Accelerating the Low-Carbon Transition of Medium and Heavy-Duty Vehicles [MHDVs]

Recommended Actions:

  1. Offer incentives for fuel-saving devices
  2. Increase financial incentives for zero-emission commercial MHDVs
  3. Raise fleet capacity (skills training)

1. Offer incentives for fuel-saving devices

Heavy-duty vehicles (HDVs) currently account for nearly one-third of total Canadian transportation GHG emissions. With truck activity increasing and fewer vehicle efficiency gains compared to light-duty vehicles, emissions from freight are expected to exceed those from passenger transport in Canada by about 2030. To improve fuel efficiency, trucking fleets across Canada can outfit their vehicles with fuel-saving devices such as aerodynamic add-ons or low-rolling-resistance tires. A recent survey of trucking fleets across Canada, however, demonstrated that adoption of most fuel-saving devices is low. Access to funding would encourage the adoption of additional fuel-saving devices for HDVs.

Recommended Investment:

$200 million over five years to establish financial incentives for fuel-saving devices on heavy-duty trucks, administered through the SmartWay program. [NRCan]

2. Increase financial incentives for zero-emission commercial MHDVs

Financial incentives are crucial for reducing one of the main barriers to electric vehicle adoption—high upfront purchase prices. The initial purchase price of a zero-emission truck can be two to three or more times that of conventional diesel options across a wide range of vehicle classes and use-cases. Hence, financial incentives are needed.

How effective would financial incentives be? In 2017, it was estimated that current ZEV financial incentives in Canada could increase the light-duty ZEV domestic new market share by 1.5 – 5 percentage points in 2040; however, stronger financial incentives49 could increase the new market share for light-duty ZEVs by an estimated 15-20 percentage points. Financial incentive policies were viewed as the most effective demand-focused policy in encouraging ZEV uptake. In addition, a recent study by the U.S. Department of Energy found that total cost of ownership was a key factor in purchase decisions, with industry feeling that high battery costs make electric commercial vehicles exceedingly expensive.

If Canada set a target of, for example, 25,000 new zero-emission medium- and heavy-duty vehicles by 2025, an estimated $5 billion would be required to cover the cost of vehicle procurement alone. This is a cost that could be shared and distributed across public and private sectors to accelerate the ZEV transition. Given the significant contribution of commercial vehicles to GHG emissions, public subsidies are merited.

It is expected that ZEV technological readiness in the freight sector will advance in waves. As ZEV technologies are accepted in their early market applications, this encourages additional market applications. For example, the success of zero-emission transit buses has served as a launch point for shuttle and school buses, delivery vehicles, drayage trucks (which move bulk and containers to and from ports and other locations), and regional trucks.

Currently the federal government offers a tax write-off for zero-emission vehicles— including medium- and heavy- duty vehicles—to support adoption by businesses.54 This write-off excludes vehicles which have received an incentive under the iZEV program. Similar restrictions could apply to vehicles which have received funding under this proposed financial incentive program for commercial ZEV MHDVs, ensuring the new program is complementary.

Recommended Investment:

$500 million over five years for financial incentives targeted to medium- and heavy-duty commercial vehicles. [TC]

See also the Transition to Zero-Emission Vehicles recommendation, next in this document.

Raise fleet capacity: skills training

Building a labour force with the appropriate competencies, skills and leadership qualities is a critical success factor and driver of Canada’s transition to ZEVs. Industry workers, including mechanics, drivers, engineers, electricians and fleet managers, need to adapt to changes in job requirements and may need to acquire new skills in areas such as electrical installation, mechanical installation, maintenance of medium- and heavy-duty vehicles, EV fleet management and fleet-charging infrastructure.

Existing programs include the Electric Vehicle Infrastructure Training Program, which provides training and certification for electricians installing electric vehicle supply equipment in North America, or the Electric Vehicle Maintenance Training program offered at the British Columbia Institute of Technology.

At a minimum, an investment of $36 million over five years is needed to expand and create skills-training programs to support the deployment of zero-emission trucks in high-potential and high-demand markets across Canada. As with existing labour market programs, the cost could be shared between government and employers. Increased skills training for ZEVs, especially for fleet managers, would build awareness of the benefits of electrification—including long-term operational benefits.

Recommended Investment:

At least $36 million over five years [ESDC]

Contact

Cedric Smith – cedrics@pembina.org