2 million electric vehicles globally, and less than 30,000 in Canada. How best to encourage more?

Electric vehicles Wikimedia Commons 768x512.jpg

From Wikimedia Commons

The latest edition of the Global EV Outlook 2017 was released by the International Energy Agency (IEA) in June, reporting that the global electric car stock, (mainly Battery Electric Vehicles (BEVs) and Plug-in Hybrid Electric Vehicles (PHEVs)), surpassed 2 million units in 2016 – an increase of 60% from 2015. China is the leader with the most vehicles, at 648,770 units, followed by the U.S. at 563,710.  China is also the leader in other electrified modes – with over 300,000 electric buses.  In terms of market share, Norway, with its its small population of 5.25 million  is the leader: its 133,260 units represent a 28.76% market share. Canada, with its population of 36.5 million people,  is well behind the pack with an electric vehicle stock of 29,270 units, representing a market share of 0.57%, according to the IEA.   (Perhaps not so bad, considering that electric vehicles still only represent 0.2% of all passenger cars worldwide) . Besides tabulating national statistics and trends regarding vehicle stock and charging stations, the report includes a substantial discussion of supportive policies amongst the member countries.

Canada committed to developing a national strategy to increase the number of zero-emission vehicles on Canadian roads by 2018  in the Pan-Canadian Framework agreement,  and the policy process is currently under review – as summarized in an article in the National Observer .  On May 26, the Minister of Transport announced that:  “ a national Advisory Group has been established to contribute to developing options for addressing the key barriers for greater deployment of these technologies in five areas: vehicle supply, cost and benefits of ownership, infrastructure readiness, public awareness, and clean growth and clean jobs.  The Advisory Group includes representatives from governments, industry, consumer and non-government organizations and academia. ”  One of the members of the Advisory Group is the non-profit Équiterre , which at the end of May released a new report :   Accelerating the transition to electric mobility in Canada .  The report modelled three scenarios for ZEV adoption and concluded that only “the scenario with a legal mandate to sell a certain number of electric vehicles resulted in the market share necessary to drive down greenhouse gas emissions in line with international targets.”

Another new report, from the Ecofiscal Commission, Supporting Carbon Pricing:  How to identify policies that genuinely complement an economy-wide carbon price , provides a detailed case study on electric vehicle subsidies  in Quebec, including a consideration of how they interact with other emissions regulations.  The Ecofiscal report suggests that the current subsidy system  results in a high cost for emissions reduction, and that flexible regulations “might be a more cost-effective approach to increasing ZEV uptake” than a supply-side mandate .   Currently, Quebec is the only Canadian jurisdiction with such supply-side regulation; under Bill 104, passed in October 2016, 3.5 % of the total number of vehicles sold or leased by car manufacturers in Quebec must be zero emissions vehicles starting in 2018,  and by 2020, the standard will  rise to 15.5 %. For an overview of the issue and support for the rebate policy option, see Clare Demerse’  article in Policy Options, “Rebates should be part of electric car strategy”  (June 9) .

Canada has signed on to a new international campaign, EV 30@30, which was announced on June 8 at the 8th Clean Energy Ministerial (CEM8) held in Beijing .  The press release  for the campaign states a target of  at least 30 percent new electric vehicle sales by 2030, and: “The campaign will support the market for electric passenger cars, light commercial vans, buses and trucks (including battery-electric, plug-in hybrid, and fuel cell vehicle types). It will also work towards the deployment of charging infrastructure to supply sufficient power to the vehicles deployed.”   A large part of the implementation will be through efforts to increase public and private sector commitments for EV fleet procurement and deployment. The program will also establish a Global EV Pilot City program to reach 100 electric vehicle-friendly cities around the World over five years, and encourage research into all aspects of deployment.  Full explanation of the 30@30 campaign is here .

Along with Canada, other countries signing on to the EV30@30 campaign include China, Finland, France, India, Japan, Mexico, the Netherlands, Norway and Sweden.  (The U.S., U.K., Korea and South Africa are members of the CEM Electric Vehicle Initiative, but did not sign on to the 30@30 initiative).  In addition to participant countries, the following groups support the campaign:  C40, the FIA Foundation, the Global Fuel Economy Initiative (GFEI), the Natural Resource Defence Council (NRDC), the Partnership on Sustainable, Low Carbon Transport (SLoCaT), The Climate Group, UN Environment, UN Habitat, and the International Zero Emission Vehicle Alliance (ZEV Alliance).

