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June 2, 2022
The Empire Club of Canada Presents
Canadian Drivers and the Low-Carbon Future
Chairman: Kelly Jackson, President, The Empire Club of Canada; Vice-President, External Affairs & Professional Learning, Humber College
Jennifer Stewart, President & CEO, Canadian Energy Marketers Association (CEMA)
Jackie Forrest, Executive Director, ARC Energy Research Institute
Ian Jack, Vice-President, Public Affairs Canadian Automobile Association (CAA)
Dan McTeague, President, Canadians for Affordable Energy
Distinguished Guest Speaker
Bob Larocque, President and CEO, Canadian Fuels Association
It is a great honour for me to be here at the Empire Club of Canada today, which is arguably the most famous and historically relevant speaker’s podium to have ever existed in Canada. It has offered its podium to such international luminaries as Winston Churchill, Ronald Reagan, Audrey Hepburn, the Dalai Lama, Indira Gandhi, and closer to home, from Pierre Trudeau to Justin Trudeau. Literally generations of our great nation's leaders, alongside with those of the world's top international diplomats, heads of state, and business and thought leaders.
It is a real honour and distinct privilege to be invited to speak to the Empire Club of Canada, which has been welcoming international diplomats, leaders in business, and in science, and in politics. When they stand at that podium, they speak not only to the entire country, but they can speak to the entire world.
Welcome Address by Kelly Jackson, President, The Empire Club of Canada
Good afternoon to the fellow directors, past presidents, members, and guests. Welcome to the 118th season of the Empire Club of Canada. My name is Kelly Jackson. I am the President of the Board of Directors of the Empire Club of Canada, and Vice-President, External Affairs and Professional Learning at Humber College. I'm your host for today's event, “Canadian Drivers and The Low-Carbon Future,” part of the “Fuel for Thought” virtual event series, a collaboration between the Empire Club of Canada, and the Canadian Fuels Association. Today, we’re going to hear about the important role Canadian consumers are playing in our low-carbon future, and how their choices will impact the country’s plans to achieve net zero.
I'd like to begin this afternoon, first, with an acknowledgement. I am hosting this event within the Traditional and Treaty Lands of the Mississaugas of the Credit, and the homelands of the Anishinaabe, the Haudenosaunee, and the Wyandot Peoples. In acknowledging Traditional Territories, I do so from a place of understanding the privilege my ancestors and I have had in this country, since they first arrived here in the 1830’s. As farmers in Southwestern Ontario, I imagine they felt a deep connection to the land, and yet likely did not recognize how that connection was built on the displacement of others. Delivering a land acknowledgement, for me, it's always an important opportunity to reflect on our human connection, and responsibility to care for the land; and to recognize that to do so, we must always respect each other, and acknowledge our histories. We encourage everyone tuning in today to learn more about the Traditional Territory on which you work and live.
The Empire Club of Canada is a non-profit organization. So, I now want to take a moment now to recognize our sponsors, because they generously support the Club, and they make these events possible, and complimentary, for our supporters to attend. Thank you to our partner in the “Fuel for Thought” virtual event series, the Canadian Fuels Association, and a big thank you, as well, to our season sponsors, Bruce Power, the Canadian Bankers Association, LiUNA, Waste Connections of Canada.
Before we get started, just a couple of housekeeping notes. I want to remind everybody who is participating today, that this is an interactive event. And so, if you're attending live, I encourage you to engage by taking advantage of the question box you can find by scrolling down below your on-screen video player. We have reserved some time for audience questions at the end of the discussion. We also invite you to share your thoughts on social media, using the hashtags displayed on-screen throughout the event. If you require technical assistance, please start a conversation with our team, using the chat button that you will find on the right-hand side of your screen. To those watching on-demand later, and to those tuning in on the podcast, welcome.
It's now my honour to welcome our guests today, to the Empire Club of Canada's virtual stage for the first time. They include, Jackie Forrest, Executive Director, ARC Energy Research Institute; Ian Jack, Vice-President, Public Affairs, the Canadian Automobile Association; Dan McTeague, President Canadians for Affordable Energy; and Jennifer Stewart, President and CEO, Canadian Energy Marketers Association, and our moderator for today. You can learn more about our speakers by scrolling down below the video player on your screen; and there you're going to find their full bios. It's now my pleasure to hand this over to Jennifer to get us started. Jennifer, over to you.
Opening Remarks by Jennifer Stewart, President & CEO, Canadian Energy Marketers Association
Thank you so much, Kelly. It's a pleasure to be here today, to discuss Canadian drivers and our low-carbon future. Thank you to the Empire Club of Canada, and the Canadian Fuels Association for bringing today's event to fruition. I have questions for our guests today, but as Kelly noted, I encourage you to submit your questions, and we will do our best to get to them with the time that we have. Jackie, I'm going to start with you. We hear a lot about the government's plan to achieve net-zero, and continue to reduce emissions related to transportation. Are Canadian consumers and the general public currently aware of the extent of their role in making this happen?
Jackie Forrest, Executive Director, ARC Energy Research Institute
Thank you, Jennifer; and thank you, everyone, for the invite to this event, I’m really looking forward to the discussion. Are Canadian consumers aware? You know, I think generally not. I mean, maybe they've heard that the Government of Canada is saying that we're only going to be able to buy electric vehicles in 2035, but I don't think they really thought about what that means; that they'd actually go to the car dealership, and that would be the only option. I can also think they're not aware of the Clean Fuel Standard that's coming, that is going to come, probably at a pretty bad time, where we're going to see maybe 15 cents, or more, added per litre to the cost of gasoline and diesel in Canada, and I don't think any of them are aware of that, or that policy. And when that comes out, I think it's going to be really hard for them to understand. It's such a complex policy. I think it's a great policy, it's a smart policy, but it's not coming out at a great time, in terms of adding to the already very high fuel prices.
