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Despite tighter emission standards on automobiles over the last three decades, New Jersey continues to face significant automobile-related air pollution problems. While new federal standards set to take effect in 2004 will further limit emissions from cars and light trucks, those standards will likely not provide sufficient protection against health dangers from smog, air toxics and other air pollutants.

To further reduce air pollution from motor vehicles, and foster the development of new, cleaner, high-technology vehicles, three northeastern states—New York, Massachusetts and Vermont—have adopted California's Low-Emission Vehicle II (LEV II) program, which includes the Zero-Emission Vehicle (ZEV) requirement. Under the ZEV requirement, automakers must sell specific percentages of zero-emission and near-zero-emission vehicles by the middle of this decade.

New Jersey will become eligible to adopt the LEV II program beginning in the 2006 model year. This report analyzes the potential benefits of the ZEV requirement and assesses whether the technology, consumer acceptance, and infrastructure are in place to make the program a feasible public policy option for the state.

We find that:

The ZEV program would bring environmental, energy and economic benefits to New Jersey.

• As part of the Low-Emission Vehicle II (LEV II) program, the ZEV program would play a major role in reducing emissions of smog-forming and toxic pollutants. A 2002 NJPIRG Law & Policy Center report estimated that LEV II would reduce air toxics emissions from light duty cars and trucks by 23% by 2020 and emissions of smog-forming volatile organic compounds by 19%.

• Technologies encouraged by the ZEV program—such as hybrid-electric and battery-electric vehicles—can also reduce New Jersey's emissions of global warming gases. Battery-electric vehicles produce less than half the carbon dioxide emissions per mile of conventional vehicles.

• The ZEV requirement can enhance New Jersey's economy by reducing its susceptibility to oil price shocks, encouraging the development of clean vehicle industries within the state, and helping to promote advanced technologies with applications in other sectors of the economy.

• The LEV II program and ZEV requirement can also help New Jersey meet its responsibility under the Clean Air Act to reduce levels of ozone smog, allowing federal transportation dollars to continue to flow to the state.

The technology exists for automakers to meet the ZEV requirement.

• Nearly a half-million vehicles that run on alternative fuels are currently on America's roads. Automakers have already manufactured thousands of electric vehicles that qualify for the ZEV program, and are beginning to make cars that qualify for partial ZEV credit.

• All six of the major automakers (General Motors, Ford, DaimlerChrysler, Honda, Toyota and Nissan) are projected to produce vehicles that satisfy aspects of the ZEV program by 2005.

• The annual anticipated cost of the ZEV program to automakers in its early years represents less than one percent of automakers' annual media spending and net profits. Offsetting economic benefits of the program and consumers' willingness to pay more for some ZEV-compliant vehicles will reduce those costs further.

Consumers are eager to buy cleaner cars and have embraced ZEVs wherever they have been introduced.

• Electric vehicle drivers in California and in public-sector fleets express strong satisfaction with their vehicles. Surveys indicate that the majority of EV drivers would recommend the vehicles to others and that EVs fit better within drivers' "real world" driving patterns than owners had anticipated.

• Vehicle fleets in New Jersey are likely to provide a substantial market for clean vehicles - particularly if the state reorients its alternative-fuel vehicle purchasing programs to focus on the procurement of cleaner cars.

• Demand for battery-electric and hybrid-electric vehicles has outstripped supply. Consumers have weathered long waiting lists to purchase the first generation of hybrid-electric vehicles and automakers are preparing to increase production to meet the demand.

• The ZEV program would be unlikely to have a substantial negative effect on overall new vehicle prices, while most vehicles covered by the requirement would likely remain within the price range of consumers. Automakers may even choose to assume the costs of more expensive "pure ZEVs" in the short run in order to maximize long-run profits and build market share.

New Jersey can have the infrastructure in place to support the ZEV program by 2006.

• The vast majority of vehicles covered by the ZEV program - such as clean conventional cars and hybrid-electric vehicles—run on gasoline and will require no special infrastructure.

• While New Jersey currently lacks extensive infrastructure for alternative fuel vehicles, fueling and recharging stations can be erected quickly and with limited cost. California and New York State provide workable models of how this can be done.

The goals of a ZEV requirement in New Jersey are attainable, and achieving them would be beneficial to the state. To ensure successful implementation of the program, the state should take a leadership role in coordinating the expansion of alternative-fuel infrastructure and educating the public about clean cars, and work to secure both public and private resources to support those efforts.