The Action Plan for Clean On-Road Transportation assembles existing policy puzzle pieces to show how ZEV sales targets, rebates and funding programs are creating a pathway to clean vehicles, in support of Ottawa’s overall 2050 net-zero pledge

This month, the Canadian government released its comprehensive action plan for zero-emission vehicle adoption. The document pulls together the policies, programs and initiatives undertaken to advance ZEV adoption since 2016 “to show how these measures are working together to help Canadians and Canadians businesses make the switch to zero-emission vehicles,” reads the plan text.

Transport Canada’s Action Plan for Clean On-Road Transportation details the multi-pronged approach the government will take to advance ZEV adoption across Canada and reduce emission from road transport, which currently make up 25 per cent of the national GHG total.

“Given the pace of change we are now witnessing in the transportation sector, the government’s approach to zero-emission vehicles will evolve over time,” reads the Action Plan.

“To meet Canada’s climate change targets, we need to decarbonize on-road transportation through a broad approach.”

Canada’s ZEV sales targets are positioned as a key policy lever. The government’s subsequent announcement on Dec. 21 confirming it is releasing draft regulations for the introduction a ZEV sales mandate — which will make these targets for light-duty vehicles enforceable for all automakers — adds a significant push. Those sales targets are:

• 100 per cent light-duty zero-emission vehicle sales by 2035 (mandatory targets of at least 20 per cent of all new light-duty vehicle sales by 2026 and at least 60 per cent by 2030);
• 35 per cent of total new medium- and heavy-duty vehicle sales being zero-emission vehicles by 2030;
• Medium- and heavy-duty zero-emission vehicle regulation to require 100 per cent of new medium- and heavy-duty vehicle (MHDV) sales to be zero-emission vehicles by 2040 “for a subset of vehicle types based on feasibility;” and
• Interim 2030 regulated MHDV sales requirements that would vary for different vehicle categories based on feasibility, and explore interim targets for the mid-2020s.

“Meeting these ambitious targets is key to reaching our goal of net-zero emissions by 2050 and will require a concerted effort by governments working closely with industry, utilities, experts, and non-governmental organizations, and responding to feedback from individual Canadians,” reads the report.

Light-duty ZEV adoption

Based on the light-duty vehicle sales targets, the federal government is anticipating at least 1.4 million light-duty ZEVs on the road by 2026, 4.6 million by 2030 and 12.4 million by 2035.

The challenges highlighted in the Action Plan that must be overcome in order to meet the government’s 2035 and interim targets include issues like vehicle supply, affordability, access to charging and EV awareness.

According to the government’s data, over 180,000 participants through November 2022 have used the federal Incentives for Zero-Emission Vehicles (iZEV) program — which offers a $5,000 rebate for eligible light-duty passenger ZEVs — across Canada.

But EV adoption still remains low in most provinces.

Quebec and British Columbia, currently the only two provinces in Canada with ZEV mandates (which in this plan are called ZEV regulations), are national outliers and leaders in EV adoption. They hit 13.3 per cent and 19.9 per cent, respectively, for new ZEV sales in Q3 2022, according to S&P Global data. The remaining provinces and territories — without provincial ZEV adoption regulations (or provincial ZEV sales mandates) — ranged between 7.6 per cent and 1.4 per cent.

“The Government of Canada is working with California, Québec, and British Columbia to align Canada’s regulations as much as possible since this benefits both citizens and industry,” commits the Action Plan.

The release of draft sales mandate regulations on Dec. 30 will allow “for feedback from Canadians and stakeholders in 2023.”

Medium- and heavy-duty ZEV adoption

On the MHDV side, the government decarbonizing the sector using a mixed approach of incentivizing a transition to new ZEVs, supporting combustion-to-zero-emission retrofits and the use of low-emitting fuels.

The two issues plaguing widespread MHDV adoption currently are cost and vehicle availability.

In response to the first issue, the government has rolled out several financing streams through 2022 to assist fleets looking to purchase new ZEVs or retrofit existing vehicles from combustion to ZEV.

Budget 2022 allocated $545.7 million to create Canada’s first national rebate program for eligible MHDVs. So far over 40 different models of vehicles have been approved with 37 applications made to date to access up to $200,000 per vehicle.

B.C. and Quebec, again, are the only two Canadian provinces to offer a provincial MHDV rebate, which is able to be combined with the federal incentive.

Based on the government’s adoption targets, the expectation is to see 39,000 new MHDV ZEV sales by 2030, but there is a significant amount of work that must be done to reach that goal.

“Given the bigger energy requirements and diversity of use for medium- and heavy-duty vehicles, we will need to use targeted approaches to support companies as they transition to zero-emission technologies,” reads the Action Plan.

“Charging infrastructure to support the medium- and heavy-duty vehicles sector must be configured to enable and allow trucks to have physical access to charging sites, while also making sure the sites can support the high-powered charging technologies required.”

The government has also recently launched an education funding stream — the Zero-Emission Vehicle Awareness Initiative — which applies to education, awareness-raising and support for prospective MHDV ZEV buyers and owners.

The Canadian Infrastructure Bank will be distributing $500 million to go into large-scale ZEV refuelling projects.

And the Green Freight Program will support companies up to $250,000 per project, for those looking to conduct fleet assessments and vehicle retrofits for commercial MHDVs.

So far, 1,620 trucks and trailers have been upgraded with 2,830 individual retrofits. And through an addition $199.6 million in new funding allocated through Budget 2022, the program is expected to be able to support 90,000 trucks and trailers, 800 truck repowers, and 200 new low carbon trucks over the next five years.

Supporting charging infrastructure

In addition to creating pathways for vehicle purchases, the government is also helping to support the roll out of a robust national public charging network.

Through a combination of at least three core government funding programs, a total of $1.2 billion is going to support over 85,000 charging and refuelling stations.

By the end of 2026 the government expects Canada to have completed over 35,000 charging and 25 hydrogen refuelling stations, financed in part with public money. The remaining 50,000 chargers will be completed by 2029.

“In addition to direct funding for zero-emission vehicle charging and refuelling stations, we’re offering businesses a temporary first-year tax write-off for investments in electric vehicle charging stations and hydrogen refuelling stations,” reads the report.

However, significant private financing is still needed to adequately build out Canada’s public charging networks. The optimum charger number — somewhere in the range of “442,000–469,000 publicly available chargers by 2035,” according to the Action Plan — means more collaboration and engagement is needed from key partners including utilities, businesses, and industry.

“We’re committed to continue working with industry to dive deeper into the charging and refuelling station requirements at a regional or provincial/territorial level with further analyses and studies,” pledges the Action Plan.

The full Action Plan can be read here.