Tax credits for the purchase or lease of EVs

The U.S. Department of Treasury and Internal Revenue Service (IRS) has released three key pieces of clarifying information for consumers, businesses and other entities seeking to utilize the tax credits for the purchase or lease of EVs: 1) Frequently asked questions about the new, previously-owned and commercial clean vehicle credits (Sections 30D, 45W and 25E), 2) a notice clarifying the incremental cost in 2023 for commercial clean vehicles (Section 45W), and 3) a notice signifying the intent to propose regulations on the clean vehicles credit (Section 30D). The proposed guidance on the new sourcing provisions for the clean vehicles credit (Section 30D) will come in March, along with a notice of proposed rulemaking, according to the Treasury.

In response, Electrification Coalition Executive Director Ben Prochazka released the following statement:

“Oil has a monopoly on U.S. transportation which puts us at a great economic and national security risk.  By accelerating the transition to EVs, we can reduce the risk of our oil dependence. The tax credits and incentives in the Inflation Reduction Act will make America safer by accelerating this transition and helping to facilitate a secure, reliable, and sustainable supply chain.

“The information released today is an important step to clarify the new requirements for consumers, businesses, and state and local governments planning to buy electric vehicles soon. While the proposed guidance for sourcing provisions was not released today, a whitepaper on the direction the Treasury Department may take was released. The whitepaper helps clarify as manufacturers identify which vehicles may be eligible for the tax credits and when the new requirements go into effect.

“The EC applauds the Treasury for sharing initial thoughts on the sourcing provisions for the Section 30D credit. This preliminary information is helpful to manufacturers seeking to make their EVs eligible and to help consumers as they consider purchasing an EV. The early information appears to be a common-sense and straightforward approach that looks to accelerate adoption but we will still need to keep our eyes on the road to create a strong and reliable allied supply chain as the final rules are written. We look forward to seeing the actual proposed guidance when it is released in March.

Historic Investments to Electrify USPS Fleet Will Reduce Dependence on Oil, Protect National Securiy

• December 20, 2022
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Today, the Biden-Harris administration announced an investment of $9.6 billion to electrify the U.S. Postal Service’s delivery fleet over the next five years. Electrification Coalition Executive Director Ben Prochazka responded:

“Our nation’s dependence on oil for transportation has led to many national security risks, so our federal government must take all necessary steps to transition to vehicles powered with domestically- and diversely-produced electricity. The USPS delivery fleet is prime for electrification because it will reduce air pollution in our communities, reduce operating costs, and strengthen our national and economic security.

“The U.S. federal fleet is the largest vehicle fleet in the world, and the USPS delivery fleet is the largest and most recognizable fleet within that. Last year, a report by the Electrification Coalition and Atlas Public Policy demonstrated that if the USPS electrified its entire light-duty fleet by 2025, it would save $2.9 billion over the life of those vehicles.

 “The Biden-Harris administration has taken historic steps to transportation electrification, including passing the Bipartisan Infrastructure Law in 2021 and the Inflation Reduction Act earlier this year. This move further signals that electricity will power not only the next generation of passenger vehicles but also medium- and heavy-duty vehicles.

“Americans can look forward to receiving their daily mail from cleaner, quieter, and more efficient vehicles.”

ChooseEV” features educational information and resources including a public charger locator and savings calculator

As the demand for information about electric vehicles grows, Eversource, in collaboration with United Illuminating (UI), has unveiled “ChooseEV,” a new, online educational tool that features information and technical assistance. The platform, which will be available on Eversource.com and uinet.com, offers customers a variety of ways to learn more about EVs and help them make decisions when comparing vehicles and charging options.

“This new resource is a great way to provide customers with critical information they’re looking for about electric vehicles,” said Eversource Electric Vehicle Expert Enoch Lenge. “We’re proud to invest in digital tools designed to educate, inform, and make it easy for people to discover the right EV solutions for them, especially at a time when electric vehicles are playing an increasing role in helping to build our clean energy future.”

ChooseEV features advice on how customers can save both money and energy; select the right EV as well as the following information:   

• EV Incentives and Offers  
• Gasoline/Electric Savings Calculator 
• EV & Plug-in Hybrid Electric Vehicle Reviewer 
• Level 2 Charger Review Tool 
• EV Public Charger Finder 

In January, both Eversource and UI worked with the Public Utilities Regulatory Authority (PURA) to unveil a statewide electric vehicle charging station installation program, designed to bolster the infrastructure required for meeting the state’s EV goals by 2025

EV incentive in the Inflation Reduction Act - Comments

Comments to IRS for IRA EV Incentive

November 13, 2022

by Barry Kresch, President EV Cub of Connecticut

Summary of Comments Submitted to the IRS

The EV Club has partnered with the Electric Vehicle Association to author comments for the in-process IRS rule-making regarding the implementation of the EV incentive in the Inflation Reduction Act.

There is a scrum of lobbyists from manufacturers and interests groups weighing in with their cadres of lawyers and tax accountants. The focus of the EV Club and the EVA is the consumer and that informs our perspective where we chose to focus our efforts.

Comments inform the details of enactment that are within the purview of the IRS, not the legislation itself, which cannot be changed without further legislation. The outlook for the legislation to be amended in the near-term is cloudy at best.

The usual disclaimer – This is based on the latest information available and is not a legal opinion.

Sourcing/Manufacturing Requirements

The focus of the IRA writ large is to “inshore,” or re-orient manufacturing to North America. It already seems to be having a material effect. This is a chart from Bloomberg showing significant announced investment levels that seemingly flow directly from the legislation.

