Quebec Premier Philippe Couillard's advisory committee on the economy and innovation draws on some of the best business minds in the province, from Couche-Tard's Alain Bouchard to the National Bank's Louis Vachon. Caisse chief Michael Sabia also sits on the 32-member committee chaired by ex-Desjardins head Monique Leroux.
You'd expect a group with this much brainpower to be capable of basic cost-benefit analysis. But when it comes to signalling Quebec's eco-virtue, it seems not even the business people advising greener-than-thou politicians can abstain from backing hare-brained carbon-reduction schemes.
The report that the Premier's Conseil consultatif sur l'économie et l'innovation sent to Mr. Couillard on Sept. 25 calls for an increase in subsidies for the purchase of electric vehicles and the short-term installation of 2,000 public charging stations that can recharge an EV battery in as little as 20 minutes. There are now only about 80 so-called Level 3 public charging stations in Quebec, compared with about 900 Level 1 or 2 stations that take hours to recharge batteries.
Quebec already offers an $8,000 rebate on the purchase of EVs and $600 on the purchase of a private charging station. A recent Montreal Economic Institute (MEI) study estimated the cost of the EV rebate at $288 for every tonne of greenhouse gas emissions removed from the atmosphere. Other studies have arrived at even higher cost estimates. Indeed, the MEI study does not take into account well-off Tesla owners who would have bought an EV even without a subsidy.
Despite such generous subsidies, there are still only about 15,000 EVs on Quebec roads, or about 0.3 per cent of all cars in the province. Quebec is aiming to get 100,000 EVs in circulation by 2020 – at a cost in subsidies of up to $860-million, according to the MEI.
The Premier's advisory committee would be willing to spend even more. To rev up EV sales, the committee recommends boosting subsidies further until the 100,000 goal is reached.
It's not surprising that a province that seeks to leverage its rich hydroelectric resources, and showcase its greening potential to would-be U.S. customers, would seek to push EVs. The advisory committee reckons the 100,000 EVs would constitute a tipping point, making Quebec a kind of Norway on the St. Lawrence River. EVs make up about a quarter of new-car sales in the oil-rich Scandinavian country. But Norway exempts EVs from sales taxes, licence fees and road tolls, and Norwegian EV owners can park and charge their cars for free. Not even Quebec seems prepared to go that far.
Still, the advisory committee offers no estimate on how much the additional EV subsidies would cost the government or their cost a tonne in reducing carbon emissions. But it's clear it would be several times the $19 a tonne that carbon credits fetch at auction under Quebec's cap-and-trade scheme or the $50 a tonne carbon tax that the federal government intends to apply nationwide by 2022.
EV subsidies are not the only inefficient carbon-reduction strategy Quebec has plugged into. Starting with the 2018 model year, zero-emission vehicles must make up at least 3.5 per cent of all vehicles auto manufacturers sell in the province. Some manufacturers, such as Mazda and Subaru, do not even offer electric models. They, and other manufacturers that fail to meet the 3.5-per-cent quota, will have to buy credits from manufacturers (hello, Tesla) that do.
The EV quota is set to rise to 22 per cent by 2025. By then, MEI analyst Germain Belzile estimates, the quota scheme will have boosted the price of a gasoline-powered car by about $1,100 in Quebec as manufacturers pass on the cost of purchasing credits to consumers.
The price of conventional smaller cars will rise disproportionately, leading Mr. Belzile to conclude that EV quotas "could well be counter-productive from an environmental point of view, by favouring the purchase of less fuel-efficient vehicles, such as light trucks."
The Couillard advisory committee's recommendation preceded by only days that of the annual report of the province's Green Fund, which spends the money raised in auctioning off credits under Quebec's cap-and-trade scheme among 19 different programs aimed at reducing emissions. According to the report, the $1.2-billion spent on these programs since 2013 reduced Quebec's overall carbon emissions by 614,000 tonnes, or by 0.7 per cent.
The implied cost to cut greenhouse gas emissions under the Green Fund's 19 programs comes to more than $2,000 a tonne, which may make Quebec's EV subsidies look like a bargain in comparison.
But they are not a bargain and the Premier's advisers need to sharpen their recycled pencils.