By Michael Bielawski

The projected longterm economic savings from mandating all-electric vehicles seem to rely more on improving climate predictions than on tangible economic trends, an influential state senator noted during a recent discussion on Vermont’s state-mandated transition to low-emission gas-powered engines.

Sen. Chris Bray, chair of the Senate Natural Resources and Energy Committee, made these comments as lawmakers of the Legislative Committee on Administrative Rules (LCAR) met with officials with the Agency of Natural Resources Thursday morning, July 25 to discuss amendments to Vermont’s Low Emission Vehicle and Zero Emission Vehicle Rules.

Vermont has committed to follow California low-emissions regulations, which mandate that 100% of all cars and light trucks sold in the state be “zero emission vehicles” (ZEVs) by 2035, with the restrictions beginning in 2026 and ratcheting up after that.

Bray remarked that much of the economic blueprint for this transition to lower-emission vehicles relies on predicted climate impacts.

“There’s a cost to emissions, and as I understand it, we’re saying that the cost to upgrade the engines is being offset by reducing emissions that have a cost associated with it,” said Bray to two representatives from the Agency of Natural Resources.

The ANR representatives confirmed that it was an accurate assessment and that climate impacts are a significant component of the predicted economic impact.

The economic analysis of these emission standards according to ANR originates with the California Air Resources Board. The ‘CARB’ report makes some ambitious claims about massive savings that Californians could expect by reducing emissions.

On page 23 it states, “reducing GHG [greenhouse gas] emissions 40 percent below 1990 levels under the Proposed Plan will lead to avoided social damages from climate change on the order of $2.4 to $11 billion.”

The document further claims that “These impacts are not included in this economic analysis.” It suggests that aside from emissions, cost savings will emerge via the economic activity associated with building these more efficient cars and infrastructure. 

They predicted [back in 2017 when the report is dated], “Second, in 2030, the California economy is projected to grow to $3.4 trillion, an average growth rate of 2.2 percent per year from 2020 to 2030.”

However, that’s not what’s happened thus far. Instead, most pundits agree that California’s ambitious energy mandates are substantially hurting what is still considered the world’s 5th largest economy.

The Economist reported in March of this year, “Every few years it becomes fashionable to declare that it is a failed state, or that the California dream is turning into a nightmare. This rhetoric is often overblown: in terms of pure economic heft California remains the most powerful American state. But for all its continuing prowess in innovation (not least in artificial intelligence), California again appears to be entering one of its periodic rough patches.”

EVs are touted as a method to achieve emission reductions. The economics of EVs have come into question since national headlines show slowing sales and major manufacturers are scaling back their investments. EV production/operational costs remain high compared to their gas-powered counterparts despite numerous public subsidies. The most recent major study on the true cost of EVs when all state/federal subsidies are accounted for is nearly $50,000.

ANR official Deirdra Ritzer explained that by 2026, manufacturers bringing cars into Vermont will be required to meet the new standards. This means by that year 10% of manufactured vehicles brought into the state must be special low-emission “legacy engines”. If they bring in more compliant vehicles before that they can get credits.

LCAR approved three amendments to the proposed rules. The first clarifies an exception for some large diesel transit/bus engines. While the exemption already exists, the language was problematic because it was written originally for California.

The second amendment involves moving the year that manufacturers can collect “early compliance credits” from 2024 to 2022, meaning credits can now be awarded for past actions by manufacturers. The third amendment “incorporates an optional compliance flexibility negotiated by California and the truck and engine manufacturers.” This will hold those manufacturers to federal standards versus the more stringent California version.

Two standards across the nation?

Rep. Mark Higley, R-Lowell, asked what it means for car manufacturers to have Vermont and 13 other states following California standards while the rest follow different rules.

“If you’ve got two sets of standards going on across the country, how are manufacturers going to adjust for that?” he said. An ANR official said these amendments are intended to help alleviate burdens regarding the adoption of these standards in Vermont.