Front Burner - As electric vehicles wobble Canada bets big

Episode Date: November 29, 2023

Canada is betting big on electric vehicles. Ahead of COP28, we’re asking why the government is pouring billions of dollars into EVs, despite debate about the industry. Just how critical is the switchover to electric vehicles? What does major investment mean for Canada’s ability to hit critical emissions targets. And what happens if we don’t make the move to zero-emissions vehicles fast enough? Ottawa-based climate reporter for the National Observer John Woodside explains. For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts Transcripts of each episode will be made available by the next workday.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Damon Fairless. This year's UN Climate Change Conference hasn't even officially begun yet, and COP28 is already off to a bad start. With just days to go before the UN's Climate Change Summit, which gets underway in Dubai on Thursday,

the president of COP28 is facing calls to resign after leaked documents seen by the BBC appear to show that the United Arab Emirates has been using its role as host as an opportunity to strike oil and gas deals. It's not a good look following the hottest summer on record in an unprecedented wildfire season. The annual negotiations are meant to bring the world together to address the climate crisis, to limit the global temperature rise to 1.5 degrees by doing things like phasing out fossil fuels and achieving net zero emissions by 2050. And here in Canada, on top of the carbon tax, a major part of the government's plan is a massive investment in electric vehicles.

It's the size of more than 300 football fields and set to be the site of Canada's newest electric vehicle battery plant. The deal with Swedish company Northvolt is the latest in a string of government investments in the EV industry, including a Volkswagen battery plant in St. Thomas, Ontario. Today, ahead of COP28, we're asking why the government is pouring billions of dollars into electric vehicles, despite debate about the industry, and what this major investment means for Canada's ability to hit critical emissions targets. Here with me now is John Woodside. He's an Ottawa-based climate reporter for the National Observer, and right now he's in Dubai to cover the summit.

National Observer. And right now he's in Dubai to cover the summit. Hey, John, thanks for coming on FrontBurner. Hey, thanks for inviting me. Okay. So I want to start by just getting a better idea of what exactly the Canadian government is doing when it comes to pouring money into the electric vehicle industry. Can you kind of walk me through some of that? Yeah. The federal government's pouring a fair bit of money into this. I mean, they're trying to attract major battery plants in Ontario and Quebec, especially. There's been a lot of effort in recent years to build the supply chains that are going to be able to, you know, allow electric vehicles to really take off. So there's a few things for that,

right? I mean, there is the charging infrastructure, electric vehicle charging stations being built across the country. But a lot of the big ticket stuff, investments that are attracting headlines, right? These are the big battery plants, you know, the multi-billion dollar investments. This facility will be able to produce batteries for a million electric vehicles a year. And at full production capacity, the plant will contribute up to $1.6 billion to our economy. You know, from the federal government's point of view, they're working to secure, like, these anchor plants,

these major, major plants that are going to create lots of jobs, create lots of batteries, and in theory, the idea there is it'll power the shift to green transportation. But as I suspect we're going to get into here, there's a lot of bumps on this road. Yeah. And I do want to get into those. And just to clarify too, we're talking about billions of dollars in taxpayer money for things like battery plants, production facilities, right? money for things like battery plants, production facilities, right? Exactly. Yeah. So $2.7 billion for battery plants, $640 million for the new Ford EV plants.

Right. A Volkswagen battery plant in Ontario. There's a Stellantis battery plant in Ontario. We have announced that Canada and Ontario will be sharing the investments in Stellantis and VW, two-thirds, one-third, in those two projects. North Volta in Quebec. We're talking about $30 billion of investment, minimum 16,000 jobs, well-paid jobs, jobs of the future. We're building an industry. Just a tremendous amount of money going into it.

Yeah, Canada's federal and provincial governments have invested, I think, just over $7.5 billion in the last three years in electric vehicle battery plants, right? Yeah, that's right. Okay, so from the outside, it seems counterintuitive in terms of timing that the government's investing this kind of money in EVs because we're seeing major automakers pull back their investments, right? Yeah, exactly. So, you know, Ford is delaying

about $12 billion worth of battery plant spending in Kentucky. Kentucky 2 plant was expected to start production in 2026, but that will be adjusted. Ford is looking at the operational schedule of that plant and looking to be at least a little bit flexible depending on the demand for EVs in the market. Its EV business has been losing money, $1.3 billion this past quarter. The U.S. car manufacturer now says it'll produce 600,000 electric cars sometime in 2024 instead of this year. And, you know, and there's others too. I mean, General Motors no longer setting EV production targets. We're seeing Mercedes saying the market for electric vehicles is a brutal space

because of pricing and interest. I mean, and basically, like, I mean, we're seeing it industry-wide. It's just playing it across the board. So, John, we just did an episode on the fall economic statement last week, and the federal government has a very tight fiscal outlook coming up. The government's fall economic statement outlines relatively modest new spending, $21 billion over six years, most aimed at housing and targeted programs to ease affordability at a time when many are worried about both. So money is not going to be flowing like crazy. From the perspective of the Canadian government, what do you imagine the thinking is behind going all in on investing in EVs right now? Well, okay. So I think the thinking right now is that transportation

emissions are a problem and we need to do something about it. You know, we need to lower those. And what this is really trying to do is bridge the gap between where we think we should be, which is, you know, more electric vehicles on the road and where we should be, which is more electric vehicles on the road, and where we are now, which is not enough. I get the sense that Canada is trying to lay the groundwork for a future industry here, right? Like that they're trying to keep up, or they're trying to get a foot in the door as the big economies like China and the US go ahead with their EV investment.

