April 01, 2020

EV for EV: Equity and Viability in Electric Vehicle Infrastructure Law and Policy

Achinthi C. Vithanage

Electric vehicles (EVs) are seldom seen in low-income communities. High up-front costs of EV ownership and the lack of charging infrastructure in proximity to such neighborhoods have fueled inequitable distribution. At the same time, uncertainty in the viability of the EV market hinders infrastructure development. EVs have not reached affordability levels for a mass majority of consumers, and establishing a widely deployed EV charging infrastructure is a significant cost burden, causing potential investors to shy away. These viability concerns underlie governmental policies and programs designed to spur EV purchases and promote infrastructure investment by utilities, potentially shifting the cost burden to ratepayers, some of whom are the least able to access EVs. Simultaneous consideration and coordination of equity and viability concerns will assist a more just transition to electrified road transportation.

Legislators and policy makers in the United States are becoming aware of these emerging forms of energy injustice, and more equitable efforts are being pursued. However, good intentions have not always yielded good outcomes, with some EV investments in underserved communities going underutilized, in part due to a lack of meaningful collaboration with those communities. Infrastructural investments taking place in the EV space should look beyond general benefit, to benefits targeted to the local community being served. Law and policy can play a role in ensuring equity in EV infrastructure deployment while promoting EV viability. This article will survey legal and policy efforts targeting the build-out of EV infrastructure in the United States and highlight opportunities for improvement through equity and viability considerations.

Issues of Equity in the EV Space

Exploring issues of equity in the EV space begins with understanding the past environmental justice implications of U.S. transportation systems on low-income and marginalized communities, including communities of color. See Lara P. Clark et al., National Patterns in Environmental Injustice and Inequality: Outdoor NO2 Air Pollution in the United States, PLOS ONE, Apr. 15, 2014. The location and distribution of high-traffic roads and highways in close proximity to these communities have exposed them to environmental injustices, such as disproportionate exposure to traffic and air pollution among non-whites and those of lower socioeconomic status, leading to greater risks and incidence of health effects. Gregory C. Pratt et al., Traffic, Air Pollution, Minority and Socio-Economic Status: Addressing Inequities in Exposure and Risk, 12 Int’l J. Envt’l Res. & Pub. Health 5355–72 (2015). Other studies have demonstrated increased risks from air pollution exposure to the very young, the very old, and the less educated. Julian D. Marshall, Environmental Inequality: Air Pollution Exposures in California’s South Coast Air Basin, 42 Atmos. Env’t 5499 (2008).

The U.S. transportation sector (cars, trucks, buses, trains, planes, and boats) remains the largest source of U.S. greenhouse gas (GHG) emissions for the third consecutive year. See Trevor Houser et al., Final US Emissions Estimates for 2018, RhodiumGroup, May 31, 2019. The electric power generation sector follows close behind. See U.S. Energy Information Administration, U.S. Energy-Related Carbon Dioxide Emissions, 2018. The disproportionate impacts of these primary contributors to climate change can more significantly impact low-income populations, who lack the financial resources necessary to prepare in advance for climate change–fueled disasters and extreme weather events. These communities are among the least climate resilient.

A transition from fossil fuel–based vehicles to EVs offers an opportunity to address existing environmental injustices by reducing proximate exposure to pollutants, while addressing potential future climate change–related injustices through reduced GHG emissions. Experts suggest that, even accounting for how electricity is generated, an EV still emits less carbon dioxide than a comparable gasoline-powered vehicle in a majority of U.S. states. Climate Central, Transportation is the Biggest Source of CO2 in the U.S. (Nov. 21, 2017). Existing and future injustices may be further alleviated as EV sales continue their climbing trajectory and emissions reductions increase. Edison Electric Institute, Electric Vehicle Sales: Facts & Figures (Apr. 2019) [hereinafter EEI, 2019].

