Greenhouse gas emissions performance for 2011 to 2016 light-duty vehicles

In relation to the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations under the Canadian Environmental Protection Act, 1999

Transportation Division

Notice

The information contained in this report is compiled from data reported to Environment and Climate Change Canada pursuant to the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations under the Canadian Environmental Protection Act, 1999. Information presented in this report is subject to ongoing verifications.

Cat. No.: En11-15E-PDF

ISSN: 2560-9017

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List of acronyms

On this page

• Executive summary
• 1. Purpose of the report
• 2. Overview of the regulations
  • 2.1. CO₂e emission standards
  • 2.2. Carbon related exhaust emissions
  • 2.3. Compliance flexibilities
    • 2.3.1. Allowances for reduction in refrigerant leakage (E)
    • 2.3.2. Allowances for improvements in air conditioning efficiency (F)
    • 2.3.3. Allowances for the use of innovative technologies (G)
    • 2.3.4. Dual fuel vehicles
    • 2.3.5. Advanced technology vehicles
    • 2.3.6. Provisions for small volume companies for 2012 and later model years
    • 2.3.7. Temporary optional fleets
  • 2.4. Technological advancements and penetration
  • 2.5. Standards for nitrous oxide and methane
  • 2.6. CO₂e emissions value
• 3. Emission credits
  • 3.1. Early action credits (2008-10)
  • 3.2. Credits purchased from the Receiver General
  • 3.3. Credit transfers
  • 3.4. Total credits generated and final status
• 4. Estimated GHG reductions
• Appendix

List of tables

Table 1: model year report submission status
Table 2: fleet average CO₂e standard (g/mi)
Table 3: average footprint for the 2011 to 2016 model years (sq. ft.)
Table 4: fleet average carbon related exhaust emissions (g/mi)
Table 5: allowance for reduction in AC refrigerant leakage (g/mi)
Table 6: allowance for improvements in AC system efficiency (g/mi)
Table 7: allowance for the use of innovative technologies (g/mi)
Table 8: FFV production volumes for the 2011 to 2016 model years
Table 9: FFV impact for the 2011 to 2016 model years (g/mi)
Table 10: production volumes of ATVs by model year
Table 11: production volumes for small volume companies by model year
Table 12: production volumes of temporary optional fleets
Table 13: penetration rates of drivetrain technologies in the Canadian fleet
Table 14: N₂O emissions deficits by company for the 2012 to 2016 model years (Mg CO₂e)
Table 15: CH₄ emissions deficits by company for the 2012 to 2016 model years (Mg CO₂e)
Table 16: compliance values over the 2011 to 2016 model years (g/mi)
Table 17: net early action credits (Mg CO₂e)
Table 18: credit transactions by model year (Mg CO₂e)
Table 19: net credits by model year and current credit balance (Mg CO₂e)
Table 20: passenger automobile compliance summary for the 2011 to 2016 model years (g/mi)
Table 21: light truck compliance summary for the 2011 to 2016 model years (g/mi)
Table A-1: production volumes by company
Table A-2: preapproved menu of efficiency improving technologies for AC systems
Table A-3: volume of vehicles with turbocharging and engine downsizing
Table A-4: volume of vehicles sold with VVT
Table A-5: volume of vehicles sold with VVL
Table A-6: volume of vehicles sold with higher geared transmissions
Table A-7: volume of vehicles sold with CVT
Table A-8: volume of vehicles sold with cylinder deactivation
Table A-9: volume of diesel vehicles sold
Table A-10: volume of vehicles sold with GDI
Table A-11: CO₂e Standard over the 2008 to 2010 model years (g/mi)
Table A-12: compliance values over the 2008 to 2010 model years (g/mi)

List of figures

Figure 1: vehicle footprint
Figure 2: 2011 to 2025 targets for passenger automobiles
Figure 3: 2011 to 2025 targets for light trucks
Figure 4: 2016 passenger automobile compliance status with offsets
Figure 5: 2016 light truck compliance status with offsets
Figure 6: 2016 compliance status of passenger automobile fleet with company size
Figure 7: 2016 compliance status of light truck fleet with company size
Figure 8: average GHG emissions performance: passenger automobiles
Figure 9: average GHG emissions performance: light trucks
Figure A-1: 2012 passenger automobile compliance status with offsets
Figure A-2: 2013 passenger automobile compliance status with offsets
Figure A-3: 2014 passenger automobile compliance status with offsets
Figure A-4: 2015 passenger automobile compliance status with offsets
Figure A-5: 2012 light truck compliance status with offsets
Figure A-6: 2013 light truck compliance status with offsets
Figure A-7: 2014 light truck compliance status with offsets
Figure A-8: 2015 light truck compliance status with offsets
Figure A-9: 2012 compliance status of passenger automobile fleet with company size
Figure A-10: 2013 compliance status of passenger automobile fleet with company size
Figure A-11: 2014 compliance status of passenger automobile fleet with company size
Figure A-12: 2015 compliance status of passenger automobile fleet with company size
Figure A-13: 2012 compliance status of light truck fleet with company size
Figure A-14: 2013 compliance status of light truck fleet with company size
Figure A-15: 2014 compliance status of light truck fleet with company size
Figure A-16: 2015 compliance status of light truck fleet with company size

Executive summary

The Passenger Automobile and Light Truck Greenhouse Gas Engine Emission Regulations (hereinafter referred to as the “regulations”) establish greenhouse gas emission standards for new 2011 and later model year light-duty on-road vehicles offered for sale in Canada. These regulations require importers and manufacturers of new vehicles to meet fleet average emission standards for greenhouse gases and establish annual compliance reporting requirements. This report summarizes the fleet average greenhouse gas emission performance of the fleets of light-duty vehicles of the 2011 to 2016 model years. This report also provides a compliance summary for each of the subject companies including their individual fleet average carbon dioxide equivalent (CO₂e)^{Footnote 1}  emissions value (referred to as the “compliance value”) and the status of their emission credits.

