ADOPT LOW- AND ZERO-EMISSIONS passenger VEHICLE STANDARDS

In June 2020, Governor Sisolak announced the Clean Cars Nevada initiative, with the goal of reducing greenhouse gas (GHG) emissions associated with personal transportation. Led by the Nevada Division of Environmental Protection (NDEP), the state is in the midst of a rulemaking process to evaluate the adoption of low- and zero-emissions standards for light-duty cars and trucks, beginning in model year 2025.

The low-emissions vehicle (LEV) standard would require car manufacturers to exclusively offer new vehicles for sale in Nevada that produce lower emissions of GHGs and other pollutants than those vehicles subject to federal emissions standards. The zero-emissions vehicle (ZEV) standard would set minimum credit targets for ZEV vehicles (including plug-in hybrid electric vehicles (PHEVs), battery electric vehicles, and hydrogen fuel cell vehicles) as a percentage of all new vehicles for sale in the Nevada market. The proposed rule only applies to passenger cars and light-duty trucks up to 8,500 lbs gross vehicle weight rating (GVWR) and medium-duty vehicles up to 14,000 lbs GVWR.

Similar LEV and/or ZEV regulations have been adopted in 14 states, all of which are based on regulations adopted in California. This is simply because the 1970 Clean Air Act allows California to seek a waiver to set stricter emissions standards than those set by the federal government, and provides the authority for other states to adopt California’s standards. Note that the LEV for California and federal standards for vehicle model years 2021–2026 were set to be the same by the National Highway Traffic Safety Administration’s (NHTSA) Corporate Average Fuel Economy (CAFE) rule. The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule part II amended the CAFE rule, creating a second set of less-stringent federal vehicle standards.

GHG emissions reductions from adoption of the LEV regulation will be directly correlated to the sales of new conventional vehicles starting with model year 2025, and to the level of car manufacturers’ compliance—in particular through the sale of alternative fuel vehicles (AFVs). In contrast, the adoption of ZEVs and PHEVs across Nevada is far more complex than simply the adoption of ZEV regulations.

Issues including charging infrastructure, shifting energy demand profiles, end-of-life battery disposal, consumer interest, job creation, and other factors all must be considered.

Greenhouse Gas Implications

Increasing the relative proportion of new LEVs and ZEVs vs. the existing fleet and those powered by more-traditional fuels will reduce tailpipe GHG emissions. However, the extent to which LEV-ZEV regulations can reduce emissions on a timeline commensurate with the state’s emissions-reduction targets will be driven primarily by market penetration and adoption rates. Simply, will Nevadans buy enough LEV-ZEV vehicles fast enough? And how will the economic impacts of the ongoing response to evolving COVID-19 conditions impact consumer purchasing?

According to the Nevada Auto Outlook 2019, total light-duty car and truck sales across Nevada declined by 4.7% through 2019, which is consistent with national trends. Light-duty truck sales continued to gain an increasing share of the total market, growing from 43.2% in 2012 to 67.8% in 2019. Sales of new hybrid and electric vehicles in Nevada represented 6.5% of the 2019 market share. Initially, total sales were up 25% for low- and zero-emissions vehicles through the beginning 2019, but dropped off rapidly later in the year.

However, the onset of COVID-19 and the consequent economic slowdown drove new vehicle registrations in Nevada down by 12.7% between January and July compared to the same period in 2019 (Nevada Auto Outlook Q2 2020). Through the first half of 2020, the market share of electric, hybrid, and PHEV vehicles declined slightly (0.5% and less) relative to the same time last year. This contrasts with a 3.5% increase in relative purchases of light-duty trucks over the same time period.

How the market evolves in the coming years will be a complicated function of the COVID-19 pandemic’s trajectory and the related economic, policy, and social response, as well as the affordability and desirability of the options available on the market. However, market availability of ZEVs in 2025 and beyond is expected to increase.

Multiple research entities are working to project the sweeping impacts of COVID-19 and the possible outcomes for different sectors of the economy—including the AFV, ZEV, and PHEV market. Estimates by the Rhodium Group suggest an increase in total sales of ZEVs and PHEVs in Nevada of 71–91% by 2025 compared with 2018. Their estimates for purchases by 2030 point to 4–5 times total Nevada ZEV and PHEV sales. While this gives a picture of the scope of possible outcomes, this is highly uncertain and there are multiple possibilities (Rhodium Group, 2020). Indeed, it is clear that if tailpipe GHG emissions drop to zero, a majority of the transportation emissions in Nevada could be eliminated (NDEP, 2019).

