It was a press release from the Ontario Minister of Energy, Todd Smith asking (nay, telling) the Ontario Energy Board “to explore options for an Electric Vehicle Charger Discount Electricity Rate as the province continues to support the adoption of electric vehicles (EV).”
Needless to say the press release goes on and on to glorify EV reminding one of old expressions such as putting “lipstick on a pig” believing it will change our beliefs and the lipstick will change our view of the pig from “ugly to pretty”!
A couple of examples follow from the press release:
1.”A new electricity rate would support electric vehicle adoption across the province by reducing the electricity costs for charging infrastructure where demand is only beginning to emerge, making them more economical.”
Presumably what the foregoing implies is that cheaper fuel costs (charging your EV) will entice more Ontarians to purchase an EV! On the other side of the road if you own or purchase an ICE vehicle you will be hammered by added costs which now include that “carbon tax” which will continue to add to those fuel costs as it increases year over year!
What is missing in the advent to “cheaper fuel costs”; implied by conversion to an EV, here in Ontariowe are many facts and costs associated with the electricity sector including:
a) increasing your home service from a 100-amp to 200 amp service, b) the electricity service on your street may require an upgrade, c) the local transformer station may also require an upgrade should EV ownership increase substantially d) lots more generation will be needed to satisfy demand. All of the foregoing will add to the costs of electricity which will impact all households and businesses either by increased electricity rates or even more than the current $7.3 billion will need to be absorbed by taxpayers.
2.“With $43 billion in new electric vehicle and EV battery manufacturing investments in Ontario’s auto sector over the last several years, our government is working to improve access to public charging infrastructure to support drivers who are making the transition to electric vehicles.”
If one follows the news and has read the November 17, 2023 press release from the PBO (Parliament Budget Office) it is interesting to note it estimated “government support” for just the battery manufacturing sector amounts to $43.6 billion which is remarkably close to what the Ontario government claims is being invested in Ontario’s auto sector.
The PBO goes on to state “We estimate the total cost of government support for EV battery manufacturing by Northvolt, Volkswagen and Stellantis-LGES to be $43.6 billion over 2022-23 to 2032-33, which is $5.8 billion higher than the $37.7 billion in announced costs,” adds Mr. Giroux. The $5.8 billion in non-announced costs represents foregone corporate income tax revenues for the federal, Ontario and Quebec governments combined.
Of the $43.6 billion in total cost, PBO estimates that $26.9 billion (62 per cent) in costs will be incurred by the federal government and $16.7 billion (38 per cent) will fall on the provincial governments of Ontario and Quebec.”
What the PBO report notes is that not only are we Canadian and Ontario taxpayers providing huge subsidies for those investments but at the same time we are granting them tax free status.
The PBO press release goes on to specify “Of the $43.6 billion in total cost, PBO estimates that $26.9 billion (62 per cent) in costs will be incurred by the federal government and $16.7 billion (38 per cent) will fall on the provincial governments of Ontario and Quebec.“ The PBO goes on stating; “We estimate a break-even timeline of 15 years for the $13.2 billion production subsidy announced for Volkswagen, and 23 years for the $15.0 billion in production subsidies announced for Stellantis-LGES—consistent with our previous estimate of 20 years based on their combined production schedules”.
The foregoing suggests our current Federal and Provincial governments contain politicians we elected to see into the future!
Based on the incredible commitments being made here in Ontario and the obvious push to capture EV manufacturing we Ontarians should wonder what is the uptake of BEV and Hybrids (including plugins) when compared to ICE and Diesel sales?
Are We Buying What Politicians Are Selling?
A quick review of StatsCan vehicle registrations in Ontario* for the 2023 fourth quarter disclosed there were 171,157 vehicle registrations in the province in total. The registrations break down as follows:
Conclusion
It sure appears Ontarians are not sold on the purchase of BEV whereas gasoline hybrids are much more popular but even those didn’t achieve a 10% market share. The BEV market share has not bloomed suggesting the $43 billion of taxpayer dollars handed to the auto companies are not inspiring people to purchase them.
It is looking more and more like our politicians; with blinkered foresight, don’t have an appreciation of taxpayers hard earned dollars! The time has come for them to realize they are not Nostradamus and simply manage the present system and stop gambling with our taxes!
