The Federal Electric Vehicle Tax Credit Is a Bipartisan Success Story, Which House Republicans Want to Undo
By Ben Jervey
As the House and Senate develop their respective versions of a tax reform bill, the $7,500 federal electric vehicle (EV) tax credit is positioned to be a potential bargaining chip. The House's version of the bill, the "Tax Cuts and Jobs Act," includes a repeal of the EV tax credit. The Senate's newly introduced version, at the moment, doesn't kill the credit.
Current policy calls for an already-scheduled phase out of the credit over the two calendar quarters after each automaker surpasses 200,000 total plug-in vehicle sales. The new House proposal would eliminate the tax credit entirely at the end of this year—only EVs registered on or before Dec. 31 would qualify.
Not only would this repeal slow the acceleration of electric car adoption, it will also hurt our economic, energy security and energy independence goals, and slow progress in bringing affordable and practical electric cars to the mass market. To understand the importance, rationale and benefit of this credit, a short history of the bipartisan legislation is useful.
The Bipartisan Roots of the Electric Vehicle Tax Credits
Regardless of the environmental and human health benefits of displacing gasoline and diesel combustion with plug-in electrics, thoughtful policymakers and legislators from both sides of the aisle have long understood the importance of EVs when it comes to promoting energy independence and security. A decade ago, the Energy Independence and Security Act of 2007, promoted and signed by Republican President George W. Bush, first deployed "incentives for the development of plug-in hybrids." The stated purpose of the act included moving "the United States toward greater energy independence and security" and "to increase the efficiency of products, buildings and vehicles."
One year later, another bill passed with bipartisan support, the Energy Improvement and Extension Act of 2008, to again be signed by President Bush. This version was written to include all types of plug in electric vehicles (both battery only and plug hybrid electrics) that met certain battery size criteria for providing a meaningful all electric range. it created the first non-refundable consumer tax credits for at least the first 250,000 plug-in vehicles sold.
In 2009, in order to make the tax credit accessible to more automakers, many of which had lobbied their concerns that they needed more time to ramp up their electric car programs, the credit was revised to its current form in the The American Recovery and Reinvestment Act of 2009. The only change in the so-called stimulus bill was that the quantity of plug-ins sold before the credit would phase out was set at 200,000 per manufacturer. In other words, the first 200,000 plug-in Chevy vehicles would all be eligible for the credit. Likewise for the first 200,000 Tesla Motors, the first 200,000 plug-in Fords, and so on.
Where Does the Federal EV Tax Credit Stand Now?
Over the past seven years, since the modern era of plug-in electric vehicles commenced with the launch of the Chevy Volt and Nissan Leaf, only a handful of automakers have sold more than 100,000 plug-in electric cars in the U.S. (most notably, Tesla and General Motors) and none have reached the 200,000 threshold for phasing out the credit.
Both GM and Tesla are due to reach the 200,000 car mark within the next year or so, meaning the tax credits for those makes would be phased out relatively soon regardless of any new policy. (Not as soon as the end of this year, but not too long from now.) However, many other automakers have taken longer to get to market, making the continuation of this credit vital to achieving the original policy goals set out by Congress at the end of last decade. For instance, Ford's plug-in F150truck (shown above) has been developed with the expectation of a federal tax credit to support early adopters.
General Motors, with even less to lose than other automakers, responded to news of the newly introduced tax bill statement critically: "Tax credits are an important customer benefit that can help accelerate the acceptance of electric vehicles. Because General Motors believes in an all-electric future, we will work with Congress to explore ways to maintain this incentive."
Beyond energy security and environmental benefits, there would be direct financial and human health impacts of slowing the adoption of EVs. Many of the electric vehicles selling well today are built in the U.S. by American workers. Slowing their sales now will have an immediate negative impact on American companies and workers. "The EV tax credit repeal would cede U.S. leadership in clean vehicles, putting our companies at a competitive disadvantage and threatening jobs while costing drivers more at the pump and increasing pollution," said Luke Tonachel, director of the Natural Resources Defense Council's Clean Vehicles and Fuels Project.
Furthermore, as supporters of the original legislation understood, the electricity that EVs run on is generated in the U.S. from domestic resources. This has real monetary value, not only to utilities and energy producers, but also in potential savings to electric ratepayers, as EV charging practices can better utilize electric system capacity. Jeff Allen, executive director of Forth Mobility, wrote last year of a California study that found that each electric car was worth up to $9,799 to the electric utility and its ratepayers.
Finally, the science is conclusive about the human health benefits of electric vehicles, particularly as they displace urban petroleum (gasoline and diesel) vehicle miles traveled with electric miles. As research published by the Proceedings of the National Academy of Sciences concluded in 2014, "EVs powered by low-emitting electricity from natural gas, wind, water or solar power reduce environmental health impacts by 50 percent or more."
Preservation of the federal EV tax is sound, non-partisan transportation energy policy. For a decade, Republicans and Democrats have agreed on the value and importance of the tax credit. In the grand scheme of tax reform, the credits are a relatively small budget item—a little more than $1.5 billion per manufacturer over the course of more than a decade. Those savings would do little to make up for the $989 billion shortfall that the rest of the tax reform plan would create.
The federal EV tax credit is smart policy that will help ensure the next generation of Americans has greater prosperity, health and opportunity in the coming global marketplace, one that is already wholeheartedly embracing the inevitable transition to vehicle electrification.
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By D. André Green II
One of nature's epic events is underway: Monarch butterflies' fall migration. Departing from all across the United States and Canada, the butterflies travel up to 2,500 miles to cluster at the same locations in Mexico or along the Pacific Coast where their great-grandparents spent the previous winter.
