How Biden Plans to Decarbonize Transportation
Transportation remains a major source of disagreement in the negotiations over infrastructure in Washington—particularly how much to spend on priorities beyond “roads and bridges.” In 2017, transportation surpassed electricity as the largest source of greenhouse gas (GHG) emissions in the United States, so decarbonizing the sector is key to addressing climate change. Biden’s initial proposal in the American Jobs Plan has been scaled back significantly in negotiations, but both his first request and what ultimately passes through Congress—plus what he does through executive action—will tell us a lot about the president’s perspective on decarbonizing how we get around. CSIS identified eight themes that describe President Biden’s energy and climate strategy when it comes to transportation.
Electrification, Electrification, Electrification
There are different ways to reduce emissions in transportation: tighten fuel economy standards or regulate tailpipe emissions; invest in alternatives to private vehicles to reduce the environmental and climate impacts of movement; or support technologies that do not rely on gasoline or diesel, such as biofuels, fuel cells, or electricity. The Biden administration is likely to do all these things, but its big bet is on electricity. The single largest climate-related item in the proposed American Jobs Plan was for electric vehicles (EVs), at $174 billion in total—$100 billion to help people buy EVs, $15 billion to build 500,000 charging stations, $25 billion for zero-emissions public transit and $20 billion for school buses. (The Bipartisan Infrastructure Framework maintains some of these incentives but scales them back: $7.5 billion for charging stations and $7.5 billion for electric buses and transit.) Even in the freight sector, where natural gas or hydrogen have long been seen as attractive options, the administration is pushing electrification. The Department of Energy recently announced $163 million in new funding for trucks—$100 million for high-efficiency, low-emissions trucks and another $63 million that can go to cars, trucks, or charging infrastructure.
Change with Money, Not Mandates or Taxes
The focus on incentives has come at the expense of other well-known tools. The administration has yet to articulate a strategy on fuel economy standards or tailpipe emissions, although it has granted California a waiver to set its own standards (thus reversing a Trump-era reversal). The support for such standards is there, of course, but the details have yet to emerge. The president is also against raising the federal gasoline tax, which has remained unchanged since 1993 and which, today, has roughly the same purchasing power as the first federal gasoline tax introduced in 1932. The focus on ethanol, which meets 5 percent of the country’s energy needs in transport, is also low. There is no push for any “cash-for-clunkers” program to incentivize consumers to swap out older cars, although Senate Majority Leader Chuck Schumer has called for one. And the president has avoided calls to ban the sale of cars that run on internal combustion engines after a certain date, ignoring the handful of governors who have asked him to do this.
Public Fleets Are a Big Priority
Public fleets are a major focus area for the administration. The most prominent example is the push to electrify the U.S. Post Office’s 231,541 delivery trucks. But the president also wants to spur state and local governments to electrify their school bus and transit bus fleets as well. The American Jobs Plan would give $20 billion to school districts to convert 20 percent of the nation’s school buses from diesel to electric and $25 billion to transit agencies to convert 50,000 buses. (The Bipartisan Infrastructure Framework has reduced these numbers to a combined $7.5 billion.) Buses only contribute about 1 percent of U.S. transportation GHG emissions, so this does not deliver as much of a climate benefit, but the administration is not selling it as one. The messaging from the White House about electrifying buses emphasizes its potential to reduce air pollution from diesel buses.
Leveraging government procurement can create a positive virtuous circle for decarbonization. Moving from privately owned internal combustion engine (ICE) cars to EVs requires that millions of individuals weigh the pros and cons of switching—making decisions one or two cars at a time. By contrast, school and transit buses, and some trucks, including USPS trucks, are managed in fleets by government agencies. They face the same trade-offs are private users—usage, charging or fueling availability, costs to buy and maintain—but these often look different. Unlike private cars, buses run on standard routes, so managers can predict charging or fueling infrastructure needs. In addition, government agencies have different budget considerations than private fleets. Even so, the economics of electric buses will remain challenging until at least 2030 without big developments in innovation, so while government procurement can help, the transition will not be easy.
Public Transportation Gets a Lifeline but Little Boost
The American Jobs Plan contains $85 billion for local transit agencies to modernize public transit and expand ridership. Amtrak would see an infusion of $80 billion for repairs and new passenger rail lines. But about three-quarters of that funding would likely go to the agency’s repair backlog rather than expanding service. On top of funding for repairs, Amtrak is looking for a $75 billion investment over 15 years to increase service along existing routes, add new stops, and build some high-speed rail. The American Recovery and Reinvestment Act contained $8 billion for intercity high-speed rail, but political, economic, and legal issues have stymied some of the biggest projects and the United States still has no real high-speed rail.
