Thursday, 18 September 2014

Linking Clean Energy to Clean Transportation: Barriers are Primarily "Cultural" Rather than Technological


There are those who suggest that a migration to a green economy is too expensive, that we must convert to natural gas as a transition fuel, that the subsidies for clean technologies are driving up the cost of energy, that we need to sell more fossil fuels to finance the transition to clean technologies.  What all these views have in common is "denial".  Indeed, these arguments may be referred to as today's version of the case for The Flat Earth Society.

Clean Energy Investments Offer Better Long Term Economics
For starters, investments in fossil fuels no longer make any long term sense.  The oil companies know the writing is on the wall in light of 1) the need to shift more emphasis to non-conventional fuels that are more expensive to exploit and refine --- such as Canada's tar sands and offshore oil and 2)  market prices that do not reflect the increases in fossil fuel project costs.  On the latter point, market prices are based on speculation more than anything else. 

 Add to this portrait that fossil fuel sectors represent the most subsidized sectors in the world, to the tune of $1.9T/year in 2011 dollars or roughly $110/tonne.   If we were to eliminate these fossil subsidies, not only would clean energy be cheaper in the long run, but also clean energy would be immediately competitive without any subsidies.

While some will argue that shale gas discoveries have injected new life into the longevity of the fossil fuel sectors, the evidence is accumulating to the effect that the US shale gas is headed towards boom and bust cycles because only the initial extractions of the sweet spot gas are economically sound investments.  To this effect US shale gas stakeholders have already begun writing off billions in investments in the US.

 As well, one might say that the case for a shift away from fossil fuels has been internalized in China and the green shift is gaining momentum in the EU and the US --- but not in Canada.  Pity!


For the migration to a green economy, the transportation sector may appear to be the most difficult challenge.  This is so because this sector is currently nearly 100% dependent on fossil fuels and there are no obvious immediate large scale practical alternatives for making the switch to clean transportation.   But these barriers are more psychological than technological.  Those jurisdictions with the courage to make the right political decisions today can change the paradigm, and some have already begun to do so.

The Role of Electrical Utilities
Electric utilities for the most part have not paid much attention to the new market possibilities associated with the electrification of transport.  This is so, despite the advancements in batteries, bi-directional fast charging stations that can be networked to use parked electric vehicles as energy storage facilities, plus the arrival of both plug-in hybrids and electric vehicles.
As to why the utilities haven't paid attention may best be described as a internal cultural mindset.  One would think that electricity utilities would be actively investigating new types of markets because the combination energy efficiency, the prevailing economic slow or no growth, and the emerging trend entailing individuals, corporations and communities getting into the act of producing their own clean energy, all suggest growth in traditional markets may be low or stagnant in the coming years.  In effect, without efforts to pursue the possibilities in the transportation sector, the utilities may find themselves faced with higher costs without the proportionate additional revenues to go with it.

Accordingly, utility investments in clean transportation are logical next steps given the 1) size of the transportation sector and 2) government initiatives around the globe to reduce dependencies on fossil fuels and 3) the current near total reliance on fossil fuels for transportation.  With the latter two considerations in mind a UN report indicated that electric vehicles could make up close to 100% of US new vehicle sales within the next 15 years.

Utility incentives for electric vehicles could range of discounts for charging stations, vehicle purchase discounts or loan payment arrangements with dealers/manufacturers; and off peak rates for charging vehicles at night.

 In Canada where many utilities are public, the preceding incentives could be part of overall provincial government incentive packages to foster a migration towards electric vehicles.

Infrastructures: Local and Regional
As implied by the preceding information, one of the keys to making the shift to electric  transportation is that of infrastructure, in particular clean energy large scale smart grids and micro-grids. 

US and California Leadership

Electric Vehicles as Extensions Micro-grids and Energy Storage
With the support of electric vehicle bi-directional charging stations, during the energy surplus periods, regionally networked plugged in parked electric vehicles would serve as energy storage facilities  via their respective batteries. -- Parked electric vehicles would become extensions of the energy storage network to be called upon during periods of high electricity demand.

At the micro-level, the combination of 1) a parked electric vehicle in an employer/industrial park parking lot or at one's home, and 2) a clean energy micro-gird supplied by local solar roof-top and/or wind power sources, supplemented by the regional utility, as required, would offer several attractive features.  Key features would encompass 1) building to vehicle and vehicle to building off-centralized opportunities off the regional grid and 2) possibilities to supply/sell surplus energy to the regional grid, as appropriate.  Also, in times of blackouts, the parked vehicles would be sources of stored energy to bridge the loss of power period until the regional source is restored.

Utilities, Hydrogen and Energy Storage

Conversely, the governments and utilities can continue to play and wait and see attitude regarding competition in the transportation sector from fuel cells and bio-fuels.

Hydrogen Vehicles
Germany has already started down the hydrogen vehicle path with a mass program to set up hydrogen fueling stations across the country.


There will be those, the automobile industry in particular, who will tell us that Canada cannot set different objectives for reducing emissions and improving the fuel consumption of vehicles sold in Canada because Canada and the US represent an integrated market.  By that, they mean that cars manufactured in the US and Canada are destined for the US and Canadian markets. 

