Policies that encourage electrification, reduce vehicle use, and otherwise reduce emissions in the transportation sector

Vehicle Standards and Incentives

Low-Emission Vehicle (LEV) Standards

Under the federal Clean Air Act, California has the unique authority to establish vehicle emission standards stricter than federal standards, which are referred to as low-emission vehicle (LEV) or Clean Car standards. This policy requires automakers to introduce lower-emitting cars and trucks to collectively emit fewer greenhouse gases and local air pollutants with each model year.

Under Section 177 of the Clean Air Act, other states may adopt California’s more stringent tailpipe emission standards. More than a dozen states have adopted the standards in lieu of federal requirements. These states are also known as “Section 177 States.”

Key Resources

State Examples

  • California Low-Emission Vehicle Program — Adopted in 2012, the LEV III regulations include increasingly stringent emission standards for criteria pollutants and greenhouse gases for new passenger vehicles through the 2025 model year.
  • Colorado Low-Emission Vehicle Standards — Adopted in 2018, all new light-and-medium-duty vehicles sold in Colorado must meet Low Emission Vehicle (LEV) standards starting in model year 2022.

    Zero-Emission Vehicle (ZEV) Mandates

    Zero-Emission Vehicle (ZEV) mandates require automakers to produce and sell a certain number of zero-emission vehicles to fulfill a quota based on a percentage of total sales in states with a mandate. ZEVs typically include plug-in hybrids, battery EVs, and fuel-cell vehicles. The ZEV sales requirement typically increases over time, and some states have set a target for 100% of all new vehicle sales to be electric vehicles by 2030 or 2035.

    This policy requires automakers to produce EVs regardless of demand, even if they are not yet economically profitable, and requires dealers to sell the vehicles. If they cannot meet the quota, automakers must pay a fine or buy credits from another company that has produced and sold more than their quota of ZEVs. ZEV mandates are a “technology-forcing policy,” encouraging automakers to produce cars with longer ranges, as vehicles sold with longer electric ranges earn more credits toward satisfying the mandate.

    Key Resources

    State Examples

    • California Zero-Emission Vehicle Regulations — Auto manufacturers are required to produce a number of ZEVs and plug-in hybrids each year, based on the total number of cars sold in California by the manufacturer. Current regulations will result in about 8 percent of California new vehicle sales in 2025 being ZEVs and plug-in hybrids.
    • Colorado Zero-Emission Vehicle Mandate — As of January 2, 2022, automakers must make an increasing minimum percentage of Zero Emission Vehicles (ZEVs) available for sale as part of their light-duty fleet.
    • Clean Cars Minnesota — Requires auto manufacturers to deliver more vehicles with zero tailpipe emissions for sale in Minnesota, beginning with model year 2025 and increasing each year.
    • Washington SB 1287 (2021) — Requires that all publicly and privately owned passenger and light duty vehicles of model year 2030 or later be electric, and sets several planning processes in motion.

      Medium- and Heavy-Duty Vehicle (MHDV) Sales Standards

      Medium- and Heavy-Duty Vehicle (MHDVs) Sales Standards aim to reduce emissions and fuel consumption in fossil fuel-powered vehicles such as heavy-duty pickup trucks, vans, tractors, and vocational vehicles. The policy requires automakers to produce and sell a certain number of zero emission MHDVs to fulfill a quota based on a percentage of total sales in states with a mandate. This share of new medium- and heavy-duty vehicle sales in a state that must be electric typically increases over time, to ensure a greater number of new vehicles purchased are electric. States working to implement a MHDV sales target have a goal of 30% of all new MHDV sales are electric vehicles by 2030, and 100% of new MHDV sales are electric vehicles by 2050.

      Key Resources

      State Examples

      • California Advanced Clean Trucks — Sales standard to reduce greenhouse gas and co-pollutant emissions from medium- and heavy-duty vehicles, and to increase the adoption of zero-emission heavy-duty technology.
      • New Jersey Advanced Clean Trucks (ACT) rule — New Jersey became the first state on the East Coast to adopt regulations to require an increasing number of zero-emission truck sales each year in the state.

        Electric Vehicle Incentives

        From the Center for the New Energy Economy (CNEE): One of the most important barriers to increased adoption of alternative-fueled vehicles (AFVs) is their typically-higher upfront cost as compared to a similar traditionally-fueled vehicle. Also, because they are relatively new to the market, many consumers are hesitant to spend the upfront money required to purchase an AFV when they can stay with something they are used to. 

