The negative response to Ontario's initiative to promote plug-in hybrid electric vehicles - the government will offer buyers an incentive of up to $10,000, beginning next year - is largely misplaced and unwarranted, a case of a hammer looking for a nail.
Coming so soon after a major bailout of General Motors, the policy has been seen by many as preferential to GM, whose Chevrolet Volt will be the first mass-produced electric vehicle. Many recession-weary Ontarians see it as subsidizing the purchases of a few affluent consumers. But while these reactions are understandable, they take a narrow view. The initiative's long-term environmental and economic benefits offer a compelling rationale.
Electric vehicles offer one of the most promising opportunities for reducing carbon intensity in the province's transport and electricity sectors. If well integrated with the power system, the vehicles can store electricity produced by intermittent sources of generation, such as wind and solar, removing one of the more intractable impediments to renewable energy. Eventually, Ontarians should be able to charge their batteries cheaply at night, when demand is low, then sell any unused electricity back to the grid during peak hours. This will be profitable for car owners and will save the utilities money by effectively reducing peak demand.
Canadians tend to understand that electric cars will benefit the environment, but they may fail to realize how much money they could save. Charged at night, electric vehicles are cheaper to run by at least a factor of four, compared to current gasoline prices. Adding the cost of "externalities" - damage caused by air pollution and greenhouse gas emissions - then the case for plug-in hybrids is compelling. If Ontario is able to phase out coal power around 2014, the case becomes stronger still.
Transport statistics indicate that a vehicle with limited electric range is more than adequate for most people, most of the time. While urban and suburban commuters would see the most benefit, a rural setting does not render a plug-in hybrid useless - it simply requires that the gas engine complete the journey. The key to widespread adoption is ensuring that policy makers and auto makers not fixate on pure electric vehicles. Extended-range electric vehicles with onboard gas engines, such as the Volt, would allow most drivers to eliminate gas from their commute, and the ability to refuel with gas would provide the flexibility consumers demand from a primary vehicle.
Transport-sector oil dependence has flummoxed researchers, auto makers and policy makers for decades. Efficiency standards, the most widely used policy tool in government's regulatory kit, are better than nothing but unlikely to achieve a substantial reduction in the use of fossil fuels. Fuel-efficient cars begat more fuel-efficient cars and, consequently, more driving that has maintained upward pressure on fossil fuel consumption. The change required is a transition to a different source of power to the car's drive-train, namely electrons to displace gasoline molecules. True, electricity is a partial solution. But given the emergent low-carbon footprint of Ontario's electricity sector, it will prove the most versatile and powerful vector of change.
While the benefits of electric transportation could be enormous, and the cost savings significant, it's a long-term proposition. In the first generation, electric-car technology will be uneconomical for both auto makers and consumers. Getting to the second and third generations, where battery costs drop through innovation and economies of scale, means smart planning now.
We should take the long view and see Ontario's incentive in that light: not as subsidy, but as groundwork for a better future. The electric vehicle is a critical change in the march from fossil fuels to sustainable mobility.
Jatin Nathwani is professor and Ontario Research Chair in Public Policy for Sustainable Energy Management at the University of Waterloo.