Some environmentalists have noted with schadenfreude that the auto industry is getting its just desserts now for pressing the Trump administration to weaken Obama-era fuel economy standards. While the auto industry may have originally just wanted some additional flexibility for compliance, instead they got a wholesale revocation of the program.
And this rollback means a worst-case scenario for the auto industry, with potentially years of litigation and uncertainty to come. In short, they won’t know what type of vehicles to produce for the next few years at least.
So if the auto industry didn’t want the administration to take this approach, why is it happening? The answer may involve the other industry that benefits from weakening fuel economy standards: Big Oil. As Bloomberg reported:
The Trump administration’s plan to relax fuel-economy and vehicle pollution standards could be a boon to U.S. oil producers who’ve quietly lobbied for the measure.
The proposal, released Thursday, would translate into an additional 500,000 barrels of U.S. oil demand per day by the early 2030s, about 2 to 3 percent of projected consumption, according to government calculations.
Apparently oil industry leaders have been quietly lobbying for this action, including Marathon Petroleum Co., Koch Companies Public Sector LLC, and the refiner Andeavor. In fact, on the KQED Forum show I participated on this past Friday, one of the guests supporting the rollback was from the Koch-funded think tank “Pacific Research Institute.”
So it looks like Big Oil doesn’t really care if the auto industry twists in the wind on the rollback, if it means the possibility of selling a lot more climate-destroying oil in the meantime.
As the Trump administration retreats on zero-emission vehicle leadership, it’s worth remembering that electric vehicles are part of a global market. In a recent blog post, Tom Turrentine and Kathryn Canepa at UC Davis made it easy to visualize the world map of where EVs are selling:
Overall, there is a lot of good news about the sales trajectories both globally and within individual countries:
In 2017, the global PEV market [including battery and plug-in hybrid electric vehicles (EVs)] grew by 65%, hitting 1.2 million PEV sales. During the first half of 2018, sales grew at an even faster pace.
….
Fastest growth? That would be Finland, with 144% market growth from last year. South Korea (+138%), Australia (+132%), Netherlands (+122%), Spain (+118%), and Canada (+114%) are following closely. China’s already-established market grew 113% from 2017.
Turrentine and his UC Davis colleagues separately lay out the top five policy recommendations for jurisdictions to boost electric vehicle sales in a new report [PDF]. They include:
- Vehicle purchase incentives
- Reoccurring incentives for driving electrically
- Robust charging networks
- Widespread consumer understanding of and experience with zero-emission vehicles
- Regulations on automakers to encourage EV production
Within the United States, California is certainly following this playbook. And as we can see from the map above, a number of other jurisdictions — notably China and Europe — are also following suit.
Which is why the U.S. as a whole now risks getting left in the dust by this growing global industry.
Battery electric buses are already cost-competitive with fossil-fueled buses, based on their lower fuel and maintenance costs. Transit agencies around the country are starting to purchase them in bulk from companies like BYD and ProTerra.
But is electricity really cleaner than a natural gas-fueled bus? Union of Concerned Scientists tackled this question in California previously and found positive results, per UCS’s Jimmy O’Dea, and now they’ve taken their research nationwide:
We answered this for buses charged on California’s grid and found that battery electric buses had 70 percent lower global warming emissions than a diesel or natural gas bus (it’s gotten even better since that analysis). So what about the rest of the country?
You many have seen my colleagues’ work answering this question for cars. We performed a similar life cycle analysis for buses and found that battery electric buses have lower global warming emissions than diesel and natural gas buses everywhere in the country.
Here’s the UCS map:
Meanwhile, the buses are getting cheaper and better, as ProTerra’s CEO Ryan Popple explained recently to E&E News [paywalled]:
When we started out, we could really only do circulator-style routes, and we needed a fast charger for every route. That was probably five years ago, and that was because our maximum theoretical range was probably 50 miles. Now we’re regularly seeing our electric buses do anywhere between 175 and 225 miles in real service. And with all sorts of topography.
But despite the technological advancements and environmental benefits, supportive policy is still needed. Here’s the top of Popple’s policy wish list:
It is at the state of California, and it is the Innovative Clean Transit rule, the ICT. That is headed to the California Air Resources Board for an initial vote, I think, in September, and it could be fully implemented by the end of this year. What that ruling will do is set a long-term target for every transit vehicle in the state of California and a date certain by which it must eliminate its tailpipe emissions, so basically it has to become a zero-emissions vehicle… The reason it matters to us is just so that the industry can move forward with long-term planning on electric fleets.
