FOTW #1144: U.S. Energy Savings Due to Light-Duty Plug-In Electric Vehicle Use Estimated at 44.8 Trillion Btu in 2019

    Originally posted by the Department of Energy Office of Energy Efficiency and Renewable Energy | Original Article

    Due to their efficiency, plug-in electric vehicles (PEVs) reduce the amount of energy used by light-duty vehicles compared to their internal combustion engine counterparts. Estimates show that the energy savings in the United States due to light-duty PEVs in 2019 was 44.8 trillion Btu, up 47% from 2018. The reduction of energy use by plug-in electric vehicles translates to a savings of 470 million gallons of gasoline in 2019.

    Notes: Gasoline conversion to Btu using gross heating value 125,000 Btu/gallon. Electricity conversion to Btu using 3,412 Btu/kWh.

    Source: Argonne National Laboratory, Assessment of Light-Duty Plug-In Electric Vehicles in the United States, 2010 – 2019, June 2020.

    Fact #1144 Dataset


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    EV Sales Trends: Covid-19 Implications

    By Samantha Breaux and Jacob Holt, LCF Interns

    It is no question that the Covid-19 pandemic has had an impact on the world’s economy this year. Across the globe, countries are struggling to stimulate their economies and return to normalcy. What does this mean for electric vehicle (EV) sales in the coming years? A few reports, including one from Bloomberg New Energy Finance, have suggested that sales will fall throughout the 2020 year but ultimately return to new growth by 2021.

    COVID-19 Forecasted Impact on EV Sales

    Between April and May, as the Covid-19 pandemic swept across the country, research companies began looking into the short and long-term implications of the economic downturn on EV sales. Wood Mackenzie was one of the first to comment, predicting a 43% drop in sales by the end of 2020. A few weeks later, Bloomberg New Energy Finance posted three potential scenarios for EV sales, deciding that the most likely outcome is that 2020 global sales fall 18%. Both companies have suggested that sales will begin to grow in 2021, returning to the 2019 value by 2025. Long term trends suggest this will result in an unchanged trajectory compared to those developed pre-pandemic. Perhaps the most optimistic projection comes from the International Energy Agency’s (IEA) Global EV Outlook 2020, which estimates that EV sales of passenger and commercial light-duty vehicles will remain broadly at 2019 levels, based on sales data from January to April 2020.

    Explanations for Decrease in EV Sales

    Other experts have turned to platforms, such as Green Car Reports, to discuss possible causes for the expected decrease in sales. One common explanation is that the economic downturn has resulted in consumer uncertainty surrounding future income and economic stability. Car purchases represent a large financial investment that buyers are unwilling to take right now.

    Automakers will also be responsible for the forecasted decrease in sales as delays in highly anticipated EV releases are expected. Due to pandemic-related shutdowns and poor economic conditions, many companies have delayed the release of their electric vehicles. This includes the Ford Mustang Mach-E and GM’s electric vehicles. Along with this, the Trump administration announced its Safer Affordable Fuel Efficient (SAFE) rule in late March requiring a 1.5% annual improvement in fleet emissions from 2021 to 2026. This standard is relaxed from the previous 5% annual increase requirement, and it loosens industry incentives to meet emission standards through EV or hybrid vehicles. This federal policy that undercuts California’s authority to maintain more stringent emissions standards has been challenged in courts by a group of 23 states, beginning in September 2019. As these policy disputes are resolved, the impact of the resulting emissions policies will become more predictable.

    Opportunities for an Increase in EV Sales

    Though companies across the industry agree that EV sales will take a hit this year, there are notable opportunities for an increase in sales due to the global pandemic and resulting economic downturn. As Advanced Clean Tech (ACT) News points out, traditional truck makers have existing product lines that cannot support themselves when experiencing cash flow issues from closures and low demand. Electric truck startups, however, often ride on venture capital. They don’t have physical capital to support today, so they are less likely to be impacted by economic slowdown. Instead, companies can focus on research and intellectual property development while production is halted. Other company incentives to start or continue EV development include low interest rates when borrowing money. This gives fleets a lower-cost opportunity to take a chance and begin familiarizing themselves with electric vehicles.

    It is also important to note that several automakers have already expressed their desires to be carbon neutral. This is led by government incentives, such as those announced by France to support sales of lower-emission vehicles with coronavirus corporate bailout money, as well as a recent shift in investor attitudes. As companies begin seeing the positive economic impacts of carbon-neutrality, the shift towards electrification of vehicles will continue.