It’s clear that rail is more efficient than driving or flying—for example, for a single passenger, taking an electric train ride from D.C. to New York emits 83 percent fewer GHGs than driving and 73 percent fewer than flying. Still, the United States spends a lot of money on cars and highways and does little to incentivize users to shift to more efficient modes. Such visible nudges would likely run into the same hurdles that have prompted the president to disavow raising the federal gasoline tax. So, for now, rail and buses are mostly going to get a cash infusion but without the policy ecosystem of nudging that is often necessary for their success.
First, Cars and Buses—Other Modes Come Later
Cars, trucks, and buses contribute about 83 percent of GHG emissions from the U.S. transportation sector. Electric cars have been available for over a decade and more options are coming to market every year, while electric or other low-carbon trucks and buses are emerging as well. Solutions for the other segments of the transportation sector, including ships and planes, are still nascent and expensive. As such, the Biden administration has chosen to focus on the options that are achievable on a shorter time horizon and would contribute the most to reducing emissions from transportation.
Electric Vehicles Should Be Made in America
One familiar phrase echoes throughout the president’s plans and speeches: “made in America.” From the title of his infrastructure proposal alone—the American Jobs Plan—it is clear that this administration wants to ensure that decarbonizing transportation creates American jobs. The administration has proposed several levers for this. In its 100-day review of critical supply chains, it supported an idea “to offer a higher value rebate for EVs that meet higher domestic content thresholds and which conform to high labor standards.” It is also reviving the Advanced Vehicle Technology Manufacturing (AVTM) Program, which has $17 billion in outstanding loan authority, and has proposed revitalizing the 48C manufacturing tax credits, which supported investments in clean energy. The Department of Energy also announced that it would require grantees to manufacture their products in the United States. U.S. law typically gives grantees full control over their patents, but this requirement makes use of an “exceptional circumstances” exemption to ensure federal dollars do not end up elsewhere.
Equity and Justice Are Central to Transportation
The Biden administration has committed to continuing an effort begun under former transportation secretary Anthony Foxx to reconnect communities divided by highways. This idea appears to be popular in Congress as well: the Senate’s bipartisan surface transportation bill includes a pilot program to do this, although it contains much less money than what the Biden administration asked for in the American Jobs Plan. Another pledge in the American Jobs Plan: no purchasing incentives will be in place for luxury vehicles or those made with poor labor standards. A proposal in the Senate would offer up to $12,500 for EVs that have a sticker price under $80,000 and are made in the United States with union labor.
In the administration’s 100-day review on supply chains, the Department of Energy recommended tying environmental and labor protections to any financing the department may provide to mining companies, battery manufacturers, or automakers. This would align production incentives with the purchasing incentives that the administration is seeking to put in place. The White House Environmental Justice Advisory Council, made up of environmental justice advocates and experts from around the country, has highlighted how the administration can advance justice and equity goals while also decarbonizing transportation by boosting public transit, which often increases opportunities to disadvantaged communities, and by lowering local air pollution that disproportionately affects low-income neighborhoods.
Car Dependency Is Being Challenged—Quietly
Transportation Secretary Pete Buttigieg has echoed a position often voiced by transit and climate activists: that cities should serve people, not cars. These are words rarely heard by a transportation secretary. The department has vast leverage through its funding programs to nudge cities and states to make decisions that prioritize walking, biking, and public transit over cars and highways. And while these shifts in mode take time, having a cabinet-level push can have a massive impact downstream.
The administration’s plans, of course, still need support in Congress. Recent developments, especially in infrastructure spending negotiations, make it clear that nothing is set in stone. But the president is tackling the decarbonization of the transportation sector with a mix of old tools and new instruments. The task ahead is immense. For example, there are about 276 million vehicles on the road in the United States. Granting a $7,500 tax credit per vehicle, as past initiatives have done, would potentially cover 13 million vehicles, or 5 percent of the total fleet, with the $100 billion provided for in the American Jobs Plan. The same scale challenge is true in public transit fleets and school buses. The overarching philosophy is one where big initial investments create positive spillovers later—but without more direct interventions to shape behavior and consumer choices, those investments must be bigger and bolder to succeed.
Stephen Naimoli is an associate fellow with the Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Nikos Tsafos is interim director and senior fellow with the CSIS Energy Security and Climate Change Program.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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