Other manufacturers, those with no manufacturing facilities in North America, produce vehicles specifically tailored to the North American market. 

Yet, notwithstanding these considerations, the integrated market reasoning to the effect that Canada cannot set itself apart from the US, is faulty for several reasons.

The California Difference and Leadership
For many years, California had more stringent smog regulations for new vehicles than the rest of North America.  Yet all vehicle manufacturers, regardless of the locations of their respective manufacturing plants, managed to make the necessary modifications to meet the California standards for new vehicles destined for sale in that state.  Since California has roughly the same population as Canada, then it stands to reason that Canada can do things differently than the US, should it desire to do so.

More recently, California and 7 other states announced plans to introduce requirementsconcerning the percentage of zero emission (eg electric and hydrogen vehicles)and low emission/hybrid vehicles sold in their respective markets beginningwith the year 2018.  There is no reason why Canada cannot join them and thereby contribute to the improvement in the North American economies of scale for providing proportionally greater numbers of low and zero emission vehicles for the Canadian market.

Corporate Average Fuel Economy (CAFE) Standards
The only important existing mechanism for improving the fuel consumption of new vehicles sold in Canada are the corporate average fuel economy (CAFE) standards.  Beginning 2016, a new set of standards will come into effect.  The Canadian standards are identical to those of the US.  

Since  a given manufacturer's CAFE performance for a given year is weighted by the total sales and the fuel consumption of each model, aggregated over the total vehicle sales of the manufacturer for the year in question, a more stringent Canadian CAFE standard than that of the US would merely mean that the distribution of models placed on the Canadian market would be different than the arrays of models of the same manufacturer makes available on the US market -- e.g. proportionally fewer big SUV models; and higher numbers of intermediate sedans; small cars; and hybrid and zero emission vehicles destined for the Canadian market.  

The nice thing about above-described more stringent than US Canadian CAFE, is that this approach does not require any requirements for technological changes, or undue burdens on the part of the vehicle manufacturers.  Of course, the manufacturers can be expected to squeal anyway. 

In any case, vehicle selections and standard equipment have always been different on the US and Canadian sides of the border.  A case in point, the Ford Motor Company discontinued the Mercury line-up in Canada many years before the company did the same in the US.  Another example, you're out of luck if you had wanted to buy a 2014 Accord Hybrid in Canada while they are readily available in the US.

Fuel Consumption Ratings:  Implications for CAFE and Consumer Choices
The fuel consumption ratings of vehicles sold in Canada are different than the ratings of the similar and the same vehicles rated by the US Environmental Protection Agency (EPA).  Unlike the US ratings, the Canadian ratings are supplied by the manufacturers and are not verified by any third party government organization.  By contrast, in the US, the fuel consumption ratings are based on test procedures and calibrations to reflect on the road experiences.  To keep the manufacturers honest, the EPA conducts verifications of around 15% of the models of new vehicles placed on the US market.

The result of the aforementioned differences are such that 1) US ratings are viewed as a reliable and realistic relative guides as to what one could expect from the vehicles on the US market while 2) the Canadian fuel consumption numbers are so exaggerated, that few Canadians consider the Canadian numbers relevant when it comes time to making their choices for a new vehicle.

Accordingly, if Canada is to have an effective and more stringent than US CAFE standards, it would be necessary to introduce testing and calibration procedures similar to that of the US EPA but with adjustments for taking into account winter driving conditions, including the use of snow tires.  This approach is essential to  assure that the Canadian CAFE achieved by each manufacturer reflects the "real world" (actual)  results of each manufacturer in reaching the more stringent Canadian targets.

As well, the more realistic data on fuel consumption stemming from the aforementioned approach is critical for assuring that Canadian consumers have credible fuel consumption information which they can rely on when comparing vehicles on the Canadian market.

Complimentary Government Leadership Roles
With respect to the influencing of consumer purchases to favour more fuel efficient and low or zero emission vehicles, the federal sales tax could be modulated in a revenue neutral fashion to charge less for the low and zero fuel consumption/emission vehicles and higher rates for the high energy consuming vehicles. 

France and Finland have adopted this model.   China is considering going one step further by eliminating the purchase tax (10%) for all new energy vehicles, in particular electric vehicles.

Lastly, the federal government could play a major leadership role in advancing clean transportation in Canada by 1) adopting a meaningful vehicle green procurement targets and 2) participating in clean transportation demo projects funded by government sustainable development and clean transportation innovation funds. 

With respect to the first item, once again China is leading the way by requiring that, beginning in 2016, 30% of vehicles purchased by the central government must be electric vehicles.   In parallel, regional government bodies in Beijing-Tianjin-Hebei region, the Yangtze River Delta, and the Pearl River Delta are aiming for electric vehicles and hybrids to makeup at least  15% of all new vehicle procurements by 2015 and 30% by 2016.

All of the aforementioned measures are readily applicable without major efforts on the part of both government and industry, as soon as Canada has federal government is willing to implement them. The only thing standing in the way of pursuing these progressive measures are political will and popular support to make this happen.... in Canada.

As Jack Layton used to say, "Don't let them tell you it can't be done."

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