Federal and state electric vehicle (EV) subsidies are intended to increase access to EVs and EV service equipment (EVSE) through public investment. However, when there are no eligibility requirements for subsidies, public investments predominantly benefit wealthier individuals and communities.
Recent research highlights the need to modify EV purchase incentives — or even outright replace them with community-focused programs — when they overwhelmingly direct funds to high-income households. In this blog post, we outline the steps that Colorado is taking to ensure that equity is at the forefront of its EV/EVSE policies and investments. These steps will be helpful for other agencies to consider as they make decisions around electrification in their states.
Vision for an Equitable Zero-Emission Future
Colorado has taken major steps to reduce greenhouse gas (GHG) emissions by 50% from 2005 levels by 2030. To meet this goal, Colorado is focusing on the transportation sector, which is responsible for the majority of GHG emissions in the state. Colorado offers some of the most generous EV incentives in the country and will soon expand its offerings to include greater support for fleets, replacement of high-emitting internal combustion vehicles, electric school buses, and more.
To meet the ambitious objectives developed in House Bill 19-1261 Climate Action Plan to Reduce Pollution, the Colorado Energy Office, Colorado Department of Transportation, and Colorado Department of Public Health & Environment are casting the State’s vision for a carbon-free future by setting a goal to reach 940,000 electric vehicles on the road by 2030.
Reaching Middle-Income Buyers and Disadvantaged Communities to Achieve EV Adoption Goals and GHG Reduction Targets
The Colorado Energy Office (CEO) partnered with Cambridge Systematics to conduct an EV Equity Study to assess barriers to EV adoption and improve policy design to better reach disadvantaged communities. The study engaged a diverse group of stakeholders to ultimately develop a dashboard to inform actionable next steps for advancing EV equity.
Based on this work in Colorado, we recommend that other states consider taking the following steps as they make plans around electrification:
Supporting Stronger, Coordinated Stakeholder Engagement for State-Run Programs
State agencies in Colorado have increasingly sought input from wide-ranging stakeholder groups that now also include non-profit and community-based organizations (CBO). Establishing an independent organization through which all community engagement is directed can strengthen stakeholder engagement by: removing redundancy, efficiently managing payment and paperwork on behalf of community members, and employing economies of scale with respect to community outreach.
Prioritizing Community-Driven Investment Through New Enterprise Spending
A grant program that allows community members to co-design a localized transportation electrification program can ensure that equity is centered throughout program development. It would also support capacity building and enable community members to develop programming that would meet localized needs.
Expanding EV/EVSE Offerings throughout the State
Support for transportation electrification is particularly robust in the Denver metro area, where utility incentives can be paired with other programming offered by local municipalities, the State, and the Colorado Regional Air Quality Council (RAQC). Expanding program offerings into areas beyond metro areas can ensure that the benefits of transportation electrification are shared equitably throughout the State.
Balancing Equity and Electrification Objectives
Currently, all EV purchasers receive the same level of incentive, regardless of the purchaser’s income. Adopting a sliding scale of incentives to encourage adoption of EVs among low- and middle-income households will be critical not only to achieving equitable electrification, but also reaching adoption goals.
Offering Electric Vehicle Incentives as Vouchers, Not Tax Credits
Tax credits tend to favor higher-income buyers who can afford to delay receiving their credits. While some dealers process tax credits immediately (and pass along the savings to the buyer), not all do. With the current system, it is difficult for consumers to know which dealers provide this benefit. If all dealers offered EV vouchers, it would make EVs more accessible to low- and middle-income buyers.
Avoiding the Use of the General Fund for Incentives
Prioritizing revenue sources outside of the General Fund reduces risk to other programs highly valued by underserved communities.
Streamlining Application Processes
Combining application processes would enable individuals applying for an income-qualified program in the state to apply for other programs or receive information on other programs at the same time. This would reduce administrative burden both for the applicant and the administrators and could be done not only for state programs, but also for programs managed by utility companies.
Combining Project Evaluation Processes
Grant applications are often scored using a manual process that may vary from program to program or cycle to cycle. Streamlining and combining these processes would reduce bias, streamline program administration in the way projects are prioritized, increase transparency, and free staff to provide community-facing support.