So, I don't think they really know, and I would argue, actually, that the barriers to them sort of embracing—let's put the Clean Fuel Standard aside and talk more about EV’s—is really the lack of infrastructure that we have in this country, for all sorts of things. So, just to back up, about 25% of all emissions in Canada come from transportation. And I think reducing our emissions is going to be much harder than a lot of other places, because Canada is a huge country. We have long distances, and less dense population, so the cost for creating alternatives to using your car are really difficult, right? For instance, if we want to use EV’s, we're going to need a lot more EV chargers than other countries, because of our big country. Things like high-speed trains, and things like that, are more challenging here than in a place like China, because we just don't have the population. And the same thing for this idea that we're going to use hydrogen for semi-trucks—the infrastructure costs are going to be massive.
And I just thought I'd dig into EV’s as an example, because each of those could be a topic, but, you know, they work great. I've actually been driving an EV for about a year and-a-half now. Our family tried to live only with an EV; we gave up after about eight months, because in Western Canada, the infrastructure just isn't there. Now, I know it's better in the Lower Mainland of BC, and parts of Ontario and Québec, but the reality is, before people will adopt these vehicles, they need to be able to drive everywhere they want to go, and that means having fast chargers, I would say, every 60 to 100 kilometres, on every single highway in Canada. We are so far from that right now. And when I say fast chargers, for those that aren't familiar with it, these are chargers that could allow your car to take the flow rate of electricity—that would be the equivalent of 200 homes. And we'd need banks of them, with five or six plugins, every 100 kilometres. So, think about the infrastructure we're going to need to build out, to get that across all of our major highways. We're also going to need it in a lot of inner cities, because you know, people aren't going to be able to plug if they live in an apartment or a condo. So, we're going to need fueling stations, just like we do for gasoline today, in our inner cities, with the same banks of chargers. So, you know, I think actually, the government needs to really step up here and build out this infrastructure.
You know, the budget announced something like a billion dollars between the Canadian Infrastructure Bank and the governments for public spending on EV chargers in Canada, that is just a drop in the bucket of what we need. And I just did a very fast “back of the envelope,” of what Europe is looking at spending by 2030, not to meet the their goals of totally phasing out ICE’s, you'd have to spend more after that, but we would be needing to spend just if it was equivalent, about $10 billion in infrastructure to—and maybe that some of that would come from private, but just to give you a sense of the order of magnitude, and I think in Canada actually, it would be higher, because we have so many more distances, and we need more chargers probably per person. I was basing that off of kind of a per capita ratio.
I will say that people criticize me when I say the government should pay for this infrastructure, and because they say, “hey, did the government pay to put gasoline stations in all these remote locations?” And I'd say, “well, it's a little different here, because the government didn't say there was a mandate that everyone had to give up their horses, and start buying combustion vehicles in a certain amount of time.” If they're saying that every single one of you won't have a choice, when you go to the car lot in 2035, but to buy an AV, then they have to pay up for that infrastructure—because it would never happen at that pace naturally. So, I think we've got to take this, study it much further, really plan what it's going to cost, and how much infrastructure it's going to take, how much copper it's going to take; is it even doable? So, that's just one example. And you know what, we could go on about other things like fast trains between cities, because that's the other way to reduce emissions from transportation is to get people out of their cars, semi-hauling, I mean, the Emissions Reduction Plan that the government put out, I think it's a couple of months ago, had very aggressive targets for zero-emission vehicles for heavy hauling. Yeah, we could go on and on, but the clean fuels is maybe something to come back to, because I think that's something that can reduce emissions in the shorter term. However, there's a price there, that consumers are going to have to bear. So, I think that’s enough, Jennifer.
Thanks Jacke. I'm sure we'll go, there's so many layers to this conversation, right? Ian, what should the level of engagement with consumers look like, as we transform our transportation system for the low-carbon future?
Ian Jack, Vice-President, Public Affairs Canadian Automobile Association (CAA)
Well, as Jackie just outlined, there are a lot of outstanding questions and, you know, fairly complex policy discussions going on. So, I think the answer is, it needs to be high. Consumers really need to understand this stuff. You know, I’d start at a couple of places, I suppose. The first is that this transition is going to take a long time, so, I think Jackie is absolutely right in everything she said, but I also think it's true that, you know, 2035, 13 years from now, and the average vehicle on Canadian roads is 12 years old. So, even if you could only go to the new car lot in 2035, and only find EV’s, we'd still be at 2047, generally speaking, you know, before the expiry, let's say, of the ICE vehicle. So, I think that there is time to figure this out; and Canadians need to understand that they don't need to panic today, that as of tomorrow, they'll only be able to buy an $80,000 EV sedan. That's not the reality. Secondly, as we know, the industry has invested billions of dollars in EV development; a ton of them are coming online over the next few years—we'll see how that goes. And I do think the government's role is to see it absolutely chargers if we look at EV’s again. But there’ll either be a private sector play here, or there won't. Either the policy will be a failure, people won't buy EV’s—and we've got a problem there—or they will. And, you know, we have a new partnership with a Shell, for instance, at CAA, and we've had some insight into their plans to install charging stations at their gas stations across the country. So, we're already seeing the early fruit of private sector investment, and we do think that'll grow over time. So, the first thing really, the first message, I think, to consumers is just, it's going to take a long time for this to unfold, and we'll all see how it goes. But I don't think we have to either go to utopian or apocalyptic scenarios, in June of 2022.
The second thing I'd say, is that there's an awful lot people can do, to lower their fuel bills, to help the environment, without buying an $80,000 EV vehicle today. It's not Tesla or bust. There are a bunch of fuel saving tips that people can adopt. We've got them on our website, so do a lot of other people—they're not our ideas, you can find them in a lot of different places. Secondly, the industry has done a fabulous job for a couple of decades now in improving fuel economy, so that if you were to buy a new ICE vehicle today, you would be doing a lot more for the environment, and for your fuel economy, and therefore your pocketbook, than if you're still driving a bit of a clunker. One of the things we've had advocated to government for, for instance, is that it's all well and good to have EV incentives—how about incentives to turn in 10, 15, and 20-year-old ICE vehicles? Because those are really bad for the environment, at least a lot worse for the environment than today's vehicles are.
