Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020

Impact of Transportation- Related Environmental Initiatives

Final Report 22nd May, 2020 Project C021273 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) • Appendix – II (Movement 101) • Appendix – III (Summary of research)

2 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 37 U.S. and global Movements were assessed prior to shortlisting 14 U.S. specific Movements for long term impact assessment

Movement Emissions, fuel economy Alternative Tolls, congestion pricing Mobility Category: and carbon pricing fuels and telecommuting initiatives

Low Carbon Fuel Connected and Subsidies / Incentives Congestion pricing Standard autonomous vehicles

ZEV Mandate Biofuels blending Telecommuting Shared mobility

Charging Infrastructure Movements shortlisted CAFE standard Global Movements assessed Movements excluded for further • China Corporate Average Fuel • EU Fuels Quality Directive (FQD) • Vehicle retirement program assessment Transportation Consumption (CAFC) standard Tolls • London Congestion Charge • Tolls Climate Initiative (TCI) • EU Emission Standards • Milan Area C • Parking benefits • Japan Energy Conservation Law • Trängselskatt I Stockholm • Passenger drones • South Korea Average Fuel Economy • Canada Telework Policy • Multi-modal transit Carbon pricing (AFE) program • EU Energy Taxation Directive (ETD) • Delivery platforms • China NEV Mandate • Autonomous Vehicle Bill Cleaner Trucks • Norway Norsk Elbilforening • EU Standard 2018/0143 (COD) Initiative (CTI) • EU Renewable Fuels Directive II (RED II) • France Mobility Law Vehicle restrictions (LEZs) / ICE bans 3 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Each Movement’s influence on emissions, fuel economy, vehicle demand, cost and scale of impact were considered for assessment

Movement Category: Emissions, fuel economy and carbon pricing Alternative fuels Tolls, congestion pricing and telecommuting Mobility initiatives

High Illustrative chart Subsidies Legend / Incentives LEZ / ICE bans Effectiveness: influence of a Movement Charging ZEV on emissions reduction, fuel economy infrastructure mandate improvement and plug-in electric vehicle demand weighted equally CTI CAFE Cost: cost to comply with a Movement standard

Medium TCI Congestion Impact: scale of impact of a Movement Telecommuting LCFS pricing Carbon localized impact from movements, pricing Biofuels Effectiveness limited to urban areas / few cities blending Movement adopted by few states Mobility / CAV National level movements / can be adopted federally

Low Low Medium High Cost Source: Ricardo analysis 4 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Telecommuting along with PEV subsidies and ZEV mandate are most effective in reducing emissions

Movement Category: Emissions, fuel economy and carbon pricing Alternative fuels Tolls, congestion pricing and telecommuting Mobility initiatives

Impact: considers scale High of impact of a Movement localized impact from movements, limited to LEZ / Subsidies urban areas / few cities ICE bans / Incentives Movement adopted Charging ZEV by few states infrastructure mandate National level movements / can be CTI adopted federally Telecommuting CAFE Acronyms standard • Corporate Average Fuel Medium TCI Economy (CAFE) LCFS • Transportation Climate Carbon Congestion pricing Biofuels Initiative (TCI) Effectiveness pricing blending • Low Carbon Fuel Standard (LCFS)

Mobility / • Cleaner Trucks Initiative CAV (CTI) • Zero-Emission Vehicle (ZEV) • Connected and Autonomous Vehicles Low (CAV) Low Medium High Cost

Source: Ricardo analysis 5 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Technological advancements in batteries will likely aid several Movements in the mid to long term

Telecommuting would reduce emissions by ~5% - 15% – Telecommuting equivalent to several other “Movements” – but at negligible cost

Emissions, fuel PEV “Movements” have the highest emissions reduction economy and effectiveness though with relatively high cost. Subsidies most carbon pricing effective in near term

Scaling back of CAFE standards will affect emissions reduction CAFE standard drawing higher reliance on PEVs to achieve desired impact Movement Category:

Emissions, fuel economy LCFS has had moderate success but will rely on PEV uptake in and carbon pricing Biofuels future. EPA continues to roll back RFS targets for 3 out of 4 alternative fuels; effectiveness of mandate under question Alternative fuels

Tolls, congestion pricing TCI and carbon pricing – though effective tools – may have and telecommuting Carbon pricing marginal impact given the limited nationwide momentum they may generate Mobility initiatives

6 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Movements range from federal to local mandates, and ones in proposal phase

• Subsidies: Federal and state incentives offered to incentivize PEV adoption. Federal tax credit of upto $7,500 available for PEVs. Various state level rebates, HOV access etc. offered • ZEV mandate adopted in 1990 by California to control emissions from passenger vehicles decrees increasing ZEV floor requirements through 2025+. Adopted by 11 other states (CT, ME, MA, VT, RI, OR, NY, NJ, MD, CO, WA) • CAFE standard is fleet wide average fuel economy targets to be achieved by passenger vehicle OEMs. SAFE rule implemented in Emissions, fuel March 2020 mandates ~1.5% CAGR growth in fleet fuel economy for MY 2021 – 2026. Scaled back CAFE standards mandated ~5% economy and CAGR fuel economy improvement between 2020 – 2025

carbon pricing • Cleaner Trucks Initiative (CTI) is still in proposal phase and aims to address diesel commercial trucks NOX emissions in low load conditions. Estimated to impact model years 2025+ • Transportation Climate Initiative (TCI) is a still-in-work “cap & invest” initiative estimated to start in 2022. TCI seeks to reduce transportation emissions and develop a clean energy economy in 12 Northeastern regions • Numerous carbon pricing initiatives have been proposed; however none has been enacted into legislation. Distribution of revenue from most proposed carbon pricing initiatives are not targeted towards transportation

• LCFS adopted by California and Oregon mandates reduced “Carbon Intensity (CI)” of fuels over time. 20% CI reduction targeted by Alternative fuels 2030 compared to 2010 level • RFS is a federal biofuel standard passed in 2005 with aim of blending ~36B gallons of biofuels by 2022 in U.S. fuel mix

Tolls, congestion • Telecommuting: Telework Enhancement Act of 2010 (applicable only for federal employees) mandates each federal agency to pricing and establish a telecommuting policy and maximize where applicable telecommuting • Zone based congestion pricing legislation adopted only by New York City in U.S. (implementation in 2021) Mobility • No legislation currently in place initiatives

Emissions, fuel economy Tolls, congestion pricing Movement Category: Alternative fuels Mobility initiatives & carbon pricing & telecommuting 7 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Acronyms and abbreviations

ANPR Advance Notice of Proposed Rule LEZ Low Emission Zone BEV Battery Electric Vehicle LNG Liquified natrual gas CAFE Corporate Average Fuel Economy MMT Million Metric Tonnes CAGR Compound Annual Growth Rate NEV New energy vehicles CARB California Air Resources Board OEM Original Equipment Manufacturer CAV Connected and autonomous vehicles parc / VIO Vehicles in operation CI Carbon Intensity Plug-in Electric Vehicles (includes Battery CNG Compresses natural gas PEV Electric Vehicles and Plug-in Hybrids) CSE Center for Sustainable Energy PM emissions Particulate matter emissions CTI Cleaner Trucks Initiative RFS Renewable Fuel Standard CVRP Clean Vehicle Rebate Program SAFE Safer Affordable Fuel-Efficient DCFC Direct-current fast charger TCI Transportation Climate Initiative EPA Environmental Protection Agency VAT Value-added tax EU European Union VMT Vehicle Miles Travelled EV Electric vehicles include mild-hybrid, hybrid electric, plug-in xEV hybrids and batery electric vehicles (BEV) GHG emissions Greenhouse gas emissions YOY Year-on-year HEV Hybrid Electric Vehicle ZEV Zero-Emission Vehicle ICE Internal Combustion Engine kWhr kilowatt-hour LCFS Low Carbon Fuel Standard LDV Light Duty Vehicles (pass cars and light trucks) 8 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) • Appendix – II (Movement 101) • Appendix – III (Summary of research)

9 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Telecommuting would reduce emissions by ~5% - 15% – equivalent to several other “Movements” – but at negligible cost

Movements: Telecommuting

Movement Category: Emissions, fuel economy and carbon pricing Alternative fuels Tolls, congestion pricing and telecommuting Mobility initiatives

High Subsidies Key takeaways / Incentives LEZ / ICE bans • ~37% of U.S. workforce can feasibly Charging ZEV complete their work from home(1) infrastructure mandate – Current U.S workforce is ~165M(2) CTI – Beginning of April 2020, ~50% of CAFE standard U.S. workforce telecommuted due to COVID-19 Medium TCI Congestion Telecommuting LCFS pricing Carbon • Average annual per person fuel savings

pricing Biofuels Effectiveness blending from telecommuting ranges from ~$150 - $800 based on number of days (3) Mobility / telecommuted CAV • Few global regions registered ~40% - 70% reduction in criteria emissions from telecommuting / stay-home orders due to Low COVID-19 Low Medium High Cost

Source: Ricardo analysis; (1) University of Chicago study - https://www.nber.org/papers/w26948.pdf ; (2) https://john-joseph-horton.com/papers/remote_work.pdf ; (3) Price of gasoline at $3 / gallon 10 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Telecommuting reduces pass car emissions (CO2, NOX, PM2.5) by ~10% nationally if 25% of workforce telecommutes 5 days / week

Telecommuting – GHG emissions

• In 2020 U.S workforce is ~165M with ~3% of U.S. workforce Emissions reduction based on % of U.S. workforce telecommuting telecommuting 1 day/week (% emissions reduction compared to 2020 baseline) • A University of Chicago study estimated ~37% of U.S. workforce Telecommuting 1 day / week Telecommuting 5 days / week can feasibly complete their work at home Telecommuting 3 days / week • Telecommuting 1 day/week with ~37% of U.S workforce yields reduction % emissions reduction from telecommuting for GHG in tailpipe emissions with ~5% for each CO2, NOX and PM2.5 20% (CO2) and criteria emissions (NOX, PM2.5) are similar • Average annual per person fuel savings from telecommuting 1 day / week to 5 days /week ranges from ~$150 - $800 (considering price of

15% Emissions from light duty vehicles: gasoline at $3 / gallon) 2.5 ~1,000 MMT in CO2 emissions ~0.5 MMT in NO emissions

, , PM X X

10% ~0.1 MMT in PM2.5 emissions

, , NO 2 2

CO 5% Work related vehicle miles travelled (VMT) per 0% ~3% 10% 20% 30% 37% person is ~50% of annual VMT

% U.S. workforce telecommuting

Source: https://www.nber.org/papers/w26948.pdf ; https://afdc.energy.gov/data/10315 ; https://www.energy.gov/eere/vehicles/fact-915-march-7-2016-average-historical-annual-gasoline-pump-price-1929-2015 ; 11 https://www.sciencedirect.com/science/article/pii/0968090X9500020J ; https://www.nrdc.org/sites/default/files/driving-commuter-choice-IP.pdf Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Telecommuting / stay-home orders due to COVID-19 registered significantly reduced criteria & GHG emissions across global regions

Telecommuting – Impact from Covid-19

• China’s carbon emissions fell by around 25% over a four-week period, equivalent to around 200M tonnes of CO2 (MtCO2)

• Beginning in March 2020, EPA air quality data shows Los Los Angeles Nov 2016 LA in March 2020 Angeles experienced its longest stretch of "good" air quality since 1995

• Major cities in India registered ~70% drop in NOX emissions

• >40% decline in NOX emissions in Northern Italy

• Bay Area air quality shows marked improvement during shelter in place with AQI in single digits Post COVID-19, telecommuting impact on emissions can be assessed by government Source: https://www.carbonbrief.org/analysis-coronavirus-has-temporarily-reduced-chinas-co2-emissions-by-a-quarter ; https://www.indiatoday.in/science/story/bonus-benefit-satellite-data-shows-significant-decrease-in-no2-emissions-in- india-due-to-covid-19-lockdown-1663637-2020-04and-05 ; https://www.cnn.com/2020/03/31/asia/coronavirus organizations for-lockdown telecommuting-impact-pollution-india-intl-hnk/index.html strategy; https://www.lamag.com/citythinkblog/air roll-out-quality-covid/ ; 12 https://www.britannica.com/science/smog ; https://www.cnn.com/2020/04/07/us/los-angeles-pollution-clean-air-coronavirus-trnd/index.html ; https://sf.curbed.com/2020/3/27/21197151/san-francisco-air-quality-pollution-coronavirus-cars ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 PEV “Movements” have the highest emissions reduction effectiveness though with relatively high cost. Subsidies most effective in near term

Movements: Subsidies / Incentives, Charging infrastructure, ZEV mandate

Movement Category: Emissions, fuel economy and carbon pricing Alternative fuels Tolls, congestion pricing and telecommuting Mobility initiatives

High Subsidies Key takeaways / Incentives LEZ / ICE bans • PEVs offer slightly lower lifecycle Charging ZEV emissions compared to ICEs; renewable infrastructure mandate energy use will further reduce lifecycle

CTI emissions for PEVs CAFE standard • Avg cost of a BEV is ~$8k - $12k higher w.r.t to a comparable ICE vehicle. BEVs Medium TCI Congestion Telecommuting LCFS pricing expected to achieve parity circa 2025+ Carbon

pricing Biofuels Effectiveness blending • Subsidies and charging network are critical PEV uptake drivers in short-med Mobility / term; ZEV mandate and charging CAV network in long term

• Subsidies are vital for PEV sales – PEV buyers survey indicates, both federal Low and state level subsidies as critical Low Medium High drivers in their purchase decisions Cost

Source: Ricardo analysis 13 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Average cost of a BEV in 2020 is ~$8k - $12k higher with respect to a comparable ICE vehicle. BEVs expected to achieve parity circa 2025+

Emission, Fuel Economy and Carbon Pricing – Cost

• Average cost of a battery electric vehicle (BEV) is ~$8,000 - $12,000 Cost of Compliance of ‘New Vehicle Sales’ from Subsidies, CAFE higher compared to a similarly sized average ICE vehicle standard, ZEV mandate and Charging infrastructure (Incremental cost w.r.t to a comparable ICE vehicle in 2020, $000’s) – Cost of battery pack ranges from ~$160 - $200 per kWhr based on volume

$14 • Average cost of a BEV expected to attain parity with a comparable ICE $12 vehicle in 2025+ timeframe based on expected reduce cost of battery – Cost of battery pack expected to range ~ $80 - $120 per kWhr $10 • Also, average cost of an ICE is expected to increase compared to today’s $8 vehicle by ~$2000 - $2500 based on SAFE rule or additional stringent CAFE standards $6 BEV potentially costs lower than $4 a comparable ICE vehicle BEV attains cost parity $2 with comparable ICE Technological advancements in batteries vehicle $0 leading to lower cost will allow EV uptake and 2020 2030 2040

-$2 aid corresponding Movements; not vice-versa Incremental cost of BEV w.r.t ICE ($ ICE w.r.t BEV 000’s) of costIncremental

Incremental cost of ICE due to increasing fuel economy standards

Incremental cost of BEV w.r.t a comparable ICE Note: Average baseline cost of an ICE vehicle in 2020 is considered as $0 on the Y-axis

Source: https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ ; https://www.bts.gov/content/average-fuel-efficiency-us-light-duty-vehicles; Ricardo analysis 14 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Subsidies and charging network are critical PEV uptake drivers in short-med term; ZEV mandate and charging network in long term

Emission, Fuel Economy and Carbon Pricing – Vehicle Demand

• Network effect of subsidies and charging infrastructure have been linked Subsidies, CAFE standard, ZEV mandate and Charging to EV uptake in multiple studies infrastructure estimated impact, YOY PEV sales % (PEV sales as % of annual light duty vehicle sales) – Ricardo estimates impact of subsidies will be reduced in 2030+ timeframe if pack costs reach ~$60 / kWhr PEVs are 60% of 60 annual sales by 2040 – Charging infrastructure especially DCFC charging infrastructure will High PEV uptake - BNEF Outlook 55 have a higher impact on PEV demand in 2030+ timeframe Low PEV uptake - AEO 2020 Outlook 50 • Home charging still remains the primary use case for PEV 45 charging with DCFC for intra city travel / travel corridors 40 • New green deal etc. type legislation supporting charging infra 35 have failed but will gain more traction as PEVs increase 30 25 • ZEV mandate states account for ~30% of annual U.S. vehicle sales , 20 which drives higher model eligibility and mandates sales of vehicles to meet requirements 15 10 • CAFE standard has limited impact on PEV uptake with OEMs selling 5 10% annual sales are vehicles only to meet fleet mpg requirement

PEV sales as % annualsales LDV % as of sales PEV PEVs by 2040 0 2020 2030 2040 • Another key factor impacting current PEV adoption is states such as California is public visibility of PEV leading to ‘network effect’ and Subsidies CAFE standard ZEV Mandate Charging infrastructure ‘neighbor effect’

Source: https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ ; http://evtc.fsec.ucf.edu/publications/documents/HNEI-04-15.pdf ; Ricardo analysis 15 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Subsidies, ZEV mandate and charging infrastructure create a network effect to directly drive PEV uptake

Emission, Fuel Economy and Carbon Pricing – Vehicle Demand

Charging Subsidies / infrastructure Tax rebate

PEV uptake (Network effect)

Model Neighbor availability effect (ZEV mandate)

Single “Movement” alone may not create the effect to drive PEV sales, but combination of all Movements drives the impact Source: Ricardo analysis 16 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 PEVs offer slightly lower lifecycle emissions compared to ICEs; renewable energy use will further reduce lifecycle emissions for PEVs

Lifecycle GHG emissions from passenger cars

Life-cycle GHG emissions for passenger cars by powertrain, 2018

45 (Large car) Variability relative to 40 vehicle size (Medium car) 35 Effect of larger battery (+200km) 30 Tank-to-wheel fuel cycle

eq Well-to-tank fuel cycle 2 25 (Small car)

Vehicle cycle batteries (200km) CO 20 Vehicle cycle assembly, disposal and recycling

tonne Vehicle cycle - components and fluids 15

10

5

0 ICE HEV PH EV BEV FCEV

Source: IEA The Global EV Outlook 2019 – life-cycle analysis 17 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 If PEVs account for 60% new vehicle sales by 2040, results in ~ 50% reduction in avoided lifecycle GHG CO2 emissions w.r.t 2020 sales Emission, Fuel Economy and Carbon Pricing – GHG Emissions

• ZEV mandate, subsidies, and charging infrastructure enable higher PEV Impact on GHG emissions of ‘New Vehicle Sales’ from Subsidies, uptake resulting in higher avoided lifecycle CO2 emissions CAFE standard, ZEV mandate and Charging infrastructure

(Lifecycle avoided emissions, MMT CO2 equivalent) • ZEV mandate potentially results in ~40% - 60% higher avoided GHG emissions compared to baseline scenario PEVs are 60% of High PEV uptake - BNEF Outlook annual sales by 2040 • Movements ‘Subsidies’ and ‘Charging infrastructure’ are indirect drivers 400 Low PEV uptake - AEO 2020 Outlook on GHG emissions. Subsidies and charging infrastructure influences vehicle demand which indirectly impacts GHG emissions Subsidies and charging

infrastructure are • CAFE standard (modified) could potentially result in improvement of equivalent

2 indirect drivers for GHG ~15% - 20% avoided GHG emissions compared to baseline scenario. emissions reduction Considers 5% CAGR in fleet wide fuel economy until 2025 and 1.5% 200 CAGR from 2025-2040

• U.S. light duty new vehicle sales lifecycle emissions in 2019 is ~800 10% annual sales are

PEVs by 2040 MMT CO2 Lifecycle CO MMTLifecycle

0 2020 2030 2040

Note: Only new vehicle sales (not U.S. parc) avoided lifecycle GHG CO emissions Subsidies CAFE standard* ZEV Mandate Charging infrastructure 2 are considered. Light duty vehicles include passenger cars and light duty trucks

Source: https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ ; https://www.bts.gov/content/average-fuel-efficiency-us-light-duty-vehicles; Ricardo analysis 18 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 60% PEV uptake (new vehicle sales) scenario in 2040 results in ~85M PEV parc, potentially displacing gasoline consumption by ~30B gal’s

Emission, Fuel Economy and Carbon Pricing – Fuel Economy

Low PEV uptake scenario High PEV uptake scenario

PEV sales as % of light duty 10% PEV penetration 60% PEV penetration vehicle sales in 2040

PEV parc in 2040 ~18M vehicles ~85M vehicles

Displaced gasoline ~7B gallons ~30B gallons consumption in 2040 (annual)

Note: 2019 U.S gasoline demand was ~142 Billion gallons

Source: https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ ; https://www.eia.gov/tools/faqs/faq.php?id=23&t=10 ; Ricardo analysis 19 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Subsidies are vital for PEV sales – in California PEV buyers survey, ~70% ranked subsidies a key factor in their purchase decision

Subsidies / Incentives – Vehicle Demand

California EV and PHEV sales YOY (unit volume) • California under its Clean Vehicle Rebate Program (CVRP) offers max rebate of $2,500 for BEVs. Program was initiated in 155,000 2010 with ~$840M rebate funding approved till end of 2019 FCEV BEV PHEV CAGR • The Center for Sustainable Energy (CSE), the administrator of +38% 96,500 the CVRP, surveyed and collected data between 2012 – 2015 75,000 regarding importance of the California state rebate ($2,500) 58,500 61,500 and federal tax credit ($7,500) 38,500 19,500 – >70% ranked both federal tax credit and state rebate 6,500 as important factors in their decision to purchase a PEV

2011 2012 2013 2014 2015 2016 2017 2018 • Additionally, CSE also surveyed respondents regarding importance of only CVRP between 2015 - 2017 and >70% of respondents replied state rebate program was extremely California 2012 – 2015 PEV buyers survey important or very important factor in their purchase decision

• ~50% of respondents would not purchase or lease a PEV State 7% 17% 28% 45% Not at all important without the CVRP rebate – based on the same survey by Rebate ($2,500) 3% Slightly important CSE between 2013 – 2017 Moderately important Federal Tax 6% Very important 16% 26% 45% Credit ($7,500) 6% Extremely important

Source: https://autoalliance.org/energy-environment/advanced-technology-vehicle-sales-dashboard/ ; https://cleanvehiclerebate.org/eng/rebate-statistics ; https://cleanvehiclerebate.org/eng/survey-dashboard/ev 20 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Georgia’s PEV demand dropped by ~60% after $5k state rebate was rescinded; similar trends observed in other countries, notably China

Subsidies / Incentives – Vehicle Demand

Georgia EV and PHEV sales YOY (unit volume in 000’s) China EV and PHEV sales YOY (unit volume in 000’s)

BEV PHEV BEV PHEV 2019 BEV & PHEV volume (does not include Nov, Dec)

+23% -64% 1,500 +71% 1,045 968 NEV purchase 20 1,000 incentives 10.6 560 6.9 reduced by 50% 10 4.5 6.1 500 210 320 0.2 1.0 2.5 2.5 in July 2019 0 0

2011 2012 2013 2014 2015 2016 2017 2018 PEV(000’s) sales 2015 2016 2017 2018 2019 PEV(000’s) sales

Georgia EV and PHEV sales monthly (unit volume) China plug-in sales monthly (unit volume)

2017 2018 2019 NEV purchase incentives 1.5 $5,000 ZEV rebate 200 cut, resulting ~50% drop in discontinued sales from July 2019 BEV 150 1.0 PHEV 100 0.5

50

PEV sales (000’s)sales PEV PEV sales (000’s)sales PEV 0.0 0 Jan- Jun- Dec- Jun- Dec- Jun- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 14 14 15 15 16 16

Source: https://autoalliance.org/energy-environment/advanced-technology-vehicle-sales-dashboard/ ; EIA - Analysis of the Effect of ZEV Policies: State-Level Incentives and the California Zero-Emission Vehicle Regulations ; http://www.hybridcars.com/the-world-just-bought-its-two-millionth-plug-in-car/ ; https://www.energy.gov/eere/vehicles/articles/fotw-1079-april-29-2019-more-1-million-plug-vehicles-were-sold-china-2018 ; http://www.ev-volumes.com/country/china/ ; https://technode.com/2020/03/05/ev-subsidies-in-china-are-making-a-comeback/ ; https://www.bloomberg.com/news/articles/2020-02-20/china-considers-prolonging-electric-car- 21 subsidies-as-sales-slump Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Scaling back of CAFE standards will affect emissions reduction for ICE vehicles drawing higher reliance on PEVs for emissions reduction

Movements: CAFE standard

Movement Category: Emissions, fuel economy and carbon pricing Alternative fuels Tolls, congestion pricing and telecommuting Mobility initiatives

High Subsidies Key takeaways / Incentives LEZ / ICE bans • SAFE rule reduces fleet fuel economy Charging ZEV targets and emissions reduction impact infrastructure mandate – SAFE rule fuel economy CTI improvement extrapolated till 2040 CAFE results in ~180 MMT of avoided standard lifecycle CO2 emissions from new Medium TCI Congestion vehicle sales Telecommuting LCFS pricing Carbon pricing Biofuels Continuation of CAFE standards fleet Effectiveness • blending fuel economy requirements growth rate of 5% CAGR till 2040 requires >50% of Mobility / CAV new vehicle sales to PEVs by 2040

Low Low Medium High Cost

Source: Ricardo analysis 22 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 SAFE rule finalized in 2020 drastically reduces fleet fuel economy targets and emissions reduction impact compared to earlier targets

Emission, Fuel Economy and Carbon Pricing – GHG Emissions

• SAFE rule fuel economy improvement extrapolated till 2040 results in Impact on GHG emissions of ‘New Vehicle Sales’ from CAFE ~180 MMT of avoided lifecycle CO2 emissions from new vehicle sales standard

(Lifecycle avoided emissions, MMT CO2 equivalent) • Modified CAFE standard results in improvement of ~15% - 20% avoided GHG emissions compared to baseline scenario

• Continuation of CAFE standard i.e. 5% CAGR growth in fleet wide fuel 400 economy till 2040 requires fleet fuel economy greater >90 mpg by 2040. Feasible through electrification and would require ~60% PEV uptake by 2040 to meet this scenario

5% growth YOY in fleet fuel equivalent

2 economy, which is feasible through Following assumptions were considered for the analysis: electrification and high PEV uptake • – SAFE rule: considers ~1.5% CAGR improvement in fleet wide fuel 200 economy till 2040 – Modified CAFE standard: 5% CAGR growth in fleet fuel economy till 2025 and 1.5% CAGR growth from 2025 – 2040 Considering 1.5% Lifecycle CO MMTLifecycle growth in fleet fuel – CAFE standard continued: 5% CAGR growth till 2040 economy YOY till 2040 0 1.5% growth in fleet • U.S. light duty new vehicle sales lifecycle emissions in 2019 is ~800 2020 fuel economy YOY 2030 2040 MMT CO from MY 2021 - 2026 2 Note: Only new vehicle sales (not U.S. parc) avoided lifecycle GHG CO SAFE rule Modified CAFE standard CAFE standard continued 2 emissions are considered. Includes both passenger cars and light duty trucks

Source: https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ ; https://www.bts.gov/content/average-fuel-efficiency-us-light-duty-vehicles; Ricardo analysis 23 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 LCFS (California and Washington) and RFS (federal) mandates have had varying success

Movements: Low Carbon Fuel Standard (LCFS), Renewable Fuel Standard (RFS)

Movement Category: Emissions, fuel economy and carbon pricing Alternative fuels Tolls, congestion pricing and telecommuting Mobility initiatives

High Subsidies Key takeaways / Incentives LEZ / ICE bans • LCFS is more effective than RFS Charging ZEV however is aided by California’s head infrastructure mandate start with the Clean Air Act and buyer

CTI allegiance for EVs; if EVs plateau, some CAFE other alt fuel disruption needs to occur to standard meet LCFS

Medium TCI Congestion Telecommuting LCFS pricing • EPA waivers for RFS show significant Carbon lag in meeting original targets

pricing Biofuels Effectiveness blending • A drawback of biofuel use is its lower Mobility / fuel economy compared to baseline CAV gasoline and diesel fuel which indirectly leads to higher fuel consumption compared to baseline fuels

Low Low Medium High Cost

Source: Ricardo analysis 24 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 LCFS is more effective than RFS however is aided by EV uptake; if EVs plateau, some other alt fuel disruption needs to occur to meet LCFS

Key Takeaways from Biofuels: Low Carbon Fuel Standard (LCFS) and Renewable Fuel Standard (RFS)

LCFS’ CI target approach • LCFS pursues a carbon intensity (CI) target approach while RFS has a volume target mandate is more effective than • RFS has needed to revise down its volume targets significantly whereas industry appears to RFS’ volume-based only slightly lag behind LCFS targets

Four main alt fuels • Starch ethanol, biodiesel, renewable diesel and biomethane are the main fuels contribute to LCFS contributing to LCFS

