PART I
WE ARE RIPE FOR THE MIGRATION TO A GREEN
ECONOMY NOW:
ALL THAT'S MISSING IS THE
POLITICAL WILL
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.
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.
PART II
THE TRANSPORTATION SECTOR:
DIFFICULT
BUT NOT INSURMOUNTABLE CHALLENGES TO GO GREEN
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.
Contrary to prevailing conventional wisdom, the
complexities of semi-autonomous micro-grids supplied by local intermittent clean energy sources (e.g: solar and wind); and supported by energy storage,combined with linkages to regional large scale clean energy utilities, do not entail any greater than the complexities of today's centralized electricity infrastructures.
US and California
Leadership
In keeping with the aforementioned holistic
path for assuring that the aforementioned infrastructures are developed and in
use, in February 2014, the US federal Department of Energy announced $7M for advancing the design of community-scale micro-grids with capacities going up to 10 MW. In addition, the DOE is offering$6.5M in matching grants for the development of integration technologies to accommodate both multiple intermittent renewable energy sources and energy storage in a grid.
Going bolder than the US
national government, the state of California has adopted the Self-Generation Incentive Program that will provide $415M over 5 years to install micro-grid components on the customer's side of the grid, including wind turbines, waste heat to power technologies and advanced energy storage systems. This program will help meet California's energy storage mandate, which among other things requires that investor-owned utilities add 1.3 GW of energy storage for their respective grids by 2020.
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.
Under the €350
million "H2 Mobility" Initiative, a partnership involving -- Air Liquide, Daimler, Linde, OMV, Shell and
Total -- by 2015, Germany will have 50 hydrogen fueling stations around the country, 100 by 2017 and 400 stations by 2023. This will mean that, in Germany's metropolitan centres, drivers of fuel cell vehicles will have at least 10 hydrogen refueling stations available, starting in 2023. Integrated into this plan, there will be one hydrogen station for every 90 kilometers of highway between densely populated areas.
PART III
THE CASE FOR STRONGER CLEAN TRANSPORTATION
OBJECTIVES IN CANADA IN
THE NORTH AMERICAN INTEGRATED NEW
VEHICLE MARKET
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.
Conclusion
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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