Finally, I'd say on that side of things for consumers, right-sizing your vehicle—and especially as we continue to see these high prices. And regardless of any fluctuations that are coming up in the next little while, there's no doubt that the long-term trend over the next 5, 10, and 20 years is going to be towards higher fuel prices. And I think that studies would show that most of us buy a vehicle that's at least one size bigger than what we really need. What we tend to do, all of us, is think about that one time a year that we go on a huge road trip with an extended family and we have 18 suitcases, and then we buy a car to match that vehicle to match that up. We'd all be better off financially—and for the environment—buying a smaller car to get us around on a day-to-day basis, and renting something for one week a year, or two weeks a year, for that one really big road trip that we do. Last thing, I'll just say a quick stat for people is, the average Canadian drives 40 kilometres a day. They don't drive 500; they drive 40. So, absolutely, we need to build that charging station network, and I think in 10 years time plus, we are going to face a crunch, and to Jackie’s point, we absolutely need to be planning and investing for that today, but that crunch is not coming tomorrow, or the next day either. We just won't get to those sales levels. The headline number for EV sales shows that they're up to 5% now, you know, they're growing, but I mean, they're growing from nothing. So, when we talk about 100%, sales growth or whatever, it's from virtually nothing; 96-97% of the Canadian fleet today is internal combustion engines. And while that number will be going down over time, it's going to take quite some time, to return to my original point, before it's below 50%, and then before it gets it gets worse than that. So, big policy issues to be figured out. But I do think we have time to do so.
Thanks Ian. Dan, the current elephant in the room is inflation, and more specifically, the cost of gasoline and diesel. How does the current price at the pump influence how Canadians view emission reductions and the pace of the transition to lower carbon options?
Dan McTeague, President, Canadians for Affordable Energy
Thank you, Jennifer, it's a very good question. And good to be here with my guests as well, an invitation from the Canadian Fuels Association here at the Empire Club. I think there's a massive disconnect between the aspirational goals of those looking to decarbonize, looking for ideas like just transition, net-zero. I've been to a couple of parliamentary committees; they're miles ahead of where I think the public is. That for ordinary, average Canadians—and that tends to be where I think many of us tend to pin our ears, at least those of us who plan to be around for a few more years—there seems to be a significant gulf between reality, and the aspirational goals of our elected representatives and those around them encouraging this transition.
Inflation in this country isn't, as we now know, transitional. We also know, much as some of us may have ventured out and taken some risks in saying, about a year-and-a-half ago, that we'd be at $2 a litre, I can remember full well my story with David Booth of driving.ca, where myself and an economist had sort of plotted out the chart where we'd go there—no one took that seriously, or thought it was credible. I think we're at the point now where I think we have to recognize that the indispensability of affordable energy is really at the basis of an affordable country, of our prosperity as a nation. And for a country which has significant provable reserves—reserves that are evermore important, especially given the situation as it is evolving in Europe—Canada is both a solution, and it tends to have potentially created a bit of its own problem, in the sense that we have allowed energy prices to rise so dramatically, so suddenly.
And while some will say of course, as most will say, this is really an international issue. Much of this can be sourced right back here to Canada, where the disruption of, or in the cancellation of pipelines—ironically, in totality, which could have provided the world with three additional million barrels a day, the very number that is being sought to displace through Russian sanctions, or sanctions against Russia—could have, in a perfect world, been there to address that shortfall. And as a result, not only are we looking at inflation in Canada, inflation globally, but a massive dramatic rise in the price of energy, such that, for instance, we have to look at oil moving to where it is today. Imagine if we had that 3 million barrels, or 2 million barrels, oil could drop $20, maybe $30 a barrel. The Canadian dollar, which continues to suffer, I don't know—Ian , who did interviews with me many years ago, when we had $100 oil, where the Canadian dollar was not trading at par with the US greenback—that's not to say that the entire devaluation or weakness in the Loonie is directly related to our inability to get more oil and natural gas to market, but there is a cause and effect. And that is having an effect on, of course, our purchase power, which in turn has a lot to do with inflation.
I won't go too far down that road, but it's pretty clear that the public, I think, is at a very different mindset, than those who continue to believe that we have to hurry up and meet these arbitrary deadlines of 2030 net-zero, 2050, no vehicles on the road that are internal combustion engines by 2035. And of course, some of the policies that Jennifer referred to a little earlier, the Clean Fuel Standard, which up until very recently had never been subjected to a cost benefit analysis. In summation, it really means that many people are probably not on board with the movement towards this great green transition, once they recognize the cost attendant—and the cost may be extraordinarily prohibitive. I don't need to mention yesterday's increase in the bank rate, the central bank rate, the effect on mortgages. Let's talk about tomorrow's gas price increase, which will go to $208.9 in Toronto, $2.10 by Saturday—again, smashing all time records—Vancouver $2.35 by Saturday. These high prices are very much in focus, and as they cascade throughout the planet, with the economy, into places like food, I think you're dealing with a very different set of circumstances in which green ambitions are simply going to have to take a backseat for the foreseeable future.
So, just a quick follow up on that, Dan, should we be then reprioritizing a North American energy market?
I think we need to recognize the importance of energy security; and ensuring that both sides of the border have adequate levels of supply. And I'm not sure you can convince those that are currently there of that importance, but it's not lost on those of us, in the 1990s, who were representatives in the significance of having pipelines that could deliver to America the energy that it needed. Demand is not dropping in the United States, supply is unfortunately, and deliberately, and predictively, at a very low level, not just in terms of diesel and gasoline, but also oil production. Look, I think we all want something decent by the by the environment, we want to do right by the environment, but to get there, we have to look before we leap. And I think we have now a very clear example of what happens when you try to rush this too quickly, without data and without science to back it up.