And as more transit agencies move forward with zero-emission vehicles, we now have assurance that the clean air benefits are real — all across the country.
The U.S. Environmental Protection Agency, under new management with the recent sacking of Scott Pruitt, will apparently be moving ahead next week with a proposed rollback of national fuel economy standards post 2020. The agency will also try for the first time in history to revoke a previously granted waiver to California to allow the state to set more aggressive standards and require automakers to produce a certain number of zero-emission vehicles, per E&E [pay-wall]:
EPA is expected to propose a rule in the coming days to prevent the standards from rising past the 2020 levels established under former President Obama, who hailed those increases as a major step toward addressing rising temperatures.
Also in the crosshairs is a California waiver under the Clean Air Act that allows it and more than a dozen other states to surpass federal car rules. EPA is expected to ask for comment on rescinding the waiver, a move that many see as a signal of the administration’s intent to do just that.
The move will set off a battle royale of litigation, probably taking years to resolve and possibly relying on the swing vote of whomever fills Justice Kennedy’s seat on the U.S. Supreme Court.
If the agency is successful (and if Trump is re-elected in 2020), it will probably badly damage the electric car market in the U.S., particularly in California, where the ZEV mandate has been the critical policy tool for encouraging automakers to introduce new EV models.
All of this retrograde action sets the stage for China to eat our lunch:
China’s generous subsidies to electric vehicle makers have created a massive field of producers, and it’s only growing.
The industry is one of 10 identified for state investments three years ago as part of President Xi Jinping’s Made in China 2025 plan. A total of 487 companies currently exist, fueled by $15 billion in direct subsidies for EV sales over the last five years.
Those subsidies are still coming: In June, the National Development and Reform Commission and China Construction Bank Corp. announced an additional $47 billion fund for high-tech industries, including EVs.
While I’m happy to see international investment in EVs continue, it’s depressing to see the Trump Administration try to roll back progress on this environmentally crucial — and economically beneficial — clean transportation technology.
California has already achieved a landmark climate goal, we learned yesterday. Newly released data from 2016 by the California Air Resources Board show that the state’s greenhouse gas emissions decreased 2.7 percent to 429.4 million metric tons.
That number is significant because it’s below the 431 million metric tons the state produced in 1990, which is the level California law requires we achieve once again by 2020. And we’re now four years early on achieving that goal. Since our peak emissions in 2004, California has since dropped those emissions 13 percent.
Much of the reduction is due to significant increases in renewable energy production. Going forward, the next challenge will be a further 40 percent reduction below these 1990 levels by 2030, per SB 32 (Pavley, 2016). And that will require major decreases in emissions from the transportation sector — primarily through greater adoption of zero-emission vehicles.
Importantly, these emission reductions have occurred during a booming economy. The state has effectively de-linked economic growth from carbon-based energy. And all of this economic growth defies industry predictions back in 2006 when the 2020 goal in AB 32 was originally legislated.
As the Sacramento Bee reported at the time during the legislative debates:
[T]he measure [AB 32] is vigorously opposed by the California Chamber of Commerce and the petroleum industry.
”Climate change is real, and we do need to do things,” said Victor Weisser, president of California Council for Environmental and Economic Balance, which represents oil firms. ”But greenhouse gas emissions reduction in California is going to be very expensive.”
In short, industry was not pleased with the climate goals and believed they would cause economic calamity, as another Bee article related:
“We don’t think heavy-handed regulation and bureaucracy is necessary,” said Thomas Tietz, who heads the California Nevada Cement Promotion Council.
Backers say AB 32 would spur new technologies, but Tietz warned that such caps will backfire on the local economy. He said the bill would drive cement producers out of state and force California to import materials produced from countries or states with less stringent environmental rules.
In retrospect, these predictions have not come true. Cement production hasn’t left the state, as industry figures show (although the sector hasn’t fully recovered since the last recession):
Overall, California’s success is a powerful example for the rest of the world and some important good news in the global fight against climate change.
With much of the credit due to the proliferation of inexpensive renewable energy, the next challenge will be to ensure similar progress with zero-emission vehicle technology. And given the state’s track record on climate so far, we should be hopeful that similar success is achievable for 2030.
Due to work- and vacation-related travel most of this month, I plan to take June off from blogging.
In the meantime, some stories worth following on some of the issues I’ve been covering on this blog:
- Solar PV: Are the Trump solar tariffs actually bringing more solar manufacturing to the U.S.? Or does automation mean it’s just a different location for foreign-owned factories, as I originally suspected? Bloomberg reports.
