Should Electric Cars Get Free Parking?

Ideally, the best way to encourage sales of non-polluting electric vehicles would be to price carbon emissions. But if that isn't possible, why not reward EV owners with perks such as free parking; or would that be a distortionary incentive?

2 minute read

July 24, 2013, 8:00 AM PDT

By Irvin Dawid


Severin Borenstein, director of the UC Berkeley Energy Institute at the Haas School of Business, views the free parking privilege as a "distortionary incentive", meaning that the reward creates a new set of problems. He points to the 15-year policy at Los Angeles International Airport (LAX) of giving free parking (now $30 per day) for EVs that was finally cancelled on March 1. The incentive served to "lower the overall cost of travelling [sic] by air, itself a greenhouse gas (GHG)-intensive activity". It was cancelled in part due to travelers using the the EV charging parking stalls for long-term parking, denying the service for those motorists actually in need of recharging their vehicles.

His article illustrates the gap between the laws that policy-makers enact and what economists - in this case, energy economists, say is good policy.

The near-unanimous view of economists is that the best way to deal with pollution externalities is by pricing them, generally through a pollution tax or cap and trade program.  Yet, policy makers still prefer to reward “good” behavior rather than impose costs on bad behavior.

Turning toward road funding, Borenstein writes, "Exempting EVs from paying for road use is like giving them free parking at LAX, an indirect reward for good behavior that will be less equitable and efficient than taxing the negative externalities directly". Noting that "technology now allows easy pricing of vehicle miles traveled (VMT)", he supports charging a VMT-fee for those vehicles that pay no gas taxes.

However, he also supports gas taxes, noting that his Prius has a license plate stating, "TAX GAS". He asserts, "There's really no reason to think that exemption for road taxes creates the right level of incentives for reducing GHGs".

Should Oregon's voluntary VMT-fee billSB 810 be signed by Gov. John Kitzhaber, as expected, it will be interesting to see how many EV owners step-up and ask to be charged by the miles they drive. However, it should be noted that conventional car owners may ask to participate as they will be refunded the gas tax they pay. The program is limited to 5,000 participants.

Monday, July 8, 2013 in UC Berkeley: Energy Economics Exchange

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Get top-rated, practical training

Close-up of "Apartment for rent" sign in red text on black background in front of blurred building

Trump Administration Could Effectively End Housing Voucher Program

Federal officials are eyeing major cuts to the Section 8 program that helps millions of low-income households pay rent.

April 21, 2025 - Housing Wire

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

April 30, 2025 - Diana Ionescu

Close-up on Canadian flag with Canada Parliament building blurred in background.

Canada vs. Kamala: Whose Liberal Housing Platform Comes Out on Top?

As Canada votes for a new Prime Minister, what can America learn from the leading liberal candidate of its neighbor to the north?

April 28, 2025 - Benjamin Schneider

Washington

Washington State’s Parking Reform Law Could Unlock ‘Countless’ Acres for New Housing

A law that limits how much parking cities can require for residential amd commercial developments could lead to a construction boom.

3 hours ago - Streetsblog USA

Bluebird sitting on branch of green bush.

Wildlife Rebounds After the Eaton Fire

Following the devastation of the Eaton Fire, the return of wildlife and the regrowth of native plants are offering powerful signs of resilience and renewal.

4 hours ago - AP News

1984 Olympics

LA to Replace Inglewood Light Rail Project With Bus Shuttles

LA Metro says the change is in response to community engagement and that the new design will be ready before the 2028 Olympic Games.

5 hours ago - Newsweek

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.