Of all top-heavy Liberal climate policies, electric-vehicles mandate is the worst

From the MacDonald Laurier Institute

“History has shown us time and again that government quotas are no match for the market.”

To meet Canada’s commitment to its Paris Agreement climate goals, the federal government has announced increasingly heavy-handed emissions reduction policies this year. It culminated Monday in the publication of regulated targets for electric-vehicle sales: an EV mandate.

History has shown us time and again that government quotas are no match for the market. The Liberals want to show us one more time why this is the case.

There is absolutely nothing wrong with EVs. Those who own them tend to love them. The car manufacturing industry is all-in on EVs, and globally has committed US$1.2-trillion toward electrification.

The problem is in the attempt to dictate, by government fiat, what consumers can or cannot buy. In the case of the EV mandate, the federal government is using dealers to enforce their strategy. One hundred per cent of light duty vehicles sold in Canada by 2035 must be EVs, with mandatory sales targets starting at 20 per cent in 2026.

If a dealer falls under the prescribed target for a particular year, they are required to buy expensive credits or pay for public charging stations to atone for their sin. The most likely response will be to sell fewer gas-fuelled vehicles than demand would indicate in order to meet the required ratios and avoid the penalties.

You don’t have to be an economist to predict the outcome: waiting lists, shortages and a black market for internal combustion engines. But it’s worth being specific about why a federal EV mandate can’t overcome the laws of supply and demand.

The first is the cost of EVs: They are more expensive than internal combustions engines. EV adoption is overwhelmingly led by urban, high-income consumers who can charge at home. Aside from nudging auto manufacturers to build charging stations, whose uptake is questionable, the mandate addresses none of the logistical and financial constraints that apartment dwellers, renters and low-income car owners face in owning an EV.

The federal government has pointed to Norway, where almost 90 per cent of new car sales are EVs, as an example of how these challenges can be overcome. But that country’s EV uptake is driven by a hefty subsidy, more than triple the Canadian amount, at about $16,000 a vehicle (and made possible by the revenues from their oil and gas exports). That’s the equivalent of a $700 a tonne carbon tax, and last year it represented 2 per cent of their national budget. I can think of no more expensive way to reduce emissions.

The second problem with the EV mandate is that the dealers don’t control the electricity grid. In parallel with the mandate, the federal government is also pushing Clean Electricity Regulations, which will severely strain utilities’ ability to meet additional demand. And it’s not just capacity that matters – it’s the ability to distribute additional power into millions of homes. In many neighbourhoods and small towns, that distribution capacity does not exist, and it will be very expensive to add.

The third is range in rural and remote areas. The federal government acknowledges that lack of charging infrastructure and battery performance in cold weather is an issue. But they just assume that it will be worked out over time – no need to worry about it now.

Fourth is the ability of manufacturers to ramp up their production to meet EV mandates and incentives across the Western world. This will depend on a supply chain that does not yet exist, from critical minerals, to mechanics, to electricians. And it will depend on greater profitability in the sector, which, outside of China, is mostly selling EVs at a loss.

No amount of regulation from Ottawa can solve all of these problems. There are some that see the EV mandate as a Hail Mary from a government that is unlikely to win re-election. The mandate, therefore, is a foolish but benign distraction.

But for refiners, whose profitability depends on some level of gasoline demand, it causes tremendous uncertainty. As long as the EV mandate hangs over their heads, they will be unlikely to invest in upgrading their existing assets, even to produce clean fuels (as mandated this year under the Clean Fuel Regulations, but which EVs would not use), and they will be very reluctant to invest in new refineries.

With our fast growing population, this will inevitably squeeze the availability of the many refined products and distillates the Canadian economy still needs. There is a cost to these policies, even when unimplemented.

The series of climate policies the Liberals have imposed since Steven Guilbeault was appointed Minister of Environment have mostly applied to industry. But the EV mandate targets consumers, limiting what they can and cannot buy when it comes to their vehicle.

Alas, consumers are voters. And command economies don’t work well in democracies.

Heather Exner-Pirot is director of energy, natural resources and environment at the Macdonald-Laurier Institute.

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Biden-Harris Admin’s EV Coercion Campaign Hasn’t Really Gone All That Well

Published on October 31, 2024

Todayville

From the Daily Caller News Foundation

By David Blackmon

The future direction of federal energy policy related to the transportation sector is a key question that will be determined in one way or another by the outcome of the presidential election. What remains unclear is the extent of change that a Trump presidency would bring.

Given that Tesla founder and CEO Elon Musk is a major supporter of former President Donald Trump, it seems unlikely a Trump White House would move to try to end the EV subsidies and tax breaks included in the Inflation Reduction Act (IRA). Those provisions, of course, constitute the “carrot” end of the Biden-Harris carrot-and-stick suite of policies designed to promote the expansion of EVs in the U.S. market.

The “stick” side of that approach comes in the form of stricter tailpipe emissions rules and higher fleet auto-mileage requirements imposed on domestic carmakers. While a Harris administration would likely seek to impose even more federal pressure through such command-and-control regulatory measures, a Trump administration would likely be more inclined to ease them.

But doing that is difficult and time-consuming and much would depend on the political will of those Trump appoints to lead the relevant agencies and departments.

Those and other coercive EV-related policies imposed during the Biden-Harris years have been designed to move the U.S. auto industry directionally to meet the administration’s stated goal of having EVs make up a third of the U.S. light duty fleet by 2030. The suite of policies does not constitute a hard mandate per se but is designed to produce a similar pre-conceived outcome.

It is the sort of heavy-handed federal effort to control markets that Trump has spoken out against throughout his first term in office and his pursuit of a second term.

