February 15) setting forth national standards on electric vehicle (EV) charging stations to be deployed using Federal resources.
The standards are needed to guide states as they begin to plan and deploy EV charging stations across the country utilizing $5 billion in state formula and competitive funding provided in the 2021 Infrastructure Act.
In general, the standards will require that chargers operate consistently across all locations, including consistent plug types and charging speeds, common payment systems, and accessible pricing information, locations, and availability.
Postal Service EV Purchasing Plan
The US Postal Service announced (December 20) new fleet electric vehicle (EV) purchasing goals, committing to 100% electric vehicle purchases starting in 2026. Total purchasing will include “at least” 45K EVs by 2028, but which may include another 21K EVs “depending on market availability and operational feasibility.”
The Postal Service has changed its purchasing plans several times over the course of 2022 after getting a better understanding of available funding, including a new $3 billion infusion of funding under the 2022 Inflation Reduction Act, as well as after much criticism from Congress and the Administration for its failure to commit to a greater purchasing level. Its last plan, from July, only committed the Postal Service to 40% of new vehicle purchases being EVs.
The Postal Service has a vehicle fleet covering more than 220K vehicles, which means that it will take some time for it to reach a fully-electric fleet, but this is not even necessarily a goal at this point as the Postal Service says that this possibility is still being “explored.”
The Postal Service says that recent purchasing should result in EVs operations on postal routes starting in late 2023.
Infrastructure Act - School Bus Replacement
The EPA awarded (October 26) first year funding of the 2021 Infrastructure and Jobs Act to replace fossil fuel-powered school buses, providing nearly $1 billion to 389 school districts spanning 50 states, the District of Columbia, tribes and US territories. EPA estimates the grants will enable the purchase of nearly 2,500 clean school buses.
The Infrastructure Act provided $1 billion annually for the next five years ($5 billion total) to replace school buses with clean technology. At least 50% of funding must go towards electric buses, and the remaining 50% can be used for alternative fuels buses and/or electric buses. About 95% of buses under this year’s awards will be electric buses.
There are an estimated 450K, mostly diesel, school buses across the United States. Just a small fraction of replacement electric buses are currently in process – about 12,720 in 38 US states according to World Resources Institute data, though the largest single portion (1,400) are going to California school systems alone. While Federal funding is intended to incentivize states and localities to transition to electric vehicles and the funding will likely drive significantly more purchases, there is a long way to go to get to a 'clean' bus fleet.
Diesel exhaust causes smog and impacts global warming, but such exhausts are also known to contain a cancer-causing element, can cause respiratory and heart issues, and can impact the cognitive development of children.
Charging Infrastructure Plan Approvals
The Department of Transportation announced (September 27) that it has approved all 50 state plans for the construction of roadway electric vehicle charging infrastructure financed by $5 billion in funding under the 2021 Infrastructure Act. This means that approved states can begin drawing down their share of formula funding from the Federal Government to begin planning and construction efforts.
California Phaseout of Gasoline-Powered Vehicles
The California Air Resources Board (CARB) approved a plan (August 25) requiring that all new vehicles sold in California be zero emissions vehicles by the year 2035, consistent with the current Governor’s 2020 Executive Order N-79-20 requiring this policy.
The CARB’s plan accomplishes the policy in two ways. First it modifies a regulation to put an “increasing number” of zero emissions vehicles on the road for the near term such as battery-electric, hydrogen fuel cell electric and plug-in hybrid electric vehicles. Second, regulation is modified to put in place, starting with the 2026 model year, “increasingly stringent standards” for passenger cars and trucks with a zero emissions standard for all new cars by model year 2035.
California currently has the highest new vehicle electric vehicle market share, with 16% of new vehicles being zero emission or plug-in hybrid vehicles according to the CARB.
Seventeen U.S. states have, by state law/regulation/policy, adopted California's policies on zero-emissions vehicles. These states are likely, for now at least, to stick with this new California policy though at least the Governor in Virginia and Republican leaders in that state's Assembly have said that they will try and remove Virginia from its connection to California policy.
Electric Vehicle Incentives
The recently-enacted Inflation Reduction Act (August 2022) includes an estimated $370 billion in clean energy and energy efficiency incentives, including significant incentives for the purchase of clean vehicles. Proponents of the Act claim that the measures collectively will yield an estimated 40% reduction in U.S. greenhouse gas emissions by 2030.
