Environment Committee on Nov. 25th, 2020

[The Chair, Liberal, Francis Scarpaleggia]

Welcome, everyone, to the eighth meeting of the Standing Committee on Environment and Sustainable Development, and our fourth and last meeting with witnesses for our study of zero-emission vehicles.

Today we have four witnesses. Each witness will have five minutes to give their opening remarks. That will be followed, of course, by the standard question-and-answer session.

Witnesses, you can speak in either official language. If you're not speaking at a particular moment, please put your mike on mute. Also, in order to allow members to get the most information out of their questioning of you, if you could be as succinct as possible in providing answers and getting to the core of the subject matter of the questions as directly as possible, that will allow members to ask more questions and the committee to get more information for its report.

Without further ado, I believe we're ready to go. I would ask—

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Mr. Chair, I have a point of order.

[The Chair, Liberal, Francis Scarpaleggia]

Go ahead, Mr. Godin.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

We've received documents on several occasions, notably from Electric Mobility Canada. So documents are piling up.

I just want to make sure we inform the members whether the version of a document we receive is identical to a previous version or has been modified. Can the clerk let us know? We're having trouble keeping track of all these documents.

[The Chair, Liberal, Francis Scarpaleggia]

Do you mean documents submitted by witnesses?

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Yes.

[The Chair, Liberal, Francis Scarpaleggia]

As I understand it, you're saying that documents are sometimes sent a second or third time? That should only happen rarely since, once those documents are submitted to the clerk of the committee, they're then sent to the members.

A witness may send additional information and amend a document. In some instances, witnesses also send various types of documents: a briefing note, for example, may be added to documents submitted for the purposes of the meeting.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

I understand.

That's intended as a constructive criticism. I would just like us to be informed when a revision has been made. Otherwise we'll assume it's the same document.

[The Chair, Liberal, Francis Scarpaleggia]

That's a good idea since we receive many documents by email.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Thank you, Mr. Chair.

[The Chair, Liberal, Francis Scarpaleggia]

Today we have with us the Canadian Taxpayers Federation, Electric Mobility Canada, Global Automakers of Canada and Ballard Power Systems.

We'll go in that order with five minutes each, starting with the Canadian Taxpayers Federation, represented by Aaron Wudrick, the federal director.

Go ahead, Mr. Wudrick, for five minutes, please.

[Aaron Wudrick, Federal Director, Canadian Taxpayers Federation]

Thank you very much, Mr. Chair.

Good afternoon to all, and thank you very much to the committee for the invitation to appear today.

The Canadian Taxpayers Federation, for those who are not familiar with us, is a national, non-profit, non-partisan group founded in 1990. We have approximately 235,000 supporters across the country. We focus really on three broad areas; lower taxes, less government waste and accountability and transparency in government.

With respect to the committee's study, the reason for our appearance today is our submission with regard to the second point on government waste, specifically, what we see as a well-intentioned but ultimately wasteful program intended to encourage the purchase of ZEVs.

In October, our group released some access to information documents we obtained regarding the cost of a program launched by the federal government last year entitled “Incentives for Zero Emission Vehicles”. This was a program that provided a taxpayer subsidy of up to $5,000 off the purchase price of electric vehicles if the base model was listed for less than $45,000. If that base model was under $45,000, higher price versions of the same model up to $55,000 would then also qualify.

The way it works is that dealerships apply this to the price of eligible vehicles when they are purchased, and then they apply to Transport Canada in order to be reimbursed for the subsidy afterwards.

This program was launched in May 2019. It was expected to run for three years and had a budget of $300 million. As of January of this year, $134 million in rebates had been issued, with the rest of the funds expected to be entirely gone by the end of 2020.

Tesla has received the most subsidies from this program, taking in more than $60 million just between May 2019 and the end of March, a little bit under a year. Notably, Tesla's Model 3 did not qualify for this subsidy initially because the base model was priced too high. It was priced at $53,700, well above the $45,000 price cap.

