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The gas tax pays for America’s road repair. So what do we do when everyone drives EVs?
Electric cars may help the United States fix its carbon problem, but they’re about to break the way America pays for its roads.
Every gallon of gas Americans buy is taxed to pay for highway improvements and other infrastructure projects. The federal government takes about 18 cents per gallon of gas (and 24 cents for diesel), while the states, on average, charge even more.
EVs escape this tax. As the Biden Administration pushes for the majority of American cars to go electric within a decade, the nation needs a new way to fund road repairs. That is why all of us, whether we drive gasoline, hybrid, or electric, soon could be taxed on the number of miles we drive.
A vehicle miles traveled (VMT) tax has become a hot idea for replacing the gas tax in the age of electric vehicles. Federal laws — including the Surface Transportation System Funding Alternatives (STSFA) program and the 2021 Infrastructure Investment and Jobs Act (as known as the Bipartisan Infrastructure Bill) — have even included money for states to run VMT pilot programs.
Economists and policymakers love VMT for a variety of reasons. Most importantly, says Adam Hoffer, director of excise tax policy at the nonprofit Tax Foundation, this approach creates a “universal toll road” where people who use the roads the most also pay the most for their upkeep.
“Gas taxes have worked really well as the best proxy for this for almost a hundred years now,” Hoffer told me. “What we're seeing is that with electric vehicles growing in market share, we need a new tool. Vehicle miles traveled taxes seem to fit that bill really well.”
Clifford Winston, a senior fellow in economic studies at the Brookings Institution, says another key advantage is that a VMT is customizable. “It has economically desirable features that go beyond generating the revenue that would be lost as the vehicle fleet turns over from internal combustion engines to EVs,” he says.
The tax could simply charge every vehicle the same number of cents per mile. On the other hand, the government could also adjust the cost up or down to incentivize good behaviors. For example, it could charge people less per mile if they drive EVs (and more if they stick with a gas-guzzler). It could put in congestion surcharges to tempt people to avoid rush hour, or charge trucking companies based on how much weight they’re hauling down the highway.
Winston’s version of VMT is an economist’s dream where price drives every choice. He compares it to the experience of calling an Uber or Lyft, where users are presented with several options at different price points. Now, he says, imagine the same scenario when you slide into your own car and enter a destination. The vehicle’s display could show you several routes with not only different driving times, but also different charges based on distance, congestion fees, or other factors.
There are downsides to this plan, of course, and not just that people may hate its complexity. Lots of folks have no choice but to drive during rush hour, and many can’t afford to replace an older car to take advantage of lower taxes on a new EV.
Privacy is the big one, Hoffer says. If drivers are charged a flat fee per mile, they would need to report their odometer reading to the taxman. A dynamic pricing scheme could be even more intrusive, requiring a way to track us everywhere, all the time.
The simplest way to confront this issue, Winston says, is to set up a third party so the government doesn’t have all this tracking data at its fingerprints. “A private company collects all this [information], sends it to the vehicle owner monthly, and says, here's your bill. Pay it,” he says. According to Hoffer, drivers already hand over this data when they sign up for car insurance programs like Progressive’s “Snapshot” that charge people based on how they drive. However, he says, privacy law around these issues is far from clear.
“There have been court cases before where lawyers have used real-time tracking data from these kinds of apps in lawsuits against people,” he says. “I think there are real questions about whether this data could be accessible via a warrant.”
There are less intrusive ways to replace the gas tax. Some states have begun to charge higher annual registration fees for electric cars to make up for the fact that they don’t burn gasoline. But a flat fee is a blunt instrument that can’t account for how far people drive. It also discourages EV sales.
An obvious replacement for taxing gas by the gallon would be to tax electricity by the kilowatt-hour. But you can’t really replicate the old system. While it may sound simple to tax fast-charging stations, lots of EV drivers do most of their charging at home. The electricity specifically used to charge a car is mixed in with the juice they use to run the dishwasher or the AC, making it hard to differentiate (not to mention that residential electricity is already taxed).
VMT may be the most logical solution to the gas tax problem, Hoffer says, but there are still plenty of bugs to work out. States currently running pilot programs, led by California and Oregon, are experimenting with how to practically implement the fee and how much it should be. It’s possible, Hoffer says, that a VMT will exist alongside the gasoline tax, at least while the U.S. car fleet goes through its transformation from gas to electric.