The concern is timing. As of the date of this writing, we are not aware of any EV that would qualify for the full incentive when the requirements begin to phase in as of January, and we are aware of many that won’t qualify for any incentive. We are advised that the IRS does have within its power to grant a temporary waiver, and facing a potentially significant disruption in the ability of the consumer to access EV purchase incentives, we support a modest delay in the requirements so that supply chains have a little more time to adjust.

Certification

Our view is that the least well thought out part of the legislation is how the eligibility of a given vehicle is communicated to the consumer. There are requirements for final assembly, battery mineral sourcing, and battery manufacture. (Price, too, but we’ll get to that later.) The latter two change every year, so a car that is compliant in 2024 might lose compliance in 2025. The fact that the requirements change on a calendar year basis puts it out of sync with the model year focus of building cars, not to mention EPA certification and other regulatory things that happen with a new vehicle. If there is a list of vehicles, such as on Plugstar or the AFDC.energy.gov website, these sources are no longer able to provide definitive information regarding incentive eligibility. The best they can do is list cars that may be eligible, leaving it for the consumer to do their own research. The AFDC website directs consumers to contact the manufacturer or check on the IRS website. That sounds like fun! I wouldn’t be surprised if the confusion filters down to dealerships. It would be possible for a Volkswagen dealership, for example, to have a German made ID.4 parked next to the identical vehicle manufactured in Tennessee. The former is immediately disqualified due to the final assembly rule, while the latter might be available if the sourcing requirements are met.

The AFDC site also links to a VIN decoder. The VIN has the information needed to know if a vehicle qualifies. The problem is that a VIN isn’t available in anywhere near a timely way relative to the consumer shopping journey. By the time the VIN is known, a binding contract is almost certainly in place and the vehicle is almost at the point of delivery.

Proposed Solution

• Have the certification be on a model year basis and have it be available at the time the model year is initially offered for sale (which may precede deliveries).
• The manufacturer takes responsibility for the certification. If due to a certification running change, the model (or some units of the model) is subsequently found to not meet the requirements, any incentive claw-back would become the responsibility of the manufacturer.
• This timing would enable the certification to potentially be included on the Monroney sticker (the label affixed to the window of a new vehicle that displays the EPA mileage rating and other officially required information).
• Online tools like those referenced above would be able to definitively report the incentive status for a particular vehicle.
• This model year basis is consistent with how many state programs are run.

Our guiding principle is that an incentive must be simple, dependable, and easy to access. The intent of this proposed solution is make the inherent complexity of the legislation invisible to the consumer.

MSRP Cap

The bill specifies that a vehicle must have a maximum MSRP of $55,000 for a sedan or $80,000 for an SUV or light truck. It does not define how the MSRP is determined. Early reports about the legislation indicated that the MSRP would be defined as the final price of the vehicle, including options (but not taxes, title, or destination charges). There are MSRP caps in state incentive programs but they typically don’t work this way.

Most vehicles have multiple trim levels and then offer options within each trim level. The Connecticut program, CHEAPR, uses the base trim level MSRP. If a trim level is below the maximum allowed MSRP, ordering additional options does not affect eligibility. The California law is more generous. If the base price of the lowest priced trim level is below the cap, then all trim levels qualify. The EV Club and EVA are advocating for the CA definition. This would obviously allow more EVs to qualify. We can deal with that!

Transfers

Eager to get a purchase incentive but not happy about waiting many months until you file your taxes to realize it? The transfer option is designed as the answer. Becoming effective in 2024, the consumer has the option to transfer the incentive to the dealer (new or used) and receive the tax credit as a “cash on the hood” rebate. As we have been diving into the bill details, an important point about the tax treatment of the rebate is not clear. If someone elects the transfer, they receive the full amount. However, if they do not have the tax liability to absorb it, they are on the hook for paying the difference between their liability and the $7500. At least that is how several folks who know more about tax accounting then I have interpreted it.

Doing this kind of claw-back makes no sense on any level. The consumer is exposed to an unquantified risk. The dealer is receiving the credit, and  either using it or getting reimbursed by Treasury, so it would be a weird form of double taxation. Finally, it is self-defeating. The intended design of the incentive is to increase EV adoption among non-affluent consumers. This would act as a red flag for exactly the target consumer. The EV Club and EVA are advocating that anyone taking the transfer get the full incentive, full stop.

Transfers vs Leasing

A transfer works differently than a lease. If a customer leases, the incentive goes to the finance company or whomever holds the title. That entity can package the incentive into lower lease payments. It has always been a way for someone who does not have $7500 of offsetting tax liability to be able to take full advantage of the incentive. However, the title holder is not legally obligated to do this. They can just keep the incentive for themselves. It is why we have always advised consumers to discuss this specifically with the seller.

One of the good things about the transfer is that the rules require full disclosure on the part of the seller and that the seller passes the entire incentive through to the customer. The EV Club/EVA recommend that these requirements be expanded to include leasing customers.

Transfers and Income Eligibility

There are income caps in this program as we explain on our incentives page. If someone takes the tax credit the old-fashioned way, meaning when they file their taxes, income eligibility can be determined by either the current year or prior year modified adjusted gross income. In the case of a transfer, where the dealer is tasked with verifying eligibility, as an operational matter, the only option is to look at the prior year. It is the recommendation of the EV Club/EVA that the consumer, if determined to be ineligible for the prior year, be given the option of using the current year. In that scenario, the incentive would be given at the time of purchase. The consumer would take responsibility for current year eligibility (to be verified upon tax filing). If the consumer remains ineligible, it is their responsibility to repay the incentive. There are situations where someone has a pretty good idea whether they will have a change in taxable income and this expands their opportunity to receive an incentive.

