Regulations Amending the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations: SOR/2023-275

Canada Gazette, Part II, Volume 157, Number 26

Registration
SOR/2023-275 December 15, 2023

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

P.C. 2023-1297 December 15, 2023

Whereas, under subsection 332(1)footnote a of the Canadian Environmental Protection Act, 1999 footnote b, the Minister of the Environment published in the Canada Gazette, Part I, on December 31, 2022, a copy of the proposed Regulations Amending the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations, substantially in the annexed form, and persons were given an opportunity to file comments with respect to the proposed Regulations or to file a notice of objection requesting that a board of review be established and stating the reasons for the objection;

Whereas, under subsection 93(3) of that Act, the National Advisory Committee has been given an opportunity to provide its advice under section 6footnote c of that Act;

And whereas, in the opinion of the Governor in Council, under subsection 93(4) of that Act, the proposed Regulations do not regulate an aspect of a substance that is regulated by or under any other Act of Parliament in a manner that provides, in the opinion of the Governor in Council, sufficient protection to the environment and human health;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of the Environment and the Minister of Health, makes the annexed Regulations Amending the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations under sections 93footnote d, 160footnote e, 162 and 326footnote f of the Canadian Environmental Protection Act, 1999 footnote b.

Regulations Amending the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations

Amendments

1 Subsection 1(1) of the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations footnote 1 is amended by adding the following in alphabetical order:

zero-emission vehicle
means an automobile that is an electric vehicle, a plug-in hybrid electric vehicle or a fuel cell vehicle. (véhicule zéro émission)

2 Section 2 of the Regulations is replaced by the following:

Purpose

2 The purpose of these Regulations is to reduce greenhouse gas emissions from passenger automobiles and light trucks by establishing

3 Section 3 of the Regulations is amended by striking out “and” at the end of paragraph (c) and by adding the following after paragraph (d):

4 The heading “Fleet Averaging Requirements” before section 13 of the Regulations is replaced by the following:

Fleet Requirements — CO2 Equivalent Emissions

5 Section 15 of the Regulations is replaced by the following:

Rounding — general

15 (1) If any of the calculations in these Regulations, except for those in paragraphs 17(4)(b) and (5)(b), subsections 17(6) and (7) and 18.1(1), (5) and (10), sections 18.2 and 18.3 and subsections 18.4(1), 30.13(1), 30.14(3) and 30.21(2) and (3), results in a number that is not a whole number, the number must be rounded to the nearest whole number in accordance with section 6 of the ASTM International method ASTM E29-93a, entitled Standard Practice for Using Significant Digits in Test Data to Determine Conformance with Specifications.

Rounding — nearest tenth of a unit

(2) If any of the calculations in paragraphs 17(4)(b) and (5)(b), subsections 17(6) and (7) and 18.1(1), (5) and (10), sections 18.2 and 18.3 and subsection 18.4(1) results in a number that is not a whole number, the number must be rounded to the nearest tenth of a unit in accordance with section 6 of that method.

Rounding — nearest ten-thousandth of a unit

(3) If any of the calculations in subsections 30.13(1), 30.14(3) and 30.21(2) and (3) results in a number that is not a whole number, the number must be rounded to the nearest ten-thousandth of a unit in accordance with section 6 of that method.

6 Section 17 of the Regulations is amended by adding the following after subsection (7):

CFR version — subsections (6) and (7)

(8) Despite the definition CFR in subsection 1(1), the provisions of the CFR referred to in subsections (6) and (7) are as they read on February 28, 2022.

7 The description of G in section 18 of the Regulations is replaced by the following:

G
is the allowance for the use of innovative technologies that result in a measurable CO2 emission reduction, which corresponds to the sum of the allowances calculated in accordance with subsections 18.3(1), (3) or (3.1), and (5); and

8 (1) The portion of subsection 18.1(2) of the Regulations before the formula is replaced by the following:

Fleet average carbon-related exhaust emission value for 2012 model year and subsequent model years

(2) Subject to subsections (8) and (10), a company must calculate the fleet average carbon-related exhaust emission value for each of its fleets of the 2012 model year and subsequent model years using the following formula:

(2) The portion of subsection 18.1(4) of the Regulations before the table is replaced by the following:

Multiplier for certain vehicles

(4) Subject to subsection (5), when calculating the fleet average carbon-related exhaust emission value in accordance with subsection (2) for fleets of the 2017 to 2024 model years, a company may, for the purposes of the descriptions of B and C in subsection (2), elect to multiply the number of advanced technology vehicles, natural gas vehicles or natural gas dual fuel vehicles in its fleet by the number set out in the following table in respect of that type of vehicle for the model year in question, if the company reports that election and indicates the number of credits obtained as a result of that election and the number of vehicles in question in its end of model year report.

(3) Item 9 of the table to subsection 18.1(4) of the Regulations is repealed.

(4) Subsection 18.1(5) of the Regulations is replaced by the following:

Requirement — plug-in hybrid electric vehicles

(5) A company may make an election under subsection (4) in respect of a plug-in hybrid electric vehicle of the 2017 to 2024 model years only if the vehicle has an all-electric driving range equal to or greater than 16.4 km (10.2 miles) or an equivalent all-electric driving range equal to or greater than 16.4 km (10.2 miles). The all-electric driving range and the equivalent all-electric driving range are determined in accordance with section 1866(b)(2) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR.

(5) Subsection 18.1(9) of the Regulations is repealed.

(6) Subsection 18.1(11) of the Regulations is replaced by the following:

Fuel cell vehicles

(11) For the purposes of subsection (8), a company must count its fuel cell vehicles before counting the other advanced technology vehicles.

9 (1) The portion of subsection 18.3(1) of the Regulations before the formula is replaced by the following:

Allowance for certain innovative technologies

18.3 (1) Subject to subsections (3) and (3.1), a company may elect to calculate an allowance for the use, in its fleet of the 2014 model year and subsequent model years, of innovative technologies that result in a measurable CO2 emission reduction and that are referred to in section 1869(b)(1) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, using the following formula:

(2) The portion of subsection 18.3(3) of the Regulations before the formula is replaced by the following:

Maximum allowance — certain innovative technologies

(3) If, for one of the 2014 to 2022 model years, the 2027 model year or any subsequent model year, the total of the allowances for innovative technologies that a company elects to determine, for a single vehicle, in accordance with the description of A in subsection (1) is greater than 10 grams of CO2 per mile, the company must calculate, using the following formula, the allowance for the use, in its fleet of passenger automobiles or light trucks of that model year, of innovative technologies that result in a measurable CO2 emission reduction and that are referred to in section 1869(b)(1) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR:

(3) Section 18.3 of the Regulations is amended by adding the following after subsection (3):

Maximum allowance for 2023 to 2026 model years — certain innovative technologies

(3.1) If, for a model year of the 2023 to 2026 model years, the total of the allowances for innovative technologies that a company elects to determine, for a single vehicle, in accordance with the description of A in subsection (1) is greater than 15 grams of CO2 per mile, the company must calculate, using the formula set out in subsection (3), the allowance for the use, in its fleet of passenger automobiles or light trucks of that model year, of innovative technologies that result in a measurable CO2 emission reduction and that are referred to in section 1869(b)(1) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR.

(4) The portion of subsection 18.3(4) of the Regulations before the description of A is replaced by the following:

Adjustment

(4) For the purposes of subsections (3) and (3.1), the company must perform the following calculation and ensure that the result does not exceed 10 or 15 grams of CO2 per mile, respectively:

(Σ (A × Ba) × 195,264) + (Σ (A × Bt) × 225,865)

(Σ Ca × 195,264) + (Σ Ct × 225,865)

where

(5) Subsection 18.3(4) of the Regulations is amended by striking out “and” at the end of the description of Ba and by adding the following after the description of Bt:

Ca
is the total number of passenger automobiles in the fleet; and
Ct
is the total number of light trucks in the fleet.

10 (1) The portion of subsection 18.4(1) of the Regulations before the formula is replaced by the following:

Allowance for certain full-size pick-up trucks

18.4 (1) Subject to subsections (2) to (4), a company may elect to calculate, using the following formula, a CO2 allowance for the presence, in its fleet, of full-size pick-up trucks equipped with hybrid electric technologies and of full-size pick-up trucks that achieve carbon-related exhaust emission values below the applicable target value:

(2) Subsection 18.4(2) of the Regulations is replaced by the following:

Allowance limitations — hybrid electric technologies

(2) The allowance for the use of hybrid electric technologies referred to in paragraphs (a) and (b) of the description of AH in subsection (1) may be calculated in respect of full-size pick-up trucks of a model year only if the percentage in the fleet of full-size pick-up trucks of that model year that are equipped with those technologies is equal to or greater than the percentage for that model year set out in section 1870(a)(1) or (2), depending on the technology used, of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR. The allowance referred to in paragraph (a) of the description of AH may be calculated only for full-size pick-up trucks of the 2017 to 2021, 2023 and 2024 model years.

(3) Subsection 18.4(3) of the Regulations is replaced by the following:

Allowance limitations — carbon-related exhaust emissions performance

(3) The allowance for full-size pick-up trucks that achieve a carbon-related exhaust emission value referred to in paragraphs (a) and (b) of the description of AR in subsection (1) may be calculated in respect of full-size pick-up trucks of a model year only if the percentage in the fleet of full-size pick-up trucks of that model year that achieve such a value is equal to or greater than the percentage for that model year set out in section 1870(b)(1) or (2), depending on the emission performance achieved, of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR. The allowance referred to in paragraph (a) of the description of AR may be calculated only for full-size pick-up trucks of the 2017 to 2021, 2023 and 2024 model years.

11 (1) The portion of subsection 20(3) of the Regulations before the formula is replaced by the following:

Calculation

(3) Subject to subsections (3.1) to (3.4), a company must calculate, using the following formula, the credits or deficits for each of its fleets:

(2) The portion of subsection 20(3.1) of the Regulations before the formula is replaced by the following:

Alternative standard — nitrous oxide

(3.1) For each test group in respect of which a company uses, for any given model year, an alternative standard for nitrous oxide (N2O) under subsection 10(1) or 12(1), the company must use the following formula, expressing the result in megagrams of CO2 equivalent, and add the sum of the results for each test group to the number of credits or deficits calculated in accordance with subsection (3) for the fleet to which the test group belongs:

(3) The description of C in subsection 20(3.1) of the Regulations is replaced by the following:

C
is the alternative exhaust emission standard for nitrous oxide (N2O) under subsection 10(1) or 12(1) to which the company certifies the test group, expressed in grams per mile; and

(4) The portion of subsection 20(3.2) of the Regulations before the formula is replaced by the following:

Alternative standard — methane

(3.2) For each test group in respect of which a company uses, for any given model year, an alternative standard for methane (CH4) under subsection 10(1) or 12(1), the company must use the following formula, expressing the result in megagrams of CO2 equivalent, and add the sum of the results for each test group to the number of credits or deficits calculated in accordance with subsection (3) for the fleet to which the test group belongs:

(5) The description of C in subsection 20(3.2) of the Regulations is replaced by the following:

C
is the alternative exhaust emission standard for methane (CH4) under subsection 10(1) or 12(1) to which the company certifies the test group, expressed in grams per mile; and

(6) Subsection 20(4) of the Regulations is replaced by the following:

Calculation and recalculation for the 2017 to 2021 model years

(3.3) A company may elect to calculate or recalculate its credits or deficits for any of its fleets of the 2017 to 2021 model years by making the election referred to in subsection 18.1(4) and by using the equation set out in subsection (3) but replacing the descriptions of A and C with the following:

A
is the adjusted fleet average CO2 equivalent emission standard, expressed in grams per mile, calculated in accordance with section 17 but, for the purposes of the descriptions of B and C in subsection 17(3), in the case of advanced technology vehicles, natural gas vehicles or natural gas dual fuel vehicles, the number of vehicles is multiplied by the number set out in the table to subsection 18.1(4) in respect of that type of vehicle for the model year in question;
C
is determined by the formula
Nv + Σ (Ncv × M)
where
Nv
is the number of passenger automobiles or light trucks in the fleet, excluding advanced technology vehicles, natural gas vehicles and natural gas dual fuel vehicles,
Ncv
is the number of advanced technology vehicles, natural gas vehicles or natural gas dual fuel vehicles in the fleet, as the case may be, and
M
is the multiplier set out in the table to subsection 18.1(4) in respect of the type of vehicle for the model year in question.

2022 to 2024 model years

(3.4) For the 2022 to 2024 model years, if a company makes the election under subsection 18.1(4), the descriptions of A and C in subsection (3) are replaced by the descriptions of A and C in subsection (3.3).

Date of credit or deficit

(4) Subject to subsection (4.1), a company obtains credits or incurs deficits for a specific fleet on the day on which the company submits the end of model year report for the model year in question.

Date of credit or deficit — 2017 to 2021 model years

(4.1) A company obtains credits or reduces its deficits for a specific fleet of the 2017 to 2021 model years if the report includes the following information in respect of that fleet:

(7) Subsection 20(6) of the Regulations is replaced by the following:

Time limit — credits for 2017 and 2018 model years

(6) Credits obtained for a fleet of passenger automobiles or light trucks of the 2017 and 2018 model years may be used in respect of any fleet of passenger automobiles or light trucks of a model year that is up to three model years before or up to six model years after the model year in respect of which the credits were obtained, after which the credits are no longer valid.

Time limit — credits for 2019 model year and subsequent model years

(7) Credits obtained for a fleet of passenger automobiles or light trucks of the 2019 model year and a subsequent model year may be used in respect of any fleet of passenger automobiles or light trucks of a model year that is up to three model years before or up to five model years after the model year in respect of which the credits were obtained, after which the credits are no longer valid.

12 Subsection 25(2) of the Regulations is replaced by the following:

Calculation

(2) The company must calculate the credits or deficits for each of its temporary optional fleets using the formula set out in subsection 20(3).

13 The Regulations are amended by adding the following after section 30:

Combined Fleet Requirements — Zero-emission Vehicles

Interpretation

Definitions

30.1 (1) The following definitions apply in this section, in sections 30.11 to 30.21 and in subsections 33(4.1) to (5).

combined fleet
means all automobiles of a specific model year that a company manufactures in Canada or imports into Canada for the purpose of sale of those automobiles to the first retail purchaser. (parc combiné)
company
has the same meaning as in section 149 of the Act. (entreprise)
ZEV requirement
means the minimum performance required with respect to zero-emission vehicles of a company’s combined fleet for a given model year, as set out in section 30.12. (exigence VZE)
ZEV value
means the actual performance with respect to zero-emission vehicles of a company’s combined fleet for a given model year, calculated in accordance with section 30.13(1). (valeur VZE)

Exclusion — emergency vehicles and fire fighting vehicles

(2) Despite the definition combined fleet in subsection (1), a company may, for the purposes of sections 30.11 to 30.21, elect to exclude emergency vehicles and fire fighting vehicles from its combined fleet of any model year, if it reports that election in its end of model year report for that model year.

Exclusion — automobile being exported

(3) The definition combined fleet in subsection (1) does not include any automobile that is being exported and that is accompanied by written evidence establishing that it will not be sold or used in Canada.

General

Requirement respecting ZEV value

30.11 Subject to sections 30.14 to 30.21, a company must ensure that the ZEV value of its combined fleet, calculated in accordance with section 30.13, of the 2026 model year and subsequent model years meets or exceeds the ZEV requirement for the model year in question.

ZEV Requirement for Combined Fleet

ZEV requirement by model year

30.12 The ZEV requirement for a company’s combined fleet for a model year in column 1 of the following table is set out in column 2.