The CO₂e emission standards are company-unique insofar as they are a function of the footprint and the quantity of vehicles offered for sale in a given model year. These footprint-based target values are aligned with those of the U.S. Environmental Protection Agency (EPA) and are progressively more stringent over the 2012 through 2025 model years. Since the Canadian greenhouse gas standards were introduced prior to the U.S. EPA program, the 2011 model year target values in Canada were instead based on the U.S. Corporate Average Fuel Economy (CAFE) levels. The resulting fleet average standards for passenger automobiles and for light trucks have become more stringent by 22.0% and 18.3% respectively over the 2011 to 2016 model years.

A company’s performance relative to its standard is determined through its sales weighted fleet average emissions performance for the given model year for its new passenger automobile and light truck offerings, expressed in grams per mile of CO₂e based on standardized emissions tests simulating city and highway driving cycles. The emissions measured during these test procedures include CO₂ and other carbon related combustion products, namely carbon monoxide (CO) and hydrocarbons (HC). This ensures that all carbon containing exhaust emissions are also recognized.  These regulations also set limits for the release of other greenhouse gases such as methane (CH₄) and nitrous oxide (N₂O). A number of mechanisms are incorporated into the regulations which provide companies with a series of options to achieve the applicable greenhouse gas standards while incentivizing the deployment of new greenhouse gas reducing technologies. These mechanisms include allowances for vehicle improvements and complementary innovative technologies that contribute to the reduction of greenhouse gas emissions in ways that are not directly measured during standard tailpipe emissions testing. Flexibility mechanisms include recognition of the emission benefits of dual-fuel capability, electrification and other technologies that contribute to improved greenhouse gas performance. The regulations also include an emission credit system that allows companies to generate emission credits if their fleet average performance is superior to the standard. Emission credits can be accumulated for future use to offset emission deficits (a deficit is incurred if a company’s fleet performance is worse than their applicable standard).  This allows companies to maintain regulatory compliance as their product mix and demands change year to year and through product cycles.  Companies that generate emission credits may transfer those credits to other companies. Emission credits generated for performance superior to the standard have a lifespan which is determined based on the model year in which they were generated, whereas deficits generated for performance worse than the standard must be offset within three years. Compliance to the regulations and the corresponding tracking of credits is monitored, in part, through the annual reports and companies are required to maintain all relevant records relating to their vehicle greenhouse gas emissions performance.

Results from regulatory reports indicate that companies continue to be in compliance through to the 2016 model year. The average compliance value for the fleet of new passenger automobiles decreased from 255 g/mi to 228 g/mi over the 2011 to 2016 model year period, representing a 10.6% reduction. The compliance value for light trucks decreased by 8.0%, from 349 g/mi to 321 g/mi over the same period. The 2016 model year marked the first time the fleet average compliance value exceeded the fleet average emission standard for both passenger automobiles and light trucks. All companies nevertheless remained in compliance with the regulations through the use of their own accumulated emission credits or by purchasing credits from other companies. To date, companies have generated a total of approximately 78.4 million credits, of which, approximately 32.3 million remain available for future use. A total of 9.5 million credits have been used to offset emission deficits by individual companies over the 2011 to 2016 model years. Some 4.5 million credits were used to offset deficits accrued in the 2016 model year, and 5.0 million credits over the course of the 2011 to 2015 model years. The remaining 36.5 million credits have expired.

1. Purpose of the report

The purpose of this report is to provide in-depth, company specific results of the fleet average greenhouse gas emission performance of the Canadian fleets of passenger automobiles (PA) and of light trucks (LT) for the 2011 to 2016 model years^{Footnote 2} .

This report builds on the previous GHG emissions performance report for the 2011 to 2015 model years. The results presented herein are based on data contained in the annual regulatory compliance reports submitted by companies pursuant to the Passenger Automobile and Light Truck Greenhouse Emission Regulations. The report will also help to identify trends in the Canadian automotive industry including the adoption and emergence of technologies that have the potential to reduce GHG emissions. It will also serve to describe emission credit trading under the regulations.

2. Overview of the regulations

In October 2010, the Government of Canada published the Passenger Automobile and Light Truck Greenhouse Emission Regulations^{Footnote 3}  (regulations) under the Canadian Environmental Protection Act, 1999 (CEPA 1999). This was the Government of Canada’s first regulation targeting GHG’s, and was a major milestone for ECCC towards addressing GHG emissions from the Canadian transportation sector. The regulations and the subsequent amendments introduced progressively more stringent GHG emission targets for new light-duty vehicles of model years 2011 to 2025, in alignment with the U.S. national standards, thereby establishing a common North American approach.

The department monitors compliance with the fleet average requirements through annual reports submitted pursuant to the regulations. These reports are used to establish each company’s fleet average GHG performance and the applicable standard for both its passenger automobile and light truck fleets. As part of the regulatory compliance mechanism, companies may accrue emission credits or deficits, depending on their fleet performance relative to the standard. These reports also enable the department to track emission credit balances and transfers. There are in excess of 10 000 data elements collected each reporting cycle. This data is subject to ongoing validation and review and may be subject to change should new information become available.

Companies that submitted a report pursuant to the regulations during 2011 to 2016 model years are listed in table 1.

^*  Indicates that a report has been submitted.
^a  All companies were required to submit a report for the 2011 model year.
^b  Beginning with the 2012 model year, low volume manufacturers (LVM) may elect to exempt themselves from CO₂e standards.  This exemption does not have a noticeable impact on fleet-wide performance given the small volume of vehicles.
^c  No longer importing or producing vehicles for the Canadian market.
^d  ECCC launched an investigation into the alleged use of defeat devices on certain vehicles. Results presented throughout the report include all vehicles imported into Canada, including those allegedly equipped with defeat devices, and are subject to review.

2.1. CO₂e emission standards

The applicable standards for a given model year are based on prescribed carbon dioxide (CO₂e) emission “target values” that are a function of the “footprint” (figure 1) and quantity of the vehicles in each company’s fleet of passenger automobiles and light trucks offered for sale^{Footnote 4}  to the first retail purchaser^{Footnote 5} . These standards are performance-based (they establish a maximum amount of CO₂e on a gram per mile basis) which allows companies to choose the most cost-effective technologies to achieve compliance.

Figure 1: vehicle footprint

The regulations prescribe progressively more stringent target values for a given footprint size over the 2011 through 2025 model years. Figures figure2 and figure3 illustrate the target values for passenger automobiles and light trucks, respectively.

