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A fresh round of funding for the state’s electric vehicle rebate program won’t be enough to reach emission goals.
Environmental advocates are praising a new $54 million influx of funding for Massachusetts’ electric vehicle incentives but also say it should be just the beginning of a more targeted and ambitious plan to boost electric vehicle ownership in the state.
“They ought to be thinking strategically: What can you do that will stimulate the market?” said Larry Chretien, executive director of the Green Energy Consumers Alliance, a nonprofit group that helps consumers access clean energy.
State officials on Dec. 31 committed to restoring funding for the Massachusetts Offers Rebates for Electric Vehicles (MOR-EV) program, which will issue rebates of $2,500 on the purchase of battery-electric vehicles and $1,500 on plug-in hybrids. To be eligible, a vehicle must have a final price of no more than $50,000.
A supplemental budget bill signed by Gov. Charlie Baker in December will provide the program with $27 million annually for 2020 and 2021, enough to offer more than 10,000 rebates each year. The money will come from Massachusetts’ share of the proceeds of the Regional Greenhouse Gas Initiative, a 10-state cap-and-trade system intended to reduce emissions from power plants in the Northeast.
“This is absolutely necessary,” said Jordan Stutt, carbon programs director at the Acadia Center, a climate change advocacy organization. “The MOR-EV program provides critical momentum toward achieving our emissions reduction targets.”
Massachusetts has a statewide goal of lowering carbon emissions 80% by 2050. The transportation sector was responsible for 43% of the state’s total carbon output as of 2016, and is increasingly a target for emissions reductions.
MOR-EV was established nearly six years ago, offering $2,500 rebates on the purchase of battery-electric and plug-in hybrid vehicles. Adoption got off to a slow start, but demand picked up sharply a few years in. In 2017, the program issued 2,854 rebates; the following year that number nearly doubled to 5,552.
But then, at the beginning of 2019, with money running low, the rebate dropped to $1,500. Later that year it was announced the program would be suspended at the end of September. With less funding available, the number of rebates issued plummeted.
Restarting MOR-EV is an essential part of the state’s efforts to electrify transportation and cut emissions, said Patrick Woodcock, acting commissioner of the state Department of Energy Resources.
“We are really trying to target transportation sector emissions for reductions,” Woodcock said. “The transportation sector is certainly an area where we’ve seen stagnant progress.”
Still, the state can — and should — go even further with its support of electric vehicles, advocates said.
The legislation that included the new funding authorizes rebates of up to $5,000. This provision could be used to offer heftier incentives targeting specific sectors, advocates said. Rebates could help nonprofit organizations or municipalities buy electric vehicles, Chretien said. Larger rebates could be offered to ride-share drivers, who spend a lot of time on the road, said Daniel Gatti, a senior transportation policy analyst at the Union of Concerned Scientists.
“Being able to electrify Uber and Lyft fleets would be a great objective and could have positive additional environmental and economic benefits,” Gatti said.
Larger rebates could also be used to make it easier for lower- and middle-income households to buy an electric vehicle, advocates suggested. In California, for example, an incentive program offers up to $9,500 to low-income consumers who buy a qualifying car.
Massachusetts should also consider tweaking the program to allow used vehicles to qualify for a rebate, Chretien said. Leasing is increasingly popular in the electric vehicle market. When the lease periods on these cars end, the vehicles go on the used vehicle market at significantly lower prices than new models. An incentive that included these cars could make a purchase more feasible for more people, Chretien noted.
Consumer education and marketing efforts will be essential to the success of the program, advocates said. Many consumers are not familiar with models other than Tesla and many do not know the federal government offers a tax credit of up to $7,500 for the purchase of an electric vehicle, Chretien said. Furthermore, surveys suggest car dealerships are frequently unprepared to deal with consumers seeking electric vehicles.
“There has to be a lot more education,” Chretien said.
In addition, there is widespread agreement that any electric vehicle incentive program will need a permanent, stable source of funding to gain any real traction. Many are hoping that a proposed cap-and-trade system for transportation emissions in the Northeast could provide this funding mechanism.
If the program, called the Transportation and Climate Initiative, comes to fruition, it could send an estimated $500 million a year to Massachusetts. State lawmakers, however, would need to pass legislation to use some of the money to fund MOR-EV.
“We need a funding source that is permanent and sustainable,” said state Rep. Carolyn Dykema, who sponsored previous efforts to re-fund MOR-EV. “That’s going to be the big question.”