HomeMy WebLinkAbout2021-09-16; COVID-19 Economic Response: Electric Vehicle Rebate Program (Districts - All); Rocha, LauraTo the members of the:
CITY COUNCIL
Date ~/,to/2t cA ✓ cc _L
CM i/ ACM ti DCM (3) L -. -
Sept. 16, 2021
Council Memorandum
To:
From:
Via:
Honorable Mayor Hall and Members of the City Council
Laura Rocha, Deputy City Manager, Administrative Services
Geoff Patnoe, Assistant City Manager ~
{city of
Carlsbad
Memo ID #2021172
Re: COVID-19 Economic Response: Electric Vehicle Rebate Program (Districts -All)
This memorandum provides information related to the potential development of an electric
vehicle (EV) Rebate Program to respond to the economic impact of COVID-19. It provides City
Council subcommittee actions, staff evaluation, and next steps.
Background
On April 7, 2020, the City Council adopted a resolution authorizing the formation of the Ad Hoc
City Council Economic Revitalization Subcommittee to provide direction on economic response,
recovery, and revitalization during the COVID-19 pandemic. The subcommittee met 36 times and
evaluated ways to address the economic impact of the COVID-19 pandemic.
In response to the COVID-19 pandemic the City Council approved a $5 million Economic Recovery
and Revitalization Initiative on April 21, 2020. As the COVID-19 pandemic extended, the
subcommittee continued to evaluate ways to aadress the ongoing impact of COVID-19 on city
businesses, business organizations, tourism, and the economy.
The subcommittee evaluated and made recommendations on ideas sourced from City Council
referrals, input from business organizations, suggestions by members of the public, and
recommendations from businesses. One suggestion from members of the public that was _
evaluated was the development of an Electric Vehicle (EV) Rebate Program to support businesses
impacted financially by the COVID-19 pandemic and help achieve the city's sustainability goals.
Discussion
The city took a data informed approach to responding to the COVID-19 pandemic, engaged with
business organizations, and surveyed businesses to guide its judicious investment of resources to
address the economic ramifications of COVID-19. It found that the COVID-19 pandemic has had
a disparate impact on businesses, with many industries seeing a significant drop in
revenue, while a few that were related to goods and services that supported the effort to
address the COVID-19 pandemic, such as our life sciences companies, experienced an overall
increase in revenue. There are other sectors that saw an initial decline in revenue due to the
COVID-19 pandemic only to see business activity boosted because of market conditions or
adaptations due to the extended nature of the COVID-19 pandemic. Some sectors that rely on
Administrative Services Branch
Innovation & Economic Development
1635 Faraday Ave I Carlsbad, CA 92008 I 760-434-5992
Council Memo -COVID-19 Economic Response: Electric Vehicle Rebate Program (Districts -All)
Sept. 16, 2021
Page 2
indoor operations to attract customers experienced a severe drop in business. Restaurants,
department stores, and other retail experienced several quarters of lost revenue. Based on an
analysis of sales tax data, with the most recent report ending in March of 2021, the sales tax
generated by these sectors have not returned to pre COVID-19 pandemic levels. In California,
tourism is another sector that saw steep declines. As the COVID-19 pandemic has extended,
there is now more clarity on sectors that need the greatest support compared to those that have
recovered or have even thrived during this difficult time.
Economic Impact of COVID-19 on Automobile Sales
New automobile sales and the tax revenue generated by that sector experienced a slight drop at
the beginning of the COVID-19 pandemic but has recovered in Carlsbad. The most current
information available to the city shows that from July 2020 through March 2021 the sales tax
generated from ne~ automobile sales in Carlsbad has exceeded pre COVID-19 pandemic levels.
Overall, sales tax for new automobile sales in 2020 was higher than any previous year in the
history of the city, and 25%-30% higher when compared to 2019.
It is more challenging to gather data specifically on EV sales in Carlsbad. There is statewide EV
sales trend data available that shows continued growth in the market. The EV market share in
California reached 9% in the first quarter of 2021, according to Veloz, a non-profit advocacy
group of state and local governments, utilities and car makers promoting the sales of battery EVs
in California.
According to the California Energy Commission, zero emission vehicles (ZEV) reached 862,874
through the first quarter of 2021, including over 60% battery EVs, 38% plug-in hybrid vehicles,
and 1% hydrogen fuel cell vehicles.
Bloomberg New Energy Finance found that battery EVs may achieve purchase cost parity with
internal combustion engine counterparts as early as 2022 for certain vehicle segments. As
charging infrastructure grows and cost parity with combustion engines improves, the EV market
share of new automobile sales should continue to rise.
Sales tax data indicates that new automobile sales have recovered and exceeded pre COVID-19
pandemic levels. The EV market share of total automobile sales continues to grow. An EV
purchase subsidy may have benefits, but the data that has been evaluated does not indicate that
this sector requires the City of Carlsbad to invest resources to address the economic impacts of
the COVID-19 pandemic.
