Oregon’s Clean Vehicle Rebate Program

 In Environmental Federalism
By Carter Harrison

Abstract

Along with many U.S. communities, Oregonians regularly deal with poor air quality.1 This issue is becoming more prominent as the population of the state grows2 and as several major Oregon cities rank among those in the U.S. with the poorest air quality.3 Recognizing the major contribution that mobile sources4 have on the state’s overall air quality, Oregon has set its sights on incentivizing the purchase of electric vehicles by offering rebates for residents that purchase or lease such vehicles – making them more affordable for low and moderate-income drivers.5 There are many challenges and potential consequences of electric vehicle subsidies that can make them regressive in their attempt to provide environmental benefit6. Oregon, however, is considered one of the most “EV-Friendly” states in the U.S7, and many believe that this program can be an effective and incentive-driven approach to improving Oregon’s air quality and the health of its residents despite the challenges of subsidy policies.8

The Problem

In the United States, mobile sources, such as cars and trucks, are responsible for nearly half of all air-polluting emissions.9 In Oregon, it is suggested that 90 percent of pollution-causing toxins come from “everyday activities” like driving.10 Vehicle emissions are known to contribute to ground-level ozone and particulate matter pollution11 which create a hazy smog that reduces visibility and causes harmful health defects to those who breathe them in.12,13 Those facing the greatest health risks associated with air pollution are children, older adults, people who are active outdoors, and those already dealing with respiratory ailments like asthma.14 For these groups living in urban areas, the issue can be most harmful as pollution risks are more significant due to a high population density and an increased number of drivers.15 In fact, four major cities in Oregon (Portland, Medford, Grant Pass, and Eugene) are ranked among the ten least-improved cities in terms of ozone and PM2.5 pollution over the last decade.16 Residents in these areas may be at greater risk of health defects related to poor air quality17 – such as reduced lung and respiratory function18 – than residents in other cities in the U.S.

In addition to the environmental challenges that these communities face, finding a solution which is cost-effective can also present unique problems. For example, subsidies for electric vehicle consumption are often seen as ways to reduce air pollution and carbon emissions and promote technological innovation.19 Support for this idea has influenced governments at all levels to adopt policies designed to encourage EV adoption among consumers. Despite subsidies, however, electric vehicles are still less cost-effective for many consumers than gasoline or gasoline-electric hybrid vehicles are.20 It is important, however, to recognize that declining battery prices and future innovations may allow electric vehicles to become cost-effective alternatives for American consumers.

The subsidies provided are often expensive for governments to shoulder, costing as much as $15 to $20 billion at the federal level and $400 to $500 million at the state level.21 Direct subsidies, whether designed for the consumer or producer, can be regressive – environmentally and socioeconomically – as benefits are usually claimed by individuals with higher incomes and as costs are dispersed among taxpayers.22 The challenge that Oregon faces is to create a solution that benefits all its residents while allowing a net environmental benefit.

The State’s Experiment

Oregon’s governor, Kate Brown, has made integrating electric vehicles a priority during her time in Salem, as she hopes to make them the most dominant vehicle in the state over the next two decades.23 In 2017, Governor Brown signed an executive order that outlined the state’s commitment to this goal.24 One such commitment was identified as the “Consumer Engagement in Transportation Electrification Plans to Achieve the State Goal.”25 This plan sought to encourage programs, like the rebate program, that support “greater electric vehicle adoption in moderate- and low-income communities26” that will support the increasing trend of Oregon consumers driving electric vehicles.27

Throughout the U.S., there are several variations of electric/zero emission vehicles available in the market, such as hybrid plug-ins and battery (all) electric vehicles.28 Despite variation and falling prices, however, Oregon’s leaders fear that the initial cost of electric vehicles may still be a disincentive for many residents .29 Thus, in 2018, the state of Oregon initiated the Oregon Clean Vehicle Rebate (CVR) Program to provide rebates to consumers who purchase or lease an all-electric or hybrid plug-in vehicle in the state.30 The first is known as the “standard rebate”, and offers buyers $2,500 for the purchase or lease of a new plug-in hybrid or battery electric with a battery of capacity of 10 kWh31 or more, and $1,500 for the purchase or lease of the same vehicles with a battery capacity of less than 10 kWh.32 Under the standard rebate, consumers can also receive a rebate of $750 for the purchase of a zero-emission motorcycle.