- Electric vehicles:Tesla addressed Consumer Reports’ concern about braking distance on the new Model 3 with a pretty amazing over-the-air software update. Ars Technica thinks that’s good but also a bit troubling about the quality of the car’s braking system.
- Housing bills in California: SB 828 (Wiener) and AB 2923 (Chiu), two bills I’ve blogged about that will boost housing near transit, both passed their houses of origin. The Real Deal covers SB 828, and Greenbelt Alliance supports AB 2923.
See you in July!
It’s fine if you don’t like Elon Musk. But it’s a mistake to let antipathy for Musk’s ideas, businesses and public persona color your view of electric vehicles, and more specifically Tesla.
And that’s exactly what happens to token “conservative” New York Times opinion writer Bret Stephens. Stephens is otherwise known (at least to me) as a climate skeptic. But in a scathing and highly personal attack on Elon Musk, he betrays ignorance of another subject: electric vehicles.
After comparing Musk to Trump, he makes some misleading charges about Tesla:
Strong words — too strong, if you ask the satisfied customers of Tesla’s Model S (base price, $74,500) and X ($79,500). But Tesla is supposed to be the auto manufacturer of the future, not a bauble maker for the rich.
The company has rarely turned a profit in its nearly 15-year existence. Senior executives are fleeing like it’s an exploding Pinto, and the company is in an ugly fight with the National Transportation Safety Board. It burns through cash at a rate of $7,430 a minute, according to Bloomberg. It has failed to meet production targets for its $35,000 Model 3, for which more than 400,000 people have already put down $1,000 deposits, and on which the company’s fortunes largely rest.
Stephens makes Tesla sound like a money-losing luxury automaker. But Tesla could have easily turned a profit a long time ago, if it was in the short-term profit game. But it’s burning cash precisely because it’s scaling up a massive battery, solar panel and mass-market vehicle business. Check out this chart on Tesla cash flow from Ars Technica:
It’s silly for Stephens to take a snapshot of Tesla’s current losses without broader context and insight into the company’s business plan. He whiffs on this score.
But it gets worse. He then lobs a broad attack against EVs in general:
Tesla, by contrast, today is a terrible idea with a brilliant leader. The terrible idea is that electric cars are the wave of the future, at least for the mass market. Gasoline has advantages in energy density, cost, infrastructure and transportability that electricity doesn’t and won’t for decades. The brilliance is Musk’s Trump-like ability to get people to believe in him and his preposterous promises. Tesla without Musk would be Oz without the Wizard.
Much of the blame for the Tesla fiasco goes to government, which, in the name of green virtue, decided to subsidize the hobbies of millionaires to the tune of a $7,500 federal tax credit per car sold, along with additional state-based rebates. Would Tesla be a viable company without the subsidies? Doubtful. When Hong Kong got rid of subsidies last year, Tesla sales fell from 2,939 — to zero. It may be unfair to describe Tesla as Solyndra on wheels, but only slightly.
It’s time for fact checks. First, lithium ion batteries and electricity rival gasoline in all categories Stephens mentions. Electricity is ubiquitous (and locally produced). Batteries can recharge in minutes with technology now being introduced on the market, just like a gas station. And cheaper battery packs deliver the range today of a full tank of gas. And on all these fronts, the technology and infrastructure is set to improve in the next few years — not decades, as Stephens suggests.
But even more important, electricity as a fuel doesn’t poison our air and lungs like burning gasoline — or leave us dependent on foreign governments for a global commodity. Gasoline is not priced for those externalities. Since Stephens doesn’t accept climate science, he may not care. But the rest of us should.
And this notion that Tesla survives on government handouts is also misleading. Many Tesla customers are wealthy enough where the tax incentives and rebates don’t factor into their decision-making, according to data collected in California on rebate customers. If anything, Tesla is now hurt by government incentives for fossil fuels and rival automakers with new electric vehicles on the market.
In short, Stephens is ignorant on this topic and unfortunately has written a column that spreads misinformation on a critical climate-fighting technology.
With all the focus on electric cars, it’s easy to overlook the impressive success that electric buses are having. The buses are more expensive than traditional diesel-powered buses (typically at about $700,000), but they have minimal operating costs due to low maintenance and relatively cheap electricity as fuel. As a result, they already present a strong value proposition to transit agencies.
Electric buses also offer a significant environmental upside, both on carbon pollution and conventional air pollutants, as E&E News reported [paywalled]:
Converting the entire U.S. fleet of diesel transit buses — around 40,000 vehicles — to electric could avoid 2 million tons of greenhouse gas emissions each year, according to a recent report by Environment America, U.S. PIRG and the Frontier Group.