These and some other, more technical, comments have been submitted to the IRS in the interest of making the incentive as user-friendly and easy to understand as possible. 

Taking freight trucks electric would have big economic and environmental benefits for India

DOE/LAWRENCE BERKELEY NATIONAL LABORATORY

 

Diesel-fueled freight trucks play an outsized role in producing India’s total greenhouse gas and air pollution emissions. While the country has promoted policies to transition to electric vehicles for public transportation buses and cars, batteries that can power such large trucks have been too heavy and expensive to make their electrification possible.

A new study from the Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab) and UCLA shows that advances in battery technology and dramatically decreased battery costs in recent years have changed that. With the right policies and incentives, battery electric trucks would be more affordable to operate than diesel, and India could become a world leader in producing electric vehicles.

The transition would also help India reduce its reliance on imported oil, improve the air quality, and meet the goal of net zero greenhouse gas emissions by 2070. India imports 88% of the oil it uses and of the total petroleum consumed by the country’s transport sector, nearly 60% is used by freight trucks. These trucks are responsible for 71% of the carbon dioxide emissions, 74% of the particulate matter emissions, and 55% of the nitrogen oxide emissions from road vehicles.

“Electric trucks would be instrumental in enhancing India’s energy security and reducing the goods transport cost,” said Berkeley Lab Research Scientist Nikit Abhyankar, an author of the report. “Additionally, for any decarbonization and air pollution control strategy for the country, electric trucks are critical.”

Comparing costs: diesel vs electric

The researchers began rethinking the economic possibility of battery electric freight trucks with the dramatic drop in battery costs in recent years. In 2010, the battery cost per kilowatt-hour was about $1,200. The current global average is now $120 to $135 and expected to decrease. Battery energy density has also improved, making powerful batteries lighter.

To develop an accurate comparison of electric and diesel trucks specific to India, the team studied four sizes of trucks used in the country: 7.5 and 12 metric tons, mostly used for short-haul transport, and 25 and 40 metric tons, primarily used for long-haul and heavier freight transport. They analyzed initial purchase price, energy and fuel costs, and maintenance and operation costs, including the cost of battery charging infrastructure, to determine total cost of ownership.

They found that battery electric trucks make better financial sense for all truck types, albeit electrifying the heavier trucks is more challenging because they need bigger, heavier batteries. At the current battery price, a 25-ton electric truck, the most commonly used long-haul truck size in India, with a 569 kilowatt-hour battery pack and 400 kilometer operational range could deliver a 28% lower total cost of ownership per kilometer than a diesel truck.

The batteries’ weight might mean electric trucks could carry slightly less freight than diesel, but that could be offset by designing the trucks to be more lightweight and through fuel cost savings, the researchers noted.

Benefits beyond trucking costs

Based on India’s current grid emissions, electric trucks would reduce greenhouse gas emissions 9% to 35% per kilometer compared with diesel trucks, the researchers found. Electric trucks would also not pollute as they travel through communities. With diesel trucks, this local pollution can hit disadvantaged groups the hardest.

And electric trucks could eventually become carbon neutral if charged with renewable energy, particularly solar energy when its production is highest, the researchers found. Renewable energy could offer other benefits, they noted. The uncertain price of imported oil makes relying on it a disadvantage and can increase the costs of goods, contributing to overall inflation. But the norm in paying for renewable energy is a much more stable 25-year power purchase agreement.

Next steps

Achieving these benefits will require investments from the Indian government over the coming years, the researchers noted. India is one of the world’s largest automotive producers, but the government will need to promote policies to increase battery manufacturing and electric vehicle manufacturing and uptake. It will also need policies to support building a fast-charging infrastructure.

“India has embarked on very ambitious electrification policies prior to this,” said Deepak Rajagopal, an author of the report and a faculty scientist at Berkeley Lab and UCLA. “We find that the time is now ripe to put targeted policies on trucking.”

In related research published last year, Berkeley Lab scientists determined how battery-electric trains can deliver environmental justice, cost-savings, and resilience to the U.S.

Advance Domestic Battery Recycling and Reuse, Strengthen Nation's Battery Supply Chain

 

Biden-Harris Administration Announces Nearly $74 Million to Advance Domestic Battery Recycling and Reuse, Strengthen Nation's Battery Supply Chain

The Biden-Harris Administration, through the U.S. Department of Energy (DOE), today announced nearly $74 million in funding from President Biden’s Bipartisan Infrastructure Law for 10 projects to advance technologies and processes for electric vehicle (EV) battery recycling and reuse. Since President Biden took office, more than 1.2 million EVs have been sold in America—more than triple the number of EVs on the road before he took office—and the rate of EV adoption continues to grow at a rapid pace. With demand for critical battery minerals, such as lithium and graphite, projected to increase by as much as 4,000% in the coming decades, this latest round of funding supports the recycling and reuse segment of the domestic battery supply chain. This will help accelerate battery production in America, mitigate battery supply chain disruptions and create good-paying jobs. Today’s announcement builds on $2.8 billion through President Biden’s Bipartisan Infrastructure Law for domestic battery processing and component manufacturing and supports President Biden’s goal to have electric vehicles make up half of all vehicles sales in America by 2030. 