There's an economic argument here for putting this much money into EV development, is there not? Yeah. So in the United States, I mean, Joe Biden's Inflation Reduction Act was a monumental piece of legislation that put a tremendous amount of money into the energy transition, into all sorts of green policies. I mean, clean energy, electric vehicles. Biden said the legislation has already created 170,000 clean energy jobs and will create some 1.5 million jobs over the next decade, while significantly cutting the nation's carbon emissions. And so what Canada is doing here, I mean, we're trying to respond to this, you know, economic behemoth just to the south of us, right? I mean, we need to stay

competitive with them. So a lot of the policies that are under development right now, you know, are aimed at this. I mean, the budget 2023 published this spring, it was basically Ottawa's response to this. The fall economic statement was pretty, I mean, pretty, pretty short on climate measures. But but big picture. Yeah, this is what we're responding to. I mean, the major economies of the world are in transition. And Canada's choice here is either keep up or be left behind. And I say it that way because

we've squandered the opportunity to lead. Yeah. So there's a 2022 report from Clean Energy Canada, and it estimated that we have a potential to build a domestic EV battery supply chain that could support up to something like a quarter million jobs by 2030 and add something like $48 billion to the economy. So I'm just thinking of all the spending that's going into developing EV. So the Canadian government's no stranger to propping up the auto industry. I'm thinking here specifically of both the federal and the Ontario government's bailout of GM and Chrysler in 2009. About $13.7 billion in taxpayers' assistance to really save the auto sector from going under in the chaos of the global financial crisis. And it wasn't just the federal government. I'm curious, this is different though, right? Is there a sense that the auto companies are

actually committed to moving away from fossil fuels and hitting climate targets? My read on it, unfortunately, is that they're not as committed as they should be. They might be interested in it if they think this is where they can make money. But, you know, auto manufacturers are not, they're not climate champions. I mean, the question even kind of calls to mind for me the Volkswagen scandal from a few years ago, where the company got caught cheating its emissions. Evidence shows smog levels continue to grow in Europe, despite increased claims of clean technology, and that prompted a U.S. group to run road tests. Its results showed Volkswagen emissions of nitrogen oxide

were up to 40 times higher when samples were collected from cars on the road compared to those in the lab. There's already been some blowback for the government in terms of EV production. So there was a plan to use 900 foreign workers to install equipment at the electric vehicle battery plant in Windsor, Ontario, and it was called an insult to Canada's tradespeople.

The federal government says it's on the same page as trade unions, and there was an emergency meeting held in Ottawa this week to discuss it. So I guess I'm curious, what do you think this controversy says about how much control the federal government actually has after big investments like these are made? Fantastic question. This is, I think, one of the big challenges the federal government has right now is it wants to incentivize the market to do things like build battery plants. Then you end up in a situation like this where it's not done in the way that the public is supportive of. So the federal government doesn't have a tremendous amount of control over these projects. They're starting to look for ways to do it. In budget 2023, it spelled out a lot of different clean energy, in quotes, tax credits.

And I put in quotes because some of them are fuzzy, but they spelt out a bunch of clean energy tax credits. And part of how these tax credits work, you basically get benefit if you're paying union wages. They're starting to try to find ways to incentivize companies paying a better wage without really making anything mandatory. So if the question is how much control do they have, not a lot. In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization.

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Okay, so John, before we talk about COP28 and how electric vehicles fit into climate targets there, they have kind of lost their shine recently, electric vehicles. So I guess what I was hoping you could do is maybe break apart the pro and cons of going full throttle into EV investment for me. Okay. Yeah. So pro, we need to cut fossil fuels and we need to phase out internal combustion engines if we are going to meet the climate targets. Another argument for electric vehicles would be that a lot of the concerns people have had over the years have been addressed through innovation. Batteries are getting better.

