Contributed by Robert Lyman © 2019
About the Author
Robert Lyman is an Ottawa energy policy consultant and former public servant of 27 years, a diplomat for 10 years prior to that. His complete biography can be read here.
Much of the public and media attention concerning measures to reduce greenhouse gas (GHG) emissions in Canada focuses on reducing automotive emissions. Almost every governmental announcement concerning a new climate regulation or tax celebrates this in terms of the “number of passenger vehicles per year taken off the roads”. The public dialogue and policy debate that surrounds these issues, however, are not based on an informed view of the facts or of the decisions that governments have been making. This paper may help to support the public debate.
LINK TO FULL REPORT: THE 85 MILLION TONNE OBSESSION Final
As context, in 2016 15.6 million Canadians commuted back and forth from home to work. After five decades of governmental efforts to discourage commuting by personal vehicle, the percentage of working Canadians commuting by car has fallen from 80.7 to 79.5 per cent. In other words, regardless of what government planners, transit commissions and environmentalists may prefer, the average citizen is voting for personal vehicles.
Of the many measures governments have taken, four stand out in terms of cost: vehicle fuel efficiency regulations on new light duty vehicle sales; subsidies for the purchase and refueling of hybrid and electric vehicles; transit subsidies; and taxes on motor fuels.
Canada and the United States have harmonized their light duty vehicle fuel efficiency regulations since they were first introduced in the late 1970’s. In 2008 and 2012, both countries agreed to a schedule of increasingly stringent increases in fuel efficiency that would raise the standard for passenger cars from 39.1 miles per U.S. gallon in 2017 to 55.3 miles per U.S. gallon in 2025 and for light duty trucks (and SUVs) from 29.5 mpg in 2017 to 39.3 mpg in 2025. In August, 2018, the Trump Administration announced that it planned to freeze the fuel efficiency standards at 2020 levels through to 2026. California has said it will sue to oppose these changes.
In the face of these developments, the Trudeau government signed a cooperation agreement with California which, while not explicit, appears to signal that it will depart from Canada’s historic policy of harmonization with the U.S. federal government. The consequences of such a move cannot be fully assessed without a detailed analysis, but it could mean that in future Canadian auto manufacturers might be required to adopt emissions and fuel efficiency technologies that are more expensive than those that are required of the U.S. auto industry in general, affecting Canadian firms’ ability to compete.
In April 2019 the Trudeau government announced targets for increasing the share of zero-emissions vehicles in Canada, rising to 100 per cent of new vehicle sales in 2040. It also announced that it would provide subsidies for the purchase of hybrids and electric vehicles ranging from $2,500 to $5,000 per vehicle. When added to the subsidies offered by British Columbia and Quebec, this could raise the combined federal-provincial subsidy to a high of $10,500 to $13,000 per vehicle, which equates to $350 to $433 per tonne of emissions avoided, many times the current ($20 per tonne) value of carbon emissions permits.
U.S. studies show that as much as 70 per cent of EV sales would take place without subsidies, and that EVs are bought primarily by people with above-average incomes.
In 2016, the Trudeau government announced Canada’s Long-Term Infrastructure Plan, which promises $180 billion in spending on infrastructure over the period 2016 to 2028. This includes $28.5 billion for public transit. Unfortunately, there is no source that can inform the Canadian public about how much is being spent on transit in total by federal, provincial and municipal governments, what this means for ridership or what this means for the amount and cost of emissions reductions. U.S. studies indicate that fares pay only one third of transit systems’ operating costs, and that the total governmental subsidy of transit capital and operating costs is about $1.17 per passenger mile.
Canadian studies indicate that, in the unlikely case that it could be achieved, a doubling of commuters using transit would reduce GHG emissions by about 2.5 million tonnes per year.
According to the analysis of the Canadian Taxpayers Federation, the national average motor gasoline price in 2018 was $1.35 per litre, 47 cents of which was tax. This is equivalent to a carbon tax of $192 per tonne. If one adds the carbon taxes scheduled to apply by 2022, the carbon tax equivalent of all gasoline taxes will be $235 per tonne.
In 2017, passenger vehicles, including all cars, SUVs and pickup trucks, produced 85 million tonnes of GHGs. This was 11.9 per cent of the Canadian total. If Canada somehow could eliminate these uses altogether, it would take us only 42 per cent of the way to the 2030 emissions reduction target.
As unlikely as even that is, it seems we cannot shake our public obsession with vehicle emissions, regardless of cost.