Last week, the House Transportation and Infrastructure Committee marked up the recently-introduced infrastructure bill, the INVEST in America Act. The bill was drafted by House Democrats and would allocate $494 billion over five years on building and repairing highways and other transportation infrastructure. Democrats on the committee are selling the bill as a down payment on ambitious climate action because of spending on public transit, emissions reductions, resilience, and electric vehicles. In this post, we will examine what the bill does for electric vehicles and how it compares to what the U.S. would need to achieve decarbonization.
Electrifying cars and light trucks is an essential piece of decarbonizing the economy. As the power sector adds more low-carbon generation, switching to electric vehicles is an effective way to cut emissions from transportation, which currently accounts for 28 percent of U.S. emissions. Alternatives to electrification—such as hydrogen and biofuels—may eventually be important, but both technologies are far behind electric vehicles in consumer adoption and market outlook.
Even though electric cars are ahead of their low-carbon competition, they are still a small part of the market, making up only 2 percent of the total vehicle fleet in the U.S. Over the last five years, consumers have cited the higher price, limited range, and lack of local charging infrastructure as factors that keep them from using electric vehicles (EVs). Now, electric vehicles are cheaper than traditional cars (considering total cost of ownership) and upfront prices are decreasing, while vehicle ranges of 150-300 miles can accommodate the daily driving needs of Americans, who drive on average 28 miles a day. Still, electric vehicle sales are constrained by lack of convenient and quick charging options, as almost 50 percent of potential buyers list lack of charging infrastructure as the key factor keeping them from purchasing an EV. Subsidizing public charging stations is the best way to stimulate EV purchases, even compared to the effectiveness of subsidizing sales of electric vehicles themselves. “A policy of equal-sized spending but subsidizing charging station deployment could have been more than twice as effective in promoting EV adoption,” according to a 2017 study in the Journal of the Association of Environmental and Resource Economists.
This is because public chargers make EVs more attractive to people who cannot charge at home or work and relieve range anxiety for prospective EV drivers. After Kansas City built 1,000 charging stations, there was a subsequent increase in electric vehicles, from 80 to at least 5,000.
The INVEST in America Act would allocate $1.75 billion over five years to government entities, such as state and local governments, to support alternative fuel vehicle-charging infrastructure projects (both EV chargers and hydrogen fueling stations) along designated highway corridors.
This measure would be a good first step on the track to decarbonization, but is a pilot program at best. Transportation analysts at the Rocky Mountain Institute have estimated that alongside a rapid decarbonization of the power sector, countries around the entire world will need to electrify one in five vehicles by 2030 to reduce emissions in line with midcentury decarbonization. In the United States, that means putting 50 million electric vehicles on the road by 2030 and building commensurate charging infrastructure. While most of those vehicles would likely be charged at work or home, they would also require public charging stations for long trips and quick fill-ups. The exact number of fast-charging public stations necessary is not known, but current estimates hold that we will need one fast charger for every 30 to 160 electric vehicles. That implies an additional 300,000 to 1.6 million public chargers of the kind that the INVEST Act could support. Currently, the U.S. has approximately 14,000 fast-charging outlets deployed.
Clearly, the charging infrastructure will require significant investment in order to support widespread EV adoption. The INVEST Act authorizes $350 million per year, for the next five years, to support up to 80 percent of the project cost for installing EV charging stations. At a conservative cost estimate of $350,000 per plug, the number of fast chargers that this program might support is less than 7,000. While this is an important step, it is far from ambitious climate action. To actively support decarbonization, Congress must spend more on alternative fuel infrastructure.
Subsidizing EV charging projects will stimulate market investment in both charging infrastructure and electric vehicles. Currently, charging stations are unattractive financial investments for two principle reasons: insufficient demand for EV charging and high installation costs. Subsidies could help address both of these, reducing long-term costs and stimulating investment from the private sector. First, low adoption rates make fast-charging stations unprofitable. In a circular challenge, EV sales are then constrained by the lack of convenient and quick charging options. Companies are hesitant to build charging stations in areas without customers, while potential customers are deterred by the lack of charging stations. Considerable gaps in western states and rural areas exacerbate this problem across the interstate system. Even Tesla, which built a network of chargers across the U.S., has significantly fewer chargers in states between California and the East Coast (to make matters worse, their stations are exclusive, as they do not provide charging infrastructure for vehicles from other makers).
Second, the market for public chargers is new and the installation costs are high. In addition to the cost of the charger hardware, there are high construction costs associated with modifying underlying electricity infrastructure. As with solar energy modules, once businesses become more proficient at developing projects and scale-up helps to reduce soft costs, charging stations will become less costly and more appealing.
The EV charging section of the INVEST in America Act allows grant recipients to contract with private companies, subsidizing their costs. Additionally, given that labor accounts for over 50 percent of commercial EV charging infrastructure costs, the program would be sure to stimulate employment. Investment to deploy existing technology, such as alternative fuel vehicles, would create jobs more quickly—and in larger numbers—than research and development funding for other environmental technologies.
Out of all decarbonization strategies, electrifying lightweight vehicles will be one of the most obvious to consumers. There are about 270 million automobiles registered in the United States, and for many Americans using a car is a daily necessity. Good policy is imperative, both for the climate and the credibility of climate policies.