Cleantech Market Intelligence
On Emissions Limits, California Goes its Own Way
Earlier this year, the California Air Resources Board (CARB) completely revamped its passenger vehicle emissions control regulations. The new Advanced Clean Cars program, which covers model years 2017–2025, combines several regulatory schemes into the new program: the Low Emission Vehicle (LEV) program, which governs tailpipe regulations for light duty vehicles; the Clean Fuels Outlet regulation, a largely dormant effort to promote alternative fuel availability; and the most famous, or infamous, component, the ZEV mandate requiring automakers to produce vehicles with no tailpipe emissions.
California already has a reputation for marching to a different drummer, and this new program confirms that stereotype.
First, while it is now practically verboten to talk about carbon reduction at the national levels of U.S. government, California is openly embracing the idea. Previously, the LEV and ZEV programs only addressed criteria pollutants. The Advanced Clean Cars program expands the regulations to cover greenhouse gases (GHG) emissions. By 2025, under the new regulations, passenger cars’ CO2 emissions will drop 34% from that of 2016 models. The program is intended to help reduce GHG emissions in the state to 80% below 1990 levels by 2050. In its scope and ambition, the new program resembles the carbon reduction goals and strategies being enacted in Europe more than anything happening elsewhere in the United States right now.
Second, the ZEV mandate remains a top-down, “technology forcing” regulation, contra a general preference for policies that simply allow new technologies to flourish. While opponents of the ZEV mandate have painted it as an inflexible government “stick,” the Air Resources Board has always been open to modifying the mandate in response to changes in the technology landscape. This flexibility helps explain the mandate’s remarkable resilience. Consider that it was enacted in 1990, when the Soviet Union was intact, Tim Berners-Lee had just proposed something called the World Wide Web, and the Toyota Prius was just a gleam in an engineer’s eye.
The Air Resources Board has reconfigured the mandate to support the state’s 2050 GHG emissions target. CARB claims that the only way to meet the target is if ZEVs make up around 87% of the passenger vehicle fleet in California by 2050, as shown in the graphic below.
To get there, sales of ZEVs must ramp up dramatically from 2018 to 2025. The mandate essentially requires that 500,000 ZEVs be produced cumulatively as of 2025, reaching 15.4% of new car sales as of 2025. CARB’s scenario for the ramp-up projects that around 70,000 plug-in vehicles will be sold in California as of 2018. This figure is close to Pike’s own forecasts for California. We projected annual PEV sales to reach over 300,000 in the U.S. by 2017, and California will constitute almost 25% of those sales, as projected in last year’s Electric Vehicle Geographic Forecasts report.
Finally, CARB is practically the lone holdout among U.S. policymaking bodies in continuing to support fuel cell technology. The ruling keeps fuel cells cars on equal footing with battery cars for earning ZEV credits. More importantly, the board has revamped the Clean Fuels Outlet (CFO) program to support hydrogen fuelling deployment. The lack of hydrogen infrastructure, and lack of incentives to deploy it absent large numbers of FCVs on the roads, is one of the key barriers to the fuel cell car market. CARB is using the CFO to address that problem. The new rule mandates that major refiners or importers of gasoline provide hydrogen fuelling when just 10,000 fuel cell vehicles are on the roads in a particular air basin. Not surprisingly, this rule is receiving major pushback from the oil companies.
The new program faces a number of challenges. First, there is controversy over a provision that lets automakers reduce the number of ZEVs they make if they “over-comply” with the overall GHG fleet standard. Second, the ambitions of this new program may come into conflict with the realities of the California state budget. Third, it’s impossible to predict how the technology mix will really look in 2050. The California plan essentially requires most of the fleet to be battery- or fuel cell-powered, with all hybrids and conventional gas cars basically obsolete by 2050. 2050 is a long way off and there are all sorts of things that could derail such a prediction, not the least of which is the actual progress of fuel cell and battery technology. But give CARB credit for thinking big.