As we reported, the California Legislature passed SB 1014 – the Clean Miles Standard and Incentive Program (the “Clean Miles Program”) – to reduce greenhouse gas emissions from “rideshare” vehicles. This led to the creation of the Clean Miles Standard regulation, which the California Air Resources Board (“CARB”) fully adopted in May 2021 after receiving stakeholder input. In sum, the Clean Miles Program directed CARB and the California Public Utilities Commission (“CPUC”) to develop and implement new requirements for transportation network companies (“TNCs”) like Uber and Lyft. In this blog post, we discuss the goals and three core requirements of the Clean Miles Program, the new regulations CARB just adopted in furtherance of those core requirements, and other obligations that lie ahead for TNCs.
The Clean Miles Program sets more stringent emissions standards for TNCs over time and encourages TNC drivers to shift to electric vehicles. The Clean Miles Program has three core requirements:
- In 2020, CARB established a greenhouse gas (“GHG”) emissions baseline for vehicles used in TNCs on a per-passenger-mile basis using 2018 as the base year;
- In 2021, CARB and CPUC adopted and implemented, respectively, targets and goals (beginning in 2023) for TNCs to reduce GHG emissions per passenger-mile driven; and
- By January 1, 2022, and every two years thereafter, each TNC shall develop a GHG emissions reduction plan.
CARB satisfied the first requirement and determined the baseline emission rate (301 grams of carbon dioxide (“CO2“) for each mile traveled.
In furtherance of the second and third requirements—CARB adopted (in May 2021) a “Clean Miles Standard” regulation that imposes new requirements that require TNCs to provide information including, but not limited to: (i) total miles that TNC drivers complete; (ii) share of miles completed by qualified “zero-emissions” (e.g., zero-emission vehicle); (iii) miles-weighted average of network-wide CO2 to produce an estimate of the GHG emissions; and (iv) total passenger-miles completed using an average passengers-per-trip estimate to account for trips where exact passenger headcount was not captured. The new regulation also requires TNCs to submit annual reports and a compliance plan every two years starting in January 2022.
The new regulation requires that TNCs shift from using gas-powered vehicles to electric vehicles. That shift must start in 2023 at which point TNCs must hit certain targets for that year based on miles traveled with electric vehicles. The targets increase annually until the year 2030. For example, in 2023, the target for the percentage of electric vehicle miles traveled is two percent. According to CARB, TNCs are already within one-tenth of a percentage of hitting that target. By 2030, however, the target is 90 percent, which will require considerably more effort to ensure that goal is achieved.
Greenhouse gas targets
The new regulation requires that TNCs seek to decrease GHG emissions from gas-powered vehicles by reducing their carbon footprint through annual GHG reduction targets. The new regulation outlines the annual proposed GHG targets that TNCs should meet, requiring that the grams of CO2 emitted per mile decrease over time from 2023 to 2030. For example, in 2023, the proposed GHG target is 252 grams of CO2 per miles travelled, although by 2030, the proposed GHG target is 0 grams of CO2 per mile travelled.
The new regulation also provides TNCs with the opportunity to obtain CO2 credits to help with compliance. The credits are applicable to environmentally beneficial activities, such as when TNCs: (i) invest in bikeway and sidewalk infrastructure to promote active transportation; or (ii) provide integrated fare options to connect riders to mass transit.
The CPUC has not determined non-compliance tiers and penalties with regard to electrification and GHG targets yet, although they will start issuing any penalties in 2023.
Mandatory reduction plans
Starting January 1, 2022, TNCs must submit a compliance plan every two years that outlines strategies for meeting electrification and GHG targets. The compliance plans must consist of: (i) plans for increasing zero-emissions vehicles for per-miles driven, as compared to a traditional overall vehicle; (ii) plans for decreasing gram-per-mile GHG emission rates; and (iii) plans for increasing TNC efficiency through environmentally productive activities such as shared rides and multi-passenger trips.
Moreover, starting March 1, 2024, TNCs must submit annual compliance reports that list annual GHG emissions from rideshare vehicles and percent vehicle miles traveled for the preceding compliance year.
If a TNC fails to provide a timely compliance plan or report, it could be subject to civil penalties by the CPUC.
In addition to the CO2 credits, there are already several programs that will help offset the compliance costs for TNCs and their drivers. For example, rebates are available for people who buy or lease electric cars for use in their TNC ridesharing services. Those rebate programs include the Clean Vehicle Rebate Project, the Clean Cars 4 All program, and the Clean Fuels Reward Program.