California lawmakers devoted a record $2.7 billion toward zero-emission vehicle programs in FY 2021-2022 and $1.2 billion over the next two fiscal years in their session that ended Sept. 10, accelerating the state toward its goals for decarbonizing the transportation sector.

The funding for zero-emission trucks, buses and passenger vehicles was far more than the $1.5 billion that Gov. Gavin Newsom proposed in January. (See Calif. Governor Proposes $1.5 Billion for ZEVs.)

“This is definitely a historic amount for California,” said Miles Muller, an attorney with the Natural Resources Defense Council. “It sets an example for other states and the federal government by saying that if we’re serious about the climate crisis and getting people into electric vehicles, California is dedicating the money to help realize that future.”

The budget plan passed this summer allocated $2 billion for medium- and heavy-duty ZEV incentives and infrastructure, including $1.3 billion over the next three years to deploy 1,000 zero-emission school buses, 1,000 zero-emission transit buses and 1,000 zero-emission drayage trucks.

The state budget includes funding for electric school buses. | Lion Electric

It also included $1.2 billion to promote consumer adoption of zero-emission passenger vehicles.

Programs that promote ZEV ownership among lower-income residents, including incentives under the state’s Clean Cars 4 All program, received $400 million over three years in the budget plan.

The state’s Clean Vehicle Rebate Project (CVRP), which offers rebates of up to $7,000 for the purchase or lease of new ZEVs, was awarded $525 million over three years. The program ran out of money earlier this year, resulting in a long waitlist for rebates.

CVRP funding wasn’t included in Newsom’s January budget proposal, which upset some lawmakers. (See Newsom’s $1.5B ZEV Plan Takes Flak from Democrats.)

Assembly Budget Committee Chairman Phil Ting said in a March hearing that CVRP had put hundreds of thousands of Californians into hybrid and EVs over the past decade and remains the best hope for wide-scale adoption. The 2021-2022 budget fixed the omission by providing $175 million in upfront funding for each of the next three years.

The plan approved in mid-July also put $407 million toward for zero-emission public-transit bus and rail equipment.

“These investments will prioritize projects that directly benefit priority populations and improve air quality in low-income and disadvantaged communities,” a summary of the climate-change portion of the budget said.

Newsom’s January plan proposed funding ZEV programs by securitizing revenues from vehicle registration fees. Lawmakers pushed back against that proposal as the state projected up to $75 billion in surplus revenues this year.

The vast sums in the budget could help the state fulfill former Gov. Jerry Brown’s 2018 target of putting 5 million ZEVs on the road by 2030 and Newsom’s executive order in September 2020 banning sales of new gas-powered passenger vehicles by 2035. The state remains far behind on both goals. (See Can California Meet Its EV Mandates?)

The investments are also being pitched as a spur to the economy. The state is home to 34 ZEV-related manufacturers, including Tesla, and ZEVs became the state’s No. 1 export in 2020, the budget summary said.

“California is committed to develop the zero-emission vehicle market equitably, not only as a foundation tool to protect public health and combat climate change, but as an engine of economic development and job creation,” it said.