A shift in climate change priorities for the U.S. means a better harmonization with Canada, a bigger push for zero-emission vehicles, and a greater need for the infrastructure — among other things.
As many readers will know, Canada has essentially harmonized its safety standards and its emission standards with those of the United States.
With respect to the latter, the previous U.S. administration posed a problem for the Liberal government in that there was no real acknowledgment by the Trump administration of climate change, flummoxing our prime minister and his cabinet that came to power on a platform of addressing climate change and committed to meeting its Paris Agreement obligations.
For the automotive sector specifically, President Trump’s Safer Affordable Fuel-Efficient (SAFE) Vehicles Final Rule passed a year ago, effectively recalibrating the standards set by the Obama Administration that required a 5 per cent improvement per annum in fuel economy, with a standard representing a 1.5 per cent improvement in fuel economy instead, over the 2021-2026 period.
As our greenhouse gas emissions standards incorporate by reference the U.S. standards — they automatically changed too.
Fortunately for the Canadian government, the U.S. elected an administration last November that made it clear that it would be acting quickly and decisively on climate change, with one of U.S. President Biden’s first executive orders requiring a review of the aforementioned SAFE Vehicles Final Rule by July of this year.
The federal government has currently spent and allocated less than $400 million for infrastructure roll out.
In the interim, our two governments have met and have established a shared vision on the environment and climate change moving forward under the auspices of a Roadmap for a Renewed U.S.-Canada Partnership.
Under the Roadmap, Canada and the United States agreed to take an aligned approach and accelerated policy actions towards a zero-emission vehicle future, as well as looking to develop and produce batteries for zero-emission vehicles through the cultivation of new supply chains and through joint work on the Canada-U.S. Joint Action Plan on Critical Minerals Collaboration.
As part of the United States’ 180 degree turn on climate change, President Biden came out at the end of March with even more aggressive measures to increase the uptake of ZEVs, by including $174 billion in the $2 trillion America Jobs Plan to provide both federal incentives for vehicles while also committing to the build out of 500,000 charging stations nationally by 2030.
ZEV penetration in the U.S. had languished at less than 2 per cent of sales during the previous administration.
A recent report by Atlas Public Policy in Washington indicated that 495,000 public and workplace charging ports would need to be put in place at a cost of $39 billion (out of a total $87 billion for charging infrastructure) to support a goal of 100 per cent zero-emission vehicle sales by 2035 in the United States.
In Canada, it was recently estimated that using the same approach as the Atlas study would require spending approximately $4.7 billion in public infrastructure to reach the same target.
The federal government has currently spent and allocated less than $400 million for infrastructure roll out, and although the Canadian government has set a goal of 100 per cent ZEV sales by 2040, it is clear — barring significant new investment in charging infrastructure — that we will not have the infrastructure in place to support the level of ZEVs the government would like to have on the road.
British Columbia and Quebec will especially have to do some heavy lifting in the infrastructure roll-out department, given that both jurisdictions have established legislated bans on internal combustion engines (B.C. in 2040 and Quebec in 2035).
Another indication of America’s change of heart on climate change was Biden’s commitment to reduce GHG emissions by 50-52 per cent from 2005 levels by 2030 at the Climate Summit, which was recently convened to engage world leaders in the need to act aggressively to address the climate crisis.
For Canada’s part, Prime Minister Trudeau upped Canada’s emissions reduction target to 40-45 per cent below 2005 levels.
It would seem that the United States is back to assuming its historic role as a leader on issues of global concern. This, in many ways, is good for Canada. But unlike the previous four years, America now represents an even more formidable competitor when it comes to clean tech investment attraction and development that will be necessary to sustain this zero-emission vehicle future.
For Canada’s part, Prime Minister Trudeau upped Canada’s emissions reduction target to 40-45 per cent below 2005 levels.
That said, there were a number of initiatives in the recent federal budget that indicate that the federal government is prepared to do what is necessary to attract investment and grow the new automotive industry — such as the $7.2 billion added to the Strategic Innovation Fund and $5 billion allocated to the Net Zero Accelerator fund, along with measures like a 50 per cent reduction in the corporate tax rate for firms involved in zero-emissions technology manufacturing.
The establishment of a Critical Battery Minerals Centre of Excellence within Natural Resources Canada should also help Canada play a critical role in what will hopefully be a North American approach to developing the batteries critical to support ZEVs.
Canada will need to continue to cultivate the North American approach in developing the raw materials, the processing and the battery assembly to avoid a still persistent “Buy America” sentiment that exists in the United States.
While it is useful to have Canada and the United States seemingly on the same page now, when it comes to addressing climate change, and with the industry itself pivoting to produce ZEVs with companies making increasingly bold predictions about when they will have fully emission-free lineups, we can’t afford to neglect the consumer as we move through this period of exponential disruption and change.
Survey after survey, including a recent survey undertaken by the Global Automakers of Canada and the Canadian Vehicle Manufacturers Association, continue to underscore the lack of charging infrastructure, the price of ZEVs — and the real lack of awareness of the technology and the benefits it can provide to the consumer, which are key factors preventing greater consumer interest and uptake of ZEVs.
The issue for the near future is not going to be manufacturers supplying ZEVs — there will be more than 120 new models on the market by 2023, compared to the 45 that are currently on the market. Rather, it will be ensuring there are enough consumers prepared to make the plunge into a ZEV. Consumers are largely going to have to do a 180 on their vehicle choices as well.
