ZEV sales mandate highlights $9.1-billion federal emissions reduction plan; industry reaction mixed
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Mar 30, 2022
Mehanaz Yakub

The federal government’s much-anticipated blueprint to put Canada on track to meet its 2030 GHG emissions reduction targets includes a sweeping set of proposals to accelerate transportation electrification and create a cleaner electrical grid

Steven Guilbeault, minister of Environment and Climate Change Canada, announces Canada’s 2030 Emission Reduction Plan. Photo: Environment and Climate Change Canada

The federal government’s much-anticipated blueprint to put Canada on track to meet its 2030 GHG emissions reduction targets includes a sweeping set of proposals to accelerate transportation electrification and create a cleaner electrical grid

The Liberal government unveiled its first emissions reduction plan this week, detailing a list of actions to enable Canada to meet its target of reducing carbon emissions 40 per cent below 2005 levels by 2030.

The many-months-in-the-making 2030 Emissions Reduction Plan includes a total investment of $9.1 billion. The money will be used, among other things, to boost rebates on zero-emission vehicles, build more charging infrastructure and support cleaner electricity and grid modernization projects.

“On behalf of the Government of Canada, I am excited to present Canada’s first Emissions Reduction Plan under the Canadian Net-Zero Emissions Accountability Act,” said Environment and Climate Change Minister Steven Guilbeault in the plan document.

“The plan lays out the next steps as we ramp up our fight against climate change and bring sustainable, lasting economic prosperity to Canada. This is our ambitious and achievable roadmap to reach our emissions reduction targets under the Paris Agreement.”

The release of the 2030 emissions reduction plan was pushed back by three months in December, when Guilbeault announced that the government was embarking on a series of consultations with 30,000 Canadians, including young people, workers, Indigenous Peoples and business owners to discuss ways to meet climate emission targets.

The government is legislatively required to meet the targets set out in the climate reduction plan, as part of the Net-Zero Accountability Act passed last June. Progress under the plan will be reviewed in progress reports produced in 2023, 2025 and 2027. Additional targets and plans will be developed for 2035 through to 2050.

Many industry and climate stakeholders welcomed the plan as an important step toward helping Canada decarbonize its transportation sector with legislative requirements and investments.

“This pivotal moment is an opportunity for all levels of government to collaborate on reducing emissions,” said Simon Dyer, deputy executive director at the Pembina Institute in a statement. “With less than a decade to achieve steep carbon reductions, success hinges on the rigorous implementation of the necessary policies and regulations. Canadians voted for climate action and the federal government now has the blueprint to deliver on its commitment.”

Investments in ZEVs and chargers

The transportation sector is the second-largest contributor to overall carbon emissions in Canada, accounting for 25 per cent of total emissions, according to data from the most recent Canada National Inventory Report.

The 2030 emissions reduction plan reaffirms many of the Liberal’s 2021 election platform promises. One of the largest single investments is in the top-up for the Incentive for Zero-Emission Vehicles (iZEV) program with $1.7 billion in EV purchase rebate funding for the next three years.

Originally launched in 2019, the total funding of the iZEV program almost reached $660 million by the end of last year after the government provided an additional $73 million to the rebate program. The upcoming 2022-2023 federal budget, set to be released on April 7, will provide more details on the design of the program moving forward.

The federal government is also promising in the plan to expand Canada’s charging infrastructure network by investing $400 million to install an additional 50,000 stations across the country. As of March 2022, Canadians had access to around 15,864 public chargers at 6,789 public charging stations across the country, according to Natural Resources Canada data.

“The policies included in the Government’s 2030 Emissions Reduction plan put Canada on the right path to accelerate the uptake of electric vehicles and charging infrastructure, making electric mobility accessible to more Canadians,” said ChargePoint Canada’s director of policy, Suzanne Goldberg in a statement. “There is a lot to do on the road to 2030, and we look forward to working with the Government of Canada on implementing its ambitious plans”

Additionally, the plan state that the Canada Infrastructure Bank will be spending $500 million on charging and refuelling infrastructure for EVs as well.

Vehicle sales mandates

Probably the most contentious measure in the 2030 emission reduction plan is a new legally binding sales mandate for light-duty vehicles. By 2026, the government is mandating that 20 per cent of all new light-duty vehicles sales in Canada be ZEV, at least 60 per cent by 2030 and 100 per cent by 2035. 

“We think [the plan] is great news and it really shows that the federal government is taking climate change seriously, because in the past the federal government would follow the U.S. regulation or lack thereof,” says Electric Mobility Canada president Daniel Breton in an interview with Electric Autonomy Canada.

“Now that the federal government has decided to take a leap and lead the way on the North American level, I think that’s very ambitious and visionary. I cannot help but congratulate the federal government on that point.”

