At least 50% of these Low Carbon Transportation funds would be invested to benefit disadvantaged communities and at least 10% would be invested directly in disadvantaged communities.

The Fiscal Year (FY) 2016-17 Funding Plan for Low-Carbon Transportation and Fuels Investments and AQIP (FY 2016-17 Funding Plan) under development describes how these funds would be spent.

The Cap-and-Trade auction proceeds provide funding for ARB’s advanced technology, clean transportation incentive programs to reduce greenhouse gas emissions, expanding the types of projects ARB has funded in the past through AQIP. ARB intends these investments to accelerate the transition to low carbon freight and passenger transportation, with an emphasis on low carbon freight and passenger transportation investments that benefit disadvantaged communities.

AQIP is a mobile source incentive program that focuses on reducing criteria pollutant and diesel particulate emissions with concurrent reductions in greenhouse gas emissions.

The discussion document summarizes ARB staff’s work to-date and the draft recommendations for the FY 2016-17 Funding Plan. It is organized into two parts:

• Draft Funding Plan Recommendations—staff recommendations on the project categories and funding allocations for the FY 2016-17 cycle.

• Long-Term Plan for the Clean Vehicle Rebate Project (CVRP) and Light- Duty Incentives—work to-date on the long-term plan required by Senate Bill (SB) 1275 (De León, Chapter 530, Statutes of 2014).

Of the proposed uses of the $500-million investment, almost half ($230 million) is targeted for the Clean Vehicle Rebate Project (CVRP). Of the $230 million, $55 million is slated to satisfy remaining FY 2015-16 demand (through Sept 2016), and $175 million for the period from Oct 2016-Sept 2017.

CVRP offers vehicle rebates on a first-come, first-served basis for light-duty ZEVs, plug-in hybrid electric vehicles (PHEVs), zero-emission motorcycles, and neighborhood electric vehicles.

Rebate amounts are $2,500 for battery electric vehicles (BEVs); $1,500 for PHEVs; $5,000 for fuel cell electric vehicles; and $900 for zero-emission motorcycles and neighborhood electric vehicles.

At the end of March 2016, rebate amounts will increase for lower-income consumers (with household incomes of less than or equal to 300% of the federal poverty level) to $4,000 for BEVs; $3,000 for PHEVs; and $6,500 for fuel cell electric vehicles.

An income cap will be instituted to exclude higher income consumers at the same time. The cap will exclude from CVRP individuals with gross annual incomes greater than $250,000, head-of-household filers with gross incomes greater than $340,000, and joint filers with gross incomes greater than $500,000.

Fuel cell vehicles are temporarily exempt from the income cap because these vehicles are in a much earlier stage of commercialization than BEVs or PHEVs. Staff has committed to re-evaluate these provisions annually. As of February 2016, CVRP has only issued rebates for about 150 fuel cell vehicles. Accordingly, staff believes the higher rebate level and temporary delay of the income cap for these vehicles should remain in place and recommends no changes to these provisions for FY 2016-17.

As of 1 February 2016, CVRP has provided rebates for about 137,000 vehicles at a cost of more than $291 million since the project’s launch in 2010.