First of all, a quick note on why I support EV tax credits: we need to switch from gasmobiles to EVs in order to avert catastrophic global warming, in order to stop killing countless people and animals through air pollution, and in order to cut the national security threat that is our addiction to oil. I think the much better drive and financial benefits of EVs will sell the cars once more people are aware of them, but until then, we need government incentives to correct for market failures that don’t adequately include the price of health damage and death in the cost of gasoline. Correcting for market failures is one of the key roles that government should play.
Now, with that out of the way, on to the story:
Further proof that we have a do-nothing Congress came at the end of 2013, when our legislators failed to renew three important electric vehicle tax credits. Basically, they just didn’t get around to it before the New Year’s break. A total of 55 tax breaks went unaddressed.
- The first credit, up to $1,000, was for homeowner alternative vehicle refueling, including the purchase of a 240-volt Level 2 EV charging station.
- The second, for up to $2,500, could be used to offset up to 10 percent of the purchase price of an electric motorcycle (or three-wheeled EV).
- The third, for businesses, allowed them a credit for up to 30 percent of an EV charger purchase, up to $30,000.
According to Brian Wynne, president of the Washington-based Electric Drive Transportation Association (EDTA), “We think these credits are valuable and are working to renew them. The charging credit is alternative-fuel neutral, so it goes beyond electric cars.”
Wynne said that credit renewal was stalled in part by some discussion of tax reform, led by Senator Max Baucus (D-MT), who is retiring. “They had a run on that, and it delayed looking at the extenders,” Wynne said. “I don’t think there was intent to let the incentives expire—that wasn’t the focus.”
More on the ridiculously unproductive House of Representatives we have today can be found here:
And here’s more excellent commentary from Jim Motavalli:
Intent or not, Congress has set a pattern of renewing credits like this for only a year, then leaving a lot of confusion in the market as it drags out the renewal process. The classic case is the wind production tax credit, which is worth 2.3 cents for every kilowatt-hour of electricity generated. That was one of the 55 credits that expired, and according to the Washington Post, “The fact that the credit constantly expires has also created a fair amount of uncertainty for the industry.”
Both of the EV credits that expired had been the victim of the one-year renewal process. That makes it difficult for companies that make charging stations or electric motorcycles to plan on what kind of sales year they’ll have. “Why is it that EV, solar and wind credits are the ones that have these sunset dates?” asked Tom Saxton, chief science officer at Plug In America.
Jay Friedland, Plug In America’s senior policy adviser, said his group worked to renew the credits that expired at the end of 2011, and although they were absent for much of 2012, they later became retroactive. That process will now have to start all over again. “Congress is ridiculous,” Friedland said.
If there’s any silver lining in this, it’s that Baucus is likely to be replaced on the Senate Finance Committee by Senator Ron Wyden (D-OR), a big EV proponent who will probably push for early renewal of the tax credits.
Also dead for the time being are incentives that encourage people to take buses and trains, buy energy-efficient appliances and install renewable energy. Breaks few people will miss help NASCAR to build racetracks, subsidize the write-off of race horses, and save on expenses for motion picture producers.
It would be good news if Congress got around to renewing these EV tax credits. But much better news would be if we got a half-decent Congress in there that actually took doing its job seriously, rather than simply working to make government a failure. (Ahem, we know which party is intent on selling government as a failure, don’t we? How we expect them to go against their message and actually work for positive and productive leadership?)