Understanding the Volkswagen Settlement: Potential Catalyst for EV Adoption Cassie Powers National Association of State Energy Officials October 18, 2017

About NASEO Formed by the states in 1986 Membership includes the 56 Governor-designated energy policy officials from each state and territory, as well as private sector affiliates Facilitates peer learning across states to improve the effectiveness of energy programs and policies Serves as a resource for and about State and Territory Energy Offices Advocates on behalf of the State Energy Offices with Congress, federal agencies, and private-sector organizations Works through topical committees to facilitate peer learning across states to improve the effectiveness of energy policies and programs Visit www.naseo.org for more information

Settlement Overview Volkswagen agreed to spend up to $14.9 billion to settle allegations of cheating emissions. Settlement funds will be used to buyback and/or modify vehicles, and to support national- and state-level projects to reduce NOx emissions.

Electrify America’s National ZEV Investment Plan Volkswagen subsidiary, Electrify America (EA), will invest $2 billion in ZEV program over 10 years $800 million – California $1.2 billion – rest of United States EA released their National ZEV Investment Plan in April The plan describes $300 million of National ZEV Investments that will be implemented over the first 30 months. Eligible expenses include: Design/planning, construction/installation, and operation and maintenance of ZEV infrastructure Programs or actions to increase public exposure or access to ZEVs Brand-neutral media activities that will provide education and raise awareness on ZEVs

Electrify America’s National ZEV Investment Plan EA has selected 11 metropolitan areas for “community charging” investments over the first 30 months Overview of metropolitan area selection methodology

Electrify America’s National ZEV Investment Plan EA plans to install DC fast chargers at approximately 240 highway sites across 39 states in the first investment cycle. Overview of long-distance highway and community-based local networks (excluding California)

Environmental Mitigation Trust $2.9 billion will be placed in an Environmental Mitigation Trust (administered by Wilmington Trust), and will be allocated to beneficiaries (states, tribes, and certain territories) based on the number of impacted VW vehicles in their jurisdictions The Trust will support projects that reduce NOx emissions where the VW vehicles were, are, or will be operated

Environmental Mitigation Trust: Eligible Mitigation Actions Eligible Mitigation Actions must result in decreased NOx emissions. State “beneficiaries” may invest in the following action areas: Large Trucks Class 8 local freight or drayage Medium Trucks Class 4-7 local freight trucks Buses Class 4-8 school buses, shuttle buses, or transit buses Freight Switchers Ferries/Tugs Ocean Going Vessels (OGV) Shorepower Airport Ground Support Equipment Forklifts Light Duty Zero Emission Vehicle Supply Equipment Diesel Emission Reduction Act (DERA)-eligible projects

Environmental Mitigation Trust: Light Duty EV Supply Equipment Beneficiaries may use up to 15% of its allocation of Trust Funds on the costs to acquire, install, operate and maintain new light duty ZEV supply equipment. Eligible projects include: Level 1, Level 2 or DC fast chargers located in a public place, workplace, or multi-unit dwelling Hydrogen fuel cell supply equipment, including hydrogen dispensing equipment that is located in a public place Many states will choose to invest 15% of their allocation in EV charging stations Percentage of Project That Can Be Funded Through Trust EVSE - publicly available at government owned property 100% EVSE - publicly available at non-government owned property 80% EVSE - at workplace but not available to general public 60% EVSE - at multi-unit dwelling but not available to general public FCVSE - publicly available and able to dispense at least 250kg/day 33% FCVSE - publicly available and able to dispense at least 100kg/day 25%

Environmental Mitigation Trust: Timeline

Environmental Mitigation Trust: Beneficiary Mitigation Plan States must submit a high-level Beneficiary Mitigation Plan that summarizes how the funds will be spent. Plans should address: Overall goal for the use of the funds; Categories of anticipated eligible mitigation actions, and preliminary assessment of the percentages of funds anticipated to be used for each type of action; How the proposed actions will impact air quality in areas that bear a disproportionate share of the air pollution burden within its jurisdiction; Expected ranged of emissions benefits. Beneficiaries may adjust their goals and spending plans at their discretion and will provide the Trustee with updates to their Beneficiary Mitigation Plan States will provide opportunities for the public to provide input on how the EMT funds should be spent.

Environmental Mitigation Trust: Accessing and Spending Allocations Beneficiaries may submit an “Eligible Mitigation Action Certification” form at any time to receive funding, and must certify that chosen projects comply with the terms of the settlement Beneficiaries can request funding before or after a vendor is selected Funds can be reimbursed or advanced to the Beneficiary Payment can be made to the Beneficiary or another party Beneficiaries have up to 10 years to spend 80% of their allocation, and up to 15 years to spend 100% of their allocation Beneficiaries may request up to one-third of its allocation during the first year, and up to two-thirds of its allocation during the first two years Two or more beneficiaries may submit a joint request for Eligible Mitigation Action funds

Environmental Mitigation Trust: State Progress 9 draft plans released Arkansas, Connecticut, Colorado, Delaware, Maine, Nevada, Oregon, Pennsylvania, Virginia About 3/4 of states have launched a website About 1/4 of states have requested some kind of public comment About 2/3 of states publicly announced lead agency States with Settlement Website Image and data courtesy of Atlas Public Policy’s EV Hub

Environmental Mitigation Trust: Draft Plan Highlights - Maine Funding priorities include projects that: Scale to achieve the greatest NOx reduction Maximize health benefits Are administered by entities with experience Are in areas that are disproportionately impacted from diesel pollution Impact Federal Class I (park) areas Leverage funding Can be implemented within 2 years of award date Have sustained emissions benefits over ten years

Environmental Mitigation Trust: Draft Plan Highlights - Nevada Funding priorities include projects that: Maximize the use of EMT funds to reduce NOx Are in areas that are disproportionately impacted from diesel pollution Reduce ozone concentration Balance environmental, social, and economic benefits, and are communities where EJ concerns are evident With respect to EVSE, align with the goals of the Nevada Electric Highway and other EV priorities

The VW Settlement in Context: EV Market and Private Sector Investment GM: announced that it is working toward an all-electric, zero-emissions future. That starts with two new, fully electric models next year—then at least 18 more by 2023. Ford: will add 13 EV models over the next several years with a five year investment of $4.5 billion BMW: plans to be able to mass produce electric cars by 2020 and offer 12 different models by 2025 VW: will spend up to 70 billion euros (~$84 billion USD) in order to bring 300 electric vehicle models to market by 2030. Volvo: announced that every Volvo it launches from 2019 will have an electric motor Daimler: plans to offer electrified versions of all of its cars by 2022 under the new EQ sub-brand Source: GoElectricDrive.org

Preparing for EV Infrastructure Investment Widespread EV infrastructure investment is coming How can states, utilities, and others prepare to accommodate this infrastructure cost-effectively and equitably? Significant load will be needed for high-power DC fast charging banks Distribution system upgrades will be needed to accommodate chargers Infrastructure ownership models will need to be explored Image courtesy of Edison Electric Institute

Different Approaches, Different States No silver bullet – states will approach EVSE differently California – PG&E, Southern California Edison, and SDG&E undertaking pilots to test EV rates/infrastructure ownership models Kansas – Kansas Corporation Commission denied request by KCP&L to recover costs associated with chargers Michigan – MPSC and MAE held technical workshop to explore topical areas related to EVs

Contact Information Thank You Cassie Powers cpowers@naseo.org www.vwclearinghouse.org