Figure 2: 2011 to 2025 targets for passenger automobiles

Figure 3: 2011 to 2025 targets for light trucks

As depicted in figures 2 and 3, the targets for the 2011 model year are unique in that they follow a smooth curve. This is because the 2011 target values were introduced one year prior to the U.S. Environmental Protection Agency (EPA) program, and were instead based on the U.S. Corporate Average Fuel Economy (CAFE) levels. Accordingly, the regulations considered the consumption of fuel as the basis to establish reasonable approximations of GHG performance for the 2011 model year^{Footnote 6} . The CO₂e standard was derived using a conversion factor of 8887 grams of CO₂/gallon of gasoline^{Footnote 7}  for the 2011 model year only.

For the 2012 and later model years, the CO₂e emissions target values are aligned with the U.S. EPA target values.

The overall passenger automobile and light truck fleet average standard that a company must meet is ultimately determined by calculating the sales weighted average of all of the target values using the following formula:

Where

A is the CO₂e emission target value for each group of passenger automobiles or light trucks having the same emission target;

B is the number of passenger automobiles or light trucks in the group in question; and

C is the total number of passenger automobiles or light trucks in the fleet.

The final company-unique fleet average CO₂e standards for the 2011 to 2016 model years are presented in table 2. These represent the regulatory values that a company’s fleets of passenger automobiles and light trucks must meet.

Since the regulations came into force, the fleet average standards for passenger automobiles and light trucks have decreased from 291 g/mi to 227 g/mi (22.0%) and 367 g/mi to 300 g/mi (18.3%), respectively. The tightening of the target curves typically result in more stringent CO₂e standards. However; the regulations provide flexibility such as the “temporary optional fleet” standards which took effect in the 2012 model year and allowed intermediate sized companies to have a portion of their fleet comply with a standard that was 25% less stringent. This provision (discussed in greater detail in section 2.3.7.) was used by Porsche, Volvo, Mercedes, and JLR and is the reason for the notable increase in their standards from the 2011 to the 2012 model year.

^a Mercedes split its production volumes into conventional and temporary optional fleets (section 2.3.7.). For the purposes of this report, a single overall fleet average standard value has been calculated.

A company’s average footprint is one of the factors in establishing their CO₂e standards. Although there has been some year over year variation in footprints amongst manufacturers, the overall fleet average footprint has remained relatively consistent over the 2011 to 2016 model years (table 3).

2.2. Carbon related exhaust emissions

The fleet average carbon-related exhaust emission (CREE) value is the sales-weighted average performance of a company in a given model year for its passenger automobile and light truck fleets, expressed in grams of CO₂e per mile. The CREE value is a single number that represents the average carbon exhaust emissions from a company’s total fleets of passenger automobiles and light trucks. The emission values to calculate a CREE value are measured using two emissions test procedures; the Federal Test Procedure (FTP) and the Highway Fuel Economy Test (HFET). The FTP and HFET tests are more commonly referred to as the city and highway tests. These two tests ensure that the CREE is measured in a manner that is consistent across the automobile industry. During these tests, manufacturers measure the carbon-related combustion products including carbon dioxide (CO₂), carbon monoxide (CO), and hydrocarbons (HC). This ensures that all carbon-containing exhaust emissions that ultimately contribute to the formation of CO₂ are recognized.

The CREE for each vehicle model type is calculated based on actual emission constituents (such as CO₂, HC, and CO) from that model over the city and highway tests. The two test results are then combined based on a 55% city and 45% highway driving distribution. A company’s final CREE value is based on the sales weighted average of the combined test results for each model, and the number of vehicles manufactured or imported into Canada for the purpose of sale.

As with the CO₂e standard, the CREE values for the 2011 model year are based on the CAFE program and therefore consider the consumption of fuel to establish reasonable approximations of equivalent GHG performance. Using this methodology, the emissions measured during the city and highway tests are used to calculate the fuel economy performance instead of directly calculating a CREE value. Once the fleet average fuel economy has been determined, it must be converted to an equivalent amount of CO₂^{Footnote 8}.

The calculated fleet average CREE values achieved by companies over the 2011 to 2016 model years are presented in table 4. The fleet average CREE from the 2011 to 2016 model years for passenger automobiles and light trucks has decreased from 258 g/mi to 237 g/mi (8.1%) and 356 g/mi to 337 g/mi (5.3%) respectively.

2.3. Compliance flexibilities

The regulations provide various compliance flexibilities that reduce the compliance burden on low and intermediate volume companies, to encourage the introduction of advanced technologies which reduce GHG emissions, and to account for innovative technologies whose impacts are not easily measured during standard emissions tests. The regulations also recognize the GHG reduction potential of vehicles capable of operating on fuels produced from renewable sources (such as ethanol). The aforementioned compliance flexibilities are discussed in the following sub-sections.

2.3.1. Allowances for reduction in refrigerant leakage (E)

Refrigerants currently used by air conditioning (AC) systems have a global warming potential^{Footnote 9}  (GWP) that is much higher than CO₂. Consequently, the release of these refrigerants into the environment has a more significant impact on the formation of greenhouse gases than an equal amount of CO₂. The regulations include provisions which recognize the reduced GHG emissions from improved AC systems designed to minimize refrigerant leakage into the environment.  Based on the performance of the AC system components, manufacturers can calculate a total annual refrigerant leakage rate for an AC system which, in combination with the type of refrigerant, determines the CO₂e leakage reduction in grams per mile (g/mi) for each of their air conditioning systems. The maximum allowance value that can be generated for an improved air conditioning system in a passenger automobile is 12.6 g/mi for systems using traditional HFC-134a refrigerant, and 13.8 g/mi for systems using refrigerant with a lower GWP. These maximum allowance values for air conditioning systems equipped in light trucks is 15.6 g/mi and 17.2 g/mi, respectively.

The total fleet average allowance for reduction in AC refrigerant leakage is calculated using the following formula:

Where
A is the CO₂e leakage reduction for each of the air conditioning systems in the fleet that incorporates those technologies;
B is the total number of vehicles in the fleet equipped with the air conditioning system; and
C is the total number of vehicles in the fleet.

