Will EVs Deliver on Decarbonization?
Ashley Nunes
Friday, August 23, 2024
00:00:00:00 - 00:00:02:07
Unknown
there's a lot of misinformation,
00:00:02:07 - 00:00:09:14
Unknown
know, in the in the EV space, you know, on both sides of the aisle, you know, people often try to twist the numbers in a manner that favors,
00:00:09:14 - 00:00:19:08
Unknown
or disadvantages the electric car. And I just think it's important, I think as far as the government is concerned, if the government is going to be spending billions of dollars on sort of
00:00:19:08 - 00:00:28:13
Unknown
subsidizing this technology, I think it's important that the government be clear about what the technology can do, what it cannot do, and what the cost is to the consumer.
00:00:28:17 - 00:00:49:21
Unknown
Welcome back to Decouple. Today I'm joined by Ashley Nunes. I actually have a lot of affiliations, and it's hard to keep up with them, but the latest I've got is former director of transportation policy at the Brewster Institute and a senior research associate at Harvard Law School. I noticed you hold a PhD in engineering psychology.
00:00:50:01 - 00:01:09:20
Unknown
I hadn't heard of that discipline. why don't you take a couple moments to, introduce yourself a little further before we get into the meat and potatoes of this podcast, which is going to be electric vehicle, something I have neglected despite 250 episodes of a climate and energy focused podcast. Again, welcome, Ashley. Yeah. Thank you so much for having me, Chris.
00:01:09:22 - 00:01:28:10
Unknown
my name is Ashley. I'm a researcher at Harvard Law School, and I teach youth, and I'm a policy at Harvard College. I spent a couple of years at the Breakthrough Institute. as their federal policy director on climate and energy. prior to that, I was a director for competition policy and antitrust at a libertarian think tank.
00:01:28:11 - 00:01:36:07
Unknown
in Washington, D.C. and prior to that, I was largely supporting the, the Canadian Department of Defense. And then after that, the United States Department of Transportation.
00:01:36:07 - 00:01:53:06
Unknown
Okay, awesome. I'm a Canuck, so I'm going to be very interested in chatting about the, massive EV subsidies we have here, in Canada. but before we get to that, I guess just thematic, actually, I want to talk about why EVs consume such a large amount of the broadband in, in climate discussions.
00:01:53:12 - 00:02:15:20
Unknown
Just just thinking about it. you know, contextually, I feel like, you know, we live in a world that's completely energy and fossil fuel blind. I mean, there's not a thing that's not made of or made in a process using, or transported by fossil fuels. They're literally everywhere. But the one place that, you know, I think we really physically see them, handle them, that they spill on our hand sometimes is at the pump, you know, filling up your vehicle.
00:02:15:22 - 00:02:27:10
Unknown
so that's just kind of what leaps off the page at me. But, wondering if you can dive into a little bit why why EVs are such a kind of prominent part of the climate discourse and whether they deserve to be.
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Unknown
if you look at emissions, we look at missions broadly on a sector wide basis.
00:02:33:05 - 00:02:38:13
Unknown
As a general rule, you know, transportation accounts for about it's close to about 30% of
00:02:38:13 - 00:02:59:22
Unknown
greenhouse gas emissions nationwide. And, it's the it accounts for the largest segment effectively. Right. So transportation is the largest contributor. Greenhouse gases. if you take that value and you break it down even further, what we usually observe is that light duty vehicles are responsible for roughly about 16 to 17%.
00:03:00:00 - 00:03:31:05
Unknown
So it's not an insignificant number. Now you compare the transportation sector and specifically the light duty vehicle sector, or ground transportation for that matter, to other sectors that exist, such as the agricultural sector, manufacturing, etc.. you discover very quickly that some of these other sectors, are quite difficult to decarbonize. So if we take manufacturing, for example, you know, the manufacturing of aluminum and steel, requires large amounts of energy.
00:03:31:05 - 00:03:54:14
Unknown
It's quite carbon intensive. And as a consequence, it's, you know, if the priority is decarbonization, there is only so much the government or indeed any entity can do to reduce emissions in some of those sectors. Now, that's not to say there aren't ways of doing it. We certainly have seen some have seen some advances, for example, in the agricultural sector, as a means of emissions reductions.
00:03:54:16 - 00:04:11:17
Unknown
But really, you know, on paper at least, transportation is easier. I would not say easy, but certainly easier to decarbonize than, you know, the energy sector more broadly. and, you know, for example, manufacturing and industrial processing,
00:04:11:17 - 00:04:30:02
Unknown
I guess it feels as well that it's, fits well with the sort of consumerist politics of the day where it's something that, you know, an individual can take action by making a virtuous choice, by buying an EV rather than, you know, a large collectivist, infrastructure project, like building power infrastructure, for instance.
00:04:30:02 - 00:04:32:04
Unknown
I don't know if that plays into it or not.
00:04:32:04 - 00:04:52:06
Unknown
Well, you know, again, it's it's certainly true that I guess you can demonstrate to consumers that they have more of a role to play when it comes to decarbonizing the land transportation sector by virtue of purchasing electric cars. But the same, involvement can be had, for example, by incentivizing consumers to use public transit.
00:04:52:08 - 00:05:12:09
Unknown
You don't necessarily need the electric car to decarbonize, right? So if you, you know, if you if you look at the totality of emissions that come from the light duty vehicle sector, you know, I think based on our best estimate, somewhere between about 55 to 60% of these trips that are taken in personally owned vehicles are what we call single occupancy trips, right?
00:05:12:11 - 00:05:36:18
Unknown
Roughly about 15 to 20% more are double occupancy. So if you just think about the single occupancy trips that largely account for the bulk of vehicle miles traveled in personally owned vehicles, we could slash those emissions in half today if people were just willing to pull their rights. Right. You don't need the electric car. You don't need large amounts of government subsidies, to actually achieve this.
00:05:36:20 - 00:05:53:09
Unknown
But there are a number of reasons for why people don't want to pull their rights. And or government is necessarily enthused by promoting such a policy. Right. MPs don't get elected by promising to force everyone to share their ride with someone else. You know, going down, going down the 401. So,
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Unknown
yeah. No doubt. No doubt. So, you know, in terms of bang for decarbonization, but the experience so far in, say, North America, how has that been?
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Unknown
with EVs?
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Unknown
Well, it's been terrible. but, I mean, I would argue no more terrible than we have seen in many other countries, right? You know, arguably the worst offender for bang for your buck, is Norway, which is often held up as sort of being this, you know, electrifying electric nirvana, if you will. But if you look at Norway, I mean, Norway's in a pretty, you know, I mean, this Norway is a country that has spent billions of dollars since the early 1990s at incentivizing adoption.
00:06:28:18 - 00:06:48:05
Unknown
and certainly if you look at their sales targets in the past year, right, you know, remarkable levels of penetration. But if you query the actual consumers who have gone out and bought an electric car, what they'll tell you is that they had no choice in Norway bottom but to buy the electric car, largely because the government just made it so darn appealing.