“Recycling advanced batteries presents an enormous opportunity for America to support the creation of a secure and resilient domestic battery supply chain to reach our clean energy and transportation future,” said U.S. Secretary of Energy Jennifer M. Granholm. “The historic investments of President Biden’s Bipartisan Infrastructure Law are making it possible for cross-sector collaboration that will fuel America’s technological breakthroughs and eliminate our overreliance on other nations to meet our clean energy goals.” 

“Michigan is a global leader in automotive innovation and developing advanced technologies, thanks in part to work being done at institutions like Michigan Tech,” said Senator Gary Peters (MI), Chairman of the Commerce Subcommittee on Surface Transportation, Maritime, Freight, and Ports. “This federal investment will help give Michigan Tech more resources to develop the technologies needed to recycle and reuse electric vehicle batteries and their materials – which will be absolutely critical to strengthening electric vehicle supply chains nationwide and the future of our automotive sector in Michigan.”  

“I’ve been a steadfast advocate for Nevada’s booming clean-energy industry, including our cutting-edge companies engaged in manufacturing and recycling batteries,” said U.S. Senator Catherine Cortez Masto (NV). “I’m pleased that these grants from the Bipartisan Infrastructure Law I supported continue to come to the Silver State to support our innovative businesses and create jobs.” 

“Thanks to the Bipartisan Infrastructure Law, the Biden-Harris Administration is investing nearly $10 million in funding to recycle batteries and create jobs right here in Nevada,” said U.S. Congressman Steven Horsford (NV-04). “This investment ensures that we are able to provide for the future demand of batteries, ensure a domestic supply chain of critical minerals and strengthen our national security. As a member of the Congressional Critical Minerals Caucus and a proud supporter of the Bipartisan Infrastructure Law, I will continue to work with the Administration to make critical investments in Nevada and across the nation to advance a clean energy future.” 

“As we tackle the climate crisis and expedite the transition to electric vehicles, it is imperative that we strengthen the domestic battery supply chain and improve battery recycling,” said U.S. Representative Michael Levin (CA-49). “I am thrilled to see the Bipartisan Infrastructure Law delivering investments for a local business on the cutting edge of this important technology, and I look forward to seeing Smartville continue to grow and thrive.” 

Advanced batteries are vital to the entire clean energy economy, but America currently does not produce enough of the critical minerals and battery materials needed to power clean energy technologies. If unaddressed, the lack of domestic mining, processing, and recycling capacity will hinder clean energy and transportation development and adoption, leaving the nation dependent on unreliable foreign supply chains. The Biden-Harris Administration is committed to using a whole-of-government approach to securing a reliable and sustainable supply chain to improve America’s energy independence, strengthen national security, and lower costs for working families. 

Projects funded by today’s announcement will lead to second-use scale-up demonstrations that integrate end-of-life EV batteries into secondary applications. This includes stationary energy storage systems and projects that focus on advanced materials separation, scale-up, and reintegration of lithium-ion battery materials. Responsible and sustainable end-of-life recycling and reuse will strengthen domestic battery manufacturing and allow the nation to meet the increasing demand for EVs through American made battery components. Objectives for projects included in this funding opportunity align with provisions in the President’s Inflation Reduction Act, and Defense Production Act to reduce the nation’s dependence on foreign materials, supercharge domestic manufacturing and create good-paying clean energy jobs. Leveraged with recipient cost share, this funding will help to provide more than $126 million for America’s clean energy future.  

Managed by DOE’s Vehicle Technologies Office, the projects announced today are part of a $7 billion investment from the President’s Bipartisan Infrastructure Law to strengthen the domestic battery supply chain. 

Clean Hydrogen

 

Biden-Harris Administration Announces $750 Million to Accelerate Clean Hydrogen Technologies

The Biden-Harris Administration, through the U.S. Department of Energy (DOE), today announced its intent to issue $750 million in funding from President Biden’s Bipartisan Infrastructure Law to dramatically reduce the cost of clean-hydrogen technologies. The funding is a crucial component of the Administration’s comprehensive approach to accelerating the widespread use of clean hydrogen and will play a vital role in supporting commercial-scale hydrogen deployment. Produced with net-zero carbon emissions, clean hydrogen is a key pillar in the emerging clean energy economy and will be essential for achieving the President’s goal of a 100% clean electrical grid by 2035 and net-zero carbon emissions by 2050. 

“Today’s announcement is yet another exciting step toward lowering the cost of and scaling-up clean hydrogen production, a versatile fuel essential to the nation’s historic transition to an equitable and secure clean energy future,” said U.S. Secretary of Energy Jennifer M. Granholm. “By investing in the cutting-edge research and development necessary to making market-ready clean hydrogen a reality, DOE is delivering on President Biden’s promise to implement an ambitious climate agenda.” 

Clean hydrogen—which is produced with zero or next-to-zero emissions from renewables, nuclear energy, or natural gas with carbon sequestration—is set to play a vital future role in reducing emissions from some of the hardest-to-decarbonize sectors of our economy, including industrial and chemical processes and heavy-duty transportation. Clean hydrogen can also support the expansion of renewable power by providing a means for long-duration energy storage and offers flexibility and multiple revenue streams to all types of clean power generation—including today’s nuclear fleet, advanced nuclear, and other innovative technologies. By enabling diverse, domestic clean-energy pathways across multiple sectors of the economy, hydrogen will strengthen American energy independence, resiliency, and security. While hydrogen technologies have come a long way over the last several years, costs and other challenges to at-scale adoption need to be addressed for clean hydrogen to realize its full potential. 