Taken together, the impact of LEV-ZEV adoption on meeting the state’s demands has the potential to significantly reduce the state’s overall GHG emissions. However, the rate at which emission reductions can be achieved is highly uncertain.

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Climate Justice

During the listening sessions conducted in association with the State Climate Strategy, Nevadans expressed support for adoption of Clean Cars Nevada in that it would improve air quality. On the other hand, they expressed concerns about the up-front affordability of low- and zero-emissions vehicles currently available on the market. This is important given the basic need for car ownership more generally across low-income populations.

At present, new ZEVs and PHEVs cost more than a new car or truck with a traditional combustion engine. The lowest-cost options for new low- and zero-emissions cars available in the United States start at ~$25,000, and SUVs start upwards of $30,000 (ICCT, 2019). In general, purchase prices are higher for ZEVs than for conventional vehicles. This could limit affordability.

However, similar to other emerging technologies, as demand increases prices should decline, thanks to competition and expanded consumer options. For ZEVs, some estimates suggest significantly more options in the $20,000 range will be on the market by 2030 (ICCT, 2019). Given the size of the market in California, the state’s adoption of a 100% by 2035 clean car standard for sales of new passenger vehicles will likely drive up national demand for electric cars and trucks, and perhaps accelerate a decline in price. It will also likely expand the secondary market, which would provide more-affordable used options.

Low- and zero-emissions cars and trucks are less-expensive to own and operate over their lifetime relative to gas- and diesel-powered options. Recent research suggests that ZEVs and PHEVs save a consumer $200–$1,300 each year in fuel costs (Borlaug et al., 2020). With relatively lower electricity charging costs and relatively higher fuel costs, savings in Nevada may be at the mid to upper end of these estimates.

Compared with other states, Nevada has fewer options to implement incentive or rebate programs that would offset these investments (see below). The federal Qualified Plug-In Electric-Drive Motor Vehicle Tax Credit is available for PHEV and ZEV purchases until manufacturers meet certain thresholds of vehicle sales. It provides a tax credit of $2,500–$7,500 for new purchases, with the amount determined by vehicle size and battery capacity.

Reducing tailpipe emissions can improve air quality and public health outcomes, particularly among vulnerable populations. Vehicle emissions contribute to air pollution by releasing fine particles into the air, as well as nitrogen oxides (NOx)and volatile organic compounds (VOCs), which are the necessary ingredients to produce ground-level ozone. Communities exposed to excessive ground-level ozone and airborne particulate matter have an increased incidence of heart- and lung-related disease, including asthma, and associated emergency department visitation. Low-income households and communities of color are disproportionately exposed to air pollution and experience a commensurate increase in adverse health outcomes.

Although the overall air quality across Nevada and most of the United States has improved over the past decade due to smog regulations (McClure & Jaffe, 2018), there are still periods where ground-level ozone and/or particulate matter exceed federal standards in the state. The U.S. Environmental Protection Agency (EPA) designated the Las Vegas Valley as in nonattainment for the 2015 ozone National Ambient Air Quality Standards (NAAQS). Moreover, climate-change-driven increases in temperature can increase the production of ground-level ozone (NCA, 2018).

Further, areas in nonattainment for ozone (or other pollutants) are subject to stricter regulations by the EPA. There is a cost associated to be in nonattainment and such costs are paid by businesses and the regulated industry. The costs increase with the level of nonattainment severity, and these expenses could be passed to consumers.

Adopting Clean Cars Nevada has the potential to improve air quality, and improve the health of minority and marginalized communities. However, the affordability of low- and zero-emissions vehicles is a concern for low-income households, although the expansion of the California market could benefit those looking for used ZEVs and PHEVs.

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Integrated Economic Assessment

The consideration and implementation of rulemaking around LEV-ZEV requires coordination across multiple state departments and divisions, particularly NDEP and the Nevada Department of Motor Vehicles (DMV), in consultation with the Nevada Department of Transportation (NDOT) and Governor’s Office of Energy (GOE). Since Nevada is in the early stages of this process, it is unclear what the necessary personnel and related budgetary requirements will be to implement Clean Cars Nevada and administer the program in the long term. 

Of the 14 states that have or are in the process of adopting LEV-ZEV, state investments (or in some cases, estimated costs) align with their unique executive branch organizational structures and related authorities. 