Along with Breton, many industry experts are applauding the government for this move, but some automaker groups are saying the government plans lack clarity and guidance.

“I think it’s good for the government to set targets. I think the challenge is those targets from our perspective seem to keep changing,” says David Adams, president and CEO of Global Automakers of Canada in an interview with Electric Autonomy. “From a planning perspective, not only for the automotive industry but for other industries, having some stability in terms of what their targets are is important.”

Previously, the Liberals announced that they wanted at least half of all passenger vehicles sold in Canada to be zero-emission by 2030, and all to be zero-emission by 2035.

“The pathway to get there is still not entirely clear as well, because the government has indicated they’re going to put in place zero-emission vehicle sales mandate, but the design of that mandate, when it will come into effect and those sorts of things
have not been laid out,” says Adams.

Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers’ Association, added in a statement: “The auto industry is leading the fight against climate change in the transportation sector. Government efforts to improve electric vehicle charging infrastructure, enhance purchase incentives and educate consumers will determine whether or not Canada will keep pace.”

Medium- and heavy-duty trucks

To cut emissions from medium- and heavy-duty trucks (MHDV), the government is launching a dedicated non-binding target strategy to have 35 per cent of all MHDV sales be zero-emission by 2030.

The government reiterated its MHDV plans first announced during COP26 last year. The Liberal goal is to have 100 per cent of MHDV sales be zero emissions by 2040 for a subset of vehicle types, based on feasibility. There is also the possibility of interim 2030 and possible mid-2020s regulated sales requirements that will vary for different vehicle categories based on feasibility.

In order to achieve these goals, the government is investing:

  • $547.5 million for a purchase incentive program for MHDVs;
  • $199.6 million to retrofit large trucks currently on the road;
  • $33.8 million for hydrogen trucking demonstration projects that address barriers to long-haul zero-emission trucking commercialization — including technical, regulatory and standards challenges; and
  • $2.2 million to support Greening Government fleet electrification commitments.

“[We] welcome the focus on incentivizing the purchase of light, medium and heavy-duty zero-emission vehicles (ZEV), as well as continued investment in charging infrastructure in the federal government’s 2030 Emissions Reductions Plan,” said Accelerate Alliance, a national initiative to support the accelerated development of a ZEV supply chain in Canada, in a statement. “These are important steps to growing ZEV adoption in Canada and are aligned with policies in the U.S., which will drive greater ZEV demand across North America.”

The emissions reduction plan also says the government will assist transit agencies and school boards to switch their bus fleets to zero emission. The government has already said it will help support the purchase of at least 5,000 buses, along with charging infrastructure, with an investment of $2.75 billion over five years, as part of the Zero Emission Transit Fund.

“We’re pleased to see a bolder trajectory for our transportation sector, the second-largest source of emissions in the country. As well, measures that speed up the transition to zero-emission buses and trucks will reduce harmful air pollution while helping Canadian fleets save money,” said Merran Smith, executive director at Clean Energy Canada in a statement.

Cleaner grid to support cleaner vehicles

As Canada transitions to more zero-emissions vehicles, this will mean an increased demand for electricity.

“Many parts of Canada are extremely lucky because they have reliable, abundant, and well priced hydro, and other zero-emission generation mixes, which makes it really effective to implement EVs from an emissions perspective,” says Travis Allan, FLO’s VP for public affairs and general counsel in an interview with Electric Autonomy.

But in order to increase the benefit of large-scale EV adoption, new requirements on the electrical grids need to take place to support enhanced EV charging, adds Allan.

“What you’re probably going to see is an increased focus on consumer education, rates that encourage charging of electric vehicles at home at the best times of the day or night to support the grid, and increasing changes to rate structures for home but also for public charging that will make it more affordable to charge electric vehicles in a way that supports the grid,” Allan says.

The country has one of the cleanest grids in the world, with over 82 per cent of electricity production emissions-free, according to Canada’s A Healthy Environment and a Healthy Economy report. The federal government is targeting to have 90 per cent non-emitting electricity generation by 2030, and 100 per cent by 2035.

To achieve this, the government will provide $2.4 million to create the “Pan-Canadian Grid Council” with provinces, territories and utilities to promote renewable energy infrastructure investments and research emerging technologies such as geothermal, tidal, small modular nuclear reactors (SMRs), carbon capture and storage, and electricity storage.

The Smart Renewables and Electrification Pathways Program (SREPs), which was launched in 2021, offers financial assistance to support building Canada’s low-emissions energy future and a renewable, electrified economy. The program is receiving $600 million from the government to invest in smart clean electricity and grid modernization projects, as well as $250 million to fund predevelopment work for significant clean energy projects in conjunction with provinces.

A total of 100 project applications had been received as of February 2022 for the Smart Renewables and Electrification Pathways Program, with 72 projects already approved.

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