To solve this, Tesla introduced a Canada-only version of the Model 3, which they called “standard”, with a non-negotiable reduced range of 150 kilometres per charge. Tesla priced this at $44,999, one dollar below the program cut-off rate, to be eligible for the subsidy.

Interestingly, they only sold 126 of this base model, but they did sell 12,000 of the higher-priced “standard plus”, which is now eligible for the subsidy because of the existence of this base model.

I would suggest that this is a problem. Presumably the purpose of setting a cut-off price was precisely to avoid having these subsidies go to more expensive vehicles, and yet that's exactly what happened here. Perhaps even more importantly, if the purpose of these subsidies is to encourage the uptake of zero-emission vehicles, it seems that a relevant question is whether they are actually leading to a higher uptake or simply providing subsidies to people who were going to buy ZEVs anyway. It's especially fair to ask that question given the price points we're talking about here.

Even a $45,000 vehicle, I would suggest—never mind a $55,000 vehicle—would be considered a luxury vehicle by most Canadians, and I think it's a fair question to ask whether regular Canadian taxpayers should be subsidizing the purchase of luxury vehicles for people who are fully prepared to pay full price for them. I would suggest that the answer is no, and for that reason our organization believes this program should be scrapped or, at the very least, revised.

I will close by observing that this government has in the past demonstrated an awareness of this windfall effect, where subsidizing the cost of something simply gives extra benefit to people who would be happy to incur the full cost anyway. The current government eliminated tax credits for transit, children's sports and arts using this exact argument since there was little evidence that they were leading to increased uptake of these things. They were simply providing a windfall to people who were going to buy transit passes or enrol their kids in sports anyway.

Taxpayer dollars, of course, are valuable for every use they have. There are many other potential alternative uses, and I would urge this committee to explore some of those uses to ensure that taxpayers are getting good value for their money.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you, Mr. Wudrick. That's very interesting and your explanations are very clear.

Now we'll hear from Mr. Breton, president and chief operating officer of Electric Mobility Canada.

Mr. Breton, you have the floor for five minutes.

[Daniel Breton, President and Chief Operating Officer, Electric Mobility Canada]

Good afternoon, ladies and gentlemen.

Thank you for the opportunity to address your committee as part of your study on zero-emission vehicles in Canada.

Founded in 2006, Electric Mobility Canada is one of the very first organizations in the world dedicated to electric mobility. We are a national non-profit organization and are considered the Canadian experts in electric mobility.

EMC has more than 220 member organizations, including utilities, vehicle manufacturers, infrastructure providers, tech companies, research centres, cities, universities, fleet managers, etc.

We work on electric mobility from bikes to cars, from buses to boats, from trucks to trains, from mining to research to assembly to infrastructure to recycling and in all parts of Canada.

I personally have been working on electric mobility for almost 20 years and have written many books on the subject. At home, we drive electric cars, and by the way, we live in a rural area.

EMC supports incentives for the purchase of light and heavy-duty electric vehicles from buses to school buses to trucks, incentives for the purchase of used EVs and PHEVs, financial support for the purchase and installation of charging infrastructure, a federal ZEV standard, innovation programs related to the EV industry, education for consumers, the electrification of government fleets, and training and retraining programs for workers across Canada.

In the first half of 2020, ZEV sales were at 3.5% of all light-duty vehicle sales in Canada.

Unless a ZEV standard is adopted, Canada won't be able to meet its EV adoption targets. It still is very hard to find an EV, since only 33% of dealers in Canada have at least one EV in stock. Outside of Quebec, B.C., and Ontario, fewer than 20% of dealerships have at least one EV on their lot, so even though dealers want to sell EVs, they don't have enough supply to meet consumer demand.

According to a 2019 report by Clean Energy Canada, 560,000 clean technology jobs are expected to be created in Canada by 2030, with 50% of them in the clean transportation sector.

Between 2021 and 2030, if Canada follows the examples of California, B.C., Quebec and other jurisdictions around the world and adopts a ZEV standard, expected sales revenues, according to our calculations, are projected to exceed $190 billion.

