Senate Minority Leader Chuck Schumer’s plan to boost the sale of electric vehicles faces strong headwinds from the oil and gas industry and its Republican allies on Capitol Hill.
The New York Democrat last week unveiled a $454 billion program called "Clean Cars for America," which would provide rebates for consumers to trade in their old gas guzzlers for new zero-emission vehicles (E&E Daily, Oct. 25).
Over 10 years, the program would take an estimated 63 million gas-powered cars off the roads, substantially lowering greenhouse gas emissions from the transportation sector.
Schumer’s office touted support from a broad coalition of environmentalists, auto companies and labor unions, including the Sierra Club, the Natural Resources Defense Council, General Motors Co. and the United Auto Workers.
Missing from the long list of supporters, however, was the oil and gas industry, which has waged a covert campaign to kill electric vehicle subsidies in recent years (Climatewire, March 4).
Oil and gas companies have an obvious financial reason to oppose electric car subsidies: EVs run on electricity rather than gasoline, chipping away at their profits at the pump.
Even so, the companies and their trade associations insist that it’s a question of fairness. They argue that most EV buyers are wealthy and simply don’t need subsidies.
Frank Macchiarola, vice president of downstream and industry operations at the American Petroleum Institute, said the trade association would oppose the Schumer plan.
"While we share Senator Schumer’s goal of reducing emissions and are taking action every day to do that, this proposal would force average American taxpayers to subsidize wealthy luxury car owners," Macchiarola said in a statement to E&E News.
"The data shows that subsidies like this disproportionately benefit the wealthy, with about 80 percent of these tax breaks going to the top 20 percent of income earners," he added.
On Capitol Hill, Big Oil has a powerful ally in Senate Environment and Public Works Chairman John Barrasso (R-Wyo.), who has introduced legislation to kill the federal EV tax credit.
S. 343, the "Fairness for Every Driver Act," would amend the Internal Revenue Code to eliminate the subsidy. It would also impose a new fee on EV drivers.
Exxon Mobil Corp. reported spending nearly $3.1 million on lobbying at the end of 2018, including on the "Fairness for Every Driver Act," according to Senate lobbying disclosure forms.
Marathon Petroleum Corp., the nation’s largest refiner, also reported lobbying on the Barrasso legislation this year.
Barrasso argues that the domestic EV market has flourished and no longer needs a government handout. EVs account for about 2% of vehicles sold in the country each year.
"Electric cars are here to stay. The market is poised for growth with or without these subsidies," Barrasso said on the Senate floor when introducing the bill. "Congress should pull the plug on this program. It’s time to end the subsidy. It’s time to stop wasting taxpayer dollars."
A Barrasso spokeswoman confirmed to E&E News that he would fight the Schumer proposal.
"Chairman Barrasso has deep concerns with any legislative effort to extend or expand the electric vehicle tax credit," she said. "He believes the tax credit has served its purpose and is no longer necessary."
The Schumer proposal is just that — a proposal. It has not been fully fleshed out into legislative text.
That won’t happen unless Democrats retake the Senate and the White House in 2020, Schumer said in a New York Times opinion piece trumpeting his idea.
"I have promised that if Democrats win control of the Senate in November 2020, I, as majority leader, will introduce bold and far-reaching climate legislation," the Democrat wrote. "This proposal for clean cars would be a key element of that bill."
Should the political stars align for Democrats next year, Schumer could still bank on support from auto workers and labor unions — constituencies that will be key to determining who wins the White House and controls Congress.
Gary Jones, president of the United Auto Workers, said in a statement that the Schumer proposal "honors the sweat and sacrifice of American autoworkers by investing in domestic manufacturing of electric vehicles and incentivizing high quality jobs across the auto supply chain."