In the nearly four years since Gov. Mills’ election, Maine has leapt from laggard to leader in responding to climate change. We have embraced ambitious targets – 80 percent renewable energy by 2030, 100 percent by 2050, carbon neutrality by 2045 – and while the state is keeping them within reach, we have a long way to go. Realizing those goals and safeguarding the quality of life that depends on them will require the equitable reduction of emissions by all sources, from residential to industrial, electricity generation to transportation.
Action across so wide a front requires equally wide collaboration, including the legislature, governor, industry, the Department of Transportation, Efficiency Maine Trust, Maine Housing, regional planning organizations and municipalities. Fortunately, unprecedented federal resources are now available through the Inflation Reduction Act and prior legislation. Now the challenge is to put those resources to work in efficient and equitable ways.
One opportunity for rapid progress on both fronts may be hiding in plain sight.
In back-to-back reports last month, Maine’s Departments of Transportation and Environmental Protection underscored that greenhouse gas emissions from fossil-fuel powered vehicles are both our biggest source of greenhouse gases and the slowest to decline. Luckily, there’s a way to accelerate the reduction of transportation greenhouse-gas emissions that is both more efficient and more equitable than Maine’s current policy.
Buyer behavior shows that aggressively rebating used EVs can bring dramatic results. Americans buy used cars and trucks at twice the rate of new, a preference increasing when income declines. Moreover, households with annual pre-tax income between $35,000 and $125,000 generate more vehicle miles than others on the road. In fact, the highest milers earn less than $75,000 a year. And lower-income drivers tend to own older, less efficient, more polluting cars, and keep them longer than affluent drivers. On a strictly dollar-for-dollar basis, rebates to get dirty cars off the road would therefore reduce greenhouse gases more than spending the same dollar to incentivize new EV purchases by higher-income drivers. Indeed, studies show large numbers of new EV buyers would buy without a rebate.
Considerations like these led Vermont, Oregon and California to offer rebates for used all-electric and hybrid electric-and-gas-powered vehicles. Program differences prevent a perfect comparison, nonetheless when those states are compared to Maine through the end of 2021, the contrast is revealing. Vermont, Oregon, and California authorized rebates up to $5,000 for low-and-middle-income households with up to $91,000 in annual income when they buy vehicles with maximum sticker prices similar to Maine’s. Vermont rebated 262 vehicles, Oregon rebated 720, and California rebated 650. Over a similar time (longer than Oregon and Vermont, shorter than California), Maine rebated two.
Two factors help explain the difference. First, Maine’s maximum rebate for a used EV is $2,500, half the other states’ rebates. Second, the means test to qualify for a rebate – the same that applies to a basket of social programs – requires an income too low to afford most used EVs (about $48,000 in Maine compared to $91,000 in the other states).
These features suppress rebates but also create an equity issue: Households earning the state’s median income of $59,500 earn too much for a used EV rebate but too little to buy a new electric vehicle, even with the $2,000 new EV rebate. Remarkably, that is the same dollar amount available to Maine’s wealthiest households.
The governor’s goal is to put 219,000 electric vehicles on state roads by 2030. Meeting that admirable goal will require transformative change in the electric vehicle industry and measures like those in the recently passed Inflation Reduction Act, including the first federal rebates for used EVs. By bringing its own policy on rebate size and low- and middle-income eligibility into line with Vermont, Oregon and California, Maine can dramatically boost the equity and effectiveness of its own greenhouse gas reduction campaign.
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