Consultation Document: Proposed Regulations to Further Limit Greenhouse Gas Emissions from New On-Road Light-Duty Vehicles

Background
Regulated Entities
Applicable Classes of Vehicles
Emission Standards
Compliance Flexibilities
Reporting and Record Keeping
Administration and Compliance Verification
Collaborative Approach
Other Considerations

Consultation Document describing key elements being considered for future regulations to limit greenhouse gas emissions from new passenger automobiles and light trucks of model years 2017 and beyond.

The Government of Canada is committed to reducing Canada's total greenhouse gas (GHG) emissions by 17% from 2005 levels by 2020, while maintaining economic competitiveness and prosperity, an objective which highlights the importance of developing common standards with the United States (U.S.). Transportation is a significant source of GHG emissions in Canada, accounting for about 22% of total emissions in 2005. Passenger automobiles and light trucks are an important contributor to overall emissions in Canada, representing 59% of GHG emissions from transportation.

Taking action to reduce GHG emissions from new vehicles is an important element of the Government's plan to introduce an integrated, nationally consistent approach to reduce emissions of air pollutants and GHGs to protect the health and environment of Canadians. The Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations, made pursuant to the Canadian Environmental Protection Act, 1999 (CEPA 1999), came into force in 2010. These Regulations apply to passenger automobiles and light trucks of the 2011 to 2016 model years. These vehicles make up about 13 percent of Canada's total GHG emissions and, as a result of these regulations, the average emission performance of new vehicles of the 2016 model year is projected to be about 25 percent lower than vehicles in 2008.

With the release of this Consultation Document, the Minister of the Environment, the Honourable Peter Kent, initiated the development of new regulatory standards to further limit GHG emissions from new passenger automobiles and light trucks of model years 2017 and beyond. The general approach of the 2011 to 2016 model year regulations will be extended: manufacturers and importers of new vehicles will be required to meet separate fleet average GHG emission standards for each of their fleets of passenger automobiles and light trucks and these standards will become progressively more stringent over model years 2017 through 2025. Canada's standards will be aligned with those of the U.S. Environmental Protection Agency (EPA).

This Consultation Document is intended to provide an overview of the main elements that could be considered in the proposed regulations for model years 2017 and beyond. It has been drafted in order to seek views from the industry, the public, as well as provincial and territorial governments on these elements in advance of developing proposed regulations.

The proposed new regulatory requirements would continue to apply to any person who is engaged in the business of manufacturing new passenger automobiles or light trucks in Canada, or imports such vehicles into Canada, for the purpose of sale.

The proposed new regulatory program would seek to reduce emissions from the whole range of new passenger automobiles and light trucks of model years 2017 and beyond. This would effectively include all four-wheeled on-road self-propelled vehicles that have a Gross Vehicle Weight Rating of less than 4,536 kg, excluding work trucks. In addition, the new regulatory program would allow companies to exclude emergency and police vehicles from their vehicle fleets of model years 2017 and beyond due to the unique features of these vehicles, which are designed specifically for law enforcement and emergency response purposes.

Building upon the model year 2011 to 2016 standards set out in the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations, a similar approach based on the size – or footprint – of the vehicle would be implemented for model years 2017 and beyond. The average GHG emission standards, applicable to manufacturers and importers of new passenger automobiles and light trucks, would be based on the footprint of their vehicles and number of vehicles they manufacture or import for the purpose of sale in Canada in a given model year.

The GHG emission standards would become increasingly stringent with each model year from 2017 through 2025. For passenger automobiles, the carbon dioxide (CO₂) emission target values, related to vehicle footprint, would be reduced on average by 5 percent per year, with the model year 2017 standard being reduced by 5% in comparison with 2016 and reductions continuing through model year 2025. In recognition that light trucks face more significant GHG emission reduction challenges than passenger automobiles, the reduction rate of CO₂ emission target values proposed for light trucks would be 3.5 percent per year for model years 2017 through 2021 – a lower average annual rate than those for passenger automobiles. Also, in recognition that large light trucks face unique GHG emission reduction challenges within the light truck fleet, the CO₂ emission target values would be designed in a manner that effectively means that the annual rate of reduction for small light trucks in model years 2017 through 2021 would be higher than 3.5 percent, while the annual rate of reduction for large light trucks over the same time period would be lower than 3.5 percent. For model years 2022 through 2025, the average annual rate of reduction for the CO₂ emission target values for all light trucks would be 5 percent per year.