Production is getting more efficient. Their range anxiety is going away as electric chargers get built out. These are arguments why people would go for it. Okay. And so the cons? The flip side, of course, is that there are still environmental concerns, not just with the production of the car itself, but with the batteries, all the environmental harm that comes from mining these critical minerals. That's a very real concern. And the cons are that, unfortunately, it's not a silver bullet to our transportation emissions. Okay. So there's also this, there's kind of this middle ground that some car manufacturers are taking to where, uh, they're shying away from

full-on, uh, investment in electric vehicles. But then for instance, Ford has pivoted to embracing hybrids, right? But there's, there's also an environmental case against hybrids, right? Yes. Hybrids, hybrids have lots of concerns. I mean, hybrids, the idea of a hybrid, right? You can charge the battery and take your short trips on electric. Whereas, you know, if you're concerned about range, you can also fuel it up with gas and go on your long trips. The problem here is twofold. One, you're not getting away from all the issues we've talked about with EVs. I mean, you're still talking about batteries, you're not getting away from all the issues we've talked about with EVs. I mean, you're still talking about batteries. You're still talking about all the manufacturing issues.

Right. But when it comes to the hybrid vehicles and taking long trips, you know, it's not the number of trips that matters. It's the amount of fuel you're burning. Right. And if you're going to go on a road trip with your hybrid, you know, it doesn't really matter that it's a hybrid if you're burning gas the whole way. So that's some of the debate about electric vehicles and investing heavily in them, depending on them as kind of the silver bullet, as you mentioned. So I want to take us to where you are now. You're in Dubai for COP28.

This year's United Nations Climate Change Conference is about to get started. And one of the big conversations is going to be getting countries to agree to phase out fossil fuels. Um, and you know, what happens if these things are that countries take stock of where they are in that, in that, um, process. So I guess I was hoping what you could do is tell me, where is Canada right now when it comes to hitting our emissions targets? Uh, Canada is off track. Uh, Canada has the widest gap between our target and our actual policies out of any country the United Nations has looked at. The Justin Trudeau government is really pushing a climate agenda. Of course, it could be more ambitious and it will need to be more ambitious, but it's a fair amount of progress. They just haven't gotten all the policies in to actually implement it, which functionally leaves us off track and it hurts our credibility.

That's really interesting because there's a report from the Environment Commissioner, Jerry DeMarco, saying that Canada is actually on track for a 34% reduction in carbon emissions by 2030, not the 40% reduction promised by Trudeau. And for some, even that 40% target wasn't anywhere good enough. So then how important is cutting down transportation emissions to our overall climate goal? Cutting transportation emissions is pretty crucial. And so in Canada, we talk about the oil and gas sector being the country's largest and growing source of emissions, which is true. But transportation is second. Now, the reason why transportation is an important one to focus on is because the oil and gas production, you know, when Suncor pulls oil out of the ground, it needs to sell it to someone, right? And so it needs to sell it to a refinery that's going to turn it into a fuel that you're going to burn in

your car. This is how it works. So if we can phase out gas-powered cars by tackling those transportation sector emissions, then you are tackling the demand side. So help me understand, how critical is the switch over to electric vehicles when it comes to cutting these carbon emissions? Switching to electric is very, very important. I mean, we're going to need to see our, not only the cars that we use personally go electric, but we're going to need to see buses made electric. We're going to need to see the federal fleet made electric, you know, Canada Post, et cetera. So it's crucial. I mean, we're going to need to see transportation move

electric. There isn't going to be room for burning fossil fuels to power the way we move in the future. Not if we're going to have a habitable planet anyway. Okay, so before we go, I just want to point out there's a pretty deep irony. So according to the BBC, the United Arab Emirates plan to use its role there at the COP28 summit to talk about making oil and gas deals. So I guess I want to ask, what happens if we don't move towards zero emissions vehicles fast enough? If we don't move to zero emission vehicles fast enough, then we're not going to cut emissions fast enough. You know, as we've been talking about through this whole conversation, electric vehicles are not the silver bullet solution that does everything. But it can be a part of a comprehensive, holistic solution to climate change. I mean, which involves living more sustainably.

I mean, it's going to involve tackling aviation as well as vehicles. But this is a very, very pivotal moment this decade for the world and for climate action. The reason why is because the reason the Paris Agreement was signed, where the goal is to hold global warming to 1.5 degrees Celsius from pre-industrial levels. The reason why that is an important goal is because we are already in the world's sixth mass extinction event. The last one was the dinosaurs. This fossil fuel climate crisis is destroying the earth that allowed humanity to flourish. Without a stable climate, the stability of everything we have falls apart. So to avoid crossing really dangerous tipping points, things like the permafrost thawing in the Arctic, releasing, you know, like an overwhelming, unbelievable amount of methane

into the atmosphere. That's why the world's making all this effort to hold global warming. That's fairly discouraging. No to end on. That's my specialty. All right. Well, John, thanks so much. I appreciate you taking time to take us through it. I really appreciate you having me on.

Thank you. It was fun. All right. That's it for today. I'm Damon Fairless. Thanks for listening to FrontBurner. I'll talk to you tomorrow. For more CBC Podcasts, go to cbc.ca slash podcasts.