Together with the regional clean hydrogen hubs (H2Hubs), tax incentives in the President’s Inflation Reduction Act, and ongoing research, development, and demonstration in the DOE Hydrogen Program, these investments will accelerate the technical advances and scale-up needed to achieve DOE’s Hydrogen Shot goal of $1 per kilogram of clean hydrogen within a decade. 

Managed by DOE’s Hydrogen and Fuel Cell Technologies Office (HFTO), projects funded through this opportunity will address underlying technical barriers to cost reduction that can’t be overcome by scale alone and ensure emerging commercial-scale deployments will be viable with future lower-cost, higher-performing technology. Reaching cost reduction goals will open new markets for clean hydrogen—creating more clean energy jobs, reducing greenhouse gas emissions, and strengthening America’s competitiveness in the global clean energy market. 

By enabling a sustainable clean-hydrogen economy, these investments will help reduce harmful air pollution and decarbonize some of the economy’s most polluting sectors—including chemical and industrial processes and heavy transportation. Reducing emissions in these sectors will be especially beneficial for disadvantaged communities that have suffered disproportionately from local air pollution in the past. Additionally, DOE’s National Clean Hydrogen Strategy and Roadmap and President Biden’s Justice40 Initiative serve as important pillars driving the energy justice efforts by HFTO and the Hydrogen Program. 

