WATER and WHEELS

You can lead a horse to water, but a pencil must be lead. ~ Stan Laurel 

There’s now next to no water available in much of the western US, especially California. Little water is sluicing down rivers to help salmon spawn and produce dams’ clean hydroelectricity, or sloshing along irrigation canals that create a bounty of produce, or providing liquid sustenance to millions of parched customers throughout the region. We again face a serious lack of water.

The supply of electric vehicles (EVs) has shrunk because of supply-side snafus. More folks are thinking of purchasing an EV, largely due to huge increases in gasoline prices – in Berkeley, gas prices well above $6/gal. are common. But far more substantial EV purchases are needed, along with greater numbers of public charging stations.

Thus, water and EV wheels each have problematic challenges at this point. Water wheels are barely turning despite politicians’ grandiose pledges.

 

Let’s first look at water before shifting to wheels.  California’s 39 million inhabitants depend on sufficient, clean water for their daily livelihoods, just like everyone does no matter where they live. But as Marc Reisner presciently stated 36 years ago in his landmark Cadillac Desert, much of California is a semidesert. Climatologists have shown that periodic droughts in California and the West are a long-time, recurring feature. Residents of the Golden State (perhaps better labelled now the burnt brown state) are in the midst of a multi-year regional drought that may be the worst in 1200 years. Other notable droughts include the 5-year event in 2012-2016, as well as in 2007-09, 1987-92 and 1976-77. “Dust bowl” dry conditions have periodically harmed Californians, just like they did for more than a decade in the 1920s and 1930s for folks in Oklahoma. Despite all these droughts and history, we haven’t yet fully understood that fresh water in the Western US is a finite resource that’s traditionally been priced way below its value, especially for non-residential customers.

The bulk of the state’s precipitation falls in the Sierra Nevada as winter snow and rain hundreds of miles from the nearest population centers. Seventy-five percent (75%) of California’s supply of water is in the northern third of the state roughly north of Sacramento, but 80% of urban and agricultural (ag) demands are in the southern two-thirds of the state.

Because of this geographic misalignment of water supply and demand, during the past 90 years the federal government and the state of California have constructed a huge system of water infrastructure including dams and aqueducts/canals to bring water from distant mountains and rivers to farm acreage and masses of urban end-users, businesses and individuals like you and me.

How is our state’s precious water used? Nine million acres of California farmland is irrigated, which represents about 77% of the state’s total end-user water demand. Agriculture is by far the single largest user of California water. In the proverbial average year, agriculture uses 4x as much water as urban end-users.

The abundance of California’s ag production is the most valuable of any state, everything from artichokes and almonds to garlic and walnuts. However, our enormous ag harvests paradoxically account only for a slender 1.5% of California’s gross state product. A gallon of water doesn’t offer much fiscal bang per bushel of California produce.

Unlike most previous droughts, both state and federal water authorities – the California State Water Board and the Bureau of Reclamation, respectively – already have significantly curtailed their water allocations to ag and other end-users. In March, the State Water Board slashed its water allocation from the State Water Project (SWP) to just 5% of normal for the SWP’s ag and urban customers.

In April, the federal California Water Project cut its water allocation to irrigation contractors to 0% of normal. For the second consecutive year ag irrigators supplied by the CWP will receive no federal water. Farmers will need to turn to groundwater or storage, if they have it, or else forgo planting and production entirely. The Central Valley’s land subsidence will intensify. If this drought continues as expected, California growers and our land will suffer greatly, and the prices of their food products will swell.

The East Bay Municipal Utility District (EBMUD) supplies our home’s water, along with another 1.4 million customers. Last month, EBMUD reported its Mokelumne River storage reservoir was 71% full which is less than normal for this time of the water-year, but fortunately much fuller than either the California state or federal systems’ reservoirs that are now hovering around being 25-30% full.

Like many other water distributors, EBMUD has recently mandated an immediate usage reduction by its customers: a district-wide 10% water use decrease together with an 8% price “surcharge” beginning on July 1. In addition, EBMUD instituted restrictions on outdoor water use and a sizable “excessive use penalty” for households who use more than 1,636 gpd (gallons per day). No worries there; our usage is less than 13% of that large threshold. We’ve cut back on our landscape watering. Landscape watering accounts for roughly 50% of homeowners’ typical usage, so that’s a fine place to start despite gardeners’ understandable lamentations.

“Nonfunctional” grass lawns are becoming so yesterday. Significant sod is being removed in desert-dry Las Vegas where such lawns have been outlawed and made illegal to water. Here’s hoping such water conservation efforts by a so far reluctant public water-users can soon make a sizeable difference. Otherwise, every Californian will learn how they must use even less water than they have been.

Let’s now turn to electrically-powered wheels.  A substantial part of US environmental improvement policy rests on significantly increased sales of EVs. In 2021, EVs accounted for 3.3% of total US car sales. Meaning there’s lots of room in the vehicle market for EVs to capture, if people decide to buy them and shed their generations-old routine of purchasing fossil-fueled vehicles.

As you have already noticed, inflation has spread its ugly, non-transitory budget-sapping cloak across many markets. As a result, macroeconomists have been uttering a word, that hasn’t been spoken in 40 years, stagflation. Stagflation is the nasty, simultaneous combination of economic stagnation (diminished macro growth) together with inflation (elevated general price increases). Stagflation may be in our future; inflation is here already.

