Clean Cars Yield $44 Billion in Benefits for New Mexicans

This blog has been co-authored by Alison Kirsch from the Sierra Club and Aaron Kressig from Western Resource Advocates. 

New Mexico has an important opportunity to provide significant air quality, health, and economic benefits to its residents. 

On July 3, New Mexico Governor Michelle Lujan Grisham announced that the state would adopt the Advanced Clean Cars II (ACC II) standard by the end of this year. Under this standard, manufacturers will sell increasingly higher percentages of new zero-emission vehicles (ZEVs) in each model year (MY), starting with 43 percent new ZEV sales in MY 2027. Under a full ACC II rule, auto manufacturers will need to sell 100% new ZEVs by MY 2035. Under ACC II, ZEVs include battery electric vehicles, plug-in hybrid electric vehicles, and fuel cell electric vehicles.   

A new analysis from ERM, commissioned by the Sierra Club, NRDC (Natural Resources Defense Council), and Western Resource Advocates, shows the significant potential public health, environmental, and economic benefits that adopting the full ACC II program could bring to New Mexico under different scenarios. 

Policy Scenarios 

The report evaluated the following scenarios:   

• Baseline: All new light-duty vehicles sold in New Mexico continue to meet existing vehicle standards. ZEV sales increase but are capped at one-third of new vehicle sales each year.    
• ACC II Flex: New Mexico starts implementing ACC II in MY 2027, and vehicle manufacturers use many of the available compliance flexibilities such that they sell fewer ZEVs than is nominally required by the regulation.   
• ACC II Flex + Clean Grid: New Mexico starts implementing ACC II in MY 2027 and reaches 100% clean electricity generation by 2040. Manufacturers use many of the available compliance flexibilities. 
• ACC II Full + Clean Grid: New Mexico starts implementing ACC II in MY 2027 and reaches 100% clean electricity generation by 2040. Manufacturers do not use any of the compliance flexibilities. 

Public Health and the Environment

Compared to the Baseline scenario, by 2050 the ACC II scenarios with a clean grid are estimated to reduce annual LDV fleet NOx emissions by 93% and PM emissions by 92%. The impact on New Mexico residents cannot be understated. This would deliver much cleaner air and better health: The resulting cumulative public health benefits between 2027 and 2050 include 85 to 93 fewer premature deaths, 80 to 86 fewer hospital visits, and 48,291 to 52,482 fewer minor cases of illness. The value of these public health benefits totals at least $1 billion. 

Compared to the Baseline scenario, under the ACC II scenarios cumulative greenhouse gas (GHG) emission reductions from New Mexico’s light-duty fleet reach between 88 and 116 million metric tons of CO₂e from 2027 through 2050. The benefits of these GHG emissions reductions are valued at $7.1 billion to $9.3 billion.  

Economic Impacts

By the time ACC II is launched, in MY 2027, the average light-duty ZEV in New Mexico will save its owner approximately $14,000 in lifetime costs compared to a conventional vehicle. 

Drivers purchasing a ZEV in MY 2030 or after could save up to $16,800 in lifetime costs. 

For rural New Mexicans, who are assumed to prefer a longer-range ZEV with higher up-front costs, an MY 2027 ZEV will save its owner $5,000 over its lifetime compared to a gasoline vehicle, and for an MY 2030 ZEV, lifetime costs will be about $13,600 lower. Rural drivers of ZEVs purchased after MY 2030 will enjoy total savings of more than $18,000. 

Under the ACC II Flex scenarios, annual net utility revenue from light-duty electric vehicle charging is projected to be $3 million in 2030, $46 million in 2040, and $43 million in 2050. 

The ACC II Full + Clean Grid scenario more than doubles net utility revenue in 2030 to $7 million, with $45 million in revenue in 2040, and $42 million in 2050.

Since ACC II will likely increase utility net revenue as it electrifies New Mexico’s LDV fleet, New Mexico’s average residential and commercial rates could be 1.8 percent lower by 2050. The average New Mexico household could therefore save $24 each year on its electricity bill, and the average commercial customer $185 each year. 

The deployment of ZEV charging infrastructure will also bring substantial investments to the state. Implementing ACC II will require up to 1.6 million in-use charge plugs. Purchasing and installing these chargers will bring approximately $3 billion in cumulative investment by 2050.  

Adopting ACC II will result in a net increase of more than 900 jobs nationally by 2050. Average wages for the new jobs created are expected to be about 50 percent higher than average wages for the jobs that will be replaced. 

Conclusion

Taken together, the cumulative net societal benefits by 2050 reach $40.4 billion under the ACC II Flex scenario, $41.9 billion under the ACC II Flex + Clean Grid scenario, and $44 billion under the ACC II Full + Clean Grid scenario. 

To fully capture the most benefits, New Mexico must adopt ACC II before the end of this year as Governor Grisham promised so that it is implemented starting in MY 2027. This way, New Mexicans can fully receive the significant public health, climate, and economic benefits as the state transitions to a clean transportation system.