Don’t Expect California ZEV Credits to Go Away Any Time Soon, CARB Head Says

While California has been taking heat for its zero emission vehicle policy, the head of the state’s Air Resources Board says it’s working out much better than expected.

California is well on its way to meeting the state’s strict ZEV mandate, said Mary Nichols, chairperson of the state governing board. It’s not going away, and funding is available for the incentives that support ZEV sales, Nichols said to WardsAuto.

Nichols was one of the speakers at “The Road Ahead,” an advanced clean-cars symposium held at the South Coast Air Quality Management District office in Diamond Bar, Calif.

“If anything, I think it will move further and faster, not move in the other direction,” she said.

The symposium was held on the 10th anniversary of the passage of Assembly Bill 32, which prompted the creation of California’s ZEV mandate a few years later. ZEVs include battery-electric, plug-in hybrid electric, and hydrogen-fuel-cell vehicles; the law will be transitioning plug-in hybrids out of the allowable vehicles for automakers to earn ZEV credits.

California requires large- and medium-volume automakers to bring a certain number of ZEVs to the state based on the volume of vehicles sold and their emissions. Automakers are allowed to sell and purchase credits to meet ZEV requirements. Those automakers that have excess credits can sell those credits to other automakers. If an automaker doesn’t somehow accumulate enough credits, it faces fines by the state.

While viewing the latest report on the Air Resources Board website, you can see which companies have been selling and buying the most credits for compliance since the program was launched in the 2009 model year. Tesla Motors has, by far, been the largest seller of credits, with 80,227 transfers recorded so far. Toyota has been second at 6,840 credits transferred and Nissan came in at third with 6,600 credits transferred. Tesla and Nissan earned credits through sales of its battery electric vehicles, while Toyota earned credits for sales of what the state defines as partial zero emission vehicles (PZEV), which has primarily been met by sales of Toyota and Lexus hybrid electric vehicles.

As for automakers buying the most credits, Fiat Chrysler has received transfers of the most credits at 37,450 purchased. Ford was number two at 35,000 transfers received.

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California’s goal is to reduce emissions to 431 million metric tons of carbon dioxide by 2020, with the ZEV policy expected to play a big part. That is the level researchers determined that the state emitted in 1990.

The state continues to offer automakers and car buyers incentives to keep the ZEV target moving forward. State rebates have been whittled down to $2,500 for several electric models from their peak at $5,000 a few years ago. Federal tax incentives can go as high as $7,500 per vehicle. Combined government incentives continue to be seen as an important factor is selling more ZEVs.

To pay for the incentives, California has been tapping into its cap-and-trade program. In that program, companies emitting large volumes of carbon emissions such as oil producers and energy plants, can bid for auction credits to meet state requirements.

While revenue from the cap-and-trade auctions have dropped dramatically this year, funding for the ZEV incentives isn’t a problem, Nichols said.

“The way we pay for incentives doesn’t only come from cap-and-trade,” Nichols told WardsAuto.

Other possible funding sources include provisions of A.B. 118, a law that directs the California Energy Commission to develop and implement an alternative- and renewable-fuel vehicle and technology program. That bill was passed in September partially to support disadvantaged communities who live at the center of air pollution coming from harbors and freeways.

There’s still a certain amount of skepticism over whether California will ever be able to reach ZEV sales targets that can reduce carbon emissions in any significant way. Sales are currently less than one percent of all light-duty vehicles. California plays a larger role in that total; an example of this market dynamic is half of all Chevrolet Volt U.S. sales have been taking place in California.

“It is not as exciting as we want it to be,” Britta Gross, director-advanced vehicle commercialization at GM, told the symposium in her keynote speech.

Gross did credit the California mandate with helping drive ZEV models to the market. Consumers will have a choice of some 35 electrified models by year’s end, including 13 battery electric models and 19 plug-in hybrids, she said.

“We don’t think ZEV is going away,” she said.