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The Top 5 Issues in LCFVs: Trump Can’t Kill the EV, But Does He Really Care?

11.17.16 | Blog | By:

Happy Thursday friends! Here’s my weekly take on the five most interesting developments in LCFV trends over the last week.

  1. Bloomberg says Trump can’t kill the EV, but I don’t think that’s his plan. He just might not help it along too much. Between automaker investments in this area, their plans to roll out new 200 EV models by 2020, and state and international efforts to facilitate EV uptake, what Trump does or doesn’t do probably will not matter too much.
  2. IEA released its World Energy Outlook 2016 this week noting that while “the era of fossil fuels is far from over”, renewables and natural gas will capture a significant portion of growing energy demand. Efficiency gains (in vehicles, buildings and other sectors) will really drive GHG emission reductions, and some countries will be able to even exceed Paris Agreement targets. Many will not, falling short of 2°C goals.
  3. The White House released its Mid-Century Strategy for Decarbonization, a last stand on climate before President Obama’s term ends. With respect to decarbonizing transport, the Administration advocates for advanced biofuels/alternative fuels, EVs and fuel-cell vehicles, among other measures. The question is, what’s incoming President Trump going to do?
  4. The election was held Tuesday, November 8. The results were clear Wednesday, November 9. The Alliance of Automobile Manufacturers approached the Trump Transition Thursday, November 10 essentially asking for relief on the federal fuel economy standards for the model years (MY) 2022-2025 and making other recommendations. I think there’s good possibility some kind of relaxation may happen, but let’s watch this space.
  5. MIT is suggesting to European policymakers that they ditch the traditional fuel economy standard framework altogether and simply include transportation in the EU’s Emissions Trading System (ETS). Including other sectors in the ETS will shore up that program’s weakness and save the EU 63 billion Euros as well.

1. Bloomberg: Trump Can’t Kill the Electric Car

I am not sure Trump is going to kill the EV, he just might not help it along. Three ways he could do that:

  • Allowing current federal incentives for purchasers of EVs to expire,
  • Not pursuing zero emission vehicle (ZEV) mandates or policies (similar to what we see in California), and
  • Curtailing federal R&D funding related to the deployment of EVs.

With respect to federal incentives, they may not be needed anyway. First, technology innovation, particularly for batteries, is driving costs down. A paper from the Zero Emission Vehicle Alliance this week showed that the EV range and cost improvements will greatly expand the market and reduce the need for incentives. “Due largely to battery innovation and manufacturing scale, higher-range electric vehicle costs will be reduced by greater than $10,000 in the 2017–2022 time period.”

Second, state incentives may actually play a more important role. According to a paper produced by ICCT this week, such incentives typically range from $1,000-3,000 per battery electric vehicle in most states, and they are typically about half as much for plug-in hybrid vehicles due to their lesser all-electric driving capability. Colorado has the highest incentive: as much as $5,000 per vehicle. State ZEV mandates, such as California’s, are a powerful mechanism to foster the EV market. This point was made in a post by former Colorado Governor Bill Ritter this week.

The Bloomberg article makes several interesting points about the post-election Trump world and the future of EVs, some of which I have made already:

  • The automakers have already invested billions in R&D and deployment of EVs, with Bloomberg noting that more than 200 models will be on the market by 2020. And this week, Toyota announced it will establish an in-house venture Company for EV development, noting that it has taken a “multi-angled approach to introducing environment-friendly vehicles and has developed hybrid vehicles, plug-in hybrid vehicles, fuel cell vehicles (FCVs), EVs and others.”
  • The U.S. only accounts for 20% of vehicle sales, and other regions as China, India (and Europe, though not noted in the article) are going to move ahead with ZEV policies of some kind. The reason? It’s not just climate change mitigation, it’s also air pollution mitigation which is crippling in these and other regions. So crippling, that it presents a national security issue in places such as China. (And reference the figure in the IEA piece above noting the large growth in the EV market in the country.)
  • Meantime, the ZEV mandate in California will remain in place. Look for other states, especially in the Northeast to follow suit. Bloomberg also points out that one-eighth of car registrations come from California alone.

As if to underscore Bloomberg’s point, eight countries this week at COP22 in Marrakech signed the Government Fleet Declaration, pledging to increase the share of EVs in their government fleets and calling for other governments to join them. The countries included: Canada, China, France, Japan, Norway, Sweden, the United Kingdom and the U.S. The goal is the global deployment of 20 million electric vehicles, including plug-in hybrid electric vehicles and fuel cell vehicles, by 2020. The figure below shows EV sales from 2010-2015 globally.

zev_1

2. International Energy Agency (IEA): World Energy Outlook 2016

According to IEA’s World Energy Outlook released this week, renewables and natural gas will be the big winners in meeting energy demand through 2040.  Energy demand is expected to increase 30% over this period. Read more about it here.

3. The White House: United States Mid-Century Strategy for Decarbonization

 Trump or no Trump, the Obama Administration is planting one of its final seeds, making what could be a final statement on climate change, the need for decarbonization in the U.S. by 2050 and how it can be achieved while growing the economy. Read more about it here.

4. Automotive News: Automakers Reach Out to Trump on Regulation, Seek Review of Fuel Efficiency Mandates

As I said last week, if any low carbon fuel and vehicle (LCFV) regulation is rolled back, it will be the federal fuel economy standards as applied in the years 2022-2025 and which are currently under review. And no sooner did I write those words did the Alliance of Automobile Manufacturers present its request to the incoming Trump Transition Team to, among other things, find “a pathway forward” on the future of the fuel economy standards. Read more about it here.

5. MIT: What’s the Best Way for Europe to Curb Greenhouse Emissions From Cars?

The EU is also in the midst of planning new fuel economy standards. The way to go, according to a new study from MIT, is to altogether ditch corporate average fuel economy (CAFE) standards, the regime the U.S. has in place, and extend its existing emissions-trading system (ETS) to encompass transportation. Not only would such a plan be more effective in reducing GHGs, it would also save 63 billion Euros per year. Adding the transportation sector to the ETS would shore up weaknesses in the existing program as MIT says there are not enough emissions-producing sectors of the economy to be effective.

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