Jumpstarting Zero-Emission Vehicle Adoption in Canada – Federal Government Publishes Final Regulations to Reach 100% ZEVs by 2035
On December 20, 2023, the Canadian government announced the publication of final regulations aimed at accelerating the adoption of zero-emission vehicles (ZEVs) across the country. The new regulations, titled the Passenger Automobile and Light Truck Greenhouse Gas Emissions Standards, set forth ambitious targets that will require all new passenger cars and light trucks sold in Canada from 2035 to be zero-emission vehicles.
Under these regulations, ZEVs are defined as electric vehicles, plug-in hybrid electric vehicles, or fuel cell vehicles. The objective behind these amendments is to phase out the use of non-ZEV light-duty vehicles (LDVs) and significantly reduce greenhouse gas emissions in the transportation sector.
To achieve this ambitious goal, the regulations introduce several measures. Firstly, they impose yearly minimum sales targets for manufacturers and importers, requiring them to offer a certain percentage of ZEV vehicles for sale each year. These targets will progressively increase until reaching 100% ZEV sales by 2035.
Manufacturers and importers who exceed the ZEV requirement threshold for a given model year will receive compliance units, while those falling short will incur deficits. Deficits can be offset through various means, including early compliance units, regular compliance units from previous years, or charging station units.
Furthermore, companies must submit an annual end of model year report, detailing their fleet composition, the number of electric and plug-in hybrid vehicles, compliance units, offset information, and other relevant data for enforcement purposes. The reports must be submitted by May 1st of the calendar year following the model year.
Addressing one of the key criticisms of Canada’s plan, the regulations incentivize investments in charging infrastructure. Manufacturers and importers can earn compliance credits for contributing to the development of fast-charging stations in Canada. The allocation of credits is based on a formula that considers the amount of investment, the number of investors, and the power capacity of the charging stations. Any investment made between January 1, 2024, and December 31, 2027, is eligible for charging infrastructure credits.
Importantly, the amendments also aim to align the administrative requirements for greenhouse gas vehicle emission standards up to model year 2026 between Canada and the United States. This will reduce the regulatory burden for companies operating in both countries and promote harmonization in the automotive industry.
The federal mandate is an essential step forward in Canada’s efforts to reduce emissions and transition to a low-carbon transportation sector. It complements existing provincial initiatives, particularly in British Columbia and Québec, that promote the adoption and sale of ZEVs. While the Canadian government has provided substantial incentives for ZEV purchases since 2019, it is important to note that these incentives are set to expire on March 31, 2025.
The publication of these final regulations demonstrates Canada’s commitment to tackling climate change and accelerating the shift to a zero-emission future. By introducing comprehensive measures to drive ZEV adoption, Canada aims to create a sustainable transportation system that will benefit both the environment and its citizens.
In conclusion, the federal government’s latest move to establish binding regulations for ZEV adoption sets the stage for a cleaner and more sustainable transportation future in Canada. With a clear roadmap towards achieving 100% ZEV sales by 2035, the government is signalling its commitment to combating climate change and reducing greenhouse gas emissions. These regulations not only prioritize environmental goals but also aim to streamline processes and harmonize standards, ensuring a smoother transition for manufacturers and importers operating in both Canada and the United States. As the deadline approaches, it will be crucial for all stakeholders to collaborate and invest in charging infrastructure to support the growing demand for zero-emission vehicles across the country.