The second rebate is called the “charge ahead rebate”, which offers $2,500 toward the purchase or lease of a new or used battery electric vehicles.33 The charge ahead rebate is only available in addition to the standard rebate for moderate and low-income drivers that meet threshold requirements determined by the Department of Environmental Quality.34 The state hopes that combining these rebates with existing federal credits will provide enough incentives to consumers to make electric vehicles common.35 The emergence of new and cheaper electric vehicles, and the growing number of drivers purchasing electric vehicles, is encouraging lawmakers to continue this trend. The executive order by Governor Kate Brown set a goal of 50,000 electric vehicles in Oregon by 2020.36 As of August 1st, 2019, there are 26,218 electric vehicles in Oregon with 1,495 public charging stations in 620 locations across the state.37 Other states are taking similar action across the U.S., helping create a strong electric vehicle infrastructure throughout the country.38 This focus on “greater electric vehicle adoption” is lowering the cost of vehicles and vehicle charges, as the current cost of a recharge in Oregon is $1.0239 – $2.43 cheaper than the average per gallon price of gasoline in the state.40

Electric vehicles are thought to eliminate direct exhaust emissions, which can benefit urban communities that experience high ground-level ozone or PM2.5 concentrations.41 Despite a reduction of direct emissions42, many are concerned with the life-cycle emissions of electric vehicles and the sources of electricity production.43 Generally, many sources of electricity in the U.S., like coal, heavily pollute the air and may cause greater environmental harm than gasoline vehicles. Unfortunately, the benefits of clean energy production are small and most likely received by wealthy neighborhoods.44 In Oregon, however, the life-cycle emissions of gasoline vehicles is nearly 80% larger than the life-cycle emissions of an all-electric vehicle driven in the state.45 This is because 56.65% of Oregon’s electricity is produced by hydro-electic sources, making a large part of the state’s electricity produced by cleaner sources.46 For this reason, Oregon believes they are equipped to make an increased number of electric vehicles an environmental benefit.

Conclusion

One task governments have is to enact solutions that provide cost-effective benefits to all it’s residents – a task that is no doubt easier said than done. With every policy decision, there are likely unseen consequences that can cause harm equal to the initial challenge the policy confronts. The same can be true for policies that subsidize the purchase of electric vehicles. For many consumers, electric vehicles are still less cost-effective than gasoline or hybrid vehicles despite subsidies.47 This reality benefits wealthy drivers who may have been willing to purchase electric vehicles without a subsidy, while bearing the costs of funding the subsidies on ordinary taxpayers. In addition, unless an area’s source of electricity comes from clean producers, an electric vehicle can have a less than positive environmental impact over its lifetime.48 Unfortunately, the opportunity and benefit of clean energy production is small.

Oregon, however, believes it may be in a unique position to provide its residents with a beneficial subsidy program. The ‘charge ahead rebate’ offered through this program is designed specifically for low and moderate-income earners who fall within an income threshold established by the state’s DEQ.49 In addition to the standard and charge ahead rebates offered by the state, residents can also take advantage of federal subsidies that make take as much as $12,000 of the price of an electric vehicle.50 Oregon is also considered a “friendly state” to electric vehicle drivers because of investments they have made to ensure that proper public infrastructure, like charging stations, is in place. As a result, the average price of a recharge is significantly lower than the price of refueling a gasoline vehicle. It is also to Oregon’s advantage that more than 50% of its electricity is generated by hydro-electric sources, making the average suspected life-cycle emissions of electric vehicles smaller than the average emissions of gasoline powered vehicles.51

Although implementing an electric vehicle subsidy in the state may present challenges to Oregon and its residents, the state believes that increasing the number of electric vehicles will benefit all. As opposed to other transportation-focused approaches to improving air quality, incentivizing consumers to purchase electric vehicles through the CVR Program may provide greater flexibility for residents to make a measurable environmental impact.

Notes


  1. Health Of the Air. “City Rankings: Health of the Air.” Map, 2019, https://healthoftheair.org/rankings. 

  2. Njus, Elliot. “Oregon 9th Fastest-Growing State; Idaho Leads Pack.” Oregonlive, The Oregonian/OregonLive, 20 Dec. 2017, https://www.oregonlive.com/business/2017/12/oregon_9th_fastest-growth_stat.html. 

  3. Health Of the Air. “City Rankings: Health of the Air.” Map, 2019, https://healthoftheair.org/rankings. 

  4. “Where Does Air Pollution Come From?” National Parks Service, U.S. Department of the Interior, 17 Jan. 2018, https://www.nps.gov/subjects/air/sources.htm. 

  5. Oregon Clean Vehicle Rebate Program: Frequently Asked Questions for Dealers. State of Oregon Department of Environmental Quality, 2018, https://www.oregon.gov/deq/FilterDocs/cardealerfs.pdf. 

  6. Bosworth, Ryan C, and Matthew Crabtree. “The Current State of Electric Vehicle Subsidies.” Strata, Strata Policy, 25 Oct. 2017, https://www.strata.org/current-state-of-electric-vehicle-subsidies/. 

  7. Gorzelany, Jim. “The Most EV-Friendly States In The U.S.” MYEV.com, MYEV.com, 6 Sept. 2019, https://www.myev.com/research/comparisons/most-ev-friendly-states. 