LCFS is not causing EV • EVs are popular due to industry’s technological advancements; not because of LCFS targets popularity but will benefit • However, LCFS will continue to benefit from EV uptake as the mandate offers credits to from it electricity use in transportation

If EVs plateau, some • Outside of EVs, other alternative fuels (based on current projections), do not appear to cause other alt fuel will need to a significant market shift in adoption, mainly because they do not offer consumers incentivize consumers appreciable operational cost benefit or driving feature enhancements as EVs do • If EVs plateau, some other alternative fuel disruption needs to occur to meet LCFS

Source: Ricardo analysis 25 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 EPA waivers for Renewable Fuel Standard (RFS) show significant lag in meeting original targets YOY Volume Requirements of RFS Statute vs EPA Final Billions of Gallons 40 Biomass Based Diesel

35 Other advanced biofuel Cellulosic Biofuel 30 Conventional Biofuel (starch ethanol)

25

20 TBD*

15

10

5

0 RFS EPA RFS EPA RFS EPA RFS EPA RFS EPA RFS EPA RFS EPA 2010 2012 2014 2016 2018 2020 2022 NOTE: RFS Statute enacted under EISA (Energy Independence and Security Act of 2007) extends the yearly volume requirements out to 2022 TBD*: EPA sets final volumes each year for the following year. Hence, data is available for 2020 (finalized on 19th December, 2019) but not for 2021 and beyond

Source: https://fas.org/sgp/crs/misc/R43325.pdf, https://www.epa.gov/renewable-fuel-standard-program/final-renewable-fuel-standards-2020-and-biomass-based-diesel-volume ; 26 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 CARB projections estimate ethanol, biodiesel, renewable diesel and biomethane to be key drivers alongside electrification to meet targets

Main Alternative Fuels Contributing to LCFS

LCFS estimated alternative fuels mix YOY (in million GGE) LCFS estimated credit mix YOY (in MMT)

5,000 Infrastructure and 40 petroleum projects 4,500 Hydrogen 35 4,000 Cellulosic Ethanol 30 3,500 Sugar Ethanol Alternative Jet Fuel 25 3,000 Biomethane 2,500 Electricity 20 Biodiesel 2,000

Starch Ethanol 15 Credits (MMT)Credits 1,500 Renewable Diesel

Volume (million GGE) Volume(million Lower and upper bound of 10 1,000 estimates for each fuel type 500 5 0 0 2018 2020 2025 2030 2040 (Ricardo 2020 2030 estimate) CI reduction target 7.5% 13.75% 20% ~30% 7.5% 20% (compared to 2010) Ricardo assumption Outside of three main alt. fuels, biomethane use may increase, however proportional credits for electricity are much more than those for biomethane

Source: CARB illustrative compliance scenario, Aug 2018; Ricardo analysis 27 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Increased EV penetration is the key driver to comply with LCFS targets. Alternative fuels only enablers based on current technology

Carbon Intensity (grams of CO2 per mega Joule of energy produced) for various alternative fuels

99 99 0.25% CI reduction - 2011 LCFS target • Through 2018 Q1, total emissions 7.5% CI reduction - 2020 LCFS target reduction requirements under the regulation were 28.9 million tons 80 80 20% CI reduction - 2030 LCFS target (MMT) CO2e. Actual reported emissions reductions were 38.3 71 MMT CO2e, representing

Carbon Intensity (2020 est.) overcompliance of 9.3 MMT Carbon Intensity (2040 est.) Usage CO2e (33%), creating a system- expected wide credit “bank” that can be used to meet future targets 45 to increase 40 40 40 40 drastically • However, to meet stringent future carbon intensity (CI) targets, 30 30 30 significant EV uptake along with alternative fuels required

Average Carbon Intensity Carbon Average 20 – Electricity with its lower CI plays a significant role in meeting credit 10 compliance compared to fuels Average CI 4 such as biomethane and CNG values from – Renewable diesel though CARB Calif CNG Starch Hydrogen CNG / LNG Renewable Cellulosic Electricity comparable in CI with electricity, Illustrative impact is limited mostly to heavy Compliance Gasoline Ethanol from landfill diesel Ethanol duty applications Calculations

Source: https://its.ucdavis.edu/research/californias-low-carbon-fuel-standard/; https://www.arb.ca.gov/fuels/lcfs/2018- 28 0815_illustrative_compliance_scenario_calc.xlsx?_ga=2.233580062.1809294636.1590000285-930621387.1583340425 ; . https://www.nap.edu/read/21744/chapter/30 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Fuel economy is lower for alternative fuels and blends compared to baseline gasoline and diesel fuel

Biofuels: Low Carbon Fuel Standard (LCFS) and Renewable Fuel Standard (RFS) – Fuel Economy Jan 2020 National Average Retail Fuel Prices used for cost impact Fuel Type E10 E15 E85 B20 B100 Renewable Diesel

~3%-4% ~4%-5% ~15%-20% ~8%-10% ~3%-7% Fuel Economy ~2% lower Impact lower lower lower lower lower

Compared to baseline Gasoline Compared to baseline Diesel Annual cost impact below does not include Renewable Diesel costs For C/D segment vehicle for 20,000 miles per year: For Class 4 vehicle for 20,000 miles per year:

Annual Cost $50 $200 $100 $700 Impact Incremental cost of fuel compared to baseline gasoline Incremental cost of fuel (includes biofuel cost impact only) compared to baseline diesel Jan 2020 National Average Retail Fuel Prices used for cost impact • Alternative fuels and fuel blends deliver marginally lower fuel economy in comparison to baseline gasoline and diesel fuels

• Renewable diesel (not provided above) is ~3% - 7% lower in fuel efficiency compared to baseline diesel Source: https://www.fueleconomy.gov/feg/ethanol.shtml ; https://www.fueleconomy.gov/feg/biodiesel.shtml ; https://e85prices.com/ ; https://afdc.energy.gov/files/u/publication/alternative_fuel_price_report_jan_2020.pdf ; 29 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Cleaner Trucks Initiative (CTI) still in proposal phase with expected impact in 2025+ timeframe

Movements: Cleaner Trucks Initiative (CTI)

Movement Category: Emissions, fuel economy and carbon pricing Alternative fuels Tolls, congestion pricing and telecommuting Mobility initiatives

High Subsidies Key takeaways / Incentives LEZ / ICE bans • CTI aims lower NOX emissions with Charging ZEV focus on lower-load conditions; CTI still infrastructure mandate in proposal phase with expected impact

CTI in 2025+ timeframe CAFE standard • EPA’s existing rule of 0.6 g/mile (0.2 g/bhp-hr) for NOX is being met only Medium TCI Congestion Telecommuting LCFS pricing under highway operation Carbon

pricing Biofuels Effectiveness blending • Trucks meeting 0.6 g/mile target across all load conditions reduces NOX Mobility / emissions of Medium and Heavy duty CAV diesel trucks parc by >65% in low electrification scenario and >75% in high electrification scenario

Low Low Medium High Cost

Source: Ricardo analysis 30 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020

CTI aims to lower NOX emissions with focus on lower-load conditions; CTI still in proposal phase with expected impact in 2025+ timeframe

Cleaner Trucks Initiative (CTI)

• EPA’s current emissions standards have lowered overall NOx emissions, but Average in-Use NOX Emissions from MY2010 – MY2016 Heavy Duty Diesel Vehicles have not resulted in effective emission control under low-load conditions. EPA’s existing rule of 0.6 g/mile (0.2 g/bhp-hr) for NOX is being met only under highway operation Distance specific NOx emissions (g/mile) Brake specific NOx emissions (g/bhp-hr) • Objective of CTI is to achieve lower NOX emissions, with focus on ) lower-load conditions i.e. idle, slowing moving or stop-and-go traffic

hr 1.5 1.4 8 - 7.0 7 • EPA last revised NOX standards for heavy-duty trucks in 2001, impacting 6 MY 2007 – MY 2010. Standards set were: 1.0 – NOx emissions of 0.20 g/bhp-hr 5 Standard set in – PM emissions of 0.01 g/bhp-hr 0.7 2001 for HD 4 Diesel NOX emissions – Non-methane hydrocarbons (NMHC) of 0.14 g/bhp-hr 3 0.5 2.4 • ICCT’s analysis of EPA’s Heavy Duty In-Use Testing (HDIUT) program 2 0.2 found that >50% of HD vehicles average time is under low-load conditions 1 0.6 • On Jan 6, EPA signed Advance Notice of Proposed Rule (ANPR),

0.0 0 Brake specific NOx (g/bhpNOx emissionsBrakespecific Distance specific NOx (g/mile)NOx emissionsspecificDistance requesting comments on Cleaner Trucks Initiative (CTI) from various Urban Suburban Highway (~1-25 mph) (~25-50 mph) (>50 mph) industry bodies. Finalized rule is not expected until 2021, with expected roll- out in a phased manner impacting MY2024 – MY2027

In-Use NOX emissions exceeding threshold in non-highway conditions

Source: https://www.epa.gov/regulations-emissions-vehicles-and-engines/cleaner-trucks-initiative#CTI-Process ; https://theicct.org/sites/default/files/publications/NOx_Emissions_In_Use_HDV_US_20191125.pdf 31 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Diesel trucks meeting 0.6 g/mile target across all load conditions reduces NOX emissions of commercial vehicle parc by >65% Cleaner Trucks Initiative (CTI) – Emissions

• CTI to impact only model years 2025+ and assuming CTI will target of Impact on tailpipe NOX emissions of ‘U.S. Diesel Commercial 0.6 g/mile NOX emissions across all load profiles of diesel truck operation Vehicle Parc’ from Cleaner Trucks Initiative (CTI)

(Annual NOX emissions, MT) • Meeting 0.6 g/mile target across all load conditions reduces Medium and

, MT Heavy duty diesel trucks parc NOX emissions by > 65% in low X 600k Medium Duty Trucks electrification scenario and >75% in high electrification scenario 400k -66%

2040 - Low PEV 2040 - High PEV 200k <5% PEV penetration <25% PEV penetration -79% Powertrain Current Scenario Scenario 0k Diesel 61% 61% 48% Current 2040 2040 Gasoline 38% 35% 27% (Low PEV Scenario) (High PEV Scenario) Medium Duty MD Trucks Annual NO Annual Trucks MD ~2M diesel vehicle parc ~3M diesel vehicle parc ~2.5M diesel vehicle parc Trucks PEV <1% ~2% ~22% (Class 4-6) Others <1% ~2% ~3%

, MT Total Vehicles ~3.5M ~5M ~5M

X Heavy Duty Trucks 1,500k Diesel 98% 98% 86% Gasoline N/A N/A N/A 1,000k -78% Heavy Duty -69% Trucks PEV <1% ~1% ~12% <5% PEV penetration <15% PEV penetration (Class 7-8) 500k Others <1% ~2% ~2% 0k Total Vehicles ~5M ~6M ~6M Current 2040 2040 (Low PEV Scenario) (High PEV Scenario) HD Trucks Annual NO Annual Trucks HD ~5M diesel vehicle parc ~6M diesel vehicle parc ~5.5M diesel vehicle parc Note: Analysis considers that PEVs replace highest emitting vehicles in the parc. Average annual VMT considered: Medium duty diesel trucks – 25k miles

Source: https://ww3.arb.ca.gov/research/veh-emissions/low-nox/low-nox.htm ; Ricardo analysis Heavy duty diesel trucks – 45k miles 32 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 TCI and carbon pricing may have direct limited impact on emissions reduction given the limited nationwide momentum these may have

Movements: Transportation Climate Initiative (TCI), Carbon pricing

Movement Category: Emissions, fuel economy and carbon pricing Alternative fuels Tolls, congestion pricing and telecommuting Mobility initiatives

High Subsidies Key takeaways / Incentives LEZ / ICE bans • TCI is estimated to contribute ~1% - 6% Charging ZEV of the overall target of 20% - 25%, with infrastructure mandate rest achieved through electrification and

CTI fuel efficiency improvement CAFE standard • Revenue from allowance sales to be invested by TCI signatory regions to Medium TCI Congestion Telecommuting LCFS pricing support low-carbon transportation Carbon initiatives

pricing Biofuels Effectiveness blending • Numerous carbon pricing legislation has Mobility / been proposed however distribution of CAV revenues are not targeted towards transportation

Low Low Medium High Cost

Source: Ricardo analysis 33 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 TCI is estimated to contribute ~1% - 6% of the overall target, with rest achieved through electrification and fuel efficiency improvement

Transportation Climate Initiative (TCI) – GHG Emissions TCI’s Estimated CO2 Emissions Reduction Target by 2032

TCI states GHG emissions impact (MMT CO2 equivalent) 20% 22% 25%

TCI relies on fuel efficiency 2 260 improvement and electrification to achieve Cap reduction target is set against 2022 estimated targeted GHG reduction 250 emissions of 254 MMT CO2 equivalent

240 Net impact Reference case with sensitivity 230 analysis estimates GHG reduction of ~1% – 6% GHG reduction if reference case 6% to 19% without TCI projection till 2032 holds true

220 Million metric tons CO tonsmetric Million 210 • Transportation Climate Initiative (TCI) is a still-in-work “cap & invest” 200 initiative that is estimated to start in 2022

0 • Average yearly incremental cost for fuel in TCI states is estimated to 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 range from ~$30 - $90 in 2022 to max of $100 - $150 in 2032

Reference Case 20% reduction 22% reduction 25% reduction Note: Only new vehicle sales (not U.S. parc) avoided lifecycle GHG CO2 emissions are considered. Light duty vehicles include passenger cars and light duty trucks

Source: https://www.transportationandclimate.org/sites/default/files/TCI%20Public%20Webinar%20Slides_20191217.pdf ; https://vtdigger.org/2020/01/01/john-mcclaughry-a-qa-on-tci/ ; Ricardo analysis 34 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Revenue from allowance sales to be invested by TCI signatory regions to support low-carbon transportation initiatives

Transportation Climate Initiative (TCI)

Illustrative Portfolios of Clean Transportation Investments – Outlined in TCI Working Groups’ analysis

Scenario A Scenario B Scenario C

Electric cars, light trucks and 5% 30% 54% vans

Low and zero-emission buses 21% 23% 27% and trucks

35% 18% - Transit expansion and upkeep

Pedestrian and bike safety, 16% 14% 10% ride sharing

7% 8% 8% System efficiency

17% 8% - Indirect / Other

Source: https://www.transportationandclimate.org/sites/default/files/TCI%20Public%20Webinar%20Slides_20191217.pdf ; 35 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Numerous carbon pricing legislation has been proposed however distribution of revenues are not targeted towards transportation

Carbon pricing

Carbon Tax Rate for Federal Carbon Tax Proposals Use of Carbon Tax Revenues 160 100% Coons Bill 140 90% 80% 120 Deutch Bill 70%

2 100 Larson/ 60% 80 Whitehouse Bill 50% Fitzpatrick Bill $/ton CO $/ton 60 40% Lipinski Bill 30% 40 Rooney Bill 20%

20 10% Percent of Gross Carbon Revenues GrossCarbon of Percent 0 0% 2020 2030 Coons Deutch Larson Whitehouse Fitzpatrick Lipinski Rooney Bill Bill Bill Bill Bill Bill Bill

• 50% of tax proposals support a higher initial tax rate that Admin. Costs Low-Income Carbon Dividends gradually increases to 2030 Infrastructure Adaptation and R&D Payroll Tax Credits • A third of the proposals support starting at a relatively lower initial Middle/Low Income Dividends General Veterans tax rate with a steeper increase to 2030, eclipsing the tax rate of Innovation Payroll Tax Rededuction State Grants the initially higher rate proposals during the early 2020s Transition Assistance Soc. Security Middle/Low Income Payments

Source: Center for Global Energy Policy, Columbia University https://energypolicy.columbia.edu/what-you-need-know-about-federal-carbon-tax-united-states ; 36 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Movements such as LEZ/ICE bans, congestion pricing and mobility initiatives are localized and limited to urban regions

Movements: Low Emission Zone (LEZ) / ICE bans, Congestion pricing, Mobility / CAV

Movement Category: Emissions, fuel economy and carbon pricing Alternative fuels Tolls, congestion pricing and telecommuting Mobility initiatives

High Subsidies Key takeaways / Incentives LEZ / ICE bans • LEZ deployment in LA county potentially Charging ZEV reduces NOX by >10% and CO2 by ~4%- infrastructure mandate 8% based on implementation scenario

CTI • Congestion pricing offers localized CAFE standard emissions reduction benefit with high cost of compliance. Investment in clean Medium TCI Congestion Telecommuting LCFS pricing public transport required to sustain and Carbon improve emissions reduction

pricing Biofuels Effectiveness blending • Increase in shared & autonomous Mobility / mobility impacts U.S. parc with vehicle CAV ownership per thousand reducing ~10% compared to 2019 value. CAV has an ambiguous future effect on emissions based on VMT Low Low Medium High Cost

Source: Ricardo analysis 37 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 LEZ deployment in LA county based on EU model potentially reduces NOX by >10% and CO2 by ~4%-8% based on implementation scenario Vehicle use type restrictions / ICE bans – Low Emission Zone (LEZ) in Los Angeles County

Impact if passenger vehicles older than 20 years are banned from driving in Los Angeles County Area

LA county has ~7.6M registered passenger vehicles in 2019. ~8% of vehicle population (~0.6M vehicles) are >=20 years in age

Option - 1 Option - 2

Scenario Replaced with public Replaced with EPA Tier 3 Impact transport / ZEVs ICEs 0.6M vehicles replaced with ZEVs / 0.6M vehicles replaced with EPA public transport Tier 3 ICEs

NOX reduction ~16% reduction ~14% reduction compared to baseline – no action is taken

Baseline: 7.6M parc in LA county leads to ~31,000 tons of NOX emissions in 2019

CO2 reduction ~8% reduction ~4% reduction compared to baseline – no action is taken

Baseline: 7.6M parc in LA county generates ~38 MMT of CO2 emissions in 2019 Note: Impact on emissions from shift to public or alternative transport not considered

Source: https://www.bts.gov/archive/publications/national_transportation_statistics/2001/table_04_23 ; http://www.laalmanac.com/transport/tr02.php ; Ricardo analysis 38 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Emission reduction benefits of congestion pricing are localized and sustained through clean public transport. Limited impact nationally

Congestion pricing – New York ,Seattle, Los Angeles Impact on GHG emissions

Impact if congestion pricing is implemented in New York, Seattle and Los Angeles

Transportation CO2 emissions (in MMT) are as following for each city: NY – 15 MMT, Seattle – 3 MMT, LA – 25 MMT

Low Impact High Impact

Scenario Low per vehicle charge and High per vehicle charge and Impact significant exemptions granted shift to clean public transport $5 - $7 per vehicle charge >$10 per vehicle charge

CO2 reduction - localized compared to local transportation ~7% reduction ~20% reduction emissions Transportation sector (3 cities) resulted in ~45 MMT of CO2 emissions in 2019

CO2 reduction – U.S. wide compared to U.S. wide transportation ~0.2% reduction ~0.6% reduction emissions

U.S. transportation sector resulted ~1,500 MMT of CO2 emissions in 2019 Note: Impact on emissions from shift to public or alternative transport not considered

Source: https://www.seattle.gov/Documents/Departments/OSE/ClimateDocs/2016_SEA_GHG_Inventory_FINAL.pdf ; https://www1.nyc.gov/site/dep/environment/transportation-emissions.page ; Ricardo analysis 39 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Congestion pricing has a high cost of access and also yields high gains in localized emissions reduction

Congestion pricing – Cost of Compliance

• Average yearly incremental cost for accessing a cordon congestion Operational cost from Congestion pricing per person – where pricing zone is estimated to range from ~$1,000 - $3,000 in 2021 to max impacted of $5,000 - $12,000 in 2040 based on stringency of implementation and (Average yearly cordon congestion pricing costs, $) revenue expected to be generated – Cost increase considered above is similar to cost increase for

access to London congestion pricing zone over the past decade $15,000 • Congestion pricing costs spread across U.S. parc results in cost of ~$3 per person and increases as more cities adopt the scheme – Assessment assumes New York congestion pricing starts in 2021

$10,000 and Seattle and Los Angeles follow suit later and congestion pricing

access costs continue to increase $5,000

If congestion pricing impact is spread across U.S. parc, annual cost per person ranges from ~$3 /per person in 2021 (based on

$0 timeframe for roll-out in New York) to ~$10 - $20 per person in 2040

Yearly ($) costpricingcongestionperson perYearly 2020 2030 2040

Incremental cost per year due to congestion pricing Note: Other operational cost such as fuel costs, parking etc. are not considered in the analysis

Source: https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ ; https://www.bts.gov/content/average-fuel-efficiency-us-light-duty-vehicles; Ricardo analysis 40 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Shared & autonomous mobility impacts U.S. parc with vehicle ownership per thousand reducing ~10% compared to 2019 value

Mobility and Connected and Autonomous Vehicles

U.S. Passenger Vehicle Parc Connected and Autonomous Vehicles - Fuel Consumption Impact - 2050 60% 777 *VMT: Vehicle Miles Traveled 400 40% High VMT 285 292 302 299 296 300 20% Increase

200 0% Low VMT Increase 100 -20%

U.S. Parc (in Millions) U.S. (inParc 0 No VMT

2020 2025 2030 2035 2040 %∆ in Fuel Consumption -40% Increase Level 1-3 CAV Level 4-5 CAV Impact of shared mobility and -60% autonomous mobility in 2030+ Low Technology Impact Max ∆ Low Technology Impact Min ∆ High Technology Impact Min ∆ High Technology Impact Max ∆

• CAVs have an ambiguous future effect on emissions based on VMT as there could be fundamental shift in usage. Potential uptick in use due to ease of travel and increased access to previously underserved communities X Vehicles per thousand people in 2040 U.S. vehicles per thousand people in 2019 is 850 • By 2050 LD vehicles could potentially increase fuel consumption by 42% or decrease it by -44.4% https://www.census.gov/content/dam/Census/library/publications/2015/demo/p25-1143.pdf ; https://tedb.ornl.gov/data/ ; https://www.dmv.ca.gov/portal/dmv/detail/pubs/media_center/statistics ; https://publications.anl.gov/anlpubs/2018/01/141595.pdf ; https://news.ihsmarkit.com/prviewer/release_only/slug/automotive-vehicles-getting-older-average-age-light-cars-and-trucks-us-rises-again-201 ; Ricardo analysis ; https://www.eia.gov/analysis/studies/transportation/automated/pdf/automated_vehicles.pdf 41 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) – Light duty vehicles powertrain mix and parc scenarios and criteria emissions impact – Medium and heavy duty commercial vehicles powertrain mix and parc scenarios – Cost assessment methodology & assumptions used to project Movement impact until 2040 – Biofuels – Cleaner Trucks Initiative (CTI) – Transportation Climate Initiative (TCI) and Carbon pricing • Appendix – II (Movement 101) • Appendix – III (Summary of research)

42 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Ricardo reviewed multiple studies to generate PEV penetration outlook scenarios

U.S. Light Duty EV Penetration Scenarios

Low PEV uptake scenario High PEV uptake scenario (10% PEV penetration by 2040) (60% PEV penetration by 2040)

1% 1% 1% 100% ~10% PEV 100% 2% 4% 5% 7% 1% 2% 6% 7% 8% 5% 5% 4% 9% penetration 5% 7% 4% 4% by 2040 2% 5% 22% ~60% PEV 38% 4% penetration 52% by 2040 PHEV 4% 92% 92% 91% 90% 88% 86% BEV 86% 4% Flex fuel (E-85) 68% ICE 51% 36%

2020 2025 2030 2035 2040 2020 2025 2030 2035 2040

Studies reviewed: – AEO 2020 Outlook, BNEF 2019 EV outlook, IEA 2019 Global EV Note: ~16M vehicle sales per year considered from 2020 through 2040 outlook, BCG Electric Car tipping point, Wood Mackenzie EV outlook, UBS auto and EV outlook, Edison Electric Institute Electric Vehicle Trends, IHS Markit etc. Source: https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ ; https://www.iea.org/reports/global-ev-outlook-2019; https://www.woodmac.com/our- expertise/capabilities/electric-vehicles/ ; https://www.eia.gov/outlooks/aeo/tables_ref.php ; https://publications.anl.gov/anlpubs/2018/01/141595.pdf ; Ricardo analysis 43 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 U.S Vehicle Parc low-to-high- scenarios based on impact of vehicle private ownership vs shared mobility and autonomous vehicles

U.S. Light Duty Vehicle Parc Scenarios

U.S. Parc – Low U.S. Parc – Medium U.S. Parc – High 777 843 898 400 400 321 400 327 342 285 292 302 299 296 285 293 302 311 285 297 312 300 300 300 200 200 200 100 100 100 0 0 0

2020 2025 2030 2035 2040 2020 2025 2030 2035 2040 2020 2025 2030 2035 2040

U.S. Parc (in Millions) U.S. (inParc Millions) U.S. (inParc Millions) U.S. (inParc Impact of shared mobility and Normal parc growth High private vehicle ownership autonomous mobility in 2030+

Example scenario: U.S. Parc – Low and High PEV uptake 350 285 292 302 299 296 300 4 1 1 5 2 18 9 12 ~85M PEV 20 19 16 41 250 74 Parc in 15 Vehicles per thousand 13 2040 PHEV X 200 people in 2040 150 BEV 263 266 264 234 U.S. vehicles per thousand 100 197 Flex fuel (E-85) people in 2019 is 850

50 ICE U.S.Millions) (inParc 0 2020 2025 2030 2035 2040 Source: https://www.census.gov/content/dam/Census/library/publications/2015/demo/p25-1143.pdf ; https://tedb.ornl.gov/data/ ; https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ https://hedgescompany.com/automotive-market-research-statistics/auto-mailing-lists-and-marketing/; https://www.dmv.ca.gov/portal/dmv/detail/pubs/media_center/statistics ; https://publications.anl.gov/anlpubs/2018/01/141595.pdf ; 44 https://news.ihsmarkit.com/prviewer/release_only/slug/automotive-vehicles-getting-older-average-age-light-cars-and-trucks-us-rises-again-201; Ricardo analysis Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Current EPA emission standards (Tier -3) impact model years 2017 - 2025, with fleetwide adoption mandated by 2025

EPA Emission Standards – Light Duty Vehicles

U.S. Emissions Average vehicle registration age that meet NOX PM Standards the standards (g/mile) (g/mile)

Tier 1 Fleetwide phase-in from 1997 0.6 0.1

88% 90%

Tier 2 Fleetwide phase-in from 2007 0.07 0.01

57% 70%

Tier 3 Fleetwide phase-in to be completed in 2025 0.03 0.003

50% 50% Tier 4 Fleetwide phase-in to be completed in 2031 0.015 0.0015 (Ricardo est.)

