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Could California's Potential Ban On Gasoline And Diesel Car Sales Work?

Gasoline and diesel-powered vehicle bans are accelerating: China, several European nations, and India have announced bans on internal combustion engine (ICE) vehicle sales will commence between 2025 and 2040. Now, America’s largest vehicle market may join the global trend of banning fossil fuel vehicle sales.

More than 2 million new vehicles were registered in California last year, the most of any state, and 5% of California’s new vehicle sales in the first quarter of 2017 were electric vehicles (EVs). Under a new legislative proposal, every new vehicle sold statewide would have to be zero emission. California Air Resources Board (CARB) Chair Mary Nichols’ recently indicated Governor Jerry Brown has asked CARB to consider banning new ICE sales, and Assemblyman Phil Ting announced he will introduce a bill banning ICE sales by 2040.

But even with surging EV sales, is it realistic to mandate all new vehicle sales be electric? And even if this mandate is feasible, is it good policy?  The short answer is yes, it’s feasible, and the benefits will be immense.  But the long answer is that it will require reworking our transportation energy system, along with continued technology innovation and smart public policies.

Electric Vehicle Transition Essential To Climate And Public Health Goals

California’s climate policies have cut electricity emissions 26% since 2014, but transportation emissions have remained stubbornly high.  Passenger vehicle tailpipe emissions grew 4.5% from 2014-2015, increasing transportation’s total share to 37%.  With petroleum refining and oil extraction, that total grows to 50% of statewide emissions.  These trends must be reversed to hit the state’s aggressive target of 40% emissions reductions below 1990 levels by 2030.

California’s 2030 emissions target will only be achieved with large-scale vehicle electrification.  The state’s analysis suggests more than 4 million electrified vehicles must be on the road by then, and CARB Chair Nichols says to meet the state’s the state’s 2050 target, “we have to pretty much replace all combustion with some form of renewable energy by 2040 or 2050.”

Local air pollution and public health concerns are also driving California’s EV embrace.  Motor vehicles are the state’s largest source of poor air quality, contributing to asthma, a host of other health problems, and premature death.  While California has made great progress, residents still suffer from the some of the dirtiest air in America with eight of the worst cities for particulate matter pollution and seven of the worst cities for ozone pollution.

Positioning For Global Success In A Market Demanding Cleaner Technologies

Global economic competitiveness is also at stake for California.  China, the world’s largest auto market, is hastening the electric age of transportation with 336,000 EVs registered in 2016 alone – the most globally – and a suite of government policies which increase that number daily.

While some consider banning ICEs a heavy-handed government mandate, this and other EV transition policies could end up being smart economic policy.  California is already showing clean technology manufacturing upside from the transition.  The state’s vehicle exports value increased three-fold over 2013-2016, from $600 million to $2 billion, largely driven by Tesla sales.  Meanwhile, Tesla’s Model 3 reached new performance milestones, such as a 310-mile range battery option, and will exponentially increase output from Tesla’s in-state manufacturing facilities.

As California presses forward with its efforts to squeeze carbon emissions out of its economy, clean technology manufacturing successes are worthy of a spotlight when assessing an ICE ban.

Technology Trends Make California’s Clean Transportation Transition Possible

EVs have made impressive price gains and are reaching battery innovation milestones – purchase prices should reach parity with ICEs by 2025 at the latest.  Batteries are the largest factor in EV purchase price, and Bloomberg New Energy forecasts that a battery which cost $1,000 in 2010 now costs less than $300, and will fall to $73 in 2030.  Mckinsey and Citi GPS have projected similar improvements.

Forecast electric vehicle battery cost projections to 2030.

 

While purchase prices must continue falling for widespread adoption, EVs already cost 66%-75% less per mile to drive than ICEs thanks to fewer moving parts, greater reliability, and lower maintenance costs. EVs are also fun to drive, with impressive acceleration.

Automakers see the writing on the wall, and are announcing new plans for cheaper, better performing EV models.  General Motors recently announced it will unveil 20 new EV models by 2023 while asserting “the future is all electric.”  Ford also announced it will release 13 new EV models by 2022, and Volkswagen says it will release 10 new electric and plug-in hybrid cars in 2018 and has set a goal of releasing 30 fully electric vehicles by 2025.

Solving The charging Infrastructure Riddle

Technology gains around performance and cost are necessary, but an essential and unanswered part of this equation is how to build out the requisite charging station network, and who will build this infrastructure. Questions abound about the optimal charger distribution:  Where should they be located (home, work, highly trafficked commercial areas)? What combination will be needed of fast chargers and slower ones?  How can planners accommodate urban dwellers without access to garages?

It’s clear more chargers of all types are needed, and California has embarked on a major expansion.  The state’s three major utilities are building more than 20,000 new chargers through pilot programs, more than tripling current capacity, and CARB is investing an additional $800 million in ZEV infrastructure and public outreach with funds from the VW diesel pollution cheating settlement.

A recent report by the Rocky Mountain Institute lays out additional strategies for state regulators to help utilities and local governments spur charging infrastructure investment through performance-based regulation and new funding sources.

Interim Public Policy Choices Abound

Continued cost and performance improvements, as well as charging infrastructure are foundational to an ICE ban’s feasibility, but numerous near-term smart policy choices are also needed for the transition.

One promising policy to spur steady automaker progress is California’s Zero Emission Vehicle (ZEV) mandate, which requires a steadily increasing percentage of electrified sales, and 15% of vehicles sales to be zero emission by 2025.  This flexible standard allows partial crediting for hybrids and credit trading among automakers.  In fact, the first version of the state’s ZEV mandate in 1990 was one of the most important government policies helping bring hybrid technology to maturity, making vehicles like the Toyota Prius so common today.

California also has its own EV purchase incentives and a bevy of programs ensuring low-income households benefit from transportation electrification, such as establishing EV car sharing programs in disadvantaged communities.

These policies are part of a roadmap to deploy 1.5 million electrified vehicles (including plug-in hybrids that run on electricity most of the time) by 2025 in California, as part of an eight-state coalition targeting 3.3 million electrified vehicles by 2025, and the state’s strategy for achieving its 2030 emission reduction goal envisions more than 4 million electrified vehicles on the road by 2030.

California Air Resources Board Mobile Source Strategy

 

This is just one possible compliance pathways to reach California’s emission reduction goals.  Technological neutrality and flexibility within the standards allows for a range of possible outcomes – for instance fuel cell vehicles could take off in future years under California’s ZEV policies.

An ICE Ban Is Feasible, But Other Policies Are Arguably More Important

The EV transition holds the promise of environmental, consumer, and broader economic gains.  While an ICE ban is worth discussing and can send a helpful signal about where we want to end up as a society, California and other jurisdictions considering ICE bans need a serious set of interim policy choices to create the conditions that are more important to driving a successful transportation electrification revolution.

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