If I were the Mayor of Calgary, an Alberta MLA who goes to Edmonton or a MP for a riding in Alberta, the thing that would terrify me the most is the decreasing cost and improving efficiency of Electric Vehicle (EV) battery back technology.
In reading OilPrice.com – a leading and reliable UK based, energy news site – I saw an astounding claim: Electric Vehicle prices have dropped by 89% in the last 10 years. To some this might not be amazing; however, I would ask anyone to think of that ramifications. Twenty years ago, Canadians were told that there were three things that were stopping the “World” from electrifying our shared transportation network: diesel, cost of battery technology and the infrastructure for an electric grid.
Given the implications of Volkswagen (VW) and Dieselgate, two of the three arguments started to lose some weight. Back in the 1990s, Volkswagen, diesel’s largest advocate, argued that they could make a “Clean Diesel” car. Clean Diesel was a simple idea: it would be a diesel car which emitted less net GHGs than other vehicles like gasoline or petrol hybrid cars or transitional electric vehicles which used a “dirty grid”. However, the Dieselgate Scandal indicated that Volkswagen had not achieved their own goal. In fact, VW largely did one thing: circumvent emission tests of various government entities.
As a reaction to public, regulatory and government action, VW decided to abandon its concept of the “Clean Diesel” car and just put all of their eggs in the electrification basket. Accordingly, VW has begun to build or support a variety of charging networks. In China, VW will support the CAMS network; while in North American Volkswagen’s initiatives include Electrify Canada and Electrify America. In Europe, they are supporting the IONITY Network among other projects; and as a result, VW will have supported the build out of over 30,000 European charging sites. Or put differently, the electric charging infrastructure and diesel are no longer impediments. Accordingly, only one problem remains: the battery.
If one follows the development of EVs, one can understand that the battery – including but not limited to its cost, durability, reliability and convenience – provide a significant issue. In an EV, batteries are the most significant cost. They are expensive to replace, they add weight to the car and have less energy density when compared to fossil fuels. Or put in other words, EVs don’t go as far and are more expensive – at least in initial costs – than their Internal Combustion Equivalent. That was the argument that Alberta based politicians could make. The cost of transition would not make EVs affordable; and, as a result, Alberta didn’t need to change.
However, the increasing stability, reduced costs and increasing efficiency of Electric Vehicle (EV) battery pack technology is going to bring us to a point – in the foreseeable future – where battery cars might be just as cost effective as an internal combustion one.
Think of Toyota. Toyota has said that they are not excited by the present battery technology (Lithium Ion batteries) – because Lithium-Ion based cars don’t fit into their ethos. Or put differently, Lithium-Ion cars are not as convenient or as durable as Internal Combustion ones. Given that Toyota’s brand is all about providing a product which is durability, reliability and convenience as well as cost effective, one can see why Toyota has been reticent to jump into the EV market.
However, in this case, Toyota seems to be acting like Apple. Just as Apple leapfrogged Blackberry with a better product, Toyota seems to want to leapfrog over other existing EV producers by spending billions of dollars on trying to develop a commercially viable “Solid-State” battery. For our purposes, I will not get into the weeds about “Solid-State” batteries; I will just ask you to think of them as a significant movement forward in battery tech. Solid-State batteries – if they are ever fully developed – would allow for mythical performance: a more energy dense and lighter battery which can charge more quickly (i.e. 10-20 minutes for a full charge), be more stable, provide more drivable range as well as lasting longer. While not cheaper, this type of technology would make EVs – whether they be battery or fuel cell powered – comparable or superior to internal combustion cars. At that point, governments and regulators could be more forceful in their transitional approach.
Now let’s be fair, Toyota is not the only company going after this Holy Grail. Either jointly or individually, there is a race to create a Solid-State battery and the players include (but are not limited to) Panasonic, Samsung, Toyota, BMW, Volkswagen, Renault-Nissan-Mitsubishi Alliance, and Hyundai.
Some might say that this technology will only see the light of day between 2024 and 2028; and I would agree with them. However, the problem for Alberta is simple: between 2021 and 2028, we are going to see an amazing amount of new EV technology. Some will come from car manufacturers. For example, Ford is electrifying its F-150. GM is bringing out an electrified Hummer. Volvo Cars is bringing its PoleStar electric car brand to North America; and VW is quickly pushing Tesla out of its dominant eCar position. Some will come out of this race for a new Solid-State battery. Some will come from places unknown. However, all of this evidence supports the predictions that BloombergNEF, Goldman Sachs and others have been making: hybrids car sales will gain increasing amounts of market share; while, by 2025, 10-25% of all cars sold will be electric.
For Alberta, that is a problem. Since the 1980s, our economy has depended on fossil fuel exploration and its resulting infrastructure expansion for growth. Or put differently, Alberta doesn’t depend on the export of bitumen, oil, natural gas or coal to other markets, Alberta – in fact – depends on the construction jobs and the engineering work that is required to get the stuff out of the ground. So, as we have seen in recent lease auctions in the American Arctic National Wildlife Refuge; if there is a glut of fossil fuels on the market, energy companies are not going to spend a lot of money to secure new sources of bitumen, oil, natural gas or coal.
This truth will also be evident in a range of outcomes. Since in much of the Western World, somewhere north of 60% of petroleum is used for transportation and less than 35% is used for Industrial and Commercial Purposes, it is safe to say that we will see a small but constant decrease in the use of Oil. Norway, as they aggressively electrified their transportation system has noticed this. While, Western Europe as a whole has increasingly found that electrification can be done while shrinking their coal, natural gas and petroleum use.
Since Alberta’s biggest exports are coal, petroleum, natural gas, bitumen and their derivatives, one can see that a stable need for fossil fuels outside of our borders could bring Alberta a shrinking economy. However, what we are slated for is worse than that. What Albertans can expect is a world with shirking use of oil, coal and natural gas. This is especially true since most of the oil produced in Alberta is expensive to recover. This higher cost oil is always the last to be extracted and the first to be shelved. The coming economic headache is I would be terrified, if I was the Mayor of Calgary, an Alberta MLA who goes to Edmonton or a MP for a riding in Alberta.
Every Alberta Politician for the next decade has a hard problem. They have to explain that Alberta’s growth will not come from what Lougheed or Getty or Klein depended on. Alberta’s politicians will have to explain that government revenues for over four decades have been supported by various forms of resource revenues and that those revenues will not likely be as strong in the future. How do you explain to those born after 1950 – the vast majority of Albertans – that due to societal change and technological change a predictable “economic tsunami” will wreak havoc on Alberta?
Honestly, I don’t know. But it is something that each and every elected representative in the Province of Alberta should ask because they have asked to lead and we have let them. We should ask every Politician in this great province how they will keep the social fabric when we all will witness the change. We should ask them how they will provide the best benefit for the majority (or most) of Alberta; while not trampling on the least of us. We should ask them what their plan for our future is because we are going to have to deal with some big questions quickly and Time – nor History – are going to be easy on them.