“I don’t see rapid adoption nationwide of a vehicle mile travel system — but I do think it is on the inevitable side of things,” he says.
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New York City may very well be the epicenter of this particular fight.
It’s official: the Moss Landing battery fire has galvanized a gigantic pipeline of opposition to energy storage systems across the country.
As I’ve chronicled extensively throughout this year, Moss Landing was a technological outlier that used outdated battery technology. But the January incident played into existing fears and anxieties across the U.S. about the dangers of large battery fires generally, latent from years of e-scooters and cellphones ablaze from faulty lithium-ion tech. Concerned residents fighting projects in their backyards have successfully seized upon the fact that there’s no known way to quickly extinguish big fires at energy storage sites, and are winning particularly in wildfire-prone areas.
How successful was Moss Landing at enlivening opponents of energy storage? Since the California disaster six months ago, more than 6 gigawatts of BESS has received opposition from activists explicitly tying their campaigns to the incident, Heatmap Pro® researcher Charlie Clynes told me in an interview earlier this month.
Matt Eisenson of Columbia University’s Sabin Center for Climate Law agreed that there’s been a spike in opposition, telling me that we are currently seeing “more instances of opposition to battery storage than we have in past years.” And while Eisenson said he couldn’t speak to the impacts of the fire specifically on that rise, he acknowledged that the disaster set “a harmful precedent” at the same time “battery storage is becoming much more present.”
“The type of fire that occurred there is unlikely to occur with modern technology, but the Moss Landing example [now] tends to come up across the country,” Eisenson said.
Some of the fresh opposition is in rural agricultural communities such as Grundy County, Illinois, which just banned energy storage systems indefinitely “until the science is settled.” But the most crucial place to watch seems to be New York City, for two reasons: One, it’s where a lot of energy storage is being developed all at once; and two, it has a hyper-saturated media market where criticism can receive more national media attention than it would in other parts of the country.
Someone who’s felt this pressure firsthand is Nick Lombardi, senior vice president of project development for battery storage company NineDot Energy. NineDot and other battery storage developers had spent years laying the groundwork in New York City to build out the energy storage necessary for the city to meet its net-zero climate goals. More recently they’ve faced crowds of protestors against a battery storage facility in Queens, and in Staten Island endured hecklers at public meetings.
“We’ve been developing projects in New York City for a few years now, and for a long time we didn’t run into opposition to our projects or really any sort of meaningful negative coverage in the press. All of that really changed about six months ago,” Lombardi said.
The battery storage developer insists that opposition to the technology is not popular and represents a fringe group. Lombardi told me that the company has more than 50 battery storage sites in development across New York City, and only faced “durable opposition” at “three or four sites.” The company also told me it has yet to receive the kind of email complaint flood that would demonstrate widespread opposition.
This is visible in the politicians who’ve picked up the anti-BESS mantle: GOP mayoral candidate Curtis Sliwa’s become a champion for the cause, but mayor Eric Adams’ “City of Yes” campaign itself would provide for the construction of these facilities. (While Democratic mayoral nominee Zohran Mamdani has not focused on BESS, it’s quite unlikely the climate hawkish democratic socialist would try to derail these projects.)
Lombardi told me he now views Moss Landing as a “catalyst” for opposition in the NYC metro area. “Suddenly there’s national headlines about what’s happening,” he told me. “There were incidents in the past that were in the news, but Moss Landing was headline news for a while, and that combined with the fact people knew it was happening in their city combined to create a new level of awareness.”
He added that six months after the blaze, it feels like developers in the city have a better handle on the situation. “We’ve spent a lot of time in reaction to that to make sure we’re organized and making sure we’re in contact with elected officials, community officials, [and] coordinated with utilities,” Lombardi said.
And more on the biggest conflicts around renewable energy projects in Kentucky, Ohio, and Maryland.
1. St. Croix County, Wisconsin - Solar opponents in this county see themselves as the front line in the fight over Trump’s “Big Beautiful” law and its repeal of Inflation Reduction Act tax credits.
2. Barren County, Kentucky - How much wood could a Wood Duck solar farm chuck if it didn’t get approved in the first place? We may be about to find out.