MEDIUM AND HEAVY-DUTY ON-ROAD TRUCKS AND BUSES

THE U.S. NATIONAL BLUEPRINT FOR TRANSPORTATION DECARBONIZATION = MEDIUM AND HEAVY-DUTY ON-ROAD TRUCKS AND BUSES 

Medium duty and heavy-duty vehicles include a wide range of vehicles that vary in size, from heavy-duty pickup trucks to long-haul semi-trucks. The use of these vehicles is correspondingly diverse, as this category encompasses vehicles used for local delivery, refuse collection, public transportation, long-haul goods delivery, and many other purposes. While MHDVs represent only 5% of total vehicles on the road, they are responsible for an outsized 21% of transportation emissions, making them the second-largest emissions contributor behind only light-duty vehicles. And within MHDVs, a small portion—about 10% of heavy trucks with high utilization—is responsible for approximately 50% of total MHDV emissions REF. MHDVs are also a major source of criteria pollutant emissions, particularly along busy corridors that are close to disadvantaged communities. These emissions cause increased asthma and lung disease rates among these populations and have been linked to thousands of premature deaths. They also contribute to the inability of some areas to achieve compliance with federal ambient area quality standards REF, REF, putting residents at disproportionate risk for additional health impacts. Although nearly all MHDVs on the road today rely on internal combustion engines fueled with diesel (81%), gasoline (17%), or natural gas (1%) REF, many manufacturers are investing heavily in zero-emission 62         THE U.S. NATIONAL BLUEPRINT FOR TRANSPORTATION DECARBONIZATION Virtually all MHDVs on the road today rely  on internal combustion engines fueled with DIESEL (81%) GASOLINE (17%) MHDVs that use battery electric or hydrogen fuel cell electric powertrains. At COP27 on November 16, 2022, the United States joined the Global Memorandum of Understanding on Zero-Emission Medium- and HeavyDuty Vehicles REF. First introduced at COP26, the Global MOU puts countries on a path to 100% new zeroemission MHDV sales by 2040 at the latest, with an interim goal of at least 30% new sales by 2030 REF. NATURAL GAS (1%) technologies (in line with DOE targets for zero-emission vehicle technologies and fuels costs and performance vetted with industry), zero-emission vehicles in all MHDV classes can reach total-cost-of-driving parity with conventional diesel vehicles by 2035 REF. Since MHDVs are used for a variety of purposes, there will likely be a suite of zero-emission technology solutions in the future to cover various use cases.  Based on expectations of current technological progress, smaller vehicles with lower utilization will likely be EVs REF. Other manufacturers are investing in hydrogen powertrains using fuel cells. While not currently commercially viable for freight applications, hydrogen vehicles are appealing for future longhaul operations requiring greater vehicle range and faster refueling times. There is also ongoing RD&D and deployment focused on hydrogen use in internal combustion engines, which could improve deployment and support the build out of hydrogen fueling infrastructure. Research and development are also improving durability and reducing costs of fuel cells, which will enable major efficiency improvements. Fleet operators are sensitive to fuel and maintenance costs, which could make efficient EVs even more appealing and result in a more rapid shift toward EVs. With continued improvements in vehicle and fuel Sustainable fuels may also be an option for some MHDVs, particularly for remote applications and for legacy vehicles relying on internal combustion engines. The historically slow turnover rate for many MHDVs means that new technologies may not replace diesel engines for several decades and that disseminating new technology across the MHDV fleet will be a slow process if market forces or policy decisions do not accelerate vehicle turnover. Sustainable fuels could help alleviate this turnover challenge by providing low-carbon solutions that are compatible with existing vehicles. To achieve 2030 and 2050 goals, the current MHDV reliance on diesel and gasoline must shift to zero-emission vehicles and sustainable fuels. This shift can be achieved in part through decisive and coordinated actions, including: 1. Fund research and innovation to develop viable technologies to replace fossil-fuel vehicles for all MHDV applications. It is vital to continue to support research, design, and development toward lowercost and higher-energy-density batteries and fuel cell applications, as well as the use of clean hydrogen and sustainable fuels to fully decarbonize the MHDV sector. For example, DOE is investing hundreds of millions of dollars to support the next stage of the SuperTruck initiative aimed at electrifying freight trucking REF. The department is also collaborating with industry through the 21st Century Truck Partnership, which is shaping a national vision for trucks and buses that safely and cost-effectively move larger volumes of freight and greater numbers of passengers while emitting little or no pollution and dramatically reducing dependency on petroleum REF. DOE is also coordinating with partners internationally on the development of the new Megawatt Charging System standard, which will enable compatibility between automakers and charging equipment installed in the United States. Research can also help improve access to big data, such as information collected from GPS navigation services and user mobile phone applications, to inform strategies to reduce GHG emissions. 63 2. Implement policy and regulation to reduce new vehicle GHG and criteria emissions and set ambitious targets for transitioning to zero-emissions vehicles on a timeline consistent with achieving economy-wide 2030 and 2050 emissions reduction goals. This effort should account for the wide range of MHDV vehicles and applications. One example of such regulatory action is EPA’s Clean Trucks Plan, which will reduce the emissions of GHGs and other harmful pollutants through a series of rulemakings REF. Another example is the fuel efficiency standards for MHDVs, which DOT issued jointly with EPA. Additionally, the government will continue to provide grants and other incentives for low-emission or zero-emission vehicles (e.g., the Congestion Mitigation and Air Quality Program, the Low or No Emission Vehicle Program, the Diesel Emission Reduction ACT (DERA), SmartWay, and the Clean School Bus Program REF). Regional, state, local, and Tribal actions to enable more rapid zeroEMISSIONS emission MHDV transitions can further support these programs. For example, 17 states and the District of Columbia and the Canadian province of Quebec are working collaboratively through the Zero Emission Vehicle (ZEV) Task Force to advance and accelerate the market for electric MHDVs REF. The committed signatories have stressed the need for market-enabled adoptions, including innovative f inancing models and additional funding sources and actions to encourage fleet purchases. Together, they have emphasized accelerating deployments of zero-emission trucks and buses in disadvantaged communities. In addition to multi-state actions, strategies can be further identified through regional, state, local, and Tribal climate action plans that consider freight planning, and state freight plans should include GHG emissions-reduction strategies. Regional coordination formalized in such planning documents will also help support this transition by reflecting multi-jurisdictional capacities. Additionally, fleet transition plans can accelerate the shift to zero-emission vehicles. The IRA directs EPA to award grants and rebates for zero-emissions heavy duty vehicles. And under the BIL, zero-emission vehicle project grant applications for the Buses and Bus Facilities Program and the Low or No Emission Vehicle Program must include a Zero-Emission Fleet Transition Plan. Innovative freight strategies, such as green loading zones, zero- or low-emissions delivery zones, and restricted multi-use lanes, can also incentivize  the use of zero- or low-carbon freight options in urban areas. The government will continue to provide grants and other incentives for low-emission  or zero-emission vehicles. = Ener Carbon I64         THE U.S. NATIONAL BLUEPRINT FOR TRANSPORTATION DECARBONIZATION 3. Invest in strategic demonstration and deployment to support the build-out of interoperable EV charging and refueling infrastructure through coordinated planning, policy, and funding opportunities. An unprecedented level of collaboration is needed among fleet operators, facilities throughout the freight transportation network, infrastructure providers, and electric utilities to ensure energy systems can accommodate the charging demands associated with the rollout of zero-emission MHDVs during the latter half of this decade. The Joint Office is offering technical assistance to school districts and transit operators for deployment of electric school and transit buses under BIL programs. For freight applications, vehicles can leverage central fueling facilities, and accordingly there will need to be an initial focus on large truck depots and key truck corridors that carry high volumes of freight from ports. These centrally located fueling facilities and focused uses will have the strongest business cases, particularly since they can help reduce the emissions and noise impacts in urban areas that disproportionately burden disadvantaged communities. The BIL created a new Reduction of Truck Emissions at Port Facilities grant program, which will support electrification at ports. For long-haul freight, long-term strategies may involve multi-state considerations for on-the-road charging stations and other infrastructure needs to support zero-emission fueling applications of long-haul freight. An accelerated decarbonization transition will require advancing the adoption of EVs and the deployment of a supporting charging and fueling infrastructure concurrently, so the growth of each component complements the other. Sustainable fuel readiness planning can help local and regional governments identify and address barriers to adoption, such as insufficient supporting infrastructure. 

Blueprint to Decarbonize America’s Transportation Sector

 

The Biden-Harris Administration today released the U.S. National Blueprint for Transportation Decarbonization. Developed by the departments of Energy, Transportation, Housing and Urban Development, and the Environmental Protection Agency, the Blueprint is a landmark strategy for cutting all greenhouse emissions from the transportation sector by 2050. It exemplifies the Biden-Harris Administration’s whole-of-government approach to addressing the climate crisis and meeting President Biden’s goals of securing a 100% clean electrical grid by 2035 and reaching net-zero carbon emissions by 2050. The Blueprint builds on President Biden’s Bipartisan Infrastructure Law and Inflation Reduction Act, which together represent historic investments in the future of our nation that will transform how we move and live while we build the backbone of a safer and more sustainable transportation system.

Jointly announced by U.S. Secretary of Energy Jennifer M. Granholm, U.S. Secretary of Transportation Pete Buttigieg, U.S. Secretary of Housing and Urban Development Marcia Fudge, and Environmental Protection Agency Administrator Michael S. Regan, the Blueprint is the first milestone deliverable of the historic memorandum of understanding (MOU) signed by the agencies in September of last year. The Blueprint will be followed by more detailed decarbonization action plans, to be developed and implemented by these agencies in cooperation with governments at the state, local, and tribal levels, philanthropic organizations, the private sector, and global partners.