Thanks, Dan. Jackie, it's often said that, on an individual level, that fighting climate change comes down to the choices that we make. Do you feel that Canadian consumers have enough information about the choices that they have available to them when it comes to reducing emissions related to transportation?
Yeah, well, first of all, I want to say I agree with a lot of what Dan said; I think all the events, and the high oil prices, and it's just really going to be disruptive and cause a delay in, I think, even the Clean Fuel Standard, honestly—I just don't know politically how they're going to bring that out at a time like this. And I think it's going to cause a delay in some of these goals in terms of EV’s as well. First of all, I can't even buy EV’s, can't even buy brand new ICE cars right now, right? Like there's a lot of problems. So, I do think there's a road bump here that's going to slow things down. But to your question around, do people have the information they need, you know, the price signal is the most important information that drives consumer behaviour. If you go back before 2014, before the oil crisis crash, when we had $100 oil, people were buying a lot less large trucks and SUVs. They were buying more economical vehicles, because they didn't want to pay for $2 a litre, and they understood how much that would cost them, so they were choosing smaller vehicles. And this is all very predictable; like if you go back into the ‘70s, when we had the oil price shocks of the ‘70s, cars were very inefficient at the time. And because of that oil shock, there were things like the CAFE standards, which regulated fuel efficiency.
I'll give you an example actually. My very first car was a 1982 Mustang—I got it when it was 10 years old though, so, I'm not that old—but it was 25 miles per gallon; the Mustangs that came out before that were like 14 miles per gallon. I apologize for using these units, but, even though I'm Canadian, I've always liked the miles per gallon. So, a phenomenal change happened because of those high prices. And today, the brand-new Mustang, if you don't get the EV one, is about 25 miles per gallon, like, we haven't made any improvements. Now, it's a lot better performance than the car I bought in 1982, but prices do drive different behaviours. And when energy prices are low, people will choose to get the most convenient, comfortable thing that they can get. And if they want to have the option to take a piece of plywood once a year somewhere, they'll get the big truck for that option. And you know, I would say, to Ian's point, yes, the average person drives 40 kilometres a day, however, when you're looking at an EV, you're saying, “well, yeah, that's fine, I could use an EV just for that.” But you also want the option to be able to take that car to go skiing, or to go on a holiday once every five months. And if you can't do that, you're probably not going to buy it, because you're gonna say, “it doesn't meet all the needs I have.” So, I do think that infrastructure, even though you won't use it all the time, is really important for people to say, “I'm going to actually switch to an EV.”
So, the price signal is really big. In the short term, it's going to be hard for people to change; but if we go forward five years, if these prices sustain even close to these levels, you're going to see a change in the makeup of new cars. Once people can buy new cars again, they're going to be a lot smaller, and a lot more efficient, because people are going to recognize the cost of transportation. And in terms of EV’s, that is an issue, in terms of, it's really intimidating to buy an EV. I mean, I'm an engineer, I'm kind of a early adopter of technology, and it's like, super intimidating. Like, what is a kilowatt, and how far can I go on this many kilowatts? And like, it's a little bit technical. Like, my mother, I tried to convince her to get an EV, and there's just no way, you can’t even understand this stuff, right? So, I think we really do need more education. And the price, the economics are really important, too, because when you look at just the lease rate, or the purchase cost, yeah, there's a bit of an uplift for the EV’s—I encourage people to look at the lease rates though; they're not as different for new vehicles as you would think. Now, granted, you have to be in the market for an $80,000-type vehicle, but you can get equivalent lease rates. But there's other huge savings, like you save a lot on fuel—like I'm paying about $8 to fill my tank right now, where an equivalent ICE vehicle, it'd be like $150 to fill my tank. But there's also maintenance savings. People don't really do those calculations, a lot of consumers don't, right? And just the technology, how do you get a charging infrastructure in your home, if you're lucky enough to have a garage? So, I would encourage people to look at Ontario’s Plug n’ Drive, it’s a not-for-profit that is really trying to close that gap in terms of education. I think that's really, really important. Obviously, early adopters are important too, getting more people that understand it, and telling their friends, but that is an issue for adoption, too. And I do think these high fuel prices are going to encourage more EV ownership, but the intimidating factor of not understanding it all, is going to be a barrier.
And just a quick follow up on that, Jackie. Do you think we've done enough to educate Canadians, and provide information about alternatives, about improved fuel efficiency, and ICE vehicles, about renewable fuels?
No, I mean, I don't think most people have any idea what renewable fuels are, right? I mean, maybe like the Husky had that campaign around ethanol or whatever. But no, and I think that's really interesting, too, right. Like, you know, with the Clean Fuel Standard—which I hope does get launched—we are going to be able to reduce the emissions in our existing fuels, which is so important. To Ian's point, it's going to take a long time to actually change out all these ICE vehicles, and if we're going to meet these 2030 goals, we are going to need to do it through fuel. But yeah, I don't think a lot of Canadians understand those options. And I know that, you know, there are options to blend more and more biofuels. Hopefully, we'll have the supply to do that, and it'll be economical. So, you know, that's something they can do in the short term.
Ian, Canada is a large country, and Canadians obviously have a variety of needs when it comes to transportation. You've got the rural versus urban experience, as well as different infrastructure and habits in different regions of the country. How do we address all of these needs—which is a challenge—while creating a reliable, sustainable, and affordable system for our future?
That's a very good question, Jennifer. And you know, picking up again on my famous 40 kilometres a day, that rings true in the East, I suspect some folks in Western Canada might say, “well, wait a minute, I drive a bit more than that every day,” so there are divides, there's no doubt. And if you look at regional patterns in vehicle buying, you compare Québec, let's say, where sedans are still a thing, to most of the rest of the country where they're not, into Western Canada, where pickups are even more important. You really start to see that, as well as the distances travelled.