Table 5 shows the leakage allowances in g/mi for the 2011 to 2016 model years. A total of fifteen companies have claimed allowances for reduction in AC refrigerant leakage.

2.3.2. Allowances for improvements in air conditioning efficiency (F)

Improvements to the efficiency of vehicle air conditioning systems can result in significant reductions in CO₂e emissions that are not directly measurable during standard emissions test procedures. Implementing specific technologies (for example, more efficient compressors, motors, fans etc.) can reduce the amount of engine power required to operate the air conditioning system which, in turn, reduces the quantity of fuel that is consumed and converted into CO₂. The regulations contain provisions which recognize the reduced GHG emissions from AC systems with improved efficiency. Manufacturers can claim these allowances by either submitting proof of U.S. EPA approval for the efficiency-improving technology, or by selecting, during reporting, the applicable technologies from a pre-approved menu (appendix A-2) that have an assigned value. These allowance values are aligned with those established by the U.S. EPA and may be applied cumulatively to an AC system but are capped at 5.7 g/mi.

Once the air conditioning efficiency allowances are determined for each AC system, the overall allowance applicable to a company’s fleet of vehicles is determined with the following formula:

where
A is the air conditioning efficiency allowance for each of the air conditioning systems in the fleet that incorporate those technologies;
B is the total number of vehicles in the fleet equipped with the air conditioning system; and
C is the total number of vehicles in the fleet.

Table 6 shows the fleet average allowance values in g/mi for the 2011 to 2016 model years. Sixteen companies have claimed allowances for improvements in air conditioning system efficiency during this period.

2.3.3. Allowances for the use of innovative technologies (G)

The regulations recognize that a variety of innovative technologies that have the potential to reduce CO₂e emissions cannot be measured during standard emissions test procedures. Innovative technologies can range from advanced thermal controls that reduce operator reliance on engine driven heating/cooling systems, to solar panels which can charge the battery of an electrified vehicle. Starting with the 2014 model year, companies were given the option to select applicable technologies from a menu of pre-set allowance values. This menu includes allowances for the following systems: waste heat recovery, high efficiency exterior lights, solar panels, active aerodynamic improvements, engine idle start-stop, active transmission warm-up, active engine warm-up, and thermal control technologies. Companies can report any combination of innovative technologies from this menu; however, the total allowance value for a fleet of passenger automobiles or light trucks is capped at 10 g/mi.

The total fleet average allowance for the use of innovative technologies is calculated using the following formula:

Where
A is the allowance for each of those innovative technologies incorporated into the fleet;
B is the total number of vehicles in the fleet equipped with the innovative technology; and
C is the total number of vehicles in the fleet.

Table 7 summarizes the total innovative technology allowances reported by companies for model years 2011 to 2016. In total, fourteen companies have made use of the allowance for innovative technologies during this period.

2.3.4. Dual fuel vehicles

Alcohol dual fuel vehicles^{Footnote 10}  [for example, flexible fuel vehicles (FFVs)] are vehicles with a traditional internal combustion engine that can operate on conventional fuels, but are also capable of operating on fuel blends of up to 85% ethanol (E85). The regulations contain provisions to allow a company to improve their fleet average GHG emissions for the 2011 to 2015 model years through the sale of such vehicles. Beginning with the 2016 model year the regulations require a manufacturer to establish whether ethanol is actually used to benefit from this allowance.

The following formula is used to calculate the emissions benefit resulting from FFVs for the 2011 to 2015 model years.

Where
CREEgas is the combined model type carbon related exhaust emissions value for operation on gasoline or diesel;
CREEalt is the combined model type carbon related exhaust emissions value for operation on alternative fuels;

The regulations limit the improvements to the fleet average CREE value that a company can achieve through the use of FFVs in a manner that is consistent with the CAFE program. Under the CAFE program, fuel economy improvements are limited to a pre-set amount based on the model year in question. The following formula is used to quantify the CAFE fuel economy limits in terms of CO₂e emissions.

Where
FltAvg is the fleet average CREE value assuming all FFVs in the fleet are operated exclusively on gasoline (or diesel) fuel;
MPG_MAX is the maximum increase in miles per gallon for a specific model year^{Footnote 11}

The treatment of FFVs for the 2011 to 2015 model years assumes equal weighting for both conventional and alternative fuel usage, and did not require evidence that the alternative fuel was used during real-world operation.  Starting with the 2016 model year, companies may only make use of this provision where they can demonstrate that their vehicles are using the alternative fuel in the marketplace (such as E85). The following formula is used to determine the CREE for FFVs beginning with the 2016 model year, where the weighting factor “F” is 0 unless the company can provide evidence that an alternate value is more appropriate.

CREE = [(1 - F) x CREEgas] + (CREEalt x F)

The total quantity of FFVs reported by manufacturers during the 2011 to 2016 model years is summarized in table 8. During this period, six manufacturers reported FFVs, the majority of which have come from Ford, GM, and FCA. Approximately three times as many FFVs were produced for the light truck fleet than for the passenger automobile fleet.

^a Due to the transition of FFV provisions which require evidence of E85 usage beginning with the 2016 model year, certain companies may not have identified all FFV models in their fleets. The FFV production volumes for the 2016 model year may therefore be under-reported.

Table 9 shows the benefit of FFVs for these companies’ fleet performance for the 2011 through 2016 model years. FCA, GM, and Ford, were the primary manufacturers of FFVs, and the impacts from the sale of these vehicles reduced their CREE values by approximately 4-5% over the 2011 to 2015 model years. The asterisks in Table 9 indicate that a company has reduced their CREE by the maximum annual allowable amount attributable to FFV sales. No companies reported the use of alternative fuels (such as E85) for the 2016 model year and hence were not eligible to reduce their CREE as a result of FFV sales.