Giant upsurges in the price of gasoline – 43.6% over the past year – have spurred more people to consider EVs. But EVs’ availability has been constrained by the lack of key components needed by manufacturers. The increased interest in EVs together with their limited supply has driven too many dealers to add substantial markups on their EV prices that were already higher than gas-fueled cars. Customers have complained these markups can sometimes add thousands of dollars to an EV’s MSRP. One industry publication states that some EVs’ prices have jumped 25% in the last year, and wait-times have lengthened. If they persist, such grumbles will confound attainment of the ambitiously-set EV market advancement.

President Biden has addressed several federal efforts to increase EVs. First, he signed his Infrastructure bill into action last November. This $1.2 trillion legislation will eventually provide $7.5 billion over 10 years to expand the nation’s meager EV charging station network. In addition, Mr. Biden signed an Executive Order last August calling for the federal government to ensure that 50% of all vehicles sold in the US will be electric by 2030. This Order was a political statement, not an actual plan because it included no funding to accomplish the aggressive objective. The Build Back Better (BBB) plan would have provided needed funding. But he and the Dems struck out with his vaunted, much larger BBB that remains a fading disappointment. It never was voted on in the Senate after passing the House. Among other efforts, it would have nearly doubled the federal EV purchase subsidy to $12,500 if the vehicle was made in a factory that has a unionized work force.

Forty-five states plus Washington DC have implemented policies and procedures that support EVs’ advancement. Only Kentucky, Kansas and North Dakota apparently don’t have any EV policies in place according to the National Conference of State Legislatures.

California is the single state that has set a specified goal mandating a stipulated percentage of EV sales to be purchased by a specific year, in addition to other EV incentives. Gov. Gavin Newsom signed the enabling Executive Order in September 2020.

California’s specific EV goals were formalized last month. The goals require 35% of new passenger vehicles sold in the state by 2026 to be zero-emission vehicles (ZEVs), powered by batteries or hydrogen. Less than a decade later in 2035, the state mandates that 100% of all new car sales will be free of the fossil fuel emissions. To portray these goals as aggressive is to notably understate the challenges that must be met for success. In a mere 4 years from now California EVs sales will need to almost triple. Total US vehicle sales increased 3.4% in 2021.

The state’s EV goals will be administered by its principal environmental organization, the California Air Resources Board (CARB) within the California EPA. The CARB has disproportionately large influence on US environmental policy because 15 other states and the District of Columbia have adopted California's stringent emissions and vehicle mileage standards as their own. The CARB set its first auto fuel efficiency standards in 1990, others followed. They were and remain very strict, have never been actualized on schedule and thus have been postponed many times. I expect the 2026 EV market goals likely will be postponed, as well. The CARB EV standard states what type of vehicles can be sold and operated in the state.

Assuming that annual California vehicle sales increase at 3.24%[1] between 2022 and 2026, over 759,000 EVs will need to be purchased in 2026 to satisfy Gov. Newsom’s EV mandate. Admittedly, this growth rate is much lower annual vehicle sales growth rate than recent history, due to Covid and supply constraints. But 759,000 EV sales in 2026 would represent a colossal 3 times as many as EV sales than happened in 2020.

Simply creating an official ukase that 35% of 2026 vehicle sales will be EVs is as naïve as it is insufficient for making it actually happen. Politicians cannot mandate that private individuals must buy a lot more EVs by 2026, only that EVs will be available. How is Governor Newsom along with Liane Randolph, the Chair of the CARB, going to convince California consumers to buy more EVs. To save our environment, someone will need to motivate most Californians to stop buying fossil-fueled vehicles like they have been for over a century. Changing our car-buying habits will take a lot of motivating that so far is utterly lacking. Federal and state incentives are solely financial – rebates for EV purchases – which is necessary now but wholly insufficient to quickly modify long-term public behavior.

Recent history provides little solace for the Governor’s, Ms. Randolph’s or others’ potential EV marketing efforts. The majority of California’s car buyers have consistently refused to consider the CARB’s previous EV vehicle mandates and incentives when contemplating a new car purchase.

Most EVs remain expensive despite offered incentives. Potential EV buyers still contend with range anxiety issues. The state’s public EV infrastructure, aka charging stations, remains spotty, insufficient and unmaintained. California now has one of the country’s worst availability records of charging stations for EV drivers, just one station for every 31.2 ZEVs. This  ratio is almost ten times inferior than North Dakota’s (3.18 ZEVs). Who would have guessed the Peace Garden state is the nation’s leader? A survey of 181 Bay Area charging stations revealed that 23% had either non-operable screens, payment system failures or broken connector cables. Non-functioning charging stations will not ameliorate range anxiety.

If politicians want cleaner air via EVs, they better do several things: start building multitudes of additional, fully-maintained EV charging stations before more EVs are sold, and mandate standardized construction of far quicker charging level-3 public stations. California is planning to increase the number of public charging stations. It’s unknown if they will include standardized level-3 charging ports or how well they will be maintained.

California deserves praise for leading the US in its quest towards a cleaner, healthier future for transportation and the environment. The likelihood of significantly higher federal investment in EV incentives and infrastructure is low, given the BBB’s demise. California and other states will need to up their ante if EV sales are to substantially increase. This will entail sustained public investments that will effect colossal changes in the public’s vehicle purchase behavior. Such investments should include persuasive marketing campaigns that focus on the general car-buying public, not wealthy purchasers of Porsche Taycans or Tesla Model Xs.

Improved public management of an expanding EV system is essential. Hopefully, challenges will be addressed and quickly surmounted. Otherwise EV sales will remain far below policy-makers’ aggressive goals.

 

---

[1] California vehicle sales will increase 3.24% between 2021 and 2022, according to California Auto Outlook.