00:06:48:07 - 00:07:08:06
Unknown
Now, you might say, well, that's a good thing, and it would be a good thing if it were the case that Norwegians were giving up their gasoline powered cars to drive the electric car. But there's no evidence to suggest that's happening either. Right? The majority of electric cars in Norway, like it's the case in Canada, like it's the case in the United States, are purchased as additional vehicles.
00:07:08:07 - 00:07:09:12
Unknown
It's not the primary car.
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Unknown
And so those those Ice vehicles are not being retired in favor of EVs. Just to be clear. That's correct. That's exactly correct.
00:07:16:02 - 00:07:25:21
Unknown
I guess you know, these these vehicles are often called zero emissions vehicles. which kind of drives me nuts. I've been in a few town halls, that's come up as a term.
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Unknown
talk a bit about the embodied, emissions and how they compare to, internal combustion vehicles.
00:07:31:06 - 00:07:51:04
Unknown
Well, you know, the carbon intensity associated with manufacturing an electric car is quite significant. And that largely reflects the carbon intensity associated with building the battery, which has lots of critical minerals. So, on average, you know, an internal combustion engine will require about two, about eight tons of carbon dioxide.
00:07:51:06 - 00:08:15:08
Unknown
That's what it will generate. An electric car tends to be closer to about 13 tons of carbon dioxide, right. and, you know, again, there is, there is something to be said for that difference. And what I mean by that is that, you know, our politicians and the political establishment, often sell us on this idea that we can get everything for nothing, right?
00:08:15:13 - 00:08:40:19
Unknown
That there is no price to pay for going green or indeed adopting any piece of technology. But there is. And we see that in electric cars. The carbon footprint associated with building the vehicle is much, much higher than it is for an internal combustion engine. And because of that, what that means is that the vehicle has to stay on the road for a certain amount of time to pay off its carbon debt, if you will.
00:08:40:23 - 00:08:52:05
Unknown
And what are those? What are those timelines look like? I guess it depends on how much they're driven and if they're a primary or secondary, a tertiary vehicle. Well, you know, again, in many ways it depends on which organization you're talking to.
00:08:52:05 - 00:08:57:06
Unknown
Right, right. So if you are if you're a very pro EV organization, you know, you we'll talk about you know well within.
00:08:57:11 - 00:09:17:14
Unknown
I mean I've seen numbers as low as 13, you know 13,000 miles about 20,000km or so. Right. I'll say, oh, within 13,000 miles, you're paying off the carbon debt and you have nothing to worry about. but you can only get numbers that are that low if you dramatically reduce the size of the battery, which is precisely what they do.
00:09:17:16 - 00:09:28:23
Unknown
You know, very often they'll take batteries that are 30 kilowatt hours. or, you know, 50. I'm sorry. Yeah, some 30 to 35 kilowatt hours. And usually that would give you about 150 miles of range
00:09:28:23 - 00:09:36:19
Unknown
for a point of comparison. And internal combustion engine would give you something closer to about 405 miles of range, right on a full tank of gas.
00:09:36:21 - 00:09:38:04
Unknown
So, you know,
00:09:38:04 - 00:10:08:09
Unknown
there's a lot of misinformation, you know, in the in the EV space, you know, on both sides of the aisle, you know, people often try to twist the numbers in a manner that favors, or disadvantages the electric car. And I just think it's important, I think as far as the government is concerned, if the government is going to be spending billions of dollars on sort of subsidizing this technology, I think it's important that the government be clear about what the technology can do, what it cannot do, and what the cost is to the consumer.
00:10:08:11 - 00:10:27:06
Unknown
So you mentioned, you know, trying to make things look more favorable with a 30 kilowatt hour battery. Can you just give us some comparisons? I mean, like the Ford Lightning, for instance, or, you know, I guess some of the, the top selling Tesla type vehicles, are we talking 60, 70 kilowatt hours? Well, currently the median.
00:10:27:08 - 00:10:52:22
Unknown
Oh, I guess we could use the average. I mean, the average size of a battery currently for an electric car or somewhere between about 75 to 80 kilowatt hours. Wow. Okay. now, 70 to 80 is sort of 75 to 80 kilowatt hours. Gives you on average, it's close to about about 260 miles of range, right now, of course, that is significantly higher than a 30 kilowatt hour battery, giving you 150 miles of range.
00:10:53:00 - 00:10:59:08
Unknown
But there are two comparison points here that are important. The first is the fact that, you know,
00:10:59:08 - 00:11:20:03
Unknown
even at 280 miles, that mileage is much less than what you would get out of an internal combustion engine powered vehicle. Right? Just sitting close to about 405 miles of range. The second point is that, you know, just because you're getting 280 miles of range on paper doesn't necessarily mean that's what you're getting in practice, right?
00:11:20:05 - 00:11:34:22
Unknown
and this is particularly problematic in markets like Canada, for example, where the extreme cold draws down power from the battery at a much faster rate, which means that you need to find a charging station to recharge a lot faster.
00:11:35:07 - 00:11:53:10
Unknown
you've advocated in the past for a more pragmatic approach, I think, which has centered on trying to deploy EVs where they're going to be consuming the most miles. So things like the taxi fleet, the bus fleet, probably delivery or Amazon delivery trucks, that kind of thing. you know, you mentioned Norway as a as another model.
00:11:53:12 - 00:12:17:01
Unknown
China definitely. I think is now the leader or certainly leading the world in terms of, EV sales and penetration and seem to be taking, again, that more pragmatic approach. arguably this is not, you know, purely any way out of, you know, climate and decarbonization concerns, but it's driven by, you know, energy security imperatives with China, you know, becoming one of the world's largest oil importers and being very vulnerable to blockade.
00:12:17:03 - 00:12:40:23
Unknown
You know, without a blue water navy that can guard the Persian Gulf or the Straits of Malacca, sort of, potentially making it, very vulnerable, in the setting of, of war, things like that. So it seems like there's a much more pragmatic drive towards, electrification of transport, in China, but also a much more pragmatic approach that's being taken versus in the US, where it's sort of a nice to do thing rather than a, you know, really need to do thing.
00:12:41:01 - 00:12:46:22
Unknown
I mean, tell us a little bit more about, again, that impact of, selective electrification of vehicles.
00:12:46:22 - 00:13:02:05
Unknown
Well, it's certainly true that, you know, the Chinese government, both at the national level and more at the state level, if you will. You know, if you look at the different provinces, it's certainly true that they have taken, I think, a very aggressive approach towards electrification.
00:13:02:07 - 00:13:33:17
Unknown
they have certainly invested, and they have a range of different subsidy policy levers that are in place, or incentive levers that are in place to get people to go electric. that being said, you know, comparing the Chinese market, for example, to Canada or the United States in terms of the uptake of electric vehicles is, in my view, slightly problematic in some ways because the demands of the market in China, if you look at major cities just as an example, aren't the same as what we see in the US, right?
