Canada’s sales of electric vehicles (EVs) are floundering in comparison to countries like Norway and California, despite a raft of incentives, new infrastructure and regulations. So how can Canada do better?
A new policy handbook released this week by Canadian transport policy analysts, supported in part by the Pacific Institute for Climate Solutions, suggests ways to bolster domestic policies in order to signal to manufacturers and consumers that EVs are the future.
The handbook lays out three policy pathways that can be effective in the long term. Last week, analysts warned that Ontario, the country’s largest vehicle market, is far off its target that would see five percent of all new vehicle sales comprised of EVs by 2020. Like Canada, Ontario is not at one percent yet.
Meanwhile in September, in California, electric vehicles represent about five percent of all new sales, and Norway was a whisker away from 50 percent (48.5%). The Scandinavian government expects EVs to achieve a majority market share some time in the new year.
One suggested policy approach focuses on consumer demand and long-term incentives. For example, Norway has built out nationwide fast-charging stations. Parking is also free for electric vehicles, as is charging, and even travel on ferries. EV owners don’t have to pay road tolls and they have access to bus lanes. The government also offers generous tax breaks albeit at the expense of the public purse. Regular car owners pay 25 percent sales tax and a hefty car registration tax to boot. But EVs can drive off the lot largely tax-free. These tax breaks are enough to make the purchase price about the same as a conventional vehicle.
Ontario, BC and Quebec also offer subsidies, but nowhere near the level equivalent to Norway’s tax breaks and they are offered for a limited time only. The researchers suggest subsidies need at least a decade to work.
Possibly a more politically palatable option could be a second policy pathway akin to California’s flagship supply-side policy: a zero emissions vehicle (ZEV) mandate. It forces auto manufacturers to sell a certain amount of electric or hydrogen fuel-cell vehicles. If they do not hit these targets, they can be fined or must purchase credits from companies such as Tesla that do even better than the target.
This pushes companies to innovate and develop electric versions for all the different type of vehicles that consumers want to buy. The researchers have found through their surveys that even those consumers in Canada who really want to buy an EV are frustrated when they find out how few models there are. Nine other US states have adopted ZEV mandates, as has Quebec recently, and China.
The researchers conclude a combination of supply-and demand-side options could work in Canada, and their forecasts are that either would achieve a market penetration rate of just over 40 percent of all new sales by 2040.
But there is also a third option: make vehicle emission standards and fuel standards radically more stringent. A strong vehicle emissions standard would achieve a better result in terms of sales of electric cars than either supply-side or demand-side policies, but could also be accomplished by steady improvements to the efficiency of hybrid vehicles, with very few sales of ZEVS.
Regardless of which option or combination of options policymakers choose, the main message is that Canada needs to stop nibbling around the edges.
Energy economist Mark Jaccard helped design BC’s carbon tax, and he still supports it. But he questions just how politically viable a stringent tax—at the level needed to meet climate targets—can really be. So he also continues to explore how other policies that the public find more acceptable could work.