Colorado, for example, estimates it will need one additional full-time equivalent (FTE) to monitor and track ZEV credits and debits for each auto manufacturer and aid in program enforcement. This estimate is based on discussions with other states on their costs of implementing ZEV standards. Colorado is also incenting ZEV purchases with a generous income tax credit for alternative fuel vehicles. Consequently, an increase in ZEV sales would diminish state income tax revenue. However, the loss in state tax revenue goes back to the consumer to potentially expend in other sectors of the state economy. 

Similarly, Oregon estimates the need for two FTEs at a cost of $500,000 per year to implement. These positions would ensure that the rules are current, oversee manufacturer compliance and enforcement, and coordinate with the DMV. 

Estimated resources required by other states to administer LEV-ZEV are shown in Table 1. 

Table 1. Estimated State Resources to Implement California Clean Car Standards

STATECAWANYMANJMECTVTRI
Full-Time Equivalent~2001.52–312110.5–10.5

Other states that have adopted clean car standards have funded their programs in different ways. Some charge fees to fund their program, whereas others rely on general funds. For example, in Connecticut and Vermont, the DMV collects fees from vehicle owners at the time of registration.

  • Connecticut registrants pay a “Federal Clean Air Act (CAA)” fee in addition to the regular registration fee each time they register or renew their car. A portion of this CAA fee ($4.25) is allocated to the Department of Environmental Protection and is used to pay for a variety of air quality programs, including the California vehicle emissions rules.
  • Vermont has a similar program where the DMV assesses a “Clean Air” fee at the point of registration/renewal. Vermont’s fee (~$1 of the general registration fee) funds air quality programs, including the California vehicle emissions rules.
  • In New York, all registered cars must get an annual safety inspection, and part of this vehicle inspection fee ($4) is used to fund the California vehicle emissions program and the mobile source section of the Department of Environmental Conservation. 

Some state environmental agencies assess fees on the auto manufacturer rather than the individual registrant. New Jersey plans to charge large and intermediate-sized auto manufacturers $1 per vehicle sold in the state. The fee is imposed on potential users of the ZEV credit bank. California, however, tallies the cost of the on-road vehicle program and divides by the number of new vehicles sold in the state. Auto manufacturers are charged a proportion based on the number of vehicles sold in California. Other states do not charge a fee, and instead, rely on general fund money. Massachusetts and Maine use general funds to staff their California vehicle emissions rules program. Washington anticipates it will not collect fees, and instead, will use its general fund to staff its program. Rhode Island is not contemplating fees, but is still working out the logistics of its program.

Investment by the state will be necessary to administer a clean cars program in Nevada. However, there is a significant return on that investment specifically associated with reduced mortality and morbidity, including avoided health costs that map directly to improved air quality.

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Implementation Feasibility

The Nevada Revised Statutes (NRS) grant the authority required to adopt the LEV-ZEV regulations proposed under the Clean Cars Nevada initiative, although an amendment to the Nevada Administrative Code (NAC) would be required to implement the regulation. However, the waiver granted by the EPA to California under the Clean Air Act that underpins their LEV and ZEV regulations was revoked by the Trump administration in 2019, though the Biden administration is expected to reinstitute the waiver. The administration’s authority to revoke these waivers is being challenged in court, and Attorney General Ford has signed Nevada to the multi-state lawsuit pending against the Trump administration. Similarly, Nevada is also party to a lawsuit asserting that the EPA violated the Clean Air Act by rolling back federal clean car standards that were set to begin in 2021. It is unclear how the announcement by California Governor Newsom committing California to eliminating the sale of new combustion-engine light-duty vehicles by 2035 may impact the waiver or the Nevada rulemaking process. 

NRS 445B.100 establishes that it is public policy of the State of Nevada and the purpose of NRS 445B.100 to 445B.640, inclusive, to achieve and maintain levels of air quality which will protect human health and safety; prevent injury to plant and animal life; prevent damage to property; and preserve visibility and the scenic, aesthetic, and historic values of the state. The statute further states that it is the intent of NRS 445B.100 to 445B.640, inclusive, to require the use of reasonably available methods to prevent, reduce, or control air pollution throughout the State of Nevada. NRS 445B.760 establishes the authority of the State Environmental Commission (SEC) to adopt standards for emissions from mobile internal combustion engines found in motor vehicles after those standards have been approved by the DMV.

To fully enact LEV-ZEV regulation, the NAC Chapter 445B would need to be amended and would likely include a new subsection for the LEV and ZEV programs under the “Emissions from Engines” section. The subsection would likely need to include general provisions, definitions, severability, adoption of the California Code of Regulations by reference, LEV program provisions, ZEV program provisions, warranty and recall provisions, and civil penalties. 

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