Item

Column 1

Model year

Column 2

ZEV requirement
1 2026 0.20
2 2027 0.23
3 2028 0.34
4 2029 0.43
5 2030 0.60
6 2031 0.74
7 2032 0.83
8 2033 0.94
9 2034 0.97
10 2035 and subsequent 1
ZEV Value for Combined Fleet

Calculation of ZEV value

30.13 (1) A company must calculate, for the 2026 model year and subsequent model years, the ZEV value of its combined fleet using the following formula:

All-electric driving range

(2) For the purposes of subsection (1), the all-electric driving range is calculated using the following formula, rounded to the nearest whole number or, if the number is equidistant between two consecutive whole numbers, to the higher number:

A × 0.7
where
A
is the actual charge-depleting range in kilometres, determined in accordance with section 311(j)(4)(i) of Title 40, chapter I, subchapter Q, part 600, subpart D of the CFR, rounded to the nearest tenth of a unit or, if the number is equidistant between two consecutive tenths of a unit, to the higher tenth.
Compliance Unit or Deficit System

Obtaining units

30.14 (1) As of the 2026 model year, a company obtains compliance units in respect of its combined fleet if its ZEV value is greater than the ZEV requirement for the model year in question and the company reports the compliance units in its end of model year report.

Deficits

(2) As of the 2026 model year, a company incurs a deficit in respect of its combined fleet if its ZEV value is less than the ZEV requirement for the model year in question.

Calculation

(3) A company must calculate the compliance units or deficit for its combined fleet of a given model year using the following formula:

(A − B) × C
where
A
is the ZEV value of its combined fleet of the model year;
B
is the ZEV requirement for the model year; and
C
is the total number of automobiles in the combined fleet.

Date of units or deficit

(4) A company obtains compliance units or incurs a deficit in respect of its combined fleet on the day on which the end of model year report for the model year in question is submitted.

Use of units — time limit

(5) Compliance units obtained for a combined fleet of any of the 2026 to 2034 model years may be used to offset a deficit incurred in respect of any combined fleet of up to three model years before the model year for which those units were obtained and, at the latest, of the earlier of

End of validity

(6) Compliance units are no longer valid after the day on which the company submits its end of model year report for the 2035 model year.

Offsetting Deficits and Use of Units

Deficits

30.15 (1) Subject to subsection (4), a company must use compliance units obtained in respect of its combined fleet of a given model year to offset a deficit incurred in respect of its combined fleet.

Remaining compliance units

(2) A company may bank all or some of any remaining compliance units to offset a future deficit or transfer all or some of them to another company.

Offset

(3) A company may offset a deficit with,

Offsetting deficits — sum of early compliance units and charging station units

(4) The sum of early compliance units and charging station units, including those charging station units that were transferred to it by another company, that a company uses to offset a deficit incurred in respect of the combined fleet of any of the 2026 to 2030 model years may not exceed, for the model year in question, the amount calculated using the following formula:

0.1 × A × B
where
A
is the ZEV requirement for the model year in question; and
B
is the total number of automobiles in the combined fleet.

Offsetting deficits 2026 to 2034 model years — time limit

(5) Any deficit incurred in respect of a combined fleet for a given model year must be offset no later than

No offset — 2035 model years and subsequent model years

(6) No deficits incurred in respect of a combined fleet for the 2035 model year and subsequent model years can be offset.

Early Compliance Units — Zero-emission Vehicles of the 2024 and 2025 model years

Obtaining units

30.16 (1) A company may obtain early compliance units in respect of its combined fleet of the 2024 and 2025 model year, if there are zero-emission vehicles in its combined fleet, the amount calculated in accordance with subsections (2) and (3) is positive and the company reports those units in the end of model year report for the model year in question.

Calculation — 2024 model year

(2) The number of early compliance units that a company may obtain for its combined fleet of the 2024 model year is equal to the lesser of

Calculation — model year 2025

(3) The number of early compliance units that a company may obtain for its combined fleet of the 2025 model year is the lesser of

Date of units

(4) A company obtains early compliance units with respect to its combined fleet on the day on which the end of model year report for the model year in question is submitted.

Banking

(5) A company may bank but cannot transfer its early compliance units.

End of validity

(6) Early compliance units are no longer valid after the day on which the company submits its end of model year report for the 2027 model year.

Registered Charging Station Installation Project — Charging Station Units

Registration

30.17 Subject to section 30.19, the Minister may, on the application of one company, register a charging station installation project so that charging station units are created if the application contains the information that is required by section 30.18. The Minister will complete registration by no later than December 31, 2027.

Registration application content

30.18 The application for registration of the project must contain

Registration — conditions

30.19 The Minister must not register a charging station installation project under section 30.17 unless the Minister is satisfied that the statement referred to in paragraph 30.18(f) will be complied with.

Cancellation of registration

30.20 The Minister must cancel the registration of any charging station installation project that does not comply with subparagraph 30.18(f)(i), (vii) or (viii).

Creation of charging station units

30.21 (1) A company may create charging station units with respect to any registered charging station project if

Number of units — one investor

(2) If a company is the only investor in a registered project, the company must calculate the number of charging station units it will create using the following formula:

A ÷ B
where
A
is the lesser of
  • (a) the total amount of the company’s investment; and
  • (b) the total of the maximum allowable investment amounts for each charging station, in accordance with the table below; and

    Column 1

    Rated power of charging stations

    Column 2

    Maximum investment for each charging station
    150 kW to 199 kW $150,000
    200 kW and above $200,000
B
is $20,000.

Number of units — multiple investors

(3) If a company invests in the registered project with other companies or third parties, that company must calculate the number of charging station units it will create using the following formula:

(A ÷ B) × C
where
A
is the lesser of
  • (a) the total investment amount in the project, and
  • (b) the total of the maximum allowable investment amounts for each charging station, in accordance with the table in subsection (2);
B
is $20,000; and
C
is the proportion of the company’s investment in the project, as compared to the total investment in the project, expressed as a percentage of the total investment.

Date of units

(4) A company creates charging station units with respect to a registered project on the day on which the end of model year report for the model year in question is submitted.

Banking or transfer

(5) A company may bank all or some of the charging station units created with respect to the registered project and transfer all or some of them to another company.

Cancellation of charging station units

(6) The Minister must cancel

End of validity

(7) Charging station units are no longer valid after the day on which the company submits its end of model year report for the 2030 model year.

14 Section 33 of the Regulations is amended by adding the following after subsection (4):

Additional information — early compliance units and charging station units

(4.1) The end of model year report must also contain the following information with respect to the combined fleet of the company:

Additional information — charging stations

(4.2) The end of model year reports for the five model years following that in which charging station units are created must also contain the following information:

Additional information — compliance units and charging station units

(4.3) The end of model year report must also contain the following information with respect to any compliance units and charging station units transferred to or from the company since the submission of the previous end of model year report:

Content — zero-emission vehicles

(5) The end of model year report for the model year 2026 and subsequent model years must also contain the following information in respect of the company’s combined fleet:

Coming into Force

15 These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: As noted in the 2022 Emission Reduction Plan,footnote 2 there is an urgent need to address climate change and move towards a low-carbon economy. Greenhouse gases (GHGs) are primary contributors to climate change and the transportation sector accounts for 28% of domestic greenhouse gas emissions in Canada. Passenger cars and light trucks account for about 40% of the transportation sector’s emissions.footnote 3 Reducing emissions in all sectors, including transportation, is necessary to tackle climate change and reach the Government of Canada’s emission reduction target of 40% to 45% below 2005 levels by 2030 and net zero by 2050.

Description: The Regulations Amending the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations (hereinafter referred to as the “Amendments”) will require that a specified percentage of manufacturers’ and importers’ (henceforth referred to as the “regulatees”) fleets of new light-duty vehicles offered for sale in Canada are zero-emission vehicles (ZEVs). These ZEV sales targets will begin with model year 2026 and reach full stringency by model year 2035. In addition, the Amendments will modify flexibilities and fix provisions related to the pre-2026 model year fleet average GHG emission standards.

Rationale: In March 2022, the Government of Canada published its Emissions Reduction Plan (PDF) [ERP], providing a roadmap to reach its climate commitments, such as reducing national GHG emissions by 40% to 45% below 2005 levels by 2030 under the Paris Agreement and achieving net-zero emissions by 2050. To reduce emissions from the transportation sector, the ERP included a plan to introduce a regulated ZEV sales target requiring that 100% of passenger car and light truck sales be zero-emission vehicles by 2035, with interim targets of at least 20% by 2026, and at least 60% by 2030.

Cost-benefit statement: The Amendments are estimated to have incremental ZEV and home charger costs of $54.1 billion from 2024 to 2050 for consumers who switch to ZEVs in response to the Amendments. These same consumers are expected to realize $36.7 billion in net energy savings over the same time period. The Amendments are also estimated to result in cumulative GHG emission reductions of 362 megatonnes (Mt), valued at $96.1 billion in avoided global damages. These GHG emission reductions will help Canada meet its international GHG emission reduction commitments for 2030 and 2050. The Amendments are thus estimated to have total benefits of $132.8 billion, and net benefits of $78.6 billion.

Issues

As noted in the 2022 Emissions Reduction Plan,footnote 2 there is an urgent need to address climate change and move towards a low-carbon economy. Greenhouse gases (GHGs) are primary contributors to climate change, and the transportation sector accounts for 28% of domestic greenhouse gas emissions in Canada. Passenger cars and light trucks account for about 40% of the transportation sector’s emissions.footnote 4 Decreasing emissions in all sectors, including transportation, is necessary to tackle climate change and reach the Government of Canada’s GHG emissions reduction target of 40% to 45% below 2005 levels by 2030 and net zero by 2050.

Additionally, the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations (PALTGGER or the Regulations) require changes to administrative provisions and compliance flexibilities for pre-2026 model years, based on a 2021 departmental review of the Regulations. The incorporation by reference of the U.S. light-duty vehicle fleet average GHG emission standards also needs to be changed from ambulatory to static in response to the United States Environmental Protection Agency’s (U.S. EPA) proposal to change the numbering of the section of the U.S. Code of Federal Regulations (CFR) that is referenced in the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations.

Background

The Regulations were published in October 2010 under the Canadian Environmental Protection Act, 1999 (CEPA), establishing GHG emission standards for light-duty vehicles (LDVs) of the 2011 to 2016 model years, in alignment with new U.S. EPA standards. These Regulations required importers and manufacturers of new vehicles to meet increasingly stringent fleet average GHG emission standards. In 2014, Canada amended the Regulations to establish GHG emission standards for the 2017 to 2025 model years, in alignment with revised U.S. EPA standards. These Regulations also adopted an incorporation by reference approach to optimize continued alignment with evolving U.S. EPA regulations.

In 2018, the United States completed a mid-term evaluation of its amended regulations, determining that the standards in later years were too stringent and ought to be reduced. In 2020, a U.S. Final Rule was published to reduce the stringency of the fleet average GHG emission standards for model years 2021 through 2026 from approximately 5% per year to approximately 1.5%. Canadian standards consequently became less stringent given the U.S. GHG emission standards were incorporated by reference into the Regulations. In February 2021, Canada completed its own effortsfootnote 5 to assess the impact of the recent U.S. Final Rule and the feasibility of establishing more stringent fleet average GHG emission standards in Canada relative to those in the U.S. Final Rule. However, the U.S. EPA released a new Final Rule later that year, increasing the stringency by about 10% for model years 2023 and 2026 and by at least 5% for model years 2024–2025. Prior to the publication of the EPA Final Rule, Canada announced through the Strengthened Climate Plan that it would work to align the Regulations with the most stringent GHG emission standards in North America post-2025, whether at the United States federal or state level. On May 5, 2023, the U.S. EPA published a Noticed of Proposed Rulemaking for the Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles (hereinafter referred to as the NPRM).footnote 6 This proposal would establish additional annually increasing GHG vehicle emission standards of about 13% per year for light-duty vehicles from model years (MYs) 2027 to 2032 in addition to new air pollutant standards. Aligning with these GHG emission standards would require a separate regulatory process, following publication of the U.S. final rulemaking.

In June 2021, the Government of Canada approved a renewed and integrated zero-emission vehicle (ZEV) strategy for LDVs, setting a mandatory target for 100% of new LDV sales to be ZEVs by 2035.footnote 7 In March 2022, the Government of Canada published its 2030 Emissions Reduction Plan (PDF) [ERP], providing a roadmap to reach its climate commitments, such as reducing national GHG emissions by 40%–45% below 2005 levels by 2030 under the Paris Agreement, and achieving net-zero GHG emissions by 2050. The ERP included a plan to introduce regulations requiring that 100% of passenger car and light truck sales be zero-emission vehicles by 2035, with interim targets of 20% by 2026 and 60% by 2030.

Complementary measures led by other federal departments

Throughout the development of amendments to the Regulations (hereinafter referred to as the “Amendments”), there were extensive consultations and coordination with other government departments, and in particular with Transport Canada (TC), Natural Resources Canada (NRCan), and Innovation, Science, and Economic Development Canada (ISED). Each of these departments is responsible for implementing key complementary measures that are helping to support Canada’s transition from GHG emitting vehicles to ZEVs.

ZEV infrastructure

Since 2016, the Government of Canada has made significant investments in ZEV infrastructure, including through NRCan’s Electric Vehicle and Alternative Fuel Infrastructure Deployment Initiative (EVAFIDI) and the Zero Emission Vehicle Infrastructure Programfootnote 8 (ZEVIP). EVAFIDI,footnote 9 which ended on March 31, 2022, supported the deployment of public fast chargers for electric vehicles coast-to-coast along Canada’s highway system, natural gas stations along key freight routes, and hydrogen refuelling in key metropolitan areas. Budget 2019 provided NRCan with $130 million over five years to implement ZEVIP. Furthermore, the 2020 Fall Economic Statement provided an additional $150 million to further expand Canada’s ZEV infrastructure and deploy electric vehicle and hydrogen refuelling stations in communities, including multi-unit residential buildings, workplaces, on-street and public parking spots.

Budget 2022 included an additional $400 million to recapitalize ZEVIP, and $500 million to Canada’s Infrastructure Bank (CIB) to invest in large-scale ZEV charging and refuelling infrastructure that is revenue generating and in the public interest. The Government of Canada is working to deploy 84 500 chargers and 45 hydrogen refuelling stations by 2029. As of September 2023, NRCan’s two programs have selected 43 050 electric vehicle chargers, 36 hydrogen refuelling stations, and 22 natural gas station projects for funding of which 9 623 are already open. As of October 2023, NRCan’s live stations locator data indicates that ZEV drivers in Canada have access to a total of 24 763 charging ports spread across 10 249 charging station locations.footnote 10

ZEV incentives

Since 2019, the Government of Canada has invested over $2 billion to Transport Canada’s Incentives for Zero-Emission Vehicles (iZEV) Program.footnote 11 This Program provides purchase incentives of up to $5,000 for eligible light-duty vehicles until March 31, 2025, subject to funding availability. To date, over 300 000 incentives have been provided to Canadians and Canadian businesses, with over 50 eligible models to choose from. The iZEV Program is complemented by incentive programs offered by several provincial and territorial governments. The combined impact of federal, provincial, and territorial measures have helped to boost new ZEV market share from 3.1% in 2019 to 8.9% in 2022 and roughly 10% for the first half of 2023, according to S&P Global Mobility.footnote 12 Vehicle transaction prices are regularly assessed to ensure that the iZEV Program is being appropriately targeted, and the Government will continue to do so moving forward.