A new report released this week by big energy data and analytics firm Enverus seems likely to influence prospective Trump officials to take a more favorable view of the potential for EVs to grow as a part of the domestic transportation fleet. Perhaps the most surprising bit of news in the study, conducted by Enverus subsidiary Enverus Intelligence Research (EIR), is a projection that EVs are poised to be lower-priced than their equivalent gas-powered models as soon as next year, due to falling battery costs.

“Battery costs have fallen rapidly, with 2024 cell costs dipping below $100/kWh. We predict from [2025] forward EVs will be more affordable than their traditional, internal combustible engine counterparts,” Carson Kearl, analyst at EIR, says in the release. Kearl further says that EIR expects the number of EVs on the road in the US to “exceed 40 million (20%) by 2035 and 80 million (40%) by 2040.”

The falling battery costs have been driven by a collapse in lithium prices. Somewhat ironically, that price collapse has in turn been driven by the failure of EV expansion to meet the unrealistic goal-setting mainly by western governments, including the United States. Those same cause-and-effect dynamics would most likely mean that prices for lithium, batteries and EVs would rise again if the rapid market penetration projected by EIR were to come to fruition.

In the U.S. market, the one and only certainty of all of this is that something is going to have to change, and soon. On Monday, Ford Motor Company reported it lost another $1.2 billion in its Ford Model e EV division in the 3^rd quarter, bringing its accumulated loss for the first 9 months of 2024 to $3.7 billion.

Energy analyst and writer Robert Bryce points out in his Substack newsletter that that Model e loss is equivalent to the $3.7 billion profit Ford has reported this year in its Ford Blue division, which makes the company’s light duty internal combustion cars and trucks.

While Tesla is doing fine, with recovering profits and a rising stock price amid the successful launch of its CyberTruck and other new products, other pure-play EV makers in the United States are struggling to survive. Ford’s integrated peers GM and Stellantis have also struggled with the transition to more EV model-heavy fleets.

None of this is sustainable, and a recalibration of policy is in order. Next Tuesday’s election will determine which path the redirection of policy takes.

David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.

Automotive

Trudeau’s new vehicle ban is a non starter

Published on October 11, 2024

Todayville

From the Canadian Taxpayers Federation

Author: Kris Sims

The Trudeau government’s ban on new gas and diesel vehicles is a nonstarter for three powerful reasons.

First, Canadians want to drive gas-powered minivans and diesel pickups.

Second, Canada does not have the electrical power to fuel these battery-powered cars.

Third, Canadians do not have the money to build the power-generating stations that would be needed to power these government-mandated vehicles.

Let’s start on the showroom floor.

The Trudeau government is banning the sale of new gasoline and diesel-powered vehicles by 2035.

In about 10 years’ time, Canadians will not be allowed to buy a new vehicle powered by an internal combustion engine because the government will forbid it.

Canadians disagree with this.

The Canadian Taxpayers Federation released Leger polling showing 59 per cent of Canadians oppose the federal government’s ban on new gas and diesel vehicles.

Among those who are decided on the issue, 67 per cent of Canadians, and majorities in every demographic, oppose the Trudeau government’s ban.

Now let’s look under the hood.

Canada does not have the electricity to charge these battery-powered cars. The government hasn’t presented any plan to pay for the power plants, transmission lines and charging stations for these government-mandated vehicles.

That leaves a big question: How much will this cost taxpayers?

Canada’s vehicle transition could cost up to $300 billion by 2040 to expand the electrical grid, according to a report for Natural Resources Canada.

Let’s look at why this will cost so much.

The average Canadian household uses about 10,861 kWh in electricity per year. The average electric car uses about 4,500 kWh of energy per year.

The average household’s electricity use would jump by about 40 per cent if they bought one EV and charged it at home.

Canada is home to 24 million cars and light trucks that run on gasoline and diesel, according to Statistics Canada.

If all those vehicles were powered by electricity and batteries, that fleet would use about 108 million mWh of power every year.

For context, one large CANDU nuclear reactor at the Darlington nuclear plant in Ontario generates about 7,750,000 mWh of power per year.

Canada would require about 14 of these reactors to power all of those electric cars.

Building a large nuclear reactor costs about $12.5 billion.

That’s a price tag of about $175 billion just for all the power plants. The Natural Resources report estimates the transition to electric vehicles could cost up to $300 billion in total, when new charging stations and power lines are included.

Who would be paying that tab? Normal Canadians through higher taxes and power bills.

Canadians cannot afford the cost of these mandatory electric vehicles because they’re broke.

Canadians are broke largely because of high taxes and high inflation, both driven by the Trudeau government’s wasteful spending.

About half of Canadians say they are within $200 of not being able to make the minimum payments on their bills each month. That’s also known as barely scraping by.

Food banks are facing record demand, with a sharp increase in working families needing help. That means parents who are holding down jobs are still depending on donated jars of peanut butter to feed their kids.

Rubbing salt into the wound, the federal government also put taxpayers on the hook for about $30 billion to multinational corporations like Honda, Volkswagen, Stellantis and Northvolt to build EV battery factories.

The roadside sobriety test is complete, and the Trudeau government is blowing a fail on this policy.

Canadians are opposed to the Trudeau government banning the sale of new gasoline and diesel-powered vehicles.

Canada does not have the electricity to charge these battery-powered cars.

Canadians don’t have the money to build the new power plants, transmission lines and charging stations these vehicles would demand.

It’s time to tow this ban on new gas and diesel vehicles to the scrapyard.

Franco Terrazzano is the Federal Director and Kris Sims is the Alberta Director of the Canadian Taxpayers Federation