16 Sep, 2022

Other states assess Calif. plan to transition from gas-powered vehicles

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By Darren Sweeney


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An electric vehicle charging station at Duke Energy's Mount Holly microgrid and technology center in North Carolina.
Source: S&P Global Market Intelligence


Several states have indicated plans to follow in California's tracks to eventually ban gas-powered cars, trucks and SUVs in the aggressive pursuit of zero-emission vehicles. Electric utilities that operate in these states see challenges and benefits as this transition gets underway.

The California Air Resources Board in August approved regulations requiring 35% of new light-duty vehicle sales to be zero-emission or plug-in hybrids by the 2026 model year, rising to 51% in 2028, nearly 70% in 2030 and ultimately 100% in 2035. The regulations, known as the Advanced Clean Cars II rule, must be authorized by the U.S. Environmental Protection Agency before they can be enforced.

S&P Global Mobility analyst Stephanie Brinley said about 15 states adopted California's previous auto emissions guidelines, but it is unclear how many will adopt the gas-powered car ban.

"Some will come along. Some won't," Brinley said in an interview, noting that "Texas and Florida are the second-highest electric vehicle states in the country, and neither of them actually are participating [in California's program]."

States can choose to either follow California's guidelines or follow federal regulations, which cover passenger cars and light-duty trucks for the model years 2023 through 2026. Emissions standards will be tightened by 5%-10% annually during the period.

An executive order signed by President Joe Biden calls for all-electric cars to make up 50% of new sales in the U.S. by 2030. The goal is "completely voluntary, and I think it is highly unlikely to actually be met," Brinley said.

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Preparing for the surge

California has already sold more than 1 million electric vehicles, and the state's utilities are making their own zero-emission commitments while gearing up for widespread rollout and more pressure on the grid.

Edison International, parent company to utility Southern California Edison Co., has said California needs to put nearly 8 million emission-free vehicles on the road by 2030 to realize its ambitious climate policy objectives.

PG&E Corp. utility Pacific Gas and Electric Co. in June unveiled an energy transition road map that calls for the utility to be "the global model" for transportation electrification by accommodating at least 3 million electric vehicles in its Northern and Central California service territory by 2030.

Elsewhere, Xcel Energy Inc. in August unveiled its zero-carbon transportation plan with the goal of powering all vehicles in its eight-state service territory with carbon-free electricity by 2050. The plan builds on the company's interim goal of enabling one out of five vehicles in its service territory to be electric by 2030.

Xcel Energy, which operates in states including Colorado, Minnesota and Texas, plans to electrify all light-duty vehicles in its fleet by 2030.

Across the nation, utilities plan to increase infrastructure spending to meet electrification goals at the state and federal levels. The Edison Electric Institute forecasts overall capex by U.S. investor-owned electric utilities at $139.3 billion in 2022.

In addition, tax incentives in the recently passed Inflation Reduction Act and about $7.5 billion in funding through 2021's Infrastructure Investment and Jobs Act are expected to drive an influx of EVs and support a national network of electric vehicle charging infrastructure.

The Edison Electric Institute released a report in June forecasting the number of EVs on U.S. roads will reach 26.4 million in 2030, compared to 2.4 million at the end of 2021.

"If the automakers deliver on their objectives and goals, we could actually see our forecast underestimating what is on the road in 2030," said Kellen Schefter, director of electric transportation at the Edison Electric Institute. "We will need to make sure we have the generation, transmission [and] distribution available to support this market."

West Coast

States along the West Coast and in the Northeast are among those with regulations linked to California's rules.

Charles Boyle, deputy communications director for Oregon Gov. Kate Brown, said the state is developing its own Advanced Clean Cars II regulations, which will be similar to California's rule.

The final rule being drafted by the Oregon Department of Environmental Quality is expected to achieve significant environmental and public health benefits and "support the development of a robust used zero-emission vehicle market," Boyle said.

In Washington, Gov. Jay Inslee signed a law in March that establishes a target for all new passenger and light-duty vehicles of model year 2030 or later to be electric.