Canada's goal is to reduce emissions of greenhouse gas, or GHGs, by at least 30% of 2005 levels by 2030. Between 2005 and 2018, GHG emissions from cars and light trucks rose 9%. GHG emissions from the transportation sector may soon be the number one source of GHG emissions in Canada, ahead of the oil and gas sectors.

According to the International Energy Agency, Canada is the number one country in the world for GHG emissions per kilometer driven by its light duty vehicle fleet, ahead of the United States' light vehicle fleet.

Over that same period, GHG emissions from the electricity sector have decreased by 46%, making Canada's electrical system one of the cleanest in the world, with 82% of electricity in Canada coming from non-GHG-emitting sources.

According to the National Research Council of Canada, light and heavy electric vehicles are cleaner than gas and diesel vehicles across Canada. By 2025, new battery technologies will drive battery prices down more than 50% while range will increase by more than 50%.

Air pollution in Canada has caused 14,600 deaths, which is 7.5 times the death toll of motor vehicle accidents.

In 2017, transport was responsible for the majority of total nitrogen oxide emissions and carbon monoxide emissions in Canada.

According to the 2019 Health Canada report, the total annual economic value associated with air pollution is $114 billion.

In conclusion, EVs, from light to heavy-duty, can help Canada meet its goals on climate change, lower air pollution and help Canadian citizens' health as well.

Thank you.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you, Mr. Breton.

Mr. Adams, are you there?

You were disconnected at one point. I imagine that you're back on the call, Mr. Adams. Are you there? No?

Okay, we'll go then to Mr. Pocard of Ballard Power Systems for five minutes, please.

[Nicolas Pocard, Director, Marketing, Ballard Power Systems Inc.]

Good afternoon.

My name is Nicolas Pocard. I am the director of marketing and strategy at Ballard Power Systems.

Ballard is a technology company based out of Vancouver, British Columbia, that has been developing fuel-cell and hydrogen technology for the past 40 years.

Today, I would like to highlight the key role that hydrogen will play in the decarbonization of the economy in Canada, especially when it comes to heavy-duty transportation. We believe that if you want to meet the objective of carbon neutrality by 2050, we are going to need hydrogen heavy-duty mobility to achieve those targets. By that, I refer to the trucking, rail and marine industries, where hydrogen fuel cells provide a path to decarbonization. In addition to that, we believe that the maturity and the leadership that Canada has in hydrogen fuel-cell technology represents a unique economic opportunity, but we need to maintain that leadership. We need to invest in the deployment and in the R and D of fuel cells in Canada. We need to keep that.

We have started to see outside of Canada countries in Europe making major investments in hydrogen, and we see the same thing in the U.S., China, Japan and Korea. We are looking forward to the soon-to-be-announced hydrogen strategy that the B.C. Ministry of Energy, Mines and Low Carbon Innovation should be announcing very soon, but we want to make sure that this strategy is backed up by support in order to deploy technology in Canada, as well as supporting R and D to maintain that technological leadership.

We strongly believe that Canada must join the other countries that have recognized the fundamental role of hydrogen fuel-cell technology in the decarbonization of heavy-duty transportation, as it represents a unique economic and job opportunity in Canada. We believe it's possible to achieve a target of 10,000 fuel-cell buses and trucks in operation across Canada by 2030. This also represents a really important investment in the value chain. Energy—hydrogen in this case—is being produced from the natural resources of Canada, from wind, solar, hydro or, in the Prairies, using natural gas converted to blue hydrogen and carbon sequestration to ensure the local production in Canada of low-carbon hydrogen. As well, it goes through the entire value chain. A fuel-cell vehicle is an electric vehicle and includes all the equipment we produce here in the value chain, from the fuel-cell system, the power train and the different integration. This represents a unique economic opportunity, as well as a way of achieving those targets of decarbonization.

Thank you.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you, Mr. Pocard.

