The day may come when Maryland doesn't need to offer a tax credit to purchasers of electric cars but that time hasn't arrived yet.
In Maryland, a tax credit offered on July 1 will usually still be available on July 8. But not the state’s $3,000 credit to those who purchase or lease electric vehicles (or those that run on hydrogen). Faster than you can say lithium-ion, the credit state lawmakers passed just months ago was exhausted within the first week of the new fiscal year, the product of a backlog of car buyers and a shortage of funds to underwrite the credit. So that begs a question: If electric cars are so popular that $6 million is gone in a flash, should Maryland keep providing a tax incentive?
The answer? Absolutely, and the bigger the better. And the reason is as simple as this: carbon emissions. Maryland needs less of them. So do the rest of the country and the rest of the world. It’s a small thing to offer an incentive to car buyers to keep gasoline and diesel-powered vehicles off the roads, but it adds up. We need to lower greenhouse gas emissions, and the less such pollution comes out of the transportation sector, the better off everyone will be.
While $6 million sounds like a lot, it’s actually been a pretty slow transition to EVs. Since 2011, just 7,169 new plug-in electric vehicles have been registered in Maryland despite maxing out on tax credits year after year. Compare that to the statewide inventory of about 2 million vehicles of all types. Now consider the impact these vehicles can have. Even in Maryland where coal and natural gas account for more than half the electricity generated, an all-electric vehicle generates about one-third the total emissions of its gasoline-powered equivalent. Even plug-in hybrids and hybrids account for only about half what gas-guzzlers generate, according to the U.S. Department of Energy.
Critics are correct about one thing. The tax credit is most readily available to rich people. But at least there’s an upper limit. Vehicles that cost more than $63,000 can’t qualify. The federal tax credit program is actually much worse. Strangely enough, the up-to-$7,500 per vehicle credit is apportioned by manufacturer, so popular EV brands get much less benefit than those that are not as big a hit with consumers — a quirk that hurts Tesla and GM. Legislation to reform and expand the program is pending before the U.S. Congress.
The more cars that are sold to consumers, the more infrastructure like charging stations will be supported and the lower the cost to make EVs and related equipment. In Maryland, for example, the state Public Service Commission this year ordered BGE and other utilities to create 5,000 charging stations statewide, offering residential customers up to $300 rebates for in-home smart chargers and much more for apartment buildings. This fall, BGE is even launching its own charging network with 500 charging locations at government-authorized sites. That’s a major step forward but no guarantee that the state will accomplish its goal of 300,000 electric vehicles on the road by 2025.
The reasoning behind such an ambitious goal is fairly obvious. Vehicle exhaust is a major source of greenhouse gas emissions. As much attention as has been given to electricity production, the transportation sector actually pumps out more. In 2017, according to the U.S. Environmental Protection Agency, cars, trucks, ships, planes and trains were responsible for 28.9 percent of greenhouse gas emissions compared to 27.5 percent from utilities. Maryland has committed to buying a much greater percentage of its electricity from renewable sources. Surely, it can make a similar investment in the transportation sector (instead of committing to multi-billion-dollar road widening plans, perhaps).
Finally, and as painfully obvious as this may be to most Marylanders, some people obviously need to be reminded that climate change is real and the Old Line State is in its cross hairs. The $6 million cost of the tax credit is pocket change compared to the cost of climate change. A $60 million tax credit would be, too. So might $600 million. Just the cost of building seawalls to stave off rising flood waters could top $27 billion in the next two decades, according to the Center for Climate Integrity.
So whatever resentment anyone might harbor toward Tesla drivers, better get over it fast. Maryland needs to adopt a transportation policy that is squarely aimed at reducing its carbon footprint. Given the continued emphasis on roads by the state and federal governments, forward-looking policies like the EV tax credit have become essential. The fact that Maryland’s 2019-2020 allocation is already gone is not a sign the credit isn’t needed, it’s a sign that Annapolis isn’t doing enough.