2.3.5. Advanced technology vehicles

The regulations offer a number of additional provisions to encourage the deployment of “advanced technology vehicles” (ATVs) which consist of battery electric vehicles (BEV), plug-in hybrid electric vehicles (PHEVs), and fuel cell electric vehicles (FCEV). BEVs are completely powered by grid electricity stored in a battery, and hence produce no tailpipe emissions. PHEVs incorporate an electrical powertrain which enables them to be charged by grid electricity to operate solely on electrical power, but also contain a conventional engine to extend the operating range of the vehicle. FCEVs are propelled solely by an electric motor where the energy for the motor is supplied by an electrochemical cell that produces electricity without combustion. When calculating a CREE, the regulations allow companies to report 0 g/mi for electric vehicles (for example, BEVs), fuel cell vehicles, and the electric portion of plug-in hybrids (when PHEVs operate as electric vehicles) subject to the limitations described below. Additionally, companies may multiply the number of ATVs in their fleet by a factor of 1.2 to increase the impact that they have on a company’s overall fleet average.

While the production of the electricity required to charge BEVs and PHEVs and the production of hydrogen for FCEVs result in upstream emissions, the approach of allowing companies to report 0 g/mi is intended to promote the adoption of advanced technology vehicles over the short term. The regulations provide two options for the quantity of vehicles that can be reported as 0 g/mi. For vehicles of the 2011 to 2016 model years, a company may report 0 g/mi for: (a) the first 30 000 ATVs if it sold fewer than 3 750 ATVs in the 2012 model year; or (b) the first 45 000 ATVs if it sold 3 750 or more in model year 2012. The regulations also recognize early action for ATVs sold during the 2008 to 2010 model years. If a company claimed early action credits (discussed in section 3.1), the production volumes that were reported in the 2008 to 2010 model years will also be counted towards this ATV cap. Any ATVs sold in excess of these caps are required to adjust the 0 g/mi CREE such that it incorporates the CO₂ contribution from upstream emissions.

The production volumes of ATVs sold by model year are presented in Table 10. ATV sales in Canada have been predominantly confined to the passenger automobile sector, though a number of ATVs have entered the market in the light truck sector in recent years. No company sold 3 750 ATVs in the 2012 model year, and no company reached the 30 000 ATV ceiling during the 2011 to 2016 model years. Thus all companies reporting were able to claim a 0 g/mi CREE for their ATVs.

2.3.6. Provisions for small volume companies for 2012 and later model years

The regulations include provisions enabling smaller companies that may have limited product offerings to opt out of complying with the CO₂e standards (non application of the standards respecting CO₂ equivalent emissions^{Footnote 12} ) for 2012 and subsequent model years. This exemption is available to companies that: (a) have manufactured or imported less than 750 passenger automobiles and light trucks for either the 2008 or 2009 model years; (b) have manufactured or imported for sale a running average of less than 750 vehicles for the three model years prior to the model year being exempted; and (c) submit a small volume declaration to ECCC. A small volume company must submit an annual report to obtain credits. These companies are still required to comply with the standards for nitrous oxide and methane (refer to section 2.5 for further details).

Table 11 summarizes the production volumes reported by small volume companies. This flexibility was claimed by four small volume companies for the 2012 and later model years.

2.3.7. Temporary optional fleets

The regulations include an option for intermediate sized companies (those with a 2009 model year total production volume of 60 000 or fewer vehicles) to meet an alternative standard for a specified time period. This provision was intended to provide intermediate sized companies that have a less varied product line additional time to transition to the more stringent standards. Companies using this option could place a portion of their fleet into a temporary optional fleet (TOF) in which the standard is 25% less stringent than what would otherwise be required. The total number of vehicles that a company could put into a temporary optional fleet was subject to limitations based on the quantity of vehicles offered for sale. A company that sold between 750 and 7 500 new vehicles of the 2009 model year could create a TOF with a combined total of up to 30 000 vehicles of the 2012 to 2015 model years, and up to 7 500 vehicles of the 2016 model year. A company that sold between 7 500 and 60 000 new vehicles of the 2009 model year could only include a combined total of up to 15 000 vehicles of the 2012 to 2015 model years. Companies that elect to create TOFs cannot use the resulting credits to offset a deficit incurred for a non-TOF portion of their fleet, nor could they bank credits earned by a non-TOF portion of their fleets.

As of the 2016 model year, Volvo, Porsche, JLR, and Mercedes have created TOFs. Given their smaller production volumes, Volvo and Porsche were able to place all of their vehicles of the 2012 to 2016 model years into temporary optional fleets which are valid up to the 2016 model year (their 2009 sales were between 750 and 7500). Mercedes and JLR also created TOFs; however, as larger companies, they were limited to 15 000 vehicles over the 2012 to 2015 model years which required them to split their fleets of vehicles into both conventional fleets and TOFs.

2.4. Technological advancements and penetration

As fleet average emission standards have become more stringent, automobile manufacturers have developed a variety of technologies to reduce their CO₂e emissions. Some of these technologies seek to reduce or eliminate the use of conventional fuels by introducing electrical powertrain components (BEVs, PHEVs etc.). There also exist, however, a wide range of technologies used by companies to improve the efficiency of transmissions and conventional engines and reduce emissions. Some examples include turbocharged engines, cylinder deactivation, and continuously variable transmissions.

This section, while not an exhaustive list, describes some of the commonly used technology types, along with their corresponding penetration in the Canadian new vehicle fleet in given model years. As summarized in table 13, during the 2012 to 2016 period, an increasing proportion of new vehicles were equipped with one or more of the aforementioned powertrain technologies.

Turbocharging with engine downsizing

Turbochargers improve the power and efficiency of an internal combustion engine by extracting some of the waste heat energy otherwise lost through the exhaust pipe. These exhaust gasses are used to drive a turbine that is connected to a compressor which provides greater amounts of air into the combustion chamber (forced induction). This results in greater power than a naturally aspirated engine of similar displacement, and greater efficiency than a naturally aspirated engine of the same power and torque. This permits the use of smaller displacement, lighter engines that can produce the same power as larger, heavier engines without turbocharging. For this reason, it is becoming increasingly common to see turbochargers incorporated into vehicles with smaller engines (<2.0 L displacement), in order to decrease the overall vehicle weight and improve fuel efficiency by as much as 8%.