00:13:33:19 - 00:14:01:08
Unknown
and the way we know this is that even though you have cars, for example, electric cars are much cheaper in China to purchase orders of magnitude lower than what you would find in Canada or the United States. Very often the batteries that these vehicles use are a different type of battery chemistries. Lithium ion phosphate. Right. and the challenge with lithium ion phosphate is that it has very low energy density, which means that you need more of that battery to get the same amount of range.
00:14:01:10 - 00:14:23:15
Unknown
It works in markets like China because the average commuting distance in general, you know, personally owned vehicle tends to be smaller. But that's not the case. Or it would not necessarily work in Canada or the United States, where the commuting distances typically tend to be longer. In more recent years, we have seen Tesla, for example, cell lab battery chemistry in Vancouver.
00:14:23:16 - 00:14:41:09
Unknown
you know, the majority of those vehicles, again, tend to use what we call nickel NMC, right? Nickel manganese cobalt. So I'm not necessarily sure that, you know, you know, comparing the Chinese market to the US or or Canada or even Norway for that matter is the most accurate comparison, right? Right. In terms of what's possible here.
00:14:41:09 - 00:15:01:01
Unknown
But certainly there is a lot of electrification going on, within China. absolutely. Yeah. I don't think I think if you look at the numbers, that's certainly true. you know how long the Chinese government can spur that level of excess of electrification for remains to be seen. Right? Because, again, they are, you know, pumping billions of dollars, into this.
00:15:01:03 - 00:15:29:06
Unknown
And at some point, you know, they're going to sort of tap the brakes on. And they have in some ways, but but in some provinces they have they've been delaying the administration of the subsidies or the ceasing of those subsidies themselves. Okay. I want to get into China a little bit more later. But while we're on the topic of, you know, the kind of effectiveness or, you know, dollar for value of of electric vehicles as a decarbonization tool, something that's come up before on this podcast is the idea that, you know, we need crude oil for a whole number of other applications other than gasoline.
00:15:29:06 - 00:15:53:14
Unknown
We still need heavy distillates to run our tractors. And, you know, a lot of our heavy vehicles and kerosene is jet fuel and, you know, asphalt, petrochemicals, etc.. And so if we are actually successful at, you know, deploying a significant fleet of EVs, we might be stuck with that 30, 40% of a barrel of oil that, you know, gets distilled off as gasoline, which then drives the price down and makes it very attractive for someone else to, you know, burn gasoline in a vehicle.
00:15:53:16 - 00:16:01:23
Unknown
do you subscribe to that analysis? Do you think that that EVs can ultimately, you know, make that impact when it comes to just the barrels of oil that that we need? Otherwise?
00:16:02:05 - 00:16:35:01
Unknown
I'm generally a proponent of the idea that there is a place in the decarbonization portfolio for gasoline powered vehicles, hybrid electric vehicles and pure electric vehicles. what that makeup looks like exactly will vary, of course, from province to province and from state to state. and based on the consumer profile of individuals. But I do not think that having an all internal combustion engine fleet or an all electrification fleet is the way to go.
00:16:35:03 - 00:16:44:10
Unknown
If the goal is to balance decarbonization, against concerns surrounding economic mobility. Right. Which is really what a car traditionally provides you with.
00:16:44:10 - 00:16:53:17
Unknown
Yeah, I heard you say that before, that a car is the kind of number one determinant of economic mobility that that probably shouldn't be surprising to me. But if you can hold through it little well, yeah.
00:16:53:17 - 00:17:17:18
Unknown
I mean, you know, it's, it was it's quite interesting. I was I teach an economics class here. and, you know, if you look at the data, the data overwhelmingly shows that, you know, if you're if you're looking to escape poverty, you know, owning a car will do it, right, because what, what a, what a car does is it allows you to better spatially match where you live with where the job is that you actually want it.
00:17:17:18 - 00:17:33:06
Unknown
So if you imagine where you actually purchase a house or where you, you know, you rent a home, it's not always the case. In fact, it may never be the case, depending on where you live, that the jobs you qualify for and the jobs you want are located within, you know, a two mile radius or a three mile radius.
00:17:33:08 - 00:17:50:07
Unknown
And even if they were located within that particular radius, it doesn't necessarily mean that you have access to good public transportation. And if you do have access to good public transportation, it doesn't necessarily mean, that things don't go wrong every now and then. Right. Or the bus and I had this experience last week and again over the weekend.
00:17:50:07 - 00:18:08:21
Unknown
Again, I was looking at my app. It said, you know, the bus is coming in four minutes, three minutes, two minutes, one minute, and then it says 15 minutes, right. alternatively, the bus can show up on time and the bus is full. Well, you're not getting on the bus. And this these are some of the challenges you do not necessarily have with car ownership.
00:18:08:22 - 00:18:36:06
Unknown
There are other externalities, of course, right. Being stuck in traffic and things like that. But but by and large, these are some of the challenges. I think the benefits of owning a personally owned vehicle, and I think this is part of the reason why, you know, in Ottawa, for example, and even Washington is very, very hesitant about calling, electric vehicle adoption or policies that incentivize electric vehicle adoption, akin to banning internal combustion engines.
00:18:36:08 - 00:18:49:03
Unknown
Right, is because because human, you know, all of us in society have a very long recollection of how much further we have gotten economically and financially because of the cars we have owned over the past two decades or three decades.
00:18:49:03 - 00:18:54:00
Unknown
Let's let's shift gears a little bit and talk about, I guess, some of the barriers for EV adoption.
00:18:54:02 - 00:19:05:13
Unknown
a big one, certainly in North American market is price, can you go into the cost of electric vehicles? whether that's cost it down, whether it's going up, how much of a barrier that is?
00:19:05:13 - 00:19:13:22
Unknown
Well, you know, if you believe the surveys, you know, and I think there's ample reason to know that the cost of electrification is significant.
00:19:13:22 - 00:19:37:16
Unknown
Right. And most consumers will tell you it's the number one barrier that's sort of impeding, that's that's impeding widespread electrification. You know, I think back in 2022 or 2023, electric cars on average, were costing about $72,000. You know, internal combustion engines were, about 50 or $55,000 over the past year, those prices have fallen quite considerably.
00:19:37:16 - 00:20:09:16
Unknown
And, you know, people have been using those price drops as indicative of what the market is going to look like. I tend to be more skeptical on that perspective. And that's largely because the the drops in price that we have seen over the past year reflect lagging demand for electric cars. And so, you know, just as an example, you know, we one of the one of my favorite talking points is with the past year when people come out and say, oh, look, electric car sales are up.
00:20:09:18 - 00:20:27:11
Unknown
And my response is, well, of course they're up now with Tesla is effectively slash the, you know, the price of these cars. So they cost half as much as they did a year before. The real surprise would be if they weren't up. Right. If electric car sales weren't up. Given how many price cuts you've actually seen, electric cars are more expensive to build.
00:20:27:13 - 00:20:45:17
Unknown
there are a number of reasons why that's the case. And I think the real challenge for, for automakers and OEMs is trying to figure out how can they sell these vehicles and remain in business at the same time because, you know, by and large, these vehicles aren't necessarily that profitable to up to just to build and to sell.