However, the transition to EVs is not a guaranteed solution for past, current, and future inequitable distribution of benefits and burdens. New forms of distributive injustice have emerged in the transition, including access and affordability. The multitude of options and benefits of EVs often do not filter through to low-income communities and communities of color. See Kat Friedrich, How to Make Electric Vehicles Affordable and Accessible, Clean Energy Finance Forum, Sept. 18, 2018.

EV affordability continues to be a significant challenge to low-income populations. Overall, low-income populations already have lower rates of non-EV car ownership compared to higher-income populations. David A. King et al., The Poverty of the Carless: Toward Universal Auto Access, J. Planning Edu. & Res. (Feb. 1, 2019) [hereinafter King et al., 2019]. This, combined with the high up-front costs of EV ownership, means that low-income consumers are unlikely to be able to afford EVs in the future, even if they were to match non-EV market prices. This inequity becomes particularly pronounced considering that low-income communities are economically the most reliant on car ownership. See Rolf Pendall, For Many Low-Income Families, Cars May Be Key to Greater Opportunity, Urban Inst., Mar. 31, 2014. Having no vehicle access translates to a loss of income, as urban environments have adapted to favor the automobile. See King et al., 2019, supra.

Access issues manifest in low-income communities due to the prevalence of large rental populations. There is a correlation between areas with large rental populations and lack of EV access. Urban rental housing often consists of multiunit dwellings (MuDs), which currently provide little accommodation for EV charging. See Lucas Davis, Apartments Rarely Come with Access to Charging Stations. But Electric Vehicles Need Them, The Conversation, July 27, 2018. Where utilities are not building access, access to charging infrastructure is at the landlord’s discretion. The cost of necessary electrical upgrades and access easements are unlikely to be borne by building owners without passing that cost on to low-income renters. This is especially problematic as the low-income rental community is often the most severely rent-burdened. See Jeff Larrimore & Jenny Schuetz, Assessing the Severity of Rent Burden on Low-income Families, Board of Governors of the Federal Reserve System, FEDS Notes, Dec. 22, 2017.

Even where utilities may be building EV infrastructure in rental areas, EV infrastructure buildout remains a significant cost burden that is often passed on to ratepayers. For example, the Commonwealth of Massachusetts allows utilities to recover the costs of infrastructure buildout where it “is in the public interest, meets a need regarding the advancement of electric vehicles in the commonwealth and does not hinder the development of the competitive electric vehicle charging market.” Mass. Gen. Laws ch. 25A, § 16(f) (2006). However, ratepayers of low-income communities already struggle to pay their utility bills, let alone finance EV infrastructure rollouts. See Dani Burlison, Making EVs Possible for Low-Income Drivers, Sustainable America, Nov. 30, 2018.

Viability Concerns

Viability of the EV industry depends on increasing EV sales, which in turn depend on broader access to charging infrastructure. EV affordability has been, and remains, a central issue hindering growth of the EV market. To be sure, consumer demand is growing, and more automakers are joining the EV fray annually. Keilah Keiser, Viability of Road Tripping with an Electric Vehicle, Renewable Energy World, Mar. 12, 2019 [hereinafter Keiser, 2019]. Eight new EV models were expected for release in 2019, broadening the range of EV options. See EEI, 2019, supra. However, the economics of both EV production and sales fall short of generating a sustainable EV market. On the production side, there is a cost gap of $12,000 between producing a small/midsize EV and a comparable internal-combustion engine (ICE). Yeon Baik et al., Making Electric Vehicles Profitable, McKinsey & Co., Mar. 2019. For the consumer, battery costs continue to hinder price parity between EVs and comparable ICE-powered variants, leaving base EVs like the Chevy Bolt still selling at an unsubsidized price that is above the average price for newly purchased vehicles in the United States. Electrifying Insights: How Automakers Can Drive Electrified Vehicle Sales and Profitability, McKinsey & Company, White Paper, Jan. 2017. Corporate ventures, such as those made by Uber (Jameson Dow, Uber and EVgo Announce Partnership to Electrify Rideshare, Electrek, Sept. 26, 2019), and taxi companies like Columbus Yellow Cab (Jeffrey Tomich, Is Ohio’s Capital the Future of Transportation?, E&E News, Sept. 27, 2019), who are expanding their vehicle fleets to include EVs, are an important source of demand, as are emerging city and state government EV fleets. Rebecca Bellan, The Grim State of Electric Vehicle Adoption in the U.S., CityLab, Oct. 15, 2018. However, industry analysts worry that much EV uptake in the United States to date has been driven by international and domestic regulation, rather than consumer demand. David McHugh, Volkswagen Bets Big on Electric. Will Consumers Buy In?, Associated Press, Sept. 9, 2019.

