STIMULUS INVESTMENTS TO BOOST CLEAN TRANSPORTATION

Reducing emissions from the highly polluting transportation sector is one of Canada’s biggest challenges given our vast distances, cities planned around cars, and a penchant for large, inefficient vehicles. At the same time, addressing emissions from transportation offers a cost-effective opportunity to improve the livability of our cities, reduce expenditures on fuel, and clean up the air. This is an opportunity to create jobs that support the ramping up of zero emission vehicle deployment, building clean transportation infrastructure and transitioning to clean fuels. The following recommendations provide a suite of proven, effective measures to advance these objectives.

Supporting Public Transit and Advancing Electrification

Transportation remains one of the highest-polluting sectors of the economy. Investments in public transit create jobs, reduce congestion, and improve affordability and livability while helping Canada reduce its emissions.

Public transit was quickly recognized as an essential service for essential workers and others during the COVID-19 pandemic. With physical distancing measures in place, declining ridership, lost farebox revenue and decreasing gas tax revenues, transit authorities across the country are reporting staggering financial losses. For instance, during the early months of the pandemic, TransLink in Metro Vancouver reported a shortfall of $75 million a month.

The Green Budget Coalition supported the Canadian Urban Transit Association (CUTA)’s recommendation, that the federal government take the necessary measures to stabilize transit systems to compensate for revenue losses and extra expenses incurred during the pandemic. The Green Budget Coalition was pleased that the federal government recognized the impact of the pandemic on public transit by announcing $1.8 billion nationally to address costs faced by public transit systems in the 2020-2021 fiscal year as part of the Safe Restart program. This infusion will allow continued transit service for essential workers, support economic recovery and ensure planned capital expenditures on system expansion and electrification do not need to be deferred.

We further recommend that Infrastructure Canada work with provincial and municipal partners to accelerate the timelines for approved and pending transit projects, where possible, and flow funds faster. This will help create employment in communities across Canada while better positioning them for a net zero carbon transportation system.

As Canadians transition to EVs, the local revenue stream collected from fuel taxes to fund public transportation (such as the $0.185/L TransLink fuel tax in Metro Vancouver and $0.03/L fuel tax flowing to the Montreal’s Autorité Régionale de Transport Métropolitain) will decline. This puts pressure on the budgets of transit authorities.                                                  

RECOMMENDATIONS

Likewise, revenues from provincial fuel taxes will decline with fewer fossil fuel powered cars on the road, further affecting local transit reliant on those funds. Yet, at the same time, transit authorities require greater funding to expand transit and encourage the shift out of private vehicles to climate friendly alternatives.

Declining municipal and transit authority revenues will slow the pace of transit investments, active transportation growth and bus fleet electrification.

The federal government must work with provincial and municipal counterparts to identify new funding mechanisms. We laud the government’s commitment to predictable funding for transit, and endorse the Federation of Canadian Municipalities’ call for a permanent transit fund of $3.4 billion annually. We recommend the start date for this fund be moved to 2021.

The integration of public transit and active transportation networks offers important synergies: transit operates most effectively and ridership increases when it is planned in conjunction with walking and cycling infrastructure. Most trips are multimodal and integrating active transportation options with transit systems can help solve the “last kilometre” problem. Furthermore, investing in active transportation infrastructure, prioritizing small and medium-sized cities, is an important response to safety and physical distancing requirements during the pandemic. We appreciate that active transportation infrastructure will be eligible for the special COVID-19 response fund to be made available through the Investing in Canada plan. Additional, dedicated funds may be needed to support new or better walking paths, bike lanes and other active transportation infrastructure.

Along with immediate emergency funding for transit, the Green Budget Coalition recommends that the federal government scale up investments in public transit infrastructure, especially electric buses, across Canada. Finally, to enable transit systems to procure exclusively zero emission buses per the federal government’s commitment to the deployment of 5,000 zero emission buses, reducing up to 100 tonnes of GHGs annually per bus, we support CUTA’s recommendation that the government cover 80% of the incremental capital costs of zero emission buses over their diesel counterparts (estimated at $345,000), and provide a per-bus subsidy of $115,000 for electric charging infrastructure, over the next five years.

