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October 30, 2023
In November 2021, the Biden-Harris Administration signed the Infrastructure Investment and Jobs Act (IIJA) (P.L. 117-58) into law. Labeled a “once-in-a-generation investment” by the U.S. Department of Transportation (DOT), the IIJA authorizes $1.2 trillion in spending for transportation and infrastructure, which will help increase resilience to climate impacts. More than $7.5 billion of these funds will support the buildout of electric vehicle (EV) infrastructure, while an additional $43 billion (not including loans and tax incentives) in flexible spending could be used for battery manufacturing, grid updates, retooling auto industry facilities, and retraining and rehiring existing auto workers. The Inflation Reduction Act (IRA) (P.L. 117-169), enacted in August 2022, invests $369 billion towards “confronting the existential threat of the climate crisis” through adaptation, remediation, and clean energy projects. Roughly $47 billion in the IRA is eligible to support the widespread adoption of EVs. Funding from the IIJA and IRA is distributed through various programs overseen by federal agencies, including DOT, the Department of Energy (DOE), and the Environmental Protection Agency (EPA). Electrifying its transportation sector will help the United States meet its nationally determined contribution under the United Nations’ Paris Agreement, which aims to keep global warming significantly below 2 degrees Celsius (3.6°F).
As we approach the IIJA’s second anniversary and celebrate the one-year anniversary of the IRA, it is time for policymakers and industry stakeholders alike to take stock of the efficacy of the efforts to decarbonize the transportation sector. How much EV funding has been awarded, and where has it gone?
An ongoing conversation on Capitol Hill around energy independence and national security has woven its way into the EV sector. Critical minerals that are necessary for the production of EV batteries, such as cobalt and lithium, are mostly mined and processed outside of the United States. These minerals have been at the center of IIJA and IRA efforts to ensure access to EV battery resources. Federal programs are working toward the domestic sourcing of critical minerals by providing grants, loans, and tax incentives to domestic mineral producers and automakers that purchase minerals from U.S.-based producers. Under the IRA, DOE’s Loan Programs Office (with an award capacity of $40 billion) has already provided almost $5 billion to four critical mineral projects that support battery recycling, lithium manufacturing and extraction, and mineral recovery. Programs created by the IIJA to address EV battery manufacturing include DOE’s Battery Materials Processing Grants (with an award capacity of $3 billion) and the Electric Drive Vehicle Battery Recycling and 2nd Life Apps Program (with an award capacity of $2 billion). To date, these programs have collectively awarded over $2 billion to 26 projects in 16 states.
Data shows a strong interest from industry and from state and local governments in taking advantage of federal funding for EV batteries. According to the Environmental Defense Fund, domestic EV battery manufacturing saw a sharp increase in 2021 following the passage of the IIJA. Enough batteries were produced to power 224,700 vehicles in 2021 and over 1 million vehicles in 2022. Production increased again in the wake of the IRA’s passage to an estimated 2.35 million in 2023, and manufacturing capacity is projected to soar to over 12 million vehicles by 2027.
To promote EV adoption among consumers and address concerns over “range anxiety,” the IIJA and IRA allocate targeted funding for charging infrastructure, with priority given to historically underserved areas. Together, the laws provide about $19.25 billion for charging infrastructure.
The National Electric Vehicle Infrastructure Formula Program (NEVI), established under the IIJA, is overseen by DOT and distributes funding for EV infrastructure through grants to state and local governments. NEVI’s 2022 deployment plans were approved for all 50 states, the District of Columbia, and Puerto Rico. The program will provide an estimated $5 billion in discretionary funding over five years. The DOT also manages several flexible grant programs that can be used for EV charging infrastructure, including a reauthorization of the Congestion Mitigation and Air Quality Improvement Program (CMAQ, with $2.5 billion), the Federal Lands Access Program (FLAP, with over $1.75 billion), and the Rebuilding American Infrastructure with Sustainability and Equity program (RAISE, with $7.5 billion). To date, almost $2.5 billion has been awarded across these four IIJA programs for over 500 projects in all 50 states.
The IRA’s Discretionary Grant Program for Charging and Fueling Infrastructure (CFI) provides $2.5 billion in grants for states, local governments, tribes, territories, city planners, and other land-use authorities to finance the construction and maintenance of charging and fueling infrastructure. The CFI is split into two programs, offering Community Charging and Fueling grants and Alternative Fuel Corridor Charging and Fueling grants to accommodate both high-traffic and rural areas. Deadlines for CFI grant applications passed in June 2023, and DOT expects to announce awards by the end of 2023.
Both the IIJA and IRA include provisions to ensure existing autoworkers are not left out of the EV transition by funding efforts to “retool,” or adapt, existing manufacturing plants for EV production and programs to educate auto workers on EV assembly. Both laws establish programs that facilitate retooling, including rehiring and retraining workers, to ensure that the auto industry remains a steady source of income for communities that have historically been dependent on it. The IRA’s Domestic Manufacturing Conversion Grants program, administered by DOE, offers a total of $2 billion in cost-share grants to assist businesses and individuals working in domestic EV manufacturing. Applications to participate in the program are due in December 2023, and funding will be distributed annually through 2031.
Language used in funding announcements and grant applications for IIJA and IRA programs emphasize that rural, low-income, and historically disadvantaged communities will be given special consideration in an effort to evenly distribute the benefits of spending packages. This is a key goal for the Biden-Harris Administration, whose Justice 40 initiative seeks to ensure that 40 percent of the benefits of federal environmental investments go to disadvantaged communities.
In a September 2023 address to the Economic Club of New York, Deputy Secretary of the Treasury Wally Adeyemo discussed the merits of taking income levels and environmental conditions into account when distributing investments. Citing an internal study, he noted that “in the year since we passed IRA, nearly two-thirds of investments in IRA-related sectors are in counties with above-average poverty rates, 80 percent are in counties with lower college graduation rates than the national average, and almost 90 percent are in counties with below-average weekly wages.”
While the IRA is designed to increase equitable access to funds, its funding for EV manufacturing varies dramatically from state to state. A 2023 report from the Environmental Defense Fund found that “88 percent of announced EV manufacturing investments” from the IRA have gone to just 10 states—Georgia, Michigan, Tennessee, South Carolina, Arizona, Nevada, Kentucky, North Carolina, Ohio, and Indiana. Projects funded by IIJA programs are more evenly distributed throughout the states, with a greater number of projects located in the more populated east.
In an effort to promote accessibility, both the IIJA and IRA include stipulations that allow for local governments, tribes, and other land-use authorities to access funding even if their state governments have not applied for it. The IRA, for example, includes provisions allowing a state’s largest metro areas to apply for regional funding, independent of the state government. Some federal agencies and nonprofits have offered resources to support these entities in the application process, and the DOE has indicated that it will work with policymakers to get benefits to residents in their states. To address geographic disparities in EV investments, DOT released a Rural EV Toolkit. The toolkit addresses concerns about EV adoption in rural areas and directs applicants to programs that have already awarded funding to rural EV initiatives that both spur economic activity and support clean mobility.
While both the IIJA and IRA are in their infancy, early investments indicate a strong commitment to their goals. Continuing to provide equitable and strategic support for domestic battery production, charging infrastructure, workforce development, and other EV projects ensures that the EV transition simultaneously fuels economic progress, equity, and climate change solutions.
Author: Maggie Christianson
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