Working Paper
Assessing Canada’s 2025 passenger vehicle greenhouse gas standards: Benefits analysis
This paper is part of a series of reports on analysis done by the ICCT on Canada-specific technology pathways, costs, and benefits of Canada’s 2025 passenger vehicle greenhouse gas standards. The analysis compares the standards currently in force to the alternative of following the Trump Administration’s proposal to roll back the 2025 U.S. fuel economy and greenhouse gas emissions standards.
From the Canadian consumer perspective, the upfront total manufacturing costs of more efficient technologies can be recouped due to lower fuel consumption within a few years of typical use, with further benefits accruing in the following years. A typical model year (MY) 2025 vehicle that complies with the GHG 2025 standards would incur additional costs, but the savings would quickly accumulate and overshadow these costs. Consequently, payback happens faster for a MY 2025 vehicle built for GHG 2025 standards than for a MY 2025 vehicle built for GHG 2020 standards. GHG 2025 standards have lifetime benefits that are 3 to 5 times the costs.
On a fleet-wide basis, maintaining the 2025 GHG standards leads to 54.1 Mt CO2 (million tons of CO2) saved over the lifetime of MY 2021–2025 vehicles. If the standards remain at their 2025 levels through MY 2050, these savings balloon to over 630 Mt over the life of all vehicles sold through MY 2050.
The 2025 GHG emissions savings are equivalent to 23.0 billion liters of gasoline over the lifetime of MY 2021–2025 vehicles, and 254.2 billion liters over the lifetime of MY 2021–2050 vehicles. At fuel prices projected by the National Energy Board of Canada, the MY 2021–2025 savings are $34.7 billion CAD. By 2030, maintaining the 2025 GHG standards leads to annual fuel savings of 4.6 billion liters, or $7.0 billion CAD. This level of savings is equivalent to an annual reduction in CO2 emissions of 10.7 Mt. These annual savings increase every year as vehicles sold between MY 2016 and 2024 are replaced by vehicles that meet GHG 2025 standards.
Related Publications:
Assessing Canada’s 2025 passenger vehicle greenhouse gas standards: Characteristics of the Canadian fleet
Assessing Canada’s 2025 passenger vehicle greenhouse gas standards: Methodology and OMEGA model description
Assessing Canada’s 2025 passenger vehicle greenhouse gas standards: Technology deployment and cost