To some analysts, once affordability is realized, improvements in charging may be a deciding factor in the industry’s future viability. Mike Lee, Do Zero-Emission Plans Help EVs? Depends Where You Are, E&E News, Sept. 27, 2019. Based on a prediction of three million EVs being in use in the United States by 2025, the International Council on Clean Transportation (ICCT) finds that 88 of the 100 most populous metropolitan areas had less than half of the required charging infrastructure in place in 2017 to service the expected EV growth. Michael Nicholas et al., Quantifying the Electric Vehicle Charging Infrastructure Gap Across U.S. Markets, ICCT, White Paper, Jan. 23, 2019 [hereinafter ICCT, 2019]. As of October 2019, there are 23,374 charging stations across the country, with a total of 69,500 charging outlets, representing a rise of over 2,000 stations and nearly 8,000 outlets in just over 6 months. Keiser, 2019, supra; and Alternate Fuels Data Center, U.S. DOE, Alternative Fueling Station Counts by State.

While these figures are expected to rise, broader deployment of charging infrastructure is needed for EV viability. The ICCT analysis predicts that an annual 20 percent growth rate in charging infrastructure is needed to meet EV demand in 2025 with the largest infrastructure gaps appearing in cities promoting high EV uptake (e.g., a potential infrastructure gap of 41,000 charging stations in Californian cities by 2025 is predicted, notwithstanding the rapid infrastructure buildout plans already in place). ICCT, 2019, supra. Improved battery storage technology may assist in filling infrastructure gaps. Emma Foehringer Merchant, How Batteries Can Bridge the EV Infrastructure Gap, Greentech Media, Mar. 2, 2018.

The cost burden of widely deploying charging infrastructure is a further viability concern. The “chicken-and-egg” dilemma (whether to first pursue EV infrastructure rollout or increase EV sales) continues to stymie proactive investment in charging infrastructure buildout from utilities, governments, and corporate investors. Garrett Fitzgerald & Chris Nelder, From Gas to Grid: Building Charging Infrastructure to Power Electric Vehicle Demand, Rocky Mountain Institute, 2017

The ability of the grid to handle the additional load required by a newly electrified fleet of vehicles is a prevailing concern, especially if energy is to be sourced sustainably. This issue appears to be particularly prevalent in local government EV adoption efforts, such as in Seattle, where transit and port authorities hold some of the most ambitious electrification goals in the country. David Iaconangelo, Report: City Electric Vehicle Efforts Could Threaten Grid in Seattle and Elsewhere, E&E News, Sept. 5, 2019. A recent study of the city’s transportation electrification strategy identified that while personal EV adoption and distributed fast charging are not anticipated to pose much risk to the grid, electrified buses or medium- and heavy-duty trucks may overwhelm available grid capacity. Lynn Daniels & Brendan O’Donnell, Seattle City Light Transportation Electrification Strategy Report, Rocky Mountain Institute, 2019. The report warns that this may be a major challenge awaiting other cities and states with strong emission-cutting commitments, requiring costly grid upgrades. Improved battery technology can help reduce energy burdens on the grid, potentially reducing demand charges by 73 percent and leveling out load peaks. Stefan Knupfer et al., How Battery Storage Can Help Charge the Electric-Vehicle Market, McKinsey & Co., Feb. 2018.

