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Canada Caught in the Middle in CO2 Rules Fight

Current regulations align with tougher standards
#GeneralMotors #Hyundai #emissions


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The Trump administration’s rollback of carbon dioxide emission standards has put Canadian regulators in an awkward spot, Bloomberg News reports.

Canada has followed U.S. standards for decades. That goes for rules that were officially reduced at the end of March by the U.S. Environmental Protection Agency and National Highway Traffic Safety Administration.

During the Obama era, those agencies called for 5% annual gains in fuel economy—and concurrently tougher CO2 limits—between the 2021 and 2026 model years. The Trump era rules reduce the annual target to 1.5%.

U.S. vs Canadian CO2 Standards

Canada’s standards are still indexed to the earlier U.S. standards. California and 23 other states have vowed to enforce those regulations in spite of the federal rollback, and they have challenged the rationale for the changes made by EPA (for CO2 emissions) and NHTSA (on fuel economy targets).

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Not surprisingly, carmakers yearn for all three parties to get on the same regulatory page. That is certainly true for Canada, most of whose cars are sold throughout the U.S.

Besides, Canada isn’t eager to relax its own CO2 standards. Unlike the U.S., Canada remains a participant in the Paris Accord, under which nations have vowed to lower their CO2 output significantly by 2030.

Bloomberg says a United Nations analysis estimates that Canada will be 77 million metric tons short of its pledge, even if it sticks with the tougher regulations. The country is pondering scrappage schemes to help retire older cars that contribute disproportionately to air pollution.

Finding Common Ground

Carmakers themselves have been split over whose side to take in the regulatory debate.

Last July, BMW, Honda, Ford and Volkswagen sided with California over the state’s vow to implement tougher standards regardless of the action of federal regulatiors.

Three months later, a group that includes Fiat Chrysler Automobiles, General Motors, Hyundai/Kia, Mazda, Nissan and Toyota took the opposite tack. They have sided with the Trump administration’s effort to rescind California’s right to set its own CO2 standards.

What’s Next: Canada and California Agree on Emission Standards

Last summer Canada and California agreed to coordinate emission standards and promote the sale of electric cars to 2025.

Environment and Climate Change

Canada tells Bloomberg it will begin a review of its own CO2 standards, now that U.S. regulators have done the same. But that process is likely to take several months.

Critics have blasted the math behind the Trump administration’s conclusions and are preparing numerous legal challenges to the resulting regulations.

After three years of analysis, EPA and NHTSA concluded that easing U.S. fuel economy standards would lower new-car prices by $1,000, generate 2.7 million in additional car sales and save 3,300 lives per year by coaxing owners of old clunkers into safer new models.

Opponents are skeptical about the sales and safety implications of weaker fuel economy targets. They also estimate that the lower price of a new car would be more than offset by greater fuel costs of operating less efficient vehicles.

Bottom Line

Canada’s quandary is one more obstacle to the auto industry’s fervent desire for a single, conflict-free regulatory landscape across North America. We’re nowhere near that point today.

One thing seems certain: When the 2021 model year kicks off less than six months from now, this mess will remain unresolved.

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