ZEV industrial transition

Via ISED’s Strategic Innovation Fund (SIF),footnote 13 and through strategic contribution agreements, the Government of Canada has supported industry efforts to accelerate the production of low and zero-emission vehicles, as well as to develop Canada’s battery supply chain. Since 2018, automotive and battery manufacturers are set to invest over $26 billion in Canadafootnote 14 to transition to electric vehicle production and establish a battery supply chain, bolstered by more than $3 billion in support from the SIF,footnote 15 and production-based support from the government via special contribution agreements.

Objective

The objectives of the Amendments are to further reduce GHG emissions in the transportation sector, as laid out in the Government of Canada’s commitment in the ERP. In addition, the Amendments aim to reduce the regulatory burden for companies operating in both the Canadian and U.S. markets, by ensuring the administrative requirements for GHG vehicle emission standards up to model year 2026 are aligned between the two jurisdictions.

Description

The Regulationsfootnote 16 were adopted in 2010 for the purpose of reducing greenhouse gas emissions from passenger automobiles and light trucks by establishing fleet average GHG emission standards and test procedures that are aligned with the federal requirements of the United States. The Amendments introduce new ZEV sales targets, beginning with model year 2026, as well as administrative amendments to the current Regulations for vehicles up to MY 2026, beginning with MY 2017. The incorporation by reference of the U.S. light-duty vehicle fleet average GHG emissions standards will also be changed from ambulatory (where the current version of a specified provision is incorporated into Canadian regulations, including any future modifications to that provision) to static (where the version of a specified provision at a fixed point in time is incorporated into Canadian regulations, and would not change if there are future modifications to that provision).

ZEV sales targets

The Amendments are made under CEPA and will establish annual ZEV regulatory targets and a compliance credit system. The Amendments require manufacturers and importers to meet an annual percentage target of new light-duty ZEVs offered for sale in Canada (hereinafter referred to as “ZEV sales targets”). These annual ZEV sales targets are as follows:

Table 1: ZEV sales targets by model year
Model year ZEV sales targets (%)
2026 20
2027 23
2028 34
2029 43
2030 60
2031 74
2032 83
2033 94
2034 97
2035 and beyond 100

The Amendments will establish a methodology for determining whether the fleet offered for sale in Canada meets the ZEV sales target for a given model year. If a company exceeds its ZEV sales target, it earns compliance units (hereinafter referred to as the “credits”) for excess ZEVs offered for sale. These credits can be used to offset a deficit for a limited number of years in the future. If a company misses its ZEV sales target, it incurs a compliance deficit, which must be satisfied by obtaining credits within a limited time frame. Compliance deficits can be satisfied with banked credits (see below) by purchasing credits from other companies or by creating some credits through financial contribution to charging stations.

The Amendments will allow a company to bank excess credits from exceeding the ZEV sales target in any given model year to use towards compliance for up to five model years after the model year in which the credits were obtained. Companies will not be permitted to use excess credits to meet their sales targets starting in model year 2035 and beyond. In addition, deficits incurred in model years 2026 to 2034 will be required to be offset no later than the third model year after the one in which the company incurred the deficit and no later than model year 2035.

The value of a credit will be based on the type of ZEV and the model year. A battery electric vehicle (BEV), fuel cell vehicle (FCV), or plug-in hybrid electric vehicle (PHEV) with an all-electric range of more than 80 km will receive one credit throughout the entire lifetime of the Regulations. PHEVs with an all-electric range less than 80 km may receive credits for model years 2026 to 2028, as well as early ZEV credits in model years 2024 and 2025 (early ZEV credits are similar to early action credits in other vehicle emission regulations).

Model year 2026: PHEVs with an all-electric range of at least 50 km and with a seating capacity of at least 7, as well as any PHEVs with an all-electric range of at least 65 km, can earn a full credit in model year 2026. PHEVs with an all-electric range of 50 km to 64 km without a seating capacity of at least 7 will receive 0.75 credits and PHEVs with an all-electric range of 35 km to 49 km will receive 0.15 credits during that same time frame.

Model years 2027 and 2028: PHEVs with an all-electric range of 50 km to 79 km and with a seating capacity of at least 7 will receive a full credit in model year 2027 and 0.75 credits in model year 2028. All PHEVs with an all-electric range of at least 80 km will receive a full credit in model years 2027 and 2028. PHEVs with an all-electric range of 50 km to 79 km without a seating capacity of at least 7 will receive 0.75 credits in model years 2027 and 2028.

Model years 2029 and later: PHEVs with an all-electric range of at least 80 km will receive full credit in model years 2029 and beyond. No other PHEVs will receive credits in model year 2029 and subsequent model years.

In addition, the Amendments will limit the contribution of PHEVs towards the ZEV sales target to 45% for model year 2026, 30% for model year 2027 and 20% for model years 2028 and beyond, regardless of the all-electric range of each PHEV.

Finally, the Amendments will also introduce flexibility mechanisms (explained in the next two sections) for companies to earn early ZEV credits in model years 2024 and 2025 and create credits by investing into ZEV charging stations in model years 2024 to 2027.

Early ZEV credits

The Amendments will allow a company to earn early ZEV credits for selling ZEVs in model years 2024 and 2025 within a specific threshold. Companies only earn early ZEV credits for the ZEV portion of their fleet offered for sale that is both below the 2026 target (20%) and above 8% in 2024 and 13% in 2025. The latter percentages were established based on analysis of current ZEV adoption trends in Canada and provincial ZEV regulatory requirements in 2024 and 2025. These credits are earned at the same rate as if they were sold in model year 2026, except there is no limit on the contribution of PHEVs towards the overall early ZEV credit allowance.

In addition, only regulatees in a deficit can use early ZEV credits, and they can only use them to offset their own deficits in model years 2026 and 2027, meaning they cannot be traded to other manufacturers. However, the combined contribution of early ZEV credits and ZEV charging station credits (described below) that can be used to meet a company’s compliance obligation is capped at 10% per model year.

ZEV charging station credits

The Amendments will also allow regulated entities to create credits through contributing to the deployment of charging stations. Regulated entities can submit projects for the development of charging stations to the Minister for approval as soon as the Amendments are published, but no later than December 31, 2027. Projects may involve third parties, but only regulated companies will be authorized to create ZEV charging station credits. To be eligible for charging station credits, the project must involve the installation of charging stations capable of electrical outputs at a rate of at least 150 kW and be located in Canada. The chargers must become operational between January 1, 2024, and December 31, 2027. Additionally, all chargers must be operational within two years of projects receiving approval from the Minister. The chargers must be in a location that is publicly available with equal pricing for all compatible ZEVs (including with adaptors) and be normally available for use 24 hours per day, 7 days per week or, if located on the property of a business, during normal operating hours. The chargers must remain operational for at least the five subsequent years following the start of operation.

Furthermore, the project must not be used to create other compliance credits under another federal regulatory program or will not be funded through any governmental (federal, provincial, or municipal) investment program at any point during its lifetime. Some examples of programs that projects cannot be linked to at the federal/provincial or municipal level include the Clean Fuel Regulations, the ZEVIP, and the Canada Infrastructure Bank.

Once a project has been registered by the Minister following receipt of the application and required affirmation statement, companies can create credits for their investments. Credits will only be authorized to be created for investments up to a maximum amount per project that increases by $150,000 for every charger in the project with a rated power of 150–199 kW and by $200,000 for every charger in the project with a rated power of at least 200 kW. Further details on eligible expenditures will be provided in guidance by the Department and will be in line with Natural Resources Canada’s ZEVIP program.

Regulated companies will earn one charging station credit for each contribution of $20,000. Credits created from charging station deployment may be traded freely and can be used to offset deficits until the end of the 2030 model year. They are limited to satisfying up to 10% of a regulated entity’s compliance obligation in each model year between 2026 and 2030, with the limit in 2026 and 2027 being shared with early ZEV credits used, as described previously.

Should a company fail to comply with its statement to the Minister, the credits for that project will be cancelled.

Administrative amendments to the Regulations

The most significant change to the existing Regulations is a shift to a static incorporation by reference of the GHG standards which are contained in subsections 17(6) and (7) of the Regulations. This is necessary due to revisions proposed by the United States in the recent post-2026 NPRM which would change the section of the CFR in which the U.S. GHG standards are located, and which is currently referenced in Canada’s GHG emission regulations.

Instead of the Canadian regulations referencing the most recent version of the CFR, it will reference a past version of the CFR as it existed on February 28, 2022. This would avoid the need to change all references to the CFR in the current Canadian regulations without affecting the stringency and flexibilities of the various provisions. The pre-2026 GHG standards in the United States took effect on that date and the revisions to the Canadian GHG regulations are based on this version.

Besides this change, the Amendments will make several housekeeping amendments to the pre-2026 model year administrative requirements. These amendments will implement changes identified in Canada’s mid-term evaluation of the Regulations in order to align with some of the changes in the U.S. EPA 2020 and 2021 Final Rules. In addition, the Amendments will make other corrections, clarify provisions and update references in the current version of the Regulations.

Regulatory development

Consultation

Pre-Canada Gazette, Part I, consultations

The Department has consulted with non-governmental organizations (NGOs), industry, academics, other government departments, provincial/territorial/municipal governments, and the public. Starting in August 2020, the Department began to engage the stakeholder community as part of the mid-term review of the PALTGGER. This involved a series of webinars and online consultation sessions in the summer and fall of that year, following the publication of a Final Rule by the U.S. EPA in April 2020. Another webinar session was held in February 2021 following the publication of a revised U.S. final decision document on the mid-term evaluation.

In December 2021, the Department released a discussion paper, which sought input on measures needed to achieve Canada’s 2035 ZEV sales targets for all new LDVs. Stakeholders were invited to provide written feedback until January 21, 2022. In August 2022, a Light-Duty Vehicle Technical Working Group (the “Technical Working Group”) was established to share technical information and views on regulations to reduce GHG emissions from LDVs in Canada and transition towards ZEVs. In addition to these meetings, departmental officials have held over 30 bilateral meetings with stakeholders and partners before the publication of the proposed Amendments.

Comments on proposed Amendments published in the Canada Gazette, Part I

Publication of the proposed Amendments on December 31, 2022, initiated a 75-day comment period during which interested parties were invited to submit their written comments. The Government of Canada’s new online regulatory consultation system was active, and stakeholders were encouraged to submit their comments via that system. The 75-day comment period ended on March 16, 2023. All stakeholder comments that conformed to the terms of use were subsequently posted online.footnote 17

The proposed Amendments were also posted on the Department’s CEPA Environmental Registry Website to make them broadly available to interested parties. The Department informed a broad range of interested parties about the formal consultation process. In early 2023, the Department held group information sessions with representatives of provincial and territorial governments, regulated companies and their representative associations, and environmental NGOs to provide an overview of the proposed Amendments, as well as to answer questions to better inform possible written submissions. The Department also held several meetings with individual regulated manufacturers and importers to better understand their views on the proposed Amendments.

The Department received a total of 215 unique comments from stakeholders regarding the proposed Amendments for pre-2026 GHG emission and ZEV requirements. The summary of comments that follows divides these stakeholders into four distinct categories: industry stakeholders (36); NGOs (20); provincial, territorial and municipal governments and agencies (5); and the public (154). Since the industry stakeholders included a diverse range of organizations, they have been further divided into the following sub-categories: regulated companies (13); associations of regulated companies (2); energy producers and/or suppliers (7); associations of energy producers and/or suppliers (6); an association of heavy-duty vehicle manufacturers (1); and other associations (7).

The Department took these comments into account when developing the final Amendments. The following paragraphs summarize the major issues raised by interested parties on the proposed Amendments and the Department’s analysis leading to the development of the final Amendments. Generally, regulated manufacturers and importers opposed regulated ZEV targets and expressed that Canada would need to put in place stronger supports for the ZEV transition, such as additional charging infrastructure and stronger incentives, and said that without these supports, the Government should adopt less stringent ZEV requirements and increased flexibilities. Regulated companies importing only ZEVs and non-governmental organizations generally advocated for more stringent standards and reduced flexibilities.

Stringency of targets

Some ZEV-only vehicle manufacturers suggested more stringent targets. On the other hand, larger regulated companies with a diversified product line, as well as other associations, suggested less stringent targets, different adoption curves, or only the ERP targets without any interim measures. Other regulated companies requested temporary relief from the targets to give them time to make the necessary investments to develop ZEV products. Similarly, a representative of the automotive supply industry advocated for a more performance-based approach with additional flexibilities particularly for PHEVs. A company whose operations include the production of hydrogen indicated support for the ZEV targets and further stated the importance of regulatory certainty for their business. A regulated company also supported interim targets and alignment with California’s Advanced Clean Car II (ACCII) program.

Many NGOs advocated for more stringent ZEV sales targets, aligned with jurisdictions such as British Columbia, Quebec, and California. They suggested that the proposed targets were too lenient and would be implemented too slowly, thus failing to promote equitable ZEV distribution and rapid GHG emissions reduction. Some NGOs suggested to start mandating ZEV sales targets sooner and remaining open to revisions for upward adjustments. NGOs also argued that more aggressive targets are crucial for meeting Canada’s commitment to reducing GHG emissions.

Response: The Amendments maintain the previously proposed stringency of the targets. These targets will result in a continuous increase in ZEV uptake in line with the commitments made in the ERP.

Making the ZEV targets more stringent in the early years would likely not lead to a meaningful increase in the number of ZEVs sold in Canada, due to the multi-year cycle to design and build new vehicle models. Instead, more stringent targets are likely to result in increased financial flows from traditional automakers to those companies with surplus credits. Financial outflows to these credit-rich companies would reduce the ability of other regulated “traditional automaker” companies to facilitate their own transition to ZEVs and provide consumers with a greater range of ZEV options across all price points.

Using the ERP-defined ZEV targets for only the three model years 2026, 2030 and 2035, without any targets in the intervening years, would reduce the certainty that Canada would continue to make consistent, steady progress towards its ZEV targets. Annual targets also provide more certainty for non-regulated entities supporting the transition, such as the operators of charging stations and the electrical grid. Regulating only 2026, 2030 and 2035 would eliminate the possibility of allowing deficits to be carried forward for up to three years, meaning that the proposed Amendments would likely provide less flexibility. In light of this, the Amendments have maintained the yearly targets for the model years 2026 to 2035 and beyond.

The Amendments incorporate several flexibilities, such as the options to generate early ZEV credits, bank and trade credits, and create credits through contributing to ZEV charging infrastructure. Regulatees may opt to use these flexibilities while they expand their ZEV product portfolio to meet the ZEV sales targets.

The Department has determined that the proposed Amendments struck the appropriate balance of both challenging regulated entities to accelerate the transition to ZEVs in line with Canada’s ERP commitment and ensuring the targets are achievable. Therefore, the Department has not modified the stringency levels of the target values in the Amendments, though it has modified the flexibility provisions in response to comments from stakeholders as detailed further below (see the “Flexibilities” section).

Regional considerations

A wide variety of stakeholders expressed support for regional considerations and requirements. These included several provincial governments and a municipal government agency, several NGOs, some members of the public and a BEV-only regulated company. They stated that the Department should ensure that the proposed Amendments increase ZEV adoption across all parts of the country and advocated for the Department to consider regional requirements. Some stakeholders also expressed concerns about the use of ZEVs in colder northern climates.

Some regulated companies and some associations of regulated companies commented that the proposed Amendments should not include regional requirements. They noted that it is common for dealers to trade vehicles among themselves once they have been supplied by the manufacturer, including across provincial borders. They also noted that different regions of the country are at different levels of ZEV readiness, with some having provincial incentive programs in place, some having substantial charging infrastructure already built, and a consumer base showing strong interest in ZEVs. They felt that regional requirements would be likely to cause shortages of ZEVs in regions with the highest consumer interest and inventories of unsold ZEVs in regions with the lowest consumer interest.

