State energy plans and comprehensive energy planning help to guide and build consensus among stakeholders in moving toward a shared goal of meeting future energy needs in a cost-effective and sustainable manner.  A well-constructed state energy plan provides an assessment of current and future energy supply and demand, examines existing energy policies, and identifies emerging energy challenges and opportunities.  

Transportation sector energy is an important component in comprehensive energy plans. In fact, of the 36 states with operational energy plans in 2014-2015, 31 have plans that discuss transportation fuels; all but one reference state efforts and initiatives to reduce or offset petroleum use by deploying fuel-efficient or alternative fuel vehicles (AFVs) and alternative fueling infrastructure; and several explicitly recommend policy, funding, and financing actions available to the state to expand the marketplace for AFVs.

An optimized, diversified, and less petroleum-reliant transportation system offers several energy-related sustainability, economic development, and resiliency benefits. These benefits provide a compelling set of reasons for why State Energy Offices should incorporate AFV initiatives and recommendations into their comprehensive energy plans. For instance:

  • The Transportation sector is a major energy consumer, accounting for 28% of total U.S. energy use in 2014 according to the Energy Information Administration (EIA).
  • Fuel diversification offers significant energy resiliency and energy security benefits.
  • For households, businesses, the U.S. military, and government agencies, fuel economy and domestically produced alternative fuels such as natural gas, propane, and electricity can buffer budgets from oil price volatility affecting the gasoline and diesel markets.
  • For some alternative transportation fuels – for instance, electricity used to power electric vehicles (EVs) – consumer demand and market expansion may have significant impacts on how existing energy infrastructure, such as our electric grid, functions. Thus, even in states that do not necessarily view AFVs as a needed strategy to achieve energy and environmental goals, the increasing penetration of advanced vehicle technologies in the marketplace still requires the attention of state energy planners to help promote energy system reliability for all major end-users, including buildings, the manufacturing sector, and transportation.

According to NASEO’s 2014 Members Survey, nearly 60% of State Energy Offices consider transportation energy to be a priority issue, underscoring the importance of incorporating AFVs and fuel diversification into states’ policy and planning activities. Several State Energy Offices have dedicated personnel, if not teams, for transportation and AFV projects and programs, and tens of millions of dollars every year in grants, incentives, financing, and other resources to promote the deployment of AFVs and alternative fueling and charging infrastructure.

Clean Cities Coalitions offer State Energy Offices, energy planners, and energy policymakers an important source of on-the-ground expertise and connection. As part of a national network organized by the U.S. Department of Energy, understand and convene a wide variety of stakeholders that are relevant to the transportation energy planning process, including automobile and original equipment manufacturers, dealers and distributors, alternative fuel marketers, metropolitan planning organizations, utilities, and departments of transportation, among many others.

The Transportation Planning Landscape

Transportation energy planning can help states achieve goals across many major priority areas and themes, including energy conservation, economic development, air quality, and grid reliability. NASEO’s Transportation Planning Index (last updated July 2015) helps State Energy Offices, Clean Cities Coalitions, and their planning partners navigate the several dozen comprehensive energy plans in operation today, and provides a snapshot of the relative importance that states afford to transportation in their energy planning process. Although the plans included in this index are varied in their treatment of AFVs, the following key themes are evident: 

In many cases, states utilize an all-of-the-above strategy. At least five state plans discuss all of the major, commercially-available alternative fuel types listed on the Alternative Fuels Data Center (AFDC): biodiesel, electricity, ethanol, hydrogen, natural gas, and propane. Another 13 reference at least four of these fuel types. The “Alternative Fuels and Advanced Vehicle Technology” section of the 2014 Virginia Energy Plan, for instance, includes of a discussion of biodiesel, ethanol, propane, natural gas, and electric vehicles, and acknowledges in-state production of all of these alternative fuels.

Additionally, many state plans discuss not only government-owned alternatively-fueled vehicles and fleets, as certain state and alternative fuel provide fleets are required by the Energy Policy Act of 1992 to acquire; they also plan for and/or recommend the broader adoption of AFVs and alternative fuel infrastructure in both the public and private markets. For example, the Utah Governor’s 10-Year Strategic Energy Plan recommends that Utah “diversity transportation fuels and build a transportation infrastructure and a fleet to meet the needs and demands of future generations”. In a similar vein, the 2012 Idaho Energy Plan’s list of recommended actions includes not only a call for the state to adopt procurement rules to promote purchases of high-efficiency, flex-fuel, and alternative fuel vehicles, but also to encourage investments in retail and wholesale fueling infrastructure as well as to advance the research, development and commercialization of AFV technologies.

