Minnesota moves ahead with 'clean car' rules

Minnesota officials are moving forward with “clean cars” standards, a plan intended to reduce greenhouse gas emissions and increase electric vehicle options for consumers, while also getting the state back on track toward meeting its climate change goals. 

The Minnesota Pollution Control Agency on Friday announced that it plans to formally publish a draft rule on Monday that it had first proposed 15 months ago. If a state administrative law judge approves the plan early next year, the new standards would go into effect in early 2024, and would apply to model year 2025 vehicles. 

Calling climate change an “existential threat” to Minnesota and a top priority of Gov. Tim Walz’s administration, MPCA Commissioner Laura Bishop said “the size and scope of the climate crisis requires bold action from state government.”

The draft rules are modeled after California’s clean car standards, and have been adopted by 13 other states. They would require carmakers to deliver for sale in Minnesota a gradually increasing number of vehicles with ultra-low or zero tailpipe emissions each year, including electric vehicles, plug-in hybrids, and hydrogen-fueled vehicles. 

While the standards will require car dealers in the state to stock more zero-emission vehicles, it won’t require consumers to buy them. 

Still, Republican legislators and car dealers have pushed back vehemently against the new regulation, arguing that the process bypassed lawmakers and the new standards will drive up the cost of all cars and trucks sold in Minnesota.

“All this rule is going to do is mean higher prices for everyone, and fewer trucks and fewer vehicles that people want to buy, on dealership lots,’ said Scott Lambert, president of the Minnesota Auto Dealers Association. 

Two standards

Minnesota’s proposed clean car rule would actually adopt two new emission standards. 

The first applies to low-emission vehicles. The LEV standard regulates the amount of greenhouse gases and other harmful pollutants that new cars and trucks can emit. 

The new LEV standard wouldn’t change anything in Minnesota. The federal government adopted the same standard in 2012. All new cars sold in Minnesota must abide by those regulations. 

But MPCA Assistant Commissioner Craig McDonnell said adopting the new rule would “provide certainty” moving forward, because in March the Trump administration proposed rolling back that standard, and its fate remains uncertain under a Biden administration. 

The second standard is designed to bring more zero-emission vehicles to the state. Bishop said some popular vehicle models, like the Subaru Crosstrek plug-in hybrid, haven’t been available in Minnesota. She said manufacturers reserve those vehicles for states that have adopted clean car standards. 

The new rules won’t require any one dealership to stock qualifying clean vehicles. But it will require auto manufacturers to ensure that more are available for sale in Minnesota. 

The MPCA estimates that when this rule goes into effect, for model year 2025 vehicles, between 6 and 7.5 percent of new vehicles sold in Minnesota would have to be a qualifying zero-emission vehicle. 

By comparison, a survey the agency conducted in July found that electric vehicles made up fewer than .3 percent of all vehicles for sale at greater Minnesota dealerships, and fewer than 1 percent at Twin Cities area dealers. 

“In the past, Minnesota has been on the tail end of receiving these new makes and models. We want to ensure Minnesota is on the forefront of receiving this new innovation,” Bishop said. 

But that innovation will come at a cost, say auto dealers and some lawmakers. 

“The MPCA is bypassing the Legislature and moving forward with a policy that will raise the price of a car by as much as $2,500,” said state Rep. Dale Lueck, R-Aitkin. “The Walz administration is making cars more expensive and forcing auto dealers to accept cars and take up inventory with vehicles that many rural Minnesotans simply aren't buying.”

State officials don’t deny that the cost of vehicles will increase, but they say the figure is closer to $1,000, and they argue consumers will make up that difference in the long run through increased fuel savings. 

Car dealers say they support the state’s goal to get more electric vehicles on the road. But they want the government to focus on the demand side of that equation, through consumer incentives to purchase clean cars. 

“They’re going about it the wrong way,” said Lambert with the car dealers association. “They're doing it by trying to increase supply. And we have said from the start, that they've got it backwards, they should be working on demand, and not supply. If you do demand, supply will follow."

Lambert said dealers are worried they will be forced to put vehicles on their lots that aren’t going to sell. He said it’s not unusual for a dealer to have $5 million worth of inventory at one time. 

“And we pay interest on that. And electric vehicles, if they don't move, it's a vehicle that's taking up capital. And we could be using that capital to buy vehicles that customers want.”

Tailpipe emissions

For state officials, the new rule is driven by a desire to curb greenhouse gas emissions, and to get Minnesota back on track to meeting climate change goals. 

Bishop said the state has already missed its goal of reducing greenhouse gas emissions 15 percent by 2015, which was part of the Next Generation Energy Act, passed in 2007

The state’s also not on track to hit its goals to reduce emissions by 30 percent by 2025, and 80 percent by 2050. 

To reach those goals the state will have to reduce emissions in the transportation sector. With electric utilities making strides in decarbonizing the power sector through increased use of wind and solar, transportation — largely cars, trucks and SUVs — is now the state’s single largest source of climate change pollution. 

“Clean Cars Minnesota is a crucial step to building a cleaner and healthier transportation system in Minnesota. It is no secret that we are behind on our carbon reduction goals,” said Michael Noble of Fresh Energy, one of a host of environmental organizations that applauded the MPCA’s rulemaking.

“Tried-and-true policies like clean car standards will get us back on track by reducing climate change-causing pollution, while also improving our public health and ensuring Minnesotans have the clean car choices they want.”

The MPCA plans to publish the draft rule on Monday. The agency will hold four on-line information sessions, starting on Jan. 19, and the public will have 60 days to comment. 

Administrative Law Judge Jessica Palmer-Denig will hold a two-day hearing on the proposal beginning on Feb. 22. If she approves it, the rule will take effect in 2024. 

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