I will say on the education piece. Very, very quick. ad for us—we like what Plug’n Drive does as well, absolutely—we have a car cost calculator that does show you the operating cost of any two vehicles on the road, and you can compare an equivalent EV, and an ICE vehicle if you want. And to Jackie's point, currently in Canada, because of the electricity mix that we have, which is pretty clean, and taking into account our electricity rates, you're at just over two years on average; where you'd reach a break-even point, because an EV is more expensive, of course than an ICE vehicle these days. You'd reach a breakeven point, and from then on, it should be gravy for you.
I think that our starting point at CAA is that mobility is a right. Most of us don't have vehicles just to do joyrides, most of us are using them to get to work, including in the service economy, which again are likely mostly not people buying brand new Tesla's; they can't afford them. They're buying older vehicles; they’re keeping them longer. Those vehicles are ICE, and they're needed for work, or to get your kids from school, to get groceries; for all of these things. And you know, we could have a whole other hour on urban design, and why it might be, but that's just the way it is in this country. You need a vehicle to get around, and that is a basic right. We can't price people out of that market. So, we do need vehicles at a range of prices, and in a range of sizes, for everybody. And in this early stage, that is partly going to have to be through government policy, and it has to be, again, through making sure that ICE vehicles are still available for as, long as they're needed by anybody in the marketplace.
So, I think that really is the is the key, from our perspective. We do support the transition, but as long as consumer choice is not unduly affected. That's the line that we use with government. It's very important not to get caught up in the latest shiny object, which is a very sexy looking brand new vehicle that, again, to Jackie's point, early adopters, like, first they’ve got their Apple Watch, and then they go out and get their EV, and so on. And that's great, and that starts on market moving, and that's what we need, but that's not where the vast majority of Canadians are. I will say, when we poll on this—and we poll on this and a bunch of other issues quite regularly, proper national sample size—just over a third of Canadians in our most recent sampling, which was before the most recent spike in prices, it was December and then January of this year, just over a third, say they be interested in an EV. That doesn't mean they're going to buy one; it means they’re at least open to one. So, that's where we're at. That's not everybody, but it's not nobody either. And I would say, you know, the recent spike in prices, if it’s anything, is an argument for people to take these vehicles a little bit more seriously, because they're not going to be having to pay those high prices. But again, years away from that; so much we need to do in order to get ready for it. And we haven't even talked about the draw on the grid. If we were to wake up tomorrow and everybody had an EV, our electricity grids would be in big trouble in this country. That's massive infrastructure, that's provincial; there's nothing the Federal Government with its EV mandates can really do about that. And that's another big issue in terms of infrastructure, never mind that the charger that you and I are going to look for on the side of the road; it's making sure we've got enough juice in the system overall to do that. That's another big challenge. So, I don't want to downplay in any regard all of the challenges that are before us in a transitionary period. It's simply to say that I find sometimes we get a little bit too freaked out, because we kind of think this is all going to have to happen in the next year or two. That's all.
Thanks, Ian. Dan, what's the one thing that we need to do now to help consumers understand their role in the low-carbon economy, and their choices when it comes to reducing emissions?
Well, I think we begin one step back, Jennifer, and we start to tell people what we have done up till now—well, before governments mandated it. It strikes me that an industry which I frequently attack—Ian will back me up on this—on the competition side, is also one that's not prepared to tell people about the good things that are being achieved. And by this, I do not mean, you know, going out and making billions of dollars, because there's been a supply constriction—a deliberate one, by the way, through ESG mandates, and divestment strategies, and other regulations—I'm talking about the reduction in methane on the production side, I'm talking about the emissions controls that we have seen, the rehabilitation and restitution of some of the lands used where there has been drilling activity in the past. And the fact that you know, when it comes to that famous ESG mantra, which seems to be the benchmark by which we determined to make our decisions as to where we want to invest, both socially, and again, financially. You know, we're not doing too half bad here in Canada when it comes to this, you know, the S and the G, and environment we're working very well on. I'm not saying that that's a reason to rest on our laurels. But it strikes me that when I go to a gasoline pump, or for that matter, I happened to drive by the Mapleview Mall in Burlington, Ontario, and see those folks waiting a couple of hours to juice up their Tesla's, that I don't see anything saying, “rather than pump talk about gas prices, here's what we've been doing.” I think the public understands, and they want to see that that is happening, but there's nowhere out there, you're not promoting yourself, so don't expect others to do it for you. Instead, you have a defined group of people this country committed, through charitable organizations, and others, trying to define your industry, and I find it, as someone who has been an outsider, a little ironic that you allow such attacks, when in fact a little bit of honesty and truth—and perhaps a better PR program—would get you a lot further in terms of telling people the great things that are being done, notwithstanding the fact that people are, with good reason, grumpy about too paying $2.10 a litre for gasoline, and even more for diesel.
QUESTION & ANSWER
Right. I'm gonna go to audience questions now, and Ian, I'm going to give you this question. If today’s ICE vehicles are getting cleaner, shouldn't the government offer incentives for consumers to upgrade their older vehicles to a newer model?
So, we're supportive of that. As I said earlier, you have to have a cut-off, because, you know, funds aren't unlimited. But a buyback program for what,15 year plus, 20 year plus, ICE vehicles, we think—and you know, what are they worth, right? If you look at the incentive for EV’s federally, $5000, $6000, $7000, that's all those vehicles are worth anyway. So, yeah, it doesn't have to be—it'd be it would still be in the billions, that program, but you know, you're not offering to pay people $20,000 for their vehicle, right, on a per vehicle basis. We think that would be a very good idea, in fact, and would help us, again, in this. If you look out the next 5 to 10 years of this transition, when most of us are still going to be in ICE vehicles, what can we be doing? We think that would be one very important thing the governments should look at.