EV Rebate Program Environmental Impact
Carlsbad has long been a steward of environmental sustainability. It is one of the Core Values of
the city's Community Vision. In 2015, the city adopted a Climate Action Plan (CAP) and updated it
in May of 2020. The CAP is designed to reduce Carlsbad's greenhouse gas (GHG) emissions and
Council Memo -COVID-19 Economic Response: Electric Vehicle Rebate Program (Districts -All)
Sept. 16, 2021
Page 3
streamline environmental review of future development projects in the city in accordance with
the California Environmental Quality Act.
The CAP identifies that driving ZEVs like EVs, fuel cell vehicles, and public-in hybrids reduces
carbon emissions by elimi~ating direct emissions of carbon dioxide and other GHGs. The CAP
includes a GHG reduction measure of increasing ZEV travel, and includes the following within
Measure L:
Measure L:. Promote an Increase in the Amount of Zero-Emissions Vehicle Travel
Goal: Promote an increase in the amount of ZEV miles traveled from a projected 4.5
percent to 25 percent of total vehicle miles traveled by 2035
Some of the most significant actions associated with implementing Measure L, and meeting the
goal, includes strategically increasing the number of charging stations in the city, increasing the
number of ZEV in the city's fleet, creating dedicated ZEV parking, and requiring new development
to provide ZEV parking. The estimated GHG reduction in the target year of 2035 is
49,912 MT co2e.
An EV Rebate Program would have an effect on the number of EVs purchased, which would have
an effect on ZEV miles traveled. The current CAP meets the city's GHG reduction goals, so the city
engaged the Energy Policy Initiatives Center (EPIC) to conduct an analysis of the costs and
potential reduction of greenhouse gas (GHG) emissions of an EV Rebate Program run by the city.
EPIC is a research center of the University of San Diego School of Law that studies energy policy
issues in California and the San Diego region. EPIC is a respected research center that has worked
with cities on climate related policies, issues and local climate action plans. EPIC provided the
results of their analysis to the city in December of 2020.
EPIC analyzed the anticipated costs to offer an EV Rebate Program alongside the expected GHGs
that would be avoided. The inputs used in the analysis were consistent with those used in
developing avoided GHG emission estimates for an EV rebate CAP measure. Inputs were
,generated from an analysis of similar EV rebate programs and information from city staff. A
program model was developed with the following elements:
• 5-year program
• 200 rebates per year
• $500 rebate per EV purchase
• Minimum 5% program operating costs with a maximum of 10% operating costs
• Avoided GHG emissions were estimates collected from CAP measures and vary by year
according to changes in anticipated miles driven and fuel efficiency standards
Council Memo -COVID-19 Economic Response: Electric Vehicle Rebate Program (Districts -All)
Sept. 16, 2021
Page 4
The program model assumes 1,000 rebates would be issued over five years. Costs to operate the
program would include activities like administration, marketing, education, and public outreach
activities. Avoided GHG emissions estimates were collected from CAP measure calculations in
two ways:
(1) The GHG emissions avoided only in the year 2035, as this is a target year of the city's CAP.
This GHG value is the same as that shown in the CAP for year 2035.
(2) The cumulative GHG emissions avoided through 2035. This is the sum of the GHG
emissions avoided each year through 2035 and is not relevant to the achievement of a
particular target year.
The $/MT CO2e was found by dividing the total rebate program cost (rebate plus program
operation) by the cumulative avoided GHG emissions through 2035. The program is likely to
result in emissions avoided beyond 2035 as well, but those emissions are not provided as they
extend beyond the stated CAP target year. Emissions avoided specifically in 2035 are provided
for reference only and align with those reported for the proposed CAP measure.
It is expected that $100,000 would be paid in rebates annually, with an additional $5,000-
$10,000 in program operation costs. The total costs of a five-year program are found in Table 1:
Table 1. Estimated EV Rebate Program Costs
Input Minimum Maximum
Cost of rebates ($/year) $100,000 $100,000
Program operation cost ($/year) $5,000 $10,000
Total program cost ($/year) $105,000 $110,000
Total program cost (5 years) $525,000 $550,000
Energy Policy Initiatives Center, 2020
Table 2, provided below, relates program costs with GHG emissions avoided as a result of the
program. A$/ MT CO2e value is shown for each year of rebates issued along with the cumulative
emissions avoided by those EVs and their contribution of emissions avoided in 2035 only. As an
example, the 200 EVs purchased in 2021 (rebates issued same year), would avoid a cumulative of
3,248 MT CO2e between 2021 and 2035 and contribute 189 MT CO2e to the emissions avoided in
CAP target year 2035. Differences in $/ MT CO2e values across the rebate years correspond to
the declining level of cumulative emissions avoided.
