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Flogging Electric Vehicles, Premier Clark Opts for the 'Sexy' Choice

Politicians promote, and heavily subsidize, an option few can afford, says resource economist.

By Andrew MacLeod 13 Apr 2016 | TheTyee.ca

Andrew MacLeod is The Tyee's Legislative Bureau Chief in Victoria and the author of A Better Place on Earth: The Search for Fairness in Super Unequal British Columbia (Harbour Publishing, 2015). Find him on Twitter or reach him here.

While the British Columbia government takes time to ponder what it might do next to reduce greenhouse gas emissions, it already wants to be seen to be in the fast lane when it comes to electric vehicles.

However, a resource economist warns that with many cheaper ways available for the government to find greater carbon reductions, politicians would be wise to slow down on promoting a transportation option that few can afford.

Last week, Premier Christy Clark was in West Kelowna, which she represents as MLA, for a photo opportunity opening an $85,000 electric car charging station, the 23rd in a planned network of 30 throughout the province.

And when Clark spoke in Vancouver in March to the Globe Conference on sustainability and innovation, the flagship announcement was that electric vehicles would be allowed in high occupancy vehicle lanes, even if they only carried their driver.

Meanwhile, Clark seems to be hitting the brakes on other climate change action. She told the Council of Forest Industries conference in Kelowna last week, "We have not decided we are raising the carbon tax."

Hiking the tax on carbon emissions -- which has been frozen since 2013 -- was among 32 recommendations made by the government-appointed Climate Leadership Team in late 2015. On April 8, the government closed a second round of open-ended public consultation on what to do about climate change.

"We have not decided by any stretch of the imagination that the recommendations that they've given us are things we can or should do," Clark told the forest council conference. "We are working through all of their recommendations, trying to understand which ones are doable, which ones are not doable."

Big subsidies required

Jim Johnson, a resource economist who is the managing principle at the Victoria consulting firm Pacific Analytics, said it's understandable why politicians like Clark want to be seen boosting electric vehicles.

"Politically it's a very good move," said Johnson, whose firm has produced reports on electric vehicles and on carbon taxes. "Electric cars are really sexy. Just look at all the hype with Tesla."

He warned, however, that promoting electric vehicle sales is a relatively expensive way to reduce greenhouse gas emissions.

An electric vehicle might save an average driver $1,000 a year, but costs about $15,000 more than a comparable non-electric vehicle, he said. "The economics are not there for those vehicles unless we subsidize them."

The Climate Leadership Team suggested a target of having 10 per cent of new vehicles sold in the province be electric by 2020 and 30 per cent by 2030.

Johnson said that currently less than one per cent of new vehicles each year are electric, so achieving that goal would require a significant subsidy. The current subsidy in B.C. is $5,000 per vehicle, but it's $14,000 in Ontario and there's pressure to raise the B.C. amount to $10,000.

Even at the current subsidy, getting 200,000 electric vehicles on the road in B.C. would cost $1 billion.

Add in that people with electric vehicles avoid paying road and transit taxes that are collected through fuel taxes, and you're looking at another $800 million subsidy to make up the missed revenue, Johnson said. "Someone has to pay," he said.

After crunching the numbers, the cost to the public of each ton of reduced greenhouse gas emissions from electric vehicles works out to about $750. "That's a huge number," he said.

For comparison, the highly criticized Pacific Carbon Trust sold carbon offsets at $25 per ton of emissions.

Help for the wealthy

There are also costs to increased electricity use, Johnson said. B.C. has ample power, but "every kilowatt of electricity we don't use we can wheel down to the United States and that will replace coal-fired generation of electricity."

By 2040, if the target for electric vehicles is met, providing the required electricity could take about half of Site C's power, he said. "It's a big draw on the electric system and that has to be recognized. The electricity doesn't come from nowhere."

There are also unknowns to take into account before committing to new infrastructure, including whether batteries or hydrogen fuel cells will become more common, he said. "I don't think the technologies have been fixed, so it might be another 10 years before we know what kind of electric vehicles are going to be dominant."

He also points out that some 85 per cent of the electric vehicles sold cost more than $50,000. "It's not every man's car," he said. "We are subsidizing people with a lot of income."

That puts policies like allowing electric vehicles in HOV lanes in a different light. As Johnson puts it, "I hate to be too polemic, but why are the rich being able to drive in the HOV lane? It is a little bit that way."

There are better options, Johnson said. "Actually the answers have a lot more to do with the structure of our communities and better transit."

For example, increasing bus hours by three per cent would drop greenhouse gas emissions by one per cent, he said, a better result than either subsidizing electric vehicles or raising the carbon tax.

Full plan coming

Despite the recent focus on electric vehicles and the lack of enthusiasm about raising the carbon tax, at this point B.C. is considering many options, Clark told her audience in Kelowna.

"Let's think about that other huge menu of things we can do, including transit, including the built environment, including incentives rather than costs for industry that can really help them reduce emissions," she said.

And in an interview, B.C. Environment Minister Mary Polak said that promoting electric vehicle use is a piece of the puzzle.

"We know that 37 per cent of our emissions currently are from the transportation sector," she said. "There's a lot that can be done and has been done in terms of large fleets, trucking and all that, but really until we advance the notion that everyday people in their day-to-day lives are going to be part of that transition, we're not going to see the huge reductions that we need."

She compared it to the carbon tax and how it works by applying broadly across the economy. "Everyone thinks of all the large emitters, big industry, but really you can't just look at big industry," she said. "You have to look at people's everyday lives and changing those behaviours if you're going to get the big reductions."

The provincial government will keep encouraging people to change to clean energy vehicles, she said. "It's important enough [that] I'm currently in the process of buying a hybrid, so there you go."

The government's new climate plan is expected to be released this spring.  [Tyee]

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