California can fend off Trump’s assault on EV mandate

OPINION – California needs to get smart about its transportation policies. In response to Trump’s revocation of the state’s electric-vehicle mandate, Governor Newsom issued an Executive Order on June 12 calling for a new “Advanced Clean Cars III regulation … as an alternative measure for deployment if the federal disapprovals of the Advanced Clean Cars II, Advanced Clean Trucks, and Heavy-Duty Omnibus regulations are not invalidated in court.” The courts might rule in California’s favor, but California could win the legal battle and still lose the war on climate change if the state continues on its current regulatory path.

California’s myopic focus on statewide emissions lacks any clear connection to global climate goals or strategies. Only about 2% of global transportation-related greenhouse gas emissions are generated in-state, so full attainment of California’s zero-emission transportation goals would not have a perceptible climate impact unless similar policies are adopted nationally and globally. States that have adopted California’s zero-emission vehicle standards are struggling to keep pace with the standards’ aggressive and inflexible targets and timelines, and prior to the federal ban a half-dozen states had already delayed, or had pending legislation to delay, their implementation of California’s rules.

For example, Oregon recently delayed enforcement of its truck electrification rules by two years because it couldn’t keep up with California’s fast-track timeline for EV truck adoption. (The delay was necessitated, in part, by the state’s lagging EV charging infrastructure.) However, Oregon cannot simply resume enforcement in 2027 on a delayed schedule, e.g., starting at the current (2025) 7% EV sales target for heavy-duty trucks. The federal Clean Air Act allows states to adopt California’s vehicle emission regulations only if the state’s rules are  “identical to the California standards,” so Oregon would have to restart enforcement on California’s timeline, complying with its 15% sales requirement in 2027. A state that wishes to adopt California’s zero-emission truck regulations in 2030 could not do so unless its heavy-duty trucking industry is already in compliance with California’s 30% sales target at that time.

The regulations provide a measure of flexibility by allowing trading of compliance credits, which has the effect of converting the mandatory performance standard into a financial incentive. Manufacturers that are not in compliance with the standard can purchase credits to offset their under-compliance, and over-compliant manufacturers can profit from the sale of credits. But a tradable standard provides no guarantee that credits will be available at an affordable price – or at any price.

The price affordability problem can be remedied by taking the trading approach one step further: Dispense with the standard but retain the financial incentive in the form of EV subsidies financed by fees on high-pollution vehicles. The incentive level would be predetermined by regulation and would be immune to the price volatility of tradable standards.

Price stability would be conducive to long-term investments in EV technology, and regulatory ambition would not need to be biased toward cost conservatism to ensure affordability under worst-case price expectations. For these reasons, an incentive system would likely surpass a mandatory standard’s emission goals.

This policy approach is exemplified by Germany’s Feed-in Tariff (FIT) program for solar power in the early 2000s, which triggered an explosive expansion of the global solar market far exceeding original program expectations. Germany did not impose mandatory sales targets or timelines on solar manufacturers; it just offered them a guaranteed price for renewable power.

Incentives could induce a similarly dramatic transformation of the global transportation industry, but not necessarily on California’s dictated timeline. Progress might be slower in the near term, but faster in the long term.

This type of regulatory reform would entirely circumvent Congressional authority over California’s transportation policies. A financial incentive does not constitute a “standard” subject to federal preemption under the Clean Air Act and would therefore not be regulated by federal law.

A financial incentive program could constitute one element of a targeted industrial policy that leverages the investment potential of EV technology to gain industry support and accelerate nationwide and global EV adoption without the encumbrance of federal obstructionism.

Ken Johnson is affiliated with the Climate Reality Project: Silicon Valley Chapter and is a writer on climate-policy topics.