An open letter to America‚Äôs Governors
 

   I have always been for an all-the-above approach to this nation’s energy policy, but that doesn’t mean we need to jam a square peg in a round hole. Solar, wind, electric and natural gas all have their place, but it must be in accordance with an appropriate application. President Obama tried to grease that square peg into a round hole, choosing energy favorites with a hefty $2.7 billion, supplied by Volkswagen. Now, there is an opportunity for the states to correct that mistake and implement a more effective energy plan.

   As you likely know, Volkswagen was caught cheating on its emissions tests, resulting in vehicles on the road that far exceed federal NOx emissions standards. The German car manufacturer was sued by the Obama EPA and settled for $16 billion with $2.7 billion going to the states, primarily for the creation of medium and heavy-duty vehicle grants to mitigate the NOx.

   Each state will receive an allotment of the $2.7 billion, and the governor of each state must appoint a department to create a plan for spending the funds that follows the terms of the settlement. However, favoritism is standing in the way of a cost-effective, energy-efficient, market-driven plan.

   While all alternative fuel types are eligible for grants of 25 percent of the vehicle cost, guess which technology was granted special treatment to receive 75 percent of the vehicle cost? You guessed it: electric vehicles (EVs). Some argue that they are cleaner because they have zero emissions. Well, they have zero tailpipe emissions, but plenty emissions are produced at the generation facility that creates the electricity. Keep in mind that many are still fired by coal and very few are utilizing even a small amount of solar or wind. In fact, when you look at the NOx emissions produced to create the electricity to power an EV compared to the tailpipe emissions of a near-zero natural gas vehicle (NGV), the NGV is at least equal and likely cleaner. For example, the South Coast Air Quality Management District of California views the new near-zero natural gas engines to be zero-emission equivalent based on the district’s mix of electric generation supplying their grid – and they have one of the cleanest grids in the country. So, natural gas engines for heavy-duty trucks are far cleaner than diesel engines and as clean as electric vehicles.

   While comparable in regard to NOx emissions, NGVs and EVs are miles apart on cost. An all-electric medium or heavy-duty vehicle can cost twice the amount or more of a similar vehicle powered by a near-zero natural gas engine. As for buses, an EV bus can cost you north of a million dollars.

   So you can see, there is no environmental or economic case for favoritism of EVs over other alternative fuel vehicles. In fact, there should be no favoritism at all. I have always been for fair and equitable market competition – government should not reach in and pick the winners and losers. If the idea is to mitigate the most NOx emissions with a set amount of funds, states should be free to accomplish that goal in the most effective way. Now, it’s becoming clearer that the focus should be on getting medium and heavy-duty trucks running on natural gas.

   That’s where America’s governors come in. The 75 percent funding level for EVs is a ceiling. Governors can correct Obama’s multi-billion dollar give-away to the EV lobbyists by creating an even playing field for all alternative fuels, by providing grants in the amount of 25 percent of the vehicle cost regardless of whether it runs on propane, natural gas or electricity. Furthermore, providing the lower 25 percent will mean more vehicles get funded and thus more emissions reduced.

   So the question presents itself: Will you, governors, continue the Obama give-away or will you put in place a market-driven plan to deploy cleaner and cheaper vehicles on the road?

   The choice is easy. It’s up to each of you to do what’s right for our nation.

 

By T. Boone Pickens, Chairman and CEO of BP Capital, a hedge fund that trades in energy equities and commodities.

Pickens Plan

September 13, 2017