Electric vehicle strategy sputters as provinces battle it out on green policies

Talks between the federal and provincial governments appear to have sputtered on launching a national electric vehicle strategy.

A joint agreement addressing vehicle electrification is expected to be unveiled Monday when transport and highway safety ministers meet in Montreal for their annual meeting.

But this agreement is unlikely to be the national Zero-Emission Vehicle Strategy that the federal government had indicated would be released by now, according to four sources close to government as well as an industry association.

Sources expect the agreement on Monday to look more like a “watered-down version,” a “basic minimum” or a “high level framework” with few specific commitments.

David C. Adams is president and CEO of Global Automakers of Canada, a group representing large international automakers such as Toyota, Volkswagen and Nissan. He said in an interview that while he understood the strategy is largely finished, coming to agreement on its rollout has proven tricky.

“I think there was an expectation that there was going to be something more formal with respect to the national Zero-Emission Vehicle Strategy come out on Monday,” said Adams.

“Information that I’ve received over the last few days is that that’s been a little bit more of a struggle to come to some consensus amongst the federal government and the provinces and territories on that strategy.”

Ford threw a wrench in the works

Transportation accounts for roughly a quarter of greenhouse gas emissions in Canada, and the federal climate plan calls for expanding the number of zero-emission vehicles on the roads. Yet, while plug-in electric sales in 2018 more than doubled from 2017, they still only represent 2.2 per cent of all new cars sold.

Sources say Ottawa wants to put something aggressive on the table. That could take the form of an electric vehicle (EV) sales mandate requiring a percentage of sales to be vehicles that don’t emit carbon pollution linked to climate change, or rebates that help lessen the burden of new EV costs for Canadians.

Both those policies are in effect in Quebec and British Columbia. Quebec has had a sales mandate in place for a year, while B.C. plans to introduce one in legislation this spring. Both also have subsidy programs in place.

Environment and clean power advocacy groups have long said that a sales mandate across the country is the most cost-effective way the federal government could reach its target of 30 per cent new EV sales by 2030. This past September, Canada renewed its commitment to that international campaign, called EV30@30.

A nationwide mandate appears to be a long shot at this point, sources said. The group of government officials, stakeholders and industry representatives that was set up to advise on the strategy has considered the option, but agreement with the provinces has proven increasingly difficult.

Last year, Ontario Premier Doug Ford's Progressive Conservative government killed the provincial subsidy program for EVs that had been funded by the province’s price on carbon pollution, and went to war against Ottawa’s carbon pricing plan, teaming up with Saskatchewan in the courts.

Adams said the conversation among provinces and territories had obviously changed considerably since the initial discussions surrounding the federal zero-emission vehicle strategy’s announcement in May 2017. He said the dramatic shift in Ontario “threw everybody for a loop” as industry had to shift gears on expectations and goals.

Sabrina Kim, press secretary for Environment and Climate Change Minister Catherine McKenna, declined comment at this time. Transport Minister Marc Garneau's media relations manager Delphine Denis said she wasn't in a position to speak on the outcome of the upcoming meeting.

Automakers have also opposed a nationwide mandate, preferring auto policies aligned with the United States. The Trump administration has been busy trying to roll back Obama-era emissions rules, and has received some help in the form of a lobbying campaign backed by the oil industry.

“If we don’t align with the U.S. then there’s going to need to be a lot more flexibility for the industry in Canada to try and meet different, and potentially more stringent targets,” said Adams.

National EV rebates seen as 'powerful signal'

Prime Minister Justin Trudeau has the option of making some additional moves in the upcoming federal budget, which the Liberals will campaign on for the election next fall. The government has yet to spell out how it will spend the 10 per cent of the fuel charge it is setting aside for non-profits, municipalities and others, for example.

One option could be to provide funding to EV promotion groups to spread the word about the benefits of EVs, which are much more efficient at using the energy stored in their power source than gas-powered cars, cost less to charge than filling up at the pumps and don’t emit noxious or toxic tailpipe emissions.

Another option is a national commitment on EV rebates. Clean Energy Canada has recommended this in a pre-budget submission, saying it would "send a powerful signal.”

"During the transition period before EVs attain price parity with internal combustion engines, well-designed rebates are an important tool that should be offered coast to coast to consumers purchasing zero-emission vehicles," reads the submission by senior analyst Jeremy Moorhouse.

"This is particularly important now that Ontario has cancelled its rebates."

As Trudeau and Finance Minister Bill Morneau put the finishing touches on the federal budget, they also continue to feel the heat on EVs.

The David Suzuki Foundation, for example, launched a petition titled “Has Canada stalled on electric vehicles?” that says any effective zero-emission vehicle strategy “must include mandatory targets” for EV sales and a temporary purchase incentive program.

Editor's note: This article was updated at 7:50 p.m. ET on Jan. 18, 2019 with a new comment from the office of Canadian Transport Minister Marc Garneau.