Coalition of Ratepayers

A Hurried Agenda

by

On January 6, the Environmental Protection Agency decided to further reduce the emissions of commercial vehicles through a proposed rulemaking for the Cleaner Truck Initiative, which once complete, will establish more stringent regulations on heavy truck and equipment’s nitrogen oxide (NOx) emissions. Two days later, Senator Fenberg (D-Boulder) and Representative Jaquez Lewis (D-Boulder) introduced SB20-038 “Statewide Biodiesel Blend Requirement Diesel Fuel Sales,” which could inadvertently increase Colorado’s NOx emissions.

SB38 mandates biodiesel blends of up to 10 percent. Beginning in 2021, fuel stations will have to sell B5 biodiesel (5 percent biodiesel blend) during the summer months of June through September. The following year, the blend will increase to B10 (10 percent biodiesel blend). When it was first introduced, the mandate applied to statewide diesel sales. Knowing how this would impact industry, the Colorado Wyoming Petroleum Marketers worked with Senator Fenberg to amend the bill and make it “implementable.” As a result, instead of a statewide mandate, it will only apply to Colorado’s nonattainment areas.

Nonetheless, it’s still anticipated that SB38 will impact consumers at the pump. Without the proper infrastructure built yet, and the fact that the nearest biodiesel refineries are outside of Colorado, the cost of shipping and blending the fuel will be passed along to end-users. The estimated price per gallon increase is around five cents for the B5 blend and 10 cents for the B10 blend. It is important to note that prices will most likely increase once the federal biofuel producer tax credit, which was extended in the recently signed omnibus appropriations measure, ends in 2022.

Admittedly, biodiesel blends emit less carbon monoxide, unburned hydrocarbons, particulate matter, and sulfide oxides than petrodiesel. Moreover, the science on whether it increases NOx emissions isn’t settled. Sources differ on the matter — a National Renewable Laboratory Paper found that there is no average increase in nitrogen oxide emissions, while an Environmental Protection Agency study concluded that NOxemissions do increase from 1-7 percent with biodiesel blends up to 20 percent. Keep in mind that the amount of emitted nitrogen oxide also depends on specific circumstances, ranging from the age of the vehicle, type of engine, and the type of unsaturated fuels used in producing the biodiesel.

Despite the decrease in GHG emissions, though, the fact that biodiesel may emit more NOx is cause for concern since it can severely impact people’s health. Whether exposure results from inhalation or skin contact, both short and long-term exposure can lead to serious health effects. Irritation to the respiratory system, nausea, and abdominal pain can occur due to short-term exposure, while more serious issues like asthma and respiratory infections can arise from long-term exposure.

An increase in NOx emissions can also impact Colorado’s environment (see PDF below article for more information). There is already a concern about excessive amounts of nitrogen being swept into Rocky Mountain National Park, where it mixes with moisture and falls with rain and snow. Unfortunately, the Rocky Mountain National Park’s ecosystems do not need very much nitrogen to survive, so as a result of excess nitrogen, non-native plant species thrive and overall forest health decreases. Fortunately, the amount of excess nitrogen has been decreasing, but SB38 could endanger that trend.

Additionally, because there are no biodiesel refineries in Colorado, and since biodiesel cannot be transported via pipelines, it will have to be trucked or railed into the state, emitting GHG emissions and possibly offsetting the anticipated reductions from the use of biodiesel.

Environmentalist groups like the National Wildlife Federation (NWF) have also historically opposed the adoption of biofuels on environmental grounds. For instance, a NWF blog cites a study that discovered renewable fuel development has contributed to 27.1 million metric tons of carbon dioxide being released yearly and has led to almost two million acres of grassland, shrubland, wetland, and forestland being converted to cropland between 2008 and 2016.

Worse yet, the industry proponent of SB38 is the Iowa-based company Renewable Energy Group. It should go without saying that out-of-state interests should not be dictating public policy that will hurt Colorado industries.

If not the fiscal impacts of the bill, the environmental issues with biodiesel should at least give pause for Democrat lawmakers. Nitrogen oxide pollution is a known concern for Colorado, and according to a prominent environmental organization, developing and using biodiesel is not as good for the environment as has been purported.

But if Democrats are unwilling to kill the bill, in the very least, the concerns laid out above indicate they should slow-down and consider the indirect consequences of a biodiesel mandate—both environmental and fiscal. There is no need to be hasty. After all, delaying the adoption of SB38 in order to conduct an environmental impact analysis may just prove that the environment is better off without biodiesel flooding into the state.