The proposed annual CO₂ emission target values for both passenger automobiles and light trucks can be represented by the following formula:

Target = Min(Min(b, Max(a,c × Footprint + d)), Min(f, Max(e,g × Footprint + h)))

Where:
a = minimum CO₂ target (grams per mile)
b = maximum CO₂ target (grams per mile)
c = slope (grams per mile per square foot)
d = intercept (grams per mile)
e = minimum CO₂ target (grams per mile) for CO₂ target ceiling curve
f = maximum CO₂ target (grams per mile) for CO₂ target ceiling curve
g = slope (grams per mile per square foot) for CO₂ target ceiling curve
h = intercept (grams per mile) for CO₂ target ceiling curve

The annual coefficients to be used in this formula to calculate vehicle CO₂ targets are presented below:

The curves that represent the CO₂ emission target values resulting from the above formula and coefficients are shown below:

The design of these standards would allow vehicle manufacturers and importers to comply with the stringent new annual GHG emission standards while maintaining flexibility related to the specific technologies that are deployed in their vehicles to achieve compliance. The design of the standards would also maintain consumer choice and allow companies to offer a full range of vehicles to meet the transportation needs of Canadians.

It is anticipated that the proposed GHG emission standards discussed above could be met through improvements in conventional gasoline, diesel and hybrid electric vehicle technologies and an increased market penetration of more advanced technologies, such as fully-electric vehicles and plug-in hybrid electric vehicles.

Vehicle-specific standards for emissions of methane and nitrous oxide would be maintained, in order to avoid significant emission increases of these gases as vehicle technologies evolve.

There is a degree of uncertainty associated with the technology and auto market forecasts that have been used to develop the proposed emission standards for model years 2017 through 2025. To address this, the U.S. has proposed a Mid-Term Review mechanism to legally require the EPA Administrator to determine, by April 2018, whether the emission standards for model years 2022 through 2025 are still appropriate. This determination would be made using the best information available at that time regarding the availability, effectiveness and cost of technologies; consumer vehicle preferences; and the economic and environmental impacts of the standards. If the Administrator determines that the standards for those model years are not appropriate, a rulemaking process would be undertaken in the U.S. to revise the standards to be either more or less stringent, as appropriate. Consideration of such a mechanism in the development of Canada's proposed regulations would take account of the regulatory authorities provided by the Canadian Environmental Protection Act, 1999.

The proposed regulations for model years 2017 and beyond would continue to offer flexibility to companies to achieve overall compliance with GHG emission standards. Several flexibilities would continue as defined by the current Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations, which cover model years 2011 through 2016.

The new regulatory program would continue the 5-year credit carry forward and 3-year credit carry back credit system established under the current regulations. To facilitate the transition to increasingly stringent standards for model years 2017 and beyond, the new regulatory program could allow companies a one-time credit carry forward beyond the 5 model year limit which applies otherwise.

For model years 2017 and beyond, the following allowances that are available under the current regulations would continue to apply; however, the methodology for quantifying them could be updated:

• Allowances for air-conditioning improvements, including refrigerant leakage reduction and system efficiency improvements; and
• Allowances for innovative technologies whose GHG-reduction impacts are not captured during conventional city/highway emission testing.

The proposed regulations for model years 2017 and beyond could include provisions that are intended to create an incentive for bringing certain vehicles or vehicle technologies to market. These provisions would allow a manufacturer or importer to report an emission value for a given vehicle that is lower than its measured value if the vehicle employs certain technologies. These provisions would create an incentive for companies to manufacture or import for the purpose of sale in Canada more of those vehicles or technologies. These adjustments would include:

• Adjustments for advanced technology vehicles: fully-electric vehicles, plug-in hybrid electric vehicles and fuel cell vehicles;
• Adjustments for the use of hybrid technologies on full-size pick-up trucks; and
• Adjustments for full-size pick-up trucks that achieve a significant emission reduction below the applicable CO₂ emission target value.

The test methods referenced by the new regulatory program would continue to provide companies with the procedures for how to quantify vehicle emissions, with specific methods for different fuel types. For model years 2017 and beyond, the quantification methods for the following dual fuel vehicles would be modified:

• Natural gas dual fuel vehicles would use a Society of Automotive Engineers “utility factor” methodology to determine the percentage of vehicle operation that would occur on natural gas;
• Plug-in hybrid electric vehicles would use a Society of Automotive Engineers “utility factor” methodology to determine the percentage of vehicle operation that would occur on electricity; and
• Alcohol dual fuel vehicles would have emissions based on actual usage of alcohol, which would be an extension of the methodology defined by the current regulations for model years 2016 vehicles.

The reporting and record keeping requirements would be amended, as necessary, to ensure that their application is consistent with the U.S. program.

Regulated companies would be subject to enforcement and compliance requirements and penalties as specified under CEPA 1999.

Work is underway with the U.S. EPA to ensure a common approach is taken to regulate GHG emissions from passenger automobiles and light trucks.

All future passenger automobiles and light trucks subject to the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations will have to meet the requirements of the Motor Vehicle Safety Act, administered by Transport Canada.