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Canada could follow U.S. or California emissions standards – or set its own.

Canada Awaits Washington’s Lead on Emissions Rules

There is concern within the Canadian auto sector that Ottawa was mulling a greener approach than U.S. federal rules by striking a cooperation agreement on emissions standards with California, whose regulations generally are tighter than those of the American feds.

OTTAWA – The Canadian government says it will wait for the release of a final U.S. rule on automotive emissions before deciding whether to follow the lead of the Trump Admin. on freezing emissions limits or imposing tougher standards for Canada.

Its message follows concern within the Canadian auto sector that Ottawa was mulling a greener approach than U.S. federal rules by striking a cooperation agreement in June on emissions standards with California, whose regulations generally are more restrictive than those of the American feds.

A spokesperson for Canada’s environment and climate change ministry tells Wards it will wait to act until the federal U.S. rule is finalized, probably later this year. It then “will engage in additional consultations to inform a determination of whether the established greenhouse gas emission standards for the 2022 to 2025 model years remain appropriate for Canada.”

These follow Obama-era rules within the U.S. and involve progressively tightening standards, while the Trump package probably will freeze GHG emissions caps from 2022. That would leave the Canadian government facing the choice of pleasing automakers calling for Canada to follow American rules or an environmental lobby that wants the country to strike an independent greener course.

The cooperation agreement signed by Canada’s minister of environment and climate change Catherine McKenna and the chair of the California Air Resources Board Mary Nichols indicates Ottawa may be ready to develop an independent policy. It commits the two jurisdictions to “collaborate on the development of our respective greenhouse-gas regulations for light-duty vehicles that require meaningful improvements in vehicle efficiency every year.”

The agreement also calls on Canada and California to jointly analyze additional potential measures to achieve zero-emission vehicle sales targets, to collaborate on research, emissions testing and modeling related to alternative-fuel vehicles and to enhance their regulations’ effectiveness through mutual acceptance of emissions data – “minimizing testing overlap.”

But this would be truly effective only if the Californians and allied states win a fight with President Donald Trump over his bid to overrule California’s rights under the Clean Air Act to set its own, tougher emissions rules. The law allows other states to follow if they wish; 12 have done so, including New York and Pennsylvania.

The Trump Admin. also wants to force all U.S. states to follow its 30 mpg (7.8 L/100 km) fuel-economy standard (Obama wanted 36 mpg [6.5 L/100 km] by 2025), and litigation is looming.

In the middle of this fight, Canada’s current Liberal government – facing an Oct. 21 election –already was holding a midterm review of its own emissions standards, which it has stalled pending the U.S. decision.

Any major departure from the U.S. federal emissions rules could be a problem, according to the Canadian Vehicle Manufacturers’ Assn. Its president, Mark Nantais (below, left), tells Wards the Canadian government is showing “wisdom” by waiting on an emissions decision from Washington before making its own determination.

“We’re a fully integrated (North American) industry and a fully integrated market,” he says. “Having one national standard on both sides of the border makes sense.”

Mark Nantais, Canadian Vehicle Mfrs. Assn.jpgOtherwise, Nantais asks, what would have been the point of the past two years’ negotiations that resulted in the new US-Mexico-Canada Agreement (USMCA) – which the Canadian government calls the Canada-US-Mexico Agreement (CUSMA).

The text includes a whole chapter encouraging cooperation on developing complementary regulations, and the whole deal is predicated on the goal of reducing non-tariff barriers to trade within North America.

Nantais says he hopes the Canadian government will use its influence in Washington to encourage the U.S. and California administrations (and their allies) to agree on a common set of emissions standards Canada could sign onto. “Canada is not a big enough jurisdiction to design its own vehicle standards,” he notes. If it did, Canada-based manufacturers would face regulatory pressures potentially harming their competitiveness in North America.

What will happen in Canada? Even if the Liberals win Canada’s general election, the current ministry spokesperson is hedging her bets: “Canada will be informed by Canada’s midterm evaluation and careful consideration of environmental impacts and economic impacts to industry and consumers. The government will take into account the importance of the integrated North American auto market and uniquely Canadian circumstances,” she says.

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