*Ontario doesn’t offer rebates but the Federal Government grants $5,000 for the purchase of a new BEV
Let’s go back a few years to examine how politicians and the bureaucrats did their job. The example is related to the auto industry and specifically to VW who were caught claiming their vehicles powered by a “2.0-litre Volkswagen and Audi diesel engine reduced emissions but they used “defeat devices” during official tests to obtain that claim. As a result they were faced with huge fines in Canada ($2.1 billion) by the Competition Bureau and in the US they were fined $14.7 billion by several authorities under their competition laws as well as the Environmental Protection Agency (EPA). VW were forced to lay off 30,000 employees globally after settlement!
Today we should wonder what has happened to the Competition Bureau here in Canada and in the US by the EPA related to “mileage claims” by EV manufacturers. Those manufacturers are being called out frequently because their claims often vastly exceed the actual range. One such article: “On Car and Driver‘s 75-mph highway test, more than 350 internal combustion vehicles averaged 4.0 percent better fuel economy than what was stated on their window stickers. But the average range for an EV was 12.5 percent worse than the window sticker numbers, the magazine says. Uh oh.“
We should wonder will the EPA in the US and the Competition Bureau here in Canada follow up and fine those EV manufacturers to the same degree as VW which in the latter’s case represented $20K per vehicle sold in Canada with that diesel engine. We should suspect not as EV will reputedly reduce our emissions! The latter claim by our politicians are humorous when one realizes that most of the batteries utilized to power those EV were manufactured in China where they operate over 1,140 coal fired generation plants used to produce those batteries! So because those batteries are manufactured in China, they contain no emissions nor did they create any, ha, ha!
Other Politically Induced EV benefits for Manufacturers:
Despite all the billions thrown at the concept of “transportation” conversion by pushing the EV narrative over the past several years there is lots more destined to find its way into their revenue stream! One of those in the US are “regulatory credits” which keep growing and will continue to grow as more automobile manufacturers convert to producing more of them in order to comply with the political push. As one example in reviewing Tesla Inc’s December 31, 2023, financial statement filed with the SEC one notes they report revenue from “regulatory credits” amounted to US $1.790 billion which represented 31.7% of Tesla’s net income after taxes. We should suspect selling those “regulatory credits” did not entail Tesla increasing their costs of operation to any great extent!
So we should all wonder what are those “regulatory credits”?
A July 2020 article from Yahoo Finance titled: “What Are EV Regulatory Credits And Why Is Tesla Selling So Many Of Them?“ gave us the answer which is: “Environmental emissions programs around the world, such as the Zero Emissions Vehicle (ZEV) program in California, give out credits to automakers that produce and sell electric vehicles. In addition to California, there are at least 13 other U.S. states that have similar programs in place. If an automaker doesn’t have enough credits by the end of the year, it could face punishment from state regulators.“ The article goes on to cite the following: “For example, Fiat Chrysler Automobiles NV (NYSE: FCAU) has reportedly committed to buying $1.27 billion in credits from Tesla to comply with new European environmental regulations that go into effect in 2021.“ It appears to be simply more punishment for any manufacturer of ICE vehicles for the benefit of those producing only EV! It also raises the price of an ICE presumably to decrease the difference in price between those nasty fossil fuel emitting vehicles and those non-emitting batteries (sarcasm intended) supplied principally by China!
The scandal, hidden away in the Federal Register, challenges the integrity of the government’s approach to enforcing fuel-efficiency rules for electric cars. Unlike the high-profile cases involving diesel emissions cheating, this scandal surrounding electric cars has garnered considerably less attention. The article notes:
At the heart of the issue is a little-known rule buried on page 36,987 of volume 65 in the Federal Register and articulates it as follows:
The Values to Be Used: Automakers must use actual values measured in a lab environment whentesting gasoline-powered vehicles for compliance with the Transportation Department’s fuel-efficiency regulations. However, the Energy Department has a different set of rules for electric cars.
