Evaluating the effectiveness of electric vehicle subsidies in Canada

Abstract

The electrification of transportation has been identified as a necessary aspect of climate change mitigation in order to limit global temperatures to 1.5°C above pre-industrial levels and prevent potentially catastrophic effects on the environment. Despite this, in Canada and most other developed countries, consumers have been slow to adopt electric vehicles. In March of 2019, to encourage increased adoption of electric vehicles, the government of Canada announced a new federal EV subsidy program that will offer a rebate of up to $5000 on the purchase of zero-emission vehicles. When evaluating the costs and benefits of such a program, it is important to consider that the magnitude of emissions reductions achieved through EV subsidies relates to the emissions intensity of the electricity used to power the EV. In this paper, the cost-effectiveness of achieving emissions reductions through EV subsidy programs is evaluated with respect to each provincial electricity system in Canada. These results were then used to compare the cost-efficiency of EV subsidies to other investments in climate change mitigation initiatives, and ultimately decide whether EV subsidies are feasible to implement in any of Canada’s provinces.