        Consumer hesitancy can be ameliorated through a range of state policies that provide incentives for the purchase of AFVs. Incentives can also support the conversion of existing vehicles to alternative fuels. AFV adoption can also be spurred by ensuring that the use of an AFV is as or more convenient than the use of a conventional vehicle. State programs that provide these other types of incentives aim to make AFV ownership attractive.

        The key components of an Advanced Vehicle Incentive policy to evaluate are:

        • Programs can be targeted to one, some, or all of the following: individuals, businesses, or units of government.
        • Programs can be directed toward incentivizing the use of one, some, or all of the following alternative fuels: electricity, hydrogen, natural gas, biofuels, or propane.
        • Loan, grant, rebate, and voucher programs must have a dedicated funding source.
        • Tax credits and rebates can be issued one-time to support initial AFV purchases or can provide discounts for the lifetime of the vehicle (e.g. rebates for replacement batteries).
        • Tax credit, loan, and rebate policies can include sunset provisions that coincide with a state goal for a certain number or percentage of AFVs in the state’s overall fleet.

        Click here to learn more about the different types of AFV incentives.

        Key Resources

        Model Rules

        State Examples

          Charging Infrastructure Incentives

          From the Center for the New Energy Economy (CNEE): The relationship between the increased adoption of electric vehicles (EVs) and the availability of EV charging stations is complicated. On the one hand, consumer range anxiety creates a barrier to increased adoption. On the other hand, while greater availability of charging stations would ease this anxiety, the relatively low numbers of vehicles on the road provides little incentive to install and make these stations available to the public. Both supportive policies for developing charging infrastructure and advancements in technology have eased range anxiety. 

          The key components of an EV Charging Infrastructure Incentive policy to evaluate are:

          • Coordination with electric utilities is key. Programs to provide access to EV registration data by service territory can assist utility planning for shifting demand.
          • Authorize utilities to earn a rate of return on their investments in EV charging infrastructure.
          • Programs can be targeted to one, some, or all of the following: single-family homes, multifamily dwellings, businesses, or units of government.
          • Eligibility for incentives can be limited to systems that comply with state codes or federal standards.
          • Loan, grant, and rebate programs should have a dedicated funding source.

          Click here to learn more about the different types of EV charging infrastructure policies.

          Key Resources

          Model Rules

          State Examples

            State Planning and Investment

            Transportation Emissions Reduction Targets

            Greenhouse gas emissions reduction targets in the transportation sector aim to limit and reduce the amount of carbon emissions from a state’s transportation system. These targets aim to reduce transportation emissions by different amounts over time, often in a percentage based on a baseline year, and typically cover light- and heavy-duty vehicles. Transportation-specific targets are a useful way for states to establish a suite of policies to reduce emissions holistically.

            Targets can be established through legislation or executive orders. Targets set by legislation typically establish economy-wide emissions reduction targets. Then, regulations are promulgated through agencies to set sector-specific targets. Governors can also establish non-binding targets through executive orders, directing state-level environment and/or transportation agencies to reduce and regulate greenhouse gas emissions.

            Key Resources

            State Examples

            • Massachusetts S.9 (2021) — Established economy-wide emissions reduction targets. Notably, the law also requires ‘sublimits’, which are sub-goals for emissions reductions in six high-priority sectors of the economy including transportation.
            • Minnesota SF 145 (2007) — The Minnesota Department of Transportation adopted the target of reducing transportation emissions by 30% from 2005 levels by 2036, in accordance with the Minnesota Next Generation Energy Act of 2007 (SF 145).
            • Oregon Executive Order 20-04 (2020) — Includes a specific directive to the Oregon Department of Transportation to implement a Statewide Transportation Strategy, which establishes emissions reduction performance metrics and identifies strategies to meet this target.

              EV and EV Charging Infrastructure Plans

              Electric vehicle (EV) and EV charging infrastructure plans provide states with a framework to guide the development, coordination, and adoption of EVs and EV charging infrastructure. These plans often establish or outline a state’s goals for a desired number of registered EVs, number of charging stations, and policies to achieve these goals. Plans may also consider grid integration, charging infrastructure, general education efforts, and outline ways low-income and/or environmental justice (EJ) communities can benefit from transportation electrification. Plans can direct the Public Utilities Commissions (PUCs) to establish a policy to encourage utility investment in EV charging infrastructure.