“The domestic transportation sector presents an enormous opportunity to drastically reduce emissions that accelerate climate change and reduce harmful pollution,” said U.S. Secretary of Energy Jennifer M. Granholm. “DOE is prepared to implement this Blueprint alongside our partners within the Biden-Harris Administration to ensure all Americans feel the benefits of the clean transportation transition: good-paying manufacturing jobs, better air quality, and lower transportation costs.”

“Transportation policy is inseparable from housing and energy policy, and transportation accounts for a major share of US greenhouse gas emissions, so we must work together in an integrated way to confront the climate crisis,” said U.S. Secretary of Transportation Pete Buttigieg. “Every decision about transportation is also an opportunity to build a cleaner, healthier, more prosperous future. When our air is cleaner; when more people can get good-paying jobs; when everyone stays connected to the resources they need and the people they love, we are all better off.”

“Under the leadership of President Biden, EPA is working with our federal partners to aggressively reduce pollution that is harming people and our planet – while saving families money at the same time,” said U.S. Environmental Protection Agency Administrator Michael S. Regan. “At EPA, our priority is to protect public health, especially in overburdened communities, while advancing the President’s ambitious climate agenda. This Blueprint is a step forward in delivering on those goals and accelerating the transition to a clean transportation future.”

“The people HUD serves deserve clean, affordable transportation options,” said U.S. Housing and Urban Development Secretary Marcia Fudge. “HUD is proud to join our federal partners at Energy, DOT, and EPA to ensure that clean transportation investments are made equitably and include communities and households that have been most harmed by environmental injustice. We look forward to working together to better align transportation, housing, and community development investments in these and other communities across the country.”

The transportation sector—which includes all modes of travel through land, air, and sea to move people and goods—accounts for a third of all domestic greenhouse gas emissions, negatively affecting the health and well-being of millions of Americans, particularly those in disadvantaged communities. Transportation costs are the second largest annual household expense in our country and for the poorest Americans, the financial burden of transportation is disproportionately and unsustainably high.

A well-planned transition to a decarbonized transportation system can address these and other inequities and provide equitable, affordable, and accessible options for moving people and goods. Further developing and deploying clean-energy technologies such as electric vehicles and hydrogen and sustainable fuels, while also building out the supporting infrastructure for clean transportation, will create good-paying jobs in all segments of the transportation sector while strengthening America’s energy independence.

The Blueprint is a critical step in the ongoing partnership between DOE, DOT, EPA, HUD, and stakeholders and will be followed by more detailed sector-specific action plans to create a comprehensive suite of strategies to realize an improved and sustainable transportation future. Learn more about the MOU and Blueprint.

 LIGHT-DUTY VEHICLES 

With more than 280 million vehicles on the road, light-duty passenger vehicles—cars, SUVs, and pickup trucks—are the primary mode of passenger travel in the country and account for over 75% of total U.S. passenger miles traveled REF, REF. LDVs are responsible for about 50% of total transportation energy use and emissions: over 120 billion gallons of gasoline consumed sold in the interim are as efficient as possible will further reduce energy needs and emissions during the transition. The rate of EV adoption and speed of vehicle replacement will affect the degree to which LDVs use liquid fuels in the decades to come. Thus, sustainable fuels provide an additional opportunity to reduce the emissions of legacy internal combustion engine vehicles still on the road in 2050 and beyond. and over 1,000 MMT CO2 emitted each year REF. Lightduty passenger vehicles are also major contributors to air pollution, which especially impacts people who live near highways. The fuel economy of new LDVs has improved by about 30% over the past 15 years, driven largely by regulations, including EPA GHG emissions standards and the Corporate Average Fuel Economy (CAFE) standards established by the National Highway Traffic Safety Administration. This improved fuel economy has translated into significant per-vehicle energy and emissions savings REF. However, sales trends toward larger and less-efficient vehicles have led to lower overall emission reductions than would have been achieved without these market shifts REF. Achieving 2050 net-zero-emissions goals will require transitioning new LDV sales to zero-emission EVs by the mid-2030s, and then rapidly replacing the legacy stock of higher-polluting fossil-based vehicles with zero-emission EVs. Ensuring that fossil fuel vehicles Sales of plug-in battery EVs have been rapidly increasing in recent years thanks to technology improvements and lower costs (especially for batteries, as shown in Figure 10), supporting policies, and increased availability of charging infrastructure REF. In 2021, U.S. EV sales more than doubled to over half a million vehicles sold, reaching 4.5% of the total market share. Globally, EVs accounted for 9% of new vehicle sales in 2021, with Europe and China representing the two largest EV markets REF. In California, where support for EVs has been substantial, EVs accounted for about 18% of vehicle sales in the first half of 2022 REF. Despite this progress, more than 99% of LDVs on the road in America today still rely on gasoline17 or diesel fuels, since only a small fraction of vehicles are replaced each year. A rapid acceleration of new EV sales will be critical to achieving decarbonization goals. 17 Motor gasoline is a blend of 90% fossil gasoline and 10% ethanol.59 With sales increasing globally and manufacturers planning to spend more than half a trillion dollars on EV and battery development through 2030 REF, it is clear that EVs are a viable technology to dramatically reduce GHG emissions from LDVs by 2050. The number of EV models available is also rapidly increasing, with more than 100 models currently or soon-to-be available across multiple vehicle classes, including larger SUVs  and pick-up trucks REF.  The outlook for EV growth for personal and commercial vehicles is increasingly positive, and over time the environmental benefits of zero-emission vehicles combined with progressive grid decarbonization are expected to compound REF. Further technological progress will accelerate EV competitiveness for additional applications and increase affordability for $297 23 Li-ion w. Silicon Lithium Metal EV Purchase Price Parity with Conventional Gasoline Vehicles Li-ion w. Graphite 