Response: The Department has concluded that ZEV requirements on a national basis remain the most appropriate structure for the Amendments. Departmental analysis indicates that the stringency of the standards is sufficient to drive increased ZEV adoption across all parts of the country even after taking Quebec and British Columbia’s ZEV regulations into consideration.

Further, national requirements provide regulated companies the flexibility to respond to markets with high consumer interest and infrastructure readiness, and more slowly in areas with lower consumer interest and infrastructure readiness, as ZEVs continue to gain market share throughout the country. Climate change is a global issue, and not a localized issue. National requirements are consistent with the key objective of the Amendments, which is to reduce GHG emissions from the transportation sector. As further explained below, the Department recognizes that plug-in hybrids may be the preferred ZEV option for many northern and remote communities, both in the short term and to 2035 and beyond.

Treatment of PHEVs

A broad cross-section of industry stakeholders, as well as NGOs and public commenters, supported the inclusion of PHEVs in the proposed Amendments. NGOs largely agreed on the need to provide partial and decreasing credits for short and medium range PHEVs. A wide variety of stakeholders expressed the view that PHEVs may play a particularly important role in remote, northern, and rural communities, where ZEV infrastructure is least developed and likely to arrive latest. Further, several public comments noted that the Department should not restrict regulated companies’ ability to offer or expand PHEVs, especially in remote and rural areas, as the market will adapt to consumers’ needs and charging infrastructure readiness.

A few regulated companies, and some public commenters, opposed the inclusion of PHEVs, with some stating they provide insufficient environmental benefits or that battery electric technology had advanced sufficiently that PHEVs are no longer necessary. Among NGOs, there was consensus on decreasing incentives for PHEVs over time, reflecting their perceived transitional status and their potential underutilization.

Response: Based on the feedback received, the Department will continue to include PHEVs in its definition of zero-emission vehicles, given that they provide a necessary option for communities that face difficulties with electrification, such as those that are more remote or those farther north, as well as give regulatees and consumers more choices to comply with the Amendments.

Furthermore, the Department has made several modifications to the treatment of PHEVs. The all-electric range threshold requirement for a PHEV to earn one credit has been reduced from the initially proposed 80 km to at least 65 km for MY 2026, reverting to 80 km for MY 2027 and later. The minimum all-electric range threshold for PHEVs to obtain 0.15 credits per vehicle has been increased from 16 km to 35 km for MY 2026. Finally, PHEVs with at least 7 seats and a range of at least 50 km will generate 1.0 credit in MYs 2026 and 2027, increasing to the same minimum range of 80 km for all PHEVs for MY 2028 and later.

These changes ensure that the credits for PHEVs better reflect the PHEV models that are currently on the market or are expected to enter the market in the near term, and provide additional credits for higher seating capacity vehicles, which have more limited battery electric options than other segments of the light-duty vehicle market.

Definition of applicable vehicle technologies

Comments received from regulated companies and their associations, NGOs, and public commenters advocated for the inclusion of vehicles using other technologies and fuel types in the ZEV definition. A broad mix of industry stakeholders proposed accommodating future technological breakthroughs and technology-neutral policies. NGOs and public commenters recommended incorporating vehicles capable of using renewable fuels, such as propane and hydrogen blending, alongside electric vehicles. Further, there was a broad consensus among NGOs for a more refined definition of applicable vehicle technologies that prioritizes emission reduction goals.

Many NGOs, a municipal government agency, and some members of the public commented on the inclusion of PHEVs in the ZEV definition. Some NGOs and public commenters suggested limiting the inclusion of PHEVs, while others asserted that PHEVs were not true ZEVs and should either be excluded entirely or discouraged. A few public commenters proposed a penalty offset system where PHEV sales would reduce penalties.

Response: The Department has determined that the existing ZEV definition remains appropriate, as battery electric, plug-in hybrid and fuel-cell vehicles remain the only vehicles capable of operating with zero emissions at this time. Canada’s Clean Fuel Regulations will separately ensure that the gasoline and diesel Canadians use every day will become progressively cleaner over time and affordable alternatives will be increasingly available to consumers. The potential for the introduction of new vehicle technologies capable of operating with zero emissions can be addressed in subsequent regulatory actions when more is known about these technologies.

The Department will continue to include PHEVs in the ZEV definition, recognizing the important role that these vehicles are expected to play in the transition to ZEVs. This considers comments from Canadians in regions where ZEV adoption will be the most challenging, such as remote, rural and northern areas with less developed charging infrastructure and the coldest parts of the country where cold-weather battery performance is of greatest concern.

Interaction with other requirements

A ZEV-only vehicle manufacturer, several NGOs, a municipal government agency, and some public commenters advocated for the Department to consider various methods of having the federal regulations interact with existing or future provincial regulations. These stakeholders suggested prohibiting vehicles which earn credit under provincial regulations from earning credit under federal regulations.

Regulated companies, as well as some NGOs and provincial governments, advocated for strong demand-side policies, including increased consumer rebates to support the purchase of ZEVs, accelerated deployment of existing resources for charging infrastructure, worker upskilling and consumer education programs, to supplement the supply-sided policies that are being implemented.

Regulated companies, energy producers and/or suppliers and another association emphasized the importance of harmonizing the Amendments with those of the U.S. EPA in recognition of the integrated nature of the North American vehicle market. Most regulated companies advocated for Canada to continue alignment with the U.S. EPA fleet average GHG emission standards, stating it is the most effective way to meet GHG and ZEV targets while protecting the competitiveness of the regulated companies.

Response: The Department has determined that ZEV requirements on a national basis are the most appropriate regulatory structure. ZEVs continue to gain market share throughout the country, and national ZEV requirements would give regulatees the flexibility to respond to markets with high consumer interest and infrastructure readiness. Regulatees indicated that ZEV supply is allocated on a national basis, and that regional requirements would not generate any additional supply for Canada.

Federal and provincial government efforts to further support the transition to ZEVs, such as incentives, infrastructure investments and provincial regulations, will continue to play an important role, along with federal regulations. The Amendments are sufficiently stringent to ensure that there is increased ZEV adoption in all parts of the country in line with national targets, while allowing the transition to take place at varying speeds in different regions.

The Department recognizes the important role that performance-based GHG emission standards have already served and will continue to serve in reducing GHG emissions from light-duty vehicles, and the Government has already committed to align with the most stringent post-2025 performance-based standards in North America.footnote 18 The Department understands that, at this time, new U.S. EPA multi-pollutant standards, which were proposed in May 2023, would be the most stringent in North America (see the “Instrument choice” section).

Flexibilities

All regulated companies that offer both conventional vehicles and ZEVs for sale and some representative associations advocated for the development of an early ZEV credit program, noting that this was a feature of many other ZEV regulatory programs, including those in California, Quebec, and British Columbia, as well as previous and proposed U.S. GHG regulations.

Several NGOs and many public commenters indicated support for imposing a penalty of $20,000 per vehicle by which a company misses their ZEV sales target at the end of each model year. NGOs and public commenters noted that these types of penalties are common in other jurisdictions like Quebec, British Columbia, and California.

Response: The Department is implementing an early ZEV credit program that will be established as part of these Amendments. In response to comments received, the early ZEV credit program will provide flexibility to regulated companies as they adjust to the Amendments while minimizing the impact of this provision on actual sales of ZEVs in MYs 2026 to 2030 by placing appropriate limits on the use of early ZEV credits. More details on the early ZEV credit option can be found in the “Description” section.

ZEV activity compliance mechanism and ZEV charging infrastructure

There were mixed views about the inclusion of “ZEV activities” in the proposed Amendments. While some NGOs and public commenters suggested tightening or eliminating this provision, others agreed that the Regulations should include a limited compliance mechanism designed to expand ZEV infrastructure as a means to overcoming consumer concerns about ZEVs without negatively impacting the overall objectives of the proposed Amendments.

Some NGOs and regulated companies that exclusively produce ZEVs opposed the ZEV activity provision, and advocated for a regulatory structure in which providing ZEVs for sale in Canada would be the only way to generate credits. Most other regulated companies stated that the ZEV activity provision in the proposed Amendments would not provide a sufficiently strong business case for them to make these investments.

Some provincial governments emphasized the importance of expanding ZEV charging infrastructure, especially in underserved areas, and suggested the use of “compliance credits” to incentivize such expansion.

Response: The Department has updated the ZEV activity credit provision with a system in which companies can obtain credits by investing in ZEV charging infrastructure. The ZEV charging infrastructure system allows regulated automakers to obtain credits for investments of a prescribed amount in specific types of charging infrastructure. Specifically, the new credit system for ZEV charging infrastructure will allow regulated companies to claim one credit per $20,000 invested in charging infrastructure that is both publicly available and with charging capacities of at least 150 kW. ZEV charging infrastructure credits cannot be generated if a project benefits from a government incentive program or credits under another federal regulatory program.

Credit banking and length of time to offset a deficit

Stakeholders from all categories generally supported the proposed Amendments regarding credit banking, the length of time credits are valid, and length of time available to offset a deficit, but some made suggestions about changes that they felt would improve the credit system.

Many NGOs as well as a municipal government agency made a variety of suggestions about how to modify the credit program, including views on timelines for credit banking and a credit clearance mechanism. They were generally against the idea of regulated companies being able to bank surplus credits. Some NGOs also suggested shortening the lifespan of banked credits, limiting credit banking, and introducing regional provisions to adjust credit values based on where a vehicle is sold.

A few NGOs also suggested limiting the deficits that can be carried forward. Some suggested reducing the number of years that companies could carry forward deficits or eliminating the ability to carry forward a deficit entirely.

Response: The Amendments maintain the initially proposed regulatory structure which permits deficits to be carried forward for up to three years, and credits to be carried forward for up to five years, with all excess credits expiring after the 2034 model year and no option to use excess credits in the 2035 and later model years. This is consistent with the treatment of credits under the existing air pollutant and greenhouse gas emission regulations in the U.S. and Canada and allows sufficient flexibility for regulated companies to meet their obligations over time while also ensuring that federal emissions reduction and ZEV objectives are met.

Cost-benefit analysis: air quality impacts

Some stakeholders noted additional impacts they thought should be included in the cost-benefit analysis. In particular, some commenters emphasized the importance of monetizing the health benefits of air pollution reductions, referencing the Atmospheric Fund’s analysis using regional benefit-per-tonne (BPT) estimates published by Health Canada to calculate national health benefits of air pollution reduction.footnote 19

Response: The Department recognizes the value in monetizing air pollution health benefits associated with the Amendments; however, full air quality modelling could not be completed due to time and resource constraints.

Although Health Canada published a report that estimates the dollar value of health benefits associated with a one-tonne reduction in selected air pollutants, this method of evaluating health benefits is not appropriate for evaluating the health benefits associated with the Amendments. The BPT values in the Health Canada study were estimated for Southwestern British Columbia and in the Windsor to Quebec City corridor for the 2015 calendar year, while the ZEV Amendments will have impacts that are national in scope. Additionally, Quebec and British Columbia have provincial ZEV mandates which already limit the amount of incremental ZEVs and associated air quality impacts that can be attributed to the Amendments in these regions. Furthermore, since the BPT values were derived for 2015 and are partly influenced by the population distribution of that year, the application of these values to air pollutant reductions out to 2050 introduces considerable uncertainty into the estimates under different population-economic growth assumptions.

As a result, the projected reductions in selected air pollutant emissions have been quantified in the cost-benefit analysis, but the potential health benefits from those reductions have not been monetized.

Cost-benefit analysis: other issues

Overall, the remaining comments on the cost-benefit analysis highlighted two further significant issues. First, the analysis should consider installation costs for home chargers, and second, the analysis should consider the implications of alignment with more stringent North American vehicle emission standards.

Response: The Department has updated the analysis to account for charger installation costs (see the “Monetized (and quantified) impacts” section). As well, the Department has considered an alternate scenario where there is alignment with the new, more stringent vehicle emission standards proposed by the U.S. EPA (see the “Attribution analysis” section).

Modern treaty obligations and Indigenous engagement and consultation

As required by the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, an assessment of modern treaty implications was conducted on the Amendments. The assessment examined the geographic scope and subject matter of the Amendments in relation to modern treaties in effect. The assessment did not identify any modern treaty implications or obligations.

Instrument choice

The objective of the Amendments is to reduce GHG emissions from light-duty vehicles to achieve broader announced climate targets. Maintaining the status quo would likely not go far enough to achieve Canada’s emission reduction target of 40% to 45% below 2005 levels by 2030. In addition, the historical method of reducing emissions from passenger automobiles and light trucks through the use of increasingly stringent fleet average GHG emission standards alone may not achieve net-zero emissions by 2050.

The Strengthened Climate Plan (see the “Background” section) included commitments by the Government of Canada to align with the most stringent GHG emission standards in North America and to accelerate and expand the availability of ZEVs to consumers through appropriate regulations and incentive programs. This was followed by additional commitments in the ERP published in 2022 (see the “Background” section), in which the Government of Canada reiterated its commitment to implement a sales mandate that requires at least 20% of all new light-duty vehicle sales be ZEVs in 2026 and at least 60% by 2030 as interim steps toward achieving Canada’s mandatory target of 100% by 2035.

In 2023, the U.S. EPA published the NPRM to increase light-duty vehicle emission standards beginning in 2027, and their analysis concluded that a cost-effective compliance strategy would be for industry to produce more BEVs. Consequently, it is possible to compare the impact on ZEV sales of either regulating them directly by establishing regulatory sales targets or regulating them indirectly by adopting more stringent U.S. emission standards. The Department has estimated the impact these two regulatory measures would have on ZEV sales in Canada over the 2027 to 2035 period as shown in Figure 1 below.

Figure 1: Attribution of ZEV adoption

Figure 1: Attribution of ZEV Adoption – Text version below the graph

Figure 1: Attribution of ZEV adoption

Figure 1 is a line graph that illustrates three trajectories of annual ZEV sales as a share of overall light-duty vehicle sales. The y-axis represents ZEV sales as a percentage of overall light-duty vehicle sales, ranging from zero to 100%. The x-axis represents the year, ranging from 2027 to 2035. There are three lines on the graph. The first line illustrates the expected trajectory of the share of ZEVs in the baseline scenario. This line begins around 20% and has a positive slope through to 2035 where it ends at roughly 50%. The second line represents the trajectory of the share of ZEVs in the regulatory scenario, and follows the annual stringencies as set out in Table 1. This line begins just above 20% in 2027, and increases more rapidly than the baseline scenario, reaching 100% in 2035. The third line represents the expected trajectory of ZEV sales under the U.S. EPA’s proposed post-2026 GHG emission standards. This line begins around 35% in 2027 and remains above the second line until 2030 when they intersect at 60%, from there the line increases to 67% in 2032 where it flattens through to 2035. The area above the second line and below the third line from 2027 to 2030 is denoted as area “B”, the area above the third line and below the second line from 2030 to 2035 is denoted as area “A”, and the area above the first line and below the other two lines is denoted as area “C”.

As shown above, either regulatory option would be expected to increase ZEV sales: ZEV targets alone would increase sales by the area shown as A plus C, and alignment with increased U.S. emission standards as set out in the NPRM would be expected to increase ZEV sales by the area shown as B plus C. Doing both would be expected to maximize ZEV sales by the combined area A plus B plus C. However, while the NPRM encourages ZEV uptake, it does not require ZEV uptake to comply with GHG regulations, meaning that establishing ZEV targets is the only mechanism that will require the fleet to shift to at least 60% ZEV sales by 2030 and 100% by 2035, putting Canada on track to reach its goal of net-zero emissions by 2050 in this sector.

