Just when you thought the Liberals could not be any more delusional, our Environmental Extremist Minister announced that all vehicles after 2035 must be electric. Shortly after, the main US auto manufacturers announced cutbacks to EV production on light demand. Even their dealer networks are turning their backs on them with 4000 dealers sending Biden a letter in December telling him to ease-up on his EV dream.  Last week, Hertz announced they will be getting rid of 20,000 EV’s, which is roughly 30% of their EV fleet, because they are too expensive to repair and the customer does not want to rent them. Thankfully criticism of the net-zero transition is growing across the globe because it is proving to be a drain on both our financial and natural resources, as well as our standard of living.

How climate friendly is the EV? Certainly not any friendlier that the ICE once you include the increased mining and the source of electricity. The International Energy Agency found that to meet 2030 pledges of 50% of all cars being EV, “the world will need fifty new lithium mines, 60 new nickel mines, 17 new cobalt mines, 50 new mines for cathode production, 40 new mines for anode materials, 90 new mines for battery cells and 81 new mines for EV bodies and motors”. That’s a total of 388 new mines worldwide, which is not very climate friendly. If Canada wishes to use domestic supply chains for battery metals, we have a lot of mines to establish in a very short time. Unfortunately, this is impossible based on Trudeau’s environmental laws, meaning we will be forced to import the materials on the back of a weak currency.

In the National Post, Adam Waterous, CEO of the Waterous Energy Fund and former Global Head of Investment Banking at Scotia Waterous, stated “it takes five times the amount of oil to build an EV than it does to build a conventional gas-powered vehicle.” To offset this difference, he explained the EV battery must last 120,000 kms using the electrical grid, assuming the battery lasts that long. So far, an EV battery does not last the lifetime of the vehicle itself, dying out in as little as eight years compared to the ICE which should last over 250,000 km’s. Replacing the battery expands the EV’s carbon footprint even further because one EV grade battery emits over seven tonnes of CO2 emissions.

All governments are slowly being forced to cut back on subsidies because they cannot afford them.  More importantly, it is morally wrong to give handouts for a luxury good when lines at foodbanks, shelters, and hospitals are growing exponentially. Sales are falling with every cut to subsidies. As evidence, Germans became one of the largest consumers of EV’s thanks to generous incentives. However, they began lowering their subsidies early last year and sales of EV’s have fallen inline. According to insideevs.com, electric car (BEV) registrations decreased by 22% year-over-year in November to 44,942, and Plug-in hybrid cars (PHEV) registrations decreased by 59% year-over-year to 18,124. 2024 will be interesting for the German EV market because the government announced an end to all EV subsidies on December 17^th. The EV will not disappear but rather remain a niche market.

Down south, the Texas Public Policy Foundation estimates that the nearly $22 billion in federal and state subsidies and regulatory credits lowered the retail price of EVs in 2021 by an average of $36,000 across the supply chain. Their paper showed that the average 2021 EV would cost $48,698 more to own over a 10-year period without government subsidies. They estimate that home and public charging stations put a significant strain on the electric grid, resulting in an average of $11,833 in consumer costs per EV over a decade. This cost is paid for by all utility ratepayers whether they are an EV owner or not. In a political climate that runs on equality, this is far from that as possible.  EV owners do not pay gas-tax used for infratructure but those with an ICE are responsible for upgrading the electrical system for the EV via higher electricity rates. There should be a sizeable levy on every EV registration for infrastructure upgrades to cover this.    

Back home, the Parliamentary Budget Office (PBO) estimates the total cost of handouts for battery manufacturing to be $43.6 billion between 2022 and 2033—$5.8 billion higher than the Liberals announced. The federal government used a break-even timeline of nine years based on full production in every year for their business model. But, based on the manufacturer Northvolt’s projected annual production schedule, PBO estimates a break-even timeline of 11 years for a $4.6 billion production subsidy. They also predict a break-even timeline of 15 and 23 years for the Volkswagen and Stellantis subsidy, respectively. Breaking even after such a timeline is unacceptable considering these companies can very easily afford to build the plants themselves.

Investment by blue-chip companies in renewable power is slowing and divesting is popular in the sector. The Danish wind developer Orsted announced in November it was cancelling two major projects off the coast of New Jersey after its demands for higher subsidies had been rejected. In its earnings release, Orsted said it was recognizing impairment losses of roughly $4b(USD), blaming supply chain delays, interest rates, and the lack of a profitable amount it can charge a utility company for renewable energy credits. BP and Equinor also announced impairments totalling $840 million combined on offshore wind investments. And last month, GE announced they spun-off their turbine division.  The only investment that appears to be taking place are ones where there are long-term contracts (usually 20 years) involved where the supplier sells the power to industrial projects like manufacturing plants and refineries.

Net-zero is not viable because governments cannot afford to finance it and private capital remains skeptical. It will also stifle the economy by increasing the cost of electricity.  The Business Council of BC believes the transition will make BC’s economy $28 billion smaller in 2030 than it would without net-zero policies. This is equivalent to what BC pays for healthcare in a year. Even the Alberta Electric System Operator estimates the cost of achieving a net-zero electricity grid by 2050 to be nearly $200 billion and “accelerating this timeline to 2035 could add an extra $45 to $52 billion”. These figures do not include the wages or tax revenue that would disappear with the fossil fuel sector.

We have been warning that the net-zero dream is not viable without government handouts. And so far, it holds true.  Any reasonable government will cut these unnecessary subsidies and economic strangling policies because the middle class is suffering. Governments need to stay out of the marketplace and let private capital make the investments. If the investment is not occurring, then there is no money to be made and business will move onto other technologies. Companies make the largest strides in environmental improvements on their own dime if there are reasonable laws and timelines in place.