Province will lose billions in fuel-tax revenue for little or no benefit in fighting ‘climate change’
By G. Cornelus van Kooten, Climate Realists of B.C., Oct 15, 2024
The idea that vehicles on British Columbia roads should be 90% electric by 2030 and 100% by 2035 is unworkable.
For a start, the province will lose hundreds of millions in revenue—not only is it subsidizing purchases of EVs but, compared to a tax on CO2, it will lose huge amounts of revenue from fuel taxes—perhaps a billion dollars a year. Moreover, a per-kilometre-driven tax on EVs would cause a backlash from owners and scare off potential EV buyers.
In California increased electricity demand is a concern because of the needs of artificial intelligence and data centres. However, my rough calculations indicate that most of the increase in electricity demand there will result from the move to EVs, which will add some 50% to the electricity load.
For British Columbia, an increase in EV demand is less of a problem because we rely more on hydroelectricity. Nonetheless, we would need at least another Site C equivalent if the province goes all-EV.
The government hopes wind turbines will make up for the increased demand for electricity, but this creates additional problems. Reliance on wind power also requires the construction of fast-responding gas plants to provide backup power during wind “down” times. This approach raises the price of electricity because you are essentially running two electrical grids, one as backup for the other. Politicians are aware of this extra expense, but prefer to stick their heads in the sand rather than face the problem.
Economists love CO2 taxes, and I am one of them. Yet once you have a carbon tax it makes no sense to start manipulating the amount of CO2 through regulation. In essence you are choosing to limit emissions through government fiat, whereas the objective of the carbon tax is to let the market decide how emissions are minimized, whether through EVs or some other way that is economically optimal.
Similarly, it seems odd that the EV route is considered a good way to achieve emission reductions. Life-cycle analyses indicate that an EV must drive somewhere around 80,000 kilometers before it has lower emissions than a conventional internal combustion engine. This means it takes about 5½ years driving an EV before there is an environmental benefit. If there is some felt urgency to addressing climate change, increasing CO2 emissions early on, only to play catch-up in the future, is the last thing you want to do.
An EV must drive somewhere around 80,000 kilometers before it has lower emissions than a conventional internal combustion engine.
There are better ways to lower emissions than spending money subsidizing EVs. My experience driving around the Lower Mainland suggests that a lot of emissions could be saved by improving the transportation infrastructure.
For example, think about large trucks driving on highways such as Highway 10 or Vancouver’s 16th Avenue between the main truck closing at Hwy 99 and Hwy 1, or Hwy 13 from Hwy 1 in the north to the border, or many other places in the region. Trucks and cars are forever stopping and going, increasing emissions, because of the many traffic lights.
Likewise, there are huge bottlenecks at the Massey tunnel and on Highway 1 through the Abbotsford area. Infrastructure improvements could do a great deal more than EVs to reduce fuel consumption and CO2 emissions and, importantly, also reduce the congestion that increases the costs of transportation whether in electric vehicles or internal-combustion engines.
EV policy benefits China, not Canada
Electric vehicles are essentially sourced from China despite efforts in North America to produce them domestically. China has a huge cost advantage and is in control of the inputs into production. As a result, the automobile manufacturing sector in Canada is under threat of disappearing if Canada goes all-EV.
In response to this threat, Canada would need to put greater emphasis on the extraction and trade of fossil fuels, minerals and metals, and production of forest and agricultural products, to ensure that our exchange rate does not collapse to the point where we can no longer afford to purchase goods from abroad.
Finally, EVs come with their own problems. They are extremely heavy and more damaging to roads than ICE vehicles; they can spontaneously ignite; they are hazardous to dispose of; and they require batteries to be replaced even in small fender-benders, to name just a few of the problems. There have even been recommendations that electric vehicles be parked on the street rather than in parking garages due to fears that an EV fire could bring down the entire garage structure.
Overall, on all counts—environmentally and economically—EVs are a very poor choice if the aim is to save us from CO2-driven “climate change.”
G. Cornelis van Kooten is a Fraser Institute senior fellow, held the Canada Research Chair in Environmental Studies and Climate at the University of Victoria for 21 years, and is currently scholar in residence at Trinity Western University.. His research interest focuses on natural resource economics and management, and issues related to the economics of climate change. He is a member of Climate Realists of B.C.