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California Legislature Passes New Greenhouse Gas Standards For Uber, Lyft and Other Ride-Sharing Platforms

Uber and Lyft are on the verge of estimated $120 billion and $15 billion IPOs, respectively, in 2019. Uber has completed over 10 billion rides and recently Lyft announced that it hit 1 billion rides. Recognizing the increased role that companies like Uber® and Lyft® play in our lives, in 2018 the California Legislature passed SB 1014, which was signed into law by Governor Brown.

SB 1014 creates the California Clean Miles Standard and Incentive Program and establishes new greenhouse gas emissions (GHG) standards for transportation network companies (TNC) like Uber and Lyft. Some have opined that SB 1014 generally mandates Uber, Lyft and other TNCs to purchase zero emissions vehicles (ZEV).

 

Uber, Lyft and Electric Vehicles

According to a California Senate Rules Committee bill analysis on SB 1014, TNCs:

 

  • . . .are attracting passengers away from public transit, biking, and walking while increasing the number of carbon-combustion vehicles on the road.

One study estimated that between November 2016 and October 2017 TNC operations produced emissions equivalent to the annual energy use of 100,000 households. The same study opined that increased use of electric vehicles (EV) could help the state of California reach their goal of 5 million ZEVs by 2030. SB 1014’s proponents also hope that it will encourage ride-sharing, like UberPOOL and Lyft Line. UberPOOL and Lyft Line connect clients with other passengers with the same route or location, thereby encouraging carpooling and lowering GHG emissions.

When talking about EVs, Uber’s global head of sustainability, Adam Gromis, has said:

 

  • It’s hard to drive an electric vehicle for Uber today [because] Drivers spend a lot of time worrying about whether they can finish the ride without running out of charge, and a lot of time looking for charging stations and charging the vehicles.

Uber was neutral on SB 1014 while Lyft opposed it contending that it could have a negative impact on low-income and part-time drivers who use Lyft to supplement their incomes, a contention that the bill’s sponsor, Senator Nancy Skinner, rejected. Others also challenged Lyft’s position arguing that since Lyft has an official goal of all electric autonomous vehicles operating on the Lyft platform, that by itself would remove low-income and part-time drivers from the Lyft platform.

Lyft co-founder John Zimmer has also said in interviews that owning a car will not make any sense by 2025 with companies like Lyft potentially offering monthly ride subscriptions. Mr. Zimmer has also opined that in the future some cities will only allow autonomous vehicles in certain parts of their cities.

 

SB 1014 Requirements

SB 1014 includes requirements for the California Air Resources Board (CARB) and TNCs. Specifically, SB 1014 includes the following:

 

  • 1) Requires CARB to establish a per-passenger, per-mile GHG emission baseline for TNC vehicles by January 1, 2020.

 

2) Requires CARB to adopt by 2021, targets and goals to reduce TNC vehicles’ GHG emissions below the baseline by 2023.

 

3) The targets and goals established by CARB must be feasible and consistent with existing state ZEV deployment goals.

 

4) The targets and goals established by CARB must include annual goals for increasing the use of ZEVs in TNC travel.

 

5) Beginning January 1, 2022, and every two years thereafter, TNCs must develop a GHG reduction plan that include proposals on how to meet the targets and goals for reducing GHG emissions established by CARB.

 

With respect to ride-sharing, a Senate Rules Committee analysis also recognized that driver income, driver turnover, and ZEV infrastructure limitations may limit the degree to which ZEVs are used. Therefore, SB 1014 also directs CARB, the Public Utilities Commission and the Energy Commission to ensure that ongoing state efforts to accelerate the adoption of ZEVs and charging infrastructure consider the goals of the California Clean Miles Standard and Incentive Program.

 

Conclusion and Implications

The increase in the use of TNCs is clear and the state of California appears to see them as and added resource toward its goal of 5 million ZEVs by 2030. It will be interesting to see how CARB establishes the greenhouse gas emission baseline and how TNCs respond in their greenhouse gas reduction plans.

(Kathryn Casey)