A handful of states have dedicated entire plans or sections of their plans to transportation energy. In June 2015, the Hawaii State Energy Office unveiled a draft energy plan for transportation under the Hawaii Clean Energy Initiative (HCEI), informed by a series of stakeholder discussions managed by the International Council on Clean Transportation (ICCT). ICCT’s Transportation Analysis includes a list of recommendations, priorities, and policy-oriented “tactics” to help the state achieve a 70% reduction in petroleum use from ground transportation by 2030.  Vehicle efficiency, electric drive vehicles, biofuel, and compressed and liquefied natural gas (CNG and LNG, respectively) are among the plan’s recommended actions.

California and Connecticut, similarly, have devoted entire chapters of their plans to transportation. The governors of both states, along with several others on the East and West Coasts, are signatories to a 2013 memorandum of understanding (MOU) and ongoing implementation Task Force committing to coordinated action on zero-emission vehicles (ZEV) programs.  In addition to participating in the ZEV program, California’s 2013 Integrated Energy Policy Report recommends the state support national renewable fuel standards, evaluate fuel storage needs for low-carbon biofuels, fund rebate programs, and optimize incentives for alternative fuel production and infrastructure.

Importantly, the in-depth treatment of transportation in plans like California’s reveals the wide range of policy mechanisms available to states to support vehicle and infrastructure adoption, such as stakeholder coordination, multistate collaboration, innovative rate and tariff design, education, standards, mandates, financial incentives, low-interest financing, and data collection. A report by the Clean Energy Coalition, “Alternative Fuels: A State Policy Analysis”, offers important insights on the correlation between select state policies and AFV use, concluding that the highest impact mechanisms (grants and rebates, discounts, and tax exemptions) often rely on a financial incentive to spur consumer adoption.  

Several plans include recommendations or document states’ efforts to address key funding and financing challenges in the AFV market. A pressing issue in many states is what the 2013 Connecticut Comprehensive Energy Strategy calls the “transportation revenue gap.” This gap refers to the budget shortfall resulting from the increased use of AFVs—because fueling for these vehicles bypasses the traditional gasoline tax, fuel-efficient vehicles and AFVs limit funding for improvements to the country’s transportation infrastructure. The 2012 Washington State Energy Strategy, developed by the State Energy Office for consideration by the state legislature and governor, urges the state to examine alternatives to fuel taxes such as Vehicle Miles Traveled (VMT) fees or an EV mileage pricing pilot with variable rates. In July 2015, the governor signed SB5987, a transportation revenue bill calling for an annual EV registration fee to support multimodal transportation and EV charging infrastructure. The Tennessee State Energy Office has scanned and documented other states’ efforts regarding transportation revenue on a Tennessee Energy Education Initiative blog post, “Financing for Electric Vehicles and Charging Infrastructure”.

Conversely, state plans have examined innovative sources of funding and financing to advance the AFV market itself. New Jersey’s 2011 Energy Master Plan, importantly, recommends that the state evaluate the creation of a Transportation Infrastructure Bank to assistance in financing “much-needed infrastructure [for AFVs, in partnership with] other state agencies, utilities, local governments, fleet operators, the New Jersey Clean Cities Coalition and other stakeholders.” In February 2015, the state legislature introduced A4151, a bill to establish a state transportation infrastructure bank fund within the New Jersey Environment Infrastructure Trust. An important parallel initiatives supporting innovative financing and investment for AFVs is the Center for Climate and Energy Solutions (C2ES) AFV Finance Initiative, which has informed the Washington State Legislature’s decision to implement an EV infrastructure bank. Similarly, to help promote utilities’ understanding of AFV issues, the Vermont Energy Investment Corporation (VEIC) has developed strategies to incorporate transportation efficiency measures into their cost-benefit analyses and tests.

A final key theme in states’ plans is integration of AFVs, particularly electric vehicles, in energy grids and evolving utility business models. For some states, the energy plan serves as a driver of and roadmap for system modernization, preparing assets like the electricity grid for the increased deployment of AFVs. As the New Hampshire 10-Year State Energy Strategy notes, “the increasingly interrelated nature of our energy systems requires comprehensive planning across sectors….modernizing our electric grid directly affects our ability to expand distributed generation, electrification of vehicles, and benefit more from energy efficiency savings. Our regulatory models will need to adapt to this energy future.” Conversely, some state planning efforts embrace AFVs for the grid services they provide and for their ability to update energy systems and utility business models. For instance, the 2015 New York State Energy Plan developed by NYSERDA calls on the Public Service Commission to “maximize the cost-effective utilization of all behind-the-meter resources that can reduce the need for new infrastructure.”

The resulting and ongoing proceeding, “Reforming the Energy Vision,” has included a discussion of the potential use of electric vehicles to provide ancillary services such as storage and voltage support.

Related Resources

To help states learn more about policies and planning for the transportation sector, several of NASEO’s partners offer helpful resources and services. 

NASEO Staff Contacts: Sandy Fazeli, Program Director, and Cassie Powers, Program Manager