What if the Government Threw an EV Party and No One Came?

On August 25, the California Air Resources Board (CARB) adopted a package of rules that will prohibit the in-state sale of motor vehicles powered by internal combustion engines (ICE) after 2034.

Officially called the Advanced Clean Cars (ACC) II Regulations, the rules will require automobile manufacturers to deliver increasing percentages of so-called “Zero Emission Vehicles” (ZEVs) as a portion of their overall product deliveries between model years 2026 and 2035. The rules will culminate in nearly 100% sales of ZEVs by the 2035 model year. Regulations will allow a small portion of sales to be plug-in hybrid electric vehicles (PHEVs), designed to prioritize their electric function and use their gas engines in limited circumstances, to meet demand for certain kinds of uses.

The ACC II Regulations will be submitted to the federal Environmental Protection Agency (EPA), where a waiver from federal regulations is expected to be approved by the Biden administration. After approval is granted, a consortium of nine states, including Oregon, will adopt identical regulations, as allowed under the federal Clean Air Act. An additional seven to eight states, who are not part of the consortium, are likely to do the same.

Adoption of the ACC II program was a Holy Grail moment for CARB members, who collectively spent more than an hour congratulating themselves before voting unanimously in favor. However, once the euphoria wears off, they will have to confront some difficult facts regarding actual implementation. Like most schemes cooked up by central planners, the EV mandate is likely to become a regulatory quagmire.

First, the implementation schedule is laughably unrealistic. Beginning with model year 2026, 35% of vehicle sales have to meet the ZEV mandate. That’s roughly triple the market share of EVs sold last year in California, and about eight times the level sold in Oregon. By 2030 the mandate goes up 68%, and then 100% by 2035.

Advocates seem to be overlooking an obvious problem: Government can mandate that manufacturers offer ZEVs for sale, but it cannot force consumers to buy them.

CARB does have enforcement mechanisms, but they are indirect. If carmakers fail to meet the mandated percentages, they would be required to obtain “credits” from another manufacturer that has exceeded the quota. This is a government shakedown that has long been used to subsidize Tesla and other EV manufacturers through a “clean fuels” program that Oregon is part of. But over time that will be a strategy of diminishing returns as more EVs are forced onto the market.

Also, California could penalize automakers that fail to meet targets, fining them roughly $20,000 for every vehicle short of their target in a given year.

However, such punitive measures still miss the point: Manufacturers and dealers cannot simply kidnap customers off the street and force them to buy overpriced products they don’t want. There will be nothing to prevent California residents from simply buying ICE vehicles from another state and bringing them home.

A CARB spokesperson has admitted that if EV sales lag the aggressive mandates, the agency may have to lower the requirement. If that’s the case, then the ACC II regulation is really more of an “aspirational” goal than a mandate.

Another flaw in the program is the assumption that EVs are indeed “zero-emission” vehicles. That is a delusion. At the point of use they may be clean, but the electricity needed to power them is not. In a typical year, more than 45% of California’s electricity is generated by natural gas. California is also the nation’s leading importer of electricity, which is generated by many different sources including coal and natural gas.

Even the electricity sources favored by environmental zealots – including hydropower, geothermal, biomass, wind and solar – have negative environmental effects, some of them quite significant. That’s why activists across the country are fighting so hard to stop lithium mining, high-voltage transmission lines, pumped storage hydro projects, and huge wind/solar farms. Many of those activists are succeeding, because at the local level, people are not interested in sacrificing their own livability to benefit a handful of people elsewhere.

Kate Brown intends to adopt the CARB standards by December, and the Oregon Department of Environmental Quality (DEQ) is conducting a rulemaking to that effect. But it won’t matter. Fossil fuel use in Oregon has actually grown under her watch, so charging all the hoped-for EVs will simply shift emissions from tailpipes to smokestacks.

According to the Oregon Department of Energy (ODOE), coal and natural gas accounted for 45% of Oregon’s electricity generation in 2012. By 2020, fossil fuel use had increased to 48%. The largest increase was in natural gas, which grew from 12% to 21.5%.

The Oregon legislature has been mandating increasing levels of wind and solar power since 2007, but the more we force-feed those sources into the grid, the more natural gas we have to use as a back-up. For engineering reasons, electricity demand and supply always have to rise and fall together in order to avoid catastrophic grid failure (blackouts). This imperative cannot be changed by politicians sprinkling fairy dust on a solar panel. Since wind and solar are weather dependent and thus subject to sudden shifts in output, they always have to be backed up by adult sources that can be dispatched at a moment’s notice by a grid operator.

In the Northwest we are lucky enough to have hydropower serve this role most of the time, but the Columbia Basin hydro system is maxed out. Plus, hydro is also weather dependent, so during a drought year, less power is available.

Natural gas will serve as the permanent training wheels for wind and solar in the future, because there are no other fuels that can do the job.

Oregon legislators ignored this reality when they passed legislation last year outlawing all fossil fuel-powered electricity generation in the future. This is another policy that is destined to fail. When blackouts arrive and politicians have to make a choice, exceptions will be made for natural gas.

