Following up on Governor Gavin Newsom’s call for the California Air Resources Board (CARB) to establish regulations requiring that all new cars and passenger trucks sold in California in 2035 be zero-emission vehicles (ZEVs), CARB has issued a preliminary report that says California will need to spend $15 billion to $30 billion in the next five years as a first step toward achieving the Newsom goal.

In CARB’s draft 145-page report “2020 Mobile Source Strategy,” the agency says that the needed spending would not only move California toward meeting Newsom’s proposal, but also California’s broader climate goals and federal air quality standards.

Where Will the Money Come From?

CARB officials listed a number of funding sources, including the auction of greenhouse gas (GHG) permits, Department of Motor Vehicle (DMV) fees, and settlements with companies that incur violations.  They noted that while the pandemic has cut available funding, some money may yet be available through economic recovery packages.  

From the draft report: “In the near-term, incentive programs to promote and accelerate the use of advanced technologies will be essential to meeting our pre-2030 air quality goals and setting us on the trajectory for the future goals.  The funding needed over the next five years to provide early reduction and put us on the path to meet our 2030 and 2050 climate goals is approximately $15 to $30 billion for vehicle and equipment costs alone to accelerate the use of advanced technologies.  In addition to funding, it is critical that clean transportation is accessible to all Californians particularly those in low-income or disadvantaged communities who experience a disproportionate share of pollution impacts.”

According to the report, more than half of the dollars would support incentives for on-road vehicles, while boats and refrigerated truck units would need an additional $5.5 billion combined.

Federal EPA Reaction

On October 1, 2020, CalEPA Secretary Jared Blumenfeld and CARB Chair Mary Nichols responded to the September 28, 2020, letter from U.S. EPA Administrator Andrew Wheeler to Governor Gavin Newsom.  Administrator Wheeler questioned Newsom’s Executive Order N-79-20 of setting a target of 2035 for 100 percent zero-emission car sales, and 2045 for full transition of all vehicles, both heavy- and light-duty, to zero-emission technologies.

The letter from Secretary Blumenfeld and Chair Nichols explained that Newsom’s Executive Order to transition California’s transportation sector was directed at fighting climate change and protecting public health, especially in heavily polluted communities adjacent to ports, rail yards, distribution centers and highways. It also highlighted the crucial role that science plays in underpinning policy decisions and regulatory actions on clean air and climate in California.

CARB intends to finalize the document by the end of the year, in line with last year’s Senate Bill 44 (Skinner), which tasked CARB with coming up with ways to reduce air pollution from medium- and heavy-duty vehicles.

Tracking the Money Needed to Get California to 100% Renewable Power

While the fully burdened delivered to load cost – what it will really take to go 100 percent green – remains a bit of a wild guess, we are starting to see a picture emerge:  The CEC’s SB 100 Report suggests a cost of between $66 billion and $74 billion for electrical infrastructure, but remains silent on transmission planning, so there would likely be a massive additional cost to add to these dollar figures. And, the CARB SB 44 report discussed above says California needs $15 billion to $30 billion.

And the impact to consumers?  In public testimony before the California Legislature, Edward Randolph, Director of Energy Policy at the CPUC, told members that every $1 billion in investment by the in-state utilities translates into a seven percent increase in electricity rates to consumers.  In a discussion last month on an industry webinar, Randolph said that the hardening the grid against future fire dangers as mandated by legislation, would result in rate increases of between 20 to 40 percent for the in-state utilities over the next two years.

How much can ratepayers really handle?  This is the important discussion that legislators and policy makers should have in 2021. 

Link to CARB California Letter for US EPA.

Link to Governor Newsom’s Executive Order.