Consumer perceptions also influence the viability of EVs. Notwithstanding the pace at which technology is improving, EVs remain an unknown quantity in many parts of theUnited States, with consumer fears propelled by a lack of awareness. New Vehicle Experience Study, Strategic Vision, 2016. As more EVs, EV equipment, and infrastructure occupy the streets, community confidence will follow the emerging visual norm. Addressing elements like infrastructure buildout and battery storage capacity can simultaneously dispel range anxiety, while public-private partnerships can help build community confidence in the industry.

In short, to be equitable, the EV industry must command a strong presence in underserved communities, particularly those with low-income, racial, ethnic, and/or renter demographics. Achieving this may require lifting cost barriers, making charging infrastructure available, and providing access to different EV options (e.g., cars versus public transport) for communities to elect to suit their needs. To be viable, the EV industry must offer affordable EV options, promote charging infrastructure development and share the cost burden through public-private partnerships, build community confidence in the technology and its value, and be adequately supported by the electricity grid and battery storage technology. It is thus critical for government decision-making to “appropriately capture equity and risk mitigation considerations at the outset, rather than scrambling later to rectify problems created by early actions.” Philip B. Jones et al., The Future of Transportation Electrification: Utility, Industry and Consumer Perspectives, Berkeley Labs, Report No. 10, 2018 [hereinafter Jones et al., 2018].

A Survey of EV Infrastructure Law and Policy in the United States

In the United States, a variety of routes to transition to renewable-energy powered EV transportation systems has emerged. Partly fueled by a need to address the chicken-and-egg quandary and pressed for carbon-dioxide emission reduction results, several U.S. states and cities have adopted laws and policies for EV infrastructure development, including initiatives to create conditions favorable to such development. Kyle Clark-Sutton et al., Plug-in Electric Vehicle Readiness: Rating Cities in the United States, 29 The Elec. J. 30 (2016). Establishing a widely deployed system of EV charging infrastructure is occurring in ad hoc ways across the country. Minnesota provides an interesting model for a collaborative solution. State legislation paved the way by permitting utilities to design tariffs specific to EV charging and allowing non-utilities to develop and operate charging infrastructure. Minn. Stat. § 216B.1614. Since then, the state’s largest utility, Xcel Energy, has sought out partnerships with cities and state governments, transit agencies, advocacy groups, and auto dealers to implement its vision for an EV transition. Xcel Energy, Paving the Way for Electric Transportation, 2018. Xcel Energy’s proposed plan was preceded by extensive studies on the viability of EVs in the state’s cities. Jeffrey Tomich, How Xcel Plans to Ice Coal, Cut Carbon and Charge Cars, E&E News, Oct. 9, 2019 [hereinafter E&E News, 2019]. Meanwhile, the state’s Public Utilities Commission concluded the need for EV infrastructure development and the utilities’ role in that endeavor. In the Matter of a Commission Inquiry into Electric Vehicle Charging and Infrastructure, Docket No. E999/CI-17-879, Feb. 1, 2019. The Commission later approved two pilot programs for installation and maintenance of targeted charging infrastructure by Xcel Energy. See E&E News, 2019, supra. Simultaneously, the utility obtained diverse stakeholder input, and documented their support for EV infrastructure buildout, among other decarbonization opportunities. Minnesota Department of Transportation, Pathways to Decarbonizing Transportation, Report, Aug. 2019. Other states have exerted significant efforts to promote EV infrastructure, including a collaborative effort by Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Virginia. Transportation & Climate Initiative, About Us, tranportationandclimate.org.

However, ambitious utility infrastructure rollouts can hit roadblocks at the utility regulatory level if they do not adequately consider viability and equity. A recent proposal by National Grid, potentially one of the country’s largest EV infrastructure rollouts, was curtailed by the Massachusetts Department of Public Utilities for, among various reasons, failing to evaluate the viability of its infrastructure program, and for placing too great a burden on consumers to offset the utility’s costs. Massachusetts Department of Public Utilities, Final Order (D.P.U. 18-150, Sept. 30, 2019), https://fileservice.eea.comacloud.net/FileService.Api/file/FileRoom/11262053. Similar utility efforts in Maryland were also restricted. Catherine Morehouse, Maryland Scales Back EV Charger Program Nearly 80%, Utility Dive, Jan. 16, 2019. These rulings are a warning to utilities to avoid rushing solutions that fail to appropriately consider equity and viability.