Northeast

Massachusetts already has a state law going back 30 years mandating that it adopt the Golden State's motor vehicle emissions standards as long as those standards push for a greater reduction in emissions than federal standards.

Gov. Charlie Baker signed a climate law in early August requiring all vehicles sold in the state to be zero-emission vehicles by 2035. There is no set timeline yet on when Massachusetts will begin advancing the new standards.

Connecticut has been implementing California vehicle emissions standards since 2008 after state regulators adopted them in 2004.

According to Paul Copleman, a spokesperson for the Connecticut Department of Energy and Environmental Protection, the agency will review the latest iteration of California's vehicle emissions standards and analyze expert and public input for potential adoption and rollout. Copleman said in an email that if the state were to adopt these emission standards, the earliest Connecticut could implement them would be 2027 as the Federal Clean Air Act requires car manufacturers be given a four-year advance notice.

The state is already investing millions into charging infrastructure, expecting to have 125,000 to 150,000 EVs on the road by 2025.

Delaware Gov. John Carney said in March that the state would adopt California's zero-emission vehicle regulations, effective the 2027 model year.

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Southeast

In Virginia, legislation passed in 2021 under former Democratic Gov. Ralph Northam hitched the state to California's emissions standards. His successor, Republican Gov. Glenn Youngkin, has vowed to pursue repeal of this law.

Victoria LaCivita, a spokesperson for Virginia Attorney General Jason Miyares, said, "The attorney general is hopeful that the General Assembly repeals this law and discontinues any trend that makes Virginia more like California."

Richmond, Va.-headquartered Dominion Energy Inc. said it would not respond directly to questions on California's policy and its impact on Virginia.

However, a spokesperson for Dominion pointed to the carbon-reduction commitments for the company's own fleet, which include converting 75% of its passenger vehicles to electric power by 2030; converting 50% of work vehicles, including bucket trucks, to plug-ins, battery-charged electric vehicles or vehicles fueled by cleaner fuels, including hydrogen, by 2030; and committing that after 2030 all new vehicles purchased "will be powered either by electricity or alternative fuels."

Dominion also is a member of the Electric Highway Coalition, an alliance of electric utilities collaborating to facilitate long-distance electric vehicle travel through a network of fast-charging stations across the U.S. The group encompasses utilities from the Southeast, mid-Atlantic, Northeast and Midwest, where another coalition is working to build out an EV charging network by the end of this year.

In North Carolina, Gov. Roy Cooper issued an executive order in January calling for an increase in registered zero-emission vehicles to at least 1.25 million by 2030 and for at least half of new vehicle sales in the state to be zero-emission by 2030. The North Carolina Department of Transportation also is tasked with working with stakeholders on a clean transportation plan.

"It's clear that the market is moving toward electric vehicles, and while we're already seeing the benefits of this shift in good new jobs and reduced pollution, our state's infrastructure needs to be ready," a spokesperson for the governor's office said.

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Electric vehicles on display in June at the Edison Electric Institute's 2022 Annual Conference in Orlando.
Source: S&P Global Market Intelligence

Duke Energy Corp., headquartered in Charlotte, N.C., has pledged to convert 100% of its nearly 4,000 light-duty vehicles to electric and 50% of its 6,000-vehicle fleet of medium-duty, heavy-duty and off-road vehicles to EVs, plug-in hybrids or other zero-carbon alternatives by 2030.

"Duke Energy's job is to be prepared for the transition to electric vehicles and to ease that transition for our customers. We must also have the infrastructure in place to handle the new demand that will come with this transition," Duke spokesperson Randy Wheeless said. "Ultimately, the public will decide the speed to full electrification. Utilities must be prepared for that speed — whether it's five years or 20 years."

Duke is collaborating with Ford Motor Co. on a pilot program designed to provide backup electricity and load balancing for the grid. This bidirectional vehicle-to-grid integration will allow Duke to draw energy from the EV batteries two or three times per month, mainly during peak winter and summer months.

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