              Key Resources

              State Examples

              • California — The state has widespread transportation electrification efforts, including legislation and executive orders aimed at bolstering charging infrastructure, creating incentives for EVs, and setting targets for the percentage of EVs on the road and the number of charging stations available to the public.
              • Iowa — Senate File 2311 (2018) called for a study to investigate the infrastructure support needed for EVs. The Iowa Economic Development Authority released a 2019 plan to examine the current status of EVs and EV chargers in the state and make recommendations to policymakers to increase EV adoption.
              • New Jersey — New Jersey has plans that include 2 million registered light duty vehicles in the state by 2035, directed the state PUC to establish goals for transportation electrification, and directed the PUC and Department of Environmental Protection to produce a report every five years on the state of the EV market in New Jersey, progress towards achieving the state’s goals, barriers to the achievement of the goals, and recommendations for legislative or regulatory action to address barriers.

                State Investment in Public Transit Electrification

                Public investments and policies have historically been made in a transportation system centered around the gasoline-powered internal combustion engine. The majority of transit buses and commuter rail lines currently operating in the U.S. are fueled by diesel, emitting greenhouse gases and local air pollutants. Electrifying public transit vehicles is a straightforward intervention to reduce emissions and improve air quality along transportation corridors. States can allocate funding to replace diesel buses with battery-electric buses and convert diesel locomotives to an electric train fleet. Additionally, procurement guidelines and practices set by the state can help transit agencies address upfront costs and other barriers associated with EV adoption. States can mandate zero-emission bus procurement targets for transit agencies via legislation, executive order, or through regulations. They also can set goals or commitments to electrify transit fleets.

                With transportation by bus being the most common form of public transportation, state investment supporting the use of electric buses can play an important role in reducing the transportation sector emissions.

                There are few funding streams to support municipal, state, and transit agency investment in electric bus deployment. Funding predominantly comes from the Federal Transit Administration through the Low-No Emission grant program. The program is a competitive grant program that provides funding to state and local governments to purchase and/or lease zero-emission and low-emission transit buses, as well as funding for the acquisition, construction, and leasing of required supporting facilities. All but three states have utilized Low-No funds to fund zero-emission buses. 

                States may also administer and fund their own programs for the purchase of electric buses. This usually works by the state providing vouchers and incentives for transit agencies within the state to purchase EV transit buses.

                Key Resources

                  State Examples

                  • California Innovative Clean Transit Regulation — Establishes a goal for public transit agencies to gradually transition to 100 percent zero-emission bus fleets by 2040.
                  • Maryland SB 137 (2021) — Requires all buses purchased for the state fleet be zero emissions after 2023, and a planning process to electrify the rest of the fleet.
                  • New Jersey SB 2252 (2020) — Requires that zero-emission vehicles make up 10% of new bus purchases made by the New Jersey Transit Corporation by the end of 2024, 50% by the end of 2026, and 100% by 2032.
                  • California Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP) — Invests in zero emission transit buses by working with dealers to apply a voucher incentive at the time of purchase for zero emission vehicles.
                  • New York Truck Voucher Incentive Program (NYTVIP) — Provides vouchers to fleets across the state to purchase or lease electric transit buses.

                      Public Transit Affordability

                      A low-carbon, efficient transportation system requires access to clean, affordable transportation options for all users. Low-income individuals currently use transit in greater numbers than wealthier individuals, however, lower-income riders are often unable to pay for trips to meet their daily needs. Making public transit more affordable can help meet this need and give riders access to low-carbon transportation options. Improving transit affordability can incentivize increased public transit use for individuals driving personal vehicles as well — lower fares can make public transit more affordable or desirable than driving private vehicles. Fare elasticity is higher in the long term and lower in the short term, so changes in pricing may take a while to impact travelers’ choices.

                      Key Resources

                        State Examples

                        • California Transit-Oriented Development Housing Program — Aims to increase public transit ridership by funding higher density affordable housing developments within one-quarter mile of transit stations and infrastructure improvements necessary for the development of specified housing developments.

                            Public Transit Expansion

                            If other measures to incentivize travel mode switching are successful, public transportation systems will experience steadily increasing demand. The sustainability of these changes will depend in part on whether the transit system can accommodate that increased demand, so expansion of existing transit services is crucial. There are a few different mechanisms for this: 

                            • Institute bus-only lanes and/or priority signals for buses, decreasing bus travel time and reducing bus congestion. Transit signal priority systems equip buses with sensors that grant them priority when approaching an intersection.
                            • Expand rapid transit bus networks, which typically drive on exclusive bus-only lanes or roads and are separate from other traffic.  They have higher speeds and better punctuality, leading to a more efficient travel experience.
                            • Enhance public transit infrastructure, improving the quality and capacity of public transit infrastructure to further incentivize the increased ridership.