While cost recovery laws may be necessary to foster EV infrastructure development and meet sustainable transportation goals, ensuring that these well-intentioned efforts do not pose an added burden on low-income communities needs to be a foremost consideration. For instance, legislation in New Mexico encourages charger deployment in low-income areas by conditioning utility cost recovery on it. House Bill 521 (2019) and New Mexico Statutes 62-3; see Alternative Fuels Data Center, New Mexico Laws and Incentives. Similarly, Maryland’s Public Service Commission specifically reserved EV infrastructure deployment in MuDs in low-income communities. In the Matter of the Petition of the Electric Vehicle Work Group for Implementation of a Statewide Electric Vehicle Portfolio, Order No. 88997, Case No. 9479, Md. PSC, Jan. 14, 2019, http://www.psc.state.md.us/wp-content/uploads/Order-No.-88997-Case-No.-9478-EV-Portfolio-Order.pdf.

States have sought novel forms of funding to address the cost burden dilemma. Recent litigation settlements, such as the nationwide settlement against Volkswagen for its emissions violations scandal, have recently begun to specifically include funds for EV charging infrastructure. In re: Volkswagen “Clean Diesel” Marketing, Sales Practices, and Product Liability Litigation, Partial Consent Decree MDL No. 2672 CRB (JSC) (2016), https://www.epa.gov/sites/production/files/2016-10/documents/amended20lpartial-cd.pdf. States managing these settlements are factoring equity considerations into use of the funds. For instance, Oregon’s Department of Environmental Quality set aside 15 percent of the Volkswagen diesel litigation mitigation fund to build EV charging infrastructure for rural and low-income communities. Or. Exec. Order 17-21, 2017. Similarly, the California legislature required 35 percent of the initial settlement fund to be spent in disadvantaged communities disproportionately affected by air pollution. California Tells VW to Build Electric Charging Stations in Poor Areas, Reuters, Jun. 15, 2017.

Administrative settlements are another potential source of state funding. In a case against Pacific Gas & Electric (PG&E), the utility agreed with the California Public Utilities Commission to a pilot program accelerating EV charging station deployment. Notably, PG&E agreed to locate 15 percent of stations in the most disadvantaged communities in PG&E’s service territory. Pacific Gas and Electric Co., Cal. P.U.C. Dec. No. 16-12-065 (2016). These efforts remain ad hoc in nature with no consistent application of equity elements to funding allocations. Mandating minimum equity considerations in future administrative and litigation settlements that include EV infrastructure funding can meet equity and viability objectives.

Localized financial incentives for EV purchases could spark the local EV demand needed to accelerate infrastructure development. For instance, Boulder County, Colorado, provided a Discount Electric Car Purchase Program, which facilitated the purchase of 289 discounted EVs in its community. Boulder County, Benefits Boulder County Discount Program. Some states have established programs that increase underserved community access to clean transportation. For example, the Charge Ahead California Initiative is a state-based initiative that directs funds from California’s GHG cap-and-trade program toward various equity programs. CA. SB 1275, Vehicle Retirement and Replacement: Charge Ahead California Initiative (2014). The program provides low-income customers with vouchers, public transit charging incentives, car-sharing options, and financing options for EV and charger purchases. Charge Ahead California, Leading with Equity, Factsheet (2016). Similarly, the State of Oregon has introduced rebates for purchases of EVs by residents of neighborhoods with higher levels of air pollution. AchiEVe: Model State & Local Policies to Accelerate Electric Vehicle Adoption, Sierra Club and Plug In America, Version 2.0, June 2018.

