Transportation accounts for about one quarter (27%) of Canada’s total GHG emissions. Of that quarter, cars and light trucks account for nearly half, accounting for 12% of Canada’s total GHG emissions.

Canada is developing its regulatory requirements to limit greenhouse gas emissions through the authority of the Canadian Environmental Protection Act, 1999 (CEPA). The release of the draft regulations is the next step in the process that was announced by Environment Minister Jim Prentice in April 2009, and will allow for early consultations with provinces, territories and stakeholders. Following these consultations, proposed regulations are expected to be published in the Canada Gazette Part I for a 60-day formal public comment period.

Our regulations will help create a common North American approach to regulating greenhouse gas emissions from new vehicles. This is an important step in the fight against climate change.

—Minister Prentice

For the 2011 Model Year, the draft regulations would require auto companies to comply with unique fleet average GHG emission standards for passenger automobiles and light trucks aligned with applicable US fuel economy standards for the 2011 model year.

A company’s unique fleet average standard would be determined based on the size (i.e. footprint) and the number of vehicles it sells in the 2011 model year 2012 and later model years. For 2012 and later model years:

• Companies would be required to comply with the unique fleet average GHG emission standards for passenger automobiles and light trucks for each model year, determined based on footprint and sales.

• The fleet average GHG emission standards would become progressively more stringent with each new model year from 2012-2016. The GHG emission standards would put Canadian requirements at par with US national standards and, by 2016 with the California standards.

• The regulations would also establish separate limits for other tailpipe GHG emissions such as nitrous oxide (N₂O) and methane (CH₄).

The draft regulations include a system of emission credits to help meet overall environmental objectives. Credits would be granted for companies doing better than the applicable fleet average standard for a given model year, while deficits would be incurred for not achieving the applicable fleet average standard in a given model year. Emission credits would have a lifespan of five model years and could be traded between companies. Emission deficits incurred in a given model year would have to be offset with an equivalent number of emission credits within the subsequent three model years.

The draft regulations also include provisions that recognize vehicle design improvements which reduce GHG emissions through approaches other than directly reducing tailpipe CO₂ emissions, including:

• Technologies that reduce the impact of air conditioning system refrigerant leakage (e.g., hydrofluorocarbons.

• Technologies that improve the efficiency of air conditioning systems.

• Other innovative technologies that reduce GHG emissions under conditions that are not captured by conventional emission testing procedures.

The beneficial effects of the above technologies would be accounted for by subtracting their GHG-reducing impacts from the average CO₂ tailpipe emissions of a company’s fleet. This approach provides companies with additional flexibility in complying with the GHG emission standards and also provides an incentive to introduce these technologies. While the proposed approach for accounting for these technologies under CEPA is different than under the US rules, the net credits/deficits generated in a given model year would be the same as under US provisions.

The draft regulations also provide an incentive for companies to market advanced technology vehicles, including electric vehicles, plug-in hybrid electric vehicles and fuel cells vehicles. Through to the 2016 model year, a company would be credited with selling two times the number of advanced technology vehicles than it actually sold in the calculation of its fleet average GHG emission performance.

The draft regulations include other provisions to ease the transition towards compliance and achieve the overall environmental objectives in a manner that provides maximum compliance flexibility:

• Companies would be able to offset any emission deficit incurred in the 2011 model year with an equivalent number of credits obtained by the payment of an amount to the Receiver General at a rate to be prescribed in the Regulation. This would provide compliance flexibility comparable to the payment of a fine under the US corporate average fuel economy (CAFE) program.

• Companies would be able to generate GHG emission credits for the 2008-2010 period if their average GHG performance exceeds specified emission levels that are based on US regulatory requirements for those model years to recognize early actions to reduce GHG emissions.

• Credits earned over the 2008-2010 period could be used to comply with the 2011 model year GHG emission standards; adjusted credits earned over the 2009-2011 period could be used to comply with the GHG emission standards for the 2012 and later model year to align with the proposed US EPA program.

• Provisions recognizing the introduction of advanced technology vehicles and non-conventional GHG-reducing technologies would be extended to apply in respect of compliance with GHG emission standards for the 2011 model year.

• Companies selling smaller-volumes of vehicles would have the option of subjecting a limited portion of their fleets to a temporary less stringent fleet average standard during the 2012 through 2015 model years, subject to specified restrictions on the generation and usage of emission credits.

The draft regulations include mandatory annual reporting of a company’s fleet average GHG performance and related vehicle model information. They also include specific information relating to emission credits and deficits and emission trading between companies.

Resources

• Consultation Draft Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations