Washington State Makes Strides Towards Energy Security

Last month, Governor Jay Inslee unveiled a bold new plan to expand Washington State’s impressive fleet of electric vehicles (EVs). Speaking before the Washington Future Energy Conference, the governor said his state would extend state sales tax breaks for EV owners and prioritize other additional incentives, including access to high occupancy vehicle (HOV) lanes, the placement of new charging stations along the State’s West Coast Electric Highway, and a redoubled effort to construct more in-home charging stations.

In Washington State, new light and medium-duty vehicles and light-duty trucks operated on alternative fuels (electricity, hydrogen, natural gas, or propane) are exempt from state motor vehicle sales and use taxes. But under current law, this exemption will expire on July 1 of next year. Washington has led the nation with the highest proportion of EVs on the road, says, a position that some lawmakers in the state hope to maintain. There are now 10,000 plug-in vehicles on the roads, of which 7,000 are entirely battery-operated. By 2020, state lawmakers hope to have 50,000 fuel-efficient vehicles.

Incentives like tax breaks or carpool lane access are robust policy measures that promote EV ownership and generally increase adoption rates. But these policies are varied among a patchwork of state laws and regulations. According to the National Conference of State Legislatures (NCSL), 37 states offer some EV incentive and at least 20 considered legislation in 2014 to encourage hybrid or plug-in vehicle (PEV) ownership. Last May, eight states devised action plans to put 3.3 million fuel-efficient vehicles on the road by 2025, NCSL says.

Specific details on the governor’s plan will not be public until he submits a proposed budget later this month, but several factors are propelling the state toward its 50,000-vehicle goal. First, Washington has some of the lowest electricity rates in the nation, according to the Department of Energy. Last year, state residents paid an average of $7.79 per Kilowatt hour for transportation-related purposes, $3.07 less than the national average.

Second, Washington State is a leading producer of electricity from hydropower. The Grand Coulee Dam on Washington’s Columbia River has a total generating capacity of 6,809 megawatts—29 percent of the nation’s net hydroelectricity generation. Hydroelectricity generated from Grand Coulee sparked an immense aluminum industry in Washington State, allowing Bill Boeing to produce the raw materials used in his company’s early planes. Today, the state’s inexpensive and abundant hydroelectricity attracted the likes of automaker BMW that not only produces carbon fibers for its i8 EV in the state, but also operates a $200 million factory there—the largest such plant on Earth.

“It is up to us to decide if this is our Grand Coulee Moment,” the Governor said of his administration’s new EV plan.

The Evergreen State also home to an extensive infrastructure that naturally supports a growing EV fleet. Its West Coast Electric Highway is a network of Level 2 fast charging stations are located every 25 to 50 miles along major roadways in the Pacific Northwest. “Isn’t it great that you can now drive all the way from British Columbia to the California state line in your electric vehicle, and not worry about where to charge your battery,” the governor added, rhetorically. And consumers who buy vehicles run on alternative fuels do not pay a state sales tax, a major consumer cost that currently ranges from seven to 9.6 percent, depending on the location of the sale.

In a recent white paper published by the International Council on Clean Transportation (ICCT), authors Lingzhi Jin, Stephanie Searle and Nic Lutsey conclude that the best state-level policies that positively affect battery electric vehicle (BEV) sales are subsidies, carpool lane access, and emissions-testing exemptions–exactly the kinds of policies implemented by Washington, and at least twelve other states, according to NCSL. ICCT researchers say that incentives drive the total cost of ownership down, and thereby positively correlate with BEV sales. With all the other ways that the state is moving forward on EVs, it’s only natural that a purchase incentive would help add an additional boost towards accelerating deployment in the state.

But some state lawmakers worry about that a growing EV fleet will eat into gross tax revenues. That is why lawmakers in Olympia passed HB 2660, setting a $100 annual flat fee to help fund public roads, one of five states to enact such a measure. Excise taxes on gasoline, a major source of state revenues, are 37.5 cents per gallon of gasoline—among the highest in the nation—and account for a larger portion of annual taxes paid to the state by internal combustion engine drivers than EV drivers, when average fuel economy standards are factored in.

As Governor Inslee rolls out a proposed budget, eyes will be on Washington State to see how it grows its EV fleet. At this stage of early adoption, states have a real opportunity to experiment with best practices, try incentives, and reap the benefits of reduced oil dependence.