Council Memo -COVID-19 Economic Response: Electric Vehicle Rebate Program (Districts -All)
Sept. 16, 2021
Page 5
Table 2. Estimated EV Rebate Program Costs to Avoid Emissions
Year Rebate
Issued
2021
2022
2023
2024
2025
2021-2025
$/MT CO2e Avoided1
•• $32 $34
$34 $35
$35 $37
$37 $39
$38 $40
$35 $37
Cumulative
Emissions
Avoided
Through 2035
(MTCO2e)
3,248
3,108
2,977
2,855
2,745
14,933
1 Includes costs for rebates issued and program operation costs.
Emissions
Avoided in
2035 Only
(MTCO2e)
189
198
208
217
228
1,039
Energy Policy Initiatives Center, 2020
Summary of Findings
Across all years of operation, the EV Rebate Program would be expected to cost between $35 and
$37 per MT CO2e avoided through 2035, and result in a cumulative 14,933 MT CO2e avoided. The
emissions avoided in 2035 would be 1,039 MT CO2e. In comparison, the existing actions in the CAP
to increase ZEV travel are estimated to achieve a GHG reduction of 49,912 MT CO2e in 2035. While
an EV Rebate Program may reduce GHGs, the city's existing measures associated with increasing
ZEV miles traveled meet the CAP goals, and the EV Rebate Program at this time does not appear to
be cost effective when compared to other measures.
City Council Subcommittee Evaluation
In late 2020 to early 2021 the City Council Ad Hoc Economic Revitalization Subcommittee
evaluated the idea of an EV Rebate Program as an economic response to the COVID-19
pandemic. The economic impact of COVID-19 on the new automobile sales sector, environmental
benefits of the EV Rebate Program, and other information was considered. During the
Jan. 25, 2021, meeting ofthe subcommittee the members did not recommend pursuing the EV
Rebate Program.
As the COVID-191 pandemic seemed to wane, the city began work on a shift from economic
response to the COVID-19 pandemic to an approach to inclusive recovery. The city contracted
with a third party to evaluate the projects and initiatives that had been implemented to respond
the COVID-19 pandemic and support impacted businesses. The results of that assessment were
presented to the City Council on May 11, 2021. The assessment included impacts by job sector
and new automobile sales, as a subsector, was not identified as significantly impacted.
On June 15, 2021, the City Council sunset the ad hoc Economic Revitalization Subcommittee and
formed a standing Economic Development Subcommittee. The new Economic Development
Subcommittee (subcommittee) was formed to continue some of the efforts guided by the ad hoc
Council Memo -COVID-19 Economic Response: Electric Vehicle Rebate Program (Districts -All)
Sept. 16, 2021
Page 6
Economic Revitalization Subcommittee and to provide ongoing guidance on economic recovery
and development programs and strategies for the city.
The standing subcommittee convened its first meeting on Aug. 16, 2021, and discussed the
general workplan for the subcommittee consistent with the direction approved by the City
Council when it was formed. The subcommittee discussed the work of the previous ad hoc
Economic Revitalization Subcommittee, the city's economic response to the COVID-19 pandemic,
moving from economic response to recovery, and what work they should conduct in the near-
term and long-term. When discussing the workplan, the subcommittee did not reconsider their
previous recommendation regarding an EV Rebate Program as an economic response to the
impacts of the COVID-19 pandemic.
Next Steps
An EV Rebate Program as an economic response to support businesses impacted by the COVID-19
pandemic, while helping the city reduce GHGs and meet its CAP goals, has been evaluated.
Currently, the data that is available does not justify pursuing the EV Rebate Program as a
measure to help impacted businesses, nor as a cost-effectiv,e way to help the city meet its CAP
goals. The city is beginning to work on its next CAP update, which is expected to kick-off in late
2021. The existing CAP will be evaluated including its goal of increasing ZEV miles traveled. A
public process will be a part of the CAP update and members of the public that are interested in a
city run EV Rebate Program to reduce GHGs will have an opportunity to provide their comments.
The standing subcommittee is scheduled to regularly meet every other month. The next meeting
of the subcommittee is scheduled for Oct. 18, 2021. As a Brown Act compliant committee,
people have the opportunity to deliver public comment at the beginning of the meeting; The idea
of an EV Rebate Program to address the economic impact of COVID-19 was originally sourced
from the community and members of the public wishing to continue engaging on this issue have
an opportunity to continue to promote the idea through that venue.
Absent further di.rection from the City Council, or a subcommittee, the evaluation of an EV
Rebate Program to address the impacts of the COVID-19 pandemic has concluded.
cc: Scott Chadwick, City Manager
Celia Brewer, City Attorney
Paz Gomez, Deputy City Manager, Public Works
David Graham, Chief Innovation Officer
James Woods, Environmental Management Director
Mike Grim, Senior Program Manager
Matt Sanford, Economic Development Manager
Joe Stewart, Management Analyst