    What This Means for Louisiana

    Specifically in Louisiana, economists are discussing what could be an economic downturn worse than the one experienced after Hurricane Katrina in 2005. In 2005, our state’s unemployment rate peaked at about 242,330 citizens, but this number was surpassed in April of this year for a peak unemployment of 291,286 people. Based on this, it is reasonable to predict that the decline in EV sales will be seen in Louisiana as well because consumer income stability has been impacted. By applying the global trend predicted by BloombergNEF and Wood Mackenzie, Louisiana Clean Fuels has forecasted that the projected EV ownership by 2040 in Louisiana will fall from 1.6 million to 1.55 million EVs. This number still represents nearly half of all vehicle registrations in Louisiana by 2040, in line with current overall US projections. This means a relatively low-impact for the long-term electrification of transportation, but short-term sales may be more seriously burdened.

    Figure 1: Long term EV ownership projections in Louisiana show a period of exponential growth that begins near 2030, despite potential drops in EV sales this year due to COVID-19. Long term estimates are impacted by many factors that are relatively unpredictable, but most models show this trend in long term growth globally.

    By 2024 and using the BNEF estimates, total EV ownership in Louisiana could be as low as 5,000 EV, or half of what pre-COVID projections show; however, this number is still twice as many EVs as the 2,400 registered in Louisiana in 2019, and BNEF projections estimate that the exponentially increasing trend in EV sales will continue by 2025 as battery costs decrease and range and consumer confidence increase. Light-duty commercial or government fleets in Louisiana are best poised to avoid these short term impacts by seeking incentives to offset the cost of EV charging equipment. If the best case scenario projected by the IEA is achieved instead, there will be no significant decrease in EV sales, and short term impacts to Louisiana would be minimal.

    Figure 2: This middle case for short term EV ownership projections represents the BNEF estimate that EV sales will drop 18% in 2020 and recover to 2019 levels by 2025. While 2024 levels in Louisiana are about half of what we expected before COVID-19, this still represents a doubling of EV in the state, and the exponential growth of sales will likely resume by 2025.

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    To learn more about post-pandemic projections, please visit the following sites:


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    Legislative Update: Moving Forward Act

    The Clean Fuels Community’s Guide to the Moving Forward Act 

    H.R. 2, the Moving Forward Act, is a $1.5 trillion plan to overhaul American infrastructure, with provisions including improvements for roads and bridges, transit systems, housing, schools, the U.S. Postal Service, drinking water systems, broadband, and clean energy. As of July 1, 2020, the Act has passed the House of Representatives.

    The bill’s provisions related to clean energy include a large amount of funding and incentives dedicated to facilitating the purchase of clean fuels and vehicles and the development of alternative fueling infrastructure. Important provisions are highlighted below.

    Key Funding and Grants:

    • The Act authorizes $50 million for the Department of Energy’s Clean Cities Program, the program to which Louisiana Clean Fuels belongs, for fiscal year 2021. The authorization would increase each year to $100 million by 2025.
    • The Act provides $350 million a year in competitive grants for alternative fueling infrastructure. 
      • The primary criteria for grant selection is the extent to which the infrastructure would decrease GHG emissions and air pollution. Infrastructure must also be on established FHWA corridors.
      • Grant recipients are also not permitted to charge fees for use of a project assisted by the grant.
    • The Act establishes competitive Community Climate Innovation grants of $250 million per year for local investments in innovative strategies that reduce greenhouse gas emissions. 
      • In addition to effective GHG emission reduction, prioritized projects are ones that are cost-effective, provide diverse transportation options, and consider accessibility, environmental justice, and equity. 
    • The Act authorizes $3.5 billion per year through 2025 for the Energy Efficiency and Conservation Block Grants, which can be used broadly at the local level to implement strategies to advance alternative fuels, vehicles, and infrastructure.
    • The Act requires the Postal Service to replace at least 75% of its fleet with electric or zero emission vehicles and authorizes at least $6 billion for the purchase of new vehicles.
      • Post Offices open to the public would also be required to install EV charging stations by 2026.


    Key Tax Incentives:

