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William Lyons
Two years after the Volkswagen emissions scandal broke, the public is finally being compensated for the damage caused by intentionally deceptive emissions controls on Volkswagen cars equipped with diesel engines. This is a watershed moment that will provide Massachusetts with the opportunity to make real progress towards reducing emissions from vehicles. How Massachusetts intends to use the funds from this windfall remains to be seen, but the options are very tantalizing.
As we recall, in September of 2015, the Environmental Protection Agency notified Volkswagen that it was in violation of the Clean Air Act. The violation stemmed from Volkswagen’s intentional programming of their diesel engines to cheat on emissions tests. In essence, the vehicles were programmed to meet emissions standards when being tested, and to far exceed emissions standards (with 40 times as much nitrous oxide being emitted) during normal driving conditions. The fallout from the revelation about such systematic cheating was swift, with public scorn matched by regulatory enforcement.
In the immediate aftermath of the deception becoming public, Volkswagen’s stock fell by a third, its CEO resigned and many of its senior executives were suspended or fired. The market value of the company and its reputation were severely damaged. But the worst was yet to come.
After an investigation into the deception, Volkswagen pled guilty to criminal charges in the United States. In addition, it agreed to retrofit or buy back vehicles that had been affected by the deception. To settle the legal charges, Volkswagen agreed to pay a $2.9 billion fine. The proceeds of this fine were placed into a trust fund, to be distributed to the states to help implement projects designed to reduce emissions.
Opportunity For Change
The Volkswagen trust fund was officially established last month. The states have until Dec. 1 to opt into the beneficiary pool of the trust. Each state will receive an allocation from the $2.9 billion to pursue emissions reduction projects.
While Massachusetts has not announced plans for the use of its allocation, other states have: Virginia and Colorado are planning to use a significant portion of their allocations to construct electric vehicle charging stations along highways. Virginia will receive almost $94 million in trust funds, while Colorado will receive approximately $69 million. The Massachusetts Department of Environmental Protection is currently conducting a public input process on what to do with the more than $75 million in funds it is expected to receive from the trust fund.
This significant influx of funds can make a substantial difference in a state’s effort to address vehicle emissions. Some of the ideas being considered by other states include converting diesel-powered transit vehicles and school buses to low emissions engines (or replacing these vehicles with electric vehicles), incentivizing businesses to replace diesel vehicles in their fleet with electric vehicles and developing the necessary infrastructure to make electric charging stations more available to most motorists. Each of these initiatives has strong merit. In Massachusetts’ case, the first option – replacing diesel powered transit vehicles with electric powered vehicles – makes the most sense.
In Massachusetts, electric vehicle charging stations are being developed very robustly by the marketplace. While it certainly would make sense to use some of the trust funds to install electric vehicle charging stations at each rest area on the interstate highway system, this is a very modest amount of the funds available. To make a real difference in air quality by reducing emissions, replacing an aging diesel vehicle fleet makes sense for several reasons.
The MBTA’s bus fleet is concentrated in the urban core of the Boston metropolitan region. Many of these buses are powered by diesel engines. These buses also tend to service many urban neighborhoods, with a resulting disproportionate impact on vulnerable populations from diesel emissions. These emissions have been demonstrated to increase incidence of asthma and other pulmonary conditions.
In addition, it would be a boon to the MBTA to replace a meaningful portion of its bus fleet with new vehicles. As the MBTA struggles to keep up with a system-wide backlog of maintenance and capital needs, there is a significant collateral benefit to replacing an older diesel fleet with a newer electric fleet. This is a benefit that should not be overlooked.
The Volkswagen settlement and trust fund present Massachusetts with a rare opportunity to leapfrog ahead to new technologies on an expedited basis. This financial windfall could help make an all-electric bus fleet a reality. While there are other beneficial uses of the trust funds, there is little doubt about what Massachusetts should do. We should double down on electric vehicle technology and lead by example with new electric buses for the MBTA.
William F. Lyons Jr. is president of Fort Hill Cos. of Boston.