Regulating more ZEV vehicle sales as soon as possible was also an explicit commitment of the ERP:

The following cost-benefit analysis evaluates two scenarios for regulating ZEV sales targets in order to provide an upper- and lower-bound estimate of the attribution of ZEV sales to the Amendments: The first estimates all impacts that could be attributed to establishing ZEV sales targets, including some impacts that could also be attributed to Canada’s commitment to adopt more stringent post-2026 vehicle emission standards (a full-attribution scenario shown as area A plus C in Figure 1 above). The second incorporates information from the EPA’s NPRM, in order to account for Canada’s commitment to adopt more stringent post-2026 vehicle emission standards. This partial attribution scenario (shown as area A in Figure 1 above) estimates the impacts that could be attributed only to establishing ZEV targets (see the “Attribution analysis” section for details). The analysis shows that there are net benefits associated with the Amendments under either attribution scenario, with larger net benefits in the full-attribution scenario (central case).

Regulatory analysis

The Amendments making administrative changes to the Regulations are not expected to have a measurable impact, as they are largely technical in nature. Therefore, impacts estimated in this analysis are attributable only to the Amendments to introduce ZEV sales targets.

The Amendments are estimated to have incremental ZEV and home charger costs of $54.1 billion from 2024 to 2050 for consumers who switch to ZEVs in response to the Amendments. These same consumers are expected to realize $36.7 billion in net energy savings over this period. The Amendments are also estimated to result in cumulative GHG emission reductions of 362 megatonnes (Mt), valued at $96.1 billion in avoided climate change-induced global damages. These GHG emission reductions will help Canada meet its international GHG emission reduction commitments for 2030 and 2050. The Amendments are thus estimated to have total benefits of $132.8 billion, and net benefits of $78.6 billion.

Analytical framework

To estimate the impact of the Amendments, a cost-benefit analysis was conducted to account for three main categories of monetized impacts, similar to the approach taken for the mid-term review of the Regulations.footnote 5 These impacts are incremental ZEV and home charger costs, net energy savings, and GHG emission reductions. There are also minor administrative costs that could begin to be incurred as soon as the Amendments come into force. The timeframe for analysis is therefore 27 years (2024 to 2050), which covers the period when the early ZEV flexibility provisions come into effect (model year 2024), when the ZEV requirements come into force (model year 2026) and reach full stringency (model year 2035), and then extends to 2050 to illustrate the trend in cumulative net benefits resulting from the ongoing shift to more ZEVs in the light-duty vehicle fleet in response to the Amendments.

ZEV costs are estimated from published sources, such as Statistics Canada, the California Air Resources Board (CARB) and the U.S. EPA, while net energy savings and GHG emission reductions are estimated using the output from the Department’s Energy, Emissions, and Economy Model for Canada (E3MC). The value of GHG emission reductions is calculated using the Department’s social cost of greenhouse gases (SC-GHG) emissions method. Air pollution reductions are also quantified but not monetized, while other impacts are considered qualitatively. The incremental impacts are derived by comparing a baseline scenario to a regulatory scenario that reflects key aspects of the ZEV Amendments. Where sources used U.S. dollars, dollars were converted to Canadian dollars using 2022 purchasing power parity.footnote 20 All dollar figures are presented in 2022 Canadian prices and discounted at 2% annually (to 2024) when presented in present value form. This is the near-term Ramsey discount rate now utilized by the Government of Canada when monetizing GHG reductions (more information on this approach is presented in the benefits section).

Updates to the analysis following publication of the proposed Amendments in the Canada Gazette, Part I

Comments received following the publication of the proposed Amendments included feedback from stakeholders and interested parties regarding the regulatory analysis. Some of these comments noted the importance of considering home charger installation costs. In response, the Department has reviewed costing information to install chargers and has updated the analysis to reflect this new information.

Additionally, updated information has been released since the publication of the proposed Amendments that has been integrated into the analysis. This includes updated guidance on the social cost of greenhouse gas emissions (including carbon dioxide) published by the Department in April 2023. These new values for the social cost of greenhouse gas have been integrated into the analysis for the Amendments to more accurately value the benefit of avoided global damages from climate change, reflecting the recent state of climate science. To ensure consistency with the methodology used to determine the updated social cost of greenhouse gas, the analysis has also updated the discount rate to 2%. Lastly, baseline ZEV projections have been updated to align with the most up-to-date information.

Furthermore, prices have been updated to be presented in 2022 Canadian dollars, and the base year to discount costs and benefits to present value has been updated to 2024. In total, these updates have led to an increase in estimated costs from $24.4 billion, estimated under the proposed Amendments, to $54.1 billion. Emission reductions attributable to the Amendments have decreased from approximately 430 Mt to 362 Mt, reflective of the increased number of ZEVs being sold in the baseline scenario. Despite the decrease in GHG reductions attributable to the Amendments, the increased value of GHG reductions has increased GHG benefits from $19.2 billion to $96.1 billion over the period of the analysis.

Baseline scenario

The baseline scenario is based on projections from the 2021 Departmental Reference Case,footnote 21 adjusted to reflect Transport Canada’s 2022 projections on ZEV penetration rates. The projections from the Departmental Reference Case take into consideration current policies in place, such as the zero-emission vehicle regulations in Quebec and British Columbia. Since Canadian passenger car and light truck fleet average GHG emission standards are aligned with the United States, the baseline scenario takes into account the regulated fleet average GHG emission standards up to model year 2026, as set out in the EPA’s Final Rule to revise GHG emissions standards for LDVs published in 2021.footnote 22 Beyond 2026, fleet average GHG emission standards are assumed to remain constant at the 2026 level. As a result, the baseline scenario approximates future GHG emissions and energy consumption based on current practices and implemented policy measures. Consequently, this baseline does not account for future policies, such as potential alignment with the proposed post-2026 GHG standards that were published by the U.S. EPA in the NPRM in May 2023. However, given Canada’s history of alignment and its commitment in A Healthy Environment and a Healthy Economy footnote 23 to align with the most stringent future GHG standards in North America, the potential implications of Canadian alignment with more stringent North American vehicle emission standards are evaluated in an alternate scenario (see the “Attribution analysis” section).

The number of new vehicles sold each year is derived using 2019 new vehicle sales data from Statistics Canada.footnote 24 In 2019, total new vehicle sales were 1.98 million. Starting in 2022, this analysis assumes that new vehicle sales will grow at the rate of population growthfootnote 21 in Canada. The years 2020 and 2021 were omitted due to the special economic circumstances of COVID-19 that impacted the industry. Transport Canada’s 2022 projections on ZEV-penetration rates are then applied to estimate the share of ZEV sales in the baseline scenario. Furthermore, Transport Canada projections on the relative percentage of each type of ZEV are also applied to estimate the number of new sales for the four representative ZEV types included in this analysis.

Regulatory scenario

The regulatory scenario assumes that the Amendments achieve the specified year-by-year ZEV sales targets. ZEV sales targets are specified by model year, and the analysis assumes that each model year’s results occur in the same calendar year. E3MC was then used to model how an increase in the percentage of ZEVs impacts GHG tailpipe emissions and vehicle energy use. Fleet average GHG emission standards for non-ZEVs are held constant in the regulatory scenario at 2026 model year levels. Costs are based on estimated incremental ZEV prices and increased share of ZEVs (with home chargers). Rates of vehicle sales and fleet turnover are assumed to be the same in the regulatory scenario as in the baseline.

The Amendments will establish a minimum number of credits required for a regulated company to meet compliance. The year-by-year stringency of the ZEV sales targets begins with model year 2026 and reaches 100% by model year 2035. Companies that go beyond their regulatory requirements earn credits which can be banked for future use or traded to other manufacturers, while those who fall short of their regulatory requirements generate deficits which must be offset. While some PHEV vehicles are eligible for partial credit under the Regulations for certain model years, the analysis assumes that all ZEVs receive one full credit and does not consider how partial crediting of certain PHEVs might affect the type of ZEVs manufactured or imported by regulated companies. Options for credit banking are also offered in the Amendments, but the analysis assumes there is no credit banking.

The Amendments will also offer industry a compliance flexibility option through which manufacturers or importers could create credits by contributing to the deployment of ZEV charging stations which are open before December 31, 2027, to meet a portion of their annual obligations for model years 2026 to 2030. Given that the proposed price of this credit ($20,000) is much higher than the estimated incremental costs of ZEVs, the analysis assumes that vehicle manufacturers and importers will not typically choose to invest in ZEV infrastructure, but instead would generally meet 100% of their annual compliance obligation through the manufacture or importation of additional ZEVs.

Furthermore, the Amendments will offer an additional compliance flexibility option where manufacturers and importers could earn early compliance credits for a portion of ZEV sales in 2024 and 2025. These early compliance credits may be used to offset deficits in 2026 and 2027, but may not exceed 10% of a regulated company’s overall compliance obligation in those years. Additionally, the early compliance credit regime is limited in scope and designed to encourage incremental sales in the years 2024 and 2025. As a result, the use of this compliance flexibility is not considered to significantly impact future GHG reductions attributable to the Amendments, and thus the analysis does not consider the impacts of these credits.

Figure 2: Projected annual share of ZEV sales in the baseline and regulatory scenarios

Figure 2: Projected annual share of ZEV sales in the baseline and regulatory scenarios – Text version below the graph

Figure 2: Projected annual share of ZEV sales in the baseline and regulatory scenarios

Figure 2 is a line graph that illustrates annual ZEV sales as a share of overall light-duty vehicle sales in the baseline and regulatory scenarios. The y-axis represents ZEV sales as a percentage of overall light-duty vehicle sales, ranging from zero to 100%. The x-axis represents the year, ranging from 2026 to 2050. There are two lines on this graph. The first line illustrates the expected trajectory of the share of ZEVs in the baseline scenario. This line begins at just under 20% and has a positive slope through to 2050 where it ends at roughly 80%. The second line represents the trajectory of the share of ZEVs in the regulatory scenario, and follows the annual stringencies as set out in Table 1. This line begins at 20% in 2026, and increases more rapidly than the baseline scenario, reaching 100% in 2035 where it flattens through to 2050.

Monetized (and quantified) impacts

The analysis estimates the incremental costs of more ZEVs, home chargers and ZEV administrative requirements, as well as the benefits of net energy savings from switching to ZEVs. GHG emission reductions are quantified and monetized, while air pollution reductions are only quantified in this analysis.

Costs of manufacturing ZEVs and home chargers, and administrative reporting requirements

The Amendments are expected to result in incremental vehicle and home charging costs for manufacturing (or importing) more ZEVs and installing more home chargers in response to the Amendments. In this analysis, the total number of new vehicles is assumed to be the same in both the baseline and regulatory scenarios. The higher upfront vehicle price could conceivably lead to a reduction in the quantity of vehicles purchased; however, this effect is assumed to be offset by the energy savings offered by ZEVs, which manufactures will use in marketing to ensure consumers are aware of this advantage. To project the number of vehicle sales out to 2050, Statistics Canada vehicle sales data from 2019 is grown using a 1% projected population growth rate from the 2021 Departmental Reference Case. In the regulatory scenario, the share of new ZEVs is increased to align with the annual ZEV targets. The analysis estimates costs to switch to four types of ZEVs: medium-sized BEV cars, BEV light trucks each with a 480 km all-electric range, medium-sized PHEV cars and PHEV light trucks with an 80 km all-electric range. In 2035, medium-sized BEVs account for 30% of ZEV sales, BEV light trucks are roughly 50%, and PHEVs make up the remaining 20% of sales. The proportion of each type of vehicle as a share of overall ZEV sales remains constant in the two scenarios.

Manufacturing costs for ZEVs tend to be higher than those for non-ZEVs and are expected to be passed directly to consumers who switch to ZEV purchases in the regulatory scenario, although price differences are expected to decrease over time. Estimated incremental vehicle costs for this analysis are adopted from a California Air Resources Board (CARB) reportfootnote 25 with prices (excluding subsidies) expressed as 2020 USD (but reported here in 2022 CAD). All ZEVs are assumed to have the additional cold-weather and all-wheel drive (AWD) features. The report estimates that the medium-sized BEV will have an incremental cost of $3,650 in 2026 and will decrease in price, becoming less expensive than its non-ZEV equivalent by 2033. The three other vehicle types do not reach price parity with non-ZEVs. Battery-electric light trucks in this report cost an additional $7,880 in 2026, which decreases to an estimated incremental cost of $725 by 2035. Medium-sized PHEV cars are estimated to cost an incremental $4,375 in 2026 and $2,805 by 2035. PHEV light trucks are estimated to cost an incremental $6,305 in 2026 and $3,950 by 2035. After 2035, the analysis holds these incremental prices constant. The total present value incremental cost of purchasing more ZEVs is estimated to be $15.6 billon in present value terms.

Table 2: Incremental ZEV prices (savings) for select vehicles in select years (in constant $2022)
Type of zero-emission vehicles 2026 2030 2035
Battery electric cars 3,650 1,085 (875)
Battery electric light trucks 7,880 3,805 725
Plug-in hybrid electric cars 4,375 3,500 2,805
Plug-in hybrid electric trucks 6,305 4,975 3,950

In addition to purchasing the vehicle itself, many consumers will purchase charging equipment for at-home vehicle charging. Electric vehicles typically come with a charging cord and can charge directly with a 120-volt plug; however, a level two alternating current (AC) charger requires a 240-volt plug and would increase the speed of charging from a range of 4–6 km to 16–32 km per hour spent charging. Although the cost of a charging cord is included in the ZEV prices outlined in Table 2, upgrading to a residential level two charger would require additional investment. The EPA’s analysisfootnote 26 in its recent NPRM estimates low-, mid-, and high-level costs for level two residential chargers and are outlined below in Table 3. Low costs are calculated assuming only a 240-volt outlet is installed, high costs assume a level two unit (such as a wall-mounted unit) is purchased and installed, while the mid cost is an average of the two. The analysis employs the mid-level cost and assumes an equal split between single- and non-single-family homes, an estimate which is based on census data from Statistics Canadafootnote 27 that shows that in 2016, roughly 53% of occupied dwellings were single-detached houses. According to a report by the National Academy of Sciences (NAS),footnote 28roughly 80% of electric vehicles (EVs) are bought with a level two residential charger. The proportion of ZEVs bought with a charger will likely decrease over time, as consumers begin replacing existing ZEVs as opposed to replacing non-ZEVs; however, this analysis maintains the 80% assumption throughout the timeframe of analysis. The cost to consumers to purchase charging equipment is determined by multiplying the EPA’s estimated mid-level cost by 80% of the incremental number of ZEVs sold for a total cost of $38.5 billion in present value terms. Alternative scenarios are tested in the sensitivity analysis.

Table 3: Level two residential charger prices (in constant $2022)
Charger costs Single-family home Non-single-family home
Low 1,120 4,630
Mid 1,545 5,190
High 2,105 5,755

The total incremental costs to purchase ZEVs and home chargers are estimated at $54.1 billion in present value terms, as shown in Table 4 below.

Most manufacturers and importers are already required to submit compliance reports to the Department under the Regulations. However, the Amendments will require the inclusion of additional information, and will cover additional manufacturers and importers who are exempt from various reporting requirements under the Regulations. The Amendments introduce new ZEV requirements, where manufacturers and importers will be required to submit documentation outlining their production or importation of ZEVs, contributing to the deployment of ZEV charging stations, or the trade of credits with other manufacturers or importers. Annualized administrative costs from the additional reporting requirements are estimated to be $125,000 annually. Over the timeframe of analysis, these administration costs are estimated to be $2.6 million in present value terms.

