Financing transport, a problem with the rise of electric vehicles

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While electric vehicles and alternative fuels help reduce greenhouse gas emissions, their continued adoption is forcing states to rethink the sources of transportation funding that currently come from taxes on diesel and gasoline.

States that already charge fees on alternative fuels and vehicles fear the amounts will bolster their coffers, as they barely replace what is lost in fuel tax revenue. They are therefore wondering how to close this gap – and overcome it – in new federal energy initiatives.

President Joe Biden’s budget proposal, unveiled on May 28, includes provisions for electric vehicles.

Some $ 600 million has been requested for electric vehicles and charging infrastructure in the individual budgets of 18 federal agencies, including dedicated funds for the General Services Administration and for charging infrastructure for the United States Postal Service.

“The federal fleet is probably a bit easier to do,” Robert Poole, director of transportation policy at the Reason Foundation, told Transport Topics. “These are not long-haul vehicles like Class 8 trucks. They are primarily delivery vehicles that can travel 100 miles in a day on battery power and be recharged at night. It is not a very adequate test for national conversion of personal vehicles and commercial vehicles.

At the state level, however, government agencies vary in their efforts to make money with electric and alternative fuel vehicles.

For example, Texas consumed 5.41 billion gallons of specialty fuels (diesel and alternative) last year, according to the Federal Highway Administration, but did not charge fees on electric vehicles.

The state said it collected $ 913 million in diesel fuel tax revenue for fiscal 2020.

Kevin Lyons, spokesperson for the Texas Comptroller of Public Accounts, said the Texas legislature is working on funding. Senate Bill 1728, which was passed by the Senate and transferred to the House of Representatives, would impose a charge on alternative fuel vehicles at the time of registration or renewal.

California, the next biggest consumer at 3.16 billion gallons last year, has taken steps to raise money from alternative vehicles. On July 1, 2020, an annual road improvement fee of $ 100 was collected at the time of registration renewal for each zero emission vehicle for the 2020 model year or newer. These fees will be adjusted for inflation each year.

Owners of electric vehicles also pay annual transportation improvement fees (such as those for internal combustion engine vehicles) based on the market value of the vehicle. This is a tiered fee determined by the California Department of Motor Vehicles and adjusted for inflation each year. This year, the fees are between $ 27 and $ 192.

California Department of Transportation spokesman Christopher Clark said diesel excise tax revenue stood at $ 1.25 billion for the fiscal year ended June 30, 2020.

Keith Duncan, head of the capital and finance office in Caltrans’ budgets division, said the charges for alternative fuel vehicles offer some financial recovery, but not to the full extent that would be lost in tax revenue on fuels.

“We can see an average vehicle paying between $ 300 and $ 400 a year in excise taxes compared to a zero-emission vehicle paying a $ 100 fee as part of the registration,” Duncan told Transportation. Topics. “Not being able to bridge dollar for dollar is definitely a concern for the future.”

For heavy trucks, Don MacKenzie, associate professor of civil and environmental engineering at the University of Washington, suggested vehicle-miles-driven charges indexed to axle load.

Kara Kockelman, a professor of transportation engineering at the University of Texas at Austin, said transportation departments needed some sort of distance-based pricing in addition to higher fuel taxes. However, she said road user fees are more expensive to administer than fuel taxes.

“The good thing is that there are only 200 refineries in the United States, and so we are billing there,” Kockelman told TT. “We really should increase the tax on gasoline significantly. We pay less for hazardous materials than for bottled water.

MacKenzie identified increasing performance range and improving charging time as major challenges that exist as charging stations still do not have the widespread presence of gas stations. “Until you have that level of ubiquity, you are not at the same level of convenience.”

Biden’s U.S. Jobs Plan proposes $ 15 billion to build a nationwide electric vehicle charging network with 500,000 ports by 2030.

Poole said investing in charging ports is a difficult coordination issue. He said that if the $ 15 billion is spent for this purpose, it would likely speed up the creation of charging stations, but it is not known if they will be good investments. There may be more loaders set up before there is a demand to use them, or there may be more vehicles than loaders.

“The federal government in Washington has regulatory levers to pull, but it cannot control the decisions made by consumers,” said Poole. “There are a lot of moving parts here. It’s hard to have this master plan to make everything happen on a certain schedule. “

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