The Canadian government has released proposed regulations to reduce emissions from the nation’s transportation sector as part of a key component of the 2030 Emissions Reduction Plan. It puts Canada on a path to achieve at least a 40% reduction in emissions by 2030. The government will officially launch a formal 75-day consultation period upon their publication in the Canada Gazette, Part I, on December 31, 2022.
Light-duty vehicles (passenger cars, SUVs and light trucks) account for about half of Canada’s emissions from the transportation sector. Canada’s Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations have helped drive down emissions in this sector by establishing progressively more stringent greenhouse gas standards over the 2017 to 2025 model years.
The proposed regulations would supplement the emission standards by adding requirements for manufacturers and importers to meet annual zero-emission vehicle (ZEV) sales targets. These would begin for the 2026 model year, with a requirement that at least 20% of new light-duty vehicles offered for sale be ZEVs, and would increase annually to at least 60% by 2030 and 100% for 2035.
Achieving Canada’s goal of net-zero emissions by 2050 requires ensuring that all new light-duty vehicles sold are ZEVs by 2035. Given the average age of a vehicle is 15 years, putting in place a 100% ZEV sales target by 2035 will help end the use of these polluting vehicles by 2050.
The regulations were informed by extensive engagements with stakeholders over the last year, and follow a phased-in approach that allows for a gradual and orderly transition to a 100% zero-emission future, as recommended by many stakeholders.
New light-duty gasoline or diesel-fueled vehicles will still be available after 2026. Companies offering new vehicles for sale will be required to offer a growing percentage of their fleet as ZEVs starting in 2026, increasing annually to 100% in 2035. Gasoline- and diesel-fueled vehicles can still be driven after 2035 and can be bought, or sold, as a used vehicle.
The proposed regulations would apply to all companies that manufacture in Canada, or import into Canada, for the purpose of selling vehicles to the first retail purchase. They will apply to manufacturers and importers of new passenger cars, SUVs and pickup trucks, and will exclude emergency vehicles and fire-fighting vehicles.
The evidence from other countries, as well as from provinces such as Quebec and British Columbia, is clear: when combined with supportive investments, a regulated zero-emission vehicle sales target increases consumer choice and accelerates the transition away from internal combustion engine vehicles. That is why the government of Canada is also increasing financial support for purchasing ZEVs, investing in charging infrastructure, and helping build a Canadian battery supply chain that includes critical minerals and manufacturing.
The regulations will help ensure that the supply of ZEVs keeps up with consumer demand.
Within Canada, zero-emission vehicle regulations are already in place in Quebec and British Columbia, which represent roughly 35% of the nation’s new light-duty vehicle market. California has had zero-emission vehicle rules in place since 1990. California significantly strengthened its ZEV sales requirements in 2022, and several other US states have adopted them.
Canada’s policy is to align its Light-Duty Vehicle Regulations with the most stringent performance standards in North America post-2025, whether at the United States federal level or state level. That means aligning with the fleet average greenhouse gas requirements of the United States Environmental Protection Agency, and the ZEV sales requirement of California.
In addition to implementing ZEV regulations, Canada will continue to align with the United States’ national greenhouse gas performance standards and technical requirements to ensure an integrated North American auto manufacturing sector, so that vehicles can be manufactured and sold in either country.
Canada’s proposed regulations are similar to those of California and the other U.S. states in their scope, their definition of ZEVs, and in giving partial credits to plug-in hybrid electric vehicles, depending on their electric-only range. In the early years, Canada proposes providing for a larger use of plug-in hybrid electric vehicles and lower targets than in those states, reflecting California’s head start and the existence of a large number of early action and environmental justice credits from past California regulations.
Notwithstanding all of the above, the Canadian standards will require an average annual increase in the deployment of ZEVs of 6.5% from this date to 2030 as compared to 4.75% for California. They are also expected to result in the deployment of more ZEVs post-2030 given there are fewer proposed flexibilities.
From 2026 to 2050, the proposed ZEV sales targets are estimated to save vehicle owners $33.9 billion in net energy costs, with incremental vehicle and home charger costs of $24.5 billion.
The cumulative greenhouse gas emission reductions from 2026 to 2050 are estimated to be 430 metric tons, valued at $19.2 billion in avoided global damages.
Regulated sales targets will result in more ZEVs becoming available on the used-vehicle market. As lower-cost ZEVs and more used ZEVs hit the market, more households will be able to benefit from their lower fueling and maintenance costs.
ZEVs are a healthier option, reducing air pollution from on-road vehicles. Almost half of Canadians live near high-traffic roads. In addition, about 50 percent of schools and long-term care facilities in Canada are located near high-traffic roads. Air pollution from on-road vehicles increases the risk of developing asthma and leukemia in children as well as lung cancer in adults.
Canada has one of the cleanest electricity grids in the world, with over 83% non-emitting electricity. Canada has also committed to achieving a net-zero electricity grid by 2035, and is actively developing a series of measures, including new Clean Electricity Regulations and complementary measures that will ensure that Canada phases out remaining fossil-fuel generated electricity.
Environment and Climate Change Canada does not project a major increase in electricity demand by 2035 related to the federal light-duty electric vehicle targets. Current data indicates that there will be an increase in electricity demand of 1.3% by 2035 and 2.2% by 2050, which is not expected to lead to significant increases in electricity prices.
Read more about the proposal here.