Energizing Our Future: Policy and Funding for Electric Vehicles

Climate change. Equity. Resilience. Air pollution. Public health. The COVID-19 pandemic and an economy brought to the brink. These ongoing major issues have taken on even more prominence as the pandemic continues to affect the United States and the world at large. It may seem a stretch to suggest that vehicle electrification could help tackle some of these diverse issues, but this fledgling industry holds the potential to provide states, municipalities and agencies with some significant solutions.

Vehicle electrification can stimulate the economy, create jobs and, by reducing carbon emissions and other pollution, address inequity, protect our environment and improve public health. Here, we examine current and future policy and funding mechanisms needed to advance this equitable, clean and economically advantageous form of transportation.

Where we are

As we write this blog, the federal government has yet to develop meaningful targeted policies, funding mechanisms or regulations to advance vehicle electrification. States and localities are pressing ahead, working independently of the federal government to develop innovative policies that will advance the transition.

Vehicle electrification is progressing. States like California and New York are taking aggressive approaches establishing initiatives with specific policies and targets tied to utility and transportation sustainability, and climate action goals. The California Air Resources Board is mandating that fleet vehicles across the state be electrified by 2040. Progress is not limited to the coasts. Some of the most aggressive policies are coming from the Midwest and Mountain states. In 2018, Colorado established a comprehensive plan to develop fast-charging corridors across the state. In Illinois, the governor has pledged that his state will be the best place in the United States to drive or manufacture an electric vehicle as part of his published plan, “Eight Principles for a Clean and Renewable Illinois Economy.” Together, those states have pledged to have 1.7 million EVs on state roads by 2030. Both are part of comprehensive approaches aimed at creating jobs, reducing pollution, tackling the climate crisis and ensuring that all communities benefit from the transition to a clean energy economy. They aren’t alone — more states and cities are expected to roll out their own policies once they determine which are successful for early adopters.

Utilities are studying policies to expand energy generation and grid capacity as they work to meet the expected new surge of energy demand resulting from vehicle electrification. Generation increases are expected to come from renewables such as solar, so utilities are opening studies to determine how to best optimize financial and performance success when connecting clean energy sources to battery storage. Careful planning is required to develop a grid that can move energy where and when its needed. As part of this effort, governments and utilities are undertaking studies and projections of when and how people will charge to determine grid impacts and costs.

Funding requires flexibility

Even as states work on policies to accelerate electrification, funding possibilities must be expanded to ensure accelerated goals are met. We work with utilities, regional planners and fleet operators across the country developing options to prioritize investments, tapping new financing strategies and targeting incentives to accelerate electric vehicle adoption, so that e-charging infrastructure is available and affordable.

From that work, we recognize that paying for needed upgrades and charging infrastructure for fleet, transit and personal vehicles can be a major consideration. While there are a few federal grant opportunities available, there are other varied arrays of funding opportunities that can help with the costs. These include traditional incentives from utilities, as well as local and state transportation grants. And, in some instances, states and localities are developing public-private partnerships as one more strategy to innovate on the delivery side of this new infrastructure.

Partnerships: A winning proposition

States, municipalities, regional and local agencies, and utilities have a mutual interest in advancing electrification and are developing partnerships to move the process along. Partnerships provide benefits for all concerned.

Utilities benefit from new customers, a key consideration for an industry where demand has been historically flat. Municipalities and states will see new revenue sources resulting from infrastructure investments, utility taxes and use-based franchise fees. Agencies can reduce systems costs as electrification enables transit networks to run more efficiently with less required maintenance. Importantly, communities will see improved environmental and health benefits through the reduction of greenhouse gas emissions and other air pollution tied to transportation.

So where do we go from here?

The transition to electrification would benefit from a national policy addressing climate change and clear policy targets requiring electrification, sending a strong signal to the markets to boost already significant and aggressive technology investment. Setting this aside, it falls to the state and municipal governments and utilities to prioritize carbon reduction and organize their policies and programs so that vulnerable communities are prioritized for the economic and public health benefits that transportation electrification can deliver.

Some states have established aggressive carbon targets and ask utilities to help meet these goals. This is often accomplished by incentivizing customer behaviors, providing rebates for actions such as installing energy-efficient light bulbs to conserve energy. Similar incentive programs are being rolled out for electric vehicles and charging infrastructure, and increasingly, these programs place equity at the center of program design and delivery.

From government actions to private investments and stronger partnerships, innovative solutions are being developed and tested across the country and the lessons we can learn from those innovations are clear. If we want to get the most from transportation electrification investments, our policies must encourage and require a clear connection between climate action, economic opportunity and equity. Even the most aggressive actions by state and local governments still need an active and supportive federal partner to engage the private sector if we want to ensure that we recover from our current public health and economic crisis and build a future that is healthy, sustainable and inclusive.