  8. “Emissions from Hybrid and Plug-In Electric Vehicles.” Alternative Fuels Data Center: Emissions from Hybrid and Plug-In Electric Vehicles, Office of Energy Efficiency and Renewable Energy, 2018, https://afdc.energy.gov/vehicles/electric_emissions.html. 

  9. “Where Does Air Pollution Come From?” National Parks Service, U.S. Department of the Interior, 17 Jan. 2018, https://www.nps.gov/subjects/air/sources.htm. 

  10. Department of Environmental Quality. “Air Quality.” State of Oregon: Air Quality – Air Quality Home, 2019, https://www.oregon.gov/deq/aq/Pages/default.aspx. 

  11. Oregon Public Health Division. Oregon Health Authority, 13 Sept. 2018, https://www.oregon.gov/oha/PH/ABOUT/Documents/indicators/airquality.pdf. 

  12. Oregon Public Health Division. Oregon Health Authority, 13 Sept. 2018, https://www.oregon.gov/oha/PH/ABOUT/Documents/indicators/airquality.pdf. 

  13. “Health Effects of Ozone Pollution.” EPA, Environmental Protection Agency, 30 July 2019, https://www.epa.gov/ground-level-ozone-pollution/health-effects-ozone-pollution. 

  14. “Health Effects of Ozone Pollution.” EPA, Environmental Protection Agency, 30 July 2019, https://www.epa.gov/ground-level-ozone-pollution/health-effects-ozone-pollution. 

  15. Department of Environmental Quality. “Air Quality.” State of Oregon: Air Quality – Air Quality Home, 2019, https://www.oregon.gov/deq/aq/Pages/default.aspx. 

  16. Health Of the Air. “City Rankings: Health of the Air.” Map, 2019, https://healthoftheair.org/rankings. 

  17. Health Of the Air. “City Rankings: Health of the Air.” Map, 2019, https://healthoftheair.org/rankings. 

  18. Oregon Public Health Division. Oregon Health Authority, 13 Sept. 2018, https://www.oregon.gov/oha/PH/ABOUT/Documents/indicators/airquality.pdf. 

  19. Bosworth, Ryan C, and Matthew Crabtree. “The Current State of Electric Vehicle Subsidies.” Strata, Strata Policy, 25 Oct. 2017, https://www.strata.org/current-state-of-electric-vehicle-subsidies/. 

  20. Bosworth, Ryan C, and Matthew Crabtree. “The Current State of Electric Vehicle Subsidies.” Strata, Strata Policy, 25 Oct. 2017, https://www.strata.org/current-state-of-electric-vehicle-subsidies/. 

  21. Bosworth, Ryan C, and Matthew Crabtree. “The Current State of Electric Vehicle Subsidies.” Strata, Strata Policy, 25 Oct. 2017, https://www.strata.org/current-state-of-electric-vehicle-subsidies/. 

  22. Bosworth, Ryan C, and Matthew Crabtree. “The Current State of Electric Vehicle Subsidies.” Strata, Strata Policy, 25 Oct. 2017, https://www.strata.org/current-state-of-electric-vehicle-subsidies/. 

  23. Francke, Tyler. “Governor Signs Law Aiming to Make Zero-Emissions Vehicles the Most Common in Oregon by 2035, Canby Now Podcast.” Canby Now Podcast, 17 July 2019, https://canbynowpod.com/government/governor-signs-law-aiming-to-make-zero-emissions-vehicles-the-most-common-in-oregon-by-2035/. 

  24. Brown, Gov. Kate. Executive Order NO. 17-21. Nov. 2017, https://www.oregon.gov/gov/Documents/executive_orders/eo_17-21.pdf. 

  25. Brown, Gov. Kate. Executive Order NO. 17-21. Nov. 2017, https://www.oregon.gov/gov/Documents/executive_orders/eo_17-21.pdf. 

  26. Brown, Gov. Kate. Executive Order NO. 17-21. Nov. 2017, https://www.oregon.gov/gov/Documents/executive_orders/eo_17-21.pdf.  

  27. “50K By 2020.” Go Electric Oregon, Aug. 2019, https://goelectric.oregon.gov/2020-goal. 

  28. “Electric-Drive Vehicles.” U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Sept. 2017, https://afdc.energy.gov/files/u/publication/electric_vehicles.pdf. 

  29. Coren, Michael J. “The Median Electric Car in the US Is Getting Cheaper.” Quartz, Quartz, 26 Aug. 2019, https://qz.com/1695602/the-average-electric-vehicle-is-getting-cheaper-in-the-us/. 

  30. Oregon Clean Vehicle Rebate Program: Frequently Asked Questions for Dealers. State of Oregon Department of Environmental Quality, 2018, https://www.oregon.gov/deq/FilterDocs/cardealerfs.pdf. 