RECOMMENDED INVESTMENT:

In accordance with the CUTA and FCM recommendations: work with the provinces and territories to [INFC]:

•   Proceed with the permanent transit fund of $3.4 billion, bringing up the start date to 2021.

•   Zero-emission bus procurement incentive program funded at $472 million annually for five years.

CONTACT:
Tom Green – tgreen@davidsuzuki.org

Accelerating the Transition to Zero Emission Vehicles (ZEVs)

Electric vehicles can dramatically lower emissions from cars and light trucks, which generate 11% of Canada’s carbon pollution. The federal government’s target is for all vehicles sold in Canada to be ZEVs by 2040. Regulated sales quotas aligned with the federal ZEV targets, along with financial support for purchasing ZEV  vehicles and charging infrastructure, are the most effective ways to accelerate adoption, while also supporting jobs in the clean energy economy.

As recovery begins, there is an opportunity to accelerate the shift to zero-emission vehicles and to build up Canada’s ZEV manufacturing capacity. Strategic investments in every aspect of the transportation value chain will create the benefits of stimulating the Canadian economy. Globally, most electric vehicles (80%) are made in the region they are sold. However, Canada’s auto industry lags behind other auto-manufacturing countries in its preparation for an electrified transportation future: Only 0.4% of the light duty vehicles produced in Canada are electric, which is 80% lower than the global average of 2.3%.

Budget 2019 provided $300 million for a consumer purchase incentive program (iZEV), $130 million for charging infrastructure, and tax incentives for business investments in ZEV  fleets. These programs can be refinanced and adjusted to contribute to rebuilding. In addition, major investments are needed to build out Canada’s ZEV  value chain, which includes raw material production and refinement, electric vehicle manufacturing and battery manufacturing. Retraining workers to have the knowledge and skill set to be a part of the ZEV  manufacturing economy is critical to sustain and grow our jobs and maintain an automobile sector. See also Just Transition recommendation.

RECOMMENDED INVESTMENTS:

•   $150 million top-up to the iZEV  incentive program [TC].  Though approved for three years in Budget 2019, uptake in Year 1 suggests the program could run out of money in Year 2 without additional funding.

•   $300 million [NRCan] top-up to the Zero Emission Vehicle Infrastructure Program, which supports deployment of ZEV  charging stations, to increase the federal government’s contribution from 50% to 80% of costs for projects initiated by August 2021, and scale up the program. NRCan  should establish targets for each charging infrastructure stream (e.g., public places, multi-unit residential buildings, fleets, transit) and review program design with a view to meet these targets and fully realize job-creation potential. See also Decarbonizing Fuel Supply.

• $10 million [ESDC] for ZEV automotive technician training program, modelled on the provincially-supported EV Maintenance Training Program at the British Columbia Institute of Technology.

• $250 million over five years [NRCan, ISED, ECCC] to prepare for a sustainable and circular EV battery supply chain, including: developing standards, policies and incentives for sustainable and material-efficient battery recycling; expanding R&D in battery and EV recycling and waste processing; advancing traceability initiatives for minerals used in batteries and EVs; and leveraging private capital to expand battery recycling capacity in Canada.
The average lifetime of EV components is approximately ten years and current battery “waste” streams are still too small to attract significant private investment.

• More favourable tax treatment to attract investments in EV manufacturing, including domestic innovation/development of ZEV technologies, manufacturing of more EV models, and driving adoption in the Canadian market to ensure Canadian competitiveness. While there is already a commitment from the federal government to cut tax rates by 50% for companies that develop and manufacture zero-emission technology, investor and financial risk remain barriers. Other financial incentives such as seed funding for projects and technology pilots and demonstrations,
and employment-related or manufacturing subsidies and loans can also be considered to reduce production costs. This can then spur follow-on funding from the private sector. [Finance, ISED]

CONTACTS
Lisa Gue – lgue@davidsuzuki.org   
Isabelle Turcotte – isabellet@pembina.org
Ugo Lapointe – ugo@miningwatch.ca

Reducing Heavy-Duty Vehicle Emissions

Freight trucks accounted for 36% of total Canadian transportation GHG emissions in 2017. With truck activity increasing and fewer vehicle efficiency gains compared to light vehicles, emissions from freight are expected to surpass those from passenger movement by about 2030 in Canada. It is important to support technological solutions that facilitate a shift to near- and zero-emission on-road heavy-duty freight vehicles. That is why we support the existing Electric Vehicle and Alternative Fuel Infrastructure Deployment Initiative (EVAFIDI) and Budget 2019’s proposed tax incentives for businesses to purchase zero-emission vehicles. Targeting vehicle efficiency improvements that can benefit existing freight trucks, that will be on the road for years to come, is also important.

