The transportation industry accounts for the highest percentage of total greenhouse gas (GHG) emissions in the United States according to the Environmental Protection Agency. This has resulted in greater demand and interest for electric vehicles and trucks (EV) in order to reduce these emissions. The U.S. Department of Energy recently reported that plug-in electric and hybrid vehicle sales nearly doubled in 2021 to 608,000. Both the Biden administration and major U.S. carmakers – Ford, General Motors and Stellantis (Chrysler) – have set an aspirational goal for EVs to account for 50% of all vehicle sales by 2030.
The passage of the Bipartisan Infrastructure Act last year took a significant step forward in support of this goal by providing $7.5 billion in federal funds to establish a national EV charging network. The fact sheet on the administration’s EV charging action plan under the act outlines the important role of the states and their transportation departments in this “transformative” investment by the federal government.
The bulk of the federal investment ($5 billion) will go to the states through a formula over the next five years to begin the construction and expansion of existing EV charging systems into a national network for both short- and long-distance travel. The secretary of transportation will retain 10% of this investment in order to provide special grants to assist states in filling in any gaps and complete a seamless EV charging network. The remaining $2.5 billion will be distributed through discretionary grants in certain corridors and communities that are underserved, such as rural and disadvantaged ones.
The National Governors Association issued a press release in February that highlights state preparedness to work with the administration, receive the funds and begin the process of developing the charging infrastructure for transportation electrification. The press release included the following statement from NGA’s Economic Recovery and Revitalization Task Force Co-Chairs, Kentucky Governor Andy Beshear and South Carolina Governor Henry McMaster:
“Governors will work with the Administration to ensure that states and territories thoughtfully and expeditiously deploy these critical resources. While also ensuring that the funds meet the transportation needs of the 21st century.”
The Joint Office of Energy and Transportation (Joint Office) is overseeing the new federal program and serve as a “one-stop-shop” on EV charging related topics. One of their first actions was to issue guidance on the new National Electric Vehicle Infrastructures Formula Program for states in accessing the federal funds. Each state will need to submit an EV Infrastructure Deployment Plan that explains the intended use of their apportionment under the new program. The Joint Office has issued a template to assist states in developing their deployment plans.
State departments of transportation are encouraged to work with state energy agencies in the development of their infrastructure deployment plans and the eventual application of the federal funds. States have until August 1, 2022, to submit their plans to the Joint Office for approval by the Federal Highway Administration (FHWA). FHWA will have until September 30, 2022, to approve eligible plans.
The Minnesota Department of Transportation, for example, has established an electric vehicle infrastructure plan webpage to keep the public informed on its progress in developing their deployment plan for the $68 million from the new funding program over the next five years. The state intends to initially focus on light-duty EV charging needs and then more medium- to heavy-duty ones in 2023. Stakeholders and the general public are encouraged to share ideas on potential EV corridors and other investments, take a survey and sign-up for email updates.
The administration’s fact sheet also notes that the U.S. Department of Transportation will publish standards for EV chargers in order to bring conformity within the national network charging stations “to ensure they work, they’re safe, and their accessible to everyone.” Like cellphone chargers, some within the automotive industry may resist a national standard for EV charging systems.
The executive branch in a state or territory may have the lead in building and expanding existing EV charging stations into a national network, but it does not prevent local governments and state legislatures from continuing to adopt mandates for EV charging stations. The District of Columbia enacted the Electric Vehicle Readiness Act last year, which requires all building owners and multi-unit buildings with three or more to prepare 20% of those for EV “make-ready infrastructure” when constructing a new building or upon a major renovation. In addition, the Colorado legislature is currently considering HB22-1218 that would require commercial and multifamily buildings to install electric vehicle charging stations for at least 10% of their parking spaces in buildings of 25,000 square feet or more. The legislation would also require building owners to put the infrastructure in to place for the possible charging expansion to 50% of the parking spaces.
The $7.5 billion in federal funding will play a role in establishing a national EV charging system or network for transportation electrification. However, state and local governments will continue discussions regarding the reduction of GHG emissions through EVs and other sectors of the economy. Final decisions arising from these policy discussions will undoubtedly have an impact on commercial real estate and development. NAIOP members will need to remain engaged to ensure balanced, sustainable and economically viable outcomes for commercial real estate and their communities.