  31. kWh is a unit that stands for kilo-watt hours. 

  32. Oregon Clean Vehicle Rebate Program: Frequently Asked Questions for Dealers. State of Oregon Department of Environmental Quality, 2018, https://www.oregon.gov/deq/FilterDocs/cardealerfs.pdf. 

  33. Oregon Clean Vehicle Rebate Program: Frequently Asked Questions for Dealers. State of Oregon Department of Environmental Quality, 2018, https://www.oregon.gov/deq/FilterDocs/cardealerfs.pdf. 

  34. Oregon Clean Vehicle Rebate Program: Frequently Asked Questions for Dealers. State of Oregon Department of Environmental Quality, 2018, https://www.oregon.gov/deq/FilterDocs/cardealerfs.pdf. 

  35. Chalmers, Keely. “Oregonians Can Save up to $12,500 on a Purchase of a New Electric Vehicle.” KGW, KGW, 31 Aug. 2018, https://www.kgw.com/article/news/oregonians-can-save-up-to-12500-on-a-purchase-of-a-new-electric-vehicle/283-589311848. 

  36. “50K By 2020.” Go Electric Oregon, Aug. 2019, https://goelectric.oregon.gov/2020-goal. 

  37. “50K By 2020.” Go Electric Oregon, Aug. 2019, https://goelectric.oregon.gov/2020-goal. 

  38. “50K By 2020.” Go Electric Oregon, Aug. 2019, https://goelectric.oregon.gov/2020-goal. 

  39. Gorzelany, Jim. “The Most EV-Friendly States In The U.S.” MYEV.com, MYEV.com, 6 Sept. 2019, https://www.myev.com/research/comparisons/most-ev-friendly-states. 

  40. Williams, Kale. “Oregon Gas Prices Tick Up, Now 4th Most Expensive Nationwide.” Oregonlive, 16 Apr. 2019, https://www.oregonlive.com/commuting/2019/04/oregon-gas-prices-tick-up-now-4th-most-expensive-nationwide.html. 

  41. “Reducing Pollution with Electric Vehicles.” Energy.gov, Office of Energy Efficiency and Renewable Energy, 2018, https://www.energy.gov/eere/electricvehicles/reducing-pollution-electric-vehicles. 

  42. Direct emissions are those that enter the air directly from a source, i.e. vehicle exhaust.  

  43. “Reducing Pollution with Electric Vehicles.” Energy.gov, Office of Energy Efficiency and Renewable Energy, 2018, https://www.energy.gov/eere/electricvehicles/reducing-pollution-electric-vehicles. 

  44. Bosworth, Ryan C, and Matthew Crabtree. “The Current State of Electric Vehicle Subsidies.” Strata, Strata Policy, 25 Oct. 2017, https://www.strata.org/current-state-of-electric-vehicle-subsidies/. 

  45. “Emissions from Hybrid and Plug-In Electric Vehicles.” Alternative Fuels Data Center: Emissions from Hybrid and Plug-In Electric Vehicles, Office of Energy Efficiency and Renewable Energy, 2018, https://afdc.energy.gov/vehicles/electric_emissions.html. 

  46. “Emissions from Hybrid and Plug-In Electric Vehicles.” Alternative Fuels Data Center: Emissions from Hybrid and Plug-In Electric Vehicles, Office of Energy Efficiency and Renewable Energy, 2018, https://afdc.energy.gov/vehicles/electric_emissions.html. 

  47. Bosworth, Ryan C, and Matthew Crabtree. “The Current State of Electric Vehicle Subsidies.” Strata, Strata Policy, 25 Oct. 2017, https://www.strata.org/current-state-of-electric-vehicle-subsidies/. 

  48. Bosworth, Ryan C, and Matthew Crabtree. “The Current State of Electric Vehicle Subsidies.” Strata, Strata Policy, 25 Oct. 2017, https://www.strata.org/current-state-of-electric-vehicle-subsidies/. 

  49. Oregon Clean Vehicle Rebate Program: Frequently Asked Questions for Dealers. State of Oregon Department of Environmental Quality, 2018, https://www.oregon.gov/deq/FilterDocs/cardealerfs.pdf. 

  50. Chalmers, Keely. “Oregonians Can Save up to $12,500 on a Purchase of a New Electric Vehicle.” KGW, KGW, 31 Aug. 2018, https://www.kgw.com/article/news/oregonians-can-save-up-to-12500-on-a-purchase-of-a-new-electric-vehicle/283-589311848. 

  51. “Emissions from Hybrid and Plug-In Electric Vehicles.” Alternative Fuels Data Center: Emissions from Hybrid and Plug-In Electric Vehicles, Office of Energy Efficiency and Renewable Energy, 2018, https://afdc.energy.gov/vehicles/electric_emissions.html.