Working Paper

Canada’s path to 100% zero-emission light-duty vehicle sales: Regulatory options and greenhouse gas impacts

This paper evaluates the CO2 emissions impacts of several possible regulatory pathways to achieving Canada’s 100% electric vehicle sales target for light-duty vehicles by 2035 and assesses how these compare to Canada’s 2030 economy-wide greenhouse gas target. The study evaluates a Baseline scenario, which reflects current polices, and three Alternative scenarios to meet Canada’s 100% electric vehicle sales target for light-duty vehicles: Alternative 1, in which Canada achieves 50% electric vehicle sales, including battery electric and plug-in hybrid vehicles, by 2030; Alternative 2, in which Canada achieves 61% electric vehicle sales by 2030; and Alternative 3, in which Canada further requires the phase-out of plug-in hybrid vehicles by 2035.

Although all three Alternative scenarios achieve markedly better outcomes than the Baseline scenario, there are significant differences in the annual CO2 emission trajectories, their cumulative emission benefits, and the extent to which they are compatible with Canada’s 2030 economy-wide greenhouse gas target of a 40%–45% reduction from 2005 levels. The Alternative 3 scenario could achieve a similar level of CO2 reductions by 2036—10 years faster than in the Baseline scenario. None of these scenarios met the 2030 benchmark.

Considering Canada’s 2050 target of net zero GHG emissions, the only scenario that comes very close to achieving that target is Alternative 3 (-93% tank to wheel emission reduction from 2021), which completely phases out plug-in hybrid sales by 2035. Alternative 2, which caps plug-in hybrids at 20% of electric vehicle sales, would achieve an 88% reduction from 2021 to 2050.

Additional strategies would help Canada to minimize cumulative CO2 emissions from light-duty vehicles before reaching net zero. A faster adoption of electric vehicles by 2030 and a cap on the share of plug-in hybrid vehicle sales (similar or stronger than Alternative 2) would decrease cumulative emissions. Regulators should also consider phasing out PHEV sales no later than 2035. To eliminate residual CO2 emissions from combustion engine vehicles in 2050, regulators could also consider strategies to accelerate fleet turnover and fully decarbonize the electricity grid.