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OTTAWA — The parliamentary budget officer says it will take the federal government until 2043 to break even on its EV battery deals with two automotive giants.
The government announced subsidies for Volkswagen and Stellantis and LG Energy Solution this year to entice them to build electric vehicle battery plants in Canada.
The PBO says it will take 20 years for government revenues generated from the production of both plants to equal the production subsidies, which total $28.2 billion.
The budget watchdog's calculation does not include any potential revenue that may be generated across the supply chain.
That's in contrast to the federal government's five-year break-even calculation for the Volkswagen deal, which includes expected revenue from production increases across the supply chain.
The federal government has not provided a break-even estimate for the Stellantis deal.
This report by The Canadian Press was first published Sept. 12, 2023.
Comments
This report from the PBO doesn't take into account all of the possible benefits from the plants. The biggest is that if the deals hadn't been made the plants would have been moved to the U.S.
Indeed.
And how long will it take the feds to recoup the billions in subsidies and loan guarantees it has paid to the fossil fuel industry, not the least TMX?
My guess we'll have to wait until well after 2050 before they'll even get around to punching the numbers.
2 decades for EV plants to payback!
Is 20 years unreasonable? I don't think so. Take Alberta's Oil Sands Syncrude in 1974! Dead in the water when Atlantic Richfield Oil pulled its 30% share out of the consortium. And effectively killed the oil sands.
Premier of Alberta, Peter Lougheed, called PM Pierre Trudeau who sent Jean Chrétien, President of the Treasury Board, Donald MacDonald, Minister of Energy and Mines, and Ontario Premier Bill Davis to Winnipeg to meet secretly with Lougheed, his Ministers and oil executives.
Chrétien persuaded MacDonald and Davis to contribute with Canada at 15%, Ontario at 5% while Alberta was 10%. (See P177 of The Patch by Alberta author Chris Turner for secret ). Plus Alberta spent as much as 20 billion on roads, infrastructure to kick start oil sands production.
Alberta is just now reaping the benefits of full royalties which were delayed for decades to help develop the business.
Canada created Petrocan. Though private now, it is still a major producer in heavy oil.
Huge investments, (No $ amount was mentioned but it had to be close to a billion in 1973 dollars.), which in 2003 Chrétien stated he did not think would pay off were made! (2003 was 25 years of actual production which started in 1978).
Chrétien's political wiles made Canada a world leader in fossil fuel production and contributed billions to our growth. As well, the technology developed to separate oil from sand has benefitted many other industries.
http://www.history.alberta.ca/energyheritage/sands/mega-projects/experi…