    • The Act extends the tax incentives for biodiesel and for natural gas and propane.
      • The Act extends the production tax credit (PTC), which allows energy producers to claim a credit based on the amount of energy derived from renewable energy resources, for facilities beginning construction by the end of 2025.
      • The investment tax credit (ITC) allows taxpayers to claim a 30% credit of the cost of qualified energy property. The Act extends this credit to properties beginning construction by the end of 2025, and then phases out over the next few years. Biogas producers will be newly eligible for this credit where they produce biogas with at least 52% methane for productive use, such as electricity generation. 
      • Income and excise tax credits will be extended for biodiesel and biodiesel mixtures at $1.00 per gallon through 2022, and the credit phases down to $0.75 in 2023, $0.50 in 2024, expiring in 2025 at $0.33.
      • The Alternative Fuel Excise Tax Credit will be extended for alternative fuels and alternative fuel mixtures at the pre-expiration level of $0.50 per gallon through 2022 and phased down to $0.38 in 2023, $0.25 in 2024, and $0.17 in 2025 when it expires.
    • The Act extends the tax credit for alternative fueling infrastructure through 2025 and expands the credit for electric charging infrastructure by allowing a 20% credit for expenses in excess of $100,000. 
      • This expansion would begin in 2021. 
      • Though the EV infrastructure credit is uncapped, the vehicle refueling property must be intended for general public use and allow for payments with a credit card or charge no fee, or it must be intended for exclusive use by government and commercial fleets.
    • The Act increases the production cap for the electric vehicle tax credit to 600,000 per manufacturer.
      • Under the current plug-in electric drive motor vehicle credit, once a manufacturer sells 200,000 plug-in electric vehicles, the tax credit available to purchasers begins to phase out, becoming lower each quarter and expiring after five quarters.
      • Under the new provision, the tax credit will be reduced by $500 when the manufacturer has sold 200,000 to 600,000 vehicles (the transition period). The credit phases out in the second quarter after a manufacturer sells 600,000 vehicles. When phase out begins, the credit is reduced by 50% for one quarter, and then expires.
    • The Act authorizes tax credit for zero emission heavy vehicles and buses.
      • Manufacturers will receive credit for the sale of zero emission heavy vehicles (at least 14,000 pounds) from the date of enactment through the end of 2025. The credit is 10% of the sales price, capped at $100,000 per sale. 
      • To be eligible, vehicles must be for domestic use and be powered by an electric motor and no internal combustion engine.
    • The Act creates a new tax credit for buyers of used plug-in electric vehicles.
      • The base credit is $1,250 for qualified EVs, and possible additional incentive for battery capacity. The credit is capped at 30% of the sale price.
      • Buyers with up to $30,000 ($60,000 married filing jointly) adjusted gross income (AGI) can claim the full credit. For buyers with more than $30,000 AGI, the credit is reduced by $250 for every $1,000 over $30,000.
      • Assuming the Act passes, qualifying for the credit may prove difficult. Used EVs must meet existing requirements for new EVs, be under $25,000, be a model year within two years prior to the date of sale, and be purchased from a dealership. Further, the credit only applies to the first resale, and sales between relatives have further restrictions. 


    Key Programs Created or Expanded:

    • The Act reauthorizes DERA, the diesel emissions reduction program, at $500 million a year. 
      • The DERA is an existing program administered by the EPA that funds projects aimed at diesel emissions reduction.
    • The Act reauthorizes the Clean School Bus Program at $65 million a year through 2025.
      • $15 million is designated for replacing or retrofitting buses that serve disadvantaged communities.
    • The Act establishes a pilot program for the electrification of certain refrigerated vehicles. The program would provide grants, rebates, or low-cost loans to eligible entities.
    • The Act creates a $500 million a year Zero Emissions Ports Infrastructure Program. 
      • The program is funded through 2030 and assists ports and port users in replacing cargo handling equipment, port harbor craft, drayage trucks, and other equipment with clean or zero emissions technology.
      • A minimum of 25% of this funding will go to areas in non-attainment status.
      • A portion of this funding will also be used to help ports develop clean microgrids that directly power their facilities with cleaner energy.


    Several other bills have been introduced with clean energy and alternative fuels in mind. America’s Transportation Infrastructure Act of 2019 (S.2302) would fund alternative fueling infrastructure and reauthorize the DERA program. It has been introduced in the Senate. Similarly, the Clean Corridors Act of 2019 (S.674, H.R.2616) would award grants to government entities and planning organizations for the installation of electric vehicle charging and hydrogen fueling infrastructure along designated alternative fuel corridors, like the one in Louisiana. The bill has been introduced in both the House and Senate. 

    The Moving Forward Act has been characterized as the House’s first offer in infrastructure-related negotiations. While smaller bills like the Clean Corridors Act or the Transportation Infrastructure Act may be passed on their own, a larger infrastructure package like the Moving Forward Act may be drafted by the Senate as a counteroffer to the House’s act, or sweeping reforms beneficial to the alternative fuels sector may wait until Congress’s next session. In either case, it seems there will be some federal aid for alternative fuels infrastructure in the near future. 


    House Summary of each section of the Moving Forward Act

    National Law Review: House of Representatives Passes Sweeping Infrastructure Bill

    Forbes: Moving Forward Act is a $1.5 Trillion Congressional Bill that Loves Electric Vehicles

    American Biomass Council: Moving Forward Act can Boost Biogas Industry

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