Fuelling controversy: What do new U.S. fuel efficiency regulations mean for Canada’s climate goals?
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Policy
Mar 31, 2020
Kerry Banks

If Canada is forced to follow the Trump administration’s newly announced lower fuel efficiency standards, it could mean a huge setback for lower-emission vehicles

The ball is now in Canada’s court. Does it follow the Trump administration’s new lower vehicle fuel efficiency standards? Or does it break rank and go it alone? The former would be a huge setback for lower-emission vehicles. The latter might be hard to pull off

The Canadian government’s growing push to encourage people to buy electric cars and compel automakers to introduce lower-emission vehicles — to help the country meet its 2030 and 2050 carbon-emission targets — has just run into a major roadblock.

Today, the Trump-led American administration introduced new automobile fuel efficiency standards for 2021-2026 model year vehicles that are significantly lower than those Canada and the U.S. had previously agreed to in 2012.

If Canada is bound by its agreement with the U.S. to follow the new standards, it will mean higher-than-expected vehicle emissions — a big setback for the government’s climate action plans.

“We are already behind on achieving those [2030] targets and this will only add to the existing gap,” says Dan Woynillowicz, deputy director of Clean Energy Canada.

No surprise

The U.S. move is not a surprise. In 2018, President Trump stated he’d move to lower the standards (known formally as the CAFE standard, for Corporate Average Fuel Economy) set in 2012 by the Obama administration. At about the same time, he also took action to bar the state of California from its long-standing practice of setting its own, stricter standards for tailpipe emissions (one a number of other states had also adopted).

Last summer, in response, Catherine McKenna, at the time Minister of Environment and Climate Change, said the Canadian government was reviewing its plans and would not commit to maintaining parity with the U.S. At the same time, she signed a memorandum of understanding with California, to work together to reduce vehicle emissions.

“When the EPA finalizes the regulation, it will be a 50-state rule. It will become de facto law for Canada as well”

Ben Sharpe, Senior Researcher, International Council on Clean Transportation

But some observers now say that unless California is successful in appealing Trump’s rollback of its right to set its own standard — a legal wrangle not expected to be resolved until 2021 — Canada may be trapped by the original agreement and have to go along.

“When the EPA finalizes the regulation, it will be a 50-state rule. It will become de facto law for Canada as well,” says Ben Sharpe, a senior researcher with the Washington D.C.-based International Council on Clean Transportation.

However, in a statement provided to Electric Autonomy Canada by the Office of the Minister of the Environment and Climate Change, Jonathan Wilkinson, the government yields no immediate ground.

“When we first adopted our rules in 2014, we committed to conducting a mid-term evaluation following the U.S. review, and we won’t be making decisions until that review is complete,” says press secretary Moira Kelly.

“We will consider today’s announcement by the U.S. EPA as well as California’s standards, which together with 12 other states’, represent 40% of the U.S. auto market,” she adds.  “Any decision that is made will be in consultation with provinces, territories, industry and more, to ensure that we enact the best regulations that work for Canadians.

“Canada must remain focused on building a competitive, low-carbon automotive industry in order to keep pace with global trends”

Moira Kelly, Press Secretary, Office of the Minister of the Environment and Climate Change

Keep pace globally

“We know that Canada must remain focused on building a competitive, low-carbon automotive industry in order to keep pace with global trends,” says Kelly.

For climate action advocates, maintaining that focus requires the government to take a stand. In a statement issued today after the new U.S. standards were formally unveiled, Joanna Kyriazis, senior policy advisor at Clean Energy Canada, says “the Canadian government has little choice but to sever this reliance and develop made-in-Canada rules that will continue to protect Canadians’ health, environment and wallets.”

“The Canadian government has little choice but to sever this reliance and develop made-in-Canada rules”

Joanna Kyriazis, Senior Policy Advisor, Clean Energy Canada

The new rule, written by the U.S. Environmental Protection Agency (EPA) and Department of Transportation, will roll back a decree that required North American automakers’ fleets to average about 54 miles per gallon by 2025. Instead, the fleets will now only have to average about 40 miles per gallon. It is expected to be implemented by late spring.

Under the terms of the 2012 agreement, car manufacturers were required to achieve 5 per cent annual increases in vehicle fuel efficiency through the 2026 model year. Under Trump, the U.S. has decided to relax those provisions, agreeing that fuel economy standards would rise, but only by a modest 1.5 per cent a year.

Financial relief

The lower standard creates short-term financial relief for automakers by lifting requirements that had forced them to invest heavily in developing and marketing hybrid, electric and low-pollution vehicles.

But the consequences from an emissions standpoint are severe: a billion more tonnes of planet-warming carbon dioxide and the consumption of about 80 billion more gallons of gasoline over the lifetime of the vehicles than under the Obama standards.

If Canada remains aligned with the weakened U.S. federal vehicle regulations it can expect nearly 6 million tonnes more GHG emissions in 2030

The impact on emissions in Canada would be substantial. According to an estimate by the ICCT, if Canada remains aligned with the weakened U.S. federal vehicle regulations it can expect nearly 6 million tonnes more GHG emissions in 2030. That would effectively erase 40 per cent of the emission reductions that the government expected to glean from the transportation sector. 

Most automakers are generally in favour, though the ongoing uncertainty has led to differences. Where they do agree is that having one standard for Canada and another for all of the U.S. would be costly and problematic.

“Canada has always been aligned with the U.S. on automobiles to ensure that Canadians would have access to a wide variety of vehicles,” says David Adams, president of Global Automakers of Canada, adding that his group is still going over the details in the document that the U.S. administration released today.

In her statement from the Environment minister’s office, press secretary Kelly says “smart efficiency rules” benefit consumers and automakers.

“As demand for cleaner and more efficient vehicles grows, smart fuel efficiency rules for cars and light duty trucks will cut pollution, save people money at the pumps, and ensure that Canadian automakers remain competitive,” Kelly says.

Appeal pending

Twenty-two U.S. states have joined California in appealing Trump’s ban on their right to set higher state standards. And Woynillowicz, for one, believes that the Trump regulation may eventually be reversed.

But in the meantime, he says, “The carmakers are really being put in a situation where they have to roll the dice because of the uncertainty they will be grappling with.”

The U.S. administration argues that the rollbacks are necessary for economic and safety reasons. But Trump’s stated objective of reducing costs for car buyers was undermined when an analysis of an earlier draft of the new standards released in January showed the reduced fuel economy would cost drivers more than they’d save on the price of vehicles.

It’s believed the final standards were revised in a bid to address that gap.

Although some in the U.S. will question the strategy of putting through measures that undercut clean air requirements for cars amid a respiratory pandemic, the Republican administration claims the haste is necessary to prevent the measures from being killed by the U.S. Congress next year if Trump loses re-election and Democrats retake the Senate.

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