Compliance costs to manufacture or import more ZEVs, install chargers, and meet the administrative requirements of the Amendments, are $54.1 billion, as shown below.

Table 4: Summary of monetized costs (millions of dollars)

Monetized benefits (costs) Undiscounted — 2024 Undiscounted — 2035 Undiscounted — 2050 Discounted — 2024 to 2050 Annualized
Vehicle costs – 783 228 15 575 752
Charger costs – 2 956 1 502 38 539 1 861
Administrative costs 0.1 0.1 0.1 2.6 0.1
Total ZEV costs 0.1 3 739 1 730 54 117 2 613

It is expected that these incremental costs will be passed onto ZEV purchasers. These consumers are also expected to incur ongoing costs associated with charging their ZEVs instead of paying liquid fuel costs for non-ZEVs. These energy costs are discussed in the “Net energy savings” section below, as the incremental energy impact is expected to be a net benefit to ZEV owners.

The Government of Canada is not expected to incur any additional costs beyond the need to inform stakeholders of the Amendments. This is because the current regulatory framework is expected to remain the same and the existing implementation, compliance, and enforcement policies and programs would continue to apply.

Monetized (and quantified) benefits

The key benefits estimated in this analysis are the net energy savings that accrue to those who purchase ZEVs as a result of the Amendments, and the reduced GHG emissions from these ZEVs which will help Canada meet its international commitments to reduce the global damages of climate change. There will also be reduced air pollution emissions, which is expected to directly benefit Canadians.

Net energy savings

Although consumers will incur costs to charge their electric vehicles, ZEVs do not require traditional liquid fuels to operate (though PHEVs can use both electricity and liquid fuels) and are more energy-efficient than their non-ZEV equivalents. The U.S. Department of Energy estimates that non-ZEVs lose the majority of the energy from the fuel they consume to inefficiencies and powering accessories, only using 12%–30% of their energy from fuel to move the vehicle.footnote 29 Conversely, ZEVs are estimated to be 60% to 73% efficient and, after accounting for regenerative braking, this figure could increase to 77% to 100% efficient.footnote 30 This increased efficiency is the primary driver behind energy savings associated with ZEV ownership. Energy costs associated with charging ZEVs are estimated in this analysis through the use of the Department’s E3MC model. BEVs use only electricity, while the model assumes PHEVs operate using their battery 65% of the time, and gasoline the other 35%. E3MC provides projections on the increased electricity demand associated with an increase in the sale of ZEVs, as well as electricity price forecasts. As noted in the 2021 Reference Case, the price of electricity ranges across Canada, and results from E3MC reflect these regional differences. Similarly, the decrease in liquid fuels demanded due to fewer non-ZEV purchases in the regulatory scenario is also modelled using E3MC and monetized using the Reference Case’s liquid fuel price projections for blended gasoline and diesel. The liquid fuel price projections included in the Reference Case are informed by the Canadian Energy Regulator’s projections. This analysis assumes that all charging is conducted at home.

In present value terms, total increased costs of purchasing electricity over the timeframe of the analysis are estimated to be $63.3 billion. These costs are expected to be offset by the liquid fuel savings which are estimated to be $100.0 billion. It is thus estimated that the Amendments will lead to $36.7 billion in net energy savings over the timeframe of the analysis.

Table 5: Energy costs (and savings) in millions of dollars
Monetized energy impacts Undiscounted — 2024 Undiscounted — 2035 Undiscounted — 2050 Discounted — 2024 to 2050
Electricity costs – 2 600 7 081 63 277
Fuel cost savings – (3 975) (11 563) (99 966)
Net energy savings – (1 375) (4 482) (36 689)

As shown in Figure 3 below, the annual incremental costs to purchase more ZEVs and chargers increase with the stringency of the Amendments from 2026 to 2035, and then fall in subsequent years as the number of baseline ZEVs increase annually. Meanwhile, net energy savings rise over time as the fleet turns over.

Figure 3: Annual ZEV costs and net energy savings

Figure 3: Annual ZEV costs and net energy savings – Text version below the graph

Figure 3: Annual ZEV costs and energy savings

Figure 3 illustrates a bar graph, with the y-axis representing the estimated cost of ZEVs and their chargers (denoted as positive values) and the net energy savings associated with increased ZEV adoption (denoted as negative values), ranging from negative $6 billion to positive $6 billion. The x-axis represents the year from 2026 to 2050. Costs for ZEVs and their chargers start at around $500 million in 2026, dip slightly in 2027 and then increase steadily until 2033 where they peak at roughly $4.7 billion. After this point, costs continually decrease year over year until 2050 when end at roughly $1.7 billion. Net energy savings are near zero in 2026 but increase steadily over time until they peak in 2049 around $4.7 billion, and dip slightly in 2050.

Greenhouse gas emission reductions

The Amendments will contribute to Canada’s climate commitments by reducing tailpipe emissions from passenger automobiles and light trucks. BEVs produce no GHG emissions from operation, while PHEVs have reduced emissions — the model assumes they operate using their battery 65% of the time, and gasoline the other 35%. Based on these projections, it is estimated that over the timeframe of the analysis (2024 to 2050), the Amendments are expected to reduce GHG emissions by approximately 362 Mt, compared to the baseline scenario. Figure 4 below presents annual GHG reductions for 2026 to 2050, the years of the analysis in which the ZEV requirements are in place and incremental GHG emission reductions are expected.

Figure 4: Annual incremental GHG reductions in megatonnes (Mt)

Figure 4: Annual incremental GHG reductions in megatonnes (Mt) – Text version below the graph

Figure 4: Annual incremental GHG reductions in megatonnes (Mt)

Figure 4 illustrates a bar graph, representing annual incremental GHG reductions, with the y-axis representing GHG emission reductions in megatonnes from zero to 30 megatonnes of carbon dioxide equivalent, and the x-axis representing the year from 2026 to 2050. GHG emission reductions begin near zero in 2026, slowly increase year over year, reaching five megatonnes in 2032, and 25 megatonnes in 2045. GHG emission reductions continue rising until they peak in 2049 around 28 megatonnes, and then dip slightly in 2050.

To monetize these benefits, the quantity of avoided GHG emissions each year was multiplied by the Department’s schedule of the value of the social cost of carbon (SCC). In November 2022, the U.S. EPA released its draft Report on the Social Cost of Greenhouse Gasesfootnote 31 (the draft U.S. EPA Report), in which social cost of greenhouse gas emission (SC-GHG) methodologies and values have been updated and presented for CO2, CH4 and N2O. In April 2023, the Department published draft SC-GHG guidance for Canadafootnote 32 in alignment with the SC-GHG values proposed by the U.S. EPA. The new value of the social cost of carbon employed in this analysis and expressed in constant 2022 dollars is $298 in 2026 and increases to $427 in 2050.

Over the timeframe of the analysis, the cumulative monetized benefits of the GHG emissions reductions from the transition to ZEVs are estimated to amount to $96.1 billion in present value terms over the 27-year timeline.

Table 6: Total monetized benefits in millions of dollars
Monetized impacts Undiscounted — 2024 Undiscounted — 2035 Undiscounted — 2050 Discounted — 2024 to 2050 Annualized
GHG benefits – 3 491 11 843 96 070 4 640
Net energy savings – 1 375 4 482 36 689 1 772
Total benefits – 4 866 16 325 132 759 6 411
Air pollution reductions

On-road vehicles are a key source of air pollution exposure. Almost half of Canadians live near high traffic roads. Individuals of low socio-economic status are more likely to live in these areas than wealthier Canadians. In addition, about 50% of schools and long-term care facilities in Canada are located near high traffic roads.footnote 33 Air pollution from on-road vehicles increases the risk of developing asthma and leukemia in children as well as lung cancer in adults.footnote 34,footnote 35 Health Canada analysis indicates that overall, emissions from all on-road vehicles in Canada contribute to an estimated 1 200 premature deaths and millions of cases of nonfatal health outcomes annually, with a total estimated economic value of $9.5 billion annually. The emissions from light-duty vehicles specifically contribute approximately 37% of the health burden associated with air pollution from on-road vehicles.footnote 36 Children, elderly people, individuals with underlying health conditions and people living in high exposure areas are populations who may be disproportionately impacted by the adverse effects of air pollution.

Light-duty vehicles targeted by the Amendments are a significant source of air pollutant emissions, including fine particulate matter (PM2.5), nitrogen oxides (NOx), volatile organic compounds (VOCs), carbon monoxide (CO) and other toxic substances. These emissions also contribute to ambient levels of secondarily formed pollutants of health concern, including PM2.5 and ozone (two principal components of smog). ZEVs offer an opportunity to address traffic-related air pollution, delivering immediate and local health benefits to the Canadian population, and those benefits will accrue into the future over the lifetime of the ZEVs. The estimated reductions in select pollutants from the Amendments are included in Table 7 below.

Table 7: Percent emission reductions in select air pollutants in select years
Type of air pollutants 2024 2035 2050
Particulate matter (PM2.5) – 10% 36%
Nitrogen oxides – 11% 50%
Volatile organic compounds – 13% 61%
Carbon monoxide – 16% 68%

As annual ZEV targets are met, the on-road fleet will turn over leading to increased air pollutant reductions in the later years of the analysis. Given the cumulative nature and magnitude of these reductions, the Amendments are expected to directly benefit many Canadians, including populations most exposed and who may be disproportionately impacted by air pollution from on-road vehicles.

Qualitative impacts

The analysis has only quantified certain impacts and monetized those most likely to contribute to the net impact in the cost-benefit analysis. Other impacts are considered qualitatively below.

Maintenance cost savings

The Amendments are expected to yield maintenance cost savings for consumers, as fully electric vehicles (EVs) have fewer moving parts than non-ZEVs, do not require oil changes or engine tune-ups, and do not contain spark plugs or engine air filters that may generally require replacement. A study by the U.S. Department of Energy estimates that electric vehicle ownership results in a two-cent maintenance cost saving per kilometre driven,footnote 37 for a saving of $300 per year for a vehicle driven 15 000 kilometres per year.footnote 38

Impacts on refuelling time

A survey of the literature by the National Academy of Sciences found that approximately 80% of all charging is done at home.footnote 39 Although charging a ZEV takes more time than fuelling a non-ZEV, consumers who charge overnight at home will save time from not having to stop at a gas station. Those who do not charge at home, however, will likely experience increased refuelling time, as even the fastest chargers exceed the average time non-ZEVs take to fuel. This does not take into account how often one refuels their vehicle, which may be more frequent with short-range BEVs, and PHEVs which can use gasoline and electricity. The analysis is unable to provide a reliable estimate of the net impacts on refuelling time.

More publicly available infrastructure

The Amendments provide regulatory certainty that the market is shifting towards more ZEVs which should incentivize an increase in private investment for public charging infrastructure. Direct-current fast chargers (DCFCs) can charge an EV in approximately 30 minutes;footnote 40 this is significantly longer than the average refuelling time for a non-ZEV. Various businesses may choose to capitalize on the opportunity to increase foot traffic at their establishments by investing in charging infrastructure. This increased investment in publicly available charging infrastructure would also benefit Canadian drivers, as it would make ZEV chargers more readily available and conveniently located.

Rebound effect (vehicles driven more due to the benefits of lower operating costs)

The Amendments will generate energy savings, some of which are expected to be directed towards additional driving. This is known as the “rebound effect,” or the price elasticity of kilometres driven with respect to fuel cost per kilometre. Academic research from the United States evaluated light-duty vehicle travel from 1966 to 2007 and found that gasoline prices have a statistically significant impact on vehicle distance travelled.footnote 41As the electricity cost to drive a ZEV is lower than gasoline and diesel costs for a non-ZEV, consumers could drive more kilometres and still save money.

Increased congestion, accidents, and noise

As noted above, energy savings may encourage consumers to drive more — a phenomenon that is referred to as the “rebound effect.” Consequently, vehicles may spend more time on the road, which would increase the negative externalities associated with driving, such as traffic congestion, motor vehicle crashes, and noise. Although ZEVs are quieter than their non-ZEV counterparts, more vehicles on the road could lead to an increase in other vehicle-associated noise, such as honking. Not only could the additional time spent driving cause more accidents, but accidents could become more fatal. ZEVs tend to be heavier than non-ZEVs due to the weight of batteries on-board, and research shows that accident fatality increases as the weight differential between vehicles increases.footnote 42

Consumer welfare impacts related to vehicle choice

The Amendments are expected to lead to a loss of consumer choice for consumers who prefer non-ZEVs, as these vehicles will eventually be phased out of the light-duty vehicle market. Furthermore, ZEVs are expected to generally cost more than non-ZEVs, and this vehicle price increase could lead to a reduction in the quantity of vehicles purchased.

Alternatively, the total number of ZEVs, as well as the variety of ZEV models available for sale in Canada, are expected to increase as a result of the Amendments. This could be expected to have a positive impact on consumer welfare for Canadians looking to purchase a ZEV, who currently face a more limited selection of vehicles. The magnitude of these consumer welfare impacts is difficult to estimate, but losses are not expected to be significant, especially when factoring in how consumers value energy savings.

Increased grid readiness

The Amendments will increase the number of ZEVs on the road and, consequently, will increase the demand on the electricity grid. A significant increase in demand for electricity, particularly at peak time, could lead to an increase in electricity prices. This is not expected to be a significant issue; however, as the Amendments are only projected to increase ZEV electricity demand as a percentage of overall electricity demand from 2.4% in the baseline scenario to 5.0% in the regulatory scenario in 2035. By 2050, ZEVs electricity demand is projected to increase from 5.2% of overall electricity demand in Canada to 9.5% of overall electricity demand. This represents an increase in overall demand of 4.3% by 2050. Further, charging demand from a public charging lot could exceed the peak capacity of a residential feeder-circuit transformer. Investments may need to be made to increase the peak kilowatt hour load capacity. However, the majority of charging is expected to be done overnight during off-peak hours for the majority of consumers who invest in at-home charging equipment. This is likely to be encouraged by utilities continuing to price electricity lower for off-peak periods in order to smooth out demands on the grid.

Reliability of battery supply

Recently, global supply chain challenges have affected the ability of vehicle manufacturers and importers to keep up with the growing demand for ZEVs. The Amendments, along with similar regulations in other jurisdictions, will further increase the demand for large-scale batteries. Should battery production and acquisition continue to be outpaced by demand for electric vehicles, this could lead to increased vehicle costs that may negatively impact consumers.

Costs of retraining mechanics

Mechanics will likely incur costs to retrofit their shops and invest in training to service ZEVs. These costs would likely be shared with consumers by passing much of the costs onto consumers through higher service costs. Additionally, mechanics may experience reduced demand, as ZEV uptake increases due to the lower maintenance requirements of ZEVs compared to non-ZEVs.

Gas stations

Gas stations with attached convenience stores may lose foot traffic in their storefronts and, consequently, earn less profits through the sale of both fuel and convenience goods. Gas stations who invest in the transition to charging infrastructure may maintain some of these sales; however, they will face increased competition since chargers can be installed anywhere, and many drivers are expected to charge their vehicles at home.