The incredible SCAM:
According to this rule, carmakers are allowed to multiply the efficiency of electric cars by a factor of 6.67 arbitrarily. This means that a 2022 Tesla Model Y, for example, which tests at the equivalent of about 65 miles per gallon in a laboratory, is counted as having a compliance value of a staggering 430 mpg.” I would note the Car and Driver testing range did not find one Tesla model that achieved a total charged range of 430 miles and perhaps that is why on January 5th, 2024 an article in Yahoo Finance stated: “Tesla has cut back claims about how far its electric cars can travel as it faces scrutiny from the US government.“ The article stated Tesla did not give a reason for the adjustment.
Is the SCAM coming to Canada:
Surely many Canadians are familiar with our Minister of the Environment and Climate Change, Steven Guilbeault’s push to impose his “Clean Energy Regulations”, encompassing rules, to force each and every province and territory in Canada to abide by his views on saving the planet from CO 2 emissions. The provincial pushbacks were extensive so those plans have recently been slightly modified but will still impose incredible harm on the generation of reliable electricity due to their push for a “net-zero” grid. The proposed changes were recently summarized in a article in the Financial Post but as noted the changes are moderate so Guilbeault has sought further input but we should suspect he will simply ignore any that deviate from his inane desire to impose his personal views!
Minister Guilbeault is taking Canada on the same path as California and those other 13 US states pushing the EV agenda as the above noted article states: “Companies would also be allowed to buy carbon offsets to compensate for overshooting their assigned limits.“ The Government’s webpage goes further as it states: “ Canada is joining some of the world’s largest economies – including the United States – in committing to clean electricity to power our vehicles, heat our buildings and support our industries.“ One should wonder who will be allowed to sell those “carbon offsets”? Many of the companies forced to purchase them will be provincially owned “fossil fuel” generation plants in most provinces adding costs to the price of electricity delivered to your home or business.
Based on the outright lies Minister Guilbeault spouts off about in his two-minute video such as his claim the transformation to green energy will create over 2 million jobs as reputedly claimed in the following chart!
Interestingly, it appears the Trudeau led government fully anticipates the foregoing will happen as they already appear to have released draft regulations under tax legislation which only appears to have been noticed by the larger business-related law firms but not by the media!
The Law firm Osler presented a good synopsis of the draft regulations on their website referenced as: “Canada releases long-awaited draft legislation for tax credits supporting the clean energy sector. The article focuses on draft legislation for the “Clean Technology Investment Tax Credit (Clean Technology ITC)“ which will hand out “tax credits” to “renewable energy companies” but the article does not clarify if those tax credits will reduce their taxes or allow them to sell them for revenue!
The article stated the “tax credits” will be handed to eligible companies involved in all of the following “green” technologies:
“zero-emission electricity generation technologies, like solar, wind, small hydro, concentrated solar energy and small modular nuclear reactors;
electricity storage systems that do not use fossil fuels in their operations, like batteries, flywheels, compressed air energy storage, pumped hydroelectric energy storage, gravity energy storage and thermal energy storage;
certain active solar heating equipment, air-source heat pumps and ground-source heat pumps;
equipment used exclusively for generating electrical energy or heat (or a combination) solely from geothermal energy, but excluding any equipment that is part of a system that extracts both heat from geothermal fluid and fossil fuel for sale or use; and
non-road zero-emission vehicles that are fully electric or powered by hydrogen, and charging or refueling equipment primarily used to support such vehicles.“
At this juncture Canada’s production of EV are nil with the only exception being some buses for transit use purposes along with some school buses. Those transit and school buses have not met the standards of similar ICE powered ones creating problems for communities from coast to coast even though their costs were approximately double of what ICE powered ones would have cost. Needless to say they received lots of taxpayer dollars suppled by Federal, Provincial and municipal governments.
While no electric vehicles are currently manufactured in Canada they are reputedly on the way if and when the VW and Stellantis EV plants in Ontario are up and running after receiving combined (federal and provincial) taxpayer subsidies of $30 billion. We should suspect when they are in production, they will be either handed “tax credits” or “regulatory credits” to sell, similar to the US!
