The Trudeau government has placed a major economic and environmental bet on electric vehicles. Not only has it dedicated more than $50 billion in total public subsidies on electric vehicle production, but widespread consumer adoption is key to Ottawa’s own emission reduction plan. 

Under the current plan, all new vehicle sales (including cars, SUVs, and light truck sales) must be fully electric or plug-in hybrid by 2035. 

Canada has a long way to go. Just 1.5 percent of all light-duty vehicles registered by the end of 2022 were fully electric or plug-in hybrid. And just 10.8 percent of new vehicle registrations in 2023 were for EVs or hybrid. Put simply: we have just over 10 years to go from less than 11 percent of new vehicles to 100 percent. 

The rapid transition away from fossil-fuelled vehicles therefore raises many more questions about charging access, electrical grid demand, affordability, and even whether emissions will be significantly reduced.

Take charging capacity for instance. The first hurdle for most Canadians will be the ability to charge up their EV, whether at home or on the road. According to the government, we will need 455,500 public charging ports by 2035, a sharp increase from the 26,500 ports as of 2023. This means installing 98 new ports every day for the next 12 years at a cost of about $6 billion. Importantly, this figure does not account for the even larger number of private charging ports required.

The EV transition will also strain the electrical grid. Electricity demand is expected to increase by 20,000 GWh by 2030 and five times that amount by 2040. Canada would need an additional 13 wind farms the size of its largest (Buffalo Plains in Alberta) by 2030 and over 66 such wind farms by 2040—a huge undertaking especially given that Canada’s approval and construction timelines are some of the slowest in the OECD.

Basic financial costs for consumers is another pressing issue. Apart from higher upfront costs, studies indicate EVs face greater depreciation. Also, repairs and replacement parts are more expensive, which could lead to higher insurance premiums.

While people cite EVs for lower fuelling and maintenance costs, these savings may be overstated. Maintenance costs for new vehicles tend to be modest over the first five years. So, the actual dollar savings may not be significant. 

Furthermore, governments will need to recoup the $16 billion in lost gasoline taxes from EV owners, as Alberta and some American states have done with new fees.

Equity concerns also arise over the costs of public versus private charging. Lower-income households will likely rely on more expensive public charging. One study suggests this alone can add $10,000 to an EV’s lifetime operating costs. Moreover, despite heavy subsidies, EV purchases remain skewed towards higher-income households.

When we factor in billions of dollars in subsidies given to corporations, including the new EV investment tax credit in the 2024 federal budget, the inequalities are further exacerbated.

The core promise of EVs lies in their potential to reduce greenhouse gas emissions. While EVs produce no tailpipe emissions, their operational emissions depend on the source of electricity. Charging EVs with fossil fuel-generated electricity, such as coal, undermines potential GHG savings. For example, according to Canada’s Energy Regulator, an electric Hyundai Ioniq emits less than one gram of GHG per kilometre driven in Quebec, compared with 107 grams in coal-reliant Nova Scotia.

The trend towards larger and heavier EVs, driven by SUV demand, also presents challenges. Automakers are increasingly using aluminum in EV construction to reduce weight and improve driving range. However, producing one tonne of aluminum generates six times more GHG emissions than steel. A recent study forecasts aluminum use will increase three to five times by 2050.

An accelerated EV sales mandate would worsen the looming shortage of critical minerals needed for battery production. Automakers would face the challenge of allocating limited mineral supplies for their battery manufacturing. Because of market demand and profit considerations, they may opt to produce fewer but larger batteries suited for electric SUVs and trucks, rather than more numerous smaller batteries used in compact and mid-size EVs. Unfortunately, producing fewer large EVs would result in fewer reductions in GHG emissions.

If EV price premiums remain high, Canadians may keep their older gas-powered vehicles longer, which Stellantis CEO Carlos Tavares warns would be a “disaster” for the climate. 

There are also doubts about whether EVs can fully substitute for conventional vehicles. In some cases, households will buy an EV but keep their gas-powered vehicle, undercutting GHG reductions.

Rather than imposing aggressive EV sales targets, the government should introduce gradually tightening GHG emissions standards. This would enable automakers to adjust vehicle portfolios to align with market demands and environmental targets while giving infrastructure and technologies time to catch up. 

However, these emissions standards must align with market realities and industry timelines. Securing new critical mineral sources, offering affordable EVs, and ensuring ample charging options will give Canadians the confidence to go electric.

Since Russia tried to take over all of Ukraine two years ago, Europe has made major strides in gradually weaning itself off Russian gas.  But, its appetite for Canadian natural gas hasn’t gone away, whatever the Trudeau government might like to think.

This March, Greek Prime Minister Kyriakos Mitsotakis himself said so during his Canadian visit. He even made it clear his country was “very interested” in Canadian liquefied natural gas (LNG), and not simply for geopolitical reasons, but environmental ones too.

“As fast as we go in terms of our renewable penetration, we will still need a reliable source of electricity and for us, for  Greece, we don’t have nuclear. We’re moving completely away from coal so that leaves natural gas for the foreseeable future as a significant source of energy for the production of electricity,” he told CTV’s Question Period.

“Canada is a country with which we share so many values,” he added, confirming that Greece and other European countries would much rather buy their energy from a fellow liberal democracy like Canada, rather than the world’s autocrats.

Yet buying energy from dictators is precisely what Germany was left to do after Chancellor Olaf Scholz returned empty-handed from a frantic trip to Canada two years ago, looking for replacements for Russian gas. 