Road impacts

ZEVs are generally heavier than non-ZEVs due to the size of the batteries used to power them. This additional weight, combined with the potential for an increase in driving associated with the rebound effect, could lead to increased wear and tear on roads. A study seeking to quantify the impact of ZEVs on road maintenance found that, while heavy BEVs such as buses and heavy goods vehicles had a measurable impact on the wear and tear on roads, the impact of smaller vehicles was found to be negligible.footnote 43

Upstream emissions

The Amendments are expected to lead to an increase in battery and electricity demand which is expected to increase GHG emissions related to mining and electricity generation. The Amendments are also expected to decrease demand for liquid fuels, and the upstream emissions related to their extraction and production. Although this analysis does not quantify the impact of upstream emission, a study looking at three regions in Canada with diverse carbon intensities in their electricity production found that plug-in electric vehicles have significant well-to-wheels GHG emission reductions even in regions with electricity sectors that are relatively more carbon-intensive.footnote 44

Summary of quantified and monetized cost-benefit analysis (CBA) results

The Amendments are estimated to have incremental ZEV and home charger costs of $54.1 billion from 2024 to 2050 for consumers who switch to ZEVs in response to the Amendments. These same consumers are expected to realize $36.7 billion in net energy savings over the same time period. The Amendments are also estimated to result in cumulative GHG emission reductions of 362 Mt, valued at $96.1 billion in avoided global damages. These GHG emission reductions will help Canada meet its international GHG emission reduction commitments for 2030 and 2050. The Amendments are thus estimated to have total benefits of $132.8 billion, and net benefits of $78.6 billion, as shown below.

The Amendments are also expected to reduce air pollutants emissions over time. In 2050, particulate matter 2.5 from light-duty vehicles is estimated to be reduced by 36%, nitrogen oxides by 50%, volatile organic compounds by 61%, and carbon monoxide by 68%, which are expected to result in improved human health outcomes (see Table 7 above). The value of these air quality improvements is not monetized in this analysis.

Table 8: Summary of monetized costs and benefits (millions of dollars)

Monetized impacts Undiscounted — 2024 Undiscounted — 2035 Undiscounted — 2050 Discounted — 2024 to 2050 Annualized
Total benefits – 4 866 16 325 132 759 6 411
Total ZEV costs 0.1 3 739 1 730 54 117 2 613
Total net benefits (costs) (0.1) 1 127 14 595 78 642 3 798
Sensitivity analysis

The monetized results of the cost-benefit analysis are based on key parameter estimates; however, the true values of the results may be higher or lower than estimated. To account for this uncertainty, sensitivity analyses were conducted to assess the effect of higher or lower parameter estimates on the estimated impacts of the Amendments. In each scenario, parameter estimates are varied in isolation and, as such, do not capture the potential causal sequence that higher or lower estimates could have on other factors, such as demand. Additionally, an attribution analysis was conducted employing an alternative baseline scenario where interaction effects of a future GHG fleet average emission policy is considered.

Uncertainty of parameter estimates

Cost of fuels: The projections for the cost of ethanol, gasoline, and diesel used in the central case comes from the Department’s E3MC model. If future realized costs of liquid fuels are higher or lower than what is projected, then fuel savings would be impacted proportionately. A sensitivity analysis was conducted that considers the impact that fuel costs that are 50% higher or lower than the projected values would have on the net effect of the Amendments. The result of this analysis shows that a 50% decrease in the cost of liquid fuels would yield a net benefit of the Amendments equal to $28.7 billion, and a 50% increase in the cost of liquid fuels would yield a net benefit of $128.6 billion. Consequently, the net benefit conclusion of the analysis is not sensitive to this variable.

Cost of electricity: Similar to fuels, electricity cost projections used in the central case come from the Department’s E3MC model. The price of electricity could fluctuate due to a high strain on the electricity grid. Additionally, consumers may carry higher electricity costs due to premiums being applied to the cost of electricity at publicly available charging stations. On the other hand, many consumers may be able to take advantage of peak-load pricing, reducing the cost of charging an EV. Taking into consideration the potential for a 50% increase or decrease in projected electricity costs would lead to a range of net benefits from $47.0 to $110.3 billion. As a result, the net benefit conclusion of the analysis is not sensitive to this variable.

Charging infrastructure: The central case assumes that 80% of ZEVs are purchased with charging equipment. This assumption comes from a NAS report that presents data showing there are roughly four home chargers for every five ZEVs in the United States. It is likely that the proportion of ZEVs bought with a charger will decrease over time as consumers begin replacing existing ZEVs as opposed to replacing non-ZEVs. This would lead to lower costs than those estimated in the central case. Alternatively, charger costs vary and thus could be higher than those estimated in the central case. A sensitivity analysis was conducted that explores the scenario where charger costs are 50% more, and 50% less than the central estimate. This would lead to a range of net benefits of $59.4 to $97.9 billion. Consequently, the net benefit conclusion of the analysis is not sensitive to this variable.

Cost of zero-emission vehicles classified as light trucks: Battery electric vehicles have a finite amount of power, and any additional burden placed on the battery will pull power away from the propulsion of the vehicle and decrease its range. The central case assumes that consumers with towing needs will opt for a PHEV with a towing package and not a BEV, since the addition of a towing package on a BEV had a significantly higher manufacturing cost in comparison to that of the towing package on a PHEV. The incremental manufacturing cost difference between a BEV and a PHEV with the towing package is estimated to be roughly $17,250 in 2026. As a result, in the central case analysis, the BEVs classified as light trucks were assumed not to contain the towing package. Adding the towing package to BEVs classified as light trucks would increase the total cost of vehicles by $72.8 billion for a net benefit of $5.8 billion. Consequently, the net benefit conclusion of the analysis is not sensitive to this variable.

Basic cost of ZEVs: The central case employs cost estimates from CARB; however, there are various factors that may impact the future costs associated with ZEV battery production. For example, higher or faster technological advancement than is expected and economies of scale could lead to lower costs than projected. A recent article by Goldman Sachs projects EV battery prices to fall faster than their previous analysis, with the author expecting 2025 battery prices to see a decrease of 40% from 2022 levels, while their previous forecasts were for a 33% decrease.footnote 45 Similarly, increased global demand or reduced access to minerals could lead battery costs to increase higher than is currently projected. To account for these uncertainties, a sensitivity analysis was undertaken that considers how the net impact of the Amendments may be impacted by ZEV vehicle costs differentials that are 50% higher or lower than is used in the central case. This range in possible upfront vehicle costs would create a range of net benefits from $70.9 to $86.4 billion. As a result, the net benefit conclusion of the analysis is not sensitive to this variable.

Discount rate: Canada’s Cost-Benefit Analysis Guide for Regulatory Proposalsfootnote 46 states that a 7% real discount rate should be used for most cost-benefit analyses. For some regulatory proposals, such as those relating to human health or environmental goods and services, guidance states that it is more appropriate to employ a social discount rate. The central case reported in Table 8 employs a 2% social discount rate; however, a sensitivity analysis was conducted using the 7% real discount rate to compare estimates. The use of the higher discount rate results in an overall net present value of $26.3 billion, so the net benefit conclusion of the analysis is not sensitive to this alternate rate.

Table 9: Summary of sensitivity analyses
Variable Sensitivity analysis case Total net present value (billions of dollars)
Central case (2024 to 2050) N/A 78.6
Higher liquid fuel prices would increase net energy savings. Higher (50%) 128.6
Lower liquid fuel prices would decrease net energy savings. Lower (50%) 28.7
Higher electricity prices would decrease net energy savings. Higher (50%) 47.0
Lower electricity prices would increase net energy savings. Lower (50%) 110.3
Higher home charging unit costs would decrease the overall net benefits of the Amendments. Higher (50%) 59.4
Lower home charging unit costs would increase the overall net benefits of the Amendments. Lower (50%) 97.9
Manufacturing BEVs classified as light trucks to include a towing package would increase ZEV costs Include towing package 5.8
Higher ZEV prices (excluding home charging infrastructure) would decrease net benefits. Higher (50%) 70.9
Lower ZEV prices (excluding home charging infrastructure) would increase net benefits. Lower (50%) 86.4
A higher discount rate would lower the present value of net benefits. 7% 26.3

In all the cases shown above, the analysis concludes that the Amendments would still be expected to yield net benefits.

Attribution analysis

In the central case analysis, the baseline scenario takes into consideration current policies that have been finalized in Canada. Although Canada has a long history of alignment and has committed to aligning with the most stringent GHG emission standards in North America, the U.S. EPA’s Notice of Proposed Rule Making is not yet finalized in the United States and has not been adopted into Canadian regulations. As a result, the proposed fleet average GHG emission standards set out in the NPRM have not been included in the central case scenario. The NPRM proposes new fleet average GHG standards which increase over the 2027 to 2032 model years. Although these standards do not dictate a specific compliance technology, the EPA’s analysis shows that BEVs are likely to be the most cost-effective compliance option and found that if BEVs are used as the compliance technology of choice, BEV deployment under the NPRM would reach approximately 60% in 2030, and 67% in 2032.

An alternative analysis was conducted using an adjusted baseline scenario which aligns with the recommended option in the NPRM. This analysis assumes ZEV deployment induced by the proposed post-2026 fleet average GHG emission standards in Canada will be equal to those of the United States and holds ZEV penetration constant post-2032. The regulatory scenario is reflective of year-by-year ZEV sales targets, with the exception of the years 2027–2029 when the regulatory scenario reflects estimated ZEV penetration under the NPRM due to the NPRM providing more ZEVs than the Canadian ZEV sales mandate in those years. These scenarios are presented in Figure 5 below.

Figure 5: Projected annual share of ZEV sales using an alternative baseline and regulatory scenario

Figure 5: Projected annual share of ZEV sales using an alternative baseline and regulatory scenario – Text version below the graph

Figure 5: Projected annual share of ZEV sales using an alternative baseline and regulatory scenario

Figure 5 is a line graph that illustrates annual ZEV sales as a share of overall light-duty vehicle sales in an adjusted baseline scenario which aligns with the recommended option in the NPRM, and the regulatory scenario. The y-axis represents ZEV sales as a percentage of overall light-duty vehicle sales, ranging from zero to 100%. The x-axis represents the year, ranging from 2026 to 2050. There are two lines on this graph. The first line illustrates the expected trajectory of the share of ZEVs in the adjusted baseline scenario. This line begins at just under 20% and has a positive slope through to 2032 where it reaches 67%, and then flattens through to 2050. The second line represents the trajectory of the share of ZEVs in the regulatory scenario, and follows the annual stringencies as set out in Table 1, with the exception of the years 2027-2029 when the regulatory scenario reflects estimated ZEV penetration under the NPRM due to the NPRM providing more ZEVs than the Canadian ZEV sales mandate in those years. This line begins at 20% in 2026, then follows the first line until 2030, whereafter it increases more rapidly than the adjusted baseline scenario, reaching 100% in 2035 and then flattens through to 2050.

The central case attributes all ZEV adoption above the baseline to the ZEV sales mandate, and thus may be considered a full-attribution estimate. Meanwhile, the alternative analysis offers a different perspective, showing a partial attribution estimate of the impact of the Amendments in a scenario where potential future regulatory alignment with the NPRM is part of the baseline scenario and ZEV deployment is used as a compliance option. The results of this analysis are presented below in Table 10.

Table 10: Comparing monetized costs and benefits under an alternative scenario (millions of dollars)

The ZEV Amendments under the alternative scenario are estimated to have incremental ZEV and home charger costs of $45.1 billion from 2024 to 2050 for consumers who switch to ZEVs in response to the Amendments. These same consumers are expected to realize $15.2 billion in net energy savings over the same time period. The Amendments are also estimated to result in cumulative GHG emission reductions of 171 Mt, valued at $42.5 billion in avoided global damages. These GHG emission reductions will help Canada meet its international GHG emission reduction commitments for 2030 and 2050. The Amendments under the alternative scenario are thus estimated to have total benefits of $60.3 billion, and net benefits of $17.9 billion, as shown below.

Monetized impacts Central case
(full attribution)		 Alternative case
(partial attribution)
GHG benefits ($) 96 070 45 129
Net energy savings 36 689 15 194
Total ZEV costs 54 117 42 466
Total net benefits 78 642 17 856
Analytical limitations

The central case has not estimated the impact of policies announced after mid-2021 when the baseline Reference Case was finalized. Therefore, the regulatory scenario may attribute some of the incremental impacts to the Amendments that might be expected to occur in an updated baseline scenario. Complementary policies that, for example, increase ZEV infrastructure, could increase consumer preferences for ZEVs. Potential strengthening of the fleet average GHG emission standards of the Regulations would also be expected to result in firms considering adding more ZEVs to their fleet to lower their fleet average emissions, even in the absence of the Amendments. A scenario analyzing the impact of the Amendments in the presence of more stringent fleet average GHG emission standards, as proposed by the EPA, is considered in the “Attribution” section above.

This analysis is unable to predict whether, or to what extent, firms may partake in strategic pricing and fleet mix behaviour in response to the Amendments. Where firms must comply both with a fleet average GHG emission standard, as well as a ZEV sales target, they may opt to meet their obligations under the two requirements by using increased ZEVs (which lower their fleet average GHG emissions) to offset increased sales of high profit but higher emitting non-ZEVs. This strategy will become less viable in Canada as the ZEV sales requirements increase to 100% by 2035. Further strengthening of fleet average GHG emission standards in Canada and the United States would also reduce this risk.

This analysis does not estimate how consumers will respond to changing vehicle prices. Incremental ZEV manufacturing costs, which are expected to be reflected in higher vehicle prices, might change the quantity of vehicles purchased in the regulatory scenario. Firms might choose cross-pricing strategies to optimize sales, but the overall quantity of vehicles demanded is expected to fall in response to rising vehicle prices. Previous regulatory analyses of the Regulations have not considered this impact, as it is difficult to estimate, and the impacts on the cost-benefit analysis are not expected to be significant, especially when factoring in how consumers value the net energy savings associated with ZEVs.

By using E3MC to estimate annual energy and emission impacts, this analysis takes a calendar year approach to reporting results, as opposed to using an engineering model that could calculate the lifetime impacts of each year of incremental vehicle sales (model year approach). This difference in perspective leads to an undervaluation of the lifetime benefits associated with these Amendments in terms of total GHG reductions and net energy savings related to ZEV operations. Given that vehicles have an estimated life expectancy of 15 years, benefits beyond the 2035 model years are underestimated.

At the same time, this analysis does not use a life cycle model that could take into account other impacts of the Amendments, particularly in terms of upstream GHG emissions from increased electricity generation and decreased fossil fuel production. Nor does the analysis consider the costs that may be associated with the mining of minerals for battery production, and the end-of-life disposal of vehicles and their parts. Published studies show that relative to internal combustion engine (ICE) vehicles, BEVs have higher vehicle manufacturing emissions due to the emission intensity from battery production.footnote 47 Nonetheless, over the life cycle, the emissions from BEVs are estimated to be 50% to 60% lower than those of a non-ZEV (Nealer et al., 2015). Overall, this suggests that the net GHG reductions from the Amendments are overvalued. However, when judged along with the underestimation of lifetime vehicle emissions, the GHG emission reduction estimate provided in the central case is likely to be reasonable.

Emissions projections are subject to uncertainty and are most appropriately viewed as a range of plausible outcomes. Many of the events that shape emissions and energy markets cannot be anticipated. In addition, future developments in technologies, demographics and resources cannot be foreseen with certainty. The projection scenarios derive from a series of plausible assumptions regarding, among others, population and economic growth, prices, demand and supply of energy, and the evolution of energy efficiency technologies.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a strategic environmental assessment for the ZEV policy was conducted in 2018 and concluded that the Amendments are in line with the objectives of the Federal Sustainable Development Strategy (FSDS). According to the 2022–2026 FSDS, these objectives include protecting Canadians from air pollution, transitioning to zero-emission vehicles, and taking action on climate change by reducing greenhouse gas emissions.