Conclusion:
What we taxpayers should be concerned about is how the bloom is slowly falling off the rose of EV replacing ICE as for the first time in a decade, EV sales in California fell in the last half of 2023 and throughout the US dealer lots have twice the level of inventory of EV as ICE. On top of that many auto manufacturers have postponed their planned expansions. In Canada, BC and Quebec have almost achieved the 20% EV sales target mandated for 2026 but the balance of the provinces are well behind that target. The question then becomes, what happens if the targets set for EV (20% of all sales by 2026, 60% by 2030 and 100% by 2035) miss their mark or are not hit in certain provinces? Will those provinces where sales miss the targets suffer from Federal cutbacks or from penalties such as higher taxes for its citizens and businesses?
It sure looks like Canada may be heading for a downward spiral in our economy caused by the Trudeau Government much like Tesla Inc is experiencing currently with its market value having fallen by $188 billion and having been overtaken by BYD of China in overall EV sales globally!
We should wonder, why have politicians and bureaucrats done an about face on commonsense planning due to CO 2 emissions by embracing rules and establishing regulations demanded by eco-warriors to the detriment to the citizens of democratic countries?
Oh yes, EV get 430 miles to the equivalent of a gallon of gasoline and pigs can fly!
As noted in “Part One” of this series, the Ecofiscal Commission’s Chair, Chris Ragan, was interviewed on the Agenda by Steve Paikin in respect to the push for a carbon tax. The program title was “Losing Ground on Carbon Pricing” which, according to Ragan, shouldn’t happen, so he sprinkled his parsimonious answers with selected information that omitted facts.
The following highlights a few questions posed and Ragan’s answers. Please note for brevity’s sake I have only included the main thrust of the question and the pertinent part of the response.
Are you losing ground in the battle for public opinion?
I think on one side of the debate there is not very good information, maybe even misinformation in some cases. I think the other side really doesn’t want to debate or explain.
It appears Commissioner Ragan is satisfied the science is settled despite some “good information” from the “other side” such as, “There are several claims that large numbers of scientists do not agree with the theory of climate change, the best known of which is a petition organized by the Oregon Institute of Science and Medicine (the OISM petition). This petition now appears to be signed by over 32,000 people with a BSc or higher qualification.” Is it Mr. Ragan who suffers from “misinformation”?
Is carbon pricing really a necessary tool to fight climate change?
A. I would argue carbon pricing does work. I think the evidence, whether its from British Columbia or the UK or other countries that have introduced these, including, and the State of California, carbon pricing does reduce emissions.
Let’s examine Mr. Ragan’s claims:
British Columbia: Mr. Ragan’s arguments in respect to British Columbia are a big stretch.
B.C.’s Carbon Footprint Grows as a very recent article suggests: “The carbon footprint of British Columbia is growing and has been growing for the last eight years despite a strong environmentalist lobby, the latest provincial government data suggests.” The article goes on to state: “British Columbia had a target of cutting carbon emissions by 33 percent from 2007 levels to 2020. However, the new figures reveal the province has only succeeded in cutting emissions by 2.2 percent from 2007 levels, which means the 2020 target will be pretty much unattainable unless a radical change in driving habits takes place.” Transportation is a major emitter in BC and a recent announcement by the NDP/Green government recently stated: “By 2040, all new light-duty car and truck sales in British Columbia will be zero-emission vehicles (ZEV).” B.C. has the highest per capita rate of EV in the county with 12,000 registered, representing a penetration rate of less than 1/2 % according to Statcan.
California: The foregoing is not much different if one looks at the State of California where an article from six months ago suggested: “Emissions from cars and other light-duty vehicles in 2016 hovered near the 2008 level of 118 million metric tons of carbon dioxide or its equivalent. Truck emissions continued to decline at a rate insufficient to make up for the added tailpipe pollution.”
If one goes further and examines other events in California one notes from an article in the SF Chronicle: “solar electricity generation, both from rooftop arrays and large power plants, grew 33 percent in 2016, according to the air board. Imports of hydroelectric power jumped 39 percent as rains returned to the West following years of drought.” So, importing hydro power allows California to claim they are reducing emissions while transportation emissions have remained at or near 2008 levels. In California’s case if one also looks at electricity prices it is interesting to compare electricity prices and note: San Francisco residential electricity prices were 27.95 cents/kwh versus 7.13 cents/kwh in Quebec.