1 IMPROVED AFFORDABILITY

Vehicle battery costs dropped 90% over the ten-year period ending in 2020, creating less expensive overall electric vehicle costs. Studies indicate that when battery costs reach an average of $100/kWh (or $60/kWh per cell), EV purchase prices (MSRP) will reach parity with gasoline-powered vehicles. Multiple technology pathways exist to achieve this cost Figure 10. Battery cost evolution and projections (2021 USD per pack-level usable kilowatthour (kWh)) Data source: DOE Vehicle Technologies Office REF. Investments, including from the BIL, IRA, and the CHIPS and Science Acts, are ensuring battery costs continue to decline and that reliable and secure supply chains and manufacturing are available. all consumers. Batteries are projected to continue to improve and become cheaper, especially as domestic minerals processing and cell production capacity increases, enabling further competitiveness over the next decade. Still, significant challenges remain to achieving high market penetration of EVs over the next decades, and multiple actions are needed to achieve 2030 and 2050 goals: 

1. Implement policy and regulation to expand the market share and use of EVs. Government, industry, and labor set a target of 50% new light-duty EV sales share by 2030 REF. The actions needed to achieve this goal will demonstrate the viability and underlying benefits of EVs, including lower costs, and put us on a pathway for 100% EV adoption. EPA and DOT are currently evaluating future GHG emissions and fuel economy policies that will support this transition while ensuring that new internal combustion engine vehicles sold in the interim are as efficient as is feasible. At the same time, tax credits and manufacturing incentives established by the IRA are designed to reduce the costs of new and used EVs and strengthen supply chains and domestic manufacturing. The federal government is also leveraging its scale and procurement power to transition the federal fleet to EVs, with the goal of having 100% of its vehicle acquisitions for its fleet of more than 600,000 vehicles be zero-emission vehicles by 2035 (2027 for LDVs) REF. Regional, state, local, and Tribal actions can also enable more rapid zero-emission vehicle transitions. For example, 13 states—California, Colorado, Connecticut, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, and Washington—have adopted mandates on automakers’ sales of zero-emission vehicles, charting a course toward 100% EV sales REF. Additional policy and vehicle incentives may also be needed to encourage legacy fleet turnover to EVs, at least until the additional purchase cost of EVs is sufficiently lowered to achieve widespread adoption. EVs generally have much lower operating costs, so educating consumers on the total cost of EV ownership relative to conventional vehicles (rather than simply comparing purchase prices) could also speed adoption. 

2. Continue EV charging infrastructure investments and planning to ensure every individual and business has access to convenient and affordable charging whenever needed. These actions will entail an equitable expansion of access to charging, including widespread public charging solutions for those without access to home charging (workplace, curbside, multi-unit buildings with shared parking), and ubiquitous fast charging networks. A major expansion of the U.S. charging ecosystem will offer opportunities to rapidly charge EVs during long trips, ensure consistent and convenient access to charging, and provide charging assurance for all individuals, including those without personal access to vehicle chargers. Moreover, investments must support network maintenance to ensure that a  well-functioning and reliable charging system is available at all times. 

The Joint Office of Energy and Transportation will be a critical part of this effort. Created through the BIL to coordinate efforts between DOE and DOT, the Joint Office supports the president’s goal of deploying 500,000 EV chargers by 2030. Combining the expertise of both agencies, the Joint Office is helping to implement BIL programs that will jumpstart a national network of EV charging along our highways and throughout our communities. In collaboration with regional, state, local, and Tribal jurisdictions, the Joint Office can help ensure that all Americans have full access to charging infrastructure. EPA is working with the Joint Office to help communities plan for investments in EV charging infrastructure and to ensure chargers are distributed equitably and in ways that will bring additional co-benefits. Local 61 and state governments can update ordinances to encourage or require vehicle chargers, particularly at multi-unit dwellings or commercial buildings that also support interoperability. Additionally, it is imperative to develop and implement solutions for effective vehicle-grid integration, as EVs are expected to become one of the largest electricity load categories by 2050. Managed charging and incentivizing charging at times that are beneficial for the grid can provide valuable demand-side flexibility to better design and operate the power system, reducing electricity costs for all and increasing resiliency. 

3. Fund research and innovation that will continue to improve vehicle, battery, and charger performance and reduce costs, and leverage large investments from BIL, IRA, and the CHIPS and Science Act to develop a domestic EV manufacturing supply chain that is reliable, secure, and creates equitable cleanenergy manufacturing jobs, as articulated in the National Blueprint for Lithium Batteries REF. Based on its research and development activities, DOE projects that new technologies under development will reduce battery costs to $80–100/kWh over the next decade, which is expected to allow EVs to achieve purchase price parity with conventional vehicles REF. Moreover, EVs offer lower operational (fuel and maintenance) costs by being more efficient and having fewer moving parts than conventional vehicles. These benefits offer significant cost savings, especially for consumers who own older vehicles REF. DOE estimates the maintenance cost of EVs is 40% cheaper than for internal combustion engine vehicles, which can amount to thousands of dollars of savings over the course of a vehicle’s lifetime REF. Additional research and innovation will be required to accelerate these trends in efficiency and performance, and to continue developing future generations of battery technology