NOx Regulation – Helping to REduce Nitrogen Impacts at Rocky Mountain National Park

EVA Confirms Fears: Electric Vehicle Mandate NOT Likely to Benefit Colorado

by

Colorado’s Air Quality Control Commission (AQCC) is more than likely to adopt the Zero Emission Vehicle Mandate (ZEV) at its Friday, August 16th meeting (today). Not only will this put Colorado further under California’s thumb, it’s also likely to impact our state’s air quality and economy negatively.

The Freedom to Drive Coalition commissioned Energy Venture Analysis (EVA), a renowned energy consulting firm, to analyze the Colorado Department of Public Health and Environment’s (CDPHE) initial economic impact analysis of ZEV. Although EVA’s conclusions didn’t shock us, they may surprise the AQCC. We’ve been making similar points for months, and while we hope both elected and non-elected officials listen, that is simply a hope and a prayer.

One of EVA’s key findings is that adopting ZEV will likely increase Colorado’s auto emissions. To isolate the impacts of the mandate from the adopted Low Emission Vehicle rule, EVA’s model assumed ZEV would raise the price of all vehicles by $500. The result of this is a decrease in new cars being purchased, and people either retaining their older, higher emitting vehicles or buying used ones. Although mandating the purchasing of electric vehicles (EV) will remove a significant portion of gas-powered cars from the road, those remaining plus the new EVs will emit more emissions than the gas-powered ones taken off.

In fact, EVA found that if Colorado does not adopt ZEV, annual auto emissions would actually be lower: “The result of the analysis is that the cumulative emissions of the Used, BEV, and PHEV vehicles is greater than those displaced ICE vehicles.”

There is also the loss of gas tax revenue. Over the next 25 years, the Colorado Department of Transportation (CDOT) expects to face a $25 billion-dollar spending gap. Removing gas-powered vehicles from the roads – and ultimately from the pumps – means that CDOT’s funding issue will get worse. According to EVA, over ZEV’s lifespan, the state will lose $1.3 million a year. All this comes at a time when CDOT already cannot pay for needed maintenance, and the Democrat-controlled legislature is unwilling to provide additional funding for Colorado roads and bridges.

Electric Ratepayers should also expect an increase in their bills as energy providers rate base the construction costs of EV charging stations – an action allowed by Senate Bill 77 – and as new substations are built to accommodate the expected spike in electricity demand from charging EVs in residential areas. Just because CDPHE chose to omit these costs in its projections does not mean they don’t exist. EVA purports ratepayers can expect a rate increase of 7 percent as a result.

And then there are batteries. According to EVA, it is impossible to guarantee the cost of batteries will remain the same, or in the best-case scenario, decrease. Of course, the CDPHE assumed prices would fall, but considering China controls a significant portion of both the upstream and downstream battery supply chain, it cannot be assumed with the ongoing trade war that the number of batteries available today will remain constant or improve. If the Sino-American relationship continues to fray, the amount of EV batteries on the market could shrink and prices may skyrocket.

ZEV will also burden farmers, ranchers, and all taxpayers. This last legislative session, the General Assembly extended Colorado’s EV tax credits through 2025. If CDPHE’s estimate that 17,600 electric vehicles will be sold in 2025 is correct, and if all those purchasers cash in on Colorado’s electric vehicle tax credit, the state will forgo $88 million in tax revenue that year. Moreover, EVA predicts the mandate will increase the price diesel in addition to electricity rates. As a result, Colorado’s farming and ranching community may see annual energy expenditures increase by as much as $22.6 million.

Effectively forcing people to purchase electric vehicles is risky business. While Denver and Boulder may be able to afford it, the rest of the state cannot. EVA’s findings are certainly a cause for concern, as they show ZEV is fiscally and environmentally irresponsible for Colorado.

The information contained in this post can be found in the Energy Venture Analysis study linked here: Energy Venture Analysis – Evaluation of the Colorado Zero Emission Vehicle Regulation (ZEV)

Electric Vehicle Mandate: An Expensive Policy that May Actually Increase Global GHG Emissions

by

The Coalition of Ratepayers agrees with the Pacific Research Institute (PRI) that the initial economic impact analysis of the proposed electric vehicle (EV) mandate for Colorado contained flawed and overlooked critical assumptions.

Dr. Winegarden, a Ph.D. economist with PRI, criticized the economic analysis, which was presented to the Air Quality Control Commission, with California’s vehicle emissions standards and their negative impact on the state in mind. His assessment added to, seconded, and solidified our own fears regarding Colorado’s adoption of an EV mandate. One of his points was that there may be other routes to achieve a reduction in greenhouse gas (GHG) emissions, since they’re already declining in Colorado as newer, cleaner vehicles continue to be bought and driven on our roads. Making one wonder: Is the mandate really necessary?

