Direct Economic Benefits of Electric Vehicles to the Province of Ontario

John Stephenson prepared this report. This is an extract from the complete report (PDF).

Introduction

Last year, we Ontarians emitted 161 million tonnes (CO2 equivalent) of greenhouse gases (GHG). We must reduce these emissions to zero by 2050 to have a reasonable chance of avoiding totally unacceptable climate change. Everyone in the world must do likewise; but we must take the logs out of our own eyes before pointing out the specks in others’ (to paraphrase a prophet, widely revered for His wise advice). What would He do?

Recently, a friend reminded me of another very relevant quote from another prophet (of sorts), Churchill, who, at a critical point in history, told the British people that “sometimes it is not good enough to do our best, we must do what is required”.

Difficult? Impossibly costly? I’m sure it’s not. There are 100 ways described, and costed, on the website www.drawdown.org, most of which are shown to save money, as will the one I argue for in this paper; for motorists, for hydro rate payers and for the Province as a whole.

Passenger road transportation emitted 30 million tonnes of GHG in Ontario in 2016 (about the same as was saved by shutting down the coal-fired power stations, but that low hanging fruit has long gone). This would be mostly from cars, plus some buses and motor-cycles. This analysis focuses on electrification of cars because they are, doubtless, responsible for the majority of the 30 million tonnes and there is readily available information to assess the direct economic benefits to Ontario of electric cars. There is also now a good selection of electric cars on the market.

The paper describes how a modest, easily justifiable, fee-bate administered by the Ontario government (but hardly costing the taxpayer anything) would accelerate uptake, playing both to this government’s Made-in-Ontario Environment Plan and creating direct economic benefits to car owners, tax-payers, hydro rate payers and the Province in general.

This is not to say we couldn’t also pursue electrification of buses, motorcycles and indeed trucks, trains, ships and off-road vehicles (construction, mining, farming and forestry). I just don’t have information ready at hand to analyse the direct economic benefits of those and how to effectively incent them. And, of course, we need emission reductions in sectors other than transportation. However, transportation is the biggest emitting sector in Ontario and specific, effective reduction strategies are more obvious than in the others.

This paper is a revision to the version ClimateActionNow kindly published for me under the same title a few weeks ago. That one took a macro-approach, looking top down at electrifying all 8 million light duty vehicles on the road in Ontario. After more research, I’ve now decided that a more intuitively do-able program can be described for eating this elephant a few cars at a time. Using this bottom up approach, it’s easier to see how the economic benefits of each new electric car justifies immediate action this year and for the next few years. Get the train rolling down the track and soon it will move well under its own momentum.

The arithmetic is simple and sources of pertinent data are readily available. For a modest effort, the Province would save money for future electric car owners and hydro rate payers, help the economy by improving the Province’s import/export balance, create more opportunity for local clean technology business, clean the air and mitigate climate change. The key to this successful strategy is the opportunity that exists to optimize use of something we already own, and are paying for (and, oh, how we are paying!), the Electricity Grid, as a substitute for buying energy from outside the Province.

Summary

Low carbon vehicle uptake is part of Ontario’s Environment Plan (1), but the only action the Plan proposes to achieve that is to remove barriers for commercial charging. That is good, but probably not sufficient to sell EV’s in large numbers, according to recent experience in this province and elsewhere.

This paper shows that each new electric car on the road produces savings for their owners, moderates hydro rates and helps the Ontario economy by keeping more of our energy dollars circulating at home. A strong home market would help related clean technology business. And they don’t put unhealthy fumes and greenhouse gases into our sky. Therefore, more effort by the government is amply justified.

A Made-in-Ontario “fee-bate” program is suggested that, at no cost to the tax-payer and miniscule costs to buyers of other types of cars (possibly as low as 1.5% of purchase price), should spur sales of electric cars, e.g. to about 50% of new car sales in the Province by 2024, developing sales momentum such that little further support should be necessary for rapid decarbonization of cars in Ontario. This would “over-achieve” in emissions reduction with respect to the Environment Plan. It needs over-achievement.

The complete report (PDF) can be downloaded.