Variable valve timing & lift (VVT & VVL)

Engine intake and exhaust valves are responsible for letting air into the cylinders and exhaust gases out. This is an important function since optimal engine performance requires precise “breathing” of the engine. In most conventional engines, the timing and lift of the valves is fixed, and not ideal for all engine speeds. VVT and VVL systems adjust the timing, duration and amount that the intake and exhaust valves open based on the engine speed. This optimization of the engines ‘breathing’ improves engine efficiency resulting in reduced fuel consumption and emissions. Variable valve timing and lift technologies can result in efficiency improvements of 3-4%.

Higher geared transmissions (>6 speeds)

Fuel efficiency, and by extension, CO₂e emissions coming from a vehicle are dependent on the efficient operation of all of the elements that make up a vehicle. An engine that is operating at speeds outside its most efficient range will result in increased fuel consumption and CO₂e emissions. Transmissions with more gear ratios (or speeds), allows the engine to operate at a more efficient speed more frequently. It is becoming increasingly common for vehicles to be equipped with transmissions that have 6 or more gears to keep the engine running at its most efficient operating point and thereby reduce CO₂e emissions.

Continuously variable transmissions (CVT)

CVT’s are transmissions that, unlike conventional transmission configurations, do not have a fixed number of gears, but instead incorporate a system of pulleys with variable diameters that are typically driven by a belt or chain. Because CVT’s do not have a discreet number of shift points, they can operate variably across an infinite number of driving situations to provide the optimal speed ratio between the engine and the wheels. This ensures that the engine is able to operate as efficiently as possible and consume only as much fuel as is required, thereby lowering CO₂e emissions. Typically CVT’s can improve fuel efficiency by as much as 4%.

Cylinder deactivation system (CDS)

Cylinder deactivation systems shut off cylinders of a 6 or 8 cylinder engine when only partial power is required (for example, travelling at constant speed, decelerating etc.). The CDS works by deactivating the intake and exhaust valves for a particular set of cylinders in the engine. A CDS can reduce CO₂e emissions by improving the overall fuel consumption of the vehicle by 4 to 10%^{Footnote 13}.

Gasoline direct injection (GDI)

A proper air-fuel mixture is critical to the performance of any conventional internal combustion engine and has direct impacts on the resulting emissions. Over the past several decades, the most common mechanism for preparing the air-fuel mixture has been “port fuel injection”. In port fuel injection systems, the air and fuel are mixed in the intake manifold and are subsequently drawn into the combustion chamber. By contrast, GDI systems spray fuel directly into the combustion chamber resulting in a slightly cooler air-fuel mixture allowing for higher compression ratios and improved fuel consumption. GDI systems are also better at precisely timing and metering the fuel delivered to the cylinder, which results in more efficient combustion.

Diesel

Diesel engines provide greater low end torque and fuel efficiency than a comparably sized gasoline engine. Diesel fuel contains more energy per unit volume than an equivalent amount of gasoline. As a result diesel vehicles can travel, on average, 20 to 35% further per litre of fuel then a gasoline based equivalent^{Footnote 14} which translates into measurable reductions in CO₂e emissions.

The fleet-wide penetration rates of the above described technologies have been provided in table 13, while data pertaining to company specific usage can be found in appendices A-3 to A-10.

2.5. Standards for nitrous oxide and methane

The regulations also limit the release of other GHG’s, such as emissions of methane (CH₄) and nitrous oxide (N₂O). Starting with the 2012 model year, the regulations set standards for N₂O and CH₄ at 0.01 g/mi and 0.03 g/mi respectively. These standards are intended to cap vehicle N₂O and CH₄ emissions at levels that are attainable by existing technologies and ensure that levels do not increase with future vehicles. Companies currently have three methods by which they can conform to the standards for N₂O and CH₄.

The first method allows companies to certify that the N₂O and CH₄ emissions for all its vehicles of a given model year are below the cap-based standards. This method does not impact the calculation of a company’s CREE.

The second method available to companies enables them to quantify the emissions of N₂O and CH₄ as an equivalent amount of CO₂ and include this in the determination of their overall CREE. Companies using this method must incorporate N₂O and CH₄ test data into the CREE calculation, while factoring in the higher global warming potential of these two gases. This method is not as commonly used as it counts N₂O and CH₄ emissions even for the portion of a company’s fleet that does not exceed the standard. Mazda, Nissan, and Subaru have thus far been the only companies to use this option to comply with standards for N₂O and CH₄.

The third method allows companies to certify vehicles to alternative N₂O and CH₄ emissions standards. This method generally offers the greatest flexibility to companies as they are left to establish alternative standards that apply only to those vehicles that would not meet the cap-based value as opposed to impacting the entire fleet. Additionally, companies using this method can comply with standards of N₂O and CH₄ separately by setting alternative standards for either emission as needed. The g/mi difference between the alternative standard and the cap-based standard that would otherwise apply is used to determine a deficit in Mg which must be offset with conventional CO₂e emissions credits. Over the 2012 to 2016 period, a growing number of manufacturers have been utilizing this method. The total deficits incurred by the companies that used this method are summarized in tables table14 and table15.

2.6. CO₂e emissions value

The fleet average CO₂e emissions value, referred to as the “compliance value” is the final average CO₂e performance of a company’s fleets of passenger automobiles and of light trucks, reported as CREE, after being adjusted for all available compliance flexibilities, using the following equation:

Compliance value = D-E-F-G

Where
D is the fleet average carbon-related exhaust emission value for each fleet (section 2.2);
E is the allowance for reduction of air conditioning refrigerant leakage (section 2.3.1);
F is the allowance for improving air conditioning system efficiency (section 2.3.2); and
G is the allowance for the use of innovative technologies that have a measurable CO₂e emission reduction (section 2.3.3).

A company’s compliance value for its fleet of passenger automobiles and light trucks is what is ultimately compared to its CO₂e standard for both aforementioned categories to determine compliance and to establish a company’s emission credit balance. Table 16 shows the companies’ compliance values across the 2011 to 2016 model years.

^a Tesla only produces electric vehicles, and is able to use the 0 g/mi incentive for its entire fleet. The compliance value is negative once its AC allowances have been factored in.