Source: Ricardo EMLEG, EPA, Dieselnet 45 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Ricardo used following assumptions for estimating U.S. light duty vehicles 2040 parc NOX and PM2.5 emissions U.S. Light Duty Vehicle Parc Criteria Emissions

U.S. parc NOX emissions Assumptions:

• EPA defined NOX and PM2.5 emissions until model year 2025. Ricardo estimated 2030 – 2040 emissions based on extrapolating historical emissions reduction

• NOX and PM2.5 impact from power generation facilities is forecasted till 2040 based on 1990 – 2018 data. Impact of renewable and clean energy is not clearly captured in the forecast, and exponential growth of renewable energy will result U.S. parc PM emissions in higher emissions reduction than estimated • Fuel refiners emissions impact projections are based on gasoline consumption from vehicle fuel economy improvement

46 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020

~67% reduction in parc NOX emissions by 2040 from vehicle retirement. Additional ~23% reduction from high EV uptake

U.S. Light Duty Vehicle Parc Emissions - NOX Emissions stated in Metric Tons (MT)

Current U.S. parc NOX emissions 2040 U.S. parc NOX emissions – 2040 U.S. parc NOX emissions – Low EV uptake High EV uptake Fuel producer to tank Tank to wheels PEVs account for ~6% of Parc PEVs account for ~29% of Parc

720,000 2,100 722,100 1,500 600 220,000

% NOX 67% reduction

% NOX reduction 500,000 23% 232,000 5,000 237,000 22,000 182,500 4,600 160,500 145,000 400 20,000 95,000 2,000 87,000 65,500 ICE PEV Total emissions ICE PEV Total emissions ICE PEV Total emissions Current 2040 – Low EV uptake 2040 – High EV uptake

Source: https://www3.epa.gov/ttn/chief/conference/ei20/session8/hcai.pdf ; Ricardo analysis ; https://www.epa.gov/ghgreporting/ghgrp-refineries ; http://www.cec.org/sites/default/napp/en/country-profiles/united-states/overview_of_emissions_data.php ; https://www.epa.gov/air-emissions-inventories/2017-national-emissions-inventory-nei-data 47 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020

~70% reduction in parc PM2.5 emissions by 2040 from vehicle retirement. Additional ~26% reduction from high EV uptake

U.S. Light Duty Vehicle Parc Emissions – PM2.5 Emissions stated in Metric Tons (MT)

Current U.S. parc PM2.5 emissions 2040 U.S. parc PM2.5 emissions – 2040 U.S. parc PM2.5 emissions – Low EV uptake High EV uptake Fuel producer to tank Tank to wheels PEVs account for ~6% of Parc PEVs account for ~29% of Parc

112,500 210 112,710 80 130

29,500

% PM 70% 2.5 reduction

% PM2.5 83,000 reduction 26% 33,500 300 33,800 50 250 24,000 1,300 25,300 19,000 1,000 13,000 300 14,500 11,000 ICE PEV Total emissions ICE PEV Total emissions ICE PEV Total emissions Current 2040 – Low EV uptake 2040 – High EV uptake

Source: https://www3.epa.gov/ttn/chief/conference/ei20/session8/hcai.pdf ; Ricardo analysis ; https://www.epa.gov/ghgreporting/ghgrp-refineries ; http://www.cec.org/sites/default/napp/en/country-profiles/united-states/overview_of_emissions_data.php ; https://www.epa.gov/air-emissions-inventories/2017-national-emissions-inventory-nei-data 48 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) – Light duty vehicles powertrain mix and parc scenarios – Medium and heavy duty commercial vehicles powertrain mix and parc scenarios – Cost assessment methodology & assumptions used to project Movement impact until 2040 – Biofuels – Cleaner Trucks Initiative (CTI) – Transportation Climate Initiative (TCI) and Carbon pricing • Appendix – II (Movement 101) • Appendix – III (Summary of research)

49 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Ricardo reviewed multiple studies to generate medium and heavy duty trucks PEV penetration outlook scenarios and impact on parc

U.S. Medium and Heavy Duty

Medium Duty PEV uptake scenarios Heavy Duty PEV uptake scenarios

Higher potential for electrification compared Lower potential for to heavy duty based on electrification due to use-cycles, especially in use-cycles, especially in regional and urban haul long haul applications applications

Medium Duty Parc scenarios Heavy Duty Parc scenarios

Increasing parc Flat parc projected in projected in medium heavy duty (HD) duty category due to category due marginally shifting dynamic of hub- declining YOY sales, and-spoke and last-mile impacted by uptake in delivery medium duty trucks

Source: Studies reviewed: – AEO 2020 Outlook, BNEF 2019 EV outlook, IEA 2019 Global EV outlook, Federal Highway Administration, Fleet Owner, Automotive Fleet, McKinsey, Cummins, Roland Berger, IHS Markit ; Ricardo analysis 50 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 U.S. Medium Duty EV Penetration Scenarios

U.S. Medium Duty EV Penetration Scenarios

Low PEV uptake scenario High PEV uptake scenario (<5% PEV penetration by 2040) (~50% PEV penetration by 2040)

272 ~<5% PEV 275 3% 5% 242 penetration 247 230 3% by 2040 228 3% 206 3% 211 1% 196 33% 1% 35% ~50% PEV 2% 195 15% 25% 2% 7% 3% penetration 33% Fuel cell 2% 5% 34% 2% 3% 33% 7% by 2040 33% BEV 33% 3% 31% 12% PHEV 27% 22% 4% CNG 15% 62% Flex fuel (E-85) 63% 62% 64% 63% 64% 57% Gasoline 49% 41% 29%

Diesel Volume in Thousands (000’s) Thousands Volumein

2020 2025 2030 2035 2040 2020 2025 2030 2035 2040

Note: % breakdown by powertrain considered for each year’s annual Studies reviewed: – AEO 2020 Outlook, BNEF 2019 EV outlook, IEA 2019 Global EV outlook, Federal Highway Administration, Fleet Owner, Automotive Fleet, McKinsey, new vehicle sales Cummins, Roland Berger, IHS Markit etc.

Source: https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ ; https://www.iea.org/reports/global-ev-outlook-2019; https://www.automotive-fleet.com/statistics/download?id=333992; https://img.fleetowner.com/files/base/ebm/fleetowner/document/2020/04/tbn-overview-3-pages.pdf ; https://www.eia.gov/outlooks/aeo/tables_ref.php ; https://publications.anl.gov/anlpubs/2018/01/141595.pdf ; Ricardo analysis 51 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 U.S. Medium Duty Parc Scenarios

U.S. Medium Duty Parc Scenarios

U.S. Medium Duty Vehicle Parc - U.S. Medium Duty Vehicle Parc - Low PEV uptake scenario High PEV uptake scenario (<5% PEV penetration by 2040) (~20% PEV penetration by 2040) 5.1 5.1 ~<5% PEV 3% 2% 4.6 penetration in 4.6 ~20% PEV 4.2 2% 1% 16% parc by 2040 4.2 0% 9% penetration in 2% 3% 3.8 35% 3.8 0% 4% 1% 5% parc by 2040 3.5 2% 3% 1% 35% 3.5 1% 1% 2% 1% 36% Fuel cell 1% 0% 34% 31% 36% BEV 36% 27% 38% 38% PHEV CNG

62% 61% Flex fuel (E-85) 62% 59% 54% 48% 61% 62% Gasoline 61% 61%

Diesel Volume in Millions (000,000’s) Millions Volumein

2020 2025 2030 2035 2040 2020 2025 2030 2035 2040

Note: % breakdown by powertrain considered for each year’s vehicle Studies reviewed: – AEO 2020 Outlook, BNEF 2019 EV outlook, IEA 2019 Global EV outlook, Federal Highway Administration, Fleet Owner, Automotive Fleet, McKinsey, stock Cummins, Roland Berger, IHS Markit etc.

Source: https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ ; https://www.iea.org/reports/global-ev-outlook-2019; https://www.automotive-fleet.com/statistics/download?id=333992; https://img.fleetowner.com/files/base/ebm/fleetowner/document/2020/04/tbn-overview-3-pages.pdf ; https://www.eia.gov/outlooks/aeo/tables_ref.php ; https://publications.anl.gov/anlpubs/2018/01/141595.pdf ; Ricardo analysis 52 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 U.S. Heavy Duty EV Penetration Scenarios

U.S. Heavy Duty EV Penetration Scenarios

Low PEV uptake scenario High PEV uptake scenario (<5% PEV penetration by 2040) (~30% PEV penetration by 2040)

295 295 282 279 272 ~<5% PEV 1% 269 261 263 261 263 4% 1% penetration 2% 8% 3% 5% by 2040 5% 12% 15% ~30% PEV 7% Fuel cell 10% penetration BEV by 2040 PHEV 98% 98% 98% 98% 98% 97% 92% CNG 84% 77% Flex fuel (E-85) 68% Gasoline

Diesel Volume in Thousands (000’s) Thousands Volumein

2020 2025 2030 2035 2040 2020 2025 2030 2035 2040

Note: % breakdown by powertrain considered for each year’s annual Studies reviewed: – AEO 2020 Outlook, BNEF 2019 EV outlook, IEA 2019 Global EV outlook, Federal Highway Administration, Fleet Owner, Automotive Fleet, McKinsey, new vehicle sales Cummins, Roland Berger, IHS Markit etc.

Source: https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ ; https://www.iea.org/reports/global-ev-outlook-2019; https://www.automotive-fleet.com/statistics/download?id=333992; https://img.fleetowner.com/files/base/ebm/fleetowner/document/2020/04/tbn-overview-3-pages.pdf ; https://www.eia.gov/outlooks/aeo/tables_ref.php ; https://publications.anl.gov/anlpubs/2018/01/141595.pdf ; Ricardo analysis 53 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 U.S. Heavy Duty Parc Scenarios

U.S. Heavy Duty Parc Scenarios

U.S. Heavy Duty Vehicle Parc - U.S. Heavy Duty Vehicle Parc - Low PEV uptake scenario High PEV uptake scenario (<5% PEV penetration by 2040) (~10% PEV penetration by 2040)

6.2 6.3 6.2 6.3 ~10% PEV 6.0 ~<5% PEV 5.9 4% 1% 1% penetration 5.6 penetration in 5.6 2% 7% 1% 2% 4% in parc by 5.2 parc by 2040 5.2 1% 2040

Fuel cell BEV PHEV 98% 98% 98% 98% 98% 95% 92% 86% 98% CNG 98% Flex fuel (E-85) Gasoline

Diesel Volume in Millions (000,000’s) Millions Volumein

2020 2025 2030 2035 2040 2020 2025 2030 2035 2040

Note: % breakdown by powertrain considered for each year’s vehicle Studies reviewed: – AEO 2020 Outlook, BNEF 2019 EV outlook, IEA 2019 Global EV outlook, Federal Highway Administration, Fleet Owner, Automotive Fleet, McKinsey, stock Cummins, Roland Berger, IHS Markit etc.

Source: https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ ; https://www.iea.org/reports/global-ev-outlook-2019; https://www.automotive-fleet.com/statistics/download?id=333992; https://img.fleetowner.com/files/base/ebm/fleetowner/document/2020/04/tbn-overview-3-pages.pdf ; https://www.eia.gov/outlooks/aeo/tables_ref.php ; https://publications.anl.gov/anlpubs/2018/01/141595.pdf ; Ricardo analysis 54 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) – Light duty vehicles powertrain mix and parc scenarios – Medium and heavy duty commercial vehicles powertrain mix and parc scenarios – Cost assessment methodology & assumptions used to project Movement impact until 2040 – Biofuels – Cleaner Trucks Initiative (CTI) – Transportation Climate Initiative (TCI) and Carbon pricing • Appendix – II (Movement 101) • Appendix – III (Summary of research)

55 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Following general assumptions were made for projecting impact of Movements in 2040

Assumptions made for Movement impact assessment

Subsidies – Continued federal tax credit and state level subsidies and incentives offered till 2030. Subsidies taper off 2030+ ZEV mandate – Limited to the 12 states that adopted ZEV mandate until 2040 Charging Infrastructure – Legislation passed 2030+ to reduce range anxiety equitable access to charging stations similar to New Jersey S2252 CAFE standard –SAFE rule implemented (~1.5% CAGR fuel economy improvement till 2040) LCFS – Considering 20% Carbon Intensity (CI) reduction by 2030; assuming 30% CI reduction by 2040 RFS – Assuming RFS continues in current format with discretionary waivers until 2040 Cleaner Trucks Initiative – Standards not defined yet. Assuming mandate impacts lower load condition of medium and heavy duty

trucks limiting NOX emissions to 0.6 g/mile across entire operating profile. Impacts only from MY2025+ Transportation Climate Initiative (TCI) – Limited to the 12 states signatory to the program. Compliance begins in 2022 and aims to

achieve 20%-25% CO2 reduction by 2032 and increases to 30%-35% reduction target by 2040 Carbon pricing – Assuming a carbon pricing legislation on transportation fuel is passed in 2025+ timeframe with max cost of per ton of CO2 lagging TCI states carbon pricing Vehicle restriction / ICE ban – Assuming only major cities such as Los Angeles, New York and Seattle pass vehicle restriction laws Congestion pricing – Assuming only major cities such as Los Angeles, New York and Seattle pass congestion pricing laws Autonomous mobility– Assuming only major cities operate autonomous vehicles until 2030 in geofenced zones

Source: Ricardo analysis 56 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Select movements cost impact assessment methodology is provided below..

Example of Movements cost assessment methodology

• Maximum incremental cost of fuel per gallon from LCFS to range from ~$0.3 in 2020 to ~$0.6 - $0.8 in 2040 • For annual vehicle miles travelled (VMT) of 13,000 miles and average fuel efficiency of 35 miles/gallon i.e. ~300 • Cost of access to congestion pricing gallons fuel costs over a 15 year duration will range from zone in New York ranges from $5 - ~$2,000 - $2,500 per consumer at expected average $12 per vehicle • Additionally, marginal reduction in fuel economy from • Annual cost of access = $5 * 260 days biofuels will result in maximum incremental annual fuel (working days per year) = ~$1,300 cost of $200 per consumer i.e. over a 15 year duration will result in an additional $3,000 cost • Total cost to consumer to access congestion pricing zone year round • Telecommuting can be • Total cost to consumer from LCFS over 15 year over 15 year duration is >$15,000 implemented at negligible cost duration = $5,000 - $5,500

ZEV Congestion Telecommuting TCI LCFS Cost Mandate pricing Low Medium High

• Maximum yearly incremental cost • Incremental cost to meet ZEV for fuel in TCI states is estimated mandate is ~$8,000 - to range from ~$100 in 2022 to $12,000 higher per vehicle max of $150 in 2032 than a comparable ICE • Total cost to consumer from vehicle TCI over 15 year duration = • Total maximum cost to $1,500 - $2,300 consumer from ZEV mandate = $8,000 - $12,000

Source: Ricardo analysis 57 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) – Light duty vehicles powertrain mix and parc scenarios – Medium and heavy duty commercial vehicles powertrain mix and parc scenarios – Cost assessment methodology & assumptions used to project Movement impact until 2040 – Biofuels – Cleaner Trucks Initiative (CTI) – Transportation Climate Initiative (TCI) and Carbon pricing • Appendix – II (Movement 101) • Appendix – III (Summary of research)

58 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 A positive but limited impact expected based on alternative fuels. Electrification will be the main driver to achieve expected reductions

Low Carbon Fuel Standard (LCFS) – GHG Emissions Impact

• When Low Carbon Fuel Standard (LCFS) is adopted does not matter for Low Carbon Fuel Standard (LCFS) estimated GHG pass cars. If other alternative fuel types such as cellulosic fuels come into emissions impact, YOY excluding EV uptake play then additional GHG emissions reduction come into play (GHG reduction in MMT CO2 equivalent) • Credit mix expected to be supported majorly through Starch ethanol, 35 40% CI reduction Electricity, and bio and renewable diesels CARB - High Fuel Demand and Low ZEV target by 2040 30 CARB - Low Fuel Demand and High ZEV • For gasoline and substitutes i.e. passenger cars, majority GHG 25 Ricardo estimate emissions impact is through starch ethanol which is maxed through blend 30% CI reduction wall of 10% ethanol and through EV charging infrastructure 20 – Higher GHG impact feasible only through alternative ethanol blends 15 25% CI reduction such as cellulosic ethanol. However, Ricardo has not seen evidence 10 supporting commercial viability of cellulosic fuels

MMT CO2 reduction MMTCO2 5 • For heavy duty fleet, GHG reductions estimated to be provided majorly 0 through renewable diesel which does not require powertrain technology 2020 2030 2040 change 7.5% 20% CARB CI reduction target (compared to 2010)

Note: Both high fuel demand, low ZEV penetration and low fuel demand with high ZEV penetration scenarios from CARB considered in the estimates – excludes emission reduction impact of ZEV uptake

Source: CARB illustrative compliance scenario, Aug 2018; Ricardo analysis 59 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Higher incremental cost of $0.6-$0.8 estimated per gallon of transportation fuel to meet LCFS targets

Low Carbon Fuel Standard (LCFS) – Cost of Compliance

• Low Carbon Fuel Standard (LCFS) credit clearance market (CCM) price Low Carbon Fuel Standard (LCFS) estimated cost at all time high in Q3 2019 of ~$207 / MT of CO2 impact on gasoline and diesel (incremental cost per gallon of gasoline and diesel) • CARB adopted Resolution 19-27, which was passed in 2019, to moderate CCM prices and mitigate impact on fuel prices. 40% CI reduction 1.5 target by 2040 No cap on CCM • Highest cost scenario: no cap on CCM and assumed CI reduction of 40% CARB estimate - cap on CCM by 2040, cost per gallon of fuel (gasoline and diesel) is expected to Ricardo estimate increase to ~$1.5 per gallon in the year 2040 1.0 30% CI reduction • Lowest cost scenario: CARB estimates that with cap on CCM and 25% CI reduction target in 2040 limits the cost increase per gallon of fuel to 0.5 ~$0.5 by 2030 25% CI reduction • Expected cost scenario: Ricardo assumed credit price capped at $200/MT for 30% CI reduction target by 2040 and cost of fuel is expected

Incremental cost of fuel ($/gal)fuel of costIncremental 0.0 to increase to ~$0.6 - $0.8 per gallon by 2040 2020 2030 2040 7.5% 20% CARB CI reduction target (compared to 2010)

Note: Incremental cost of fuel assumes considers both gasoline and diesel and assumes that incremental cost per gallon of each fuel type are similar i.e. within $0.01 - $0.02 difference Source: CARB illustrative compliance scenario, Aug 2018; Ricardo analysis ; https://stillwaterassociates.com/lcfs-cost-fuels-growing-hidden-tax/ ; file:///C:/Users/mm62/Downloads/Final-Report-Cap-and- Trade-LCFS%20(2).pdf 60 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Limited and a lower impact on GHG emissions from RFS compared to LCFS on a normalized basis if RFS continues with current format

Renewable Fuel Standard (RFS) – GHG Emissions Impact

• Continued discretionary waivers and lack of confidence in the RIN market Renewable Fuel Standard (RFS) estimated GHG has reduced the estimated impact of Renewable Fuel Standard (RFS)

emissions impact, YOY (GHG reduction in MMT CO2 equivalent) • High emission impact scenario: considers high fuel demand into 2040, meeting E10 blend wall of 15B gallons per year and a stable RIN market 180 leading to increase in uptake of other alternative fuels such as biodiesel, RFS - High fuel demand and higher alt fuels uptake 160 and other advanced biofuels. Estimated emissions reduction of RFS - Low fuel demand and limited alt fuels uptake ~180MMT CO in the year 2040 140 2 Ricardo estimate 120 • Low emission impact scenario: considers low fuel demand into 2040 100 (based on AEO outlook) which limits E10 use i.e. <15B gallons and an 80 unstable RIN market leading to limited uptake of other alternative fuels. 60 Estimated emissions reduction of ~80MMT CO2 in the year 2040

40 MMT CO2 reduction MMTCO2 20 0 2020 2030 2040

Note: Both high fuel demand, higher alternative fuels uptake (i.e RIN market stabilized) and low fuel demand with low alternative fuels uptake (i.e. RIN market unstable with waivers continued) scenarios considered in the estimates

Source: https://afdc.energy.gov/fuels/biodiesel_blends.html ; https://afdc.energy.gov/files/u/publication/alternative_fuel_price_report_jan_2020.pdf ; https://www.fueleconomy.gov/feg/biodiesel.shtml ; 61 https://energypolicy.columbia.edu/research/report/reforming-renewable-fuel-standard ; https://ethanolrfa.org/wp-content/uploads/2015/11/RFS_COP21_Final.pdf Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 RFS levies a lower incremental cost per gallon of fuel compared to LCFS; expected to continue if RFS implementation does not change

Renewable Fuel Standard (RFS) – Cost of Compliance

• Renewable Fuel Standard (RFS) continues to suffer from wild swings in Renewable Fuel Standard (RFS) estimated cost RIN prices i.e ~30% fluctuation YOY compared to a baseline of 2015 impact on gasoline and diesel prices due to changing federal policies (incremental cost per gallon of gasoline and diesel) • Highest cost scenario: considers a stable RIN market leading to increase 0.45 in uptake of other alternative fuels other than ethanol. Cost per gallon of RFS - High fuel demand and higher alt fuels uptake 0.40 fuel (gasoline and diesel) is expected to increase by ~$0.5 per gallon in RFS - Low fuel demand and limited alt fuels uptake the year 2040 0.35 Ricardo estimate 0.30 – Higher cellulosic fuel demand considered under this scenario 0.25 – Increased demand considered for other alternative fuels such as 0.20 biodiesel, and other advanced biofuels 0.15 • Lowest cost scenario: considers a volatile RIN market with continued 0.10 discretionary waivers and limited uptake of alternative fuels i.e. status 0.05 quo continued scenario. Cost per gallon of fuel (gasoline and diesel) is

Incremental cost of fuel ($/gal)fuel of costIncremental 0.00 expected to increase by ~$0.3 - $0.35 per gallon in the year 2040 2020 2030 2040

Note: Incremental cost of fuel assumes considers both gasoline and diesel and assumes that incremental cost per gallon of each fuel type are similar i.e. within $0.01 - $0.02 difference

Source: https://www.natso.com/topics/natso-analysis-rin-market-volatility-driven-by-policy-announcements-rumors-news-reports-reforms-unnecessary ; Ricardo analysis ; https://www.natso.com/topics/natso-analysis-rin-market-volatility-driven-by-policy-announcements-rumors-news-reports-reforms-unnecessary ; 62 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) – Light duty vehicles powertrain mix and parc scenarios – Medium and heavy duty commercial vehicles powertrain mix and parc scenarios – Cost assessment methodology & assumptions used to project Movement impact until 2040 – Biofuels – Cleaner Trucks Initiative (CTI) – Transportation Climate Initiative (TCI) and Carbon pricing • Appendix – II (Movement 101) • Appendix – III (Summary of research)

63 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Trucks meeting 0.6 g/mile target across all load conditions reduces NOX emissions of new vehicles by ~80% Cleaner Trucks Initiative (CTI) – Emissions

• CTI to impact only model years 2025+ and assuming CTI will target of Impact on NOX emissions of ‘New Vehicle Sales’ from Cleaner 0.6 g/mile NOX emissions across all load profiles of diesel truck operation Trucks Initiative (CTI) (Lifetime tailpipe avoided NO emissions, MT) – Assuming ~40%-50% improvement over current in-use emissions X yields significant avoided emissions over vehicle operating lifetime

800k – Current distance specific NOX emission ranges from 3.6 – 4 g/mile Medium Duty - High PEV uptake Heavy Duty - High PEV uptake 700k • Cleaner Trucks Initiative (CTI) expected impact on NOX emissions reduction ~70-80% of expected impact from CTI and electrification for

Emissions, MT Emissions, 600k both medium and heavy duty trucks X 500k • Average useful life including rebuilds considered as follows based on 400k EPA’s estimate: – Medium duty diesel trucks – 500k miles 300k – Heavy duty diesel trucks – 900k miles 200k

100k

0k

2020 2030 2040 Lifetime Tailpipe Avoided Avoided NO TailpipeLifetime

Note: Only new vehicle sales lifetime avoided NO emissions displayed in the Cleaner Trucks Initiative X plot to the left. Lifetime emissions calculated based on EPA’s useful life

Source: https://ww3.arb.ca.gov/research/veh-emissions/low-nox/low-nox.htm ; Ricardo analysis estimate 64 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Fuel economy could potentially improve or reduce by 1% - 2% based on technologies used to comply with emissions targets

Cleaner Trucks Initiative (CTI) – Fuel Economy

• CTI mandates, though not defined yet, could potentially drive higher PEV Impact on fuel economy of ‘New Vehicle Sales’ from Cleaner uptake, which would improve average fuel economy or could potentially Trucks Initiative (CTI) be met by ICE powertrains only which would marginally improve or (MPG gas equivalent based on PEV sales as % of annual Medium and Heavy reduce average fuel economy based on emissions reduction technology Duty Vehicle sales ) deployed to meet targets 16 Medium Duty - High PEV uptake • CTI to impact only model years 2025+ 15 Medium Duty - Low PEV uptake 14 Heavy Duty - High PEV uptake • Based on technologies deployed, can expect improvement in fuel 13 Heavy Duty - Low PEV uptake efficiency or marginal fuel efficiency loss of ~1-2% compared to baseline

12 – CARB NOX emissions reduction strategies study which EPA is 11 assessing for CTI rule making found marginal increase in fuel consumption for technologies such as advanced after treatment etc. 10 9 – Additionally, CARB also found that technologies such as cylinder deactivation could drive both lower NOX and CO2 emissions MPG gas equivalentMPGgas 8 7 • Weighted average impact of electrification on fuel economy for medium duty trucks in year 2040 ranges from min of ~12 mpg to max ~15 mpg 0 2020 2030 2040 • Weighted average impact of electrification on fuel economy for heavy duty trucks in year 2040 ranges from min of ~8 mpg to max ~11 mpg

Cleaner Trucks Initiative Expected average fuel economy

Source: https://ww3.arb.ca.gov/research/veh-emissions/low-nox/low-nox.htm ; https://ww3.arb.ca.gov/research/veh-emissions/low-nox/sae_congress-2017-01-0954-956-958_presentation_sharp.pdf ; 65 https://ww3.arb.ca.gov/msprog/hdlownox/files/workgroup_20190926/guest/08_meca_technology_solutions.pdf?_ga=2.116258054.1698380302.1588176983-930621387.1583340425 Ricardo analysis Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) – Light duty vehicles powertrain mix and parc scenarios – Medium and heavy duty commercial vehicles powertrain mix and parc scenarios – Cost assessment methodology & assumptions used to project Movement impact until 2040 – Biofuels – Cleaner Trucks Initiative (CTI) – Transportation Climate Initiative (TCI) and Carbon pricing • Appendix – II (Movement 101) • Appendix – III (Summary of research)

66 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Average incremental yearly fuel costs from TCI and carbon pricing are not significant enough to shift consumer behavior

Transportation Climate Initiative (TCI), Carbon pricing – Cost of Compliance

• Average yearly incremental cost for fuel in TCI states is estimated to Operational cost of compliance from Transportation Climate range from ~$30 - $90 in 2022 to max of $160 - $230 in 2040 Initiative (TCI), Carbon pricing (Average yearly incremental fuel consumption cost compared to baseline – Cost per ton of CO2 in TCI is estimated to range from $5 in 2022 to gasoline price, $) $70 in 2040

• Total estimated cumulative incremental fuel cost impact from TCI per $400 person ranges from ~$1,000 –$2,500 over 2022 – 2040 duration

• Similarly average yearly incremental cost for fuel from Carbon Pricing if implemented in 2025+ time frame is estimated to range from ~$30 - $80 in 2025 to max of $100 - $150 in 2040 – Carbon pricing assumed to be implemented in 2025+ time frame $200 nationally with cost per ton of carbon assumed to lag TCI pricing

$0 2020 2030 2040 Yearly ($) of consumptioncostfuel incrementalYearly Incremental cost of fuel per year due to TCI

Incremental cost of fuel per year due to Carbon Pricing Note: Average baseline cost of an gasoline is considered as $0 on the Y-axis

Source: https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ ; https://www.bts.gov/content/average-fuel-efficiency-us-light-duty-vehicles; Ricardo analysis 67 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Both TCI and carbon pricing are reliant on technology breakthrough in PEVs to impact vehicle demand compared to other Movements

Transportation Climate Initiative (TCI), Carbon pricing – Vehicle Demand

• Only in the long term, as PEVs attain cost parity with ICEs, do TCI and Transportation Climate Initiative (TCI), Carbon pricing and carbon pricing enable shift in vehicle demand Vehicle restriction/ICE ban estimated impact, YOY PEV sales % (PEV sales as % of annual light duty vehicle sales) • The average cost of carbon with TCI from 2022 - 2032 is expected to PEVs are 60% of range from $5 - $30 per ton of CO2 and is expected to drive limited 60 annual sales by 2040 impact on vehicle demand High PEV uptake - BNEF Outlook 55 Low PEV uptake - AEO 2020 Outlook • Incremental price ranges for TCI are <10% during the TCI 50 Series implementation period to drive meaningful change. Ricardo estimated 45 cost of 2X – 5X to drive any meaningful change in vehicle demand in 40 short term 35 30 • However, in the long term as incremental annual cost of fuel increases 25 over $150+ per year range, supports PEVs achieve TCO parity in 20 comparison to an ICE driving vehicle demand, lower GHG emissions and improved average fleet fuel economy 15 10 • Total estimated incremental fuel cost impact from TCI per person ranges 5 10% annual sales are from ~$1,000 –$2,500 over 2022 – 2040 duration

PEV sales as % annualsales LDV % as of sales PEV PEVs by 2040 0 2020 2030 2040 TCI Carbon pricing Vehicle restriction / ICE ban

Subsidies CAFE standard ZEV Mandate Charging infrastructure

Source: https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ ; http://evtc.fsec.ucf.edu/publications/documents/HNEI-04-15.pdf ; Ricardo analysis 68 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Impact on fuel economy from TCI and carbon pricing is heavily reliant on uptake of fuel efficient vehicles

