Should taxpayers subsidize EVs?
A company called Ecotality has received another $15 million from the Department of Energy to provide free home chargers to the purchasers of Chevrolet Volt and Nissan Leaf electric vehicles, a $1,000 to $2,000 saving courtesy of U.S. workers.
This new Federal grant extension includes $15 million of American Recovery and Reinvestment Act (ARRA) funding, which will be matched with $15 million in private funds, for a total of $30 million.
ARRA, in case you forgot, was an almost $1 trillion dollar bill – in both legislative and cost senses – by the new Obama Administration that used borrowed money to stimulate the U.S. economy. This was after the outgoing Bush Administration allowed the collapse of Lehman Brothers in the fall of 2008 and the financial markets imploded. Whether it actually stimulated the economy or just stopped a further contraction or was just more pork for special interests is still a matter of debate.
These new federal funds to Ecotality are in addition to the original grant of almost $100 million to Ecoality’s EV Project in October of 1999, which was created through ARRA.
The additional taxpayer largesse comes as the House of Lords in the United Kingdom is due to debate next week controversial electric vehicle subsidies of up to $7,400 per car and $44 million for charging stations in London and other urban areas. Similar and just as expensive giveaways are under consideration by governments globally.
The conversion of automobility to electric vehicles will require these taxpayer subsidies, according to proponents. Critics counter that this is shaping up to be a massive raid on public coffers by special interests under the guise of cleaner air.
The debate has taken on new political urgency as the Global Great Recession drags on and governments continue to run huge, unsustainable deficits, and financial reforms over the practices that started this mess are stalled by corporate lobbyists.
The stated mission of Ecotality’s EV Project is to evaluate the use of electric vehicles and charging systems in diverse geographies and climates, then to use that information to build a foundation that will optimize adoption of electric vehicles nationwide.
With this expansion, Ecotality’s EV Project, already the largest electric vehicle infrastructure project ever undertaken, will provide an additional 2,600 home chargers for owners of the Chevrolet Volt, as well as another 1,000 chargers for the zero-emission Nissan LEAF electric vehicles. In the U.S., the EV Project will now deliver nearly 15,000 residential and commercial chargers to 13 cities in five states and the District of Columbia.
On a stand alone basis nether the Nissan Leaf nor the Chevrolet Volt can compete on a direct ownership cost and operating basis when compared to other vehicles from their makers, say the Nissan Versa, or the upcoming Chevrolet Cruze – both high mileage, low cost vehicles that burn gasoline.
However, that’s the problem counter EV proponents. Some way has to be found to move beyond petroleum, a phrase that has increasing resonance as the Deepwater Horizon spill continues to spew oil into the Gulf of Mexico in what is the largest environmental disaster in U.S. history.
The only apparent defender of British Petroleum, responsible for the ongoing Deepwater disaster, is the Republican party in the U.S.
Representative Joe Barton (R-Texas) – the leading Republican on the House Energy and Commerce Committee – said earlier this week that President Obama’s insistence that BP establish a $20 billion escrow fund to help pay for the growing ecological and economic damages from the Gulf of Mexico Oil spill was a “shakedown” and that — are you sitting down – the U.S. Congress owed British Petroleum an apology.
Barton has received more than $1 million in campaign contributions from the oil and gas industries.
(See Enter Our “Rename BP” Contest )
BP statement on escrow fund. The views expressed are BP’s. – Ken Zino, editor
Following a meeting with the President of the United States, the BP Board announces an agreed package of measures to meet its obligations as a responsible party arising from the Deepwater Horizon spill.
Agreement was reached to create a $20bn claims fund over the next three and a half years on the following basis:
* BP will initially make payments of $3bn in Q3 of 2010 and $2bn in Q4 of 2010. These will be followed by a payment of $1.25bn per quarter until a total of $20bn has been paid in.
* While the fund is building, BP’s commitments will be assured by the setting aside of U.S. assets with a value of $20bn. The intention is that this level of assets will decline as cash contributions are made to the fund.
* The fund will be available to satisfy legitimate claims including natural resource damages and state and local response costs. Fines and penalties will be excluded from the fund and paid separately. Payments from the fund will be made as they are adjudicated, whether by the Independent Claims Facility (ICF) referred to below, or by a court, or as agreed by BP.
* The ICF will be administered by Ken Feinberg. The ICF will adjudicate on all Oil Pollution Act and tort claims excluding all federal and state claims.
* Any money left in the fund once all legitimate claims have been resolved and paid will revert to BP.
The fund does not represent a cap on BP liabilities, but will be available to satisfy legitimate claims. Further and more detailed terms regarding the establishment and operation of the claims fund and the ICF will be finalized and announced as soon as possible.
As a consequence of this agreement, the BP Board has reviewed its dividend policy. Notwithstanding BP’s strong financial and asset position, the current circumstances require the Board to be prudent and it has therefore decided to cancel the previously declared first quarter dividend scheduled for payment on 21st June, and that no interim dividends will be declared in respect of the second and third quarters of 2010.
The Board remains strongly committed to the payment of future dividends and delivering long term value to shareholders. The Board will consider resumption of dividend payments in 2011 at the time of issuance of the fourth quarter 2010 results, by which time it expects to have a clearer picture of the longer term impact of the Deepwater Horizon incident.
The Board believes that it is right and prudent to take a conservative financial position given the current uncertainty over the extent and timing of costs and liabilities relating to the spill. BP’s businesses continue to perform well, with cash flows from operations expected to exceed $30bn in 2010 at current prices and margins before taking into consideration costs related to the Deepwater Horizon spill. BP’s gearing level remains at the bottom of its targeted band of 20-30 per cent. In addition, the Company has over $10bn of committed banking facilities. To further increase the Company’s available cash resources, the Board intends to implement a significant reduction in organic capital spending and to increase planned divestments to approximately $10bn over the next twelve months.
Chairman Carl-Henric Svanberg said: “We appreciated the constructive meeting conducted by the President and his senior advisers and are confident that the agreement announced today will provide greater comfort to the citizens of the Gulf coast and greater clarity to BP and its shareholders. We welcome the administration’s statements acknowledging that BP is a strong company and that the administration has no interest in undermining the financial stability of BP. This agreement is a very significant step in clarifying and confirming our commitment to meet our obligations. We regret the cancellation and suspension of the dividends, but we concluded it was in the best interests of the Company and its shareholders.”
Chief Executive Tony Hayward said: “From the outset we have said that we fully accepted our obligations as a responsible party. This agreement reaffirms our commitment to do the right thing. The President made it clear and we agree that our top priority is to contain the spill, clean up the oil and mitigate the damage to the Gulf coast community. We will not rest until the job is done.”