Tim Mak
Western Standard
February 12, 2008

Much of the Canadian environmental movement’s efforts to fight climate change have been directed towards advocating for increased government intervention. But what about existing regulatory barriers that hamper the market’s own ability to address environmental problems? Before enacting new legislation to deal with environmental ills, it is worthwhile to consider removing existing laws that block financial incentives for green initiatives. In Canada, government regulation has held back the development and usage of environmentally friendly alternatives like electric cars and hybrid taxis.

The ZENN (Zero Emission, No Noise) is an award-winning Canadian electric vehicle that travels at a maximum speed of 40 km/h and has a range of approximately 56 km per charge. As the name suggests, the vehicle emits no greenhouse gases during the course of its operation. The ZENN is recharged by simply plugging it in to a standard wall outlet overnight. Given that wide use of these cars could significantly reduce total greenhouse gas emissions, it is surprising to find restrictions in Canada impeding their sale and use. Until late last year, Transport Canada stated that the ZENN did not meet Canada Motor Vehicle Safety Standards and it was only after the CBC aired a story about this egregious government oversight that the ZENN was cleared for sale. But the regulatory barriers to be cleared were far from over; after being approved for sale in Canada the ZENN now needs to be approved for operation in each individual province. Since British Columbia approved the operation of ZENN cars in 2000, no other provinces have followed suit.

While some suggest that ZENN cars are dangerous because they travel at slow speeds, it is relatively easy to buy bikes or ride scooters that travel at similar even slower speeds. Further, low-speed vehicles (LSVs) with the same type of body as the ZENN have proven their safety in Europe over 15 years of use on the roads and the ZENN has already been approved for use in the US, with 43 states allowing them on low speed public roads. What is still preventing Canadian authorities from approving a car that could save consumers loads of cash on gas money while eliminating 7,700 pounds of tailpipe emissions per car each year?

Another aggravating government regulation is a Toronto by-law that prevents small and fuel-efficient hybrid cars from being used as limousines at Pearson International Airport. Since there are restrictions that discourage taxis from operating at the airport, such as the $10 fee that drivers must pay to the airport authority, limousines are a primary form of transportation. However, due to a by-law regulating legroom in limousines, local firms like the Green Limousine Service are not permitted to use hybrid gas-electric Toyota Prius cars when traveling from the airport. Considering that taxis are driven ten times the distance of an average car each year, one would think that a government making any attempt to be environmentally-friendly would take action to remove or amend this by-law immediately.

Vexing regulations such as these have already stifled Canadian-bred green-friendly innovation. Firms like Dynasty Electric Cars, a British Columbia electric car manufacturer, have already had enough. Dynasty decided to move its operations overseas after being constantly thwarted by these types of regulatory barriers. These regulations fly in the face of both the financial and environmental benefits that could be had if ZENN cars were widely used and hybrids could operate as limousines. "Government just isn’t keeping up with market innovation," says Nick Schneider, a Policy Analyst for the Centre for Risk, Regulation, and Environment at the Fraser Institute, a free-market think-tank. "Greater innovation in greener technology will continue without further regulation."

Could an even more interventionist approach be the solution to our environmental woes? In May 2007, New York Mayor Michael Bloomberg was hailed as leader in environmental policy when he announced that the city’s entire fleet of 13,000 cabs would be required to convert to gas-electric hybrids by 2012. Rather than being a genuine beacon of strong environmental leadership, such command and control approaches just lead to bad policy. Why adopt this policy when there are already incentives to switch over to hybrids without the regulation especially when considering the obvious negative consequences for those who may not be able to withstand the compliance costs? "Mandating people to ditch their old technology may not make sense for taxi drivers who, for example, don’t work full time," says Schneider. Given the evident financial benefits to switching over to a gas-electric hybrid, allowing the market to function freely seems to be the easy choice. Why not allow the price mechanism to convey the preferences of cabbies to manufacturers? Rather than being an effective long term policy, Bloomberg’s dictates reduce incentives for manufacturers to innovate and improve–if taxi drivers are being forced to buy certain models, there is little reason for car manufacturers to further improve their products so as to draw in more customers.

The multitude of other regulatory barriers in place but not discussed in this article should fill any person carrying an ounce of common sense with incredulity. "Government regulations often end up being ineffective and unproductive," says Elizabeth Brubaker, Executive Director of Environment Probe, a Toronto-based environmental and public policy research institute. As an example, Brubaker mentions the unintended consequences of some energy-conservation programs. "If you subsidize people in buying an energy-efficient refrigerator, they often will buy a more efficient fridge. But what also often happens is that they will put their old fridge in the garage and [continue to use it]. In the end, we have higher rates of energy consumption than ever before."

Canadians and their governments need to start identifying and removing the regulations that prevent the market from working towards environmentally-friendly outcomes. Removing these barriers provides for a variety of positive results – it allows for the freedom of trade and commerce, increases consumer choices, and allows market incentives to function freely in harnessing human ingenuity and satisfying individual preferences. In short, says Brubaker, "if markets can work, let them work!"

How can all these suggested changes be brought into reality? Government does show some responsiveness to public pressure. Indeed, government cares about issues that people draw attention to. Just days after the CBC aired a story on the plight of the ZENN car, Transport Canada gave the car its ‘National Safety Mark,’ thus removing the regulatory barriers preventing it from being sold in Canada. As a result, it is crucial to apply pressure on all points of government by blogging, writing letters to your MP, or just discussing it with your friends. Removing barriers to ZENN cars and hybrid taxis is not a panacea for the problem of climate change and will not be enough to satisfy some. But such changes are a step in the right direction, and something that libertarians and environmentalist alike will be happy to see put into action.