3. Iberia Parish, Louisiana - Another potential proxy battle over IRA tax credits is going down in Louisiana, where residents are calling to extend a solar moratorium that is about to expire so projects can’t start construction.
4. Baltimore County, Maryland – The fight over a transmission line in Maryland could have lasting impacts for renewable energy across the country.
5. Worcester County, Maryland – Elsewhere in Maryland, the MarWin offshore wind project appears to have landed in the crosshairs of Trump’s Environmental Protection Agency.
6. Clark County, Ohio - Consider me wishing Invenergy good luck getting a new solar farm permitted in Ohio.
7. Searcy County, Arkansas - An anti-wind state legislator has gone and posted a slide deck that RWE provided to county officials, ginning up fresh uproar against potential wind development.
Talking local development moratoria with Heatmap’s own Charlie Clynes.
This week’s conversation is special: I chatted with Charlie Clynes, Heatmap Pro®’s very own in-house researcher. Charlie just released a herculean project tracking all of the nation’s county-level moratoria and restrictive ordinances attacking renewable energy. The conclusion? Essentially a fifth of the country is now either closed off to solar and wind entirely or much harder to build. I decided to chat with him about the work so you could hear about why it’s an important report you should most definitely read.
The following chat was lightly edited for clarity. Let’s dive in.
Tell me about the project you embarked on here.
Heatmap’s research team set out last June to call every county in the United States that had zoning authority, and we asked them if they’ve passed ordinances to restrict renewable energy, or if they have renewable energy projects in their communities that have been opposed. There’s specific criteria we’ve used to determine if an ordinance is restrictive, but by and large, it’s pretty easy to tell once a county sends you an ordinance if it is going to restrict development or not.
The vast majority of counties responded, and this has been a process that’s allowed us to gather an extraordinary amount of data about whether counties have been restricting wind, solar and other renewables. The topline conclusion is that restrictions are much worse than previously accounted for. I mean, 605 counties now have some type of restriction on renewable energy — setbacks that make it really hard to build wind or solar, moratoriums that outright ban wind and solar. Then there’s 182 municipality laws where counties don’t have zoning jurisdiction.
We’re seeing this pretty much everywhere throughout the country. No place is safe except for states who put in laws preventing jurisdictions from passing restrictions — and even then, renewable energy companies are facing uphill battles in getting to a point in the process where the state will step in and overrule a county restriction. It’s bad.
Getting into the nitty-gritty, what has changed in the past few years? We’ve known these numbers were increasing, but what do you think accounts for the status we’re in now?
One is we’re seeing a high number of renewables coming into communities. But I think attitudes started changing too, especially in places that have been fairly saturated with renewable energy like Virginia, where solar’s been a presence for more than a decade now. There have been enough projects where people have bad experiences that color their opinion of the industry as a whole.
There’s also a few narratives that have taken shape. One is this idea solar is eating up prime farmland, or that it’ll erode the rural character of that area. Another big one is the environment, especially with wind on bird deaths, even though the number of birds killed by wind sounds big until you compare it to other sources.
There are so many developers and so many projects in so many places of the world that there are examples where either something goes wrong with a project or a developer doesn’t follow best practices. I think those have a lot more staying power in the public perception of renewable energy than the many successful projects that go without a hiccup and don’t bother people.
Are people saying no outright to renewable energy? Or is this saying yes with some form of reasonable restrictions?
It depends on where you look and how much solar there is in a community.
One thing I’ve seen in Virginia, for example, is counties setting caps on the total acreage solar can occupy, and those will be only 20 acres above the solar already built, so it’s effectively blocking solar. In places that are more sparsely populated, you tend to see restrictive setbacks that have the effect of outright banning wind — mile-long setbacks are often insurmountable for developers. Or there’ll be regulations to constrict the scale of a project quite a bit but don’t ban the technologies outright.
What in your research gives you hope?
States that have administrations determined to build out renewables have started to override these local restrictions: Michigan, Illinois, Washington, California, a few others. This is almost certainly going to have an impact.
I think the other thing is there are places in red states that have had very good experiences with renewable energy by and large. Texas, despite having the most wind generation in the nation, has not seen nearly as much opposition to wind, solar, and battery storage. It’s owing to the fact people in Texas generally are inclined to support energy projects in general and have seen wind and solar bring money into these small communities that otherwise wouldn’t get a lot of attention.