The biggest barrier to electric vehicle uptake in Canada is cost. But the Canadians facing this barrier are also the ones who would receive the most benefits from going electric. Clearly, something needs to change- and fast.
The Canadian government has set a target to have 100% of new vehicles sold be electric by 2040. If successful, this would make an enormous dent in our 2050 emissions reductions targets, as transportation accounts for the second largest portion of Canada’s carbon pollution- just 1% behind oil and gas. Yet if we don’t place a much greater value on ensuring all Canadians can afford an EV, and have access to charging, we will simply not meet the target. It’s a major opportunity that will require updates to federal and provincial EV policy, as well as the work of all local governments to ensure clean transportation is equitable in their communities.
Background: An “elite” climate solution
Thousands of families across Canada still struggle to pay basic bills, including energy bills, which have a higher burden for low-income households. Low-income households also often spend a much greater proportion of their income on vehicle-related costs annually. Canadian Urban Sustainability Practitioners (CUSP) estimates that one in 5 Canadian households suffer from “energy poverty,” spending more than 6% of their after-tax income on energy. Owning an EV is therefore not only absent from these Canadians’ priority lists, it is simply not a possibility for them. These same households would also benefit most from taking diesel cars and trucks off the road, as they are often located closest to high-traffic corridors and freeways shipping commercial goods. A recent International Council on Clean Transportation (ICCT) study underscored that “savings from EVs relative to income are significantly higher for low-income households, non-White households, and households in areas with higher levels of pollution.”
Despite the dramatic fall in price tags on most EVs over the past five years- the cheapest new EV, Volkswagens’ e-golf, is now $24K CAD after rebates – many still view EV’s “as climate solution mostly for the elite”. And despite several commendable federal and (some) provincial efforts to combat this with various incentives, including a $5000 federal rebate, this discourse remains veritable.
The truth is in the numbers. One can find a decent used Nissan Leaf in Canada for ~$10K CAD (note rebates are irrelevant for this price as used vehicles don’t qualify for federal rebates nor most provincial rebates). Add in an extra ~$2000 for a Level 2 home charger installation. Used EVs will also have to have their battery replaced earlier (although they typically last for a good 10 years). For wealthier Canadians, the difference in total cost of ownership of an electric vehicle- i.e. including fuel and maintenance costs, which are negligible for EVs- compared to a gas vehicle, makes a huge difference in savings over a long time period. But for lower-income Canadians, the upfront cost of the vehicle and charger is the only thing that matters. And a $12,000 total upfront cost of a used EV still doesn’t compare to the millions of used gas cars being spewed off dealership lots or sold privately at $3K CAD a piece. A friend recently sold her old Toyota for a resounding $1200. Why wouldn’t low-income and disadvantaged families be forced to choose this option time and time and again?
To make matters worse, current statistics and polling on EVs don’t reflect the income barrier reality in Canada. In a 2021 survey conducted by KPMG, 68% respondents said they were likely to purchase an EV in the next 5 years. But statistics like this are likely to reflect a wealthier urban population- and, to date, there has not been enough polling in remote as well as lower-income communities.
A 2021 study by the ICCT showed that by 2029, EVs will have reached upfront cost parity with the average vehicle bought by a low-income household. For the wealthier household, this cost parity will be reached almost a full two years earlier. As automakers get their parts in gear and ramp up EV production to as much as 100% by 2030, a greater supply of EVs will also become more attractive to lower-income households. But if Canada has any true hope to achieve it’s “100% of EV sales by 2040” target, EVs must be made available to lower income and disadvantaged households much sooner than 2030. And that means targeted policy at both the federal and provincial levels. To date, access and equity around EVs has largely amounted to an acknowledgement of the issue by governments, but limited real action has been taken. For instance, the Federal 2020 Fall Economic Update “recognized” that public funding for EV charging will benefit high income EV owners, but so far no concrete steps have been taken to address this. An Electric Autonomy article stated in April that Natural Resources Canada (NRCan) had assured them it is working with all levels of government to address identified gaps. Yet NRCan’s current EV and E funding programs do not currently intentionally allocate resources towards disadvantaged communities and households.