Transportation Climate Initiative (TCI), Carbon pricing – Fuel Economy

• Weighted average impact of electrification on fuel economy for combined Impact on fuel economy of ‘New Vehicle Sales’ from TCI, pass car and light trucks in year 2040 ranges from ~55 mpg to ~90 mpg Carbon pricing and Vehicle restriction/ICE ban (MPG gas equivalent based on PEV sales as % of annual LDV sales ) – ~90mpg takes into account 60% of sales in 2040 are PEVs – ~55mpg considers PEV sales limited to 10% of annual LDV sales in PEVs are 60% of 90 annual sales by 2040 2040. 10% PEV scenario also considers marginal improvement in High PEV uptake - BNEF Outlook 85 fuel economy till 2040 from SAFE rule implementation Low PEV uptake - AEO 2020 Outlook 80 • TCI and carbon pricing, both gas taxes, have limited impact on new 75 vehicles average fuel economy in the short run. Reduced total cost of 70 ownership of PEVs through technology breakthrough allows TCI and 65 carbon pricing to have a larger impact in the 2030+ timeframe 60 • TCI and carbon pricing have limited direct causal effect on fuel efficiency 55 of vehicles. Both rely on assumption that increased fuel prices, cause 50 consumers to reduce fuel consumption or shift to fuel efficient vehicles MPG gas equivalentMPGgas 45 10% annual sales are – Multiple studies have found demand of gasoline from price shift to PEVs by 2040 40 be inelastic to marginally elastic 0 – A congressional study found that 10% increase in fuel costs in short 2020 2030 2040 term lead to 0.6% decline in average fuel consumption and 4% TCI Carbon pricing Vehicle restriction / ICE ban decline if higher costs persists for a sustained period of ~15 years Note: Fuel economy impact considers on road light duty fuel economy mpg for Subsidies CAFE standard ZEV Mandate Charging infrastructure both passenger cars and light trucks

Source: https://about.bnef.com/electric-vehicle-outlook/ ; https://www.eia.gov/outlooks/aeo/ ; https://www.eia.gov/todayinenergy/detail.php?id=19191 ; https://www.bls.gov/opub/btn/volume-5/using-gasoline-data-to-explain-inelasticity.htm ; 69 https://www.bts.gov/content/average-fuel-efficiency-us-light-duty-vehicles; Ricardo analysis Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) • Appendix – II (Movement 101) – Assessed U.S. and global Movements for 2040 impact: • Telecommuting • Low Carbon Fuel Standard • Vehicle use type restrictions / • Subsidies / Incentives (LCFS) ICE bans • ZEV mandate • Cleaner Truck Initiative (CTI) • Congestion pricing • Charging infrastructure • Transportation Climate Initiative • Connected and autonomous (TCI) vehicles • CAFE • Carbon pricing • Shared mobility • Renewable Fuel Standard (RFS) – Excluded Movements: Vehicle retirement program, Tolls, Parking benefits Appendix – III (Summary of research) • 70 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) • Appendix – II (Movement 101) – Assessed U.S. and global Movements for 2040 impact: • Telecommuting • Low Carbon Fuel Standard • Vehicle use type restrictions / • Subsidies / Incentives (LCFS) ICE bans • ZEV mandate • Cleaner Truck Initiative (CTI) • Congestion pricing • Charging infrastructure • Transportation Climate Initiative • Connected and autonomous (TCI) vehicles • CAFE • Carbon pricing • Shared mobility • Renewable Fuel Standard (RFS) – Excluded Movements: Vehicle retirement program, Tolls, Parking benefits Appendix – III (Summary of research) • 71 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Telework Enhancement Act of 2010 mandates each federal agency to establish a telecommuting policy and maximize it where applicable

Movement “101”: Telecommuting Regions with Telecommuting Policy Legislation Applicable Regions Legislation: • Telework Enhancement Act of 2010 History: • Earliest iteration passed in 1990 as the “Treasury, Postal Service and General Government Applicable only for federal Appropriations Act, 1991 Public Law 101-509, §624” agencies across U.S. • Updated in 2001 as the “Transportation and Related Agencies Appropriations Act of 2001 (Public Law 106-346)”. Required each executive agency to establish a telecommuting policy allowing eligible employees to telecommute to the maximum extent possible without diminished employee performance • Current iteration passed in 2010. “Telework Enhancement Act of 2010, Public Law 111-292” Geography: • United States – applicable for federal agencies Objective: • Act passed in 2001 began as an effort to address transportation concerns and manage real estate costs Low Emissions • Grew into an important flexible work arrangement and a recruitment and retention tool for the Federal Government, culminating in Telework and Enhancement Act of 2010 • Telework Enhancement Act of 2010 applies to all federal executive agencies and applies to Cost of Compliance federal employees as defined by section 2105 of title 5 USC

Vehicle Demand Outlook: • Post COVID-19, telecommuting impact on emissions can be assessed by government and organizations for telecommuting strategy roll-out. Some states such as Utah, Tennessee etc. Fuel Economy are implementing initiatives to maximize telecommuting Negative Neutral Positive 2040 through impact Cumulative

Source: https://www.telework.gov/guidance-legislation/telework-legislation/background-history/ 72 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 EU telework agreement provides autonomy to each member state on implementation; Canada telework policy limited to federal positions

Movement “101”: Telecommuting Regions with Telecommuting/Telework Legislation Other Global Legislation Legislation: • European Framework Agreement on Telework; Telework Policy - Canada Canada European History: Telework Policy Union • The European Framework Agreement on Telework was concluded and signed in 2002 by applicable only social partners such as BusinessEurope (formerly UNICE), the European Association of Craft, for positions in Small and Medium sized Enterprises(UEAPME) etc. federal public • This agreement is not implemented through a European directive, but adopted by each service member state based on their labor practices and regulations • Canada – Telework Policy became effective in 1999

Geography: • EU + UK + Norway; Canada For global Movements assessment limited to current Objective: impact. Impact till 2040 not assessed in the study • European Framework Agreement on Telework: As more employees have been able to work from remote locations, in the context of the European Employment Strategy, the European Low Emissions Council invited social partners to negotiate agreements to modernize the organization of work • Canada – Telework Policy: to allow employees to work at alternative locations, thereby achieving a better balance between their work and personal lives, while continuing to Cost of Compliance contribute to the attainment of organizational goals – policy applicable only for positions in federal service Vehicle Demand

Outlook: Impact Current • 2022 European Framework Agreement on Telework laid down rules o ensure protection of teleworkers. Post COVID-19, further guidelines and improvement on telework policies can be Fuel Economy expected Negative Neutral Positive

Source: https://www.eurofound.europa.eu/sites/default/files/ef_files/docs/eiro/tn0910050s/tn0910050s.pdf; https://www.tbs-sct.gc.ca/pol/doc-eng.aspx?id=12559 ; https://www.eurofound.europa.eu/news/news-articles/covid-19-could- 73 permanently-change-teleworking-in-europe Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Many states are promoting alternative adoptions by providing extra incentives, tax credits and registration fee reductions (1/2)

HOV Parking Rebate on purchase/ lease Discounted/ special No Emissions Movement “101”: Subsidies Lanes Incentives of BEV and/ or PHEV rates on EV charging testing Required Legislation Applicable Regions Legislation: • State-level subsidies for EVs History: • Clean Vehicle Rebate Project (CVRP), Property-Assessed Clean Energy (PACE), California • New York State Energy Research and Development Authority (NYSERDA) • Port Authority of New York & New Jersey (PANYNJ) • Jacksonville Electric Authority (JEA), Florida • Maryland Energy Administration (MEA) • Massachusetts Offers Rebates for Electric Vehicles (MOR-EV)

Geography: • All states except AK, AR, ME, NE, OK, SC and VW Subsidies / Incentives are indirect drivers on fuel economy, Objective: GHG emissions and cost of compliance • CVRP - Offers up to $2,500 for the purchase or lease of BEVs. Qualifying low-income households also receive an additional $2,000 for purchase or lease of EV after 1st Nov, 2016 Low Emissions – NYSERDA offers $2000 and MOR-EV offers $1,500 of rebate for purchase/ lease of BEV – JEA offers $1000 in rebate for purchase/ lease of qualified PEV • PACE – Finances residential property owners to install EV supply equipment (EVSE) Cost of Compliance – NYSERDA offers a rebate of $8,000 for EVSE installed. MEA offers EVSE rebate as well • PANYNJ - EVs are eligible for the Clean Pass Program and receive a discounted toll rate Vehicle Demand Outlook: • Subsidies are critical PEV uptake drivers in short-to-medium term. Continued incentivization of PEV through subsidies required for PEV uptake. As PEVs achieve cost parity, subsidies are Fuel Economy scaled back beyond 2030+ timeframe Negative Neutral Positive 2040 through impact Cumulative

Source: https://evcompare.io/incentives/, https://www.ncsl.org/research/energy/state-electric-vehicle-incentives-state-chart.aspx 74 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Many states are promoting alternative adoptions by providing extra incentives, tax credits and registration fee reductions (1/2)

Low Annual Registration fees MassEVIP SDG&E Rebate Rebate on purchase Movement “101”: Subsidies on EVs and alt. fuel vehicles Program of Nissan Leaf Legislation Applicable Regions Legislation: • State-level subsidies for EVs MassEVIP, History: Massachusetts San Diego Gas and Electric (SDG&E)’s rebate program, San Diego, California • Washington D.C – Program ended on 30th September, 2017 • Massachusetts Electric Vehicle Incentive Program (MassEVIP), Massachusetts SDG&E – Started on 22nd April, 2013 (Earth Day) San Diego, CA

Geography: • CT, IL, DC, CO, DE, FL, GA, IN, KY, MD, PA, CA (San Diego) Subsidies / Incentives are indirect drivers on fuel economy, Objective: GHG emissions and cost of compliance • SDG&E – Annual rebates up to $20,000 or tax credits of $50 on purchase of EVs and HEVs • Connecticut, Illinois, and the District of Columbia have low annual registration fees for EVs or Low Emissions alternative fuel vehicles • $10,000 rebate by electric utility companies on purchase of Nissan Leaf in Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland and Pennsylvania in 2017 Cost of Compliance • MassEVIP - 50% (up to $25,000) grants off the cost of Level 1 or Level 2 workplace EVSE for employers with 15 or more employees in a non-residential place of business Vehicle Demand Outlook: • Subsidies are critical PEV uptake drivers in short-to-medium term. Continued incentivization of PEV through subsidies required for PEV uptake. As PEVs achieve cost parity, subsidies are Fuel Economy scaled back beyond 2030+ timeframe Negative Neutral Positive 2040 through impact Cumulative

Source: https://www.ncsl.org/research/energy/state-electric-vehicle-incentives-state-chart.aspx#, https://www.theverge.com/2017/8/14/16127106/bmw-i3-nissan-leaf-electric-car-rebates-san-diego, https://blog.mass.gov/energy/energy- 75 efficiency/the-massachusetts-electric-vehicle-revolution-has-begun/, https://core.ac.uk/reader/146684320 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Several countries offer subsidies to drive EV uptake; EU considering VAT exemption for EVs to drive demand post COVID-19

Movement “101”: Subsidies Regions with Subsidies on EVs Other Global Legislation Legislation: • Global subsidies History: • Different developments in UK and EU as of 2019 – Germany – Landmark Climate package launched in Nov, 2019 with aims to boost EV sales – France – Paris Climate Accord aims to promote sales of EV and charging stations – UK - Society of Motor Manufacturers and Traders (SMMT) seeks govt. help for battery manufacturing investments, incentives and infrastructure spending

Geography: • Germany, France, UK, Norway, Sweden, Netherlands, Denmark, Italy For global Movements assessment limited to current Objective: impact. Impact till 2040 not assessed in the study • Germany – Handouts of €6000 on purchase of EV for less than €40,000 – Govt. also plans for 1M charging station by 2025 Low Emissions • France - €6000 plus conversion bonus to buyers scrapping an old vehicle for an EV • UK - Offers grants and rebates on pure EVs of as much as £3,500 • Netherlands - Low sales-tax applied to the first €50,000 of the price tag of an EV. No road tax Cost of Compliance • Sweden - Customers get bonus of as much as $6,300 at purchase of an EV • Denmark cancelled planned tax increase on EV and Norway exempts EVs of most taxes Vehicle Demand

Outlook: Impact Current • Several EU countries will continue to incentivize EV adoption through subsidies to meet respective emission targets. Electric cars to get a boost in Europe as part of COVID-19 Fuel Economy recovery plan, VAT exemption considered Negative Neutral Positive

Source: https://www.bloomberg.com/news/articles/2019-12-12/europe-gains-ground-in-global-race-to-sell-electric-cars ; https://electrek.co/2020/05/19/electric-cars-boost-europe-recovery-plan-vat-exemption/ 76 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 ZEV mandate requires OEMs selling vehicles in signatory states to sell a percentage of vehicles to be xEVs to meet credit requirements

Movement “101”: ZEV Mandate Regions with in ZEV mandates ZEV Mandate Applicable Regions Legislation: • CARB Zero-Emission Vehicle (ZEV) program History: • Originally part of the Low Emission Vehicles (LEV) program, ZEV program was established as California is the a standalone regulation in 1999 originating state for • In 2012, CARB adopted a set of regulations to control emissions from passenger vehicles, ZEV program collectively called “Advanced Clean Car” program • ZEV program is a part of the Advanced Clean Car program that mandates increasing ZEV floor requirements through 2025+

Geography: • California and 11 other states (CT, ME, MA, VT, RI, OR, NY, NJ, MD, CO, WA) Objective: • CARB states mobile sources account for well over half of the emissions which contribute to ozone and particulate matter and ~40 percent of the greenhouse gas emissions in California Low Emissions • Zero Emission Vehicles are required to help meet California’s air quality standards and GHG reduction goals as parts of CARB’s Advanced Clean Cars program • Requires automakers that sell more than 20,000 vehicles per year to produce a percentage of Cost of Compliance vehicles sold in CA to comply with ZEV or Transitional ZEV requirements which increase yearly – ZEV credits requirement: 7% in 2019, 9.5% in 2020 and 22% by 2025 Vehicle Demand Outlook: • ZEV mandate states account for ~30% of annual U.S. vehicle sales , which drives higher model eligibility and mandates sales of vehicles to meet requirements. As subsidies are Fuel Economy reduced beyond 2030, ZEV mandate takes precedence in long term Negative Neutral Positive 2040 through impact Cumulative

Source: https://ww2.arb.ca.gov/our-work/programs/zero-emission-vehicle-program ; https://www.zevstates.us/ ; https://phev.ucdavis.edu/wp-content/uploads/zev-mandates-policy-guide.pdf 77 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 China’s NEV policy mandates manufacturers to meet incremental credit based requirements through xEVsales

Movement “101”: ZEV Mandate Regions with ZEV Mandate ZEV Mandate Applicable Regions Legislation: • China NEV Mandate

History: China • In 2017, China’s Ministry of Industry and Information Technology (MIIT) launched New-Energy Vehicle (NEV) mandate policy for passenger cars • The NEV mandate sets annual NEV credit targets at a percentage of the conventional passenger vehicle market • NEVs subsidies are proposed to be phased out after 2020

Geography: • China For global Movements assessment limited to current Objective: impact. Impact till 2040 not assessed in the study • Chinese government views NEVs as pathway for energy security, controlling urban air pollution, and meeting emission targets Low Emissions • China also hopes to leapfrog competing global automotive regions with its NEV policy • Chines government envisages xEVs to account for 25% of vehicle sales in China by 2025 and 60% of all sales by 2035 Cost of Compliance

Vehicle Demand

Outlook: Impact Current • Expected to continue to increase in stringency of targets and backing through subsidies to continue to support the NEV policy. After blip in EV sales in 2019 from subsidy roll-back, China Fuel Economy decided to extend subsidies for additional two years through 2023 to support EV sales Negative Neutral Positive

Source: https://www.reuters.com/article/us-china-autos/china-says-no-significant-cut-in-new-energy-vehicle-subsidies-in-2020-idUSKCN1ZA09Z ; https://theicct.org/sites/default/files/publications/Zero%20Emission%20Vehicle%20Mandate%20Briefing%20v2.pdf ; 78 https://www.prnewswire.com/news-releases/china-extends-new-energy-vehicle-purchase-subsidies-and-purchase-tax-exemption-policy-for-two-years-301032549.html Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 EV Freedom Act is a federal level legislation, still under legislative process, that seeks to address EV charging infrastructure issues

Movement “101”: Charging Infrastructure (Federal) Regions applicable Legislation Applicable Regions Legislation: • EV Freedom Act, HR 5770 History: • EV Freedom Act HR 5770 was introduced by representatives Andy Levin and Alexandria Applicable throughout U.S. Ocasio-Cortez on February 2020 to establish national network of electric vehicle charging when legislation is passed stations • The act has not been approved and is currently under legislative process

Geography: • United States Charging infrastructure is an indirect driver on fuel Objective: economy, GHG emissions and cost of compliance • The findings of the act noted increase in sales of EVs, new model launches and investment by OEMS and lack of infrastructure to support increasing demand. The act aims to establish Low Emissions network of electric vehicle charging stations along eligible roads to improve consumer experiences and encourage the widespread adoption of light, med and heavy-duty EVs by - – eliminate “range anxiety” Cost of Compliance – allowing drivers to charge vehicles more quickly; and – equitable access to charging stations Vehicle Demand Outlook: • Legislation expected to reduce range anxiety equitable access to charging stations similar to New Jersey S2252 Fuel Economy

Negative Neutral Positive 2040 through impact Cumulative

Source: https://www.congress.gov/bill/116th-congress/house-bill/5770/text?r=4&s=1 79 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 NJ’s S2252 bill passed (01/2020) mandates establishing a statewide public charging system to support 330k PEVs by 2025

Charging Infrastructure – New Jersey Goals / Impact from New Jersey’s S2252 Legislation

• S2252 (signed into law in 01/2020) establishes goals and incentives for the increased use of plug-in S2252 codifies establishing EVs and infrastructure in New Jersey (NJ) state wide public EVSE • The bill codifies goal of 330,000 registered light-duty electric vehicles by 2025 and directs state-owned network to support 330k light-duty vehicles to be electric by 2035. Goal of putting NJ on a path to a 100% clean energy by 2050 PEVs by 2025 • The legislation creates a “Plug-in Electric Vehicle Fund” and will be funded by approximately $30 million from the Clean Energy Fund each year. The bill authorizes the use of Regional Greenhouse Gas Program supported through Initiative (RGGI) funds as well. surcharge on electricity in – The Clean Energy Fund is supported by a surcharge on electricity (both public and commercial) addition to revenue from • The legislation directs the Department of Environmental Protection and Board of Public Utilities to RGGI establish goals for the electrification of medium and heavy-duty vehicles – Plan to install at least 600 DCFC and 1,000 Level 2 public community chargers at ~300 locations Plan to install at least 600 by end of 2025 DCFC and 1,000 Level 2 – End of 2019, NJ has 87 DCFC stations with 341 plugs and 330 stations with 767 plugs public community chargers at ~300 locations by end of 2025

Source: https://afdc.energy.gov/fuels/electricity_locations.html#/analyze?region=US-NJ&fuel=ELEC&status=E&status=T ; https://www.politico.com/states/new-jersey/story/2018/12/11/cost-the-biggest-issue-of-bill-designed-to-increase- 80 use-of-electric-vehicles-739421 ; https://www.njleg.state.nj.us/2018/Bills/S2500/2252_U2.HTM ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Norway and France have charging infrastructure rollout legislation. Other regions have directives to support increased EV adoption

Movement “101”: Charging Infrastructure Region with approved legislation Other Global Legislation Legislation: • Norsk Elbilforening – Norway, Energy Transition Law, no 2015-992 - France History: • Norway – Latest iteration of EV support legislation was rolled out in 2012 • France – Energy transition law was adopted in 2014 and ratified in 2015

Geography: • Norway, France, Netherlands For global Movements assessment limited to current Objective: impact. Impact till 2040 not assessed in the study • Norway - By 2017 the Norwegian Government launched a program to finance the establishment of at least two multi-standard fast charging stations every 50 km on all main Low Emissions roads in Norway. With the exceptions of Finnmark and Lofoten, there has successfully been established fast charging stations on all main roads in Norway • France - Law on Energy Transition for Green Growth” (LTECV), the French Government has Cost of Compliance set the target of 7 million public and private charging points for electric vehicles by 2030.

Vehicle Demand

Outlook: Impact Current • Norway and France mandated EVSE installations. Other regions in EU and around the globe are supporting EVSE through subsidies and public and private partnerships Fuel Economy Negative Neutral Positive

Source: https://elbil.no/english/norwegian-ev-policy/ ; https://www.iea.org/policies/2861-ev-charging-infrastructure-target-2030 ; https://cleantechnica.com/2019/02/16/standardization-of-ev-charging-in-the-eu/ 81 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 CAFE includes targeted incentives for advanced technologies that promote fuel economy improvements and GHG reductions

Movement “101”: Corporate Average Fuel Economy (CAFE) Regions with fuel economy standards Legislation Applicable Regions Legislation: • Corporate Average Fuel Economy History: • First enacted by Congress in 1975, the purpose of CAFE is to reduce energy consumption by Applicable throughout U.S. increasing the fuel economy of cars and light trucks • Regulated by National Highway Traffic and Safety Administration (NHTSA) • 21st May, 2010 – Joint final rules by NHTSA and EPA for CAFE as well as GHG regulations for passenger cars and light trucks built in 2017 and beyond

Geography: • United States Objective: • CAFE standards (rolled back in 2020) impacting passenger car and light trucks impacts 2017- 2021 model years and were mandated to achieve combined fleet-wide fuel economy of 40.3- Low Emissions 41.0 mpg – Required to reach 55 mpg by 2026 (5% year-on-year growth in fleet fuel economy between 2020 – 2025 model years) Cost of Compliance • SAFE rule, implemented in March 2020, mandates 1.5% fleet fuel economy improvement impacting model years 2021 - 2026 Vehicle Demand Outlook: • Stringency must be increased for emissions benefits as fleet fuel economy growth rate of 1.5% per year from SAFE rule forecasted till 2040 results in fleet average mpg of 55 in 2040, Fuel Economy compared to rolled back CAFE standards, which mandated that 55mpg be achieved by 2025 Negative Neutral Positive 2040 through impact Cumulative

Source: https://www.transportation.gov/mission/sustainability/corporate-average-fuel-economy-cafe-standards, https://www.sciencedirect.com/topics/engineering/corporate-average-fuel-economy, http://www.nhtsa.gov.edgesuite-staging.net/fuel-economy/ 82 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Japan, China, and South Korea have fuel economy standards similar to CAFE standards in U.S.

Movement “101”: Corporate Average Fuel Economy (CAFE) Regions with fuel economy standards Regions with Fuel Economy Standards Legislation: • Energy Conservation Law - Japan; Corporate Average Fuel Consumption – China; etc. South Korea History: Japan China • Japan - Energy Conservation Law was enacted in 1976 and fuel efficiency standards were adopted in 1979 amendments which were applicable beginning in 1985. Standards were last amended in 2019 for vehicles starting in MY 2030 • China – Corporate Average Fuel Consumption (CAFC) was first adopted in 2004 (National Standard GB 19578-2004) as Phase I. Phase V proposed in 2019 impacting MY 2021-2025 • South Korea – Average Fuel Economy (AFE) program took effect in 2006. Standards impacting fuel economy of MY2016 – MY2020 were adopted in 2014 Geography: • Japan, China, Korea For global Movements assessment limited to current Objective: impact. Impact till 2040 not assessed in the study • Japan - Energy Conservation Law mandates an average fleet gasoline-equivalent fuel economy of 25.4 kilometers per liter by 2030; a 32.4% improvement over the fleet average for Low Emissions fiscal year 2016 • China – CAFC phase V proposed standards mandate average fuel consumption of new passenger cars to be reduced to 4 l/100km in 2025 Cost of Compliance • South Korea – AFE targets 24.3 km/L fuel economy for passenger vehicles in 2020

Vehicle Demand

Outlook: Impact Current • Japan, South Korea and China fuel economy standards forecasted to be more stringent compared to U.S. CAFE standards to drive their EV policies Fuel Economy Negative Neutral Positive

Source: https://theicct.org/publications/japan-2030-fuel-economy-standards; https://theicct.org/news/comments-chinas-proposed-2021-2025-fuel-consumption-limits-evaluation-methods-and-targets 83 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Increased difficulty in meeting standards impacts the cost of compliance, resulting in significant financial burden for refiners

Movement “101”: Biofuel Blending – Renewable Fuel Standard (RFS) Regions with biofuel regulation Legislation Applicable Regions Legislation: • Renewable Fuel Standard (2) Mandate History: • Authorized under Energy Policy Act 2005, expanded under Energy Independence and Security Applicable throughout U.S. Act of 2007 to meet Clean Air Act • RFS 2020 rule – 6th Feb, 2020

Geography: • United States Objective: • Blend following renewables into traditional fuels – Biomass-based diesel Low Emissions – Cellulosic biofuel – Advanced biofuel – Total renewable fuel Cost of Compliance • Aim of blending 36 Billion gallons of renewable fuel with gasoline by 2022

Vehicle Demand Outlook: • EPA expected to grant waivers for 2021 and 2022 as RFS will not be able to meet volume target requirements Fuel Economy

Negative Neutral Positive 2040 through impact Cumulative

Source: https://www.americanactionforum.org/research/renewable-fuel-standards-policy-failures-economic-burdens/, https://www.realclearenergy.org/articles/2019/04/05/the_unintended_consequences_of_the_renewable_fuel_standard__110422.html, 84 https://www.card.iastate.edu/products/policy-briefs/display/?n=1191, https://www.americanactionforum.org/insight/epas-proposed-rfs-targets-still-short-still-expensive/ Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 EU has assigned individual national targets in order to achieve 80 - 95% GHG emission reduction by 2050

Movement “101”: Biofuel Blending Regions with biofuel regulation Other Global Legislation Legislation: • Renewable Fuels Directive II (RED II) History: European • Renewable Energy Directive (RED) signed in 2009. Aimed at fulfilling 20% of EU’s energy Union needs with renewables by 2020 • To be upgraded to RED II – 21st December, 2020 – Overall EU target has been raised to achieve 32% of EU’s energy needs by 2030

Geography: • European Union For global Movements assessment limited to current Objective: impact. Impact till 2040 not assessed in the study • 14% of transportation fuel must come from renewable sources by 2030 – Advanced biofuels and biogas produced from feedstock must be at 0.2% usage in 2022, Low Emissions 1% in 2025 and 3.5% in 2030 • It also sets limits on high ILUC (Indirect Land Use Change) biofuels using criteria for: – Determining the high ILUC-risk feedstock Cost of Compliance – Certifying low ILUC-risk biofuels, bioliquids and biomass fuels

Vehicle Demand

Outlook: Impact Current • All European Union member states were required to submit a National Renewable Energy Action Plan (NREAP) that detailed how each member state intends to meet their target Fuel Economy Negative Neutral Positive

Source: https://en.wikipedia.org/wiki/Renewable_Energy_Directive_2009, https://ec.europa.eu/jrc/en/jec/renewable-energy-recast-2030-red-ii 85 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Low Carbon Fuel Standard (LCFS) is designed to reduce the lifecycle carbon intensity (CI) of transportation fuels

Movement “101”: Low Carbon Fuel Standard (LCFS) Mandate LCFS in place LCFS under consideration Legislation Applicable Regions LCFS also in Legislation: place in BC, WA • Low Carbon Fuel Standard (LCFS) Mandate Canada OR History:

• The LCFS was adopted in 2009 and became effective in 2011; was re-adopted in 2015 CA • Under the AB 32 Scoping Plan, CARB identified LCFS as one of the nine discrete early action measures to reduce California's greenhouse gas (GHG) emissions that cause climate change • Amended in 2018 to strengthen the carbon intensity (CI) benchmarks through 2030 and align with California's 2030 GHG emission reduction target PCC States – California, Oregon, Washington and British Columbia (Canada) Geography: • California, Oregon, British Columbia (Canada), Washington (under consideration) Objective: • LCFS sets Carbon Intensity (CI) Standards that reduce over time for gasoline, diesel and fuels that replace them Low Emissions – CI is the lifecycle measure of fuel GHG emissions from production to consumption – Fuels in California transportation fuel pool that have a CI lower than the target established by CARB generate LCFS credits Cost of Compliance • The goal of California’s LCFS program is to reduce 20 percent of carbon emissions throughout the entire energy life cycle by 2030 Vehicle Demand Outlook: • LCFS has an established market for credit transactions that exceeded $2 Billion in 2018 • Other states like Oregon, Washington and British Columbia are joining California to reduce Fuel Economy GHG, which is evident from the Pacific Coast Collaborative (PCC) agreement Negative Neutral Positive 2040 through impact Cumulative

Source: https://ww2.arb.ca.gov/our-work/programs/low-carbon-fuel-standard/about, https://afdc.energy.gov/laws/6308, https://stillwaterassociates.com/lcfs-101-a-beginners-guide/?cn-reloaded=1, https://ww3.arb.ca.gov/fuels/lcfs/background/basics-notes.pdf86 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Fuels Quality Directive (FQD) will be phased out after 2020 as decarbonization of transport fuels will be addressed in RED II

Movement “101”: Low Carbon Fuels Standard LCFS in place Other Global Legislation Legislation: • Fuels Quality Directive (FQD) History: European • In 2009, EU passed the FQD along with the Renewable Energy Directive (RED) regulation Union supporting increased use of renewable fuels. FQD became effective from 1st January, 2011 – Member States should reduce the GHG intensity of fuels in road vehicles and non-road machinery by 6% by 2020 – Beyond 2020, FQD will be rolled into an updated RED II

Geography: • European Union For global Movements assessment limited to current Objective: impact. Impact till 2040 not assessed in the study • Fuel suppliers are required to annually report the following information: – Total volume of each type of fuel supplied, indicating its origin and purchase location Low Emissions – Life cycle GHG emissions per unit of energy • Optional target: Reduced carbon intensity of the fuel mix by 10% Cost of Compliance

Vehicle Demand

Outlook: Impact Current • EU aims for reduction of CO2 emissions by 40% and growth in renewable energy consumption by 27% by 2030. Fuels Quality Directive (FQD) to be phased out after 2020 as decarbonization Fuel Economy of transport fuels will be addressed through Renewable Fuels Directive II (RED II) Negative Neutral Positive

Source: https://www.fuelseurope.eu/policy-priorities/climate-energy/fuel-quality-directive-fqd/, https://www.transportenvironment.org/sites/te/files/media/2011%2009%2022%20FQD%20Administrative%20Burden%20Briefing.pdf, https://ec.europa.eu/clima/policies/transport/fuel_en, 87 https://ec.europa.eu/clima/policies/transport/fuel_en#tab-0-0, https://insideclimatenews.org/content/eu-may-scrap-green-fuel-law-boon-tar-sands-industry, https://www.transportenvironment.org/what-we-do/biofuels-whats-problem Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Cleaner Truck Initiative in proposal stage and expected to impact in 2025+; aims to target NOX emissions reduction in low-load operation Movement “101”: Cleaner Trucks Initiative Regions with CTI Initiative Legislation Applicable Regions Legislation: • Cleaner Trucks Initiative History: • In November 2018, EPA announced that it would pursue the Cleaner Trucks Initiative (CTI) to Applicable throughout U.S. update NOx emissions standards for heavy-duty trucks when implemented • 6th January, 2020 – EPA signed an Advance Notice of Proposed Rule (ANPR) soliciting pre- proposal comments on a rulemaking effort known as the Cleaner Trucks Initiative (CTI) • Existing standard of 0.2 g/bhp-hr is being met mostly under highway operation, but not under low load conditions (idle, stop-&-go and city traffic)

Geography: • All states Objective:

• CTI rulemaking intends to update NOX emissions standards for heavy-duty trucks which were last updated in 2001 Low Emissions

• EPA states “Heavy-duty vehicles are the largest contributor to mobile source emissions of NOX and will be one of the largest mobile source contributors to ozone in 2025” • CTI focusses on emission control under low-load conditions—when trucks are at idle, moving Cost of Compliance slowly, or in stop-and-go traffic

Vehicle Demand Outlook: • CTI is still in proposal phase and is expected to impact model years 2025+ on-highway diesel commercial trucks Fuel Economy

Negative Neutral Positive 2040 through impact Cumulative

Source: https://www.epa.gov/regulations-emissions-vehicles-and-engines/cleaner-trucks-initiative#:~:text=The%20Cleaner%20Trucks%20Initiative%20will,pollution%20from%20heavy%2Dduty%20trucks., https://www.bicklawllp.com/our- 88 insights/cleaner-trucks-initiative/, https://www.epa.gov/regulations-emissions-vehicles-and-engines/advance-notice-proposed-rule-control-air-pollution-new, https://www.epa.gov/newsreleases/epa-jumpstarts-cleaner-trucks-initiative Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Transportation Climate Initiative seeks to reduce transportation emissions and develop a clean energy economy in 13 regions in U.S.