Fuel saving devices such as aerodynamic add-ons, low rolling resistance tires, automatic tire monitoring and inflation systems and idle reduction technologies, among others, can play an important role in reducing the fuel consumption of freight trucks.10 Though fiscal measures are expected to improve the adoption of fuel saving devices, educational tools also promote adoption. Ensuring access to easily accessible resources on best practices and technologies is imperative.

RECOMMENDED INVESTMENT [NRCan]:

1.  Establish financial incentives for fuel saving devices on heavy-duty trucks: $200 million over five years (2020-2024)

Please see also recommendations on funding zero emission vehicle rebates and urban transit.

CONTACT
Isabelle Turcotte – isabellet@pembina.org

Decarbonizing Fuel Supply

The forthcoming Clean Fuel Standard (CFS) will be a core regulatory pillar for decarbonizing the fuel supply and enabling Canada to meet its climate commitments and achieve net-zero carbon emissions by 2050. Locking in a robust CFS in 2021, as proposed, will help attract private investment in clean fuels. The sector has the potential to create thousands of jobs during the construction phase and new full-time clean-tech jobs.

To complement the CFS, the Green Budget Coalition recommends near-term
financial support for the clean fuel sector to accelerate expansion of renewable, low-carbon fuel production capacity and distribution/use infrastructure, while supporting economic recovery. We further recommend that Finance Canada review applicable tax policy to attract investment in renewable, low-carbon fuel production, distribution and use.

RECOMMENDED INVESTMENT:
• $100 million [NRCan] top-up to the Electric Vehicle and Alternative Fuel Infrastructure Deployment Program, which aims to establish a national network of clean fuel charging/refueling stations, to increase the federal government’s contribution from 50% to 80% of costs for projects initiated by August 2021, and to expand eligibility criteria to include biofuel blending infrastructure.
• $350 million over five years [NRCan] for a new low-carbon fuels innovation program, leveraging private capital, to accelerate expansion in clean fuel storage and distribution.

CONTACTS
Lisa Gue – lgue@davidsuzuki.org
Isabelle Turcotte – isabellet@pembina.org

Pricing Road Infrastructure

One reason that Canadian roadways, highways and cities suffer from congestion is that infrastructure projects that increase traffic volumes qualify for federal funding, resulting in a subsidy that favours private vehicle dependency, while use of roads is for the most part unpriced. Users do not pay for pollution they emit, the GHG emissions or the costs they impose on other users by adding to the total volume of traffic, or for their role in exacerbating congestion. Low density developments and the growth of suburbs and exurbs result in ever increasing demand for new investments in roads, yet frequently as soon as the roads are built or expanded, traffic volumes increase, often negating the rationale for the investments. However, COVID-19 has forced companies and communities to rethink how work is carried out and the need to commute to downtown office spaces. Much of the revenue earned by municipalities comes from sources that can have the perverse effect of encouraging municipal leaders to embrace sprawl: gas taxes, development charges and property taxes. Outside of North America, many highways are tolled and a number of cities such as London and Milan have reduced congestion, addressed GHG emissions and improved air quality through road pricing and congestion charges.

The Green Budget Coalition recommends that the federal government:

  • Work with provinces and territories to restructure infrastructure funding mechanisms for municipalities to better align incentives with smart growth principles;
  • Support municipal efforts (such as the City of Vancouver) to advance mobility pricing via special grants to support studies;
  • Undertake a comprehensive review of budgetary and regulatory mechanisms to ensure that a climate lens and demand side management is incorporated into roads built with federal support; and
  • Make ineligible for federal funding road projects or other transportation infrastructure that will lock-in or exacerbate pollution, GHG emissions and loss of natural habitat.

RECOMMENDED INVESTMENT:
•   $5 million [INFC]

CONTACT
Tom Green – tgreen@davidsuzuki.org