Two years ago this month, Congress passed the historic Infrastructure Investment and Jobs Act (IIJA). Transportation electrification was one of the priorities in the legislation—electric vehicles and related infrastructure were eligible for $30.7 billion of the funding. We broke down the electric vehicle programs in a previous blog.
A combination of formula and competitive funding aimed to propel federal, state, and local transportation agencies to implement the transportation electrification provisions of the law. Two years in, the agencies have made significant progress on many of those programs.
IIJA programs for electric vehicle charging infrastructure deployment
All 50 states, the District of Columbia, and Puerto Rico developed detailed transportation electrification plans for the $5 billion National Electric Vehicle Infrastructure program. The Joint Office of Energy and Transportation approved these plans in September 2022, allowing states to use the $1.5 billion funding for fiscal years 2022 and 2023.
Pennsylvania, New Mexico, and other states announced the first-round awards for funding in October 2023. Ohio was the first in the nation to break ground on an electric vehicle charging station funded by the program.
The US Department of Transportation received applications nationwide for the Charging and Fueling Infrastructure Grant Program in June 2023. The competitive $2.5 billion program aims to deploy tens of thousands of electric vehicle charging stations throughout the US in urban and rural communities in addition to the designated alternative fuel corridors, where the program will complement the National Electric Vehicle Infrastructure program. The agency is expected to announce the awardees by the end of the year or in January 2024.
IIJA programs for government fleet vehicles
IIJA also included the Buses and Bus Facilities and Low- or No-Emission (Low-No) Vehicle grant programs that provide funding for transit agencies and state and local governments to modernize facilities and purchase new, lower- or zero-emission vehicles. The US Department of Transportation awarded $3.3 billion in grants to transit projects in 46 states and territories as part of these programs in the past two years. Government officials expect to award an additional $5 billion by 2027. The Federal Transit Administration estimates that fiscal year 2023 funding alone invests in more than 1,700 buses that will be manufactured domestically.
IIJA program for ports
The US Department of Transportation’s Federal Highway Administration opened applications for the first round of the $400 million Reduction of Truck Emissions at Port Facilities grant program. The first round will distribute $160 million to awardees. The program aims to reduce port-related emissions from idling trucks, including through port electrification and improving the efficiency of port operations.
IIJA programs for school buses
The IIJA also created a $5 billion Clean School Bus (CSB) Program to facilitate the replacement of existing school buses with low- and zero-emission models. The US Environmental Protection Agency awarded $965 million to finance 2,600 school bus replacements at nearly 400 educational institutions as part of its initial funding opportunity in 2022.
The agency intends to distribute another $900 million during fiscal year 2024 as part of the 2023 CSB Grants Program Notice of Funding Opportunity and the 2023 CSB rebates program.
Other IIJA programs
The broad categories of programs created and funded by IIJA include other initiatives that indirectly support transportation electrification. Agencies have used billions of dollars in grant funding from programs like the Carbon Reduction Program, RAISE Discretionary Grants, and the Port Infrastructure Development Program to build infrastructure that can support transportation electrification initiatives.
IIJA also aimed to boost domestic manufacturing capabilities for clean energy technologies. The legislation created new US Department of Energy grant programs for battery processing, manufacturing, and recycling, totaling $6 billion. The agency awarded $2.8 billion in grants in October 2022 to support manufacturing and processing companies in at least 12 states to extract and process more lithium, graphite, nickel, and other battery materials. On August 31, 2023, the US Department of Energy issued a Notice of Intent to invest $3.5 billion in the production of advanced batteries and battery materials as part of the second round of the grant programs.
The law also expanded the Advanced Technology Vehicles Manufacturing Program to include medium- and heavy-duty vehicles and off-road vehicles, including maritime technology, opening $17.7 billion in financing for these vehicles.
Manufacturing investments and job creation from the IIJA
As IIJA programs supporting clean technology manufacturing were introduced, the US saw a spike in investment announcements from manufacturers of electric vehicles, components, batteries, and recyclers.
According to a report by the Environmental Defense Fund, manufacturers have announced $132.5 billion in electric vehicle-related investments since IIJA was passed in November of 2021. The report states that these announcements translate into 129,300 new jobs nationwide.
Conclusion
The IIJA presents a once-in-a-generation opportunity for the US to transition to a clean energy economy. The multi-billion dollar programs are a monumental endeavor for federal and state agencies.
States must formulate comprehensive strategies to ensure that the IIJA-funded charging stations are convenient, dependable, and optimally situated to maximize the impact of federal funding. This undertaking must also address equity-related challenges and the potential strain on the electric grid. The success of this endeavor hinges on collaborative efforts involving local, state, and federal government authorities, utilities, private sector stakeholders, community-based organizations, and the general public.
The federal investments in the clean economy are only a first step toward the transition. The private sector must continue to actively participate in this transition if we are to meet our national climate goals. According to Atlas Public Policy, over $87 billion in investments in charging infrastructure will be required over the next decade to support 100 percent of passenger electric vehicle sales by 2035.
Additionally, the critical minerals needed for producing electric vehicles and related components are mostly mined and processed outside the US. The federal tax rebates for electric vehicles introduced under the subsequent Inflation Reduction Act come with strict critical mineral requirements which require that an applicable percentage of the value of the critical minerals contained in the battery must be extracted, processed, or recycled in the United States or a country with which the United States has a free trade agreement.
Through the multi-billion dollar investments in electric vehicle supply chains, the federal government is betting on jumpstarting an electric vehicle and components industry in the US just as vehicle demand takes off. If executed properly, the robust federal investments and incentives can poise the US for sustained investment growth, job creation, and production capacity as electric vehicle and battery manufacturers declare ambitious goals to transition to electric vehicle production.
Stay tuned for our transportation electrification progress update on the Inflation Reduction Act!