Figures figure4 and figure5 provide a graphical representation of the role that compliance flexibilities play in arriving at a company’s overall compliance status for their 2016 model year passenger automobile and light truck fleets. Note that under the regulations, a company’s CREE value is calculated to include the benefits from FFVs. Figures 4 and 5 instead refer to “tailpipe emissions”^{Footnote 15}  as opposed to CREE so that FFV benefits can be portrayed separately. The dark green line on the top of the bar indicates a company’s fleet average tailpipe emissions. The wide orange line represents the fleet average standard and the wide dark blue line represents the fleet average compliance value (accounting for compliance flexibilities). The green shaded bars show the extent to which companies incorporate the previously described compliance flexibilities into their products to achieve their fleet average compliance value. Figures showing this information for prior model years are located in the appendix.

Figure 4: 2016 passenger automobile compliance status with offsets

Notes:

1. The asterisked companies are those that used the temporary optional fleet provisions
2. The final compliance value may be lower than the tailpipe emissions through the application of compliance flexibilities

Figure 5: 2016 light truck compliance status with offsets

Notes:

1. The asterisked companies are those that used the temporary optional fleet provisions
2. The final compliance value may be lower than the tailpipe emissions through the application of compliance flexibilities

3. Emission credits

The regulations include a system of emission credits to help meet overall environmental objectives in a manner that provides the regulated industry with compliance flexibility. A company must calculate emission credits and deficits in units of megagrams (Mg) of CO₂e for each of its passenger automobile and light truck fleets of a given model year. Credits are weighted based on VKT to account for the greater number of kilometres travelled by light trucks over their lifetime than by passenger automobiles. Using the mathematical formula below, a company will generate credits in a given model year if the result of the calculation is positive or better than the GHG emission standard. If the result of the calculation is negative or worse than the applicable standard, the company will incur a deficit. A company that incurs an emissions deficit must offset it with an equivalent number of emission credits from past model years or within the subsequent three model years.

The total credit balance is determined according to the following formula:

Where
A is the fleet average standard for passenger automobiles or light trucks;
B is the fleet average compliance value for passenger automobiles or light trucks;
C is the total number of passenger automobiles or light trucks in the fleet; and
D is the is the total assumed mileage of the vehicles in question, namely,

1. 195 264 miles for a fleet of passenger automobiles, or
2. 225 865 miles for a fleet of light trucks.

The ability to earn, bank, trade and sell credits, including early action credits, is an important aspect of the regulations and is intended to give manufacturers flexibility to meet the 2012 to 2016 model year standards, as well as assist with the transition to the progressively more stringent standards during the 2017 to 2025 model years. The credits represent the emission reductions that manufacturers have achieved in excess of those required by the regulations. The ability to accumulate credits allows manufacturers to plan and implement an orderly phase-in of emissions control technology through product cycle planning to meet future more stringent emission standards.

The regulations initially established that credits could be banked to offset a future deficit for up to five model years after the year in which the credits were obtained (the credits had a five-year lifespan). The regulations were amended to extend the lifespan of credits earned during the 2010 to 2016 model years to 2021. Emission credits that can be used to offset a deficit incurred in the 2022 and later model years can only be generated beginning with the 2017 model year and have a five-year lifespan.

As previously noted, a company’s ability to earn credits is based on its compliance value relative to its standard and its overall production volume. For this reason, the compliance margin (the difference between the compliance value and the standard) of a company with a large production volume will generate a greater number of credits (or deficits) than that of a company with a low production volume, all else being equal. Figures figure6 and figure7 illustrate the extent to which a company will earn credits (or incur a deficit) for its fleets of passenger automobiles and light trucks in the 2016 model year. The vertical axis denotes the compliance value and the horizontal axis shows the applicable standard. The center of each circle situates the company’s compliance value and standard, and the diameter is indicative of the company’s production volume. Companies that are positioned below the diagonal line have emission levels that are better than their applicable standard and will generate credits. The standard values for companies that reported TOFs fall well outside the range of figures 6 and 7, and have not been included. Figure 6 illustrates that while the majority of companies are subject to a CO₂e standard that ranges between 220 g/mi to 230 g/mi for their fleet of passenger automobiles, there is a comparatively wide range of compliance values achieved by these companies. Figure 7 shows that there is variation in both compliance values and applicable CO₂e standards for companies’ fleets of light trucks. Comparable charts for model years 2011 to 2015 can be found in figures A-9 to A-16 of the appendix.

Figure 6: 2016 compliance status of passenger automobile fleet with company size

Notes: Companies that used the temporary optional fleet provisions are not shown in this graph.

Figure 7: 2016 compliance status of light truck fleet with company size

Notes: Companies that used the temporary optional fleet provisions are not shown in this graph.

3.1. Early action credits (2008-10)

The regulations enabled companies to earn “early action” credits for their 2008 to 2010 model year vehicles to recognize early adoption of fuel efficient technologies. This provision required that companies provide a full report on their 2008 to 2010 model years and that the net credit balance be positive. Any deficits accrued during those model years had to be offset by credits acquired in those same model years before calculating any credits that may be carried forward into the 2011 model year.

To generate early action credits, companies could elect to calculate their fleet average standards using methods that corresponded to either U.S. CAFE standards, or alternatively to California’s GHG emission program (Alternative Fleet Combination). California’s program differed slightly from the federal program in how cars and trucks are classified, and also the applicable emission levels.

The use of early action credits generated was subject to certain limitations. For example, credits claimed in respect of the 2008 model year were only available up to the 2011 model year after which they were no longer valid. Additionally, a company that generated credits using thresholds that correspond to California’s GHG emission regulations could not trade credits of the 2009 model year.

Table 17 presents a summary of the total early action credits generated by those companies that elected to use this provision. In total, almost 52 million early action credits were generated. The compliance data (compliance value and standard) used to calculate the resulting early action credits can be found in tables tableA-11 and tableA-12 of the appendix.

3.2. Credits purchased from the Receiver General

Under the U.S. CAFE program, companies can meet the mandatory fuel economy standards by paying a monetary penalty. To provide companies with comparable compliance flexibility for the 2011 model year exclusively, companies were able to purchase credits from the Receiver General of Canada at a rate of $20/Mg CO₂e to offset an emissions deficit. The option to purchase credits from the Receiver General was used by Porsche, Lotus, and Aston Martin. The quantities of credits purchased can be found in table 18.