Moreover, according to Winegarden, forcing Coloradans to drive electric vehicles is more likely to cause a net increase in emitted GHG. The manufacturing of EVs generates more emissions than producing gas-powered cars, resulting in a deficit that takes time to overcome – in Germany, it’s as high as ten years. Making matters worse, a conservative estimate of an EV battery’s lifespan is approximately eight years. Hence, if we are to assume Germany’s timeline is correct, the break-even point is unlikely to be achieved, and the result will actually be a net increase in greenhouse gas emissions.

Colorado’s power generation mix is still dominated by coal as well. Democrats hope to change that reality, but for the time being, EV owners are simply using what Democrats call “dirty coal” to charge their vehicles. Their tailpipes are simply outside of town.

Mandated switching to renewable energy sources will not be cheap either, and there is no guarantee it will be successful. Any attempt will impact low- and static-income ratepayers the most, and if the move towards renewables is unsuccessful, “the expected reduction in emissions will overstate the actual emissions reduction achieved.”

Electric vehicles also cost $7,000 more than gas-powered cars after calculating the down payment and loan repayment costs. Admittedly, they’re cheaper to operate annually by about $660, but EV owners, on average, need to own one for 11 years to make up the $7,000 difference. Considering batteries typically last eight years, saving money, or breaking even isn’t likely.

Before adopting an electric-vehicle mandate, Colorado’s elected and non-elected officials need to know that the initial economic impact analysis presented to the Air Quality Control Commission was faulty and failed to consider serious assumptions. Winegarden’s report gives a much clearer perspective on what will most likely be a costly and detrimental policy.

If he is correct, changing the minds of elected officials and AQCC members on the proposed EV mandate may be critical to lowering Colorado’s GHG emissions even further.

 

The information and data contained in this post can be foundin Dr. Winegarden’s Issue Brief. The link to which is below. 
Pacific Research Institute, Issue Breif, CO ZEV Mandate Analysis

 

The Coalition’s Testimony in Support of SB19-053: California Motor Vehicle Emission Standards

by

Last Thursday, the Coalition testified in support of Senate Bill 53. The following text is the transcript of the Coalition’s testimony.

Good afternoon, Senator Fields and fellow committee members. My name is Britton Naas, and I’m here representing the Coalition of Ratepayers in support of Senator Cooke’s bill. 

The Coalition of Ratepayers is a Colorado non-profit concerned with issues that impact small businesses and residential ratepayers. 

First, we acknowledge and agree with those who have already testified in support of the bill. However, we are here to address the issue from a different consumer’s perspective – that of Colorado’s electric ratepayers. We believe that if this bill isn’t passed, Colorado’s low-income electric customers will have to pay the price. 

While former Governor Hickenlooper issued his Low Emission Vehicle (LEV) standard last summer, he chose not to include a Zero Emission Vehicle (ZEV) mandate. However, he did address ZEVs and many stakeholders suspected one would be coming if Jared Polis was elected. Within two weeks of being sworn into office, Governor Polis issued an executive order that initiated the rule making process for a ZEV mandate. What was the Gov. Polis’s reasoning? Apparently, a bunch of people who testified in favor of Governor Hickenlooper’s executive order on LEVs also voiced their support for a zero-emission vehicle mandate. 

Currently, electric vehicles make up only 1 percent of Colorado’s total vehicle registrations. Mandating a massive increase in the number of ZEVs on the road will require low income Coloradans to pay for the cars and the additional infrastructure needed to accommodate the ZEVs. 

But a build out of charging stations won’t be enough, since high demand charges accompany direct-current fast-charging stations, the type of station that can completely re-charge a battery in 30 minutes. According a Reuters article, a high demand charge coupled with the price of the actual energy can cost someone $70 to $110 per charging session at a direct-current fast-charging station.

If the initial, upfront cost of an electric vehicle doesn’t turn away prospective buyers, this most certainly will.   

There is of course, a costly solution: equip each station with enough storage capacity. The batteries can be charged at a steady pace during the low demand periods of the day, and then the energy stored can be used to charge EVs. This will decrease or avoid the demand charge, but it will also increase the construction cost of each charging station, which ultimately raises the amount paid by each ratepayer. 

There has not been enough vetting of how much all of this, Regulation 20 and the ZEV mandate, will cost auto dealers, buyers and electricity ratepayers. Before we mandate anything, we should have a cost and we don’t. We just know it will be expensive. 

We applaud Senator Cooke for bringing this bill forward and hope the committee will take a favorable approach to it.

Thank you.