Another important fact; California imports about a quarter of its electricity on average and much of that is emissions-free hydro. This is not information Economist/Commissioner Ragan brandishes as it flies in the face of his claims. The Chronicle article notes: “And while California has aggressively supported electric cars, only about 200,000 are registered in the state. “We have not made progress on transportation,” Borenstein said. “We’ve made negative progress.” In contrast, efforts to slash emissions from power plants have been far more successful, and are running well ahead of schedule.” As of December 31, 2017 there were 25,467,663 automobiles registered in California so EV represented less than 1% of all automobiles registered in the state.
UK: If one quickly glances at the UK statistics on emission reduction it appears they have been successful at leading the way amongst most European countries. On closer examination however much of their achievements can be attributed to either reducing coal generation, adding gas plants or converting some coal plants to biomass. The Drax Power Station is one large example of the latter. “Drax Power Station is the biggest renewable generator in the UK and the largest decarbonization project in Europe.” “It has a capacity of 3,906 megawatts (MW) and produces around 20 terawatt-hours (TWh) of power a year, 65% or more using compressed wood pellets, a form of sustainably sourced biomass. The remainder is produced using coal, a fossil fuel being phased out by 2025.” And “Drax Power Station supplies 6% of the country’s electricity needs, including 11% of its renewable power. Four of its six power generation units have been upgraded from burning coal to use biomass.” An article from 2014 by the writer examined the conversion process to biomass and the eventual consumption of wood pellets (7 million tons annually) produced in the southern US and elsewhere and shipped to a port in the UK for destination to the DRAX Power Station. The energy created will generate emissions 150% of a coal plant and 300% of a gas plant but are classified as “renewable” energy. That means each megawatt hour created will generate a “carbon credit” to be sold via the ETS (European Emission Trading Scheme). It’s a “double whammy” counted towards reducing emissions.
The electricity generating sector has been a driver in reducing UK emissions. In a report for 2017 year-end from the UK government they note: “Reductions in carbon dioxide emissions in the energy supply sector down 7.6 per cent (8.7 MtCO2e) driven by a decrease in power station emissions. The main reason for this fall is the switch in the fuel mix for electricity generation from coal and gas to renewables.“
It appears the “evidence” offered by Mr. Ragan is not factually related to carbon pricing — unless he views the UK’s biomass generation as representing an event caused by “carbon pricing” and not from “carbon credits” for a plant now generating 50% more emissions than when operating as a coal plant!
If you’re are taking with this hand and giving back with this hand and it’s a wash, why would I change my behaviour?
Because it’s not a wash at the end of the day in terms of what you do. It’s a wash in terms of your purchasing power. The whole logic is to maintain your purchasing power but because gasoline and other carbon-intensive things are now more expensive you do things differently. [Ragan goes on to say] It’s their choice and that flexibility is the key for why carbon price is the lowest cost way.
What economist/commissioner Ragan doesn’t say is the obvious. Ragan suggests the plan should be to return all of the “carbon tax” so we can change our purchasing habits. The plan announced by the federal government suggests 80% of households will receive rebates in excess of their cost. The question becomes: will they use the slight excess to trade in their automobile for an EV or change their gas furnace to one consuming wood pellets? Unlikely on both counts, as the excess received, as an example, in Ontario in 2022 when the carbon tax is $50/tonne the excess per household will be $133.00 for the full year. Most of that excess will be paid back to the government via the sales taxes applied to both the gasoline we use for our cars and the natural gas we use to heat our homes*. Households will see the cost of all consumption rise as food, services, toiletries, etc. etc. will increase based on carbon taxes charged to the raw material/assemblers/transporters of those products/services. By 2022, when the $50/tonne is in place the cost to Ontario’s households and businesses will be in excess of $8 billion based on 2016 provincial emissions of 161 MT but the amount returned to households will be about half that amount.
What about subsidizing fossil fuels, what we do to the tune of $1 billion per year?
We as a country do not have explicit fossil fuel subsidies.
Finally, Ragan provides one honest answer!
PARKER GALLANT
Coming tomorrow: Part 3 will look at the influence the Ecofiscal Commission had in the creation of the Carbon Tax.
*Over 6 million Canadian (43%) households heat their homes with natural gas.
Parker Gallant Energy Perspectives 