It pays to drive an electric vehicle in California. Literally.
In addition to a federal tax credit of up to $7500 and state rebates of up to $4500 (depending on your income), California has a lesser-known program to incentivize the use of low-carbon alternatives to gasoline or diesel fuel. Even climate policy wonks who have heard of the Low Carbon Fuel Standard (LCFS) may not realize that it applies to electricity used in vehicles as well as low-carbon biofuels. That should change as utilities begin providing “clean fuel credits” to their customers who drive EVs.
Here’s how it works: Under California’s Low Carbon Fuels standard, oil companies have to gradually reduce the average amount of climate-altering pollution emitted by making and using the fuels they sell. They can do that directly—by blending sustainably-produced biofuels into the gasoline or diesel they sell, for example—or indirectly, by buying LCFS credits from someone who sells more low-carbon fuel than required. Electricity used in EVs is one source of such credits.
So how did I get a check for $500 from PG&E?
Last year my wife and I leased an EV. We love the powerful, smooth, quiet acceleration. We love skipping the gas station and refueling by plugging in at home even more. And because we participate in a pilot program which allows the utility to adjust when our car is charged we know that we are also contributing to making the electricity system work better. It is our best drive ever!
We don’t have a special outlet or a submeter to directly measure how much electricity goes into the car. Instead, the California Air Resources Board uses data from vehicles that do have their charging measured to estimate the average amount of electricity EV drivers use to charge at home. The LCFS assigns credits from EV charging to whoever owns the charger; if you own a home and an EV, that means the credits from charging are rightfully yours. It would be impractical for every EV driver to track and trade LCFS credits, so CARB assigns the credits created by home charging to utility companies to manage on behalf of their customers. Utilities sell the credits to oil companies who need them to comply with the LCFS and rebate in various ways the proceeds to the EV drivers in their service territory who apply online (PG&E’s application is here, SDG&E is here, SMUD’s is here, and SCE’s is scheduled to launch soon).
Et voila—my check for $500.
I was happy to get the check, but since we didn’t know about the program when we were looking for a new car this clean fuel credit program had no impact on our decision to drive electric. Because my wife and I believe that everyone should benefit from clean energy we donated our windfall to Grid Alternatives, an organization dedicated to making renewable energy and job training available to underserved communities.
For the LCFS program to provide as much leverage as possible to expand the EV market, consumers need to know that clean fuel credits are available when they are shopping for a car. Utilities, car companies, and CARB should all do a better job of focusing and publicizing the program to drive growth in the EV market as quickly as these cars can accelerate from zero to sixty.