FOR ALL THE moves backing up its newfound enthusiasm for an electric future—70 new battery-powered models by 2028, a $1 billion investment in its own battery plant, a national network of high-power charging stations—Volkswagen may make no bigger contribution to that vision than the $15 billion it paid to settle the Dieselgate scandal in the US. Most of the money went to repurchase cars from deceived customers and to promote electric cars in general. But nearly one-fifth was meant to help state governments jumpstart the shift away from driving on dirty diesel.
So it’s just a bit distressing that, for the most part, the officials charged with spending that money don’t seem especially intent on putting it toward a cleaner future. Many, in fact, are using it to buy new diesel vehicles. Just a handful of states have laid out plans that ensure their VW moolah will exclusively power electric vehicles.
That’s the takeaway from a newly released report by the US Public Interest Research Group, whose authors went over the high-level plans each state had to submit before collecting its check. It’s a wasted opportunity to use the cash to move toward zero-emission vehicle fleets and improve the health of people and the planet, says Matt Casale, who wrote the report with Brendan Mahoney.
The money in question comes from a $2.9 billion Environmental Mitigation Trust that VW funded as part of the 2016 settlement, which it signed with the Environmental Protection Agency and Federal Trade Commission. The deal settled allegations that VW cheated emissions tests and deceived customers with its “Clean Diesel” advertising campaign. The money is distributed based on how many offending cars were registered in each state (plus Washington, DC, and Puerto Rico). California received more than $422 million; each state got at least $8.125 million.
The attached strings required states to spend the funds on relatively clean vehicles for public fleets, including electrics, cleaner diesels, and natural gas burners. Those vehicles can’t be passenger cars, so things like police cars are out. States can’t spend more than 15 percent of the pot on EV charging infrastructure. The plans didn’t have to detail precisely how states would spend the money; most outline funds and grants that government agencies can use to offset the costs of new vehicles.
When the settlement was finalized, US PIRG recommended that states spend 15 percent on their windfalls on infrastructure, and put the remainder into fully electric buses to replace vehicles that are commonly diesel-powered and tend to travel in densely populated areas, around children. The Sierra Club and Natural Resources Defense Council made similar recommendations.
Once each state (except Florida, the slacker) had filed its plan, US PIRG graded them using a rubric based on the perhaps impractical notion that using this money to do anything but support the use of zero-emissions vehicles should count as a failure. It rewarded plans that restrict spending to electric vehicles (especially buses) and infrastructure. It punished those that allow the use of the funds for new diesels. Even new diesel systems that are far cleaner that what’s on the road today (and what VW was selling) get little credit here. The fuel’s exhaust, even when emitted below regulatory limits, is a carcinogen that’s especially harmful to kids and tends to affect low-income communities particularly. “The longer we have these vehicles on our roads that are emitting this exhaust,” Casale says, “the less healthy we’ll be.”
USPIRG’s grading system is harsh—four out of eight points converts to a D—and so the grades are grim. Just four states scored an A+ or A. Twenty-one, plus Washington, DC, got a D. Fourteen, plus Puerto Rico, got an F. Every state other than Hawaii, Washington, and Rhode Island will let local governments and departments use the money to buy diesel vehicles, if they want to. Arizona (which received an F) is buying 330 new diesel-powered school buses. New Jersey (C) allows local governments to have the cost of a diesel vehicle fully reimbursed. Wisconsin (F) does nothing to encourage the purchase of electric vehicles. So their local officials and transit agencies have no financial reason to go with a battery over an internal combustion engine. But some choose to, anyway. In Wisconsin, cities including Racine are dipping into the fund to purchase new battery-powered buses.
The states allowing for diesel, Casele says, are thinking short-term, to their disadvantage. He notes that Arizona’s new diesel buses run $111,000 a pop. A new electric bus costs more than twice that, so diesel appears to be a logical choice, especially if it’s cleaner than what’s on the road now. But Casale and USPIRG note that electric vehicles are cheaper to operate than gas and diesel vehicles (cheaper fuel, less maintenance), and can drastically reduce public health costs stemming from increased rates of asthma and other respiratory problems. Meaning, they can cost less in the long term.
This would not be the first time short-term thinking has led states away from using a windfall the way advocates hoped they would. Every year, the 46 states that signed the 1998 accord settling lawsuits against the tobacco industry receive a share of $9 billion. At the time, it seemed like a “no-brainer” that states would use the money to fund lavish anti-smoking education efforts, says John Schachter, director of state communications for the Campaign for Tobacco-Free Kids. But there are no restrictions on how the money can be used, and most of it—especially since the financial downturn a decade ago—has gone into states’ general funds, to be used for all sorts of things. Meanwhile, the states collectively spend just 20 percent of what the Centers for Disease Control recommends on those education efforts. Rising concerns around youth e-cigarette use, though, could provide what Schachter calls “an unfortunate boost to our campaign.”