We will now begin the first round of questions. We will give Mr. Adams the floor if he can reconnect.

Go ahead, Mr. Godin.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Thank you, Mr. Chair

Thanks to the three witnesses for taking part in this exercise. We'll thank the fourth witness later if he manages to reconnect. Hurray for technology! This is what we elected members go through every day.

My questions will first be for a representative of Quebec, Mr. Breton, who was environment minister in 2012.

Mr. Breton, as you mentioned, you're very consistent in your statements on the environment. You're very sensitive to the environment issue, but I'm not sure your successor shares that concern. It was the leader of the Bloc Québécois in the House of Commons, Mr. Blanchet, who took your place when you left your position in that department.

The greenhouse gases produced by oil consumption are one aspect, but the composition of an electric vehicle has a significant impact on production. It also emits greenhouse gases. If you reduce GHGs on the one hand, but increase them on the other, I'm not sure we can be carbon neutral by 2050.

Mr. Breton, can you provide us with information on the impact of electric vehicle production on greenhouse gas emissions?

[Daniel Breton]

That's an excellent question. You're ultimately talking about the entire vehicle lifecycle, that is, production of the vehicle, including its battery, use and disposal.

On pages 8 and 9 of the brief I sent you on Monday, we discuss an analysis that was conducted by the National Research Council of Canada. That analysis shows that, in Quebec, for the entire lifecycle, including battery production, the greenhouse gas emissions of partial and fully electric vehicles are 35% to 55% lower than those of an equivalent gas vehicle. Even in Alberta, where electricity production is not as clean, an electric vehicle is still cleaner than a gas vehicle. Regardless of the sources used for electrical generation or battery production, a partial or full electric vehicle is still cleaner than a gas vehicle.

In addition, since 2013, battery production has vastly improved from an environmental standpoint, as a result of which its environmental impact has declined by 60%. Emissions from battery production and battery lifecycle will decline by a factor of 8 by 2030. I can send you documents on that subject later. Batteries pollute less and less because we're discovering increasingly efficient manufacturing methods that make electric vehicles cleaner and cleaner over time.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

You're talking about battery manufacturing.

[Daniel Breton]

Yes, that's correct.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

You have to mine raw materials in order to produce batteries, and that has an impact on GHG emissions.

We believe you when you say that the impact of battery production on greenhouse gas emissions will decline by a factor of 8 by 2030, but are there any hard facts on that?

You haven't convinced me with your argument that electric vehicle use is “the” solution. I think electric vehicles are one of the solutions. From what I understand, we'll need oil to produce plastics and the materials needed to build electric vehicles.

I'd like to get your view on that, Mr. Breton.

[Daniel Breton]

I just told you about the study conducted by the National Research Council of Canada. I'm talking about the entire lifecycle, from the mining of raw materials to battery manufacturing, vehicle use and disposal. That's the full lifecycle. It includes drilling for oil and mining raw materials to produce gas vehicles because they have to be built, and drilling for oil in order to build electrical vehicles, as well as using oil and electricity to operate those vehicles. That's the full lifecycle. What you're telling me corresponds to that. We take into account raw materials extraction for producing both batteries and gas vehicles.

The National Research Council's study clearly shows that electric vehicles emit less GHG throughout their lifecycle, including emissions attributable to raw materials extraction.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

I'd like to continue on the subject of the impact of electric vehicle production, but from another angle.

We have power grids. You live in a rural area, Mr. Breton; you know exactly how cold it gets in Quebec. It happens every year. We have a power supply problem in January, and Hydro-Québec, a Quebec crown corporation, asks us to cut back our power consumption. If you cause one problem by trying to solve another, maybe you're putting the cart before the horse.

Can you explain to me how we can manage the energy transition efficiently and the way we use electricity so that our grids can meet our needs?

[The Chair, Liberal, Francis Scarpaleggia]

Your time is unfortunately up, Mr. Godin. You're on the list for the next round, and you'll have an opportunity to get an answer to that question.