00:20:45:17 - 00:21:07:12
Unknown
And is that why? they're essentially a luxury goods being priced in in that range alongside Mercedes and Beamers? Well, I think, I think two things. The first thing is that, you know, most products and services or many products and services start out at the upper end of the price of distribution before they begin to drop, right? So, proponents of electric cars will say that.
00:21:07:12 - 00:21:34:06
Unknown
They'll say, look, things are expensive right at the beginning. And at some point, you know, the prices drop, you know, so it's it's going to be different in the future. My response to that is, if you look at the price trajectory of these cars, right, you know, going back ten years, going back 15 years in inflation adjusted dollars, the price these cars and I'm talking now about the mSRP, I'm not talking about these price cuts that these automakers are sort of doing as a one off, if you will, because nobody wants to buy their cars, right?
00:21:34:08 - 00:21:55:23
Unknown
If you look at the price trajectory of these vehicles, by and large, it is either a flat line implying no change in price or a slight increase in price. Right. now, this sort of leads to the next point, which is that, well, if you say that prices are going to drop over time, what does over time mean?
00:21:56:01 - 00:22:11:04
Unknown
Is 15 years an insufficient amount of time for prices to drop, or do you need another 15 years, right. If you need another 15 years, how many more billions of dollars are we spending on this? And I think on these points, the government doesn't really have an answer.
00:22:11:04 - 00:22:18:16
Unknown
And so, you know, like if I were a climate czar, I would be thinking about, you know, a true people's wagon, a Volkswagen for the people.
00:22:18:21 - 00:22:40:02
Unknown
That would be, you know, small that could have a decent range. but that would be, you know, broadly available in, in the price range of the general public. We're starting to see that with some Chinese models, which you've said due to their lithium ion phosphate chemistry may not be applicable. but, you know, then again, the North American market where I can speak the Chevy Volt, but that was, you know, just a tiny fraction of overall EV sales.
00:22:40:02 - 00:22:42:01
Unknown
And I think it's been canceled. Is that correct?
00:22:42:01 - 00:22:58:19
Unknown
Vehicles like the Chevy Bolt, for example, are poor indicators of what the market looks like. and the reason why is that if you look at these vehicles, they do not have the totality of features that consumers rely on. Right. some of that can be due to range.
00:22:59:00 - 00:23:14:16
Unknown
very often it's not just due to range, but it's also because these cars lack many of the features that you and I have become accustomed to. So my mother, for example, she has assured me that when she buys her next car, she's going to make sure that the car has a blindspot detector that provides her with an audio alert.
00:23:14:18 - 00:23:36:10
Unknown
Right. So she does not have to look into her blind spot. While there's a dollar value associated with that, there's a dollar value associated with lots of different features in the vehicle. And I think this is the key point to remember, which is that because electric cars are expensive currently, does not mean that there aren't cheaper electric cars on the market.
00:23:36:15 - 00:23:57:11
Unknown
Right? It does not imply that there aren't bargains to be had. For example, you can go out and buy a $30,000 electric car today. but again, to the point about sales. I mean, in general, these vehicles account for 1.2 to 1.5% of sales because the profile of those vehicles does not cater to the needs of the average consumer.
00:23:57:18 - 00:24:14:20
Unknown
And I guess if you're selling a relatively small number of these vehicles, you're unable to, you know, produce a lot and, you know, with a small margin make profit. I think I've heard you say that before. Well, what I would say is that even on the vehicles that have a higher price. So it's not entirely clear that the automakers are making much of a profit on those either.
00:24:14:21 - 00:24:32:04
Unknown
Right. so, I mean, you know, GM and Ford have come out and said that they're losing, you know, tens of thousands of dollars on every electric car they're selling. The only reason why they continue to do so is largely because they're patting the losses on electric cars with profits that they're getting from, you know, from selling internal combustion engine powered vehicles.
00:24:32:06 - 00:24:54:08
Unknown
There are some anomalies in the market. If we look at lucid, for example, you know what lucid seems to be doing. Okay. But even in the case of lucid, I mean, you're talking about cars that are 120 to $150,000, more than two times the price of the internal combustion engine. So this is again, this is not necessarily, a product that is going to spur widespread adoption amongst the masses.
00:24:54:11 - 00:25:19:18
Unknown
I mean, you know, in my own country, massive, massive subsidies are under way, $50 billion. It looks like, I think over about 15 to 20 years. You know, for context, our national defense budget is $26 billion last year. I mean, the, you know, Bloomberg, which is one of our famous aerospace corporations, you know, received and has been criticized for receiving a significant corporate welfare, I think over its 40 or 50 years of operation, that's total about 3 billion.
00:25:19:18 - 00:25:28:00
Unknown
That's a Canadian company. So we're talking, you know, absolutely massive, but sound to me to be pretty unprecedented level of subsidies, for the sector.
00:25:28:00 - 00:25:36:05
Unknown
it seems like the market is not necessarily emerging. The consumer demand is not necessarily there. How risky do you think, these these government subsidies are?
00:25:36:05 - 00:25:42:02
Unknown
I'm not sure I would characterize the provision of a subsidy in this case at least, as being a risk.
00:25:42:05 - 00:25:59:03
Unknown
Right. And what I mean by that is that, you know, when the government invests this type of amount, in electrification, for example, you know, there's a little bit of decarbonization, you know, that's part of the motivation, but there's a broader motivation, at least for the companies that are receiving the subsidy that they will. You will see the creation of jobs.
00:25:59:03 - 00:26:15:07
Unknown
Right. And, you know, especially if they're high paying jobs, there will be spillover effects, right, that those all those engineers will go and they'll take that, you know, big paycheck that they're getting, you know, partially subsidized by the Canadian government. And they'll spend it you know, they'll spend it. Excuse me. Their local towns and their local villages and things like that.
00:26:15:07 - 00:26:50:02
Unknown
And that has sort of a knock on effect. So, you know, recently, for example, when, just Justin Trudeau and Doug Ford announced this sort of billion dollar taxpayer funded subsidy for Honda, you know, all stuff, you know, everyone was, you know, saying, oh, this is just going to be so great, etc.. but, you know, again, over there, the question is, if you give a corporation $1 billion, in the hopes of it creating economic effects downstream, the provision of those benefits, or realizing those economic benefits are largely tied to people wanting to buy your product.
00:26:50:04 - 00:27:18:13
Unknown
And what evidence is there to suggest that people want to buy this product? Right. to the degree, that, you know, that these subsidies actually make sense. I mean, when, you know, when the Inflation Reduction Act passed in the United States in 2022, I think on paper at least, we had about 370, 380 billion USD that were allocated to, you know, to providing, climate benefits.
00:27:18:15 - 00:27:37:20
Unknown
And about 7.5 billion of that is for electric car subsidies, etc.. We've just had the Congressional Budget Office come out and say, well, guess what, it's not 7.5 billion or it's on 370 billion. It's more like something, you know, in the trillions. and the reason why, again, is because more people went out and got that subsidy, because everybody wanted a bit of free money.