Fortunately, some provinces and municipalities are starting to make headway. The 2021 BC Budget earmarked $94 million in addition to $40 million invested in 2020/21 to transition existing incentives program to an income-tested rebate model (described further below) in 2021-2022. And PEI, Nova Scotia, and Quebec all have rebates for used EVs as well as new, expanding access for lower-income purchasers. Other provincial governments should follow this lead. At the local level, Vancouver is leading the way with a variety of impressive, innovative equity-based policies around EV charging infrastructure (also see below). Momentum is certainly building across the country with some governments driving their own initiatives. But it is not nearly enough, and in most places EVs remain far out of reach for millions of disadvantaged Canadian families. Targeted, equity-focused EV policies will expand access to a wider demographic and get more EVs on the road, while supporting a just transition in Canada- which, so far, has been a lot of talk and not enough walk.
Provincial and Federal EV Rebate Systems Require Two Targeted Updates:
- Rebates for used EVS:
- Ironically, the smallest province in the country, PEI, also has the greatest rebate for used EVs; purchasers of both new and used EVs are qualified for a $5000 rebate. Quebec provides up to $4000 for used EVs. But not a single other province currently has a used EV rebate. Other provinces should follow PEI and Quebec’s leads- and also ensure the rebate is at point-of-sale so lower income buyers don’t have to wait months for the discount. This policy need is especially salient considering it is largely up to provincial governments to address social inequity. Moreover, all provincial and federal incentives available should be listed next to the EV’s upfront sticker price both online and at dealerships.
- Income-adjusted rebate system
- Lower-income EV buyers in California receive an additional US$2,500 on top of the US$7,000 used EV rebate. And higher income households above a certain threshold are not eligible for either a new or used EV rebate. A number of studies show evidence for improved equity following targeted EV incentives towards low-income households. In addition, the overall incentive program can be made more cost-effective, as higher-income households are more likely to purchase an EV in the absence of any subsidy. Canada’s federal purchase incentive program is not currently adjusted for income- and it should be if we are to get 100% EVs on the road by 2040. Moreover, the cost of purchase incentives born by governments will become politically challenging as EV sales grow, so why not better distribute these costs by scaling the system to income? It will be exciting to see how BC’s current trial of an income-tested model plays out in the next two years.
The MURB Challenge: EV Readiness Plans
One of the biggest EV equity challenges in Canada is ramping up charging stations in multi-unit residential buildings (MURBs), which is currently no less than a disaster in much of the country. In Vancouver, 62% of homes in 2016 were apartments. Lower-income families tend to live in multi-unit dwellings- and are thus “garage orphans” lacking a space to install their own EV chargers. And yet there is significant red tape to installing chargers in MURBs: changes to buildings in BC have to be approved by 75% majority of building’s owners, then the owners must hire a contractor to determine if their building can even handle the extra power needs. The cost of installing just a few chargers in parking floors can also be upwards of $15,000, including subsidies. Fortunately, BC Hydro has made good progress on this challenge with EV installation programs that include feasibility studies and EV Readiness studies for each building. EV Readiness Plans are crucial to ensure that families in apartments and townhomes have access to EV charging: other utility programs across Canada should incentivize this or require it. Plug in Drive also offers education and resources for helping building and condo owners become EV ready. Some municipalities have also mandated that all new buildings have the capacity to accommodate charging stations-CUSP provides strong resources for policymakers and building owners. Reports from Pollution Probe and Deli on garage orphans can also help policymakers and utilities identify where these families are across Canada and target charging infrastructure here.
Chart Source: Canadian Urban Sustainability Practitioners
Municipal governments have a key role to play in achieving EV equity
Local governments have a critical role in ensuring equity in their communities. Yet they also have the least amount of money of all levels of government. More funding support from provincial governments and investments in municipal programs would allow local governments to implement targeted equity policies in their communities. Local governments can also work with community groups and organizations to spread education and excitement about EVs in disadvantaged neighbourhoods.
Municipal governments can use excellent resources such as the Canadian Urban Sustainability Practitioners’ Integrating Equity into City Electric Vehicle Programs” to inform targeted equity policies.
CUSP defines equity as:
- Procedural (Inclusion)- ensuring development and implementation processes of any policy is fair and inclusive
- Distributional (Access)- ensuring benefits and resources are prioritized to those who most need them first.
- Structural (Intergenerational)- commitment to correct past harms and prevent future, by institutionalizing accountability and decision-making structures that sustain positive outcomes.
Integrating Equity also teaches local governments to consider equity in each a: “geographic context (rural-urban compositions, composition of housing stock, existing EV infrastructure, who has the longest commutes?), economic and policy context (to whom are EVs least economically viable, what are city’s long term economic development goals and how do these relate to access to new EV infra?), and utility regulatory context (does the city’s utility have EV-specific policies, what are the community’s avenues for engaging the utility in EV programs?)”