Movement “101”: Transportation Climate Initiative Regions participating in Transportation Climate Initiative (TCI) TCI Signatory Regions Legislation: • The Transportation and Climate Initiative (TCI) History: • In 2010, eleven states and District of Columbia signed a declaration of intent to create the Transportation Climate Initiative (TCI) – a regional transportation approach to help the states build clean energy economy • In 2018, Virginia announced support and formally joined the TCI collaboration • In December New Hampshire withdrew from the agreement citing gas-tax impact on rural and disadvantaged communities

Geography: • Eleven participating states & DC (CT, DE, ME, MD, MA, NJ, NY, PA, RI, VT, VA, DC) Objective: • The TCI seeks to improve transportation, develop the clean energy economy and reduce carbon emissions from the transportation sector. Sub-initiatives are grouped into 5 areas: Low Emissions – 1) Clean Vehicles and Fuels 2) Sustainable Communities – 3) Freight Efficiency 4) Information & Communication Technology – 5) Policy Design Process Cost of Compliance • The Clean Vehicles and Fuels program supports the deployment of clean vehicles and fueling infrastructure in TCI states Vehicle Demand Outlook: • Released a draft MOU for a regional cap-and-invest program to curb emissions from transportation and invest proceeds from program in low-carbon transportation Fuel Economy

Negative Neutral Positive 2040 through impact Cumulative

Source: https://www.transportationandclimate.org/content/tci-declaration-intent ; https://www.heartland.org/news-opinion/news/new-hampshire-rejects-participation-in-transportation-climate-initiative 89 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Transportation Climate Initiative (TCI) is a still-in-work “cap & invest” initiative that is estimated to start in 2022

Transportation Climate Initiative (TCI)

TCI timeline Participating jurisdictions develop a model rule and take 2020 any needed legislative steps 2021 2022

Draft MOU Participating jurisdictions Compliance period released Final MOU to be released, conduct a rulemaking process of program begins end of 2019 and TCI jurisdictions to decide participation in the program to adopt the model rule

• TCI is a regional “cap and invest” program consisting of 12 North-Eastern and Mid-Atlantic states, where transportation fuel suppliers shall be required to hold allowances to cover resulting reported emissions

• The draft MOU is based on the determination that more than 40% of GHG emissions within TCI states are emitted by the transportation sector

• TCI projects that through cap and invest program, CO2 will be reduced by 20% - 25% by 2032. Revenue from the sale of allowances is projected to range from minimum ~$1.4B in 2022 to max of ~$7B by 2032 based on cap reduction targets. Revenue from allowance auctions will be returned to participating jurisdictions for investment in other measures to reduce transportation emissions.

• The MOU specifies that jurisdictions that sign the MOU will: – Implement a regional cap on CO2 emissions from on-road diesel and gasoline; – Develop a process to auction CO2 emissions allowances and require fuel suppliers to hold and report off-setting allowances

Source: https://www.transportationandclimate.org/sites/default/files/FINAL%20TCI_draft-MOU_20191217.pdf ; https://www.jdsupra.com/legalnews/transportation-climate-initiative-seeks-60056/; ; 90 https://www.transportationandclimate.org/main-menu/tcis-regional-policy-design-process-2019 ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Ten states currently pricing carbon with impact limited mostly to power gen sector. Legislation under review for nationwide adoption

Movement “101”: Carbon Pricing Regions impacted by Carbon Pricing Legislation Applicable Regions Legislation: • American Opportunity Carbon Fee Act History: • In April 2019 Sheldon Whitehouse, Brian Schatz, Martin Heinrich, and Kirsten Gillibrand Applicable throughout U.S. reintroduced the American Opportunity Carbon Fee Act to charge for the emissions driving once implemented climate change • The legislation aims to reduce the nation’s GHG emissions by approx. 51% by 2029

Geography: • United States (currently under review) Objective: • Imposing a carbon fee on mined, processed, refined, or imported fossil fuels Low Emissions • The bill would result in US beating carbon emissions target outlined in the 2016 Paris Agreement and deliver 2x carbon reductions by 2030 compared to Clean Power Plan • The revenue would be used to deliver at least $10 billion annually to the states to assist them Cost of Compliance in dealing with the costs of climate change and transition to a low carbon economy Vehicle Demand Outlook: • Several similar proposals such as Coons bill, Larson bill, Fitzpatrick bill etc. are under consideration in the legislative branches of the U.S. government Fuel Economy

Negative Neutral Positive 2040 through impact Cumulative

Source: https://www.whitehouse.senate.gov/news/release/whitehouse-schatz-heinrich-gillibrand-introduce-updated-carbon-fee, https://www.rff.org/publications/issue-briefs/projected-emissions-reductions-american-opportunity-carbon-fee-act-2019/, 91 https://www.c2es.org/site/assets/uploads/2019/09/carbon-pricing-proposals-in-the-116th-congress.pdf / Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Energy Taxation Directive (ETD) establishes minimum duty rates that States must apply to energy products for fuel, transport, & electricity

Movement “101”: Carbon Pricing Regions impacted by Carbon Pricing Other Global Legislation Legislation: • Energy Taxation Directive (ETD) History: European • Energy Taxation Directive adopted in 2003, was designed to avoid competitive distortions in Union the energy sector within the Internal Market • Current scope is incoherent with EU’s Emission Trading System (ETS), a scheme for trading of GHG emission allowances

Geography: • European Union For global Movements assessment limited to current Objective: impact. Impact till 2040 not assessed in the study • ETD establishes the minimum excise duty rates that member states must apply to energy products for fuel and transportation Low Emissions • Revised directive aims to restructure the energy taxation method; supporting movement towards low-carbon and energy-efficient economy – Measures to put a price on CO2 emitted by sectors outside the EU ETS: higher the Cost of Compliance emissions of fuel, higher the CO2 tax – Linking the level of taxes with energy content of fuel Vehicle Demand

Outlook: Impact Current • Proposal in place to reform Energy Taxation Directive (ETD) carbon pricing scheme with aim to make EU carbon neutral by 2050 Fuel Economy Negative Neutral Positive

Source: https://ec.europa.eu/commission/presscorner/detail/en/MEMO_11_238, https://eu2019.fi/en/backgrounders/energy-taxation, https://ec.europa.eu/taxation_customs/business/excise-duties-alcohol-tobacco-energy/excise-duties- 92 energy_en Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Multiple legislation and trading schemes are in place around the world to mitigate GHG emissions

Movement “101”: Carbon Pricing Regions impacted by Carbon Pricing Other Global Legislation Legislation: • National Determined Contributions (Resolution 797-E/2017), Cap-and-trade program History: • National Determined Contributions (Resolution 797-E/2017), Argentina, started in 2017 • Carbon Taxation (No Formal Name), Alberta, Canada, started on January 1, 2017 • New Zealand’s Energy Trading Scheme (NZ ETS), started in 2008 and amended in 2012 • South Korea’s Cap-and-Trade Program, started on January 12, 2015

Geography: • Global (Argentine, Canada, New Zealand, South Korea) For global Movements assessment limited to current Objective: impact. Impact till 2040 not assessed in the study • Argentina - Labeling light duty vehicles for each new model starting 2018 with an Energy Efficiency vehicle label Low Emissions • Canada - Alberta household will pay direct carbon costs (gasoline, diesel and natural gas) of $150 to $200 • New Zealand - Reduction of carbon emissions or purchase NZ emission units from foresters Cost of Compliance who plant trees to absorb CO2 • South Korea - Cut transportation emissions by 30% below current levels by 2020 Vehicle Demand

Outlook: Impact Current • Most of countries have legislation that encompass all the sectors emitting GHG; they do not exclusively tax carbon for the transportation sector Fuel Economy Negative Neutral Positive

Source: https://www.unenvironment.org/news-and-stories/blogpost/argentina-and-un-environment-work-together-reduce-greenhouse-gas, https://www.canadianfuels.ca/Blog/2017/January-2017/What-new-carbon-pricing-systems-will-mean-for-Alberta-and-Ontario/, 93 https://archive.thinkprogress.org/south-korea-launches-worlds-second-largest-carbon-trading-market-5e9c24da32b2/, https://www.mfe.govt.nz/climate-change/new-zealand-emissions-trading-scheme/about-nz-ets Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 No LEZs in U.S cities. New Jersey only state mandating >85% of new vehicle sales by ZEVs by 2040; other states proposals in draft/rejected

Regions/Cities with proposals Regions/Cities with proposals Movement “101”: Vehicle use types / restrictions / Low or Zero emission zones implementing ICE ban by 2030 implementing ICE ban by 2040 Legislation Applicable Regions Legislation: • AB 40 – California; HB 2593 – Hawaii; S2252 – New Jersey; H.Res.109 - USA History: • California – AB40 was introduced by CARB in 2019 for 2040 gasoline passenger car phaseout San Francisco Washington DC in California; proposal was not adopted • New Jersey – S2252 was proposed in 2018 and passed legislature in 2020 Los Angeles • Washington DC – DC Act 22-583 passed in 2019 mandates all fleet vehicles (public & private) be ZEV by 2045 • SB 275 –New Hampshire; HB 2515 – Washington; DC Act 22-583 – District of Columbia; HB 2593 – Hawaii are other states with ICE ban proposals Geography: • New Jersey, California, New Hampshire, Washington Objective: • New Jersey – S2252 states that >85% of all light duty vehicles sold or leased in state of New Jersey be plug-in electric vehicles by December 31st, 2040 Low Emissions • California – AB40 (not adopted) mandated CARB to develop a comprehensive strategy to ensure sales of all new light vehicles are zero emission vehicles by 2040 • USA – H.Res.109 i.e. Green New Deal, which did not pass Senate, called for need to replacing Cost of Compliance ICE vehicles in addition to other initiatives to tackle climate change

Vehicle Demand Outlook: • Major cities such as Los Angeles, New York and Seattle have conducted studies evaluating vehicle restriction laws. Effective impact from vehicle restrictions / ICE bans, but localized due Fuel Economy to limited deployment areas, and also potential headwinds from citizens / groups Negative Neutral Positive 2040 through impact Cumulative

Source: https://www.njleg.state.nj.us/2018/Bills/S2500/2252_U2.HTM ; https://www.planetizen.com/news/2018/ ; https://www.coltura.org/world-gasoline-phaseouts ; 94 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Major cities worldwide have implemented low emission zones to improve air quality

Movement “101”: Vehicle use types restrictions (Low or Zero emission zones) Cities with LEZ / ULEZ in place Legislation Applicable Regions Legislation: • Clean Air Action – Amsterdam; Ultra Low Emission Zone (ULEZ) – London London Amsterdam Other European Paris History: cities with LEZs Madrid Milan Seoul Beijing • Amsterdam – The city’s Clean Air Action plan to ban diesel passenger cars from November Berlin 2020 with emission standards lower than 4 from the city’s low emission zone. Stuttgart Mexico City • London – Low Emission Zone (LEZ) launched in 2008. Ultra Low Emission Zone went into Helsinki effect in 2019 Copenhagen Oslo South Korea - Seoul introduced restriction for emission vehicles from city center in 2017 • Antwerp • Brussels – LEZ in place since 2018 Lisbon • Beijing – LEZ in effect from 2017 Glasgow Geography: etc. • London, Paris, Amsterdam, Beijing, Seoul, Barcelona, Madrid, Lisbon, Berlin, Stuttgart, etc. For global Movements assessment limited to current Objective: impact. Impact till 2040 not assessed in the study • Beijing LEZ – continuation of policies initiated in 2008 during Beijing Olympics to minimize pollution. Access to LEZ restricted based on emission standards Low Emissions • Madrid – introduced Zero emissions zone for Madrid Central region since 2019 banning entry to all ICE vehicles with some exceptions. Measured NO2 reduction of around 40% • London – ULEZ in effect in central area of London to reduce air pollution and protect public Cost of Compliance health. NOx emissions estimated to reduce by 45%. Operating petrol and diesel passenger cars must meet Euro 4 and Euro 6 standards Vehicle Demand

Outlook: Impact Current • Majority of cities with low emission zones have tabled proposals to implement zero emission zones or ultra low emission zones by 2040 timeframe Fuel Economy Negative Neutral Positive

Source: http://www.koreaherald.com/view.php?ud=20190415000705 ; https://thedriven.io/2019/05/06/amsterdam-bans-all-petrol-and-diesel-cars-and-motorbikes-from-2030/ ; https://www.amsterdam.nl/en/traffic-transport/low-emission- 95 zone/ ; https://urbanaccessregulations.eu/countries-mainmenu-147/spain/madrid-access-restriction ; https://www.bbc.com/news/science-environment-47816360 ; https://www.london.gov.uk/press-releases/ Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Proposals outlined by major car production and sales regions to ban combustion engine cars beginning in 2030

Region with proposals implementing ICE Regions with proposals Movement “101”: Vehicle use types restrictions (ICE ban) ban by 2030 implementing ICE ban by 2040 Legislation Applicable Regions Legislation: • Mobility Law – France; Low-emission mobility strategy COM (2016) 501 final - Germany History: • France – Proposal in place to ban sale of new gasoline and diesel vehicles by 2040 Seoul • Netherlands – “Confidence in Future” plan to ban ICE sales by 2030 • United Kingdom – Proposal to ban sales of ICE powered vehicle by 2035 • Germany – Federal council (Bundesrat) passed a non-binding resolution to ban vehicles combustion engines from 2030 • China – Study underway for potential ban on sales of new combustion engine cars by 2040

Geography: • Spain, Portugal, Britain, Ireland, Netherlands, Norway, Denmark For global Movements assessment limited to current Objective: impact. Impact till 2040 not assessed in the study • United Kingdom – ICE ban from 2035 to meet target of net carbon neutrality by 2050 • France – New ICE vehicle sales ban from 2040 to target carbon neutrality by 2050 Low Emissions – France implemented a bonus-malus scheme (Italy and Sweden also have such schemes) incentivizing xEVs and penalizing pure ICEs • Germany – ICE ban proposal to comply with climate agreement i.e. reduce German Co2 Cost of Compliance emissions by 95% by 2050

Vehicle Demand

Outlook: Impact Current • Major passenger car sales and production regions have tabled proposals to ban new internal combustion engine car sales from 2030 Fuel Economy Negative Neutral Positive

Source: https://www.reuters.com/article/us-france-autos/ ; https://www.bbc.com/news/uk-40726868 ; https://geckoresearch.com/germany-moves-to-ban-internal-combustion-engine-by-2030/ ; https://www.bbc.com/news/business- 96 41218243 ; https://electrek.co/2017/10/10/netherlands-dutch-ban-petrol-diesel-cars-2030-electric-cars/ ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Zone based congestion pricing legislation adopted only by New York City in U.S.; feasibility studies underway in other regions

Regions with congestion Regions where congestion pricing Movement “101”: Congestion Pricing pricing plan in place feasibility study is underway Legislation Applicable Regions Legislation: Seattle • The Traffic Mobility Act, Article 44-C History: San Francisco New York City • The Traffic Mobility Act, also called as Central Business District Tolling Program was passed in April 2019 Los Angeles • Legislation mandates the Triborough bridge and tunnel authority to establish and implement the program in coordination with New York City department of transportation by “no sooner The Traffic Mobility Act is than Dec 31, 2020” applicable only in New York

Geography: • New York City (Central Business District only) Objective: • Will implement congestion pricing on vehicles entering Central Business district (CBD) in New York Low Emissions • To mitigate traffic congestion and vehicular throughput in CBD • Leverage funds (aim to raise $15B in bonds from revenue) raised from congestion pricing for improving public transit Cost of Compliance

Vehicle Demand Outlook: • Seattle, San Francisco and Los Angeles are other U.S. cities conducting feasibility studies to adopt congestion pricing Fuel Economy

Negative Neutral Positive 2040 through impact Cumulative

Source: https://www.nysenate.gov/legislation/laws/VAT/T8A44-C ; https://www.seattle.gov/transportation/getting-around/driving-and-parking/congestion-pricing ; https://www.ttnews.com/articles/los-angeles-feasibility-study-will-look- 97 congestion-pricing ; https://www.sfcta.org/downtown ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 London, Stockholm, Milan and Singapore are few prominent examples of cities that implemented cordon congestion pricing

Regions with congestion Movement “101”: Congestion Pricing pricing plan in place Congestion Pricing Regions Legislation: • London Congestion Charge; Milan Area C, Trängselskatt i Stockholm etc. Stockholm London Milan History: • London Congestion Charge was introduced in 2003. Commuters are charged a £11.50 daily Valletta (Malta) fee for driving a vehicle within the Congestion Charge Zone (CCZ) between 07:00 and 18:00, Monday to Friday Singapore • Area C, a congestion charge program in Milan was introduced in 2012, replacing the earlier Ecopass program • Trängselskatt i Stockholm was implemented in 2007 after a trail period of seven months.

Geography: • Singapore, London (UK), Stockholm (Sweden), Milan (Italy), Valletta (Malta) etc. For global Movements assessment limited to current Objective: impact. Impact till 2040 not assessed in the study • London Congestion Charge was introduced to mitigate traffic and reduce air and noise pollution in the Central London area Low Emissions • Milan’s Area C objective was to reduce chronic traffic jams, reduce smog and particulate matter and to leverage revenue gained from congestion charge to improve sustainable transport Cost of Compliance • Trängselskatt i Stockholm, Electronic Road Pricing (ERP) in Singapore are other congestion pricing programs globally Vehicle Demand

Outlook: Impact Current • More cities around the world are conducting congestion charge implementation feasibility studies. Few proposal have been shelved due to public criticism Fuel Economy Negative Neutral Positive

Source: https://tfl.gov.uk/modes/driving/congestion-charge# ; https://www.skatteverket.se/privat/skatter/bilochtrafik/trangselskatt/stockholm.4.2b543913a42158acf80006765.html ; https://www.comune.milano.it/aree- 98 tematiche/mobilita/area-c Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 With steady growth, states will adopt further measures to formally incorporate Shared Mobility into their overall transport system

TPP Similar legislation Shared Mobility Tax Shared Mobility P2P Shared Mobility Movement “101”: Shared Mobility Electrification Legislation Applicable Regions

Legislation: WA ME • Transit Priority Program MN OR MA WI NY History: • Shared Mobility OH IL IN MD • Created in 2011 under Senate Bill 310 Electrification also CA CO • Program links car sharing to larger land-use policy goals available in CA OH • P2P Shared Mobility also available in CA, • State-owned WA and OR shared mobility FL fleet also available HI in MA Geography: Shared, connected and autonomous technologies have an ambiguous effect on • California, United States vehicle miles travelled and has both the potential to increase and decrease energy consumption (impacting emissions) in the coming decades Objective: • Reduction of vehicle miles by promoting development that supports transit use • Policies under a TPP project include: Low Emissions – Parking for bikeshare – Provide car sharing onsite or nearby – Developer must provide a carshare vehicle for the first 20 units and one vehicle for every 50 units thereafter Cost of Compliance • In turn, TPP project provides expedited and reduced permitting costs, as well as a height and density bonuses Vehicle Demand Outlook: • Multiple states have enacted legislation regarding car sharing that includes: Incentives to use car sharing, addressing car-sharing taxation, electrification of car sharing fleets and creating a Fuel Economy regulatory framework for shared mobility Negative Neutral Positive 2040 through impact Cumulative

Source: https://www.ncsl.org/research/transportation/car-sharing-state-laws-and-legislation.aspx, https://learn.sharedusemobilitycenter.org/overview/california-state-senate-bill-310-ca-transit-priority-program-tpp/ 99 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Federal level regulation yet to be implemented for autonomous vehicles; two acts under legislative review

Movement “101”: Connected and Autonomous Vehicles Regions with legislation in place Legislation Applicable Regions Legislation: • SELF Drive Act and AV START Act History: • Both SELF Drive Act and AV START Act are pending approval in legislation Applicable across U.S. once • SELF Drive Act was passed by the Congress in 2017; yet to pass Senate implemented • AV START Act was introduced in Senate in 2017 and is yet to be approved

Geography: Shared, connected and autonomous technologies have an ambiguous effect on • United States vehicle miles travelled and has both the potential to increase and decrease energy consumption (impacting emissions) in the coming decades Objective: • The bills aim to do the following: – Establish a framework for federal role in ensuring the safety of highly automated vehicles Low Emissions (HAVs) – Preempt states from adopting, maintaining, or enforcing any law, rule, or standard regulating an HAV or automated driving system (ADS) regarding certain subject areas Cost of Compliance – Sets forth conditions under which HAVs may be introduced into interstate commerce for testing, evaluation, or demonstration; and applies certain safety exemptions to HAVs Vehicle Demand Outlook: • Various states have adopted and enacted legislation regulating use and testing of autonomous vehicles. However, a federal level regulation is still in legislative approval process Fuel Economy

Negative Neutral Positive 2040 through impact Cumulative

Source: https://www.congress.gov/bill/115th-congress/senate-bill/1885 ; https://www.congress.gov/bill/115th-congress/house-bill/3388 100 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 EU working to harmonize rules as multiple legislation in place & will likely cause disruption as vehicles drive on diverse regions road systems

Movement “101”: Connected and Autonomous Vehicles Countries in with legislation in place Countries with legislation under review Other Global Legislation Legislation: • Centre for Connected and Autonomous Vehicles (CCAV), Autonomous Vehicle Bill History: • Centre for Connected and Autonomous Vehicles (CCAV), UK was established in 2015 • Autonomous Vehicle Bill, Germany, was started in 2017 • Direccion General de Trafico (DGT), Spain, approved in November, 2015 • Italy passed its first law regulating testing of autonomous vehicles in February, 2018 • Legislative framework under review in France allowing testing of autonomous cars on roads starting 2019, with an aim to deploy ‘highly automated’ vehicles between 2020 and 2022

Geography: • Global (UK, Germany, Spain, Italy, France) For global Movements assessment limited to current Objective: impact. Impact till 2040 not assessed in the study • CCAV, UK - Working on legislation to allow testing on motorways in the country • Autonomous Vehicle Bill, Germany - Modification of existing Road Traffic Act to define the Low Emissions requirements for a fully automated vehicle, while also addressing the rights of a driver • DGT, Spain - Reduce road accidents and prepare Spain’s infrastructure and regulatory policy for driving autonomous vehicles Cost of Compliance • Italy - Activity permitted on ‘specific roads’ with road operator’s approval of testing procedure

Vehicle Demand

Outlook: Impact Current • In 2018, the European Commission published the EU strategy on connected and automated mobility along with guidelines developed together with EU countries to harmonize the Fuel Economy exemption procedure for EU approval of automated vehicle Negative Neutral Positive

Source: https://autovistagroup.com/news-and-insights/state-autonomous-legislation-Europe, https://www.gov.uk/government/organisations/centre-for-connected-and-autonomous-vehicles/about, 101 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) • Appendix – II (Movement 101) – Assessed U.S. and global Movements for 2040 impact: • Telecommuting • Low Carbon Fuel Standard • Vehicle use type restrictions / • Subsidies / Incentives (LCFS) ICE bans • ZEV mandate • Cleaner Truck Initiative (CTI) • Congestion pricing • Charging infrastructure • Transportation Climate Initiative • Connected and autonomous (TCI) vehicles • CAFE • Carbon pricing • Shared mobility • Renewable Fuel Standard (RFS) – Excluded Movements: Vehicle retirement program, Tolls, Parking benefits Appendix – III (Summary of research) • 102 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 California offers Consumer Assistance Program (CAP), an incentive program to retire older high polluting vehicles

Movement “101”: Vehicle Retirement Program (excluded from analysis) Regions with retirement programs plan in place Regions with Vehicle Retirement Programs Legislation: • Incentive Program: Consumer Assistance Program (CAP), AB 616 History: • Earliest iteration passed in 1997 as a repair assistance program and upgraded to a full fledged retirement program in 2007 as Consumer Assistance Program, AB 616 • Operated by Bureau of Automotive Repair( BAR) • Participation in the program is based on meeting eligibility requirements and the availability of funds each fiscal year (July 1 – June 30)

Geography: • California Objective: • Program aimed at reducing emissions through retirement of high polluting vehicles • Consumer Assistance Program (CAP) offers eligible consumers $1,000-$1,500 incentive to Low Emissions retire their operational vehicle • Other county/regional programs exist in California that provide incentives to retire/replace vehicles Cost of Compliance • Offered only in California In 2019 CAP enabled ~53k vehicles retirement whereas U.S. parc is ~284M vehicles. 2019 CAP was allocated budget of ~$33M, whereas technology cost of CAFE standard is >$10B Vehicle Demand

Outlook: Impact Current • Retirement programs are short-term in nature i.e. funded annually, has limited applicability based on vehicle eligibility and budget is limited to few thousand vehicles resulting in minimal Fuel Economy impact on vehicle demand Negative Neutral Positive

Source: https://www.bar.ca.gov/Consumer/Consumer_Assistance_Program/CAP_Vehicle_Retirement_Program.aspx 103 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 California CAP support in 2019 limited to ~3% of total new vehicle registrations in California market and ~0.02% of U.S. parc

Movement “101”: Vehicle Retirement Program (excluded from analysis)

CAP impact (# of vehicles in 000’s retired / repaired) • CAP supported retirement of ~53k vehicles in 2019 i.e. ~3% of new car Repair Retire registrations in California in 2019 – New car registrations in California in 2019 at ~1.9M 58.7 53.5 53.5 54.3 55.0 7.9 5.6 4.4 3.4 2.4 Automotive volume (in Millions)