00:27:37:21 - 00:28:03:09
Unknown
And the on again, on paper that is a good thing. The problem is that and we've seen this in the United States, we've seen this in Norway, we've seen this in Canada. The problem is that the majority of people who buy electric cars would have bought the vehicle, regardless of whether the subsidy was available, which means that you have large amounts of government money that are effectively just being wasted.
00:28:03:11 - 00:28:26:15
Unknown
Right. Why are you giving you know, you know, Mr. Smith, you know, in, in Mississauga, right. In Ontario. What are you giving Mr. Smith? $7,500 to buy a car when Mr. Smith was going to buy that car regardless, it seems like a terrible waste of money. I just want to say something, you know, because it is a waste of money doesn't necessarily mean that all of us should be faulted for it.
00:28:26:18 - 00:28:57:08
Unknown
We should not fault Ottawa for the policy, at least initially. The goal of the policy is to incentivize adoption. I think the hallmark of good governance is for Ottawa to then recognize that the policy is not working out in the way in which it was intended, and tweak the policy accordingly. Okay. What sort of tweaks? Well, you, my my colleague Lucas Woodley at Harvard, and I had written a piece recently in which we basically said, well, one of the things we should do is impose very stringent income caps.
00:28:57:09 - 00:29:25:23
Unknown
The part of the reason why you have large groups of people using these subsidies, to buy cars they would have bought anyway is because these people are rich, right? Rich people don't need the subsidy, but they'll take it. So one thing you can do is, is establish an income cap. The next thing I think that government should do is be very clear that the provision of the subsidy only goes when you are replacing an internal combustion engine powered vehicle, right?
00:29:26:01 - 00:29:44:05
Unknown
Not we're not paying you to just go out and fill your household with additional cars in your garage, right? That's not the point of the subsidy. In fact, in aggregate, if all you are doing is going out and buying more and more cars, it's a net carbon creator. It's an emissions created. It's not a it's not, you know, you're not reducing emissions.
00:29:44:07 - 00:30:03:23
Unknown
So I think that's something else that the government can actually do. When I finally, I think what the government should also consider is the fuel economy of vehicles that are being phased out of the fleet. Right? So if I take a very fuel efficient car and I go and I traded in to buy an electric car, I think, I think I should get less of a subsidy than somebody who takes a very dirty car.
00:30:03:23 - 00:30:21:12
Unknown
Right, right. Because again, the ideal situation from the government's perspective is that it provides a subsidy to everyone, but the government doesn't have enough money to provide a subsidy to everyone. Right. And we know that because if it did, you wouldn't see Ottawa placing restrictions on how much of a subsidy you actually get.
00:30:21:12 - 00:30:24:12
Unknown
So those are just sort of three, to me at least, common sense measures.
00:30:24:12 - 00:30:49:01
Unknown
Right. Establish income caps. You know, be specific that the subsidy only goes when you're replacing an internal combustion engine powered vehicle. and finally think about how dirty the vehicle is that is being replaced. It kind of sounds like, in terms of, you know, trying to enforce this replacement, like it would be, a trade in in the same way we have sort of, you know, buybacks for assault weapons or something like, absolutely.
00:30:49:01 - 00:31:10:03
Unknown
And again, that's not to say you won't find people who skirt the rules. Right. And that's not to say it won't be a clean process. But that being said, you know, we are seeing consistent evidence across numerous markets that this policy isn't working out the way in which it was planned. which again, a great example of this is the price cuts that we are seeing from Tesla and GM and Ford.
00:31:10:03 - 00:31:41:21
Unknown
Right. Why do you think these automakers are cutting prices so drastically? It's because nobody is buying the cars. And now you have this mandate, for example, right, that Ottawa has put forward where they're effectively saying that, you know, if you don't sell X number of vehicles, you're going to get financially penalized for it, right? how is that fair to a firm to make sure it designs a product that must literally be crammed down the throats of the consumer in order to ensure that the firm is fined?
00:31:42:07 - 00:32:05:04
Unknown
In terms of, again, these these, generous subsidies, we're seeing China, you know, with a glut of battery production. BYD, has surpassed, Tesla not just in the hybrid market now, but in fully electrified vehicles. as we said, they have a $10,000, version of the. I think it's the dead seagull that's available. Big tariffs are being put on these.
00:32:05:06 - 00:32:22:23
Unknown
but to what degree do you think the Chinese dominance over the, supply chain? and, and now the vehicles is, is a threat to these big investments that are being made under the IRA. And, and, you know, Canada, for instance, trying to put in enough chips, to meet the kind of anti that Biden has created with the IRA in this climate poker game.
00:32:23:01 - 00:32:34:18
Unknown
Well, I think there are two separate issues. The first is, as you are aware, you know, the United States and I'm in Canada to that to some extent has been very, adamant that we do not want to see, you know, mass,
00:32:34:18 - 00:32:42:10
Unknown
penetration of Chinese vehicles in the North American market. on the one hand, I think that is not a good strategy for the consumer, right.
00:32:42:10 - 00:32:55:09
Unknown
Because what that does is it it takes away the incentive for the likes of GM and Ford and Tesla, even, for that matter, to find a way to lower their production costs, right, to provide the consumer with a better deal.
00:32:55:09 - 00:33:01:17
Unknown
Again, it's sort of very basic economics, right? You just constrain supply. and by virtue of that, you, you provide an upper hand to it.
00:33:01:19 - 00:33:29:17
Unknown
Incumbents that are currently in the market. That being said, there is, I think, a reasonable concern that when it comes to, you know, building electric cars, certainly sort of establishing, you know, factories for building electric vehicle batteries, etc.. China does have a stranglehold. and we've seen concerns, some of these concerns being, I think given voice more recently, when I think about two months ago or three months ago, China established, export controls on graphite, right?
00:33:29:17 - 00:33:49:02
Unknown
Which is one of the key minerals that you require when you're building the, the anode of an electric vehicle battery. So those are I think those are completely realistic concerns to have the challenge that both, you know, Justin Trudeau and even the United States, you know, President Biden and, you know, most notably, Joe Manchin, have a Senator Manchin is that
00:33:49:02 - 00:34:06:19
Unknown
it is not possible to wean yourself off the Chinese supply chain and can't currently meet the decarbonization targets that that, you know, our leaders have said, sure, you can take the Inflation Reduction Act, you can build all these factories, you can do all those things.
00:34:06:19 - 00:34:14:07
Unknown
But those will take time. And by virtue of those taking time, you are going to miss the decarbonization targets that have been set.
00:34:14:07 - 00:34:26:09
Unknown
that's why in many ways, I think the Inflation Reduction Act, which the administration has taken a lot of credit for, it is in many ways an energy security act, more so than an actual climate.
00:34:26:11 - 00:34:44:21
Unknown
you know, policy, if you will, at least where electric vehicles are concerned. Yeah. I mean, as an illustration of, the supply chain dominance, I was reading that, there was a mandate put in that, to qualify for the subsidy, you had to have less than 50% of your inputs to the battery or the vehicle being Chinese sourced.
