The cost of federal EV subsidies far outpace the price of carbon they’re meant to displace, according to a new report by the Vancouver-based Fraser Institute. A new study pegs the cost of various consumer incentives to buy EVs at $355 per tonne of abated CO2, “dwarfing” the $65 carbon tax. And it will still be less than half that figure when it rises to $170 by 2030..And that doesn’t include more than $30 billion in handouts to major auto manufacturers such as Volkswagen and Stellantis to build battery plants in Canada.“By essentially paying people to buy electric vehicles, governments across Canada are spending a lot of money despite questionable benefits,” said Jock Finlayson, senior fellow at the Fraser Institute and co-author of A Review of Electric Vehicle Consumer Subsidies in Canada.The federal government presently provides a $5,000 subsidy for every eligible EV purchase in Canada. Some provinces provide their own additional subsidies, ranging from $2,500 in Newfoundland and Labrador to $7,000 in Quebec (Alberta, Saskatchewan, Manitoba and Ontario have none)..On its own, the federal subsidy costs $355 per tonne of averted GHG emissions. Depending on the province, that cost tops out at $857 per tonne in Quebec.In theory, the subsidies reduce the number of gasoline-powered vehicles on the roads and thus reduce emissions. But in fact, the report notes that taxpayers ultimately pay for them. “How much value, measured in averted GHG emissions, do taxpayers receive from these subsidies?” it asks..“There are more efficient public policies available to reduce carbon dioxide and other GHG emissions. Consumer subsidies for purchasing EV are among the most expensive tools governments can use.”.It is also unclear to what extent EVs actually help reduce GHG emissions. In jurisdictions where fossil fuels produce electricity, more EVs on the road means an increase in demand for electricity including power generated by fossil fuels.That’s notwithstanding that 90% of EV incentives in both Canada and the US flow to the richest one-fifth of households. Or that the federal government will require 100% of new vehicles sold to be zero-emitting..“Layering EV purchase subsidies on top of the existing national carbon tax increases the over-all cost of carbon abatement and adds to the fiscal burden shouldered by Canadian taxpayers,”Jock Finlayson, Fraser Institute Senior Fellow.But unlike the US, Canada already has a carbon tax.“Layering EV purchase subsidies on top of the existing national carbon tax increases the over-all cost of carbon abatement and adds to the fiscal burden shouldered by Canadian taxpayers,” the report reads.“There are more efficient public policies available to reduce carbon dioxide and other GHG emissions. Consumer subsidies for purchasing EV are among the most expensive tools governments can use.”