50.9 47.9 49.1 51.0 52.6 California New Vehicle Registrations Total California VIO Total U.S. VIO 270.4M 279.1M 284.5M 2015 2016 2017 2018 2019

25.6M 26.1M 2.1M * 2.1M 1.9M CAP budget vs Cost of Compliance for CAFE ($M)) 2017 2018 2019

Expenditure (in $M) Technology Cost ($M) $33,000M • Annual budget for CAP program fluctuates between ~$30M - $40M – Fund supported by a portion of revenue from motor vehicle $37M $33M $36M $37M $33M inspection program • CAFE standard technology compliance cost of ~$33 Billion is limited to MY 2022 – 2025 and is based on EPA final determination (2017) 2015 2016 2017 2018 2019 Cost to comply with CAFE for MY 22 - 25 *Information not available Source: https://www.cncda.org/wp-content/uploads/Cal-Covering-2Q-19.pdf ; https://www.dca.ca.gov/publications/annual_reports.shtml ; https://www.dmv.ca.gov/portal/wcm/; https://www.dmv.ca.gov/portal/wcm ; 104 https://hedgescompany.com/automotive-market-research-statistics/auto-mailing-lists-and-marketing/ ; https://theicct.org/sites/default/files/publications/ICCT_US-rollback-CBE-flaws_20190621.pdf Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 France and Romania run incentive programs for replacing eligible older vehicles with lower emitting new/used vehicles

Movement “101”: Vehicle Retirement Program (excluded from analysis) Regions with retirement programs plan in place Regions where vehicle retirement programs expired Regions with Vehicle Retirement Programs Legislation: • Prime à la conversion – France; Rabla - Romania France Romania History: • France - Prime à la conversion is a vehicle scrappage scheme that provides bonus ranging from €200 - €6,300 for purchase of a new lower emitting vehicle based on eligibility. Initially launched in 2007, a revised version was introduced in 2019 • Romania – Rabla scheme introduced in 2000 is an ongoing vehicle retirement program that provides vouchers ranging from €1,350 - €10,000 for replacing an eligible diesel car with a new vehicle

Geography: • France, Romania Objective: • France - Prime à la conversion aims to incentivize purchase of low emission vehicles • Romania – Rabla was introduced to help get older diesel vehicles off the roads to help improve Low Emissions air quality – In 2020, 60,000 vouchers worth €1,350 allocated – 3,000 vouchers worth €10,000 allocated for 2020 Cost of Compliance

Vehicle Demand

Outlook: Impact Current • Vehicle retirement programs duration is constrained by budgets for such schemes, where in most countries are allocated on an annual basis Fuel Economy Negative Neutral Positive

Source: https://www.acea.be/uploads/news_documents/ACEA_Tax_Guide_2019.pdf ; https://www.romania-insider.com/romania-scrappage-program-budget-2020 105 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 FAST act approved in 2015 amended Section 166 of title 23, U.S.C.; grants bodies authority to convert HOV to HOT lane

Movement “101”: Tolls (excluded from analysis) Legislation Applicable Regions Legislation: • Fixing America's Surface Transportation (FAST) Act, 2015 History: • Section 1411 of the Fixing America's Surface Transportation (FAST) Act (Pub. L. 114-94), was Applicable across U.S. signed into law on December 4, 2015 • Includes the most recent amendments to the prior HOV provisions • Section 1411 amended the Section 166 of title 23, United States Code (U.S.C.) which contains the HOV provisions • The FAST Act made changes to the statutory provisions that govern tolling on highways constructed or improved with Federal funds Geography: • United States Objective: • Act include provisions requiring the same treatment of over-the-road buses and public transportation vehicles on certain toll facilities Low Emissions • Allows authorities to allow vehicles not otherwise exempt to use the HOV facility if the vehicle operator pays a toll i.e. convert HOV to HOT lanes – Ex: Extends regulating bodies authority to exempt low emission vehicles from HOV rules Cost of Compliance Studies indicate customers prioritize other incentives for EV purchase decision. xEV HOV incentive is an xEV adoption factor in some states and not in other. Studies are inconclusive on HOV access as key purchase criteria Vehicle Demand

Outlook: Impact Current • Tolls are used to mostly support infrastructure maintenance and manage usage demand through influencing driver behavior, but not to suppress overall vehicle demand. Ex: Updated Fuel Economy rules in California limit EVs access to HOV lanes based on eligibility conditions Negative Neutral Positive

Source: https://ops.fhwa.dot.gov/freewaymgmt/hovguidance/chapter3.htm; https://www.fhwa.dot.gov/fastact/factsheets/tollingandhovfs.cfm 106 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Cost of running the car, battery life, safety, purchase price are the key drivers influencing consumer’s BEV purchase

Movement “101”: Tolls (excluded from analysis) Household Income Factors that positively influence decision to buy a BEV ILLUSTRATIVE EV buyer

Environmentally friendly >60% EV owners have income >$140K Cost of running the car 50% Battery life 50% Safety

Performance $30K $100K $200K Purchase price $60K Median US household income Government incentives (tax etc.) It’s the car of the future Design Location Fun to drive Noise level ~40% Status Live on the Other west coast

10% 20% 30% 40% 50% Source: UBS Evidence Lab ; Carmax survey (2300 respondents); Wall Street Journal 107 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 xEVHOV incentive is an xEV adoption factor in some states and not in other. Studies are inconclusive on HOV access as key purchase criteria

Movement “101”: Tolls (excluded from analysis) Regions with xEV HOV access program Regions limiting / ending / ended xEV HOV access programs Regions with xEV HOV Incentive

Georgia xEV YOY (% of annual sales) BEV PHEV 3% 2.4% -71%

2% 1.4% 1.1% 1% 0.4% 0.6% 0% 2013 2014 2015 2016 2017

• Georgia incentivizes xEVs with HOV access. However, after ending its • Colorado Hybrid vehicle HOV access ending in May 2020 subsidies program in 2015, xEV sales decreased by ~70% in the state • Hardman, S., & Tal, G. study found that HOV lane access, workplace though it continued to offer HOV access to xEVs charging and free parking are not motivational factors but they do – Georgia offered $5,000 tax credit on top of federal credit of $7,500 increase likelihood of repeat purchases on BEV • Based on EIA analysis , the value of this incentive in California, New – In 2015 Georgia state lawmakers ended the incentive York, and Hawaii was more than double that of most other states that – Georgia was the 2nd largest EV market in U.S. prior to incentive offered this incentive roll-back

Source: https://www.codot.gov/programs/hybrids ; Incentivizing Adoption of PEV – Argonne National Lab ; https://www.eia.gov/analysis/studies/transportation/zeroemissions/pdf/zero_emissions.pdf ; 108 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Parking incentives in Connecticut, California etc. aim to encourage people to reduce GHG emissions and use EV for transportation

Movement “101”: Parking Benefits (excluded from analysis) Regions with Parking incentives Parking Initiative Applicable Regions Legislation: • Alternative Fuel Vehicle (AFV) and HEV Parking, Low Emission Vehicle Parking

History: Salt Lake City, UT New Haven, CT • Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Parking - New Haven, CT – Las Vegas, NV Introduced prior to 2012 • Low Emission Vehicle Parking - San Jose, CA - No information on start date. Program will San Jose, CA continue at least until June 30, 2020 • Alternative Fuel Vehicle (AFV) Parking Incentive – Arizona, allows eligible AFV to park without penalty in parking areas that are designated for carpool operators

Geography: • New Haven, CT and San Jose, CA Objective: • New Haven, CT - Provides free parking on all city streets for HEVs and AFVs registered in the city. Owners must obtain a non-transferable pass from the Department of Traffic and Parking Low Emissions • San Jose, CA - Free parking at city parking meters, parks and recreation facilities, and participating garages for vehicles that display a valid Clean Air Permit, available to vehicles eligible for a CARB Green or White State of California high occupancy vehicle lane stickers Cost of Compliance Krause et al. (2013) found that whilst free parking can increase purchase intentions, only 1.7% of adopters were aware of the free parking already offered in regions that they live suggesting its actual impact on sales was low Vehicle Demand Outlook: Impact Current • Limited number of cities / regions have introduced parking benefits for alternative fuel vehicles. Similar to Norway, parking benefits may be rescinded with increased EV penetration Fuel Economy Negative Neutral Positive

Source: https://afdc.energy.gov/laws/local_examples#3, https://afdc.energy.gov/laws/local_examples#3, https://phev.ucdavis.edu/wp-content/uploads/reoccurring-incentives-literature-review.pdf 109 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Norway is reducing xEV parking incentive in a staggered manner to curb traffic congestion from increased xEV penetration

Movement “101”: Parking Benefits (excluded from analysis) Regions with Parking Incentives Other Global Legislation Legislation: Denmark • ZEV parking - Madrid, Norsk elbilforening - Norway Paris Amsterdam History: Madrid • Amsterdam (Netherlands), Paris (France) - Preferential parking permit for electric vehicles offered atleast since 2012 (start date unkown) • Madrid, Spain - In Madrid’s city center, drivers of a zero-emission vehicle can park without • time limitation (Madrid City Council, 2018a) • Denmark - Electric cars are exempt from parking fees up to DKK 5,000 (€670) per year • Norway – max of 50% of parking fee can be charges on ZEVs in public parking facilities

Geography: • Amsterdam, Paris, Norway, Denmark, Madrid, Helsinki etc. Objective: • Amsterdam – residents and companies owning an electric vehicle given priority on the waiting list for parking permits (Municipality of Amsterdam, n.d.d) Low Emissions • Cities like Madrid, Berlin incentivize commuters to use xEVS through combination of parking incentives and LEZs Cost of Compliance

Vehicle Demand

Outlook: Impact Current • EV parking benefits in Norway have been reduced in a staggered manner. Initially all EVs could avail free parking at public facilities, but with increased EV penetration, parking fee hiked Fuel Economy to 50% to that of an ICE vehicle Negative Neutral Positive

Source: https://www.eltis.org/discover/case-studies/shuffling-pack-optimising-car-parking-amsterdam-netherlands, https://en.parisinfo.com/practical-paris/, https://www.bird.co/press/encouraging-better-scooter-parking-in-paris-through-design-and-incentives/; https://elbil.no/english/ ; 110 https://wallbox.com/en_us/guide-to-ev-incentives-europe ; https://issuu.com/gemeenteamsterdam/docs/plan_amsterdam_the_electric_city ; https://theicct.org/sites/default/files/publications/EV_city_policies_white_paper_fv_20200224.pdf Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) • Appendix – II (Movement 101) • Appendix – III (Summary of research) – Telecommuting – Subsidies, ZEV mandate, Charging network – CAFE standard – Biofuels: Low Carbon Fuel Standard (LCFS) and Renewable Fuel Standard (RFS) – Carbon pricing and Transportation Climate Initiative (TCI) – Low Emission Zone (LEZ) / ICE bans, Congestion pricing and Mobility initiative

111 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) • Appendix – II (Movement 101) • Appendix – III (Summary of research) – Telecommuting – Subsidies, ZEV mandate, Charging network – CAFE standard – Biofuels: Low Carbon Fuel Standard (LCFS) and Renewable Fuel Standard (RFS) – Carbon pricing and Transportation Climate Initiative (TCI) – Low Emission Zone (LEZ) / ICE bans, Congestion pricing and Mobility initiative

112 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Studies opinions vary on impact of telecommuting of fuel savings ranging from no impact to ~$2B per year

Telecommuting – Fuel Economy Effect of Telecommuting on Fuel Savings in U.S. • Study “2017 State of Telecommuting in the U.S. Employee Workforce” ~$1B ~$1.7B $1.9B a Flexjobs survey based study estimates ~3.9M employees in U.S 1 2 3 telecommute half-time or more VMT reduced Telecommuting VMT reduced – Fuel savings ~$980M and VMT reduction of 7.8 billion miles; in by 0.3% if 5% 2017 U.S. total VMT was ~3 trillion miles annually by 7.8 in U.S. saves billion miles from ~840M gallons of of U.S. pop. • 2008 survey by Consumer Electronic Association (CEA): states there telecommuting gasoline / year telecommutes are 3.9M people in U.S. who work from home at least one day / week 1day/week – this practice saves about 840 million (U.S.) gallons of petrol, equivalent to taking two million cars off the road for a year Flexjobs study CEA study NRDC Study

• 2013 Natural Resources Defense Council (NRDC) study “Driving 2017 survey based 2008 survey based Assesses Commuter Choice in America” estimates that by telecommuting 1 day / study assessing study by Consumer telecommuting impact week consumer can save: telecommuting impact Electronics Association on VMT and fuel on VMT (CEA) savings in 2013 – $150 - $300 annually on fuel by commuter type (urban, rural etc.) – Reduce U.S. VMT by 10 billion miles and fuel costs by ~$1.9B if 5% of U.S. population telecommuted 1 day /week Estimated Impact • 2018 study “Does telecommuting promote sustainable travel and 1 2 3 physical activity? – Chakrabarti et al” assessing 2009 U.S NHTS states Fuel Economy regression estimates show that telecommuting, regardless of Negative Neutral Positive frequency, is associated with relatively more annual miles driven

$X Estimated annual fuel savings

Source: https://link.springer.com/article/10.1007/s11116-004-3046-7 ; https://afdc.energy.gov/data/10315 ; https://www.energy.gov/eere/vehicles/fact-915-march-7-2016-average-historical-annual-gasoline-pump-price-1929-2015 ; 113 https://www.sciencedirect.com/science/article/pii/0968090X9500020J ; https://www.nrdc.org/sites/default/files/driving-commuter-choice-IP.pdf ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Additional studies reviewed also found that telecommuting has a net positive impact on fuel savings

Telecommuting – Fuel Economy Study summary Additional Studies reviewed

2008 Study “The Energy and Greenhouse Gas Emission Impacts of Telecommuting in the U.S” Telecommuting decreases analyzes GHG emission impacts in U.S. from a life-cycle perspective U.S. light-duty vehicle – Estimates that the 4 million U.S. workers telecommute an average of one or more day per week gasoline consumption by and reduce primary energy consumption by an amount equal to 0.13 to 0.18 percent and 0.16 to Study 2 Study 0.23 percent of U.S. annual primary energy consumption ~0.8% – In addition, telecommuting decreases U.S. gasoline consumption by about 0.8 percent of U.S. light-duty vehicle gasoline consumption

Telecommuting reduces 2005 study “Does telecommuting reduce vehicle-miles traveled? An aggregate time series analysis annual VMT by ~0.8% i.e. for the U.S. – Choo et al” which assessed impact of telecommuting on Vehicle Miles Travelled (VMT)

~$1.7B in fuel savings per 1988 – 1999 found that Study 1 Study year – telecommuting reduced annual VMT by ~0.8%, which is estimated savings of $1.7B in 1998

1996 study “The travel and emissions impacts of telecommuting for the state of California ~77% decrease in VMT from Telecommuting Pilot Project” assessed impact of telecommuting and VMT in California

telecommuting – California – Study monitored participants over two years 1988 – 1990 and observed a 77% decrease in VMT Study 3 Study specific study – Also found an increase on non-commute personal trips – though a negligible impact

Source: https://www.researchgate.net/publication/4349409_The_Energy_and_Greenhouse_Gas_Emission_Impacts_of_Telecommuting_in_the_US ; https://www.pcworld.com/article/138062/article.html ; 114 https://www.sciencedirect.com/science/article/pii/S2214140517309258#bib27 ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Studies estimate telecommuting reduces GHG emissions from ~4 million tonnes to 7 .4 millions tonnes

Telecommuting – Low Emissions Effect of Telecommuting on GHG Emissions in U.S. • 2013 NRDC study “Driving Commuter Choice in America” estimates that if 5% of U.S population telecommutes 1 day / week, can reduce: 1 2 3

– Annual transportation GHG emissions by ~0.5% i.e. 4.7 Million 3.9 million 7.4 million 4.7 million tonnes of CO 2 tonnes of tonnes of tonnes of annual CO annual CO • ~7.4M tonnes of CO2 savings estimated based on 2008 survey 2 2 annual CO2 commissioned by Consumer Electronic Association (CEA): savings savings savings – Value calculated based on estimate of 840 million (U.S.) gallons of

petrol and considering gasoline CO2 emissions coefficient of 8.89 kg CO2 per gallon Flexjobs study CEA study NRDC Study

• Study “2017 State of Telecommuting in the U.S. Employee Workforce” 2017 survey based 2008 survey based Assesses a Flexjobs survey based study estimates 3 millions tonnes of GHG study by Flexjobs in study by Consumer telecommuting impact partnership with Global Electronics Association on VMT and fuel emissions savings based on estimated 3.9 millions telecommuters in Workplace Analytics (CEA) savings in 2013 2017

Estimated Impact Total U.S. emissions from transportation in 1 3 2

2017 was 1,872 million metric tonnes of CO2 Low Emissions Negative Neutral Positive

Source: https://www.nrdc.org/sites/default/files/driving-commuter-choice-IP.pdf ; https://www.eia.gov/environment/emissions/co2_vol_mass.php ; https://www.pcworld.com/article/138062/article.html ; https://globalworkplaceanalytics.com/telecommuting-statistics ; https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions ; 115 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Post COVID-19, telecommuting and its impact on GHG emissions may be assessed for future telecommuting strategy roll-out (1/2)

Telecommuting – Impact from Covid-19

• China’s carbon emissions fell by around 25% over a four-week period, equivalent to around 200M tonnes of CO2 (MtCO2)

• Beginning in early March of 2020, EPA air quality data shows Los Angeles Nov 2016 LA in March 2020 that Los Angeles experienced its longest stretch of "good" air quality since at least 1995

• Major cities in India registered ~70% drop in NOX emissions

• >40% decline in NOX emissions in Northen Italy

• Bay Area air quality shows marked improvement during shelter in place with AQI in single digits

Source: https://www.carbonbrief.org/analysis-coronavirus-has-temporarily-reduced-chinas-co2-emissions-by-a-quarter ; https://www.indiatoday.in/science/story/bonus-benefit-satellite-data-shows-significant-decrease-in-no2-emissions-in- india-due-to-covid-19-lockdown-1663637-2020-04-05 ; https://www.cnn.com/2020/03/31/asia/coronavirus-lockdown-impact-pollution-india-intl-hnk/index.html ; https://www.lamag.com/citythinkblog/air-quality-covid/ ; 116 https://www.britannica.com/science/smog ; https://www.cnn.com/2020/04/07/us/los-angeles-pollution-clean-air-coronavirus-trnd/index.html ; https://sf.curbed.com/2020/3/27/21197151/san-francisco-air-quality-pollution-coronavirus-cars ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Post COVID-19, telecommuting and its impact on GHG emissions may be assessed for future telecommuting strategy roll-out (2/2)

Telecommuting – Impact from Covid-19

Comparison of NO2 emissions over Northern Italy

Beginning of January 2020 End of March 2020

Source: https://www.esa.int/ESA_Multimedia/Videos/2020/03/Coronavirus_nitrogen_dioxide_emissions_drop_over_Italy ; 117 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) • Appendix – II (Movement 101) • Appendix – III (Summary of research) – Telecommuting – Subsidies, ZEV mandate, Charging network – CAFE standard – Biofuels: Low Carbon Fuel Standard (LCFS) and Renewable Fuel Standard (RFS) – Carbon pricing and Transportation Climate Initiative (TCI) – Low Emission Zone (LEZ) / ICE bans, Congestion pricing and Mobility initiative

118 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Opinions diverge on impact of subsidies on xEV demand ranging from no impact to ~30% of EV sales a direct result of subsidies

Subsidies / Incentives – Vehicle Demand Effect of Subsidies / Incentives on Vehicle • U.S. Energy Information Administration (EIA) in its 2017 study found Demand in U.S. valuation of state-level electric vehicle incentives is not well correlated 1 2 3 with market share of ZEVs and PHEVs 2.6% ~30% EV of increase in • Congress Budgetary Office (CBO) its 2012 study estimated that ~30% sales due to EV sales per of current and future sales of electric vehicles will be attributable No impact to the Federal tax credit, and ~70% would have occurred even Federal Tax $1k increase without the credits credit in incentive – CBO determined Federal Tax Credit was likely to have the greatest impact on sales CBO and Tal EIA analysis Jenn et al • 2018 study “Effectiveness of Electric Vehicle Incentives in the U.S. – et al. Jenn et al” for the period 2010 – 2015 found that every $1000 offered Translates to ~55% avg Translates to ~21% avg as a rebate or tax credit increases average sales of EVs (incl. BEV & growth YOY growth YOY with just PHEV) by 2.6% federal credit and ~30% avg growth incl. state – Includes both federal and state incentives credit of max $6k – This study does not consider EVSE network in its model Estimated Impact • 2016 survey based study “Exploring the impact of the federal tax credit on the plug-in vehicle market – Tal et al” attributes 32.5% of plug-in 1 3 2 electric vehicle sales directly to federal tax credit Vehicle Demand Negative Neutral Positive

Source: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/reports/electricvehiclesone-col.pdf ; https://www.eia.gov/analysis/studies/transportation/zeroemissions/pdf/zero_emissions.pdf ; 119 https://ideas.repec.org/a/eee/enepol/v119y2018icp349-356.html ; Tal, Nicholas - Exploring the impact of the federal tax credit on the plug-in vehicle market Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Other evaluated studies also found federal and state incentives along with charging infrastructure are critical drivers for xEVadoption

Subsidies / Incentives – Vehicle Demand Net impact Study “An in-depth examination of EV incentives: Consumer heterogeneity and changing response ~20% increase in PEV over time” evaluating purchase decision of buyers in California from 2010 - 2017 found: ownership in CA attributed to – that federal and state tax credit are the two most important factors federal and state tax credit – “we found about a 20% increase in PEV owners who would not have purchased a PEV in 2016 compared to 2010 if the federal incentive were removed”

~8% increase in BEV Study “Providing the Spark: Impact of financial incentives on battery electric vehicle adoption” registrations per $1,000 assessing incentives and impact of sales during 2011 – 2015 states it found ~8% increase in new incentive offered registrations of BEVs per thousand dollars of incentive offered

~17% of PEV sales in 2015 Study “Measuring the cost-effectiveness of electric vehicle subsidies” found that only 17% of PEV due to federal tax credit sales in model year 2015 are attributable to the federal tax credit

2018 study “The role of demand-side incentives and charging infrastructure on plug-in electric vehicle Tax incentives along with adoption: analysis of US States” assessing 2008 – 2016 U.S. EV sales states: EVSE network are primary – “tax incentives of any type and EVSE network are dominant factors in driving PEV adoption” factors for PEV adoption – This study also studies the impact of charging infrastructure as a purchase decision criteria

Source: https://iopscience.iop.org/article/10.1088/1748-9326/aad0f8 ; https://www.sciencedirect.com/science/article/pii/S0095069618303115 ; https://www.sciencedirect.com/science/article/pii/S0140988319303408#bib0105 ; 120 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 EIA found that state-level ZEV incentives was not well correlated with market share of ZEVs and PHEVs in 2016

Subsidies / Incentives – Vehicle Demand

• EIA found valuation of state-level ZEV incentives was EIA – ZEV 2016 incentive value and market share not well correlated with market share of ZEVs and PHEVs in 2016 $8,000 ZEV Market Share Tax Credit 1.8% HOV Rebate • Four states with the highest ZEV market shares, 1.6% $7,000 Emissions Inspection Sales Tax Washington, Oregon, Hawaii, and Georgia, had Home EVSE Free Parking relatively low ZEV incentive values 1.4% $6,000 – EIA found that Oregon credited high adoption rates 1.2% primarily to their extensive EVSE network. Also, $5,000 the case for Washington and California 1.0% – EIA found Hawaii had unique drivers such as $4,000 highest gas prices in the country in addition to 0.8% limited driving distanced and robust EVSE network $3,000 0.6% – Georgia appears as an outlier as states ZEV tax $2,000 credit of $5,000 was discontinued in July 2015 0.4% – EIA does acknowledge that “comparing sales and $1,000 0.2% incentives over time shows that incentives, particularly rebates and tax credits, do have a $0 0.0% direct impact on sales, at least in some states” CO DE MD TX CA CT MA RI DC NJ PA WA LA UT HI NY 0R NV GA MO referring to ZEV sales trend in Georgia

States that adopted ZEV mandate (2016)

Source: EIA - Analysis of the Effect of Zero-Emission Vehicle Policies: State-Level Incentives and the California Zero-Emission Vehicle Regulations 121 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Studies indicate even in Europe subsidies and incentives are key factors influencing consumer purchase behaviors

Subsidies / Incentives – Vehicle Demand (Europe)

• Value of incentives in Norway translates to ~$11,000 - $20,000 Fiscal incentives and share of EVs in 2014 (%) (based on 25% VAT exemption and purchase tax) • TCO analysis in “The effect of fiscal incentives on market Average of financial incentives as % of net price of EVs penetration of electric vehicles: A pairwise comparison of total 50% Share of EVs in total new car registrations in 2014 cost of ownership” states incentives in Norway made EVs cost 45% competitive with ICE vehicles resulting in increased uptake The total amount of 42% – In 2019, Norway’s passenger plug-in sales was at 55% 40% fiscal incentives is the sum of subsidy, VAT, market share of total new car sales 35% registration tax, and 33% circulation tax 80% of BEV owners surveyed in Norway in 2014 30% differences between EVs and their ICE pair stated purchase tax and VAT exemption was the 25% 20% critical factor for BEV adoption 20% 19% From “Incentives for promoting Battery Electric Vehicle (BEV) adoption in Norway” by Bjerkan et.al 15% 14% 10% 4% An incentive of €1,000 would increase PEV sales 5% 2% 2% 3% 1% 1% 1% shares on average by about 5–7% in Europe 0% Based on 2010 – 2017 Europe incentives and impact on plug-in sales study by Hungary Germany Italy France United Netherlands Norway Munzel et.al Kingdom Note: Average incentives were calculated for the eight vehicle pairs in the eight countries analyzed Source: How large is the effect of financial incentives on electric vehicle sales? – A global review and European analysis – Munzel et. Al; http://dx.doi.org/10.1016/j.trd.2015.12.002 ; The effectiveness of financial purchase incentives for battery electric vehicles – A review of the evidence – Hardmann et. Al ; https://ofv.no/aktuelt/2020/bilsalget-ned-i-2019-elbilene-%C3%B8ker-fortsatt-mest ; 122 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 ZEV mandate applies to ~30% of national new vehicle fleet; most estimates range at ~$400-$500* incremental cost per vehicle

ZEV Mandate – Cost of Compliance Avg compliance cost per vehicle ($) ZEV Mandate – Cost of Compliance • Two major studies are reviewed for ZEV mandate: $10.2B – Cost Implications for Automaker Compliance of Zero Emissions Vehicle Requirements – UC Davis (2018) $8.5B $600 4 $7.5B – A Macroeconomic Study of Federal and State Automotive Regulations (2017) - $6.8B $500 from Indiana University, funded by Auto Alliance (consists of 12 OEMS including 2 $440 GM, Ford, FCA, etc.) $400 3 1 • Both studies consider California and 9 other states that adopted ZEV mandate in their analysis

• ZEV low and ZEV high scenario cost difference impacted PHEV and BEV fleet mix to meet ZEV mandate UC Davis study - UC Davis study - IU study - ZEV IU study - ZEV – Cost estimate provided for meeting ZEV mandate with MY 2025 ZEV low (2025) ZEV high (2025) low (2025) high (2025)

Estimated Impact

4 2 3 1 Cost of Compliance *Note: This estimate appears low per Ricardo analysis. We will Negative Neutral Positive review this assessment in upcoming weeks $X Estimated annualized cost at ~17M vehicles per year

Source: https://doi.org/10.1021/acs.est.8b03635 ; https://oneill.indiana.edu/doc/research/working-groups/auto-report-032017.pdf ; 123 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Studies estimate lifetime fuel savings of ZEVs range from ~$5,000 to ~$15,000 per vehicle

ZEV Mandate – Fuel Economy Fuel savings per year ($) Fuel savings per ZEV lifetime ($) Fuel Economy Impact (ZEV Lifetime Fuel Savings per vehicle in $) • ”Colorado Zero Emission Vehicle Program Will Deliver Extensive Economic, Health and Environmental Benefits” study by Environmental Defense Fund (EDF) estimates MY 2025 ZEVs will realize net lifetime $15,498 savings of ~$5,000 - $10,000 in fuel costs 4 – This study is specific to ZEV (includes both BEV and PHEV) $10,921 mandate implementation impact in Colorado 2 $9,828 3

• In the study “Impacts Of Electrification Of Light-duty Vehicles In The $5,122 United States, 2010 – 2017” Argonne National Lab (ANL) estimated 1 that an average BEV in 2017 avoided use of ~410 gallons of gasoline $1,292 per vehicle and an average PHEV avoided use of ~260 gallons of $819 gasoline per vehicle Colorado EDF Colorado EDF ANL study - PHEV ANL study - BEV study - Gas study - Gas Gas Reference Gas Reference – Net lifetime savings on fuel estimated taking into account gasoline low (2025) high (2025) Case (2025) Case (2025) reference case from U.S. Annual Energy Outlook report 2019 and 12 year lifetime per vehicle