00:34:44:21 - 00:35:04:09
Unknown
And that basically eliminated 80% of EVs that were on the market. Well, it's a it's a graded system, right? Where the whether the sourcing requirement becomes more stringent year on year. But yeah, I mean, just the sentiment is exactly correct because, you know, China doesn't necessarily have all the reserves of minerals, but it certainly processes a lot of minerals.
00:35:04:09 - 00:35:26:15
Unknown
Right? Lithium, for example, the bulk of lithium, you know, that we get comes from Australia followed by Chile. Right. You know, cobalt is DRC. There are a few other places you can find a little bit more. But so much of those minerals are actually sourced. excuse me. Our process in China. So there is a realistic national security concern that, you know, one day, you know, the Chinese government wanted to they could just turn the spigot off and say, that's it.
00:35:26:15 - 00:35:30:04
Unknown
No more process processed minerals for any of you Western countries.
00:35:30:04 - 00:35:43:11
Unknown
Getting back to the idea of, you know, the Chinese penetrating Western markets, how would that be different than, you know, the entry of Asian auto manufacturers and in the market in the 80s and 90s with, you know, companies like Toyota?
00:35:43:11 - 00:35:57:18
Unknown
Well, I, you know, I would say that, and this is more of a national security question, you know, as a general rule that, for better or worse, we appear on paper at least to be friendlier with South Korea and Japan than we do with China.
00:35:57:20 - 00:36:15:20
Unknown
Right. there you know, there are longstanding geopolitical tensions, you know, at least in Canada, that have been exacerbated or been brought to the forefront in more recent years. Certainly, you know, with the arrest and the and the detention of the two Michaels, for example. Right. so, you know, I think there is, skepticism maybe on both sides of the aisle.
00:36:16:02 - 00:36:34:20
Unknown
and I think that skepticism isn't going away anytime soon. So on paper at least, you know, I think many of our national security agreements, for example, that we have, you know, we have intelligence sharing agreements with Japan and South Korea to some extent with China. but, yeah, I think, I think we just consider some people to be better friends, than others.
00:36:35:03 - 00:36:55:23
Unknown
There was interesting, I think Jigger Shaw retweeted a post from, Noah Smith, yesterday, and he was talking about how, the US, you know, has done the R&D and capitalized on initial investments in things like computers, the internet, AI, even genome sequencing, and that we've really dropped the ball on batteries, and that we've really ceded even that R&D space.
00:36:55:23 - 00:37:23:10
Unknown
So this isn't just an example of, China sort of, you know, borrowing, to put it charitably, Western technologies. But actually, being you know, first in the world really in terms of, you know, developing new battery chemistries and innovations there. one, one idea that I, that I saw an automotive, not sure what exactly what his, his position was, but he was saying maybe we should try and replicate what China did with the West and, you know, have them make investments, but have Western companies with a 51% stake.
00:37:23:12 - 00:37:42:20
Unknown
and technology transfer really seemed like just such an inversion, obviously, of what's happened with globalization in the last 20 years. Do you think, do you think that's realistic or or coming? I think it depends on the country. I mean, you know, there are a certain you know, the department, the Treasury Department, for example, recently provided guidance on who qualifies for government subsidies for electric cars.
00:37:42:22 - 00:38:01:05
Unknown
You know, they're a very, interesting set of requirements. Right? So, you know, 50% or more than 50% of the board has to be, you know, can't be from certain countries. wherever those board members are sitting, can't be in any of those other countries. Right. You know, where the seats physically are, you know, where the trades are physically occurring.
00:38:01:07 - 00:38:23:14
Unknown
So, you know, again, this reflects the complexities of working in a global market where, you know, if you, you know, if Canada said, well, we'll give you a subsidy if the car isn't made in China, okay. Well what if it's not made in China, but it's assembled in China, right. what if the what if it's assembled in Canada, produced in Canada, etc., but all the minerals come from China.
00:38:23:16 - 00:38:47:21
Unknown
And I think the this is, again, the fundamental problem, which is the fact that there's this basic economic concept called comparative advantage. You either believe in it or you don't, right? It's the notion that some countries are better at doing some things. Other countries are better at doing others. When they trade, everyone is better off. So it feels a little bit as though we are sort of trying to go against this kind of very classic economic sort of doctrine of comparative advantage.
00:38:47:23 - 00:38:51:21
Unknown
And in the process of doing so, we are getting ourselves into all kinds of trouble.
00:38:51:21 - 00:38:57:01
Unknown
Are there any examples of, Chinese manufactured cars getting into the North American market so far?
00:38:57:01 - 00:39:16:16
Unknown
am struggling, to think of one. Okay, that's not to say that. Yeah. Let's talk about a few more of the challenges. I think similar to, you know, wind and solar, where, you know, we think basically purely of the generators and not the enabling infrastructure in terms of transmission and grid reliability, reliability services.
00:39:16:16 - 00:39:30:11
Unknown
EVs are a lot like that, where we tend to you know, there's talk about the charging stations, but I think when we start talking about, you know, a neighborhood like mine, all of a sudden being able to charge all their EVs, that requires some really big changes just to the local distribution.
00:39:30:11 - 00:39:35:01
Unknown
talk about, I guess, the challenges in terms of that, that question of distribution of energy.
00:39:35:01 - 00:39:54:12
Unknown
so, you know, when people think about the challenges of electrification, you know, I think we talked a little bit earlier about the cost or the upfront cost to the consumer. And that's certainly one of the challenges. Another challenge that people talk a lot about is where can you find recharging infrastructure? You know, more recently, at least over the past year, the Wall Street Journal has been quite good.
00:39:54:12 - 00:40:15:03
Unknown
And I think, if I remember correctly, CBK had a piece on it not too long ago, in which I think we had sent one of the reporters out to sort of look at charge charging infrastructure across Canada. So there are multiple issues with regards to recharge. And the first, of course, is that it's hard to find charging infrastructure, assuming you do find charging infrastructure, a fraction of it actually works, right?
00:40:15:03 - 00:40:46:20
Unknown
Very often the pins are broken, etc. which of course puts you in a bit of a bind, but I actually think that even if government could pour large amounts of money into making the infrastructure better and making the infrastructure more reliable, you would still struggle with the fundamental problem with electrification, which is that the opportunity cost associated with recharging the vehicle is orders of magnitude higher than using gasoline, right?
00:40:46:20 - 00:41:08:14
Unknown
So if you take your car, gasoline powered car to a gas station, you can top off your tank, right? You can get 405 miles of range by pumping gasoline into the car. That pumping process will take you 6 or 7 minutes, tops. Good luck finding a recharging system that will give you that amount of range right in 6 or 7 minutes.
00:41:08:14 - 00:41:33:09
Unknown
It's just not going to happen. So this raises a very interesting question, particularly for our policymakers who sort of view electrification as being some sort of equity nirvana. Right. You tell me what is you know, what is equitable about the rich person sitting on their couch while their car recharges in the driveway, while the poor person is standing out in the rain on the side of the right?
