Since Joe Biden’s election last month, U.S. car companies have been stepping up one by one to support the limits on tailpipe emissions he has pledged to impose. A new spirit of cooperation between the industry and the government would be good news for the fight against climate change. But it’s also good news for automakers themselves: What they really need — and Biden can provide — is help building the U.S. market for electric cars and trucks.
Biden’s first order of business will be to settle the matter of those emissions limits. He has promised to go beyond even the standards set by President Barack Obama, which called for a yearly increase in average fleet fuel economy of 4.7%. Reaching that target alone would mean that by 2026, one of every four light-duty passenger vehicles sold in the U.S. would be electric.
President Donald Trump lowered this standard to just 1.5%. But he ran into trouble with California, which sets its own rules (and those of a dozen other states that follow its lead) and which has insisted on sticking to Obama’s path. Trump’s attempt to rein California in only sent the fight to court. At this point, dropping that case and reraising the standard would be the most effective thing Biden could do to reduce emissions without Congress’s help.
Beyond that, Biden is right to try to boost demand for electric vehicles. The simplest way to do so would be an economy-wide tax on carbon emissions. That would raise the price of gasoline and encourage consumers to buy greener cars without need of further regulation. In the bargain, it would accelerate the transition away from carbon in every other sector — power generation, manufacturing, construction, agriculture — while boosting innovation and long-term investment in clean energy. Unfortunately, Congress has resisted this elegant strategy for years, and doesn’t seem poised to start supporting it now.
The next-best option for Biden is to expand electric vehicle tax credits. As things stand, Americans can claim a credit of up to $7,500 if they buy an electric car, and each automaker can sell up to 200,000 qualifying vehicles before the credit is phased out. That adds up to about 1.9 million eligible cars. (Tesla and GM have already reached their cap.) Democrats have said they want to raise that ceiling to 7.5 million, increasing the cost of the credit from $14 billion to $53 billion. A big push from the White House, combined with pressure from automakers, could feasibly persuade a bipartisan majority to get this done.
ANOTHER WAY to boost electric vehicle sales is with a new cash-for-clunkers program. Sen. Chuck Schumer’s $392 billion “Clean Cars for America” program would pay EV buyers at least $3,000 for their old gas-powered vehicles. Adding such a program to the tax credits could shave as much as $14,000 from the cost of an electric vehicle, BloombergNEF figures — thus making them far more competitive with old-fashioned cars.
Biden can also increase demand for EVs by getting the government to purchase them. Today, less than 1% of the federal fleet’s 645,000 vehicles are electric. Substantially boosting that share — by prioritizing EV purchases by the Postal Service, the military and more — would be a big step forward. Creating incentives for school districts to switch from diesel to electric buses could reduce both carbon emissions and particulate pollution.
Finally, to ease anxieties about how far electric vehicles can travel, it’s essential that the federal government help provide more charging stations. The U.S. will need half a million such stations by the end of Biden’s first term, to support potentially 8.5 million EVs on the road, BloombergNEF estimates, and that would cost about $6 billion. Even President Trump supports existing Senate legislation that would offer grants to states and local governments to build more than 330,000 charging stations. Biden would merely need to nudge Congress to enlarge and pass this plan.
Thanks to the coronavirus, the U.S. has had a brief respite from rising transportation emissions this year. But as the pandemic ends and Americans get back on the road, automotive carbon pollution will surely start rising again — until the U.S. shifts away from fossil fuels for good.
— Bloomberg Opinion