Providing payment variability for EV charging stations can also enhance affordability of EVs. Miles Muller, California Moves to Make Paying for EV Charging Easier, NRDC, Aug. 12, 2019. In New Hampshire, state legislation mandates that charging stations support multiple payment options. N.H. REV. STAT. ANN. § 236:133 (2018). The law also prohibits charging station operators from imposing a subscription fee, making charging stations more accessible to lower-income users. NH SB 575-FN 236:134, Prohibitions and Restrictions (III) (2018).

“Load management” efforts to make the electricity grid “smarter” and better positioned to handle increased electricity demand from EV charging can also promote transition to EVs. For example, the Virginia State Corporation Commission recently approved an experimental rate option for residential EV owners, which allows the utility to offer a special time-of-day rate with a discount for charging EVs during low-demand hours. Petition of Appalachian Power Company, Case No. PUR-2019-00067, (Va. SCC, May 6, 2019), http://www.scc.virginia.gov/case/e-notice/nr190067.pdf.

Alternative Governance

In addition to state and federal efforts, alternative forms of governance are emerging in the EV space. Public-private partnerships, such as the New York Power Authority’s EVolve NY initiative, provide a mechanism for sharing the cost burden of EV infrastructure provision between the state and the private sector. Governor Cuomo Announces $250 Million Initiative to Expand Electric Vehicle Infrastructure Across New York State, New York State, May 31, 2018. In California, the Charge Ready Pilot Program, the result of a negotiated settlement between Southern California Edison and 16 organizations, including environmentalists, consumer groups, environmental justice advocates, EV drivers, automakers, EV charging companies, and labor unions, is another collaborative effort seeking to deploy EV charging stations. Max Baumhefner, Proposal to Charge Electric Cars in Southern California Gets the Green Light, NRDC, Jan. 14, 2016. Notably, 50 percent of the Charge Ready sites are situated within the most pollution-impacted communities. Southern California Edison, Charge Ready Pilot Final Report: Results and Findings, 2018.

A variety of stakeholders, including vehicle manufacturers, car-sharing enterprises, EV charging businesses, and utilities, committed to the Transportation Electrification Accord, which outlines 11 principles for “how transportation electrification can be advanced in a manner that benefits all utility customers.” Transportation Electrification Accord, http://www.theevaccord.com. The nonbinding principles seek to address equity and viability issues, such as EV load management that accounts for the interests of all electricity customers, and utility engagement with all local stakeholders in infrastructure deployment programs benefiting all customers, for meaningful consideration of equity issues.

Voluntary corporate pledges are beginning to incorporate EVs into long-term business plans. As part of its pledge to decarbonize operations by 2040, Amazon publicly committed to purchasing 100,000 EV delivery vehicles. David Shepardson & Nandita Bose, Amazon Vows to Be Carbon Neutral by 2040, Buying 100,000 Electric Vans, Reuters, Sept. 19, 2019. Though pledges lack the force of law, by putting reputation and consumer trust on the line, companies appear to hold themselves publicly accountable.

Collaboration among city governments is a rising phenomenon in the United States. U.S. cities are forming coalitions to generate favorable conditions for EV infrastructure development, using internet-based pathways for communication and resource sharing. For example, the Climate Mayors Electric Vehicle Purchasing Collaborative is an online procurement platform designed to utilize the collective buying power of over 160 cities and counties to accelerate public fleets of EVs and generate the necessary demand for the EV market. Drive EV Fleets, https://driveevfleets.org. The portal also provides contractor options for charging infrastructure provisions along with relevant contract documents to fast-track the EV fleet procurement process.

Collaborating for EV for EVs

Collaboration is a key element in many of the legal and policy initiatives outlined in this article. Collaboration can promote multiparty investment in EV infrastructure buildout and provide a burden-sharing model to overcome investor “cold feet.” A collaborative model also ensures continued stakeholder engagement throughout the EV transition process and increases its viability. This is particularly useful for dealing with equity considerations and securing meaningful engagement of underserved communities from the outset.

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Achinthi C. Vithanage

Ms. Achinthi Vithanage is a visiting associate professor of law and environmental and energy law fellow at the George Washington University Law School in Washington, D.C. She may be reached at avithanage@law.gwu.edu.