00:41:33:09 - 00:41:56:22
Unknown
What's equitable about that? Because that's where, you know, you know, Ottawa decided to place a whole bunch of recharging systems, right? I don't find it to be particularly equitable. Yeah. I heard a really interesting kind of energy calculation, which was, you know, if you look at, you know, we have these on route gas stations on the, on the, you know, 401, which is a big Canadian highway, really easy to access off the highway and lots and lots of traffic.
00:41:57:04 - 00:42:18:20
Unknown
And the pumps there basically consume, as much electricity as a 7-Eleven corner store. if you were to take the energy units from the gasoline that's pumped there and replace it with electricity, it would be analogous to a sports stadium worth of, load. and that's just I think illustrates, again, just the incredible infrastructural challenges, to making to making this possible.
00:42:19:01 - 00:42:27:06
Unknown
Yeah. I mean, I, you know, I, I do want to be very clear about this. Just because it is a challenge doesn't mean we should not try to address it.
00:42:27:06 - 00:42:37:23
Unknown
I'm looking at this more from the vantage point of if you could solve all those challenges, right, the government could get the stuff to be cost effective, could get the building of charging stations, etc., to be cost effective.
00:42:38:01 - 00:43:14:10
Unknown
How do you address the fundamental problem, which is that you just have a very high opportunity cost associated with recharging the battery. Let's assume for a second you have this magical system that you know, you can if you tap it and the battery, you know, magically is recharged. Well, guess what? If we look at vehicles today and we look at the distribution of vehicles across Canada, across the United States, etc., one of the first things we noticed is when we look at population density, there are large numbers of people, typically middle and low income households who live in very dense housing.
00:43:14:12 - 00:43:41:20
Unknown
Right? They own cars as well. What is the solution? Are you going to go and, you know, refit entire buildings so that every single parking spot has its own charging station? What's the cost of that? and which which is probably a good thing that the government isn't talking about this at all. Right. and again, I think there is very much this equity angle on electrification that is often lost, where people often say it's about equity, it's about clean air cleaner disproportionately hurts communities of color.
00:43:41:20 - 00:43:53:16
Unknown
It does it does do all those things. Just based on what I have seen, I'm not sure that the solution that is being proposed necessarily improves outcomes for these communities as much as people say it does.
00:43:53:16 - 00:44:02:19
Unknown
there was a, interesting takeaway from the breakthrough dialogs this year, which I wasn't able to attend, but there was a lot of talk, from a pollster who was looking at, you know, messaging around climate.
00:44:02:19 - 00:44:12:04
Unknown
And apparently EVs was just talking about EVs was just absolutely toxic, for Democratic politicians. maybe that's playing into it a little bit. Those questions of, of equity,
00:44:12:04 - 00:44:24:04
Unknown
you know, I'm trying to get a sense again, I don't want to, come off as if I'm saying or that you're saying that there's there's no role for EVs, but, you know, China seems to be kind of like the proving ground for a lot of Western decarbonization fantasies.
00:44:24:09 - 00:44:41:08
Unknown
you know, in terms of the degree I would I would push back, I would say it's more Norway. That seems to be the, that seems to be the the playground. I mean, I you know, I testified before Congress last year, and at that time Norway came up in the hearing predictably as well. and, you know, you mentioned China.
00:44:41:08 - 00:45:05:18
Unknown
I mean, sure, you you can do many things when you're sort of. Yeah, I think when you have a top down kind of directing structure, if you will. Right. Many things can be done. it's I think it's much harder when you give people choice. and then you rely on them to make the right choice. But there is a misalignment between what you want and what they end up selecting.
00:45:05:20 - 00:45:22:11
Unknown
Right? Right. I guess to clarify, you know what I'm saying? We cover nuclear quite a bit. And, you know, nuclear is stagnating around the world. Russia's exporting. But China, you know, is leading an advanced nuclear and deployment of conventional nuclear and renewables and transmission. They seem to be far ahead, or at least putting into practice what's being talked about in the West.
00:45:22:11 - 00:45:46:14
Unknown
And I'd say in terms of, electrification of transportation, they seem to be pretty far ahead and probably again, driven by pragmatic reasons in terms of concern about oil imports rather than climate. but are there lessons we can take from the Chinese, potentially in terms of, you know, a smarter approach to decarbonization of transport, again, focusing on certain vehicle types or, is that a is that a you pay attention?
00:45:46:15 - 00:46:07:00
Unknown
Well, I think, you know, one of the things that the Chinese government, both at the state and national level did quite well was there was a period of time where some not all, but some of the incentives that will be provided were pegged, to what the range was of the vehicle. So effectively, the longer the range was that the vehicle that you produced, the more of a subsidy you would get.
00:46:07:00 - 00:46:27:11
Unknown
I think that's a good idea. Right. If we know that range anxiety is a problem for consumers, and it is, it makes sense to incentivize firms to build vehicles that afford you more range. I think the challenge that we have seen in North America in general is that we just took a hammer approach, right? We just said, here's a subsidy.
00:46:27:11 - 00:46:47:01
Unknown
Everybody gets a subsidy. We don't care how you use it. We don't care who uses it. As long as we can cram more electric cars on the road, that's a good thing. And I think we need to tweak that subsidy at this point. And I think, you know, using China as a example, not the sole example, but a example is is helpful.
00:46:47:03 - 00:47:23:05
Unknown
I also think it's beneficial to understand that there are countries that have been doing this a lot longer than we have, the most notable, of course, being Norway, Norway has been unusual insofar as, you know, it's decarbonization. Its decarbonization efforts have largely been, bankrolled, by its sovereign wealth fund, which relies on fossil fuel exports. so, you know, I think to the extent that we care about fiscal pragmatism and we certainly do, I noticed that Justin Trudeau during the the recent NATO summit, was taking some flak for not increasing our defense spending.
00:47:23:07 - 00:47:41:12
Unknown
You know, to the extent that you care about, you know, being more pragmatic with how we spend our money, I think we should look at some of these countries and say, what did they do correctly? What did they do incorrectly? Then adjust the policy accordingly. Now it seems like again electrification of vehicles that drive a lot of miles makes sense.
00:47:41:12 - 00:48:01:05
Unknown
And I think taxi I think so. Yeah I think, I think that that is a reasonable approach. I think given the fact that again we have a limited amount of capital and we are trying to take the dirtiest vehicles off the road, right? The vehicles that cover the most mileage, the vehicles, for example, busses that sit for long periods of time by schools where our kids go to school, etc..
00:48:01:09 - 00:48:04:20
Unknown
Right. So I think there are instances where electrification does make sense
00:48:04:20 - 00:48:21:08
Unknown
getting into more solutions. hybrids, plug in hybrids, talk us through that. Is that is that something where it's not as kind of puritanical? Maybe it's more pragmatic. there's still a nice, engine in there, but, do you think that's a better bang for our buck?
00:48:21:10 - 00:48:40:15
Unknown
Well, there are two separate issues here. The first is whether or not you are talking about a pure plug in hybrid where there is an internal combustion engine and there is a battery. Right. And you fill in gasoline as you ordinarily would. and then you have a kind of a pure hybrid, right? the, you know, the Toyota, Toyota has been at this space for quite a long time.
