The Government of Canada and automakers signed a Memorandum of Understanding (MOU) in which the automobile manufacturers agree to reduce greenhouse gas (GHG) emissions from new vehicles in Canada so that by 2010, resulting annual emissions reductions will reach 5.3 megatonnes (Mt). (Earlier post.)

The 5.3 megatonne target is equivalent to approximately a 25% increase in fuel efficiency.

The GHG performance calculation will include all GHGs recognized under the Kyoto Protocol, including CO₂, N₂O, CH₄, HFCs and other Kyoto gases, all equated to a CO₂ equivalent value (CO₂e) in megatonnes.

The Canadian government currently has 14 voluntary agreements in effect with the auto industry and two that have been completed successfully.

To achieve the GHG-reduction, the Canadian automobile industry is agreeing to offer and to promote a wide variety of fuel-saving vehicle technologies, including hybrid powertrains, cylinder deactivation technology, advanced diesel technology, and emerging technologies.

In addition, the automakers are agreeing to support support automotive research and development in Canada in the areas of lightweight materials, alternative fuels, hydrogen fuel cells and infrastructure, and other advances.

The agreement sets out interim GHG emission reduction goals of 2.4 megatonnes in 2007, 3.0 Mt in 2008 and 3.9 Mt in 2009. Beginning this year, the Canadian Automotive Industry will report its projections for GHG emissions for the coming model year by November 30. Actual performance shall be reported for each model year by May 31 following the model year.

Should the voluntary agreement fail to produce the desired reductions, the Canadian government will step in and regulate to achieve its goal.