As transit agencies seek to retire old diesel buses, they are increasingly turning to zero-emissions technology, determining that it’s cheaper in the long run and provides significant public health benefits. Boesel estimates that around 5 percent of new U.S. bus sales are electric right now. Around 1 percent of new car sales are electric.
So not only are electric bus sales outperforming electric passenger vehicle sales right now, they are projected to dominate in the near future. Bloomberg New Energy Finance forcecasted electric buses to constitute 84% of new bus sales around the world by 2030, compared to 28% of new passenger vehicle sales by that same year.
We’ll be hosting the chief executives of two of the leading electric bus companies, Proterra and BYD, at our upcoming June 8th conference at UCLA on zero-emission freight at Southern California’s ports. Register now to hear more from them, as space is limited.
Gas prices have been on the rise, reaching a high not seen since summer of 2015:
The price increases could have both a positive and negative effect on California and the country’s transportation politics and climate policies.
First, let’s look at the price increases, which have been volatile and uneven. As the Wall Street Journal reported last week:
“The crude complex has seen prices stall a bit near recent highs as the market weighs whether a rising tide of geopolitical risk and strong demand is enough to continue overshadowing U.S. production growth to force prices steadily higher,” said analysts at Schneider Electric.
But analysts expect price declines to remain limited: the potential loss of Iranian oil from global markets might open up extra space for U.S. exports, while the market has already tightened due to falling Venezuelan output, worldwide economic growth and production curbs from OPEC members.
If the price rise lasts, it could affect some key transportation policies and efforts to decarbonize driving. On the positive side for the environment, high gas prices could:
- Boost battery electric vehicles: higher gas prices will encourage people to buy more fuel-efficient vehicles, particularly electric vehicles. That’s an all-around win for the environment and long-term efforts to transition away from fossil fuels.
- Reduced vehicle miles traveled: higher gas prices mean people will be less likely to drive as much, reducing emissions in the process and making it easier to meet our climate goals and decreasing the demand for outlying sprawl housing.
But on the negative or mixed side, higher prices could:
- Help California’s gas tax repeal measure: the California Legislature took a courageous step last year when they voted as a super-majority to increase the gas tax to pay for transportation infrastructure maintenance. Republicans have now put the tax on the November ballot as a voter-initiated repeal measure, hoping it will energize their base to come out to vote. High gas prices in November could give this measure real political life (although I’d rather see legislators investigate possible oil industry price manipulation instead).
- Possibly reduce economic output with less money for investment in clean technology: high gas prices could potentially depress sectors of our economy, which could dampen investment in clean technology generally and undermine political will to tackle environmental problems. But high gas prices in the U.S. cut both ways: while it hurts consumers, it helps oil and gas producers. And in the U.S., we’re among the global leaders in fossil fuel production, as this EIA chart shows:
So high gas prices could boost oil-producing states and the economy for those residents, which could have varied effects on those states’ willingness to pursue clean transportation policies (although admittedly probably minimal, as many of these states are dominated by Republicans and unlikely to support pro-clean tech policies anyway).
Overall, high gas prices could be a political win for most clean transportation policies and technologies, but with some potentially negative consequences as well.
Last week I had the opportunity to tour the world’s first zero-emission marine container terminal at the Port of Long Beach (see photo). The terminal uses fully automated battery electric cargo handling equipment to move containers, with more than 60 lead acid battery electric units running in every day service.
Here is a video I took of the autonomous vehicles, which are pretty mesmerizing to see move on their own:
[youtube https://www.youtube.com/watch?v=z-rJJiKNtLM&w=560&h=315]
The entire project cost well over $1 billion to build and took years to secure all the permitting, according to port officials who led us on the tour. Despite the productivity gains, port leaders seem unlikely to expand the use of the technology anytime soon, given funding constraints.
Still, the terminal is not without controversy. As I blogged about previously, the project led to a battle between labor unions and port officials, as the automations component led to longshoremen layoffs.
Ultimately, as port officials, policy makers, and advocates move toward cleaner freight at the ports, issues such as automation and workforce participation will play a major role in determining the technologies and implementation going forward.
It’s a topic we’ll discuss at the upcoming free UCLA/Berkeley Law conference on June 8th at UCLA on zero-emission freight at Southern California’s ports, featuring a keynote presentation by California Air Resources Board chair Mary Nichols. Sign up today to learn more about this and other issues related to sustainable freight at the ports. MCLE credit available for attorneys. Space is limited!