Millions of People Care About Monarchs<p>I will never forget the sights and sounds the first time I visited monarchs' overwintering sites in Mexico. Our guide pointed in the distance to what looked like hanging branches covered with dead leaves. But then I saw the leaves flash orange every so often, revealing what were actually thousands of tightly packed butterflies. The monarchs made their most striking sounds in the Sun, when they burst from the trees in massive fluttering plumes or landed on the ground in the tussle of mating.</p><p>Decades of educational outreach by teachers, researchers and hobbyists has cultivated a generation of monarch admirers who want to help preserve this phenomenon. This global network has helped restore not only monarchs' summer breeding habitat by planting milkweed, but also general pollinator habitat by planting nectaring flowers across North America.</p><p>Scientists have calculated that restoring the monarch population to a stable level of about 120 million butterflies will require <a href="https://doi.org/10.1111/icad.12198" target="_blank">planting 1.6 billion new milkweed stems</a>. And they need them fast. This is too large a target to achieve through grassroots efforts alone. A <a href="https://www.fws.gov/savethemonarch/CCAA.html" target="_blank" rel="noopener noreferrer">new plan</a>, announced in the spring of 2020, is designed to help fill the gap.</p>
Pros and Cons of Regulation<p>The top-down strategy for saving monarchs gained energy in 2014, when the U.S. Fish and Wildlife Service <a href="https://www.fws.gov/southeast/pdf/petition/monarch.pdf" target="_blank">proposed</a> listing them as threatened under the Endangered Species Act. A decision is expected in December 2020.</p><p>Listing a species as endangered or threatened <a href="https://www.fws.gov/endangered/esa-library/pdf/listing.pdf" target="_blank">triggers restrictions</a> on "taking" (hunting, collecting or killing), transporting or selling it, and on activities that negatively affect its habitat. Listing monarchs would impose restrictions on landowners in areas where monarchs are found, over vast swaths of land in the U.S.</p><p>In my opinion, this is not a reason to avoid a listing. However, a "threatened" listing might inadvertently threaten one of the best conservation tools that we have: public education.</p><p>It would severely restrict common practices, such as rearing monarchs in classrooms and back yards, as well as scientific research. Anyone who wants to take monarchs and milkweed for these purposes would have to apply for special permits. But these efforts have had a multigenerational educational impact, and they should be protected. Few public campaigns have been more successful at raising awareness of conservation issues.</p>
<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="91165203d4ec0efc30e4632a00fdf57d"><iframe lazy-loadable="true" src="https://www.youtube.com/embed/KilPRvjbMrA?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span>
The Rescue Attempt<p>To preempt the need for this kind of regulation, the U.S. Fish and Wildlife Service approved a <a href="https://www.fws.gov/savethemonarch/pdfs/Monarch%20CCAA-CCA%20Public%20Comment%20Documents/Monarch-Nationwide_CCAA-CCA_Draft.pdf" target="_blank">Nationwide Candidate Conservation Agreement for Monarch Butterflies</a>. Under this plan, "rights-of-way" landowners – energy and transportation companies and private owners – commit to restoring and creating millions of acres of pollinator habitat that have been decimated by land development and herbicide use in the past half-century.</p><p>The agreement was spearheaded by the <a href="http://rightofway.erc.uic.edu/" target="_blank">Rights-of-Way Habitat Working Group</a>, a collaboration between the University of Illinois Chicago's <a href="https://erc.uic.edu/" target="_blank" rel="noopener noreferrer">Energy Resources Center</a>, the Fish and Wildlife Service and over 40 organizations from the energy and transportation sectors. These sectors control "rights-of-way" corridors such as lands near power lines, oil pipelines, railroad tracks and interstates, all valuable to monarch habitat restoration.</p><p>Under the plan, partners voluntarily agree to commit a percentage of their land to host protected monarch habitat. In exchange, general operations on their land that might directly harm monarchs or destroy milkweed will not be subject to the enhanced regulation of the Endangered Species Act – protection that would last for 25 years if monarchs are listed as threatened. The agreement is expected to create up to 2.3 million acres of new protected habitat, which ideally would avoid the need for a "threatened" listing.</p>
A Model for Collaboration<p>This agreement could be one of the few specific interventions that is big enough to allow researchers to quantify its impact on the size of the monarch population. Even if the agreement produces only 20% of its 2.3 million acre goal, this would still yield nearly half a million acres of new protected habitat. This would provide a powerful test of the role of declining breeding and nectaring habitat compared to other challenges to monarchs, such as climate change or pollution.</p><p>Scientists hope that data from this agreement will be made publicly available, like projects in the <a href="https://www.fws.gov/savethemonarch/MCD.html" target="_blank">Monarch Conservation Database</a>, which has tracked smaller on-the-ground conservation efforts since 2014. With this information we can continue to develop powerful new models with better accuracy for determining how different habitat factors, such as the number of milkweed stems or nectaring flowers on a landscape scale, affect the monarch population.</p><p>North America's monarch butterfly migration is one of the most awe-inspiring feats in the natural world. If this rescue plan succeeds, it could become a model for bridging different interests to achieve a common conservation goal.</p>
The annual Ig Nobel prizes were awarded Thursday by the science humor magazine Annals of Improbable Research for scientific experiments that seem somewhat absurd, but are also thought-provoking. This was the 30th year the awards have been presented, but the first time they were not presented at Harvard University. Instead, they were delivered in a 75-minute pre-recorded ceremony.