Thanks, Ian. Jackie, this is a question from Dr. Andy Picard, and says, why do you talk about zero-emission vehicles instead of zero-emission transportation systems? Driving an EV on power generated by a coal burning plant is a high CO2 emission mode of travel.
Well, yeah, that is a good question. I guess it's zero-emission at the tailpipe, but it isn't necessarily, depending on where you are in Canada, zero-emission total. I would say that, you know, Canada, 80% of our power is emissions-free, because we got a lot of nuclear and hydro in parts of this country. Western Canada is the one place where we still have coal today, although it's being phased out by 2023, there will be no coal, and we do still rely on a lot of natural gas. However, I would just say, if you look at the lifecycle emission studies, if you are using power generated with natural gas, you are still ahead, from a greenhouse gas perspective. So, by 2023, I think you'd still be better to drive an EV in Western Canada than you would be for if you're using oil. But hey, I will say one thing, we can't just wait to start selling EV’s in Western Canada because our electricity is high emitting, because it takes years and years and years to phase out all those combustion vehicles. And we know the electricity system is going to become cleaner over time, we have a goal in Canada for zero-emission electricity by 2035, I think that's a whole other panel to talk about the challenges in terms of achieving that. But you can't wait until you get clean electricity to start selling these EV’s, because as Ian described, that ramp-up takes, you know—the S-curve, the most aggressive S-curve adoption curve you can have is 20 years. In fact, we haven't even seen adoption at that rate. The fastest adoption we've ever seen, in terms of transportation, was actually going from steam locomotives to diesel locomotives, and that took 30 years, those were corporates making decisions that were highly dependent on economics, not consumers, sometimes buying cars not for economic reasons. But you know, it's more of a passion or an impulse buy or something was not really impulse, but you don't choose it just on economics, that's for sure. Okay, so back to my rant. So, we can't stop buying ICE cars now, waiting for that electricity, because that'll just delay us another 15 years. So, we do have to start ramping up now recognizing that electricity will get better.
Right. Thank you, Jackie. I'm going to throw this out to the group, and whoever can respond. It's a question from Pierre. What is the cost impact of higher amounts blending lower carbon fuels, like ethanol and bio-based diesel, into gasoline and diesel respectively? I'm not sure if we'll have a specific response to that, and maybe some generalities.
Jackie, if you you're okay. Jackie had referred to this, in terms of the Clean Fuel Standard, the amount of ethanol being blended in, and of course, even the province has its own mandates. I suspect that there is a cost involved with this. Certainly, Ian can speak to perhaps the lessening of the fuel efficiency of ethanol, it's not as clean energy, of course as gasoline. But as far as the Clean Fuel Standard is concerned, should it be implemented, I think, in July of 2023, using the BC Low Carbon Fuel Standard as the model, there's no mystery sense, as the Horgan government may have talked about a couple years ago, it's about 16 cents a litre, and I'm using that based on a carbon credit, using the Federal Government's RIAS as of December 2019. Looking at about 17 cents a litre plus, that's for gasoline, and about 20 cents a litre for diesel. So, that sort of in a nutshell, is probably as precise a number as I can give for now.
I can just add a little bit to Dan's on the greenhouse gas emissions. You know, it's not just an easy answer, because depending on the source of biofuels, it can vary greatly, right? Some ethanol is maybe—actually there is some ethanol out there that isn't that much different than gasoline, there's some that's about half, you know, really depends on the feedstock in the process. If you used carbon capture, which is maybe coming on ethanol, it could be very low. The good news is, the Clean Fuel Standard gives you more credits, the lower it gets, and it should create the motivation that biofuels become cleaner. Today in Canada, we have requirements to blend in certain amounts of biofuels, but it's not necessarily rewarding the cleaner ones. So, I do think it's going to make a big difference and drive down emissions, and it really is the most impactful thing we can do in the next 10 years, because we have this infrastructure that uses combustion engines for all sorts of things, and the only way to really reduce the emissions from that existing infrastructure is to make the field cleaner.
And, Jackie, just to follow up, it's not an audience question. But do you think the implementation of the lifecycle analysis to CFR will help identify which are the cleaner biofuels?
Well, yeah, I mean, the whole point of the policy is to give more credits to biofuels that are lower carbon, and so now it creates an economic incentive to go look at things like—and I know you're already seeing it, ethanol plants putting on carbon capture, because now that can generate more credits, there's an economic return for doing that. So, yes, it's definitely going to increase the or reduce the carbon intensity of our biofuels, because now, you're incented to do that.
Right. Ian, I'm going to give you this question. Consumers might not realize that gasoline taxes go a long way to build and maintain our roadways. What will this look like as more consumers purchase electric vehicles?
There's another elephant in the room. Speaking of long-term dilemmas for government, is how are they going to replace all the revenue from gas taxes? We don't know. We do know there's a few US state jurisdictions, Oregon, I think in particular, that is looking at a per kilometre charge for using roads, so more of a user tax, as a replacement for the gas tax. Indeed, that's, if people want to have another reason to get white hairs over this whole energy transition, billions upon billions of dollars into both provincial and federal treasuries in this country, come from gas taxes. I'm sure Dan can talk to you more about that, but the fact is, it's a big source of revenue, and in theory, it'll dry up eventually. And what are we going to do about that? So, for sure, that's, that's an issue going forward. I mean, I think, again, there's no time to figure that out, and why would government today want to talk about new taxes in this area when they don't have to, and they don't need them just yet? But it's coming, I mean, as with inflation, generally, this is good for coffers right now, these huge prices, right? Because they're making more money in gas taxes.
Dan, can you comment? This is a question from our audience. Can you comment on hybrid cars as a bridge or alternative to electric vehicles?