Estimated Impact

1 3 2 4 Fuel Economy Negative Neutral Positive

Source: http://blogs.edf.org/climate411/files/2019/08/FINAL-EDF-Colorado-ZEV-report-2019.pdf ; https://publications.anl.gov/anlpubs/2018/01/141595.pdf ; 124 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Argonne cradle-to-grave lifetime analysis forecasts MY25 ZEV emissions to be atleast 50% less compared to a MY25 ICE vehicle

ZEV Mandate – Emissions Emissions Impact (Vehicle lifetime GHG emissions impact, tonne CO ) • Argonne National Lab (ANL) Cradle-to-Grave lifetime analysis for ZEV 2 emissions indicates impact varies broadly based on range of vehicle Total GHG emissions per MY2015 ZEV lifetime (tonne CO2) and power generation mix Total GHG emissions per MY2025 ZEV lifetime (tonne CO2) Total ICE MY2025 lifetime GHG emissions impact (tonne CO2) • MY2025 ZEV vehicles CO2 lifetime emissions impact forecasted to be Total ICE MY2015 lifetime GHG emissions impact (tonne CO2) at least 50%% lower compared to a MY 2025 ICE vehicle 81 Other Studies 63 60 • A cradle-to-grave 2015 study by Union of Concerned Scientists stated 38 34 23 that lifecycle lifetime CO2 emissions impact for a BEV90 and BEV210 6 7 is ~50% lower compared to a comparable ICE vehicle ICE - base case BEV90 BEV 90 (Clean BEV210 BEV210 • A 2019 lifecycle assessment of cars CO2 emissions by International Carbon clean Carbon generation) Generation Energy Agency (IEA) states lifetime emissions impact of a 2018 BEV with a large battery is comparable with a small sized 2018 ICE vehicle – However, IEA considers global passenger car in its analysis, and a small sized ICE vehicle footprint in Europe and other global Estimated Impact regions is smaller compared to small sized ICE vehicle in U.S. Low Emissions Negative Neutral Positive Note: BEV90 indicates ~90 miles of electric range and BEV210 indicates >200 miles of range

Source: https://www.osti.gov/biblio/1254857-cradle-grave-lifecycle-analysis-light-duty-vehicle-fuel-pathways-greenhouse-gas-emissions-economic-assessment-current-future-technologies ; https://afdc.energy.gov/files/pdfs/argonne_phev_evaluation_report.pdf ; https://www.ucsusa.org/sites/default/files/attach/2015/11/Cleaner-Cars-from-Cradle-to-Grave-full-report.pdf ; https://blog.ucsusa.org/rachael-nealer/gasoline-vs- electric-global-warming-emissions-953 ; 125 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Impact of ZEV mandate must be assessed considering BEV sales within California are driven by customer demand for Tesla Model 3

ZEV Mandate – Vehicle Demand Fuel Cell Battery Electric Plug-in Hybrid ZEV Mandate – Minimum Expected ZEVs in California • 2019 combined EV and PHEV sales in in California is~146,000 units (unit vehicle volume) and is greater than volumes estimated for 2020. However, Tesla Model 3 sales skews the sales impact 227k 2 – Tesla Model 3 sales in 2019 was ~60,000 units which is ~40% of 65k the total EV and PHEV sales in California 146k – Telsa Model 3 was the 3rd best- selling sedan in California after 23k 1 127k Honda Civic (~76k units) and Toyota Camry (~63k units) 84k 40k 38k 7k 162k • ~15.4% BEV/PHEV penetration estimated in 2025 in 10 states that 22k 84k 89k adopted ZEV mandate including California, which make up ~30% of 55k national new vehicle sales 2020 2025 2020 2025

CARB Fact Sheet IU Study estimate

Estimated Impact

1 2 Vehicle Demand Negative Neutral Positive

Source: https://doi.org/10.1021/acs.est.8b03635 ; https://oneill.indiana.edu/doc/research/working-groups/auto-report-032017.pdf ; CARB ZEV Regulation Fact Sheet ; 126 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Studies found significant correlation between EVSE network and PEV uptake. 2X impact on uptake per $ for EVSE compared to subsidies

Charging Infrastructure – Vehicle Demand Effect of Charging Infra on Vehicle Demand in • Study “The role of demand-side incentives and charging infrastructure U.S. on plug-in electric vehicle adoption: analysis of US States-collaboration 1 2 3 between Tufts University and NREL” assessing U.S. PEV sales 7.2% increase in 10% increase in Each additional between 2008 – 2016 found charging infrastructure significantly BEV and 2.56% the number of station per 100,000 influences PEV purchases increase in PHEV public charging residents purchases with stations would – one additional EVSE per capita is associated with a 7.2% increase in BEV increases PEV one additional increase EV sales purchases yet only a 2.56% increase in PHEV purchases market share by EVSE per capita by about 8% 0.12% – EVSE is a measure of public stations, not plugs

• Study “The Market for Electric Vehicles: Indirect Network Effects and Tufts University Li et al Sierzchula et Policy Design – Li et al” evaluating 2011 – 2013 U.S. PEV states that a study al 10% increase in the number of public charging stations would increase 2008 - 2016 2011 - 2013 Assesses EV market in EV sales by about 8% (Considers only public EVSE network) 2012 – Also states, the increase in EV sales would have been twice as large if federal tax incentive were used to build charging stations instead of subsidizing EV purchase

“The influence of financial incentives and other socio-economic factors • Estimated Impact on electric vehicle adoption – Willian Sierzchula et al” suggests that one vehicle charging station per 100,000 residents is associated with an EV 3 1 2 market share increase of 0.12 percentage points Vehicle Demand – Also suggests that each charging station (per 100,000 residents) could have twice Negative Neutral Positive the impact EV market share than $1000 in consumer financial incentives

Source: https://www.journals.uchicago.edu/doi/10.1086/689702 ; 127 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Additional studies reviewed also found a positive correlation between strong EVSE network and EV uptake

Charging Infrastructure – Vehicle Demand

Study summary Additional studies reviewed

Study “Environmental and economic impacts of expanding electric vehicle public charging infrastructure in California′s counties” evaluating charging infrastructure and PEV adoption rate in 58 public charging station California counties found availability of public charging stations is positively correlated with PEV purchase in each county Study 1 Study availability is positively correlated with PEV ICCT study “Identifying the leading regional electric vehicle markets in the United States” evaluating purchasing rate charging infrastructure and PEV adoption rate in U.S in 2015 found

Study 2 Study – Public charging infrastructure has been an important aspect in spurring EV sales, with leading markets typically increasing their electric vehicle public and workplace charging options

ICCT study “Expanding the EV market in U.S. cities” assesses the 2015 - 2016 U.S. electric vehicle EVSE growth of market and the actions driving it, focusing on the 50 most populous U.S. metropolitan areas approximately 30% to 80%, – The leading EV markets tend to have at least 275 public chargers per million people, whereas corresponds with at least half of the U.S. population lives in a market where available charging is less than 1/3 of that rate 2X EV growth between 2015 Study 3 Study – The markets of Charlotte, Detroit, Kansas City, Minneapolis, Pittsburgh, Providence, and Virginia to 2016 in major U.S. Beach each had approximately 30% to 80% charging infrastructure growth, corresponding with metropolitan areas at least a doubling of their electric vehicle uptake from calendar year 2015 to 2016

Source: https://www.sciencedirect.com/science/article/pii/S136192091630757X?via%3Dihub#b0095 ; https://www.sciencedirect.com/science/article/pii/S1361920918300877 ; https://theicct.org/sites/default/files/publications/US%20Regional%20EV%20Markets_working-paper_ICCT_10112016.pdf ; 128 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 ICCT study – In 2016, regions with high EV market uptake had correspondingly high charge points per million population

Charging Infrastructure – Major National Markets

ICCT study “Emerging best practices for electric vehicle charging 2016 PEV sales share and public charge points per million population infrastructure” which evaluated EVSE network and EV sales in in major markets major EV regions found the following:

1,800 30 • Public charging infrastructure is a key to growing the electric New Electric Vehicle Sales Share 1,600 vehicle market – used a multivariable regression to find DC Fast Charge 25 correlation between EVSE network and PEV uptake 1,400 Level 2 1,200 20 • The leading electric vehicle markets of Norway and the Netherlands have more than 10 times as many public charge 1,000 points per capita as average markets, and leading markets in 15 800 California and China had three to five times the average

600 10 • China, the world’s largest EV market by volume, in 2016 more 400 than 100,000 Level 2 and 38,000 direct current (DC) fast 5 charge points

200 New Electric Electric New Vehicle Sales Share (%) 0 0 • In California one public charger per 25 to 30 PEVs is typical. In

Public Charge Points Per Million Population Per MillionPoints PublicCharge the Netherlands, one public charger per 2 to 7 PEVs is typical. China

Japan This ratio ranges from 3 to 6 in major markets in China

Ireland

Austria

Finland

Norway

Canada

Sweden

Belgium Denmark

Germany – Shanghai, Beijing, and Shenzhen etc. as part of a federal Switzerland

Netherlands program are required to provide one charge point for United States United

United KingdomUnited every 8 electric vehicles

Source: https://theicct.org/sites/default/files/publications/EV-charging-best-practices_ICCT-white-paper_04102017_vF.pdf ; 129 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Major EV markets continue to invest in charging infrastructure

Charging Infrastructure – Major National Markets

• China 2018 PEV sales share and public charge points per million population in major markets – Installed based of ~350,000 public charging points including L2 and DC fast charge points New Electric Vehicle Sales Share Level 2 and DC Fast Charge • Netherlands

2,500 – ~38,000 L@ and DC fast charge points 50 – High reliance on public charge points especially in major 2,000 metropolitan areas due to lack of home charging 40 1,500 • Norway 30 – 49%% of new car registration are PEVs 1,000 20 – 8,100 L2 charger points

500 10 – 1,100 Fast Charge points – Fewer total number of charge points compared to

0 0 Netherlands as majority of charging is conducted at home

New Electric Electric New Vehicle Sales Share (%)

Public Charge Points Per Million Population Per MillionPoints PublicCharge

China

Japan

Norway

Germany

Netherlands United States United

Source: https://energypolicy.columbia.edu/sites/default/files/file-uploads/EV_ChargingChina-CGEP_Report_Final.pdf ; https://www.bloomberg.com/news/features/2019-10-15/china-electric-car-chargers-fleet-outpaces-u-s-ev-stations ; 130 https://newmotion.com/en/norway-is-leading-ev-owning-country-in-the-world/ ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 In Europe relationship between public charging infrastructure and EV uptake varies based on availability of home charging and use cases

Charging Infrastructure – Europe Study summary Studies reviewed - Europe

Europe – EV take-up is 2017 Study “An exploratory policy analysis of electric vehicle sales competition and sensitivity to infrastructure in Europe” modelling PEV uptake in Europe between 1995 – 2050 found relatively insensitive at target – EV take-up is relatively insensitive at target levels below 5 or over 25 PEVs per charge point

Study 1 Study levels below 5 or over 25 PEVs per charge point – Charging infrastructure availability also appears to have the strongest impact on uptake once electric vehicle stock share exceeds 5%, which is currently the case only in Norway Germany – Fast charging stations are more important Study “Consumer preferences for public charging infrastructure for electric vehicles” assessing EVSE than a dense network of network in Germany through survey based method found consumer prioritized fast charging stations Study 2 Study over a dense network of charging points charging points

Netherlands – Public Study “How much charging infrastructure do electric vehicles need? A review of the evidence and charging infrastructure is international comparison” assessing EVSE network in Netherlands and other regions found

important and a substitute to – For Netherlands, public charging infrastructure an alternative to home charging due low Study 3 Study home charging availability of detached houses and concurrently home charging equipment Study “Can public slow charging accelerate plug-in electric vehicle sales? A simulation of charging Germany - Public slow infrastructure usage and its impact on plug-in electric vehicle sales for Germany” which models EVSE charging facilities do not network and PEV uptake in Germany until 2030 found

Study 4 Study increase PEV market shares – Public slow charging facilities do not increase PEV market shares and they need to be subsidized for a long time Source: https://www.tandfonline.com/doi/abs/10.1080/15568318.2018.1489016?journalCode=ujst20 ; https://www.sciencedirect.com/science/article/pii/S136192091930896X ; 131 https://www.sciencedirect.com/science/article/abs/pii/S0967070X1830742X ; https://www.sciencedirect.com/science/article/pii/S0040162516302104 ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 By end 2019 U.S. had installed public base of 78,ooo L2 and DC fast charge public with ~18 PEVs per plug

Charging Infrastructure – U.S.

2019 U.S. Public Charging Network and PEV Sales (Cumulative) 18 18 1,444 1,500 Public Level 2 and DC Fast Charge Plugs Installations (Cumulative) 20 PEV sales in U.S. (Cumulative) 15 13 13 1,117 Ratio of PEVs to charge points 15 1,000 11 9 756 10 561 5 5 500 401 287 5 168

71 61 78 pointcharge of PEVsper # 3 18 13 19 26 31 42 51 0 0 Cumulative volume in U.S (in 000’s)in U.S (involume Cumulative 2011 2012 2013 2014 2015 2016 2017 2018 2019

U.S. Estimated to have ~20,000 public PEV charging stations (Level 2 and DC fast charging) in 2019

Note: Charging Network is counted by the outlet rather than by the geographical location i.e. does not indicate stations

Source: https://afdc.energy.gov/data/10332 ; 132 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 California accounts for ~1/3rd of U.S. EVSE network; has 28 PEVs per plug

Charging Infrastructure – California

California Public EVSE Network Bay Area Public EVSE Network

6,266 2,092 Stations Stations

25,084 9,634 Charging plugs Charging plugs

700,110 ~40% PEVs (cumulative) Of charging plugs in CA ~28 PEVs per plug

California has ~25,000 L2 and DC charging plugs. 2nd highest state in U.S., Florida has <4,000 plugs

Source: https://insideevs.com/news/400378/2019-california-ev-sales-veloz/ ; 133 https://afdc.energy.gov/fuels/electricity_locations.html#/analyze?fuel=ELEC&location_mode=address&location=94129&status=E&status=T&radius=80&show_map=true Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 District of Columbia accounts for ~6% of U.S. EVSE network; has 5 PEVs per plug

Charging Infrastructure – District of Columbia

144 Stations

444 Charging plugs

2,817 PEVs (cumulative – June 2019)

~5 PEVs per plug

Note: PEVs from surrounding regions of Northern Virginia and Baltimore must be considered before assessing the low PEV to plug ratio

Source: https://afdc.energy.gov/fuels/electricity_locations.html#/analyze?fuel=ELEC&location_mode=address&location=94129&status=E&status=T&radius=80&show_map=true ; https://autoalliance.org/energy-environment/advanced- 134 technology-vehicle-sales-dashboard/ ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) • Appendix – II (Movement 101) • Appendix – III (Summary of research) – Telecommuting – Subsidies, ZEV mandate, Charging network – CAFE standard – Biofuels: Low Carbon Fuel Standard (LCFS) and Renewable Fuel Standard (RFS) – Carbon pricing and Transportation Climate Initiative (TCI) – Low Emission Zone (LEZ) / ICE bans, Congestion pricing and Mobility initiative

135 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Cost estimates to meet 2025 CAFE compliance range from $570 per vehicle to >$3,000 per vehicle

CAFE – Cost of Compliance Technology cost per vehicle ($) Crash and Congestion cost per vehicle ($) CAFE – Cost of Compliance • Four major studies are reviewed for CAFE movement: $53.4B – EPA Final Determination (2017) impacting MY 2022 – 2025 $31.9B $3,141 – NHTSA Technical Assessment Report (2016) impacting MY 2022 – 2028 5 Includes – Proposed SAFE Vehicles Rule(2018) impacting MY 2021 – 2029 all costs $1,581 – A Macroeconomic Study of Federal and State Automotive Regulations (2017) - $21.3B $1,881 from Indiana University, funded by Auto Alliance (consists of 12 OEMS including $13.8B 4 GM, Ford, FCA, etc.) $9.7B $1,249 3 • ICCT takes a favorable stance towards EPA and NHTSA cost analysis $812 $1,881 $570 2 $1,560 and disagrees with proposed SAFE Vehicles Rules as: 1 $1,249 $502 $758 – For technology costs, EPA Final Determination and NHTSA $68 $54 Technical Assessment Report vary to a certain degree on costs EPA Final NHTSA Macroeconomic Macroeconomic Proposed Determination Technical Study of Study of SAFE Vehicles considered and penetration of fuel economy improvement (2017) Assessment Federal & State Federal & State Rule (2018) technologies. However, the proposed SAFE Vehicles Rule Report (2016) Automotive Automotive Regulations - Regulations - considers >2X cost for implementing fuel efficient technologies Low(2017) High(2017) – Additionally, SAFE Vehicles Rule considers >100X cost for crash Estimated Impact and congestion stating that improved fuel economy results in higher driving and also continued use of older vehicles with lower 5 4 3 2 1 scrap rate due to higher fuel economy ratings Cost of Compliance Negative Neutral Positive

Note: $X Estimated annualized cost at ~17M vehicles per year

Source: https://oneill.indiana.edu/doc/research/working-groups/auto-report-032017.pdf ; https://theicct.org/sites/default/files/publications/ICCT_US-rollback-CBE-flaws_20190621.pdf ; 136 https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100QQ91.pdf ; https://nepis.epa.gov/Exe/ZyPDF.cgi/P100OXEO.PDF?Dockey=P100OXEO.PDF ; https://www.govinfo.gov/content/pkg/FR-2018-08-24/pdf/2018-16820.pdf ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Studies estimate lifetime fuel savings impact of CAFE varies between ~$800 to ~$1,400 per vehicle

CAFE – Fuel Economy pre-tax fuel savings per vehicle lifetime ($) CAFE – Fuel Economy Impact • Proposed SAFE Vehicles Rule to freeze fuel economy standards at 37 $1.9B mpg (estimated real-world at ~30 mpg) post 2020 $1,409 $1.5B • ICCT disagrees with Proposed SAFE Vehicles Rule calculation of fuel 1 $1.2B economy benefits stating that SAFE assumes progressive improvement $1,048 in fuel economy at 1% per year in spite of freeze in fuel economy 2 $832 standards, enabling higher fuel economy savings projection 5

CAFE Fuel Economy Standards (in real-world mpg) Not estimated in model Historic Fleet mpg requirement Proposed SAFE Fleet mpg requirement 3 4 Existing CAFE Fleet mpg requirement EPA Final NHTSA Macroeconomic Macroeconomic Proposed 43.6 Determination Technical Study of Study of SAFE Vehicles (2017) Assessment Federal & State Federal & State Rule (2018) 30.6 33.4 29.6 25.1 Report (2016) Automotive Automotive Regulations - Regulations - Low(2017) High(2017) Estimated Impact

Expected Actual Pojected Projected Proposed 5 2 1 (2018) (2018) (to be met (to be met SAFE in 2020) in 2025) Standards Fuel Economy (to be met Negative Neutral Positive in 2025)

Note: $X Estimated annualized savings at ~17M vehicles per year and vehicle life of 12 years

Source: Ricardo EMLEG ; https://theicct.org/sites/default/files/publications/ICCT_US-rollback-CBE-flaws_20190621.pdf ; https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100QQ91.pdf ; 137 https://nepis.epa.gov/Exe/ZyPDF.cgi/P100OXEO.PDF?Dockey=P100OXEO.PDF ; https://www.govinfo.gov/content/pkg/FR-2018-08-24/pdf/2018-16820.pdf ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Variability in pricing considered for cost of carbon influences emissions reduction impact for each analysis

CAFE – Emissions pollution benefit per vehicle lifetime ($) CAFE – Emissions Impact • SAFE Vehicles Rule reduces Social Cost of Carbon (SCC) impact by 85% reducing the overall benefits compared to prior analysis $0.6B $441 – The cost of carbon for EPA (2017) and NHTSA technical report 1 $0.5B (2016) if considered at ~$47 / ton $323 – SAFE Vehicle Rule cost of carbon is ~$7 - $10 / ton 2

$0.1B CAFE – CO2 Emission Targets Not estimated in model Existing CAFE Fleet CO2 emissions target (g/mile) $35 3 4 5 Proposed SAFE Fleet CO2 emissions target (g/mile) -23% EPA Final NHTSA Macroeconomic Macroeconomic Proposed Determination Technical Study of Study of SAFE Vehicles 240 213 (2017) Assessment Federal & State Federal & State Rule (2018) 163 Report (2016) Automotive Automotive Regulations - Regulations - Low(2017) High(2017) Estimated Impact Baseline CO2 emission Originial target (to Proposed SAFE target target (in 2020) be met in 2025) (to be met in 2025) 5 2 1 Low Emissions Negative Neutral Positive

Note: $X Estimated annualized savings at ~17M vehicles per year and vehicle life of 12 years

Source: Ricardo EMLEG ; https://theicct.org/sites/default/files/publications/ICCT_US-rollback-CBE-flaws_20190621.pdf ; https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100QQ91.pdf ; 138 https://nepis.epa.gov/Exe/ZyPDF.cgi/P100OXEO.PDF?Dockey=P100OXEO.PDF ; https://www.govinfo.gov/content/pkg/FR-2018-08-24/pdf/2018-16820.pdf ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Proposed SAFE predicts positive impact on vehicle demand and IU study indicates negative impact from existing CAFE rules

CAFE – Vehicle Demand CAFE – Vehicle Demand • EPA (2017) and NHTSA technical report (2016) do not estimate impact Additional Vehicle Sales (in million units) to vehicle sales in their analysis 1.0M • Proposed SAFE Vehicle Rule estimates 1 million additional new vehicle 4 sales through MY 2029 – SAFE Vehicle Rule also states that existing CAFE standards will 1 2 negatively impact new vehicle sales Not estimated in model 3 • Macroeconomic Study from Indiana University (IU) estimates roughly -0.3M 0.5% - 1.5% decline in sales YOY for current CAFÉ standards EPA Final NHTSA Technical Macroeconomic Proposed Determination Assessment Study of Federal & SAFE Vehicles (2017) Report (2016) State Automotive Rule (2018) Regulations (2017)

Estimated Impact

3 4 Vehicle Demand Negative Neutral Positive

Source: https://oneill.indiana.edu/doc/research/working-groups/auto-report-032017.pdf ; https://www.epa.gov/regulations-emissions-vehicles-and-engines/safer-affordable-fuel-efficient-safe-vehicles ; 139 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) • Appendix – II (Movement 101) • Appendix – III (Summary of research) – Telecommuting – Subsidies, ZEV mandate, Charging network – CAFE standard – Biofuels: Low Carbon Fuel Standard (LCFS) and Renewable Fuel Standard (RFS) – Carbon pricing and Transportation Climate Initiative (TCI) – Low Emission Zone (LEZ) / ICE bans, Congestion pricing and Mobility initiative

140 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Low Carbon Fuel Std. (LCFS) and Cap and Trade (C&T) projected to save cum. ~$8 billion by 2025 in social cost of avoiding carbon emission

Low Carbon Fuel Standard (LCFS) – Low Emissions LCFS – GHG emissions impact • LCFS targets reducing Carbon Intensity* to 90% by 2020 and 80% by (in $ Billions) 2030 relative to 2010 levels Annual economic benefit from Assuming social cost • Example of fuels that qualify: ethanol, biodiesel, CNG, hydrogen, electric, decreased carbon pollution ($ Billions) of carbon $50/ton California reformulated gasoline, etc. $1.2 • According to CalStart, LCFS appears to have industry support in the 3 industry (155 industry groups approve support for continuation of LCFS) 2010-2025 cumulative cost Carbon Intensity target, $0.7 relative to 2010 level savings $8B in CA 2

150MT CO2e 100% (Total on-road $0.2 90% 1 transportation GHG 80% emissions) 2015 2020 2025

*Note: Carbon intensity is a Estimated Impact measure of the GHG emissions released by the full lifecycle of a fuel, including production, transportation, and Low Emissions consumption Negative Neutral Positive 2010 2020 2030 Source: https://www.edf.org/media/report-california-fuels-policies-save-state-residents-over-10-billion-health-economic-costs, https://ww2.energy.ca.gov/almanac/transportation_data/gasoline/piira_retail_survey.html, https://www.edf.org/sites/default/files/content/edf_driving_california_forward.pdf, https://www.edf.org/sites/default/files/dcf_fact_sheet_may_21_2014_final2.pdf; https://www.law.berkeley.edu/wp-content/uploads/2019/12/Fact-Sheet-LCFS.pdf; Ricardo analysis 141 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 LCFS and Cap-and-Trade estimated to result in cumulative savings of ~$7B by 2025 from decreased petroleum dependency

Low Carbon Fuel Standard (LCFS) – Fuel Economy LCFS – petroleum fuel consumption impact • From 2011–2017, the share of alternative fuels in California’s (billion gallons) transportation energy grew from 6.1 percent to 8.5 percent. Of alternative fuel energy, the portion coming from non-liquid fuels Estimated Annual savings No regulation $0.2B increased from 7.6 percent to 13.5 percent over the period 21 20 LCFS & C&T 19 $0.6B 18 18 • Study “Driving California Forward - Environmental Defense Fund and 17 $0.9B the American Lung Association” which assess the fuel economy impact 15 of LCFS for the years 2015 – 2025 was reviewed 12 • The study estimates cumulative savings of ~$7B from reduced petroleum dependency between 2010 – 2025 through LCFS program

• EDF study also states that California’s LCFS and Cap and Trade will result in reduced consumption of 21.4 billion gallons of gasoline and 11.8 billion gallons of diesel fuel by 2025, resulting in cumulative savings of >$100B 2010 2015 2020 2025 • UC Davis study corroborates EDF’s claim – Ricardo needs to scrutinize Estimated Impact assumptions

Fuel Economy Negative Neutral Positive

Note: $X Estimated annual fuel savings with LCFS in place compared with no-regulation

Source: https://www.edf.org/media/report-california-fuels-policies-save-state-residents-over-10-billion-health-economic-costs ; https://ww2.energy.ca.gov/almanac/transportation_data/gasoline/piira_retail_survey.html ; https://www.edf.org/sites/default/files/content/edf_driving_california_forward.pdf ; https://www.edf.org/sites/default/files/dcf_fact_sheet_may_21_2014_final2.pdf ; Ricardo analysis 142 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 ~$2B in incremental cost in 2017 to fuel refiners from California’s LCFS and Cap-and-Trade program; cost expected to be >$9B by 2030

Low Carbon Fuel Standard (LCFS) – Cost of Compliance LCFS – Cost of Compliance • Three sources reviewed for LCFS movement: (incremental cost to fuel refiners per gallon - $/gallon) – ICF: Post‐2020 Carbon Constraints - Modeling LCFS and Cap‐and‐Trade (2017) Estimated incremental cost $9.8B 2020 – 2030 per gallon to refiners in 2025 $0.70 – Stillwater Associates: Projecting the Costs of California’s Cap & Trade and Low Carbon Fuel Standard Programs (2018) 2020 – 2030 2 $5.9B – Economic Analysis California Low Carbon Fuel Standard $0.42 • LCFS was established in 2007 and required refiners to reduce the 1 carbon intensity (CI) of their fuels by 10 percent by 2020. New amendment provides glidepath to reduced CI incrementally till 2030

• Both ICF and Stillwater studies forecast incremental cost impact per gallon to meet LCFS standards Stillwater Associates study ICF: Post‐2020 Carbon Constraints study • Cost of Compliance stated is for refiners, and assumes the cost is Assumes 13.5% CI Assumes 15% CI transferred to the end users reduction in 2025 reduction in 2025 Estimated Impact

2 1 Cost of Compliance Negative Neutral Positive Estimated total incremental annual cost to refiners in Note: $X 2025 based on fuel consumption in California Source: https://stillwaterassociates.com/projecting-the-costs-of-californias-cap-trade-and-low-carbon-fuel-standard-programs/, https://caletc.com/wp-content/uploads/2016/08/LCFS-Report-Fact-Sheet_v10.pdf, https://www.icf.com/insights/energy/post-2020-carbon, https://ww2.energy.ca.gov/almanac/transportation_data/gasoline/piira_retail_survey.html ; Ricardo analysis 143 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Renewable Fuel Standard (RFS): (1/2)

Biofuel blending – Renewable Fuel Standard (RFS)

Note: EISA’s four renewable fuel standards are nested within each other. This means, the fuel with a higher GHG reduction threshold can be used to meet the standards for a lower GHG reduction threshold. For example, fuels or RINs for advanced biofuel (i.e., cellulosic, biodiesel or sugarcane ethanol) can be used to meet the total renewable fuel standards (i.e., corn ethanol).

