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Will the outcome of the Volkswagen Dieselgate settlement be more investments in diesel?
Posted on July 21, 2019 by Charles Morris
As everyone who follows politics knows, when something is causing a problem, the solution to the problem is much more of that something. As part of Volkswagen’s punishment for getting caught cheating on emissions tests, it has made $3 billion in grants available for individual US states. The money is theoretically supposed to be used to reduce nitrogen oxide pollution from diesel engines, but state governments have broad discretion as to how to spend the money. As Michael J. Coren writes in Quartz, some states are using the money to buy more diesel engines.
Above: Volkswagen continues to pay a price for Dieselgate (Flickr: Sean Davis)
The states have eight years to decide how to invest their windfalls, and so far, 22 states have published spending plans, totaling around $258 million, according to Nick Nigro, founder of Atlas Public Policy, a firm that aggregates publicly available information about the transportation industry. Atlas reports that about 42% of the state Dieselgate investment announced so far has been directed to diesel, natural gas, and propane infrastructure.
Some states apparently hope to mitigate diesel pollution by buying newer (and yes, slightly cleaner) diesel engines. Missouri plans to spend over $3.5 million on diesel school buses, trucks and other vehicles. New Mexico is also investing in diesel and natural gas vehicles, and Arizona has earmarked $27.8 million for diesel projects.
The news isn’t all bad, however. A few states have chosen to invest their settlement funds in electrification. New Jersey and Virginia have each announced plans to invest $25 million in electric garbage trucks, school buses, and airport vehicles, as well as in EV charging stations.
The settlement funds have also provided an impetus for states to establish charging infrastructure programs. Coren points out that, before the VW settlement, few US states had their own programs for funding EV charging. Now almost all of them do.
Three billion may sound like a lot, but it’s small potatoes in terms of the investment that will be required for the transition to electric transportation. From a global perspective, the US is a laggard (and is likely to fall farther behind now that federal fuel emissions standards have been more or less scrapped). Atlas is tracking some $350 billion in private electrification investment, and only 10% of that is destined for the US. Other sources confirm that the US is sitting on the sidelines: in January, Reuters reported that global automakers were planning investments of $300 billion in electrification projects - only $34 billion of that will be spent in the US.