Colorado Transportation Bill Paves the Way for Electric Transportation

Posted by Noah Garcia on May 13, 2021 1:00:00 PM

CO transportation bill EV boost

“Kicking the can down the road” is an expression often used to describe states’ progress – or lack thereof – on funding aging, antiquated transportation systems. However, Colorado has the opportunity to buck that trend in favor of a cleaner, 21st century transportation future. With the introduction of Senate Bill 21-260 (SB 260), Colorado now has the opportunity to invest over $730 million in transportation electrification over the next decade, sending a strong market signal to the advanced transportation industry while supporting the state’s economic recovery and climate policy goals. Enjoying broad-based support, the bill is on the move.

To understand where Colorado’s transportation sector is headed, it’s important to understand where it’s been. In short, the magnitude and type of transportation investments the state has made have not kept pace with Colorado’s needs. The state gasoline tax, a foundational transportation revenue source, has remained at 22 cents per gallon for 30 years. Over the course of three decades, inflation, more stringent vehicle fuel economy standards, and more intensive road usage have eroded the revenues and infrastructure necessary to maintain a modern transportation system. If the state’s gas tax had simply been indexed to inflation, it would be approximately double what it is today. In other words, insufficient contributions from petroleum-fueled vehicles to state transportation budgets have put Colorado’s system of roads, bridges, and public transit on an increasingly unsustainable trajectory. 

Moreover, the transportation sector is Colorado’s leading source of greenhouse gas emissions and a significant contributor to air pollution that disproportionately burdens underserved communities. Aligning Colorado’s transportation funding with its climate and energy policy goals means supporting transformational investments in zero-emission vehicles and infrastructure as well as investments in clean transit and multimodal transportation options that provide Coloradans with more mobility options. SB 260 would do that. 

SB 260 responds to Colorado’s transportation challenges with a multi-faceted approach to investments over the next decade. While the bill covers more than transportation electrification, it establishes several key “enterprises” – akin to government-operated businesses – to accelerate electric vehicle (EV) adoption across the state:

  • A community access enterprise within the Colorado Energy Office to support passenger vehicle electrification efforts through funding for the deployment of EV charging infrastructure and replacement of older, inefficient vehicles with EVs;
  • A clean fleet enterprise within the Colorado Department of Public Health and Environment to support ride-hailing and retail delivery fleet electrification through new financing options and development of strategies to encourage widespread EV adoption; and
  • A clean transit enterprise within the Colorado Department of Transportation to support transit electrification through planning efforts, transit site upgrades, procurement of electric transit buses, and deployment of associated charging infrastructure.

These enterprises will be primarily funded through a series of new fees on retail deliveries and rides provided by transportation network companies (like Uber and Lyft). In aggregate, bill sponsors estimate that these fees will generate over $730 million over the next decade, providing a critical source of funding to support the state’s transportation electrification goals.

To help close the state’s yawning transportation funding gap, SB 260 also establishes a new road user fee on gasoline-powered vehicles starting at two cents per gallon in 2022 and increasing to eight cents per gallon in 2028 while indexing these fees to inflation.  With respect to EVs’ contributions to transportation funding, the bill indexes the state’s existing $50 annual fee to inflation and increases the fee through 2032. 

AEE maintains that EV owners should pay their fair share to maintain the transportation system, and we would support changes to the bill to ensure that EV owners do not pay more than a comparable, fuel-efficient internal combustion engine (ICE) vehicle driver at this nascent stage of EV market development in Colorado. Critically, we support SB 260’s requirement that a special committee review vehicle fees in 2026 to ensure they are appropriately balancing the state’s transportation funding needs with state climate policy objectives. Above all, Colorado’s goal should be to advance funding solutions that support market transformation and seek to create parity between EV and ICE vehicle fees on a miles per gallon equivalent basis.

After many months of conversations with a diverse set of stakeholders, SB 260 was introduced in the Senate on May 4 with broad support, including from the Polis administration, city mayors, and business groups. Since its introduction, the bill has passed the Senate Finance Committee on a party line vote, with Democrats holding the majority. It now goes to the Senate Appropriations Committee before heading for a floor vote.

With the legislative session coming to a close in June, Colorado is on the verge of taking decisive action to align transportation planning with its economic recovery and climate policy goals. Colorado has been a regional leader on transportation electrification with its actions to adopt Zero Emission Vehicle standards, authorize utility programs that support the deployment of EV charging infrastructure, encourage transportation electrification investments under its Volkswagen Beneficiary Mitigation Plan, and related grants and incentives. Even so, the state has a long way to go to achieve its goal of 940,000 EVs on the road by 2030 and 100% zero-emission medium- and heavy-duty vehicle sales by 2050

SB 260 will continue the progress Colorado has made to invest in a modern, clean transportation future. Instead of kicking the can down the road, it’s time to pick it up and run with it.

Download AEE’s report on the economic impact of investment in advanced energy technologies, including electric transportation, in Colorado, as well as other select states, by clicking below.

Download State Economic Impact Reports