ALT FUEL: California Likely to Axe Electric-Vehicle Rebates

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California embraced our clean air future by offering handsome rebates on the purchase of electric and hydrogen fuel cell vehicles, but the love affair may be coming to an end. Recent budget proposals are cutting the rebates down to zero.

The rebates were $2,500 for battery-electric vehicles, $1,500 for plug-in hybrids, and $5,000 for hydrogen fuel-cell vehicles. There were also rebates for select heavy-duty trucks that were considered green. It’s all over if the state’s most recent annual budget is approved.

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There is still a chance that these rebates could remain, possibly in smaller amounts, if Governor Jerry Brown doesn’t sign off on the proposed budget. He’s a very green-focused guy and is unlikely to be happy with the idea of getting rid of rebates that help improve California’s air quality.

It also goes directly against was Governor Brown announced back in January. The plan back then called for $500 million of spending on low-carbon transportation programs. That included $230 million for the low-emission vehicle rebate program and another $30 million to incentivize low-income residents to go electric.

The California Air Resources Board announced earlier this year that they planned some changes for how rebates are issued in an effort to provide more help to low-income residents. Those with low incomes would get an extra $1,500 rebate while those making $250,000 or $500,000 for joint-income filers would see their rebate on electric vehicles disappear.

The problem is the state’s plan to pay for those rebates with revenue from the cap-and-trade program. The program requires companies like oil refineries and manufacturers to buy permits based on how much they pollute the environment.

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These permits are auctioned and they’re going for far less than expected. The state had $1.4 billion sitting in the fund, but the latest auction produced almost no new revenue, which means they’re using up that money fast. Once it’s gone, there’s no way to continue issuing rebates unless they find a new source of funding.

Over the past six years, the state has paid out nearly $300 million in rebates for roughly 140,000 vehicles. Removing the rebates could see the number of green vehicles on California roads drop if people can’t quite make the numbers work for their budgets anymore.

Although the budget has not yet been signed by Governor Brown, the state is already putting rebates on hold. They aren’t outright denying rebates yet, but instead are putting names on a waiting list until the issue is fully resolved.

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Nicole Wakelin

Nicole Wakelin