                            Key Resources

                              State Examples

                              • Maine LD 1429 (proposed in 2021) — Would commit $400,000 per year for public transportation expansion and to bring public transportation funding to $5 per capita by 2024, as recommended by the Maine Climate Council

                                  Market Mechanisms and Price Incentives

                                  Carbon Pollution Pricing

                                  Carbon pollution pricing is a market-based mechanism that aims to reduce the amount of greenhouse gases emitted by either imposing a fee or a cap on carbon dioxide emissions. In the transportation sector, this applies to transportation fuels, such as gasoline and diesel. 

                                  A price on carbon pollution reduces greenhouse gas emissions in two ways. First, it creates an incentive for companies and individuals to shift away from vehicles with internal combustion engines, toward cleaner transportation modes including public transit, active mobility, or electric vehicles. Second, it can generate substantial revenue to invest in the transition to clean energy, such as subsidizing clean vehicle purchases, electrifying rail and bus systems, and improving active mobility infrastructure.

                                  Key Resources

                                  State Examples

                                  • California AB 398 2017 — Reauthorizes the state’s cap-and-trade program, which covers transportation fuels.

                                    Low Carbon Fuel Standard (LCFS)

                                    A low carbon fuel standard (LCFS) is a market-based mechanism to reduce the carbon emissions of transportation fuels. An LCFS focuses on the carbon intensity of transportation fuels and accounts for the fuel’s life cycle greenhouse gas emissions, so the policy applies to emissions created during production, transportation, and eventual consumption of the fuel. Instead of establishing a standard that must be met by vehicle producers or owners, an LCFS program requires fuel producers to meet an emissions standard, or trade credits to comply with the program. This emissions standard becomes more stringent over time, driving down the carbon intensity of fuels, and therefore reducing greenhouse gas emissions.

                                    An LCFS is technology-neutral — it does not mandate or outlaw the use of any particular fuel product, simply incentivizes the products which perform best against the standard.

                                    Key Resources

                                      State Examples

                                      • California Low Carbon Fuel Standard — Designed to decrease the carbon intensity of California’s transportation fuel pool and provide an increasing range of low-carbon and renewable alternatives.
                                      • Oregon Clean Fuels Program — Reduces the lifetime carbon footprint associated with transportation fuels in Oregon and aims to encourage the use of cleaner fuels.
                                      • Washington State Low Carbon Fuel Standard — Calls for a 10% reduction in the carbon intensity of transportation fuels (e.g. gasoline and diesel) by 2028 and a 20% reduction by 2035.

                                          Congestion Pricing

                                          Congestion pricing aims to reduce road congestion by charging a fee for driving on certain roads, typically in urban areas. Congestion pricing can be a flat fee or it can be a dynamic price that changes based on factors like time of day or traffic levels. The policy aims to shift the time, mode, route, or overall number of drivers along routes of high traffic congestion, and to raise revenue for road and transit infrastructure maintenance and repair.

                                          Key Resources

                                              Measures to Reduce Vehicle Miles Traveled (VMT)

                                              Vehicle miles traveled (VMT) measures the amount of travel for vehicles in a given geographic area, such as a state or local level. VMT has been increasing over several decades, largely due to urban sprawl and development in less populated areas. There are a variety of interventions that can be implemented to reduce vehicle miles traveled (VMT), and therefore greenhouse gas emissions and local air pollution.

                                              Policy options include:

                                              • Adjust parking regulations to reduce the availability of free individual car parking or create priority parking spaces for low- or zero-emission vehicles.
                                              • Change access regulations in urban areas to create car-free zones or low-emission vehicle only zones.
                                              • Implement a VMT-based fee or a tax on vehicle purchase and/or ownership to disincentivize vehicle ownership, which can be tailored to be lower for low- or zero-emission vehicles.
                                              • Support and improve alternative modes of transportation to personal vehicles, such as public transit and active mobility infrastructure like bike racks, safe bike lanes, and safe sidewalks.
                                              • Encourage development in existing developed areas or to repurpose existing buildings through tax credits and other incentives, rather than development in less-dense areas contributing to sprawl.

                                              Key Resources

                                                Model Rules

                                                State Examples

                                                • Virginia Transportation Board’s Project Prioritization System — Uses the potential to reduce GHG emissions as a factor in scoring projects so that they can be prioritized for inclusion in the state transportation funding plan.
                                                • California SB 339 (2021) — Requires the Transportation Agency to implement a pilot program to evaluate the collection of revenue for a road charge program. An advisory committee is responsible for making recommendations by July 2023.
                                                • Minnesota’s Active Transportation Program — Provides grants to increase the number of people walking, biking, and rolling to destinations
                                                • Minnesota Statewide Pedestrian System Plan (2021) — Identifies priority areas for investments and lays out specific strategies to improve walking availability and accessibility now and for the next 20 years to help communities plan for the future

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