Lessons learned from California
One in ten cars sold in 2021 were fully electric. The history of how electric cars have finally broken through to the mainstream is fascinating and offers many lessons. Given the huge impact road transport has on both climate change and human health, it may seem odd/frustrating that we haven’t made the switch to electric sooner. However, given the huge weight of both the oil industry and the established motor vehicle manufacturers, it’s also quite remarkable that we’ve made the progress we have. Countries including the UK have now pledged to end the sale of internal combustion engine (ICE) vehicles and are designing regulations to deliver that outcome - this is a long overdue recognition that markets struggle to address environmental and human health impacts and governments need to take action to force change. As we draft these regulations we need to learn the lessons from previous regulators.
Chart: UK car sales by fuel type - 2021
In the history of government support for cleaner vehicles, one policy intervention stands out as catalytic: the California ZEV mandate. And it’s this policy that is in the process of being adapted and adopted in the UK, thanks to enabling powers in the 2008 Climate Change Act. It’s a policy idea that dates back to 1990, when it was included in a much wider suite of policies designed to address poor air quality. It came into existence thanks to a combination of factors: there was growing recognition among policy makers that electric transport offered the best long term solution to poor air quality, which was a growing concern in cities like L.A.; General Motors had showcased its first electric vehicle (originally dubbed the ‘Impact’ and then EV-1); state electricity providers saw electrification as a source of growth; and policies that involved ‘tradeability’, meaning the creation of a ‘credit’ that could be submitted against an environmental obligation, (or banked for future use or sold to non-compliant competitors), were in vogue.
The governance of air quality was also overseen by CARB - the California Air Resources Board - an independent regulatory body - which had a highly transparent decision making process and which could place human health protection on an equal footing to potential economic impact. Over the years, the technically savvy staff had also developed a healthy distrust of the car manufacturing lobbyists, who always claimed technological progress was impossible but then miraculously disproved this, when required to by regulations.
The scene was set therefore for policy entrepreneur Don Drachand and chair of the CARB board Jan Sharpless to help successfully win a policy mandating that a rising number of cars sold in California be zero emissions vehicles (2% by 1998, rising to 5% in 2001 and 10% by 2003). The path to progress is seldom linear, however, and thanks to a provision that this mandate would be reviewed every two years, by 1996 it had been significantly watered down (to require a small fixed volume of sales rather than a percentage) and it remained a weak policy driver until 2012 when the policy was reinvigorated and the requirement to meet 15% of sales by 2025 restored. What changed between the mid 1990’s and 2010 was increased confidence in the EV market, coupled with a growing focus on transport’s impact on climate change. By 2010, the albeit weaker mandate had been enough to support the development of the Nissan Leaf and first Tesla cars, and the shift from lead acid batteries to lithium ion, which was so instrumental in getting to longer durability and longer range batteries.
Chart: California ZEV Mandate requirements
CARB’s ZEV mandate was catalytic because it wasn’t just constrained to just California - in the 1970’s it had been agreed level that in terms of air quality regulations California could set its own standards and, later in the decade, that States could choose to either follow the national EPA standards or California’s (which were generally tougher). As a result, a dozen other states opted to adopt ZEV mandates. Eager to develop its own EV sector, China also adopted a version of the ZEV mandate, requiring a fixed proportion of car sales to be EVs by the end of 2020. Europe’s path to cleaner air was less successful, thanks in part to diversionary tactics from the incumbents to promote diesel vehicles as more efficient alternatives (on a greenhouse gas basis) to petrol. But the ‘dieselgate’ scandal which broke in September 2015, uncovering systematic evasion of air quality standards by European manufacturers, Europe is now finally catching up.
Expert commentators, including Dan Sperling, founder of UC Davis International Transport Centre, have been tracking the policy evolution over the decades and have teased out important lessons. One of which is that there is a correlation between how much flexibility a policy allows and how ambition you can expect to achieve. This is why tradeable obligations which allow over and under compliance by participants are so effective. Creating carrots that can create lots of different winners is also key, as is ensuring a policy doesn’t overly focus on a narrow solution set that may or may not deliver. Dan is, however, ready to admit that California didn’t get everything right. The fact that large pick-up trucks were treated separately from smaller cars, skewed the market in favour of ever larger gas guzzlers and eroded environmental gains - but today’s policy makers can learn from this mistake and correct for it. In the UK, for example, its essential that we create a level playing field across all vehicle classes and introduce policies that capture the full impacts of larger and heavier vehicles. We also need to consider how we can target policy support for those that are most in need. The Californian ZEV policy created an additional reward to bring on higher range vehicles which has largely been resolved now - new policies can and should focus on other challenges. For example, helping bring on more affordable or lighter vehicles and ensuring, while there is limited supply of vehicles, that we are incentivising sales to those who are driving the most miles. We believe that this could have a substantial effect on increasing the environmental impact of the policy - ensuring we get the most benefit possible from intervening in the market.
If the history of the faltering path towards mainstream EV adoption teaches us anything it’s that policy makers have an absolutely essential job to do in forcing technological improvements. Faced with the inevitable barrage of incumbent industry opposition they need to hold firm and trust the fact that well designed policies will drive innovation and deliver results. Adopting a healthy scepticism when engaging with directly affected lobby groups is essential, as is seeking out the most progressive actors to form a more optimistic view, including impartial experts/NGOs and those in the electricity sector.
With thanks to Dan Sperling for his generous insights - any errors are the author’s.
Source: “The origin of California’s zero emission vehicle mandate”; Gustavo Collantes, Daniel Sperling; Institute of Transportation Studies, University of California at Davis; 2007