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Hot off the press: this past Saturday the Canadian government released its proposed regulation for heavy-duty vehicle greenhouse gas standards. This is Phase 2 of the regulation. Phase 1 was finalized in 2013 and affected vehicles and engines in model years 2014 through 2017.
Canada has a history of aligning its environmental regulations for vehicles and fuels with those of the United States. Based on an initial scan of the proposal, it seems that Environment and Climate Change Canada’s (ECCC) Phase 2 regulatory categories, stringency targets, and test procedures are harmonized with the U.S. Environmental Protection Agency’s Phase 2 final rulemaking, as was also the case in Phase 1.
We’re still working our way through the details of the proposal, but here are three things that caught our eye right away.
Benefits exceed costs by nearly 3-to-1
The total monetized benefits of the proposed rule are estimated at $13.6 billion CAD ($10.1 billion USD) versus $4.8 billion in costs. The nearly $9 billion in net benefits for the Phase 2 proposal exceed the net benefits of the Phase 1 regulation by a factor of two.
Fuel savings and GHG reductions are substantial
The majority of the benefits of the proposed standards come from fuel savings, which are significant. The increases in new-vehicle fuel efficiency levels for model years 2018 to 2029 are estimated to result in nearly 16 billion liters of fuel savings. As shown in the figure below, if we also include model years 2030 and beyond, the cumulative savings jump up to 52 billion liters.
Note: This figure represents an estimate of fuel consumption totals and reductions due to the Phase 1 and 2 regulations in Canada.
The proposed regulation’s impact on climate-forcing emissions is equally impressive. ECCC estimates that total GHG reductions from vehicles affected by the regulation (i.e., model years 2018 to 2029) will be about 41 million tonnes. This is roughly the equivalent of taking all of the passenger cars in Canada off the road for an entire year!
Trailers are a newly regulated equipment category
As the U.S. did in its Phase 2 rule, Canada has proposed to add commercial trailers as a newly regulated equipment category. ICCT research has shown that fuel-saving technologies for trailers are already fairly widespread in Canada, so it’s great to see that regulators in Canada see additional opportunities to promote the development and deployment of new generations of efficiency technologies for trailers.
During the 60-day comment period, we'll be doing a comprehensive analysis of the rule, and we'll publish a summary policy update that focuses on the key ways in which this proposed regulation in Canada differs from the final Phase 2 rulemaking in the U.S. With so much uncertainty concerning the future of climate policy in the U.S. under the Trump administration, we welcome this proposal as sign of Canada’s continued strong commitment to advancing policies that will cut GHGs and fuel use and provide substantial economic benefits to fleets and society at large.