Federal government about to release its proposals for promised national carbon pricing system as California debates radical changes to its cap-and-trade program

In advance of a consultation paper by the federal government, expected to be released in the week of May 15, the Pembina Institute released a Backgrounder report , Putting a price on carbon pollution across Canada . The Pembina report  outlines the current federal and provincial carbon pricing policies in Canada, and makes recommendations for the national benchmark plan promised by 2018. Recommendations  include that any benchmark should at least  provide guidance on treatment of Export Import Trade Exposed sectors and be designed to minimize carbon leakage and competitiveness impacts; and stipulate that cap-and-trade systems must have a cap decline rate in line with a 30% reduction below 2005 levels by 2030. Pembina places emphasis on the need for a 2020 carbon pricing review, as well as frequent carbon pricing and climate policy reviews to ensure that Canada meets its obligations under the Paris Agreement.

A briefer paper on carbon pricing, also released in May, also summarizes the existing provincial carbon pricing plans – but from a right-wing point of view. From the Fraser Institute:   Poor Implementation undermines Carbon Tax efficiency in Canada  .

Also on the topic of carbon pricing, Pembina posted a blog  on May 11 “Time for Premier Brad Wall to focus on carbon price implementation” , in which Nathalie Chalifour, a Professor of Law at University of Ottawa, explains her opinion that the federal government is within its constitutional authority to impose a carbon pricing mechanism on the provinces, despite Saskatchewan Premier Brad Wall`s recently stated opinion to the contrary.

Meanwhile, as reported in the National Observer (May 4) , “California tables new cap-and-trade plan that jumps ahead of Quebec and Ontario” . Quebec and California  have a linked carbon credit market that expires at the end of 2020, and Ontario`s cap and trade plan is schedule to link to the California−Quebec system in 2018.  Continued partnership with California  will demand that those provinces raise their minimum price per tonne of carbon and abolish offsets, among other changes outlined in the  bill currently before the California state Senate . For a full discussion of the proposed legislation, read “California is about to revolutionize climate policy … again” (May 3) in Vox.  Author David Roberts states: ” The changes that SB 775 proposes for the state’s carbon trading program are dramatic — and, to my eyes, amazingly thoughtful. I know some environmental groups have reservations (on which more later), but in my opinion, if it passes in anything close to its current form, it will represent the most important advance in carbon-pricing policy in the US in a decade. Maybe ever.”

Canada Pension Plan Investment Board lags international financial community on recognition of climate change risks and stranded assets

In what the WWF has called   “a landmark moment for responsible investment in Europe” , the European Parliament voted in November 2016  to mandate that all workplace pension administrators must consider climate risk and risks “related to the depreciation of assets” -stranded assets-  in investment decisions.  It also requires greater transparency about investment policies. Individual governments of the EU now have two years to pass into national law this updated version of the  existing Institutions for Occupational Retirement Provision (IORP) Directive. Currently, the directive would affect occupational pension plans affected covering approximately 20% of the EU workforce, mostly in the United Kingdom, the Netherlands, and Germany .  A September 2016 Briefing Note from the European Parliament  details the administrative/political evolution of the Directive; a December  article from Corporate Knights  or  Go Fossil Free or Reuters  provide summaries.

In December 14, 2016, the Task Force on Climate-Related Financial Disclosure, chaired by Michael Bloomberg,  released its report and recommendations  to the Financial Stability Board, a G-20 organization chaired by Mark Carney. An article by the two men appeared in The Guardian, capturing the gist of the work:  “We believe that financial disclosure is essential to a market-based solution to climate change. …. A properly functioning market will price in the risks associated with climate change and reward firms that mitigate them. As its impact becomes more commonplace and public policy responses more active, climate change has become a material risk that isn’t properly disclosed.” The Task Force calls for companies to make voluntary disclosure of climate risks to their business,  to help  investors, lenders and insurance underwriters to manage material climate risks, and ultimately to make the global economic and financial systems more stable.   A 60-day public consultation period began with release of the report; an updated report, incorporating that input,  will be released in June 2017.  The Task Force report was summarized in   “Climate disclosure framework creates a better environment for investors” in the  Globe and Mail Bloomberg News also reported on another recommendation, “Carney Panel Urges CEO Compensation Link With Climate Risk ” , stating that the time has come for organizations to provide detailed reporting of how manager and board member pay is tied to climate risks.  (See a Dec. 1 Reuters article about Royal Dutch Shell’s moves to link CEO bonuses to GHG reduction).

