By Keith Reid
More than halfway into President Joe Biden’s first year in office, the administration is starting to gain some traction on the energy goals Biden outlined during his campaign, but a lack of consensus among Democrats in Congress on the roughly $1 trillion bipartisan infrastructure package threatened to stymie progress on more ambitious projects.
Widely expanding the number of electric vehicles in the nation’s fleet is one part of Biden’s plan to lower carbon emissions, and the success in part hinges on the rapid buildout of EV charging infrastructure. The Biden Administration has set a goal of installing 500,000 EV chargers nationwide by 2030.
“The administration is really looking at everything, everywhere,” said Paige Anderson, NACS director, government relations. “They’re looking at any federal lands and property where they can put EV chargers. They’re transitioning the federal fleet to EVs. Whether it’s military bases, public lands—anywhere there are a lot of federal employees and parking lots.”
Legislation pending in Congress aims to facilitate charger expansion. A rebate program sponsored by Rep. Paul Tonko (D-N.Y.) is included in H.R. 3684, and Rep. Yvette Clark (D-N.Y.) is backing a grant program to incentivize EV charging in underserved and minority communities.
The United States in February officially rejoined the Paris Agreement on climate change, and in April the administration convened the virtual Leaders Summit on Climate, which essentially reconvened the Major Economies Forum (MEF) on Energy and Climate, a U.S.-led initiative that was critical to the Paris Agreement. The summit featured 40 world leaders including heads of state and government, as well as leaders and representatives from international organizations, businesses, subnational governments and indigenous communities.
The major announcement was that the United States will target reducing emissions 50% to 52% by 2030 (compared to 2005 levels). As noted in a release on the summit: “In the United States, the Biden-Harris Administration has mobilized a whole-of-government approach to unleash economic opportunities, create good jobs, and advance environmental justice. From the national to the local level and across all agencies, the federal government is not only working to help those hit hardest by climate impacts, but also creating a more resilient, equitable, and prosperous future.”
The summit acknowledged that 85% of emissions come from beyond U.S. borders, and domestic action must go hand in hand with international leadership. It was also apparent through the range of proposed initiatives that the United States will be providing significant support for these initiatives not just nationally but globally.
The Energy Resource Governance Initiative (EGRI) and the Foundational Infrastructure for the Responsible Use of Small Modular Reactor Technology (FIRST) program were two action items from the summit that aim to address significant issues related to EV transportation technology.
ERGI is a multinational effort to “help build sustainable supply chains and promote sound sector governance for the minerals vital to technologies powering the energy transition, such as solar panels, electric vehicles, and battery storage.” China currently dominates these markets.
The FIRST program would be essential to a true “zero-emissions” energy policy and focuses on building capacity in partner countries for safe and secure nuclear reactors that are not useful for nuclear weapons proliferation.
While the administration is pursuing ambitious goals, action on the ground is only now starting to take form. H.R. 3684, the INVEST in America Act, is a five-year surface transportation reauthorization bill that was passed by the U.S. House of Representatives but failed a vote for cloture on July 21.
H.R. 3684 drew several objections from industry associations including NACS and NATSO, the latter group now also handles SIGMA’s legislative efforts. As NACS President and CEO Henry Armour noted in a public statement: “NACS supports infrastructure investments that will leverage private funds and lead to improvements throughout the nation. This bill does the opposite and will depress overall investment in critical new technologies like electric vehicle charging. The policies related to electric vehicle charging put forth in this legislation undermine the necessary business case for EV charging infrastructure, making it more difficult for the private sector to make such investments.”
There were several provisions that the industry found objectionable.
The first provision opened the door for EV charging at public rest areas. The industry objections to this are no different than the long-running objections to allowing these public rest areas to become commercialized and directly compete with existing retail sites that have developed adjacent to the nation’s interstates. It is a familiar battle, and one where the industry typically enjoys considerable support.
“Allowing EV charging at rest areas is a big deal,” said Anderson. “California is pushing that primarily, starting with their park-and-ride facilities that are different than rest areas. That motivated the state department of transportation to want to allow for EV charging in rest areas. And they used it in a broader context.”
The second provision focused on objections to last-minute provisions added by the Energy and Commerce Committee that would have awarded rebates to public utilities, which are also free to use ratepayer (customer) dollars to invest in EV charging stations. This effectively allows them to “double dip” giving the utilities an excessive advantage over private sector investments in EV technology.
Currently, in a simplified form, the utility determines the infrastructure, maintenance and operational costs to generate electricity, and the state regulatory board allows them to set rates for their customers based on those costs. That means the costs of developing infrastructure to support EV charging could be added to ratepayer costs for consumer and commercial services if approved by regulatory boards. Industry marketers and retailers, on the other hand, must risk their own resources with no guaranteed return.
Making Charging Pay Off
“There’s a long on-ramp to profitability with respect to EV charging, but that’s fine,” said David Fialkov, NATSO’s executive vice president of government affairs. “It’s not uncommon for marketers to make investments with an expectation that they won’t start making money on them for a while down the road. That has been a problem, but the lack of a viable business model that they can have confidence will result in a return on their investment is the primary hurdle.”
Giving the utility sector a leg up on developing the new market, including the retail environment, only adds to that uncertainty and makes the hurdle that much higher.
“Assume you’ve got the vehicles consumers actually embrace, and they are comfortable with EV charging,” Anderson said. “The reality is there are still impediments for investing in EV charging, and that’s where we’ve been working. You need to be able to charge for charging and not be regulated like a utility. You need to make sure there’s an even playing field with utilities and other players who want to get into the marketplace and not giving preferential treatment to one business sector over another. Then you’ve got to look at the cost of electricity, so we have a known price to pass those costs along to our customers. We don’t have that ability with electricity, particularly if we’re going to compete against a utility who also wants to get into that space.”
While there are industry objections to existing utility customers funding retail-focused EV developments, that does not mean that there are necessarily objections to utilities taking advantage of such opportunities to enhance the grid required to provide energy to either homes or retail sites to support electrification.
“The core competency of the utility sector is to enhance the grid and transmission capacity, distribution and storage,” said Fialkov. “The reason that utilities are regulated is because that model is the most efficient way of providing that service. They should get all the grant money they need to do that. They should be able to charge their ratepayers more money to do that. But that is fundamentally different than owning and operating a charging station and selling transportation energy to a driver.”
Obviously, ratepayers might have some thoughts on the issue if their monthly bills see a notable increase.
One thing that is becoming readily apparent is just how far the charging infrastructure needs to develop before EV drivers remotely enjoy the same certainties and conveniences associated with liquid fuel vehicles today. These are important, foundational issues concerning the players who will be providing charging at the various touchpoints from the home to a convenience store or travel plaza, and how that will impact the customer.
“The environmental community has a lot of negative things to say about gasoline and diesel,” said Fialkov. “But if you look at the markets where those products are sold, they’re extraordinarily efficient and good for keeping prices low. This is something that one would think the environmental community would be trying to harness and replicate with respect to alternative solutions. And there are ways to do that.”