Distributional analysis (including gender-based analysis plus)

The Amendments are expected to have unequal impacts on various subpopulations within Canada. The benefits of reducing GHG emissions are global in nature. The non-monetized benefits from reductions in air pollution are experienced differently across Canada and affect various people differently. These are discussed in the “Air pollution reductions” section. The cost-benefit analysis estimates the incremental costs and benefits of ZEV ownership and, as these impacts are not distributed evenly in society, they are further discussed below in terms of regional impacts, vehicle buyer impacts, and then in terms of gender-based analysis plus (GBA+) considerations.

Regional impacts

The GHG benefits of the Amendments are global (not regional) in nature. The analysis assumes that ZEV purchases are distributed regionally according to historical buying patterns and existing provincial policies. Energy savings resulting from ZEV ownership are primarily driven by the efficiency advantage that BEVs have over non-ZEV vehicle engines (as noted in the net energy savings section). In the central case, regional energy prices result in net energy savings for all regions, depending on relative regional energy prices which are likely to change over time. The magnitude of savings estimated over the timeframe of the analysis is shown in Table 11 below.

Table 11: Total energy cost (savings) by region (millions of dollars)

Region Gasoline savings Diesel savings Ethanol savings Electricity costs Net energy savings
Alberta (17 564) (527) (2 045) 15 651 (4 485)
British Columbia (1 982) (60) (224) 580 (1 686)
Manitoba (5 117) (52) (593) 3 136 (2 626)
New Brunswick (2 266) (22) (268) 2 000 (557)
Newfoundland (2 342) (35) – 1 675 (701)
Northwest Territories (148) (28) – 125 (51)
Nova Scotia (3 012) (55) (107) 2 747 (426)
Nunavut (83) (11) – 58 (36)
Ontario (45 266) (1 432) (5 138) 28 015 (23 821)
Prince Edward Island (710) (7) (25) 706 (36)
Quebec (2 807) (72) (320) 1 124 (2 074)
Saskatchewan (6 703) (118) (781) 7 447 (155)
Yukon Territory (46) (2) – 12 (35)
Canada (88 046) (2 420) (9 499) 63 277 (36 689)

Vehicle buyer impacts

The Amendments will require manufacturers and importers of vehicles to increase the supply of ZEVs and decrease the supply of non-ZEVs on the new vehicle market. This is likely to have a positive impact for consumers who wish to purchase a ZEV and a negative impact for those who wish to purchase a new non-ZEV. The incremental price for both BEVs and PHEVs is expected to fall as the supply is increased and battery costs decrease, with BEV cars currently expected to reach price parity with non-ZEVs in the early 2030s, while BEV pickup trucks and SUVs, as well as PHEVs, are not expected to reach price parity before 2035. These trends coincide with the trajectory of the Amendments. A similar trend towards price parity is expected in the used-vehicle market, with one study by the International Council on Clean Transportation suggesting price parity in the U.S. used vehicle market could be reached in the 2025 to 2028 timeframe.footnote 48

While BEV cars are projected to reach price parity with comparable non-ZEVs, they may not be seen as an acceptable substitute for certain applications (e.g. towing purposes and long-distance travel). Though PHEVs can address some of these concerns, they are not projected to reach price parity with non-ZEVs before 2035, unlike BEV cars. Over time, consumer preferences are likely to shift more in favour of ZEVs as the benefits of ZEV ownership, including lower operating and maintenance costs, become more well known and as charging infrastructure becomes more widely available.

The CBA fully accounts for the upfront purchase costs of ZEVs and their associated home charging equipment within the timeframe of the analysis. The lifetime benefits of energy savings associated with these vehicles, on the other hand, are underestimated in the CBA as a result of the modelling approach not capturing the lifetime benefits of any given model year, but instead analyzing the impacts in a given set of calendar years (in this case, 2024 to 2050). These benefits are primarily driven by the increased energy efficiency of electric vehicles which is estimated to be 60% to 73% efficient, as compared to 12%–30% efficient for a traditional gasoline-powered vehicle (see net energy savings section).

Purchasers of new and used ZEVs are expected to realize ongoing operational savings compared to owners of similar non-ZEVs. These include energy savings and maintenance savings for the duration of ZEV ownership. These lifetime savings are generally expected to offset the initial price difference to purchase a ZEV versus a non-ZEV. The circumstances of ZEV owners will vary and factors, such as access to home charging, will influence their lifetime energy savings potential. The CBA does not monetize maintenance cost savings, as reliable Canada-specific data does not exist, but some outside sources suggest these could be as much as $300 annually for BEVs (see the “Maintenance cost savings” section). PHEV owners will not realize maintenance cost savings to the same extent because they contain both battery and internal combustion engine technology. Additionally, the lifetime energy savings associated with PHEV ownership would vary based on the relative use of liquid fuel and electricity. For buyers of BEVs, especially used BEVs, the decreased costs of energy and maintenance could result in a lower cost of transportation relative to comparable internal combustion engine vehicles.

Households are expected to make purchase decisions regarding ZEVs based on various considerations, such as the upfront purchase cost, financing costs, the long-term energy and maintenance savings, and the relative convenience of charging. Thus, the decision to purchase a ZEV will depend on the household budget for vehicle purchases, the availability of purchase subsidies, the options for private or public charging, and other factors such as a ZEV’s compatibility with a household’s need for towing or long-distance travel. While many households may benefit from ZEV ownership, not all households will have the same opportunity to realize these benefits.

Household and GBA+ impacts

A recent U.S. report by Resources for the Futurefootnote 49 that looked at the issue of ZEV affordability for lower-income households found that these households are discouraged by vehicle prices to a greater degree than other income groups, which indicates that low-income households will be less likely to purchase ZEVs until ZEVs reach purchase price parity, regardless of their reduced operating costs. Therefore, the Amendments are expected to have unequal impacts on various subpopulations within Canada, especially in the early years when most of the ZEVs on the market are new, as only the households who buy ZEVs will benefit from the energy and maintenance savings of ZEV ownership over time. It is expected that this difference will diminish, and lower-income households will have more opportunities to benefit from ZEV ownership as new and used ZEVs increase in number and become more affordable.

Another reason low-income households may not realize the full potential of energy savings related to ZEV ownership in the near-term is that low-income households are more likely to live in rental units which, in some cases, may not be suitable for at-home charging equipment. This indicates that low-income households, and more generally households living in rental or multi-unit housing, that do purchase ZEVs will be more likely to have to rely on publicly available charging stations that may charge a premium on the cost of electricity. A study published in the Massachusetts Institute of Technology (MIT) Science Policy Reviewfootnote 50 suggests that public charging could be two to four times more expensive than charging done at home. Additionally, households who depend on public charging will likely experience increased refuelling time, as even the fastest chargers exceed the average time non-ZEVs take to fuel.

The Amendments could also disproportionately impact households living in rural and northern communities that may have lower access to public charging infrastructure. In addition, northern communities are expected to face more difficulties with the transition to ZEVs due to prolonged periods of cold temperatures that may affect the range of battery-powered electric vehicles. Furthermore, electricity costs vary by region. Canadians living in regions with high electricity costs may not benefit from energy savings as much as those living in lower-cost areas. For these reasons, northern and remote communities may prefer PHEV options, which would offer more flexibility due to their ability to use multiple fuel sources; however, their upfront costs are estimated to be higher than that of BEVs.

Some Canadians may experience a compounding effect where individuals belong to both regional and economic subgroups discussed above. To mitigate these impacts, the Government and its partners will continue to work on policies to ensure that ZEVs are accessible to individuals despite economic or regional differences and that the charging infrastructure needs of all Canadians can be met.

As noted in the “Monetized (and quantified) impacts” section, the Amendments are expected to reduce air pollutants, resulting in a positive impact for most Canadians. These impacts may be felt more by Canadians who are at higher risk of being negatively impacted by air pollutants — namely children, elderly people, individuals with underlying health conditions, and people living in high-traffic exposure areas. Individuals of low socio-economic status are more likely to live in high-traffic areas than wealthier Canadians. As well, about half of schools and long-term care facilities in Canada are located near high-traffic roads. Thus, the Amendments will particularly benefit these populations.

Competitiveness analysis

The Amendments are similar to regulatory ZEV sales targets in British Columbia and Quebec, as well as California and 15 other U.S. states, known as the “section 177 states.” Manufacturers and importers of light-duty vehicles have already responded to the regulatory requirements in other jurisdictions, and it is expected that they will similarly adapt to these Amendments. The addition of the Amendments to the Canadian-American market will represent an increase from 36% of the market having ZEV regulations to 42% having them. The competitiveness of Canadian manufacturers and importers is not expected to be impacted by these Amendments, as profit-seeking firms are expected to adopt sales strategies for regional markets as they have done for certain states and Canadian provinces, and pass on any incurred costs to the consumers in the form of prices.

Small business lens

Analysis under the small business lens concluded that the Amendments will not impact Canadian small businesses. The fleet average CO2e emission standards (GHG standards) do not apply to any companies that manufacture or import, on average, fewer than 750 new light-duty vehicles in Canada per year. This threshold does not apply to the Amendments implementing ZEV sales targets, which offer no exemptions. The Amendments to establish annual ZEV sales targets will, however, have a compliance option for companies to buy excess credits from other companies, to generate early compliance units from sales in model years 2024 and 2025, and an alternative flexibility option to create credits by investing in registered ZEV charging station projects. Currently, there are no regulatees that fall within the threshold of being a small business.

One-for-one rule

The one-for-one rule applies, since there is an incremental increase in administrative burden on business, and the Amendments are considered an “in” under the rule. No regulatory titles are repealed or introduced. Under the Amendments, manufacturers and importers of new light-duty vehicles will be subject to mandatory requirements that prescribe annual proportions of vehicles offered for sale that must be ZEVs. The administrative costs borne by manufacturers and importers of LDVs that result from the Amendments are tied to learning about the Amendments, compiling records and reporting, and conducting business associated with trading credits and creating credits by contributing to the development of ZEV charging station projects. The one-for-one rule analysis estimates that 33 manufacturers and importers will bear incremental costs in relation to the Amendments. All associated activities were assumed to be performed at a cost of labour associated with the national occupation code for business, finance, and administration at a cost of $30.47/hour. Each stakeholder is assumed to require 6 hours upfront to learn about the regulatory requirements, 80 hours annually to compile records and report administrative obligations, and 29 additional hours annually for administrative tasks related to credit trading, charging station program and ongoing learning.

The net annualized costs are estimated to be $47,800, or $1,450 per business.footnote 51

Regulatory cooperation and alignment

The LDV ZEV target in 2035 is in line with the proposed requirements in British Columbiafootnote 52 and California,footnote 53 as well as the newly finalized rules in Quebec,footnote 54 all of which have set a target to achieve 100% ZEV sales by 2035. As of 2026, it is expected that California’s ZEV regulation will have been adopted across 15 other U.S. states, otherwise known as “section 177 states,” collectively representing almost 36% of the U.S. market.footnote 55 At the national level, the NPRM predicts that the fleetwide ZEV penetration necessary to comply with the annually increasing GHG emission standards from 2027 to 2032 will be 60% of new vehicle sales by 2030 and 67% by 2032.footnote 56

The Department continues to work closely with the U.S. EPA to maintain a common Canada-United States approach to regulating GHG emissions from on-road light-duty vehicles, where possible. The Regulations continue to include many, but not all, of the other elements of the U.S. rules, such as definitions, compliance options, and measurement and reporting requirements. The Department and the U.S. EPA continue to collaborate in an effort to implement aligned regulatory standards and joint compliance programs, which help maximize efficiencies in the administration of the respective programs in the two countries. These Amendments will retain fleet average GHG emission standards that are aligned with those of the U.S. EPA 2021 Final Rule Making (PDF).

In April 2023, the European Parliament voted to endorse new GHG standards that would reduce GHG emissions from new cars and vans by 100% by 2035.footnote 57 This is equivalent to Canada’s ZEV sales mandate that will require all new 2035 model year passenger cars and light trucks to be zero-emission vehicles. However, to achieve 100% ZEV by 2035, the European Union has opted to progressively increase the stringency of its GHG standards, as opposed to implementing ZEV targets. Through the Canadian-European Comprehensive Economic Trade Agreement (CETA), Canada continues regulatory dialogue with Europe for aligning vehicle regulations where possible. This dialogue includes discussions on aligning Canada Motor Vehicle Safety Standards (CMVSS) requirements with the goal to increase ZEV models offered and available in Canada.

Implementation, compliance and enforcement, and service standards

Implementation

The Amendments will come into force on the day on which they are registered. The Department will proactively communicate with known passenger automobile and light truck manufacturers and importers, as well as industry associations for this sector, to ensure a maximum number of stakeholders are aware of the publication of the Amendments and have adequate lead time to comply with the regulatory provisions.

Compliance promotion, enforcement and service standards

Members of the regulated community will be responsible for complying with the Amendments and for producing and maintaining evidence of conformity. To assist regulated parties in understanding the new requirements, the existing guidance material will be updated and posted on the Department’s website. The updated material will provide details on the new administrative provisions and ZEV requirements. This guidance material will also include information to address frequently asked questions concerning evidence of conformity and the procedures to be followed when submitting required documents to the Department.

As a result of the new requirements that apply to passenger automobile and light truck manufacturers and importers, the Department plans to update its reporting system to accommodate new information anticipated to be received from these regulated parties. The Department will continue to review and respond to submissions of evidence of conformity in a timely manner, in accordance with the response times set out in the guidance material for the Regulations.footnote 58

Implementation and enforcement actions will continue to be undertaken by the Department in accordance with the Compliance and Enforcement Policy for CEPA (the “Policy”).footnote 59 As the Amendments will be made under CEPA, CEPA analysts and enforcement officers will apply the Policy when verifying compliance with the regulatory requirements. The Policy sets out the range of possible enforcement responses to alleged violations. Following an inspection or investigation, when an enforcement officer discovers an alleged violation, the officer will choose the appropriate enforcement action based on the Policy.

Performance measurement and evaluation

Regulated parties are required to submit end of model year reports to the Department concerning the performance of the passenger automobiles and light trucks that they manufacture or import for each model year. Starting with the 2023 model year, these reports will be used to assess compliance with the Amendments. These reports will indicate the average GHG emissions standards of a regulated company’s fleet and, starting in model year 2024, the amount of early ZEV credits. Beginning with the 2026 model year, the reports will also include the information on compliance with the ZEV requirements, including compliance values. Companies will also need to include information related to the registered vehicle charging projects and the credits generated from them.

The information in the end of model year reports will be used to monitor compliance with regulatory requirements, measure and evaluate the performance of the Amendments, and provide data to support enforcement activities, if required. The Department will also review evidence of conformity and other records that regulated parties must maintain. The Government will continue to monitor EV adoption, the number of chargers available, population density and other factors to assess where the Government’s action is required and to help inform future investments in the private sector.

In addition, the Department will continue to conduct tests of emissions from samples of passenger automobiles and light trucks each year to verify compliance with the fleet average GHG emission standards. The Department will also conduct testing of electric vehicle range of ZEVs against company reported range and verification of registered charging station project requirements, as well as any other testing or verification it deems necessary.

Contacts

Stéphane Couroux
Director
Transportation Division
Energy and Transportation Directorate
Environmental Protection Branch
Environment and Climate Change Canada
351 Saint-Joseph Boulevard
Gatineau, Quebec
K1A 0H3
Email: infovehiculeetmoteur-vehicleandengineinfo@ec.gc.ca

Matthew Watkinson
Executive Director
Regulatory Analysis and Valuation Division
Economic Analysis Directorate
Strategic Policy Branch
Environment and Climate Change Canada
351 Saint-Joseph Boulevard
Gatineau, Quebec
K1A 0H3
Email: RAVD.DARV@ec.gc.ca