In Canada, the Canada Pension Plan Investment Board, which administers the assets of the national public pension fund, seems to be standing on the sidelines.  A recent article in the Globe and Mail was written by the director of the CPPIB Sustainable Investment department , which is described in  more detail in their 2016 Report on Sustainable Investing . The report states (page 11)   “ CPPIB has established a cross-departmental Climate Change Working Group to consider how physical risks, as well as technological, regulatory and market developments will impact climate change-related risks, and create opportunities, in the future. …. This review, which will take some time, is being done from a long-term perspective in light of how the gradual transition to a lower-carbon global economy might unfold….  On the topic of divestment and climate change, research has shown that investors with longer horizons tend to be more engaged with the companies that they invest in, and CPPIB is a case in point. As responsible owners, we believe that in many cases selling our shares to investors who might be less active in terms of considering material risks, including climate change, would be counterproductive.”   In light of this very slow approach, Friends of the Earth (FOE) has been frustrated in its divestment campaign for the CPPIB in 2016 ;  FOE maintains a petition website, Pensions for a Green Future, which calls for the CPPIB to, among other things,  “report immediately to its 19 million members on the carbon footprint and exposure to climate solutions of our CPP investment portfolio” and “to replace climate polluting investments with those in green energy, technologies and infrastructure that support Canada’s commitment to act to avoid 1.5°C of warming.” The CPPIB discloses the companies it is invested in here  .

In contrast to the CPPIB, the Caisse de dépôt et placement du Québec (CDPQ),  the second largest pension fund manager is Canada,  is highlighted in a new report by the World Economic Forum  as “ one of the most important institutional investors in wind power” for its investment of  close to $2.5 billion (US) in both onshore and offshore wind projects in Europe and North America, starting in 2013 with a tentative investment in the Invenergy , and now including the London Array wind farm in the outer Thames estuary.  The Caisse statements on environmental and social responsibility are here ; it is a signatory to the U.N.  Principles for Responsible Investment (PRI), a member of the Carbon Disclosure Project and the Carbon Water Disclosure Project, and endorses the Extractive Industries Transparency Initiative , which monitors the oil and gas industry .

Provisions for Clean energy and Oil and gas development in Quebec’s Bill 106

Bill 106, An Act to implement the 2030 Energy Policy and to amend various legislative provisions, passed into law in the Quebec National Assembly in a special session on Saturday Dec. 10.  The Bill establishes Transition energetique Quebec (TEQ),an agency to “support, stimulate and promote energy transition, innovation and efficiency and to coordinate the implementation of all of the programs and measures necessary to achieve the energy targets defined by the Government “.   In addition to the clean energy provisions, Bill 106 also introduces new measures concerning the distribution of “renewable natural gas”, and enacts the Petroleum Resources Act, whose purpose is to “to govern the development of petroleum resources while ensuring the safety of persons and property, environmental protection, and optimal recovery of the resource, in compliance with the greenhouse gas emission reduction targets set by the Government.” The Bill establishes a licence and authorization system for the production and storage of oil,  including a requirement for a guarantee to cover the costs of well closure and site restoration.    The Globe and Mail report, “Quebec paves way for oil, gas exploration with new energy plan”  (Dec. 11) highlights opposition by environmental and citizen groups, and states that the provisions regarding oil and gas could  potentially allow for fracking.

How best to boost Electric vehicle sales in Canada?

In his remarks  at the launch  of  the Transportation 2030 policy in November, Minister Garneau stated  “The future of transportation will be in electric cars and vehicles using zero-emission fuels like hydrogen.”   Yet in Canada, electric vehicles are still rare, representing  only 1% of all new vehicle sales and just over 18000 cars in  total in 2015, according to the Global EV Outlook Report 2016 .  A CBC article in August 2016  reported on an internal federal government  report that recommended tax incentives and cash rebates as the best policy means to encourage Canadians to buy cars.   In November,  the  Sustainable Transportation Action Research Team  at Simon Fraser University  published   Canada’s Electric Vehicle Policy Report Card , evaluating  whether existing  provincial  policies are likely to be sufficient to  boost electric vehicle sales to the  levels needed to achieve Canada’s emissions targets.  The report provides  policy “ report cards”  for each province and concludes that  the most effective policies include a Zero Emission Vehicle mandate (as  in California and Quebec), strong and long-duration financial incentives (as in Norway and Ontario), and strong taxation on gasoline or carbon pricing.   The report also notes that municipal governments can also play a role through building regulations and public charging infrastructure deployment.