Key clean vehicle incentives include:
A $4,000 consumer tax credit for lower/middle income individuals to buy used clean vehicles, and a $7,500 tax credit to buy new clean vehicles.
$20 billion in loans to build new clean vehicle manufacturing facilities.
The Treasury Department recently released initial guidance for consumers on the clean vehicle tax incentives.
California’s Electric Vehicle Goal Implementation
The State of California, via the California Air Resources Board (CARB), is developing a rule that would set a target of 100% “plug-in hybrid-electric” vehicle sales within the state by the 2035 model year. The rule is guided by a 2020 policy set by Governor Gavin Newsom that 100% of car and truck sales be zero emissions by 2035, along with most medium- and heavy duty vehicles by 2045.
The CARB proposal would phase in market share targets, with an EV market share of 35% by 2026 and 68% by 2030. Exactly how they will reach these targets is not clear, as this will require a combination of changed consumer preferences, increased offerings by manufacturers, State investments in infrastructure and consumer incentives, and improving technology in the industry. The CARB highlighted planned state investments totalling $6.1 billion over four years to, among other things, increase access to clean transportation. The state already provided $3.9 billion in 2021. At least $10 billion may be needed between 2021 and 2026 to meet the targets.
A comment period on the proposal is underway with two public hearings scheduled for the summer.
Miles-Per-Gallon Efficiency – CAFE Standards
The National Highway Traffic Safety Administration (NHTSA) announced (April 1, 2022) final Corporate Average Fuel Economy (CAFE) standards for cars and light trucks following its initial proposals in a September 2021 proposed rule.
New CAFE standards will grow efficiency by 8 percent per model year between 2024 and 2025, and 10% for 2026. The new CAFE standards should result in an industry-wide fleet average for cars and light trucks of 49 miles per gallon (MPG) in model year 2026, an increase of 10 MPG above the 2021 model year. The Department estimates that the new standards will result in more than 200 billion fewer gallons of fuel used through 2050 and reduce carbon emissions by 2.5 billion metric tons.
As a point of comparison, EPA data provide that the United States collectively produced about 6.5 billion metric tons of carbon emissions in 2019 alone, with transportation (all sources, not just passenger vehicles) accounting for 26% of the total.
Electric Vehicle Goal
The Biden Administration signed an Executive Order (August 5, 2021) setting a policy goal that half of US cars sold in the United States by 2030 be zero-emissions vehicles such as battery, fuel-cell, and plug-in hybrid electric vehicles.
No Results Found
Clean Cars & Trucks - Executive Order
This Executive Order sets forth the policy of the Biden Administration that half of all new vehicles sold by 2030 be zero-emissions vehicles, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles.
Status: this EO was published on August 10, 2021.
Corporate Average Fuel Economy Standards
The National Highway Traffic Safety Administration (NHTSA) implemented a final rule that will increase Corporate Average Fuel Economy (CAFE) standards for passenger cars and so-called "light duty" trucks by an average of 8 percent per year, each year between 2024 and 2025, and another 10% for 2026. As a result, the fleet-wide miles-per-gallon standard will increase to 48 mpg by 2026.
Status: this rule was finalized on April 1, 2022.
Light Duty Vehicle Greenhouse Gas Emissions - Final Rule
The Environmental Protection Agency (EPA) announced a Final Rule putting new federal greenhouse gas (GHG) emissions standards in place for passenger cars and light trucks for Model Years (MY) 2023 through 2026. The EPA claims the standards are "the strongest vehicle emissions standards ever established for the light-duty vehicle sector", and that the standards will result in avoiding more than 3 billion tons of GHG emissions through 2050."
Status: this Final Rule was published in the Federal Register on December 30, 2021.
Thacker Pass Lithium Mine Project - Record of Decision
Mining activities on public lands are subject to review and approval by the Federal Bureau of Land Management within the U.S. Department of the Interior. Thacker Pass is located on public lands within Nevada. This Record of Decision and Plan of Operations Approval concluded that the project "is not anticipated to affect any threatened or endangered species or significant scientific, cultural, or historic resources, as these resources are either not present or the effects will be mitigated".
Status: this Decision was completed on January 15, 2021