TCI Regional Policy Design Stakeholder Submissions

ChargePoint offers the following comments on the draft Memorandum of Understanding (MOU) regarding the Transportation Climate Initiative (TCI). We recognize all the work put into this initiative thus far and appreciate the efforts to develop this MOU and the opportunity to provide comments.

ChargePoint is the world’s largest electric vehicle (“EV”) charging network with more than 108,000 Level 2 and direct current fast charging (“DCFC”) EV charging spots. ChargePoint designs, develops, and deploys residential and commercial AC Level 2 and DCFC charging stations, cloud-based software applications, data analytics, and related customer and driver services aimed at creating a robust, scalable, and grid-friendly EV charging ecosystem.

ChargePoint supports the adoption of a regional cap-and-invest program across the Northeast and Mid-Atlantic in order to reduce greenhouse gas emissions, improve air quality, and promote cleaner transportation solutions within the region. The transportation sector now presents the biggest threat to long-term state and regional greenhouse gas reduction targets, and transportation emissions are likely to continue to rise should policymakers not take action to address this trend. A well designed cap-and-invest program will help gradually and cost-effectively decarbonize transportation, improve local air quality and public health in the region, promote energy security and the use of low-carbon alternative fuels, and create economic and job opportunities in the region for local businesses offering cleaner, more efficient transportation solutions.

Similar clean fuels policies at the state level have proven to be environmental and economic successes where adopted. In California, the Low Carbon Fuel Standard has led to a doubling of alternative fuel use since 2011(1) and a 10% reduction in CO2 emissions from transportation(2). In British Columbia, the Renewable and Low Carbon Fuel Requirements Regulation is credited with 25% of the province’s emissions reductions between 2007 and 2011. Both B.C. and California have seen some of the highest economic growth relative to their respective national averages over the same time period(3)(4). To this end, we offer comments on several aspects of the policy’s design in line with the Initiative’s key policy objective to stimulate transportation emissions reductions in a least-cost and equitable way.

Comments RE: Investment of Proceeds from Auction Allowances

ChargePoint recognizes the differences in each participating jurisdiction’s transportation market and policy objectives, and we therefore support the use of local criteria in investment decisions. However, we advocate for the adoption of common principles when reinvesting allowance proceeds, such as competitive bidding, long-term cost effectiveness, and customer choice. The investment of allowance proceeds will play a critical role in shifting behavior and stimulating low-carbon fuel switching which will in turn serve to lower transportation emissions in the region. The supply of low-carbon fuels in existing clean fuels programs has proven to respond positively to increased demand(5) and the ability to ramp up production when investment materializes. Because of this, it is important that there is transparency around allowance proceed reinvestment such that those price signals can be incorporated into business and consumer investment decisions.

In California, even where electricity prices are relatively high, research has found that EVs present the lowest-cost option for large-scale deep decarbonization of the transportation sector(6). In fact, as battery technology improves and the cost of EVs continues to decline, EVs have the potential to provide a negative abatement cost option (i.e. they offer consumer savings over traditional vehicles today). This forward view towards investing in scalable and cost-effective solutions will be key to achieving policy objectives, while recognizing the need for a comprehensive portfolio approach.

ChargePoint also proposes customer choice play a strong role in allowance proceed reinvestment. This stimulates competition in the market which drives innovation and benefits consumers in the long run. Allowing low-carbon fuel suppliers to compete for allowance proceeds will naturally drive efficiencies in how the proceeds are spent and help lower the cost of the policy.

Comments RE: Market Linking

Without more information on the rules and restrictions that may govern the potential linking mechanism between the TCI and other emissions markets, ChargePoint neither supports nor opposes linking at this stage. We would caution the Initiative to consider several key economic and environmental ramifications of linking, namely: 1) how allowances under different programs with varying degrees of stringency compare to one another in terms of incentivizing emissions reductions, 2) how linking to programs that cover non-transportation emissions may disincentivize emissions reductions within the transportation sector to the detriment of the overall goal of the TCI; and 3) the transfer of allowance proceeds between markets and how those proceeds are reinvested in transportation. While linking can be an effective tool to drive efficiencies and stabilize prices in a market, the unintended consequences of diluting the incentive to reduce transportation emissions within participating jurisdictions via linking must be carefully considered.

Comments RE: Offsets

ChargePoint supports the role of verifiable carbon offsets as a cost containment mechanism and urges the Initiative to consider offsets from eligible EV charging, such as those approved under the Verified Carbon Standard’s (VCS) approved methodology for electric vehicle charging systems(7). VCS methodologies are independently proven to yield verifiable, additional emissions reductions and allowing this specific pathway, or a locally adopted adaptation, would further support the policy’s overall goal of reducing emissions from transportation and catalyzing the use of low-carbon alternative fuels. A market for these verified emissions reductions and the supporting infrastructure already exists today and could easily be leveraged under the Initiative.


By establishing a strong cap-and-invest program across the transportation sector, the TCI will enable fuel producers to introduce an increasing mix of clean, alternative fuels, promote fuel switching and cost savings among consumers, diversify the region’s fuel mix and reduce its dependence on volatile global petroleum markets, and stimulate investment in homegrown clean transportation solutions.

For these reasons, we strongly support the TCI.

We greatly appreciate the opportunity to provide these comments. If you have any questions or seek further clarification, please contact Evan Neyland at evan.neyland@chargepoint.com.

Sincerely,
Evan Neyland


References:
(1) Alternative fuel supply increased 109% between 2011 and 2019 (CARB data dashboard, Feb 3, 2020).
(2) Huseynov S, Palma MA (2018). ‘Does California’s Low Carbon Fuel Standards reduce carbon dioxide emissions?’. PLoS ONE 13(9): e0203167.
(3) Bureau of Economic Analysis.
(4) Statistics Canada.
(5) Non-ethanol alternative fuel supply in California is highly correlated with LCFS credit prices in CA (r2 = 0.9), (CARB data dashboard, Feb 24, 2020).
(6) Fingerman et al, 2018. ‘California’s Low Carbon Fuel Standard: Modeling financial least-cost pathways to compliance in Northwest California’. Transportation Research, vol. D 63, pp. 320 – 332.
(7) Verified Carbon Standard (VCS) Methodology VM0038.