McClaughry: The EV subsidy train picks up speed

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McClaughry: The EV subsidy train picks up speed

Tue, 07/23/2019 - 4:05am -- tim

by John McClaughry Chairman Anthony Roisman of the Public Utility Commission has made it official. Vermont is facing a “Pearl Harbor moment”. We in Vermont must launch a “wartime effort” like the United States did in 1942, to establish dominance over the lurking menace of “climate change”.

The occasion for this alarming metaphorical excess was the release by the PUC of a report commissioned by the 2018 legislature, entitled “Promoting the Ownership and Use of Electric Vehicles in the State of Vermont”. Its punch line is “Bold legislation, including identifying and appropriating meaningful funds to enable additional EV adoption and EV charging station deployment, will continue to establish Vermont as an EV-supportive environment, and will facilitate progress towards Vermont’s GHG emissions reduction responsibilities.”

The measure of our success will be the appearance of sixty thousand electric vehicles on Vermont’s streets and highways by 2025. If the legislature votes enough subsidies to enable Roisman’s “wartime effort” to attain that goal, today’s 3,000 EVs will increase to 60,000. That will require an astonishing 54% growth rate compounded annually for six years. 

Transportation produces 47% of the State’s total greenhouse gas emissions. The 2016 Comprehensive Energy Plan – the one no legislator ever voted on - calls for reducing transportation sector GHG emissions by 30% by 2025. Thus, the Report avers, “if Vermont is to meet its GHG reduction goals, it is critical that barriers to the deployment of EV infrastructure and to the purchase and use of EVs themselves be addressed and eliminated to the extent possible.”

To that end, the 2019 legislature created a new EV subsidy program. Says the Report: “Given the uncertainty surrounding the federal tax credit, it is becoming increasingly important for the State of Vermont to take a larger role in providing incentives for EV purchases if the State is to meet its emissions-reduction goals, at least until EVs reach cost-parity with internal combustion engine vehicles.” 

As I observed last month, the new law offers more EV purchase and lease incentives to “help all Vermonters to benefit from electric driving including [of course!] Vermont’s most vulnerable.” If you’re sufficiently economically challenged, you can fight climate change by driving a $40,000 EV that will be the envy of your neighbors, at least until they find out how much subsidy it took to close the deal.

The legislature responsibly charged the PUC with finding a way “to achieve the goals... without shifting costs to electric ratepayers who do not own or operate EVs”. It did discuss that issue, but showed no hesitation about shifting costs to taxpayers. In effect, the Report wants to spend carbon tax revenues to subsidize thousands of EVs, even though the legislature doesn’t dare pass a carbon tax bill that Gov. Scott will assuredly veto.

How about asking EV drivers to contribute to highway maintenance? The Report rejects an EV registration surcharge. It is willing to explore a per-kilowatt hour fee for EVs, but notes a host of inequities and complications that would ensue, especially for electric utilities charged with billing and collecting it. It’s pretty clear that growing numbers of subsidized EVs will continue to ride free on Vermont’s roads for the indefinite future – if for no other reason than charging them for the privilege would dampen the EV enthusiasm that the legislature is so keen on stimulating.

In the course of preparing the Report, Roisman’s PUC managed a year of hearings among “stakeholders”. The group included state agency officials, electric utility officials, and auto industry participants. But it also included a parade of self-appointed “stakeholders”, a Grecian chorus dedicated to inflating the menace of climate change and demanding a vast collection of subsidies, taxes, mandates, and prohibitions to stamp it out. Just to name seven: Union of Concerned Scientists, Regulatory Assistance Project, Sierra Club, Conservation Law Foundation, Vermont Natural Resource Council, VPIRG, and of course the chief  EV lobby group, Drive Electric Vermont.

And who represented the real “stakeholders”, the motorists, ratepayers and taxpayers of Vermont? As usual, nobody.

There is a place for (unsubsidized) EVs, when and where they meet the needs and desires of consumers. And leaving aside the obligatory endorsement of the beliefs of the climate change activists, it must be said that the Report contains a lot of useful information and analysis of the complexities of the issue, clearly and fairly presented. Once they get past Roisman’s Pearl Harbor metaphor, legislators will benefit from reading it, if they keep their wits about them.

John McClaughry is vice president of the Ethan Allen Institute (