The government’s new climate plan contains a suite of policy measures aimed at advancing electric vehicle adoption — with some key parts hinging on coordination with the incoming Biden administration in the U.S.
Identify the problems, mastermind the solutions and work together to execute. That appears to be the strategy baked into the DNA of the Canadian government’s new $15-billion climate plan, “A Healthy Environment and a Healthy Economy,” announced last Friday by Prime Minister Justin Trudeau and key members of his cabinet.
Along with setting a timetable to increase the carbon tax to $170 per tonne by 2030, the plan offers new insights into how seriously the government is taking the transition to electric transportation. Specifically, it pledges to make electric vehicles more readily available to purchase, to adopt the most stringent North American light-vehicle performance standards, and to work with “partners” on “supply-side options” to reduce vehicle emissions, which could potentially mean lending its support to a national ZEV mandate.
Notably, the Trudeau government wants to execute key elements of its proposal in tandem with the incoming Biden administration.
“We welcome the report,” says Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers’ Association, in an interview with Electric Autonomy Canada. “With respect to ZEVs, it’s a real commitment on encouraging Canadians to purchase more, which is fantastic. These are great steps and heading in the right direction.”
Daniel Breton, president and CEO of Electric Mobility Canada, agrees. “The government of Canada is taking more than one step in the right direction, it is taking several steps in the right direction,” says Breton.
Along with the new policy pledges, the government also reiterated several promises made earlier this year. Specifically, the $1.5 billion allocated to procuring 5,000 electric public transit and school buses via the Canadian Investment Bank, as well as new financing for the iZEV purchase rebate program and “additional funds for the installation of new charging and refuelling stations for zero-emission vehicles,” the last two of which were in the recent Fall Economic Statement.
The climate plan also reveals that the government is taking a narrower path with the proposed federal Clean Fuel Standard (CFS). More details are due shortly, but in its plan the government says the CFS will only apply to liquid fossil fuels such as gasoline, diesel and oil, while gas and solid fuel are now exempt.
A linchpin to the next phase of the Trudeau climate plan appears to be incoming American president, Joe Biden. Pundits on both sides of the border are anticipating a welcome return of a warm working relationship between Canada and the U.S. after January 20. Climate initiative and cooperation overall became chillier under the Trump administration, but Biden — whose platform includes massive new investments in clean energy and green jobs and a pledge to reach net-zero carbon emission by 2050 — is expected to be more receptive. The Trudeau government’s plan seems to lend official credibility to the theory.
“Given the integrative nature of the auto sector — we buy a lot of cars that are made in the USA, we also export a lot of cars that are made in Canada — it’s prudent to find optimal opportunities for alignment,” says Dan Woynillowicz, principal at Polaris Strategy + Insight. “We need to be aligning, at least in some portion, with the U.S. market. We have the signal from the government that they are intent to figure out how to do it one way or another.”
The Trudeau government’s intent to match Canada’s light-duty vehicle regulations with “the most stringent performance standards in North America post-2025” is a pointed response to the Trump administration’s recent move to lower fuel-economy standards for manufacturers. Those changes divided automakers and were contested by California and other states, but Canada was compelled to follow them through 2025 by the terms of an earlier treaty.
Another policy realignment is the government’s promise to invigorate the flow of vehicle manufacturing goods and all different types of electric vehicles themselves between the two countries to ensure better market access overall.
“Making sure Canadian policy is in line with the most ambitious policies set south of the border is going to be important to make sure that when those products do come to market Canadians are going to be able to access them,” says Jeff Turner, senior research lead at Dunsky Energy Consulting. “Canada is actually behind in terms of our production of light-duty, all-electric or plug-in hybrid vehicles. Hopefully we will be able to fix that with these recent announcements.”
A national ZEV mandate?
Less precise is the government’s pledge in the climate plan to “Work with partners in the year ahead on supply-side policy options to achieve additional reductions from Canada’s light-duty vehicle fleet, including regulations and investments to accelerate and expand the consumer availability of ZEVs in Canada as demand grows.”
To some, it reads like a tentative step towards implementing a national ZEV mandate.
“Are we talking about a ZEV standard or not? Too early to tell,” says EMC’s Breton, in an interview with Electric Autonomy Canada. “I think that the elected officials understand that there is a supply problem. Obviously if Canada wants to reach its targets the government is going to have to make sure we can get access to zero-emission vehicles.”
A ZEV mandate would act as both aspirational and enforceable policy mostly on the supply-side. Ultimately it would compel OEMs and suppliers of EVs to scale production (or product allocation) to meet growing demand and set EV sales benchmarks for dealerships to meet. It would also ensure there is a wider variety of EVs available in all regions. To date, only B.C. and Quebec have introduced ZEV mandates which, along with generous purchase rebate incentives, has led to surging EV adoption. Meanwhile, supply and selection in other parts of Canada has lagged far behind. While the federal government’s iZEV rebate incentive (up to $5,000) helps with affordability, it does nothing to ensure supply.
Making EVs mainstream
Woynillowicz emphasizes that whatever policies are implemented, the goal is to bring EVs to the centre of the Canadian market and remove the perception, actual or imagined, that they are novelty purchases existing on the fringe. That end game should be consolidating the supply chain as soon as possible.
David Adams, president of Global Automakers of Canada, agrees — to a point.
“It’s right for the government to look at this through the lens of: ‘What are other initiatives we can undertake in collaboration and conjunction with manufacturers to try and ensure there are vehicles for those individuals that want to purchase them?’” says Adams.
However, he adds, it’s “simplistic” to think a ZEV mandate will solve the supply issue.
“We have no disagreement on where the government and environmental groups want to go. The challenge is how quickly we can get there and we are aware in the industry of the challenges of overhauling an entire industry. That takes time and retooling factories and bringing new supply chains on board and getting different suppliers on board, but we will get there.”
Other policies that could help drive the transition, say industry experts, include implementing vehicle scrappage programs to get old cars off the road and starting skilled worker training for EV manufacturers. But, overall, the government’s new plan is being lauded. And it’s giving hope to a brighter, cleaner North American future.
“To be frank, we didn’t expect to see something as powerful as this [plan],” says Breton. “We’re in the middle of a pandemic and it’s really tough for a lot of people. For us in the EV industry, even though things are tough these days, we can see that what’s coming after the pandemic is going to be really exciting. We have a lot people working really hard to get prepared for the post pandemic recovery, I can tell you that.”