2011 Model Year

The draft regulations would establish fleet average greenhouse gas emission standards aligned with applicable standards under the U.S. national fuel economy program.

• Companies would be required to comply with “unique” fleet average GHG emission standards for passenger automobiles and light trucks aligned with applicable U.S. fuel economy standards for the 2011 model year
• A company’s “unique” fleet average standard would be determined based on the size (i.e. footprint) and the number of vehicles it sells in the 2011 model year

2012 and Later Model Years

The draft regulations would establish a comprehensive regulatory program for reducing GHG emissions aligned with the GHG-based program that has been proposed by the U.S. Environmental Protection Agency (EPA) under the Clean Air Act.

• Companies would be required to comply with “unique” fleet average GHG emission standards for passenger automobiles and light trucks for each model year
• A company’s “unique” fleet average standard would be determined based on the size (i.e. footprint) and the number of vehicles it sells in a given model year
• The fleet average GHG emission standards would become progressively more stringent with each new model year from 2012-2016
• TheGHG emission standards would put Canadian requirements at par with U.S. national standards and, by 2016 with the California standards.
• While more detailed modeling is being conducted, it is anticipated that the average GHG emission performance of the 2016 Canadian fleet of new cars and light trucks would match the average level of 155 g CO₂/km (250 gCO₂/mile) that has been projected for the US, which would represent an approximate 20% reduction compared to the new vehicle fleet that was sold in Canada in 2007.
• The regulations would also establish separate limits for other tailpipe GHG emissions such as nitrous oxide (N₂O) and methane (CH₄)

Emission Credit System: Providing Compliance Flexibility

The draft regulations include a system of emission credits to help meet overall environmental objectives in a manner that provides the regulated industry with maximum compliance flexibility.

• Credits would be granted for companiesdoing better than the applicable fleet average standard for a given model year
• Deficits would be incurred for not achieving the applicable fleet average standard in a given model year
• Emission credits would have a lifespan of five model years and could be traded between companies
• Emission deficits incurred in a given model year would have to be offset with an equivalent number of emission credits within the subsequent three model years

Incentives for Non-Conventional GHG-Reducing Technologies

The draft regulations include provisions that recognize vehicle design improvements which reduce GHG emissions through approaches other than directly reducing tailpipe CO₂ emissions, including:

• technologies that reduce the impact of air conditioning system refrigerant leakage (e.g., hydrofluorocarbons)
• technologies that improve the efficiency of air conditioning systems
• other innovative technologies that reduce GHG emissions under conditions that are not captured by conventional emission testing procedures

The beneficial effects of the above technologies would be accounted for by subtracting their GHG-reducing impacts from the average CO₂ tailpipe emissions of a company’s fleet.  This approach provides companies with additional flexibility in complying with the GHG emission standards and also provides an incentive to introduce these technologies.  While the proposed approach for accounting for these technologies under CEPA is different than under the U.S. rules, the net credits/deficits generated in a given model year would be the same as under U.S. provisions.  

Incentives for Advanced Technology Vehicles (ATVs)

The draft regulations provide an incentive for companies to market “advanced technology vehicles”, including electric vehicles, plug-in hybrid electric vehicles and fuel cells vehicles.

• Through to the 2016 model year, a company would be credited with selling two times the number of advanced technology vehicles than it actually sold in the calculation of its fleet average GHG emission performance.  Doing so provides an incentive for the marketing of these vehicles since it will result in a lower calculated fleet average GHG emission value for the company’s fleet.

Other Compliance Flexibilities

The draft regulations include other provisions to ease the transition towards compliance with stringent emission standards and achieve the overall environmental objectives in a manner that provides the regulated industry with maximum compliance flexibility:

• Companies would be able to offset any emission deficit incurred in the 2011 model year with an equivalent number of credits obtained by the payment of an amount to the Receiver General at a rate to be prescribed in the Regulation. This would provide compliance flexibility comparable to the payment of a fine under the U.S. corporate average fuel economy (CAFE) program.
• Companies would be able to generate GHG emission credits for the 2008-2010 period if their average GHG performance exceeds specified emission levels that are based on U.S. regulatory requirements for those model years to recognize early actions to reduce GHG emissions.
• Credits earned over the 2008-2010 period could be used to comply with the 2011 model year GHG emission standards; adjusted credits earned over the 2009-2011 period could be used to comply with the GHG emission standards for the 2012 and later model year to align with the proposed U.S. EPA program.
• Provisions recognizing the introduction of advanced technology vehicles and non-conventional GHG-reducing technologies would be extended to apply in respect of compliance with GHG emission standards for the 2011 model year.
• Companies selling smaller-volumes of vehicles would have the option of subjecting a limited portion of their fleets to a temporary less stringent fleet average standard during the 2012 through 2015 model years, subject to specified restrictions on the generation and usage of emission credits

Mandatory Annual Reporting

The draft regulations include mandatory annual reporting of a company’s fleet average GHG performance and related vehicle model information. They also include specific information relating to emission credits and deficits and emission trading between companies.