Experts say the launch of a Clean Fuel Standard, with initial regulations now slated for release this fall, remains potentially transformative for the Canadian EV industry
Canada’s electric vehicle industry has been anticipating the release of proposed greenhouse gas-reducing Clean Fuel Standard (CFS) regulations since the federal government first outlined its CFS intentions in early 2017. So the industry is taking in stride Ottawa’s recent decision to postpone that release until fall due to COVID-19.
Done right, the experts say, it will be worth the wait — potentially triggering a leap forward in EV adoption.
The Clean Fuel Standard is a multiphase plan to reduce Canada’s GHG emissions by 30 megatons by 2030. The transportation sector is currently responsible for approximately 25 per cent of Canada’s overall annual emissions. EVs therefore are positioned to play a major role in reducing the carbon footprint.
“Quite a large portion of the reductions achieved through the CFS could be ‘supplied’ by a shift to electric vehicles,” says Bora Plumptre, federal policy senior analyst at Pembina Institute, in an interview with Electric Autonomy Canada.
“Generally it’s understood, in terms of the market potential, that EVs would be the big player in that area of how compliance is occurring under the policy.”
Lower carbon emissions
The CFS will work to lower carbon emissions from users of three classes of fuel — liquid, solid and gas — by imposing regulations that require producers, importers or distributors to take steps to reduce their associated GHG outputs.
According to the government’s CFS backgrounder, those steps “can include reducing emissions along the fuel supply chain, substituting carbon-based fuel with renewable fuel, and making investments that support cleaner options such as electric vehicles.”
In return for those actions, companies will receive credits that they can either use to offset their own future emissions or sell to firms whose emissions exceed the standards in a CFS credit marketplace.
Under the rollout schedule, regulations for liquid fuels will come first.
“The credits are valuable and that can lead to more EV uptake,” says Jeremy Moorhouse, an independent climate policy consultant, to Electric Autonomy. “For businesses it can help change that business case…and move it from ‘maybe it makes sense’ to ‘it does make sense’.”
Resowing CFS revenue
CFS’s intention is to encourage carbon displacement throughout the supply chain with value accumulating as more levels of industry green up.
“The CFS is not only a GHG-reduction policy, it is also a transportation electrification industry policy that can stimulate investment, job creation, new businesses and innovation,” says Suzanne Goldberg, director of public policy at ChargePoint in an e-mail to Electric Autonomy.
“[E]lectricity used as a transportation fuel will be an important source of emissions reductions. EVs produce 45 – 98 per cent fewer GHG emissions than a conventional gasoline vehicle with today’s grid.”
An important question remaining for industry stakeholders is how credit sellers will be able to use the proceeds.
“The companies that would be benefiting from the crediting of electric vehicle charging — whether it’s the automaker like Tesla or charging network operators like Flo and ChargePoint — have all agreed that it’s a good idea for the system to also incorporate reinvestment requirements for the use of those revenues generated from EV crediting,” says Plumptre.
“That can help to accelerate the deployment of EVs in a way that doesn’t rely on public funds.”
Clarification on this point is one of the details that EV stakeholders are hoping will be addressed during the review period.
Complicated, but powerful
Fortunately, the timeline for full adoption in 2022 has not been impacted — a relief to all the experts Electric Autonomy spoke with. The universal opinion is that keeping momentum going in a time of COVID or otherwise is critical to CFS’s success.
Once the proposed regulations are released a technical working group will fine-tune the policy and address issues.
And in the interim, the EV stakeholders are eagerly anticipating what may end up being a watershed moment for the industry.
“This standard will actually help build out EV charging and even make EVs cheaper and that’s important to understand,” says Moorhouse.
“It’s complicated, but it’s quite powerful.”