Well, I think they're a bridge, and I guess I'm speaking with a bit of bias with my little 2021 Ford Escape. I went from driving a fairly large vehicle, to a smaller vehicle that gets substantially ,better mileage 900 and some odd kilometres per tankful. So, yeah, if I'm using Ian's model for just 40 kilometres a day, then I can probably tank up every couple of months. I think the hybrid technology is certainly not well established—and maybe a bit of bias because I was public relations with Toyota Canada when we introduced, or at least the first version of a hybrid on our side, which was called Tsunami then, you know it today as the Prius—but I think it's not well explored, but I'm sure companies are going to go in that direction. Some, like, my old company will probably move and make the transition from, you know, the full use of hybrids, right to hydrogen, if that is a possibility, as opposed to going down the road of electricity. And why not? Hey, look, I was in Bobcaygeon, two weeks ago. The power went out and didn't come back for almost a full week; there weren't a lot of people driving around electric vehicles. And as we've seen in colder weather, hybrids are also challenged in that environment. But, I suspect that that's where we're likely to go, because they don't require a lot of government incentives, and they certainly don't require, you know, substantial amounts of subsidies by taxpayers to buy green energy, as we see here in Ontario, costing the government here about 6.5 billion bucks a year to shield people against the true effects of policy decisions made 10 years ago. But I think hybrids is certainly the long-term transitional until we do get to some other form, but I don't think it's going to be electricity, simply because I think the science will not support EV’s being a long-term solution, especially given the cold climate that we have here in this country, most of the year.
I just add to that, Jennifer, if we don't it yeah, if you don't mind. You know, I think Dan makes a good point; but I think there's the broader point here. For me, is this is an excellent example of a disk policy disconnect, from consumers and from real people. I think a lot of consumers are very interested in the hybrid as an idea, but driven by government policies, if you look at automaker investment decisions, they're heading straight to BEVs, they're skipping over hybrids. And so, what is coming on the market over the next number of years is overwhelmingly, you know, if it's not an ICE vehicle, it's a BEV, a battery electric vehicle, it's not a hybrid. Whereas I do think there's great consumer interest, and I agree with Dan, that they're an excellent transition vehicle, let's say, they may even be the endpoint in some ways. Again, the science would suggest that if you drive shorter distances, they're great, because you're mostly on the EV, but you've got that little boost for that time you do actually drive from Toronto and Ottawa or whatever. If you're mostly, like, if you're a commuter in Toronto, and stuck in traffic an hour a day or more, and you're using the gas motor, they're not so great, actually, because they're like little sewing machine engines, basically, that they put into them, so they're not very efficient, but—there's a there's a disconnect for you.
And I'll just make one other quick point if I could, which is not the kind of thing that people who work in Ottawa usually say, and the government will never admit this, but the reality at the end of the day is we don't really set policy here. And in terms of the environment, and vehicle mandates, it's not even Washington that sets them, it's the state of California. This has been true for decades. The entire North American industry, manufacturing is driven by California mandates. And so, I just think there's an inevitability about a lot of what's going to happen here, because, unlike Canada, where the Federal Government changes, and policy changes, California, under both Democrats and Republicans going back 20 years plus, has only moved in one direction in terms of tailpipe emissions regulations, other environmental regulations on the vehicle, and now mandates. And the industry builds to suit California, which is, of course, the biggest market in North America. And so, I think that that is going to drive—and so, inevitably, here people will do like lengthy studies, and discuss things in the house, and so on and so forth, and then, miracle of miracles, amazing, they'll end up with the same rules as California; because they know that in our country, we're not going to get away with trying to tell the manufacturers to do something different, by and large, in our market. Perhaps a bit of a cynical take, but I think it's borne out by the reality of the last number of decades in this policy, not so much the Clean Fuel Standard, perhaps, because that, you know, is blended in Canada by and large, but in terms of vehicle manufacturing, and mandates to move towards EV’s, mandates on emissions, that's where it comes from. And, you know, if you want to know what's happening here, just read whatever California puts out, really.
Jennifer, I just wanted to add a few comments to kind of respond to Dan’s answer as well. My opinion is, the plugin hybrids, the consumer, we're seeing the switch that people are going pure electric. Hybrids, you know, you could go back in time even till, you know, there was hybrid sail ships, right? When the engines came out, and they put the sails on them like they did, they've just never really taken off. And you know why? Because if you drive an EV, the performance is out of this world. Like it is, you know, for the sedan you're getting, like the Porsche sort of performance, and you don't get that with the plugin, right? That's what will get people over to the EVS is their performance, and you lose that. I also did want to just comment a little bit about the cold weather in Canada. You know, I am optimistic EV’s are the future, and will be in Canada. You do lose range, significant range when it's cold, like you almost cut your range in half, but this is where the every 60 to 100 kilometres you need a fast charging, will be okay. You know, the range on my car is over 400 kilometres, but in the winter, it's like 200, and I'd like to see a charging station every 60 or 100 kilometres so I don't have to stress out about am I gonna make it to the next one. Once we have that, I think that that anxiety in the winter will go away—which is huge anxiety, I've lived it, when you feel like the battery's falling faster than you think, because the weather's cold, and you're not sure you're gonna get there, like, that's not a good feeling.
And the last thing, Dan talked about outages, and I just wanted to draw attention to my Globe and Mail article that I put out the weekend that all the outages started in Ontario, I guess two weeks ago. I actually think all of these outages are going to drive people to electric cars, as counterintuitive as that may be. But these cars have enormous batteries. My car could, if I had it fully charged before an outage, it could provide power to my home for three days if I was just acting like normal, and 10 days if I if I conserved a bit. And I have solar panels on my roof, so, depending on the time of year, I could be charging my battery during the day, and I could be going a long time and be self sufficient. So, I think, you know, the reason to get solar panels before was because you wanted to offset your utility bill, and maybe be greener. I think people are gonna go—so, once they buy that EV and they have it, it's like a free option on a massive battery. I think you're going to see people, if these extreme weather events keep happening, create their own energy security in their homes. And because they have a massive battery pack—by the way, these, my car, if I was to replicate that by buying Tesla Powerwalls, my car would be for free. That's how, you know, like, it's something, you know, it's cheaper to buy a car to get that battery pack, and to buy the Powerwalls, so.
