Can California Take a Pummeling?
At a glance, CA looks golden. The state’s size and wealth makes it the sixth largest economy in the world. With a $2.2 trillion GDP, CA is set up to outpace the UK in less than five years. It has billions in grants and incentive programs. It’s rumored to have a growth rate of two new renewable energy businesses a day. But California’s confident stance will take a few blows if House Bill 861 terminates the EPA.
Next to developing countries like India and China that are commercializing resource efficiencies at faster rates, CA’s golden hue pales. Demand for infrastructure to harness renewable resources is spiking around the world. As a result, 60% of global new investment was made in developing countries last year.
Economists use the term “survival-driven” to describe the market needs for solutions to tainted water supplies, wasteful manufacturing practices, and air pollution.
For the time being, CA keeps pace with its competitors; the state is already 28% to its 50% renewable energy goal for 2030. Its 2016 Infrastructure Plan has carved out $57 billion for Transportation Agency projects, some of which support clean energy infrastructure.
But a closer look reveals a cluster of influences like federal and state regulations, consumer behaviors, and the low price of oil that present potential obstacles in the race to meet market-driven demands. Now add federal cuts to this list.
We heard Governor Jerry Brown recently defend CA’s bragging rights. Brown said that CA will “set the stage” in the fight against climate change. To that end, Mr. Brown hired former US attorney general Eric Holder, now a prominent Washington lawyer, to represent the state’s interests.
“We’ll set the example, and whatever Washington thinks, we will change the future,” Brown told an audience of earth scientists at their annual American Geophysicists Union meeting in San Francisco. “We have the scientists, we have the universities, we have the national labs. No doubt we will fight and we will persevere.”
This is an exceptional threat. The state already has higher standards for carbon taxes and lower greenhouse gas emissions than anywhere else in the country. Some of these standards are enumerated in Assembly Bill 118. The bill authorizes California’s Energy Commission to develop renewable fuels and “advanced transportation technologies” to help meet goals for reducing greenhouse gas emissions and petroleum dependence.
We should also expect CA to make huge innovation in the transportation sector. Intelligent car design is a big promise. Rollout of a high speed rail plan is yet another. Investment in the electric vehicle (EV) market is a third column for growth.
But CA goals could begin to falter by 2025 when automaker fleets in Europe and the US will have to average upwards of 60 miles per gallon. If oil prices remain low, this will be a tall order. While bureaucratic regulations could hinder the EV market, on the consumer side, mainstream adoption of autonomous and electric cars will ultimately be timed to personal economic considerations.
Another obstacle is the private sector bumping up against public regulations. For example, an Uber pilot program in San Francisco tested the functionality of so called “self-driving cars” last December. But the call for city permits chafed Uber management, and the company shipped its program to Arizona within just a few months.
Even though CA is one of the US regions with state incentives and federal tax credit for consumers who go EV, it’s not a slam dunk. The first GM EV1 hit the highways in 1996. This has been a slow burn. To see a shiny new Tesla on the road is still a bit of a surprise, even in 2017.
Consumers have reservations about buying into EV. One reason is the perceived convenience problems associated with battery charging. When you add a higher price point to “range anxiety” — the psychological barrier to driving around with a half-charged battery — it looks like the market demand for EV is meh.
Indeed, a 2015 study on EV market penetration shows EVs have a new-vehicle market share of 10 to 18 percent. The study also found the 30 California cities with the highest electric vehicle uptake have an average of five times the public charging infrastructure per capita as the US average.
CA already has thousands of charging stations, both public and private, including Tesla Supercharger, EVgo, ChargePoint, SemaCharge, and GE WattStation. But lack of public information about our options when the battery in a Nissan LEAF or a Ford Focus, for instance, goes below 10% seems to be another barrier to purchase besides sticker price.
Injecting cash to boost the growth of alternative transportation options seems like an option. Throw some money at the problem. The Feds tried to accelerate the roll-out of charging stations in 2010 by giving $100 million in funding to a private company. This company has since gone bankrupt.
Some speculate that what the electric vehicle industry really needs is healthy competition within its ranks. Tesla founder Elon Musk suggests that his company’s goal is to populate the world with battery stations to fuel the future of its electric cars. He could use some competitive partners in the industry to support that endeavor.
Problem is, Teslas use proprietary chargers that ignore outlet standards of other EVs, a disinclination to play well with others.
Meanwhile, Europe seems to be taking nimbler steps in transitioning to electric. We’ll see what happens with its new policy to make charging more convenient by requiring installation of charging points in buildings with more than ten parking spaces.
Countries like India and China are killing it with clean energy goals and infrastructure in the survival-driven economy. In a Reuter’s story, China was reported as having more than doubling its installed photovoltaic capacity last year, surpassing Germany in 2013 as the largest solar market in the world.
India pledged in the Paris Agreement at the Convention of Parties that non-fossil fuels would account for 40% of the total energy generation capacity by the year 2030. In spring of 2016, India’s wind power capacity was already almost half way towards its goal.
It’s hard to keep pace with the rest of the world with a bully pounding you at home. If CA goes toe-to-toe with the federal government, a protracted fight may deplete the state’s ingenuity. Calling out Washington gives CA some tactical ground, but let’s hope Governor Brown is also planning big strategy moves to stay in the ring.