Anyone who doubts this should just look south. Multiple natural gas plants in California that were scheduled to be shut down in 2020 have been extended to 2023 or beyond, to the outrage of anti-fossil fuel activists. These shutdowns were negotiated more than a decade ago, so the state had plenty of time to prepare. But after the rolling blackouts of 2020, California politicians lost their appetite for plant closures.

California Gov. Gavin Newsom is also busy negotiating with state legislators to extend the life of the two nuclear reactors at Diablo Canyon, which are scheduled to be permanently shut down in 2024 and 2025, respectively. Diablo is the last nuclear power facility in California, and the political decision to shut it down was made in 2018. But here we are just four years later, and grid failure is imminent.

Diablo Canyon produces roughly 8.5% of California’s in-state power generation, and all of it is carbon free (which matters to a different set of activists). Despite furious opposition from the Sierra Club, Natural Resources Defense Council, and other anti-nuclear activists, it’s likely that Gov. Newsom will prevail and Diablo Canyon will continue operating into the 2030s.

Every politician in California remembers that when California experienced extended blackouts during 2000-2001, Gray Davis was the governor. By the time the crisis was over, Davis was the ex-governor (he was recalled in 2003).

As Dan Richard, an engineering consultant, told the LA Times last week, “Do any of these legislators really want to own the next blackout? The ghost of Gray Davis is hovering over all of us.”

Kate Brown has clearly not grasped the seriousness of the grid reliability situation. According to the most recent supply/demand forecasts produced by the Pacific Northwest Utilities Conference Committee (PNUCC), there will be major shortages of reliable electricity in the region for the rest of this decade, starting now. The forecast calls for a Northwest deficit of 204 average megawatts (MW) in September, growing to 856 MW in December, and 2900 MW in February.

On an annual basis, the Northwest is likely to face a 19 average MW deficit in 2023, growing to 3,790 MW by 2032.

This is a crisis created by politicians. More than 2,100 MW of coal generation has been shut down in the Northwest since 2019, and another 2,800 MW will be terminated by 2026 – the exact year that the first EV mandate requiring 35% of sales will kick in.

Coal, gas and nuclear have been outlawed in Oregon; and hydro is subject to droughts. Salmon advocates are also seeking their own Holy Grail moment in the form of hydroelectric dam removals on the Klamath River and Snake River. Should they succeed – and they already have in the Klamath – more carbon-free generation will be lost.

The bizarre thing about EV mania is that there is no compelling environmental argument behind it. ICE vehicles do release small amounts of air pollution, but most people in America are experiencing the best air quality in American history.

Few people face serious health risks.

This is acknowledged by regulators at every level. The CARB website proudly proclaims that in 1967 there were 186 smog alerts in California, but in 2019 there were zero. Elsewhere, the agency states, “Emissions of black carbon have dropped by 90% since 1967. Black carbon is the main light-absorbing component of soot, and has been recognized as one of the largest contributors to global warming … ”

The agency also states, “Cars today are 99% cleaner than in the 1970s … ”

The Oregon DEQ website says, “In 1980, only 30% of Oregonians lived in clean air areas that met national health standards for air pollution. Today all areas in Oregon meet those standards.”

EPA assures us that these trends are national in scope, not just regional. According to the agency, from 1970-2021, United States GDP increased 292%, vehicle miles traveled went up by 191%, population increased by 62%, and energy consumption up 43%; but aggregate emissions of six common pollutants went down by 76%.

The fact that our economy has grown so much in the past 50 years while urban smog has been permanently eliminated is one of the greatest achievements in human history. Clean air activists should be throwing a party to celebrate, but all this success just makes them angry. Apparently if the number of smog alerts is zero, we must go lower!

Anyone who’s been around the regulatory scene knows what is going on here. With billionaires like Jeff Bezos, Bill Gates and Mike Bloomberg throwing vast amounts of money into climate change paranoia, activists no longer care about smog or acid rain. Carbon dioxide, or “greenhouse gas emissions,” is now the focus, but there are no local benefits to CO2 reductions the way there are with actual pollutants like lead, nitrogen oxides or particulate matter.

Career activists need a perceived crisis, and climate change is the perfect crisis because no one can actually define it, and there is no objective way to know what “success” looks like. Climate change will always be the crisis that keeps on giving.

While regulators and activists love the issue, voters have a very different point of view. They understand that the benefit-cost ratio is wildly asymmetric.

You can summarize the problem in one sentence: The benefits of reducing carbon dioxide are speculative, global, and decades in the future, but the costs are known, local and immediate.

I challenge anyone to randomly knock on 100 doors and sell this to voters. You can’t do it, which is why a carbon tax has never passed Congress and has never passed the Oregon legislature, even when liberal Democrats had a super-majority in both chambers.

Five years ago, Kate Brown established a goal of 50,000 EVs registered in Oregon by 2020. We never came close. As of June 2021, there were 38,482 light-duty, zero-emission vehicles registered in Oregon, comprising just of 1% of passenger vehicles. According to an ODOE report submitted to the legislature, “the state is not on track to achieve the 2025 or 2030 goals.”

Even if Kate Brown’s goals are miraculously met, the increased electricity demand will bump up against the grid reliability crisis. I don’t know who the next governor will be, but I feel safe in predicting that if she has to choose between two competing priorities, preventing blackouts by using more natural gas will win over virtue-signaling from Tesla owners.