Canada and the Automakers

25 February 2005

Although the government of Canada has yet to strike an accord with automakers over CO₂ and fuel consumption reductions (earlier post), it reaffirmed its intention to do so in its just-released 2005 Budget Plan.

Vehicles produce significant amounts of greenhouse gases—about one-quarter of Canada’s annual emissions—and other harmful substances. Two-thirds of vehicular emissions are generated within urban areas and are also major contributors to smog.

To help reduce greenhouse gas emissions and contribute to cleaner air in urban areas, the Government is negotiating with the auto manufacturing sector to achieve an agreement that would improve the fuel efficiency of vehicles sold in Canada by 25 per cent, or its equivalent in greenhouse gas reductions, by 2010.

—Budget Plan, p. 191

Canada is also considering a vehicle “feebate” program for consumers to improve fuel efficiency and decrease emissions.  Such a program would provide consumer rebates for fuel-efficient vehicles and impose a fee on fuel-inefficient vehicles.

The government has asked the National Round Table on the Environment and the Economy (NRTEE) to develop options for a feebate, to consult and to make recommendations on this program for the 2006 federal budget.