The consumer carbon price has officially moved to palliative care, as new Prime Minister Mark Carney says the policy is simply too politically divisive.
This raises an important question: what fills the gap it leaves behind?
There are two ways of thinking about this gap. One is purely about near-term emissions: the Canadian Climate Institute estimates the consumer carbon price would have reduced them by about 8 to 14 per cent by 2030. Economist Mark Jaccard was quick to point out that a number of flexible regulations also implemented by this federal government — including the industrial carbon price, an EV availability standard, and regulations related to clean electricity, cleaner fuels and methane — have helped Canada reduce its emissions and are similarly economically efficient.
But there is another gap worth unpacking, and doing so requires a different way of thinking. The consumer carbon price was essentially a thumb on the scale, increasing the price of fossil fuels. But that is not the only way to incentivize households to make cleaner choices. Policy does not exist in a petri dish. We need measures and messages that don’t just focus on near-term emission reductions, but that truly reach Canadians where they are: their homes.
Canadians must be willing participants in the energy transition, which means they must feel its benefits firsthand, especially in the form of lower energy bills. Unlike measures that largely operate in the background, things like buying an EV or a heat pump are personal. Your neighbour isn’t asking you about Canada’s methane regulations, but they’ll pick your brain about your new electric Hyundai.
In a survey of the Toronto and Vancouver regions Clean Energy Canada will publish later this spring, 59 per cent of respondents say they’re inclined to buy an EV as their next vehicle. But among those who “know someone who has an EV,” this jumps to 73 per cent. Other studies have shown a similar network effect. EVs, heat pumps, smart thermostats, solar panels: this is the energy transition that people see, share, and as a result, ultimately buy into.
Households account for 17 per cent of Canada’s emissions, due to the cars we drive and home heating. But in more ways than one, households are having an even bigger impact. In advanced economies, households have accounted for nearly 60 per cent of clean energy investment growth since 2016, driven by EV purchases, energy efficiency, and rooftop solar. Already, Chinese EV adoption is putting downward pressure on global oil prices.
For Canada to realize its potential, the next prime minister must resurrect the incentive programs for EVs, heat pumps and other efficiency upgrades with an eye to careful design and cost-efficiency. Through building and electrical codes, the feds should also require EV readiness in new homes, reducing the need for costlier retrofits later, while continuing to build out Canada’s public charging network.
These supportive policies are critical for the success of Canada’s EV availability standard, which sets targets for the percentage of an auto manufacturers’ offerings that must be zero emission. It’s another key policy that will drive down the cost of going electric by increasing EV availability and competition — while also aligning us with Europe, the U.K., China, and 17 states representing 40 per cent of the U.S. car market where comparable policies exist.
All of these measures will support jobs and investment in a modern auto industry.
As the International Energy Agency made clear in a recent analysis, “pathways for building a more competitive battery industry … start with ensuring strong domestic demand.” Similar research from Princeton University found that Trump’s weakening of U.S. EV policies could put 100% of planned construction and expansion of domestic EV assembly and half of existing assembly capacity at risk of cancellation or closure.
The economic opportunities of clean energy are indeed monumental and represent a pivotal moment, especially as we bolster relationships with our clean-energy-focused trade partners in Europe and Asia.
It’s often said that halting climate change is not so much a technical or economic challenge as it is a political one. Well, politics is what hits home for people.
This post was co-authored by Trevor Melanson and first appeared in the Toronto Star.