00:48:40:17 - 00:49:00:16
Unknown
As a general rule, I tend to be more of a fan of the pure hybrid versus the plug in hybrid. There are a number of reasons for why, not the least of which is that plug in hybrids tend to be orders of magnitude more expensive. So one thing few people know is that in 2023, plug in hybrid electric vehicles were actually more expensive than pure, electric vehicles.
00:49:00:18 - 00:49:26:00
Unknown
Really? Okay. Yes. I think by a pretty significant margin, actually. plug in hybrid. excuse me. Pure hybrid electric vehicles usually tend to be about 3 to $4000 more than a comparable internal combustion engine. So I think that, you know, if what you care about is maximizing decarbonization, right. Based on the time we have available, based on the financial constraints, then hybrid vehicles are the way to
00:49:26:00 - 00:49:27:01
Unknown
a hybrid vehicles.
00:49:27:01 - 00:49:43:20
Unknown
Again, I'm not a car nut, but this is just regenerative braking. That's exactly right. Yes that's right okay. Yeah yeah I'm really surprised. And and as a general rule, you know, a hybrid will give you somewhere between about 55 to 70. Yeah, 55, 70 miles a gallon. An internal combustion engine will give you 28 to 30, if you're lucky.
00:49:44:02 - 00:49:59:08
Unknown
and of course, an electric car will give you much, much more, right? It will give you about 112 to 150 miles a gallon. Right? Right. I'm really surprised to hear that because, you know, in terms of the overall cost, you have a much smaller battery, I guess, in a, in a plug in hybrid. Is there a reason why why it's, more expensive.
00:49:59:10 - 00:50:11:10
Unknown
Well, the, the I mean, there are a number of reasons, but, you know, even though the battery is smaller, you still need to, but you still need to build an internal combustion engine. Right? You effectively have two engines that are at play over there.
00:50:11:10 - 00:50:17:03
Unknown
the part of the challenge we see with plug in hybrids is the fact that the vehicle itself is heavier, because now you have two engines, right?
00:50:17:03 - 00:50:22:03
Unknown
You have the battery and then you have the internal combustion engine. So you now need more power to actually move the vehicle.
00:50:22:03 - 00:50:33:09
Unknown
And so in a hybrid you don't have, a battery or it's just so small that it's insignificant. It's so small it's insignificant. Okay, okay. Interesting. So, what do you think? What do you see things going?
00:50:33:09 - 00:50:52:19
Unknown
I guess, over the next decade, there's there's a lot of aspirations, obviously. this is a, you know, very loaded question. We're likely to see some pretty radical changes in politics in the North American continent, maybe in most of Europe, over the next decade. the EV hype train is is it going to, you foresee it running into some major snags?
00:50:52:21 - 00:50:54:01
Unknown
what's what's your predictions?
00:50:54:01 - 00:51:17:18
Unknown
So, you know, we've had in the United States, we've had this major legislation that has been pushed to sort of change the trajectory of climate. we've had similar efforts, for example, in Europe. you know, China, of course, is still working hard to decarbonize to the extent that it does not impede economic growth globally. You know, we see, you know, rising powers like India, for example, and even parts of Africa, right.
00:51:17:22 - 00:51:38:10
Unknown
Sort of trying to claim their piece of the economic pie. Where does it leave us? Well, I think that the last year has shown that you can pump billions of dollars of subsidies, and still come up short. and I think the United States is a very good example of this. Right. We've had billions of dollars in subsidies.
00:51:38:12 - 00:52:00:23
Unknown
and yet, you know, in 2023, if we just look at fossil fuels alone, we sold more fossil fuel than we ever had in our history. I think it was 110 million barrels of oil a day is basically what it kind of amounted to, more than we ever had. At the same time that we've been talking about the benefits of, you know, renewables, and we keep talking about how renewables are making this big splash.
00:52:01:03 - 00:52:30:05
Unknown
We we sold more fossil fuels than we ever had before. I think that that trend is likely to continue fundamentally, because it is very difficult to match the price point of fossil fuels, and it is very difficult to get the same level of reliability and or energy density. And until we address these issues, the uptake of renewables, you know, electric vehicle technology, electric propulsion systems for airplanes, etc. is going to be challenging.
00:52:30:05 - 00:52:34:05
Unknown
Do you see technological breakthroughs on the horizon that are going to make that challenge a lot easier?
00:52:34:05 - 00:52:34:22
Unknown
No.
00:52:34:22 - 00:53:05:13
Unknown
And I mean by no is maybe, but I don't think that maybe should be the basis for government policy. Right. Hope is not a strategy. Right? You can't. And this is one of my my, my beefs, if you will, with how many governments have approached this, where they are effectively taking, the hammer to firms and saying that if you don't sell this amount of technology, we are going to find you without accounting for whether or not the firm even can develop the technology.
00:53:05:15 - 00:53:21:12
Unknown
Right. so, you know, is that necessarily that fair? I don't I don't particularly think so, you know, sort of saying, well, something will come up in the future, just believe in yourself. Something will come up. And oh, by the way, if it doesn't come up, you're on the, you know, you're on the hook, so to speak.
00:53:21:12 - 00:53:23:22
Unknown
Well, I think we're going to wrap up here, actually, but I'm interested.
00:53:23:22 - 00:53:36:01
Unknown
I see you, you know, when I was looking up your, your affiliations and everything, you do a lot of a lot of stuff, so you don't. You're not just in the EV space. tell us about something else that you're that you're working on and where listeners can, can track you down.
00:53:36:01 - 00:53:38:20
Unknown
Yeah. You know, we work on a range of different projects.
00:53:38:22 - 00:53:59:07
Unknown
you know, we're working on a project right now looking at the carbon footprint associated with flying first class versus business, class versus economy, which is a fascinating area because a few organizations like the International Monetary Fund of the world Bank, some time back, they had come out. They had said, well, we're not paying for first class tickets anymore because we are it's very polluting.
00:53:59:09 - 00:54:21:09
Unknown
And, one of my students, Yasmin, you know, she's based out in Vancouver, so she's been working on this finding some truly fascinating results. I'm also doing some work currently, you know, sort of trying to trace what the long run trajectory is of, of critical mineral prices independent of electrification, which is, again, another very fascinating area because there's so much volatility in the market.
00:54:21:11 - 00:54:42:16
Unknown
Right. you know, so that's another kind of project that we have going on. yeah. It's, it's it's a little hard to keep track, to be quite frank with you. but and I also do a fair bit of work in aviation. I been writing for The Globe and Mail for, for quite a while now. So, on aspects of refunds and whether or not you and I should deserve a refund of Air Canada cancels our flight, so.
00:54:42:21 - 00:54:59:01
Unknown
Right, right. And are you Canadian because you have a fairly encyclopedic knowledge of our our highway system and, Oh yeah, I'm in Toronto, so my favorite follows. So right on. Okay, well, next time you're up your, let's grab a coffee. Oh, sure. Of course. All right. Thanks so much for making the time. I really appreciate it.
00:54:59:03 - 00:55:02:06
Unknown
Of course.