Thanks, Jackie. I'm gonna throw this question out to the group, starting with Dan. What are your thoughts on an infrastructure mandate, as opposed to a ZEV sales mandate?
Well, if we're looking at the way in which governments have decided to pick and choose winners, from those that we are less in enviable, I think we have to be concerned about what belies the decision in the first place. And whether or not, if we are going to go down a particular path or road, is based on the evidence that such things are, in fact, doable. I also think that we tend to disregard what I call the old CRTC rule, the consumers rarely take into consideration approach. While some suggest we have to go these routes, because there's some kind of pressing concern about the world coming to an end in 10 years—and I’m not being flippant. I worked for Morris Strong in 1978, when he was a Liberal candidate in the Scarborough Centre, and then she quit. I was there as energy guy for Stéphane Dion in 2008, when I heard the same thing, again about the world coming to an end. And I'm hearing it again today. I think our policy decisions have to be made on long-term assumptions that are correct, as opposed to saying, “well, we're doing this because if we don't do it, somehow Canada's going to be a laggard, somehow Canada's gonna be contributing to problems around the world.” That's a general way of answering that question, but from what I've seen so far, I don't necessarily believe that we are in a position where we can automatically make quick decisions, choose one versus the other—and we get into specifics of that, I’ll let the other guests, as well, do some of that—but I think it's critical that we first understand and ascertain what are the facts, before we jump on board to either or the other options. And I suspect that that's a much greater discussion that has to take place, and has to be done in the context of facts, not in the context of political correctness. Thanks.
I'll just had a comment, too. I really liked the question. I mean, I think the EV, the $5,000 should just go away, and it should all be spent on infrastructure. Because that is, to me as an EV driver, the hugest, the biggest barrier to adoption. And once we get that infrastructure, then yeah, let's go maybe incent people to buy the cars. So, I think that would be a smart policy move.
I think we could continue this conversation for many more hours. Jackie, Ian, Dan, I want to sincerely thank you for your time here today and your insight. Certainly, it's incredibly valuable, as we all work together to reduce our footprints, and help create a lower carbon economy. And with that said, I will pass things back to Kelly.
Thank you, Jennifer. And thanks, as well, of course to Jackie, Ian, and Dan—what a great conversation. I'd now like to introduce Bob Larocque, President of the Canadian Fuels Association, our partner in delivering this event, to share some observations and appreciation remarks. Bob, welcome.
Note of Appreciation by Bob Larocque, President and CEO, Canadian Fuels Association
Thank you, Kelly. And a very special thank you to Jennifer, Dan, Jackie, and Ian, and to all of you who have joined us today. The intent of our “Fuel for Thought” speaker series, is to focus on open discussions about issues that are important, not only to the transportation sector, but to all Canadians. It's also critical that we hear from different perspectives, so we can broaden our conversation, and also be more knowledgeable. And today we did just that. We heard about the role Canadian drivers play in a low-carbon future, and how important consumers are, to help Canada achieve net-zero. We also heard about the role of government policies, such as the zero-emissions vehicles mandate or the clean fuel regulation, and also the cost implication of all those policies that's going to be on Canadians, and also on government. A couple of quotes today that I felt really stand out. “Do not panic, we have time to work on this.” I do like that one, I’m looking forward to that. “Support the transition, as long as consumers have options, we can't forget about consumers.” “The price signal is the number one driver for consumers,” and “Canadians have choices to lower their emissions.”
The panel also agreed on more education, and simple clear messages—I remember, Jackie, when you said “kilowatt, what’s that?”—is needed for consumers. The opportunities and challenges of Canada's transportation to getting to net-zero, is something we will be hearing about more and more in the future, and we're all better informed after today's event. Jackie, Ian, and Dan, I want to thank you for your contribution today to this discussion. It has been extremely insightful, and I look forward to continuing collaboration, and discussion, on understanding the impact of Canadian consumers on achieving emissions reductions, as we all engage in the public in a more constructive way. Looking forward, Canadian Fuels Association is excited about continuing our partnership with the Empire Club of Canada. The next “Fuel for Thought” speaker series event will take place in the fall. Stay tuned for announcements and upcoming topics and panelists. Kelly back to you to close this session.
Concluding Remarks by Kelly Jackson
Thanks, Bob. And thanks again to the Canadian Fuels Association, and all of our sponsors for their support. Thanks, as well, to our guests, and everybody who joined in today to watch live, or those who will be watching or listening later on-demand. Our next event will take place on Tuesday, June 7th. Join us virtually for a panel discussion on “The Importance of Human Capital,” with a power panel of Canadian business experts, like Mark Wiseman and Kathleen Taylor, and government leaders, including the Honourable Ahmed Hussen, and Senator Hassan Yousef. Then, on June 9th, we will be hosting the Honourable Bob Rae, Canada's Ambassador and Permanent Representative to the United Nations. Ambassador Rae will be giving a lunchtime keynote speech on “The World We're in: the Impact of Conflict, Energy and Climate Change on Canada.” This is going to be one of our last in-person events of the season, and we encourage you to join us at the Arcadian Court, in downtown Toronto, for that event. Tou can also tune in online to check it out. More details, and registration for both of these events, can be found at empireclubofcanada.com. As a club of record, all Empire Club of Canada events are available to watch and listen to on-demand on the website. The recording of today's event will be available later today, and everybody who has registered for the event will receive an email with a link. Please feel free to forward it on to colleagues, families and friends; let's keep the conversation going. Thanks again for joining us today. I wish you a great afternoon. Take care and stay safe.