Do customers really want what they say they do?

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Polls show Canadians support the environment — as long as there’s no personal cost

It has been a little over a year since the Liberals won the last federal election. Now a year into his mandate, Justin Trudeau’s approval rating as Prime Minister sits at a phenomenal 69 per cent.

Besides bringing a more positive, inclusive and generally “sunny ways” perspective to governing, one of the items that the electorate has provided  PMJT with is a mandate to take action on the issue of climate change.

The Prime Minister and his Environment Minister, Catherine McKenna were the stars of last December’s United Nations Conference on Climate Change in Paris, with the latter being a key component to securing the climate agreement with 195 signatory countries.

So consumers and the electorate want the federal government to act on climate change because — perhaps — they were tired of perceived inaction on the file by the previous Conservative government, or they have become convinced that the science is unequivocal, or, and perhaps more importantly, they are finally seeing the effects of climate change with their own eyes with all of the wacky weather we’ve been experiencing.

Polls conducted over the last year seem to show a growing acceptance of the notion of carbon pricing or a carbon tax. Supporting carbon pricing, however, and paying for it are two different things.

The Ontario Budget this past spring noted that implementing a cap and trade program in Ontario would have the effect of increasing gasoline prices by 4.3 cents per litre. Oddly enough, 68 per cent of the people polled in the Forum Research poll disapproved of the higher prices!

A different poll undertaken by in August indicated that less than one third of Canadians opposed the introduction of a carbon tax. Perhaps that high level of support makes sense if a carbon tax ends up being essentially revenue neutral as is the case in B.C. where increases in carbon taxes have been offset by tax reductions elsewhere.

A further poll released in October, however, again by Forum Research, noted that only 45 per cent of those polled supported the carbon pricing plan that was announced by the federal government at the beginning of October.

You might recall that the federal government announced that it would require all provinces and territories to put a minimum carbon price of $10 per tonne  by 2018 — or it would impose a price.

The carbon price is to increase by $10 per year until it reaches a maximum of $50 per tonne in 2022. So it would seem to a certain extent that support for carbon pricing starts to lose favour when a price (cost) is actually set, even though consumers might not fully understand what the impact of that carbon price will be.

Trever Tombe authored an article for Maclean’s magazine in which he suggested that a $50 per tonne price on carbon would cost each family about $500-$600 more per year . He also cited some work undertaken by University of Ottawa economist, Nic Rivers, which suggested that public transit would go up about 5 per cent, gasoline about 10 per cent, electricity about 12 per cent and natural gas about 30 per cent. These are not insignificant costs.

The question arises as to whether or not the carbon pricing introduced by the federal government will allow us to achieve the emissions reduction target committed to in Paris last December of 30 per cent below 2005 emissions levels by 2030. The short answer is “No.”

When the Office of the Parliamentary Budget Officer looked at this issue in an April 2016 report entitled “Canada’s Greenhouse Gas Emissions: Developments, Prospects and Reductions,” it suggested that our carbon emissions would need to fall by about 208 million tonnes and that a price of $100 per tonne would be necessary to achieve that  level of reduction.

Or for greater perspective, the PBO noted that reductions of that size would mean removing more than the equivalent of all of the emissions from today’s cars and trucks — including off-road vehicles. Wow.

That said, for those of us in the automotive industry, however, we need to remember that the stringent greenhouse gas emissions regulations for both the 2011-2016 period and the 2017-2025 period were promulgated under the previous Conservative government.

The 2011-2016 standards will bring about a 10 million tonne reduction in GHG emissions, but the cost of a passenger car in 2016 was estimated to be $1,057 more ($1,419 more for a truck) than a comparable 2010 vehicles.

For the 2017-2025 standards the costs were estimated to be $707 more for a 2021 model year vehicle and $2,095 more for a 2025 model year vehicle — compared to a 2016 model year vehicle.

That’s a lot of cost being added to vehicles to meet the stringent emissions standards.

The challenge for the industry however, is that governments of all levels look at those regulations — and their achievements — as yesterday’s news. Reducing emissions by 50 per cent in 2025 compared to 2008 is greeted with a certain amount of indifference.

This could be because road transportation in Canada is the still the second largest source of all greenhouse gas emissions at 18 per cent in 2013 according to Canada’s National Inventory Report to UNFCCC (2015).

Further, emissions forecasts have factored in the reductions that will be generated by the GHG regulations and the results show that transportation will still remain a fair chunk of Canada’s GHG emissions.

While vehicle manufacturers can build a vehicle to meet any challenge — whether that is safety, environmental, automated, connected etc., the real challenge is to build such a vehicle at a price that consumers can afford. New, fuel efficient or zero emission vehicles do the environment no good  if they remain on dealers’ lots because consumers cannot afford to purchase them.

It’s not a shameless plug for the industry to suggest that the best thing a consumer can do for the environment is to replace their older vehicle — especially those 10 years or older — with a new vehicle.  Regardless of the type of vehicle. the fuel efficiency is that much better.

That said, based on consumers’ purchasing habits of late, the new support for carbon pricing amongst the populace according to the polls cited earlier, does not appear to have been reconciled with consumers’ purchasing decisions.

For the last number of months, we’ve had truck sales at over 60 per cent of total sales . How does that square with pretty good support for carbon pricing? The only way it makes sense to me is if people are looking at their vehicle  purchase from a short term perspective with the belief that gas prices are going to stay around $1.10 a litre or lower — as they have been for the past couple of years — and that even if  gas does go up because of carbon pricing, it will only go up a few cents a litre which would still be lower than what we were paying for gas three years ago.

On the face of it though, support for carbon pricing does not seem to square with consumer’s vehicle purchasing.

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