City of Vancouver: Leader on Equity-Focused EV Policy in Canada
The City of Vancouver highlights how local governments can be pacesetters working at ground level with their communities on EV equity and access. Vancouver’s new Building Code has been incredibly powerful: 100% of stalls in new multi-unit residential buildings must be EV-ready. Vancouver’s new Climate Emergency Action Plan also uses an equity-based approach for charging installations for low-income, to be rolled out in the coming months. The City is also experimenting with installing chargers on utility poles (a la Europe) and smart cables tied to an LED retrofit program. The City of Vancouver should be commended for its efforts at the grassroots level to expand electric vehicle access across its communities- and, with sufficient funding and support- other municipalities across Canada should follow suit.
Potential for Equity Mapping to Inform EV Equity Policy
Equity mapping involves sweeping data collection and synthesis on environmental exposures- such as diesel pollution- that specific communities face. Transforming this data into an interactive, dynamic digital mapping tool, an equity map shows how these vulnerable communities are distributed geographically and spatially, and how their environmental risks overlap with other social, and economic exposures (like income level and energy burden). In other words, an equity map provides a powerful, real-time tool to educate policymakers on where the communities most threatened by environmental, social and economic exposures are across the country. Policymakers can then direct greater resources towards these communities to both prevent further harm and, in this case, ensure a just and equitable energy transition. See my blog post on equity maps and an impressive first-of-its-kind equity map recently developed in the US on a national scale. Equity mapping often focuses on communities’ proximity to toxic release facilities and how this interacts with other economic exposures, but they can be translated to focus on transportation as well. A good example would be mapping out where all garage orphans are in each province, to inform targeted public EV charging infrastructure policy. Within its EV strategy, the City of Toronto is already developing a transportation-focused “equity toolkit” that includes equity mapping. (see figure below). Other Cities- or NGOs- across Canada could do the same. Equity mapping takes time and resources but is well-worth it to provide both electric vehicle access, and benefits of the clean energy transition, to communities who need it most.
Source: CUSP, Integrating Equity into City EV Programs
Conclusion
Combine a domino effect of automaker announcements to ramp up EV production- and some of that production will be in Canada– with the continuing downfall of battery costs, you have two key ingredients to stamp out Canada’s current reality that electric vehicles are a climate solution for the privileged. But federal and most provincial government policy, with a few notable exceptions, has so far simply not aligned with these developments. The Trudeau government has announced a goal to reach 100% EV sales by 2040, which would be an enormous support in our country’s fight against climate change. But we are so far leaving a significant portion of our population behind in our race to electrify transportation. A recent paper defines sustainable mobility as “the need for deep reductions in GHGs and air pollutants while also being affordable and accessible to the full population”. Governments at all levels across Canada should heed this statement and use it as the backbone for clean transportation policy, which, in most cases to date, has ignored the need for a just and equitable transition.
The two policy directives of 1. used EV eligibility for rebates, and 2. a tiered-income rebate system, are recommended by leading clean energy policy groups like the ICCT and Clean Energy Canada, and should be considered by the Federal and Provincial governments immediately.
At the municipal level, local governments in Canada can learn from the City of Vancouver’s leadership. For equity doesn’t just benefit from a local government approach- it requires it. City leadership can start by working with community groups and conducting equity mapping, or a similar approach, to identify where needs are, and then target EV infrastructure and charging accordingly. To support these equity initiatives at the local level, provincial governments should provide targeted funding flows to municipalities. Meanwhile, utilities can also cooperate with cities on charging infrastructure, learning from Vancouver and BC Hydro’s partnership. Decision makers on all levels can be educated by resources like CUSP’s “Integrating Equity into City Electric Vehicle Programs” as a requisite for sound and effective equity policy.
Canada is making important strides towards our critical 2050 climate targets, as we committed to in 2015 at the Paris Agreement. And with climate change right on our doorsteps- deadly heatwaves in Toronto, wildfires in BC, increasing morbidity from air pollution, extreme weather patterns increasing across the country- we are realising these strides need to come fast and furious. We are also seeing the giant economic opportunities laying in plain sight with a transition away from fossil fuels towards cleaner energy sources. But it is simply not enough to charge ahead with solutions to combat climate change if those solutions benefit only a few. Canada must face the reality that the households who would most benefit from the clean energy transition are also those who are being most left out of it. Equity must therefore be at the forefront of every conversation about our clean energy transition, and that includes electrifying the way we move around. There is an immense and decisive opportunity here, and Canadian policymakers should take it- for the sake of not only our climate targets, but for all Canadians.
Wild Peak Consulting 