VW owes Florida $166 million after emissions scandal. How will it be spent?

The Florida Department of Environmental Protection is near the end of a public survey and comment period seeking input on how to spend the state's share of the proceeds from the Volkswagen diesel settlement.
The company's logo is pictured on the hood of a Volkswagen Beetle a wrecking yard in Berlin, Germany. [AP]
The company's logo is pictured on the hood of a Volkswagen Beetle a wrecking yard in Berlin, Germany. [AP]
Published April 27, 2018

Volkswagen's diesel deception could be on its way to super-charging the future of electric vehicles in Florida, if state regulators agree.

The German car marker has agreed to pay up to $2.7 billion to states as part of its settlement agreement with the U.S. Environmental Protection Agency, including $166 million to Florida over 10 years, to compensate for the environmental harm it caused when its diesel vehicles emitted more nitrogen oxide than the EPA compliance level allowed.

The state Department of Environmental Protection is in the final weeks of a 60-day public survey and comment period seeking input on how to spend the money.

Up to 15 percent of it, or $25 million, can be used for electric vehicle charging stations and infrastructure, and the rest of the money can be provided to state and local governments to replace aging diesel equipment.

"It is a lot of money until you see the scope of the mitigation projects and the cost,'' said Preston McLane, assistant director of the Division of Air Resource Management, at a public webinar held late Thursday. The primary purpose is to "achieve real environmental benefits through diesel reduction."

Volkswagen admitted in 2015 to installing cheating computer systems in nearly 500,000 vehicles made between 2009 and 2016. The emissions controls ran only during testing, not during normal operation, allowing vehicles to emit nitrogen oxide at high levels. The pollutant is a key contributor to lung disease and smog, which contributes to climate change, the settlement notes.

In Florida, 33,160 vehicles were affected by the diesel scam, only California and Texas had more, and they emitted more than 500 tons of excess nitrogen oxide, McLane said.

Fewer than 1 percent of all cars in Florida are electric vehicles, and the infusion of money comes at a time when clean vehicle technology has struggled to gain a foothold in Tallahassee.

Legislation proposed last legislative session by Sen. Jeff Brandes, R-St. Petersburg, and Rep. Jason Fischer, R-Jacksonville, would have established a Smart City Challenge Grant program through the Department of Transportation to fund local innovation related to shared, electric or autonomous vehicles, but it didn't pass.

The Legislature put $325,000 into the budget in 2017 to fund the program, but Gov. Rick Scott vetoed it.

Another bill, SB 852 by Brandes, would have required the Florida Transportation Commission to study the impact the move to electric vehicles will have on Florida's gas tax revenue and plan for it as soon as 2 percent of all vehicles are electric. The measure died in the final days of the session.

"Legislatures like to address the current crisis, not the next one,'' Brandes said. "This is an issue that is going to be right in front of us quicker than people think, so we ought to have a plan to deal with this in the future."

Dave Schatz, director of Public Policy at ChargePoint, a California-based company that has the world's largest charging network, said there are 27,000 registered electric vehicles in Florida, about 2,000 charging stations, and the annual growth rate is estimated at 33 percent. The industry predicts a six-fold increase by 2026.

"Florida is not really prepared for the EV growth we have already,'' he said. "$25 million could result in doubling the amount of charging infrastructure available today."

According to the Federal Highway Administration, most EVs have a range of 60 to 120 miles on a single charge, and nearly all household trips are under 60 miles. Charging times can vary from 20 minutes to 20 hours, depending on the depletion level of the battery, how much energy the battery holds, the type of battery, and the type of supply equipment.

The absence of charging stations leads to what drivers call "range anxiety."

"We know the cars are coming, and we don't have enough infrastructure to meet the needs of today,'' Schatz said.

As with most environmental initiatives, local governments have been more aggressive than the state in replacing aging diesel-powered vehicles with low- and no-emission vehicles as part of their city and school bus fleets.

Miami-Dade County, for example, as a member of the Southeast Florida Clean Cities Coalition developed a plan last year to encourage the widespread use of electric vehicles in the community and is in the process of buying a new fleet of electric buses.

Miami-Dade Commissioner Daniella Levine Cava passed a resolution in March urging DEP to allocate the full 15 percent of the settlement funds for electric vehicle charging infrastructure and steer the rest of the money into projects to help local government convert their transit fleets to electric vehicles.

She cited Chargepoint estimates that every mile driven in an electric bus could save taxpayers up to 70 percent of the cost they would otherwise pay for conventional diesel-powered buses.

Levine Cava is also in the process of test-driving her own electric car.

"I want to do it for the planet and to show people it can be done,'' she said. The county has a goal of reducing its carbon dioxide output 80 percent by 2050 and electric vehicles "will play a big role in that."

Under the settlement, negotiated by the U.S. Environmental Protection Agency and the California Air Resources Board, VW must spend about $14.7 billion on mitigation efforts, with $10 billion to buy back diesel cars from consumers and another $2 billion to increase infrastructure for electric passenger cars and trucks with zero-emissions, including providing grants to local communities seeking project funding.

The $2.7 billion going to states is outlined in the Environmental Mitigation Trust Agreement for State Beneficiaries.

McLane said the $142 million spent by Florida will be used to "scrap" older diesel vehicles and replace them with new alternatives. He added that steering the money into EV investment has to date been the most popular option.

One question is whether areas of the state "that bear a disproportionate share of the air pollution burden" from diesel emissions than others and regulators must decide whether they should get more of the projects.

"Florida has good air quality,'' McLane told participants of the webinar on Thursday, noting that the small number of manufacturing industries and younger vehicle fleets "have cumulatively resulted in lower levels of pollution occurring statewide."

But, he said, some areas of the state — often near seaports and rail hubs — have more pollution. A map of the state showed that South Florida and the Tampa Bay regions have the highest nitrogen oxide emissions .

Many other states have already decided how to spend their settlement funds. Voters in New Mexico demanded that state steer $18 million into zero-emission school buses. In South Carolina, educators are also talking about replacing their aging school buses with electric vehicles. Colorado plans to use its $69 million to subsidize new electric and compressed natural gas transit buses.

California is planning to use its $423 million to reduce diesel emissions with vouchers to help businesses buy hybrid and zero-emission trucks, buses and freight vehicles in neighborhoods near warehouses and seaports. Connecticut is using its $56 million to replace old diesel engines in public and private fleets with cleaner diesel engines.

Connecticut is suing its $56 million to replace old diesel engines in public and private fleets with cleaner diesel engines.

Because regulators have 10 years to spend the money, Brandes urges them to carefully follow the growth patterns of the EV industry before deciding where to invest in the infrastructure.

"This is a meaningful push toward electrification and, long term, it will be absolutely beneficial,'' he said. "But they should probably invest these dollars toward the end of that period, not the beginning, or they may make the wrong decisions."