When Volkswagen was caught systematically cheating on emissions tests, making their diesel vehicles look much cleaner than they actually are, the U.S. Department of Justice (DOJ) filed suit for violations of the Clean Air Act. The company and the DOJ have reached a partial settlement, which is expected to be approved by a federal judge in October. The settlement includes approximately $10 billion in compensation to owners of noncompliant VWs, but also includes $4.7 billion that could help to accelerate the adoption of electric cars and buses. Of the $4.7 billion, $2.7 billion is earmarked for an environmental remediation fund and the other $2 billion for a zero emission vehicle fund.
We believe the two big opportunities that come from these substantial settlement dollars are building out the electric vehicle charging infrastructure in the Southwest and replacing old diesel buses with zero emission buses powered by electricity.
Here is a snapshot of how the settlement agreement works:
The settlement allocates $2.7 billion to an environmental remediation fund to reduce emissions of nitrogen oxides (NOx). This is allocated to each state by a formula based on how many VW diesel cars were registered in that state and has a list of allowable uses. It is up to each state to decide how they want to allocate the money within these uses.
Up to 15% of the funds may be used to build out the electric vehicle charging network. The other uses allowed are primarily oriented at replacing older diesel trucks and buses with vehicles with much lower NOx emissions. Some of the allowed uses probably don't achieve much over the long term - such as replacing older diesels with newer diesels, since this is likely to happen anyway - but old diesels can also be replaced with electric trucks or buses.
Click here to read the full press release.
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