The good news coming out of Massachusetts electric vehicle policy is that the MOR-EV rebate program, the primary incentive that the Commonwealth offers to support vehicle electrification, will be extended into 2019.
MOR-EV survives thanks to an infusion of new funding committed by the Baker administration, using proceeds from the Regional Greenhouse Gas Initiative (RGGI). MOR-EV has never established a permanent source of funding, so it has relied on these occasional bursts of new resources, including the commitment of $12 million by the Baker administration in 2015. With no income, the program drains out of money until it runs out or gets a new burst of funding. With electric vehicle sales on the rise in Massachusetts, the program was on path to expire in early 2019.
The bad news is that with this new batch of funding comes new limitations designed to reduce the speed at which the program drains money. The most unfortunate of these cuts is the reduction in total rebate amount from $2,500 to $1,500 for battery-electric vehicles. In addition, plug in hybrid vehicles, such as the Chevy Volt, will no longer get any rebates at all (although I wonder if the state would consider an exemption for the coming plug in F-150). Tesla fans should take note that the state is also eliminating any rebates for vehicles with a purchase price above $50,000.
Electric vehicles are critical to achieving Massachusetts climate limits
At the same time that the state is cutting back on rebate amounts in MOR-EV, our state agencies and our utilities are conducting modelling that shows that dramatic growth in electric vehicle sales is essential to achieving our climate mandates. Preliminary analysis conducted by the Baker administration shows that by 2030, at least 2 of 3 new vehicle sales must be electric by 2030. National Grid estimates that 100 percent of all new vehicle sales must be electric by 2028. Electric vehicles are currently about 3 percent of new vehicle sales.
I don’t have a strong opinion about whether the cuts being made to MOR-EV represent the most effective use of scarce resources to get the state through the first six months of 2019. But it’s clear from the data that the state needs a more ambitious effort to bring electric vehicles into the mainstream.
We can do better than MOR-EV
The truth is, MOR-EV is a program that already had serious limitations, even before the cutbacks in rebate amounts. Unlike the electric vehicle incentives in Connecticut and Delaware, MOR-EV is not available to consumers at the point of purchase: electric vehicle consumers have to mail in their proof of purchase and wait up to 90 days to receive their $2,500 rebate. Unlike New York and California, Massachusetts does not offer an incentive to electrify heavy-duty vehicles, one of the reasons why metro systems in Los Angeles and New York City have made larger commitments to electric buses than the MBTA. And unlike California, there is no program in Massachusetts specifically targeting low- and moderate-income drivers, although the state did attempt a low and moderate income pilot last year.
MOR-EV remains a good program. It’s goal of encouraging the electric vehicle market, so that economies of scale would improve quality and reduce price, remains well founded. Yes, many of the direct beneficiaries are early adopters, tech enthusiasts and people with high incomes. But those initial investments have put the technology in a position where electric vehicle technology really could transform this whole industry for everybody.
Looking beyond MOR-EV
MOR-EV could be improved in two ways. First, the state should find a dedicated funding stream that renews MOR-EV funds on an annual basis and allows people of all income levels to access electric vehicle technology. Second, MOR-EV should take a more comprehensive approach to addressing the obstacles to electric vehicles facing low- and middle-class consumers. One effective model that can offer some lessons for an expanded EV program is Mass Save, our state’s premier energy efficiency program.
For example, thanks to Mass Save, all Massachusetts residents can enjoy a free Home Energy Assessment. As part of that assessment, a person comes to your house, explains what your options are, explains what incentives and programs are available to support you. Mass Save is a big part of the reason why Massachusetts has been consistently rated the most energy-efficient state in the country, saving consumers hundreds of millions per year on their energy bills.
Mass Save also combines direct rebates with financing assistance, offering zero-interest loans for technologies such as heat pumps, insulated windows, and solar water heaters. Several programs provide greater incentives to low income residents – or give away efficiency technologies for free to low income residents. This is the kind of comprehensive approach we need for vehicles: a program that will address multiple obstacles to vehicle electrification and help the consumer through the process of understanding this technology and making a purchase.
We need dedicated funding to make this happen
The problem of course is that you can’t do all of this fancy stuff without putting real resources into the effort. Mass Save has a budget that is relatively insulated from the political process, fed by dedicated revenue streams that have been identified and flow into the program on a consistent basis. If we want a program that can deliver like Mass Save we need to give it the resources that we provide to Mass Save.
It’s great that we have the Regional Greenhouse Gas Initiative around. But we can’t fund our entire approach to climate and energy policy on the back of a $5.35 price on carbon that only applies to electricity (now 11% of statewide emissions). And it makes little sense, when we are trying to get people to switch from an oil-consuming car to an electric car, to hold the electric sector accountable for their emissions but allow the oil industry to pollute for free.
We need to bring new resources into the system. Creating a program similar to RGGI covering transportation fuels is one obvious approach to creating the kind of dedicated revenue stream that can produce a robust electrification agenda. We encourage Massachusetts officials to explore this and additional strategies to bring electric vehicles to mainstream consumers throughout the state.