3.3. Credit transfers

Table 18 summarizes transactions by company and the model year in which the credits were generated. There have been more than 5.6 million credits transferred between companies for either immediate use to offset a deficit or in anticipation of a possible future deficit, including those purchased from the Receiver General. It should be noted that the model year is not indicative of when a credit transfer occurred (it is possible to transfer credits for the 2012 model year during the 2016 calendar year). As well, the total quantity transferred in or out from a company for a given model year may be the result of multiple transactions.

3.4. Total credits generated and final status

Table 19 shows the credits earned (or deficits incurred) by all companies over the 2011 to 2016 model years. Credit values have been provided for Mercedes, JLR, Porsche and Volvo, however the use and lifespan of these credits are subject to restrictions since they were generated under less stringent temporary optional fleet (TOF) standards (see section 2.3.7.). This table also shows the total number of credits remaining in each company’s bank, taking into account the credits that have expired, been transferred, or used to offset a deficit.

Since the regulations came into force, companies have generated approximately 78.4 million emission credits (including early action credits and TOF credits), of which approximately 32.3 million credits remain valid for future use through the 2021 model year. A total of 9.5 million credits have been used to offset deficits and 36.5 million credits have expired.

^a The current balance accounts for any expired credits, remaining early action credits, transactions, and offsets.
^b Used temporary optional fleet provisions. Credits are subject to restrictions as described in section 2.3.7.

4. Estimated GHG reductions

The overall fleet average compliance information for passenger automobiles and light trucks is summarized in tables table20 and table21. Additionally, figures figure8 and figure9 illustrate the year over year performance for both passenger automobile and for light truck fleets. These trend lines depict the average standard applicable to the overall fleet (dotted line) and the compliance value (solid line) for each fleet.

Because each manufacturer’s fleet is unique, the data presented in the tables and graphs are based on the aggregated values for all companies, and are intended to depict the average results.

Figure 8: average GHG emissions performance - passenger automobiles

Figure 9: average GHG emissions performance - light trucks

As depicted in figures 8 and 9, during the 2011 to 2015 model years as the stringency of the regulations has increased, the overall passenger automobile fleet continued to outperform the applicable standard. From 2011 to 2015 the average compliance values from passenger automobiles decreased from 255 to 230 g/mi, a reduction of 9.8%. During the 2011 to 2015 period, compliance values for the light truck fleet have also continued to trend downwards (figure 8) from 349 to 311 g/mi, a reduction of 10.9%.

The 2016 model year marked the first year in which the compliance values for both passenger automobile and light truck fleets exceeded the applicable standard. The changes to the flex-fuel vehicle (FFV) provisions for the 2016 model year were a significant factor in the shift towards a negative compliance margin for the 2016 model year. The 2016 model year saw the overall compliance value for passenger automobiles decrease only slightly to 228 g/mi, and the overall compliance value for light trucks increased to 321 g/mi. This resulted in an overall net improvement of 10.6% and 8.0% relative to the 2011 model year for passenger automobiles and light trucks respectively.

Results to date indicate that all companies have met their regulatory obligations through to the 2016 model year. Despite the fact that the majority of companies incurred a deficit in the 2016 model year, a sufficient number of credits generated from earlier model years were available to ensure that industry was able to fulfil their regulatory obligations.

Appendix

Figure A-1: 2012 passenger automobile compliance status with offsets

Notes:

1. The asterisked companies are those that used the temporary optional fleet provisions
2. The final compliance value may be lower than the tailpipe emissions through the application of compliance flexibilities

Figure A-2: 2013 passenger automobile compliance status with offsets

Notes:

1. The asterisked companies are those that used the temporary optional fleet provisions
2. The final compliance value may be lower than the tailpipe emissions through the application of compliance flexibilities

Figure A-3: 2014 passenger automobile compliance status with offsets

Notes:

1. The asterisked companies are those that used the temporary optional fleet provisions
2. The final compliance value may be lower than the tailpipe emissions through the application of compliance flexibilities

Figure A-4: 2015 passenger automobile compliance status with offsets

Notes:

1. The asterisked companies are those that used the temporary optional fleet provisions
2. The final compliance value may be lower than the tailpipe emissions through the application of compliance flexibilities

Figure A-5: 2012 light truck compliance status with offsets

Notes:

1. The asterisked companies are those that used the temporary optional fleet provisions
2. The final compliance value may be lower than the tailpipe emissions through the application of compliance flexibilities

Figure A-6: 2013 light truck compliance status with offsets

Notes:

1. The asterisked companies are those that used the temporary optional fleet provisions
2. The final compliance value may be lower than the tailpipe emissions through the application of compliance flexibilities

Figure A-7: 2014 light truck compliance status with offsets

Notes:

1. The asterisked companies are those that used the temporary optional fleet provisions
2. The final compliance value may be lower than the tailpipe emissions through the application of compliance flexibilities

Figure A-8: 2015 light truck compliance status with offsets

Notes:

1. The asterisked companies are those that used the temporary optional fleet provisions
2. The final compliance value may be lower than the tailpipe emissions through the application of compliance flexibilities

Figure A-9: 2012 compliance status of passenger automobile fleet with company size

Notes: companies that used the temporary optional fleet provisions are not shown in this graph

Figure A-10: 2013 compliance status of passenger automobile fleet with company size

Notes: companies that used the temporary optional fleet provisions are not shown in this graph

Figure A-11: 2014 compliance status of passenger automobile fleet with company size

Notes: companies that used the temporary optional fleet provisions are not shown in this graph

Figure A-12: 2015 compliance status of passenger automobile fleet with company size

Notes: companies that used the temporary optional fleet provisions are not shown in this graph

Figure A-13: 2012 compliance status of light truck fleet with company size

Notes: companies that used the temporary optional fleet provisions are not shown in this graph

Figure A-14: 2013 compliance status of light truck fleet with company size

Notes: companies that used the temporary optional fleet provisions are not shown in this graph

Figure A-15: 2014 compliance status of light truck fleet with company size

Notes: companies that used the temporary optional fleet provisions are not shown in this graph

Figure A-16: 2015 compliance status of light truck fleet with company size

Notes: companies that used the temporary optional fleet provisions are not shown in this graph