Opinion on Canada’s new 2035 zero-emission vehicle sales requirement
Yesterday, the Government of Canada announced a country wide requirement for 100% of car and passenger truck sales to be zero-emission by 2035¹. This lofty but very much needed requirement, will put pressure on several industries, and many citizens in the coming years. In our view, one of the most critical needs to successfully meeting the requirement is the physical infrastructure required to charge electric vehicles.
This new requirement of 100% of car and passenger truck sales, however good it might be, has been made with little actual plans, incentives, regulations, or strategies on how we will achieve this as a country. Therefore, the announcement does very little in the near term. Many areas of Canada have literally been built around the use of gas-powered vehicles. To say the least, it will be an incredibly challenging task. Like the gasoline network though, the electricity network is also a key building block which much of Canada has been designed around as well.
On the supply side most major automakers already have many electric vehicle options and most have made commitments to drastically increase production of electric vehicles this decade, and beyond. This definitely bode well for us meeting the new requirement. Setting a goal such as this without a real plan creates little to pat ourselves on the back about, but at least it puts a timeframe on things so the hard work can begin at all levels of government, in many organizations, and in many households.
There is no doubt that the transportation industry is already undergoing electrification, albeit slowly. How and where vehicle owners “fuel” up…or should we say “charge” up will be a big question needing answers in the coming years. How smoothly this critical infrastructure is integrated and at what pace and cost to taxpayers, businesses, or others, remains to be seen. Important planning work needs to begin now for utilities, businesses, Indigenous groups, and governments. Governments, corporations, Indigenous groups, communities, and individuals will need to work together to be efficient in achieving this goal. The heavy lifting will need to be done on planning and development in the next few years, leaving about a decade to implement and achieve the requirement.
Charging infrastructure will need to expand faster than the rate of the adoption of electric vehicles for many reasons, such as:
- New electric vehicles purchasers need to have confidence in the charging availability where they drive and the costs to charge before committing to purchasing an electric vehicle to replace a gas powered one.
- Planning and implementing charging and other electricity infrastructure (additional generation, energy storage, distribution lines, or transmission lines) follows a much longer time horizon than a consumer purchasing a new vehicle.
- Country-wide charging standards will be needed to make sure an uncoordinated mess doesn’t ensue. Consider that every gas station has near universal “fueling” infrastructure.
Shifting Revenue
As more vehicle owners transition from gas to electricity, there will be a steady transition of revenue going from gas producers, distributors, and providers to electricity generators, distributors, and providers. This transfer of revenue will spur a new wave of growth in new businesses and it has potential to benefit many, many different areas of society and the economy. A clear winner of the transition, and perhaps the biggest outside of our overall improved air quality, will be electric distribution utilities. Electric vehicles can be charged practically anywhere there is sufficient and reliable power with charging costs being paid by the consumer to the utility or retailer.
In 2017, the average Canadian spent $2,142 on gasoline². This data is both a few years old and a small sample size of just one year, but the point is that this is a large amount of money that many Canadians are used to paying to drive! With the impending boom of electric vehicles coming to Canada this significant new revenue source is on its way to the well-established electricity sector. Utilities stand to benefit greatly from this transition to electric powered vehicles simply due to a mix of market circumstances, environmental factors, government decisions, and consumer driving decisions.
Charging patterns and locations of charging infrastructure will likely look different than the existing network of gas stations does now. 7-Eleven is making clear that they want to be on the leading edge of future charging options and earlier this month they made an announcement that they would be building 500 direct current fast charging ports at 250 select U.S. and Canada stores by the end of 2022³.
Utilities ought to help plan for and make it possible to transition to electric vehicles easier by offering good incentives, fair rates, and great customer service to integrate charging infrastructure across their networks rapidly. Designing rate structures is another area that utilities and electricity commissions need to factor into their planning to ensure revenues go towards supporting this new 2035 requirement.
For personal vehicle owners, charging will most likely be done at home when all possible. While commercial vehicle owners or fleet owners might charge in industrial complexes or along major transportation routes or many combinations. The way we are used to ‘gassing up’ our vehicles now will not be the same as the way we ‘charge up’ our cars going forward. With new revenue, utilities should be in a great position to help lead the way to support Canada in achieving its new requirement by 2035.
Blue Harp Consulting
We work with governments, institutions, and utilities on planning and implementing sustainability related projects, such as how to integrate electric vehicle charging infrastructure into transportation and utility networks. Reach out to us today to learn more about how we can help your organization with electrification projects or other energy or sustainability related initiatives.
Do you have questions about our consulting services or this blog post? Connect with Dave via email at: dcarscadden@blueharpconsulting.ca
References
1 – Government of Canada: https://www.canada.ca/en/transport-canada/news/2021/06/building-a-green-economy-government-of-canada-to-require-100-of-car-and-passenger-truck-sales-be-zero-emission-by-2035-in-canada.html
2 – StatsCan : https://www150.statcan.gc.ca/n1/daily-quotidien/181212/dq181212a-eng.htm
3 – 7-Eleven Corporate website: https://corp.7-eleven.com/corp-press-releases/06-01-2021-7-eleven-charges-forward-with-installation-of-500-electric-vehicle-ports-by-end-of-2022-providing-convenient-charging-options-that-drive-a-more-sustainable-future