“As Germany is moving away from Russian energy at warp speed, Canada is our partner of choice,” Scholz said at the time. “For now, this means increasing our LNG imports. We hope that Canadian LNG will play a major role in this.”

Yet Prime Minister Trudeau rebuffed Scholz, claiming there was no “business case”—even as countries like South Korea, Japan, Ukraine, Poland, and Latvia all contradicted his conclusion. For Japan and Poland in particular, these calls for more Canadian LNG came from the very top.

Instead, Canada sold Scholz some hydrogen. The current federal government, along with environmental groups like the Pembina Institute, view a long-term commitment to fossil fuels like LNG as worsening climate change significantly. Supporting LNG exports to Europe would also require infrastructure investments into ports on the east coast – matching the one in Kitimat, B.C. Such support is unlikely to play well politically with the Liberal Party’s environment base.

Meanwhile, the German chancellor signed an LNG deal with autocratic Qatar instead of democratic Canada. Having bought 55 percent of its gas from Russia before Ukraine was invaded, Germany has now quit Kremlin gas cold turkey – but still has to buy from authoritarian states and Norway, rather than Canada.

Today, the Liberal government looks to be making the same mistake on another crucial resource file—the critical minerals the free world also needs.

Canada has got the minerals

It’s not that the government hasn’t been thinking about the minerals it could sell to its allies.  Natural Resources Canada actually has a strategy document listing the critical minerals and rare earths Canada has in abundance and how they could be a part of new global supply chains. Many of these are minerals Canada’s allies either don’t have at all or have in short supply—including aluminum, copper, nickel, potash, tin, lithium, and zinc. Prime Minister Trudeau has even expressed some willingness to export them.

Canada is among the world’s top five producers for nine of the 31 critical minerals named in the strategy–with the US taking the vast majority of Canadian critical mineral exports at $37.6 billion in 2022. China was in a distant second with just $3.9 billion. Europe meanwhile, takes even less from Canada–and currently remains dependent on authoritarian China to a large extent for many of these minerals.

Beyond the Canadian LNG  other countries require for their present energy needs, these Canadian critical minerals represent what the world—and particularly the free world—needs for the energy of the future. 

Many of these minerals are found in solar panels—a market China currently has cornered.  Almost 90 percent of the world’s solar panels come from China—leaving Canada and the rest of the democratic world dangerously exposed to the geopolitical whims of an authoritarian adversary, as we choose to rely more on solar power. Should China ever attack Taiwan, our ability to respond decisively as the free world could be held hostage to our energy transition needs. That is if free societies don’t bring key elements of it back home.

Canada plays an integral role in this “friendshoring” of the democratic world’s critical mineral supply. European Commission vice-president Margrethe Vestager told German business newspaper Handelsblatt as much in 2022, calling for Europeans to be ready to pay a “national security premium” to buy less from aggressive, authoritarian countries, and more from allies and friends sharing liberal democratic values.

“Canada has almost all the raw materials we need. But the companies there need a long-term perspective from us in order to invest,” she said.

As Vestager suggested, it takes two countries to do the critical mineral trade tango—and European money is clearly needed. 

“We now face a rapidly changing world, with supply chains pushed to breaking point. We can only ensure security and prosperity through decisive action from governments to support the industry to navigate these challenges,” said Bernd Schäfer, the CEO and managing director of EIT RawMaterials in Berlin, in an interview with The Hub in Berlin.  His organization attempts to secure the supply of critical raw minerals for the European industry and is largely funded by the EU.  “We see an enormous need for innovative funding solutions for partnership projects between European and Canadian businesses and mechanisms to identify and fast-track projects of mutual strategic importance,” he said.

Yet even if Canada has a strategy on paper, experts say high political buy-in—and a sense of how urgent the problem is—is still missing on the Canadian side. That political buy-in is especially needed to secure European investment.

“It could take Trudeau coming to Europe and specifically saying ‘Hey, I have minerals,’” said Loyle Campbell, a Canadian research fellow in the Center for Climate and Foreign Policy at the German Council on Foreign Relations, in Berlin. “The Trudeau government needs to take political leadership over this and keep driving it forward aggressively.”

Campbell compared the Canadian government’s efforts on critical minerals with its recent pet project to export hydrogen. He said while there has been movement on the hydrogen file, the mineral file leaves much to be desired.

“Hydrogen has gotten quite a lot of support and a lot of attention and a lot of promotion among the [Canadian] diplomatic staff,” he said. “Hydrogen and critical minerals both started from a baseline of zero. There wasn’t much activity going on and we needed to get them both going much faster. So why are there MOUs coming out now on hydrogen, and much less action between the countries that need critical minerals and Canada?”

Campbell points to what he calls Canada’s “special responsibility” to help the rest of the democratic world with its energy and mineral needs—particularly in light of Canada shirking its global responsibilities in other areas, including defence spending that remains well below NATO targets.

“The scope and scale of the energy transition and the energy security crisis really require you to be all on board for more than just your favourite [resource],” he said. “You also need to be realistic about what your allies are asking for. You need to say, ‘What do you need and how can I help?’  rather than saying, ‘This is what we want to promote.’” “Rather than having political favouritism towards hydrogen, really go in on what’s strategically necessary.”

On critical minerals, as well as LNG, Canada is punching well below its potential. As Heather Exner-Pirot recently pointed out in these pages, collapsing energy and resource investment has stymied Canadian economic growth. The responsibility for that lies at the Trudeau government’s feet.

Without a government that will change course on its indifference—or even antipathy—to Canada’s resource sector, these domestic economic mistakes will soon become wider geopolitical ones.