Source: https://www.epa.gov/renewable-fuel-standard-program/renewable-fuel-annual-standards ; 144 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Renewable Fuel Standard (RFS): Annual volume standards that have been finalized for 2010 to 2020 (2/2)

Biofuel blending – Renewable Fuel Standard (RFS)

Annual Volume Standards

Source: https://www.epa.gov/renewable-fuel-standard-program/renewable-fuel-annual-standards ; 145 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Net GHG emissions reduction from RFS mandate is <5% compared to baseline of standard gasoline and diesel fuel use

Renewable Fuel Standard (RFS) – Emissions RFS Emissions Reduction Target • Renewable Fuels under RFS are targeted to achieve 20-60% GHG emissions reduction

• Std. ethanol currently accounts for 80% of all renewable fuels under this 20% 50% 60% mandate (others: advanced, biodiesel and cellulosic fuel)

• If all motor fuels were replaced by renewable fuels, net GHG impact would Std. Ethanol Advanced Cellulosic be 20-60% reduction, however when compared to current gas and diesel and Biodiesel use profile and std. ethanol use, it has a net impact of <5% GHG reduction • Std ethanol is 80% of all Total gas and diesel vs renewable fuel renewable fuels Net impact consumption (2019), billion gallons used • Renewable fuels <5% GHG reduction Gasoline and diesel 172 10-15% of total accounting for total gas and diesel Renewable fuel motor fuel used consumed vs renewable fuel

Estimated Impact Estimated Impact

25 Low Emissions Negative Neutral Positive

2019

Source: EPA https://www.epa.gov/renewable-fuel-standard-program, Ricardo analysis 146 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Cost-benefit equation for consumers choosing std. ethanol based vehicles is neutral to slightly negative

Renewable Fuel Standard (RFS) – Fuel Economy

• E85 national average in March 2020 is $1.87/ gallon whereas gasoline 1.00 1.00 is $2.10/ gallon (ratio of gasoline: E85 = 1: 0.85) 0.85 – Ratio may fluctuate between 0.80 to 0.90 0.80

• E85 vehicle fuel economy is about 15-25% worse than comparable gasoline vehicle (ratio of gasoline: E85 = 1: 0.80) – Ratio may fluctuate between 0.75 to 0.85

• This translates to roughly $0.20/ mile impact for a C/D segment vehicle Gasoline For 20,000 miles per year: E85 E85 vehicle costs $50-150/ year more to operate MPG Fuel price

Estimated Impact • Consumers do not have an incentive to purchase E85 vehicles Estimated Impact

• Advanced, biodiesel and cellulosic renewable fuels will provide Fuel Economy fuel economy benefits but currently cost to produce remains Negative Neutral Positive prohibitive to overall equation

Sources: E85prices.com, FuelEconomy.gov, EPA, Ricardo analysis 147 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Industry is incurring combined $5-20B annual cost to comply with RFS mandate or purchase Renewable ID numbers (RINs)

Renewable Fuel Standard (RFS) – Cost of Compliance RFS – Cost of Compliance • Refiners need to comply with Renewable Volume Obligation (RVO) or purchase Renewable ID No. (RIN). Price of RINs has increased over Industry spends time and independent small refiners cannot pass on increased cost of $150-300B per purchasing RINs to consumers year to produce $5-20B gasoline and diesel • Government has relaxed penalties on small refiners that cannot comply (depending on with RVOs, however that tends to disrupt RIN price balance price of oil) • Currently there aren’t enough E85 fuel dispensers in the country to Combined cost range for industry – satisfy significantly higher production targets this includes cost of compliance, cost of purchasing RINs and cost of • Increase in ethanol use requires increased land allocation and water use that tends to conflict with other crop production opportunities with potentially additional E85 fuel agricultural land availabilities dispensers to supply fuel

Estimated Impact Estimated Impact

Cost of Compliance Negative Neutral Positive Source: https://www.americanactionforum.org/insight/epas-proposed-rfs-targets-still-short-still-expensive/ https://www.card.iastate.edu/products/policy-briefs/display/?n=1191. https://www.actionaidusa.org/wp-content/uploads/2015/03/Mandating-Hunger-The-Impacts-of-Global-Biofuels-Mandates-and-Targets.pdf https://www.realclearenergy.org/articles/2019/04/05/the_unintended_consequences_of_the_renewable_fuel_standard__110422.html Ricardo analysis 148 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) • Appendix – II (Movement 101) • Appendix – III (Summary of research) – Telecommuting – Subsidies, ZEV mandate, Charging network – CAFE standard – Biofuels: Low Carbon Fuel Standard (LCFS) and Renewable Fuel Standard (RFS) – Carbon pricing and Transportation Climate Initiative (TCI) – Low Emission Zone (LEZ) / ICE bans, Congestion pricing and Mobility initiative

149 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Revenue from allowance sales to be invested by TCI signatory regions to support low-carbon transportation initiatives

Transportation Climate Initiative (TCI)

Illustrative Portfolios of Clean Transportation Investments – Outlined in TCI Working Groups’ analysis

Scenario A Scenario B Scenario C

Electric cars, light trucks and 5% 30% 54% vans

Low and zero-emission buses 21% 23% 27% and trucks

35% 18% - Transit expansion and upkeep

Pedestrian and bike safety, 16% 14% 10% ride sharing

7% 8% 8% System efficiency

17% 8% - Indirect / Other

Source: https://www.transportationandclimate.org/sites/default/files/TCI%20Public%20Webinar%20Slides_20191217.pdf ; 150 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Estimated end user incremental fuel cost could range between $2B - $5.6B in 2032 based on TCI cap reduction targets

Transportation Climate Initiative (TCI) – Cost of Compliance TCI – Cost of Compliance • Study ” Draft Memorandum of Understanding & 2019 Cap-and-Invest (avg incremental cost per gallon of gasoline/diesel - $ / gall) Modeling Results” from TCI committee reviewed for analysis. All cost of 1 2 3 compliance impact scenarios provided are from this study

• Fuel suppliers to TCI states would be required to hold allowances to $0.09 per $0.13 per $0.27 per cover emissions from regulated fuels gallon gallon gallon – Currently gasoline and diesel are under consideration in the preliminary MOU document released in 2019 $2B $2.8B $5.6B – Allowances can be acquired though auction or through trade 2032 20% Cap 22% Cap 25% Cap – Allowance costs are assumed to be passed directly to consumers Target reduction reduction reduction in the study Cap reduction target is set against 2022 estimated • TCI impact provided includes New Hampshire. New Hampshire withdrew from TCI in Dec 2019 emissions of 254 MMT CO2 equivalent

Estimated Impact Average total transportation fuel spend, 3 2 1 including gasoline and diesel, in TCI states in Cost of Compliance 2016 was ~$86 Billion Negative Neutral Positive

$X Estimated incremental transportation fuel cost in 2032 for users in TCI regions

Source: https://www.georgetownclimate.org/files/report/GCC_TransportationFuelSystemConsiderations_July2018.pdf ; 151 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 TCI GHG emissions impact may be only be 1% - 6% if TCI analysis reference case assumptions hold true, and limited to max of 19%

Transportation Climate Initiative (TCI) – Low Emissions TCI CO2 Emissions Reduction Target by 2032 • TCI analysis projects ~6% - 19% GHG emissions reduction without TCI mandate 1 2 3 – Implies net impact of only 1% - 6% with TCI in place 20% 22% 25%

• Study ” Draft Memorandum of Understanding & 2019 Cap-and-Invest Modeling Results” also estimates ~$3B - $10B in public health benefits Cap reduction target is set against 2022 estimated from reduced NOX, particulate matter and preventative deaths emissions of 254 MMT CO2 equivalent

TCI states GHG emissions impact (million metric tons CO2) Net impact 260 Reference case with sensitivity analysis estimates ~1% – 6% GHG reduction if reference case 250 GHG reduction of 6% to 19% without TCI projection till 2032 holds true 240 230 Reference Case 220 Estimated Impact 20% reduction 210 22% reduction 1 2 3

Million metric tons CO2 tonsmetric Million 200 25% reduction Low Emissions Negative Neutral Positive 0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033

Source: https://www.transportationandclimate.org/sites/default/files/TCI%20Public%20Webinar%20Slides_20191217.pdf ; https://vtdigger.org/2020/01/01/john-mcclaughry-a-qa-on-tci/ ; 152 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Fuel savings impact may range from ~$1B - $15B in fuel savings depending on net impact of TCI

Transportation Climate Initiative (TCI) – Fuel Economy TCI – Fuel Savings Impact • Study ” Draft Memorandum of Understanding & 2019 Cap-and-Invest (Total potential fuel savings in 2032 - $) Modeling Results” used to estimate fuel savings impact in 2032 in TCI states Consumers in TCI – Range calculated using minimal net GHG emissions impact and max GHG emissions impact states spent ~$86B $1B - $15B in 2016 and are – Both low and high fuel savings impact scenarios provided are 1 2 expected to spend based on this study >$60B in 2032 • TCI impact provided includes New Hampshire. New Hampshire withdrew from TCI in Dec 2019 Total fuel savings range in TCI states in 2032 estimated based on min and max expected TCI impact based on cap reduction targets

Estimated Impact

1 2 Fuel Economy Negative Neutral Positive

Source: https://www.georgetownclimate.org/files/report/GCC_TransportationFuelSystemConsiderations_July2018.pdf ; https://www.transportationandclimate.org/sites/default/files/TCI%20Public%20Webinar%20Slides_20191217.pdf ; 153 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Countries in Europe tax carbon at varying levels of jurisdiction with cost ranging from ~$1 – >$100 per ton

Carbon Taxes in Europe

Finland was the first country in 1990 to introduce carbon tax. Currently 15 Carbon Tax Rates per Ton of CO e, as of 2019 • 2 European countries have implement carbon taxes that range from ~€1 per ton in Ukraine, Poland to > €1 in Sweden

IS SE • Sweden levies the highest carbon tax rate in Europe at €112.09 (U.S. €27.38 €112.08 FI ~$132) per ton of carbon emissions NO €62.0 EE €52.09 €2.0 • Carbon taxes are levied on different types of greenhouse gases such as LV DK €5.0 methane, CO2, etc. Scope of each country’s carbon tax differs, resulting in IE €23.21 varying shares of greenhouse gas emissions covered by the tax €20.0 GB €20.34 PL – Ex: Spain applies carbon tax only on fluorinated gases, taxing only €0.07 UA ~13% of its GHG emissions €0.33 FR – Norway for example abolished most of its exemptions and its carbon €44.6 tax covers 60% of its GHG emissions

PT ES • All member states of the European Union (plus Iceland, Liechtenstein, and €12.74 €15.0 Norway) are part of EU Emissions Trading System (EU ETS), a market created to trade a capped number of greenhouse gas emission allowances – Other European countries (non-EU) that levy carbon tax are also part of EU ETS except Switzerland Carbon Taxes in Europe

Lower Higher

Source: https://taxfoundation.org/carbon-taxes-in-europe-2019/ ; https://www.carbontax.org/where-carbon-is-taxed/ 154 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Carbon Tax Rates, Share of Covered Greenhouse Emissions, and Year of Implementation (as of 2019)

Carbon Taxes in Europe

Carbon Tax Rates, Share of Covered Greenhouse Emissions, and Year of Implementation (as of 2019) Share of Jurisdiction’s Greenhouse Gas Year of Carbon Tax Rate (per ton of CO2e) Emissions Covered Implementation Euros US-Dollars Denmark (DK) €23.21 $27.37 40% 1992 Estonia (EE) €2.00 $2.36 3% 2000 Finland (FI) €62.00 $73.11 36% 1990 France (FR) €44.60 $52.59 35% 2014 Iceland (IS) €27.38 $32.29 29% 2010 Ireland (IE) €20.00 $23.58 49% 2010 Latvia (LV) €5.00 $5.90 15% 2004 Norway (NO) €52.09 $61.42 62% 1991 Poland (PL) €0.07 $0.08 4% 1990 Portugal (PT)* €12.74 $15.02 29% 2015 Slovenia (SI) €17.00 $20.05 24% 1996 Spain (ES) €15.00 $17.69 3% 2014 Sweden (SE) €112.08 $132.17 40% 1991 Switzerland (CH) €83.17 $98.08 33% 2008 Ukraine (UA) €0.33 $0.39 71% 2011 United Kingdom (GB) €20.34 $23.99 32% 2013

Source: https://taxfoundation.org/carbon-taxes-in-europe-2019/ ; 155 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Impact of carbon tax on gasoline price appears moderate, however that on natural gas and coal prices appears significant

Effects of Carbon Tax on Fuel Prices

340 330 Carbon tax of $40/ton, results in: Gasoline 320 Natural Gas 300 Coal 280 $0.40/ 264 50% 264% 260 gallon 240 220 198 Increase in Increase in Increase in 200 gas price natural gas price coal price 180 160 Transportation accounts for ~50% of GHG 140 132 emissions in US, so even if price impact on gas is 120 % Price Change Unit per % Price marginal, the significant impact on energy cost 100 creates headwinds for carbon pricing adoption 80 66 62 60 50 37 Estimated Impact 40 25 18 22 20 12 13 Cost of Compliance 4 9 Negative Neutral Positive 0 10 20 30 40 50 $USD / metric ton CO2 Source: https://www.forbes.com/sites/rogerpielke/2019/09/13/the-case-for-a-goldilocks-carbon-tax/#8b845d2f02ad; https://www.resourcesmag.org/common-resources/calculating-various-fuel-prices-under-a-carbon-tax/ 156 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 2020 marked with Asia/Pacific region leading GHG emissions coverage through carbon pricing initiatives

Carbon Pricing Initiatives and GHG Emissions Coverage

Global Initiatives GHG Emissions Coverage 25%

20%

15%

10%

5%

0%

1990 1995 2000 2005 2010 2015 2020 Annual Annual GHG Emissions Covered Highlighted areas include all regional, national, sub-national Years of Implementation locations where carbon pricing initiatives (carbon tax or emissions trading system) have been implemented, scheduled, Africa Asia/Pacific Europe N. America S. America or are under consideration through 2019

• Europe has historically lead the charge in terms of number of initiatives and early-on emissions coverage • Asia/Pacific region has caught up in the last five years overtaking Europe in covering emissions with carbon pricing initiatives

Source: The World Bank, https://carbonpricingdashboard.worldbank.org/map_data 157 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Europe leads in both the steepest carbon tax pricing as well as revenue generation through taxation

Carbon Tax Prices and Revenues – Top Five

130 Carbon Price (2019) 16,000 Carbon Revenue (2018) 120 110 14,000 100 12,000

90 2 80 10,000 70

$/tonCO 8,000 60

50 SUSD Millions 6,000 40 30 4,000 20 2,000 10 0 0 Sweden Liechtenstein Switzerland Finland Norway California EU France California Sweden Japan

• European countries, particularly in the north have the highest carbon taxes globally • Revenue generation however is expectedly higher on an aggregate level in mostly differing regions due to larger geographies and/or densities

Source: The World Bank, https://carbonpricingdashboard.worldbank.org/map_data 158 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Carbon revenue use varies globally with a notable amount being spent on environmental and climate related projects

Global Carbon Revenue Usage Study summary Additional Studies reviewed

2016 Energy Policy Study “Tracking global carbon revenues: A survey of carbon taxes versus cap-and-trade in In 2014, ~27% of the carbon the real world” assesses carbon pricing systems across 40 countries and 16 regions for the year 2013 - 2014 revenues collected globally – ~$28B collected by governments as “carbon revenues” each year in 56 countries and regions with totaling $28B were used to “cap-and-trade” contributing ~23% and “carbon tax” contributing remaining 77% of the revenues

subsidize spending in – ~ 27% of total carbon revenues (~$7.8B) is used to subsidize “green spending” i.e. energy efficiency Study 1 Study energy efficiency or and renewable energy initiatives. Rest are used for by regions for tax cuts, rebates etc. renewable energy – ~60% of green spending revenues are from cap-and-trade system i.e. ~70% of cap-and-trade revenues go towards green spending. Rest of green spending revenue is from carbon tax system

2019 World Bank Study “ Using Carbon Revenues” assesses global carbon revenues for the year 2017-2018 In 2018, ~42% ($18.5B) of covering 46 national and 28 sub-national jurisdictions global carbon revenues – Study estimates carbon revenues from carbon pricing increased from $22B in 2016 to $44B in 2018 totaling $44B were used on with global GHG emissions covered increased from 13% in 2016 to 20% in 2018 environmental projects. – Also estimates that in 2018 ~42% (~$18.5B) of carbon revenues were allocated for environmental

Study 2 Study Driven mainly by EU projects with remaining allocated towards general budget, tax-rebates, development and direct transfers. For example, California assigns all revenues from its ETS for climate-oriented projects contribution of ~$13B of the – Majority of the $18.5B driven by EU. EU ETS allocates ~80% of its carbon revenues totaling ~$16B ~18.5B towards environmental projects

Source: https://www.sciencedirect.com/science/article/pii/S0301421516302531; https://www.oecd-ilibrary.org/taxation/the-use-of-revenues-from-carbon-pricing_3cb265e4-en; 159 https://openknowledge.worldbank.org/bitstream/handle/10986/32247/UsingCarbonRevenues.pdf?sequence=7 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contents

• Executive summary • Project report • Appendix – I (Project report addendum) • Appendix – II (Movement 101) • Appendix – III (Summary of research) – Telecommuting – Subsidies, ZEV mandate, Charging network – CAFE standard – Biofuels: Low Carbon Fuel Standard (LCFS) and Renewable Fuel Standard (RFS) – Carbon pricing and Transportation Climate Initiative (TCI) – Low Emission Zone (LEZ) / ICE bans, Congestion pricing and Mobility initiative

160 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 First enacted in 1992, EU emission controls set limits for air polluting nitrogen oxides (NOx) and particulate matter (PM) from engines Low Emission Zone (LEZ), Vehicle use type restrictions / ICE bans

Euro Emissions Standard Average vehicle registration age that meet the standards

Euro 1 Most New Registrations Beginning on December 31, 1992

Euro 2 Most New Registrations Beginning on January 1, 1997

Euro 3 Most New Registrations Beginning on January 1, 2001

Euro 4 Most New Registrations Beginning on January 1, 2006

Euro 5 Most New Registrations Beginning on January 1, 2011

Euro 6 Most New Registrations Beginning on September 1, 2015

Source: https://urbanaccessregulations.eu/userhome/map ; 161 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Diesel vehicles not meeting Euro 4 are not allowed in majority LEZs , whereas less stringent for gasoline vehicles (meeting Euro 1 allowed)

Low Emission Zone (LEZ), Vehicle use type restrictions / ICE bans

Cities with Low Emission Zones in Europe • London Ultra Low Emission Zone (ULEZ) rolled out in 2019 impacts both Light Duty Vehicles (LDV) and Heavy Duty Vehicles (HDV). Following standards have to be met to enter the ULEZ: – Euro 4 (NOx) for gasoline LDVs – Euro 6 (NOx and PM) for diesel LDVs – Euro VI (NOx and PM) for trucks, buses and coaches and other specialist heavy vehicles (NOx and PM)

• First enacted in 2008 by Berlin, as of date 47 cities in Germany operate an LEZ applicable to all LDVs. As of 2020, in most cities gasoline vehicles meeting Euro 1 and diesel vehicles meeting Euro 4 are allowed into LEZs

• Brussels in Belgium enacted an LEZ in 2018 where access standards are set till 2025 and are incremental in nature: – In 2018, diesel vehicles of Euro1 and earlier were not allowed access – In 2020, Euro 3 or earlier diesel LDVs and Euro 1 gasoline LDVs are denied access – In 2025, Euro 5 or earlier diesel LDVs ad Euro 2 or earlier gasoline LDVs are not allowed

Source: https://urbanaccessregulations.eu/userhome/map ; https://tfl.gov.uk/modes/driving/ultra-low-emission-zone/ways-to-meet-the-standard ; 162 https://environnement.brussels/sites/default/files/be_lez_depliant7volets_1485x210mm_en_ok_web.pdf Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020

LEZ implementation results in ~5% - 10% reduction in NOX and PM emissions based on stringency, exemptions and enforcement

Low Emission Zone (LEZ), Vehicle use type restrictions / ICE bans Study summary Studies reviewed - Europe

Study “Impact of the implementation of Lisbon low emission zone on air quality” assessing impact of Lisbon – implemented for Low Emission Zone (LEZ) in Lisbon from 2009 - 2016 found significant improvements in NO2 & PM10 both pass car & CV, >20% – 22% reduction in NO and 25% reduction in PM between 2009 - 2016 reduction in NO and PM 2 10 Study 1 Study 2 10 – Only Zone 2 considered where only EURO 2 or higher vehicles are allowed. Zone 1 is smaller between 2009-2016 in LEZ and only EURO 3 or higher vehicles are allowed

Study “Impacts of low emission zones in Germany on air pollution levels” assessing impact of LEZs in urban centers in Germany from 2002 - 2012 found that within LEZ areas the following Germany – avg reduction of 17% PM and 7% NO – ~17% reduction in PM10 concentrations and ~7% reduction in NOX concentration. NOX reduced 10 X from ~125 µg/m3 to ~115 µg/m3 Study 2 Study concentration in LEZ region – Study also does not see possibility for further reduction unless stringency is increased as vehicles qualified to operate in LEZs reached ~90%, with other vehicle meeting exception rules

Brussels: 6.4% reduction in Bruxelles Environnement, 2019 fact sheet

PM2.5 and 4.7% reduction in – Brussels implemented a progressive LEZ in 2018 covering all light duty vehicles NO from LDV between 2018 - Study 3 Study X – In 2018 - 2019, vehicles with Euro 2 or lower were banned from entering LEZ 2019 from its LEZ

Source: https://www.sciencedirect.com/science/article/pii/S0304389418310902 ; https://www.sciencedirect.com/science/article/pii/S2352146517305185 ; https://www.transportenvironment.org/publications/low-emission-zones-are- 163 success-%E2%80%93-they-must-now-move-zero-emission-mobility ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Congestion pricing in New York (limited to Central Business District) is expected to cost pass car commuters $6 - $12 per day

Congestion Pricing – Cost of compliance Congestion Pricing Costs in NYC • 2019 study by Regional Plan Association (RPA) “Congestion pricing in New York: Getting it right” provided recommendation on ~$1B 1 ~$1.5B 2 implementation of congestion pricing in New York’s Central Business $6 - $9 per District (CBD) passenger car Up to $11.5 for – Recommended that pricing range from $6 - $9 during day and $3 and 2.5X for passenger car during night for passenger vehicles, estimated to generate revenue commercial per day and of ~$1B - $1.1B vehicles ~$25 for CVs – Pricing for commercial vehicles expected to be 2.5X of passenger vehicles Fix NYC Advisory RPA study – VMT reduction in congestion zone is ~3.8% panel study

• Fix NYC Advisory Panel, Government panel appointed by NY Gov, in ~400,000 vehicles enter New York’s Central its report recommended following Business District every 24 hours – Commercial vehicles would pay $25.34 – For-hire cars would likely only pay $2 to $5 Estimated Impact – Personal vehicles would have to pay up to $11.52 2 1 Cost of Compliance Negative Neutral Positive

$X Estimated annual revenue to city from congestion pricing Source: https://nyc.streetsblog.org/2018/01/12/congestion-pricing-will-help-stop-climate-change-but-differently-than-you-think/ ; https://archpaper.com/2018/01/governor-cuomo-transportation-panel-report ; https://gothamist.com/news/heres-what-you-need-to-know-about-congestion-pricing/ ; 164 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Congestion pricing in NYC estimated to reduce GHG emissions by ~1M tonnes i.e. ~6 - 7% of total transportation emissions in NYC

Congestion Pricing – Low Emissions Congestion Pricing GHG Emissions impact in NYC • 2019 study by Regional Plan Association (RPA) “Congestion pricing in New York: Getting it right” provided recommendation on implementation of congestion pricing in New York’s Central Business Both RPA and Fix District (CBD) ~1M tonnes of NYC studies CO reduction – Co2 emissions reduction is ~7% in congestion zone 2 estimate similar from congestion amount of emission • Congestion pricing estimated to eliminate ~1M tonnes of GHG pricing emissions (tailpipe) reduction – NYC total emissions in 2017 stood at 50M metric tonnes CO2 equivalent with 15M metric tonnes CO2 equivalent from road transportation Total transportation related emissions in New York City in 2017 was ~15 MMT of CO2.Total GHG NYC Carbon Emissions in 2017, emissions was 50 MMT of CO2 million metric tonnes CO2 4% Estimated Impact 30% 50 Stationary Energy

MMT CO2 Transportation 66% Low Emissions Waste Negative Neutral Positive

Source: https://nyc.streetsblog.org/2018/01/12/congestion-pricing-will-help-stop-climate-change-but-differently-than-you-think/ ; https://nyc-ghg-inventory.cusp.nyu.edu/ ; 165 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 London congestion pricing scheme estimated to have reduced vehicle volume by ~35% compared to year 2000 level

Congestion Pricing – London

London Congestion Zone • Prior to 2003 all-day average speeds in Central London averaged ~8.6 mph with 1/3rd of time spent at complete standstill

• London Congestion Charge (LCC) was implemented covering 21 square km in London in 2003 with a daily flat charge of £5. The charge was increased to £11.50 in 2014

• Based on 2011 estimate, LCC estimated to reduce 30,000 tonnes CO2 annually

• Charging zone residents receive a 90 percent discount while certain vehicles are exempt, such as buses, taxis including private for hire (Uber) and electric vehicles and certain drivers, such as the disabled

Trend in cars crossing London Congestion Zone, Because of congestion charge ~35% fewer cars crossing 2000-2017 the congestion zone in 2017 compared with 2000 100 However, in between 2016 - 2017 bus ridership, after 50 Cars crossing Central London years of growth, decreased by 6% due to increased congestion. Caused by ~30% increase in private-for-hire

0 (PFH) vehicles between 2000 – 2016 which are exempt 2000 2000 as considered 100 Volume of cars in year of cars year inVolume 2000 2003 2006 2009 2012 2015 2017 from LCC

Source: http://content.tfl.gov.uk/travel-in-london-report-11.pdf ; https://www.citymetric.com/transport/london-congestion-charge-has-been-huge-success-it-s-time-change-it-3751 ; https://www.london.gov.uk/sites/default/files/bus_network_report_final.pdf ; https://www.citymetric.com/transport/london-congestion-charge-has-been-huge-success-it-s-time-change-it-3751 ; https://www.c40.org/case_studies/londons-congestion-charge-cuts-co2-emissions-by-16 ; 166 Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Near term, consumers use mobility services in conjunction with private and public transport. Reduced vehicle ownership 2030+

Mobility initiatives – Shared, Connected and Autonomous vehicles

• Impact on fuel consumption and emissions are highly uncertain and could be either positive or negative from shared and autonomous mobility uptick • Demographic shift and investment in public transit are other factors that impact vehicle demand • Ride hailing services are ~1.5 – 4X more expensive than owning a private vehicle, breaking even in costs with car ownership at ~2,000 VMT on an annual basis. Ride hailing services account for ~2% of U.S. VMT • Carsharing programs from OEMs such as Car2Go / Share Now from Daimler and BMW, Chariot from Ford, and Maven from GM scaled back in operations from market volatility and rising infrastructure costs. Zip car stated a fleet of ~12,000 vehicles across U.S. in its 2018 report

Source: Source: Ricardo analysis ; https://www.theverge.com/2019/12/18/21028517/sharenow-car2go-leaving-north-america-bmw-daimler-cities-date ; https://www.zipcar.com/impact ; https://www.caranddriver.com/news/a32235218/gm- 167 maven-car-sharing-closes/ ; https://www.bain.com/insights/a-triple-threat-to-automakers-recession-demographics-and-disruption/ ; Impact of Transportation - Related Environmental Initiatives Project # C021273, 22 May 2020 Contact details

Ricardo Inc. Ricardo Inc. Detroit Technology Campus, 40000 Ricardo Drive Detroit Technology Campus, 40000 Ricardo Drive Van Buren Twp., Michigan 48111 USA Van Buren Twp., Michigan 48111 USA

Mark Kuhn Mithilesh Mayreddy Vice President – Ricardo Strategic Consulting Consultant – Ricardo Strategic Consulting Mobile +1.248.819.5744 Mobile +1.734.664.4695

[email protected] [email protected]

www.ricardo.com www.ricardo.com

Ricardo Inc. Ricardo Inc. Detroit Technology Campus, 40000 Ricardo Drive Detroit Technology Campus, 40000 Ricardo Drive Van Buren Twp., Michigan 48111 USA Van Buren Twp., Michigan 48111 USA

Ruth Latham Aneesh Padalkar Senior Manager – Ricardo Strategic Consulting Principal – Ricardo Strategic Consulting Mobile +1. 734.834.8395 Mobile +1. 734.394.4189

[email protected] [email protected]

www.ricardo.com www.ricardo.com

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