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Electric-car subsidies take greenwashing to a new level

Next month, Montreal will host a Formula E championship – an electric car race for which the city's taxpayers will cough up $24-million in addition to guaranteeing a $10-million line of credit for the group organizing the event. All for the distinction of hosting a race no one's heard of.

That's even more than the $18.7-million that Ottawa, Quebec and Montreal pay Formula One owners each year to host the Canadian Grand Prix, the fossil-fuel-powered car race that draws thousands of tourists to the city each June. That makes the Formula E one pricey carbon offset.

It seems there is no length to which some politicians won't go to in their drive to look greener than thou. His support for the carbon-spitting Grand Prix notwithstanding, Montreal Mayor Denis Coderre fancies himself an environmental trailblazer, never missing a photo op that involves hugging an electric-vehicle (EV) charging station. He makes going green look so easy.

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Related: Popularity of electric race series on rise as car makers use it for testing

Easy, but not cheap. Subsidies aimed at encouraging the purchase of EVs are perhaps the least cost-effective and socially inequitable emissions-reduction measures imaginable. They typically favour well-heeled early adopters who would have bought an EV anyway. Yet, politicians keen to look green continue to throw good taxpayers' green after bad.

Earlier this year, Ontario removed the $3,000 rebate cap on EVs costing more than $75,000, enabling wealthy Tesla buyers to claim a $14,000 subsidy on their luxury indulgence. Quebec offers a lower rebate – $8,000 – but has gone further than any province to promote EVs by requiring auto makers to sell a minimum number of zero-emissions vehicles (ZEVs), with a ZEV target of 15.5 per cent of all auto sales by 2025, a more than a 20-fold increase over eight years.

The likelihood of meeting such targets are remote but that won't stop the politicians from wasting even more taxpayers' money trying. Not even a recent report from Canada's Ecofiscal Commission, which estimates the cost of Quebec's EV rebate at $395 for every tonne of carbon removed from the atmosphere, can move the province off its chosen course, no matter how much it looks set to hit a wall.

There are far simpler and more cost-effective ways to cut emissions. But our greener-than-thou politicians are scared silly of how the silent majority in suburbia would react to an immediate economy-wide $50-per-tonne carbon tax, much less the estimated $100 tax that federal government bureaucrats estimate would be needed by 2020 to meet Canada's emissions reductions targets. So, EV subsidies become a substitute for real action, wheat grass for urban elites for whom going green is cool, as long as it doesn't require too much sacrifice.

Next up to get in on the ZEV act are the federal Liberals. Prime Minister Justin Trudeau's government has struck an advisory committee to come up with ways to boost zero-emission vehicle sales. Unfortunately, the most effective policy tools for that, such as exempting ZEV drivers from road tolls or congestion taxes, are virtually unavailable in Canada. So, chances are that a federal ZEV rebate will soon be coming to a Tesla dealership near you.

Proponents insist that rebates simply help EVs get a toehold in the market and can be withdrawn once mass production scales up and consumer prices come down. But though production costs are coming down, prices are unlikely to decline for some time, since most auto makers lose thousands of dollars on every EV they sell. What's more, as demand for the metals used in EV production rises, so will the prices of commodities used in greater quantity in EVs, such as copper and lithium.

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Besides, if EVs ever do catch on – electric vehicles and plug-in hybrids accounted for only 1.1 per cent of global car sales in 2016, and 0.59 per cent of all sales in Canada – it will not likely be because individual consumers choose to buy them. It will likely be as part of a massive shift in urban transportation driven by on-demand autonomous EVs owned by fleets, rather than individuals.

To be clear, I have zero bias against zero-emission cars and, were I to own a car, it would probably be an EV. (Though, on my salary, not a Tesla.) Still, it is never a good idea for governments to favour one technology or, in the case of Tesla in Ontario, one manufacturer, that may or may not have the answer to our carbon conundrum. Politicians who say otherwise are just greenwashing you.

Video: McKenna says Ottawa has ‘right’ to impose carbon tax on provinces (The Canadian Press)
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About the Author

Columnist Konrad Yakabuski writes on politics, policy and business for The Globe and Mail’s Comment section and Report on Business. More

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