By on November 29, 2012

Canada’s government is seen as reluctant to tackle the issue of climate change. Concerned Canadians have even taken to discussing how putting a Canadian flag on one’s backpack may be dangerous because our lack of environmental leadership has diminished our standing in places like Europe. Or at least that’s what one eco-conscious party guest told me, in between agitating for more bike lanes and asking for a lift home.

Since motorists and drivers are low-hanging fruit without any kind of organized lobby, our Conservative government has decided to offer up the automobile as a sacrificial lamb in the PR temple by implementing CAFE-style standards on Canadian vehicles. As we all know, CAFE is a deeply flawed system that rewards the bad guys. So why would Canada, a land of small cars and high gas prices, do this?

The official answer, beyond all the environmental posturing, is for the sake of harmonizing Canadian and American regulations. Canada’s Environment Minister, Peter Kent, made this clear in a speech announcing the regulations on Wednesday

Given the integrated nature of the North American automotive industry, it makes sense for us to cooperate closely with the United States on regulations. Our approach is consistent with the overall goal of the Canada-U.S. Regulatory Cooperation Council, which aims to achieve greater alignment and reliance on each other’s regulatory system.  

As the race for better fuel efficiency continues to drive increased global competition in the auto sector, Canada and the United States have worked together so that North America can have a common long-term approach.  This is consistent with the overall goal of the Canada-U.S. Regulatory Cooperation Council, which aims to achieve greater alignment and reliance on each other’s regulatory system.

Now, this is understandable in light of our geographic proximity with the US, and Canada’s Motor Vehicle Standards, which are broadly in line with America’s FMVSS. But a background document reveals another interesting tidbit that won’t surprise anyone familiar with CAFE, even if it may hold a clue as to why Canada chose to adopt it, rather than more stringent standards.

 As light trucks are typically used by farmers and construction workers, it is equally important that these vehicles can perform the work they are required to do. To that end, the proposed regulations provide short-term relief in the form of less-aggressive annual reductions. Consequently, light trucks will be required to achieve, on average, 3.5% annual GHG emission reductions from model year 2017 to 2021 and 5% reductions from 2022 to 2025. This will give time for companies to find technological solutions that lead to reduced emissions without affecting the utility of their trucks.

Despite loving small cars, Canadians love trucks even more. The Ford F-Series and RAM 1500 are Canada’s first and second best-selling vehicles respectively. A tailpipe emissions based standard like Euro VI would make these cars horribly unaffordable for the average Canadian, to the point where they would become toys for the rich.

Consumers would cry foul over having their choice in vehicle being regulated out their budget, thanks to punitive carbon taxes or the inability to comply with the standard, and the Detroit Three would cry foul, faced with the prospect of having a 33 million-strong market for their most profitable vehicles at risk of drying up. It’s true that many full-size pickups are used for work related purposes, but the vast majority aren’t. The rest of the world manages to do just fine with the global mid-size pickups offered by a variety of auto makers, so why not Canada? Would harsh emissions regulations that hurt full-size pickups be a good pretext for the D3 to leave the country? With the strong Canadian dollar and the tough negotiating tactics of the CAW, it might be the perfect excuse to pack up and move to Mexico.

 

 

Get the latest TTAC e-Newsletter!

51 Comments on “Canada Adopts CAFE 2025-Based Fuel Economy Standards...”


  • avatar
    blowfish

    i just dont give a damn, as i drive 30 yrs old merc oel burners, mix with Used vege oel, so i dont give a rats’ ass as what kind of rule would they pull out of the POGG aka peace order & good government to make getting around within Canuckstan freely as the canadian charter of rights once guaranteed of moving freely within canada.

    http://en.wikipedia.org/wiki/Section_Six_of_the_Canadian_Charter_of_Rights_and_Freedoms

    perhaps some day we’re could be require to drink our own pee inorder to drive a mile in our gas guzzling machine.

    on the lighter side should we limit peoples’ beans intake as that leads to production of methane which abett the global warming! unless there’s an invention of getting it to be contained and burn else where useful.

  • avatar
    el scotto

    I could see farm/ranch exemptions being passed. More turbo and diesel powered trucks? I foresee blue collar pissing contests in the future. I got a V-8 how’s that 6 working out? Then again, I wore Red Wing boots to work and had a spare pair in the truck. Or under the law of unintended consequences; people buying heavy duty trucks to get the power they want.

  • avatar
    danio3834

    Of course Canada will harmonize with whatever US standard, it doesn’t make any sense to do otherwise.

    Canada creating it’s own vehicle standards in this right makes as much sense as California doing so.

    • 0 avatar
      NMGOM

      Actually, I am in favor of Canada doing its own thing and not cow-tow to American interests. It’s an independent country, for crying out loud.
      And I in favor of each of the other 49 states here doing their own thing and telling California to take a long walk on a short pier. But what do I know? The Constitution maybe?

      —————-

      • 0 avatar
        danio3834

        Beign sovereign is great and all, but making separate policies in areas with no significance or benefit is just a waste of time and money.

        A good example was the harmonization of vehicle bumper standards that happened a few years ago. There was no good reason for the different standards, but it kept a lot of cool machinery from being sold in Canada until it was made to be in line with US standards.

        It also cost the manufacturers more money to certify the vehicles that were sold in Canada, which would be passed onto consumers. Designing to one standard benefitted everyone.

      • 0 avatar
        don1967

        “Actually, I am in favor of Canada doing its own thing and not cow-tow to American interests.”

        What American interests are being served if Canada follows the CAFE rules? If anything it benefits us Canadians to standardize products on both sides of the border. Having our own standards makes us a small niche market, which at least partly explains why cars cost so damn much up here.

        I’m not endorsing CAFE, by the way. I see it as just another form of social engineering, which is all the rage among modern liberals. But for Canada to take an angry-little-man stance against the American economy makes even less sense.

      • 0 avatar
        NMGOM

        danio3834 and don1967…

        I appreciate what you both are saying.
        But I guess I’ve had about enough with the world-wide homogenization that blends cultures and economies at the expense of individual identities and expression. Not everything can be an economic or financial short-term consideration.

        There is value in “wasting time and money” to preserve some things; and what’s wrong with being a “niche market”? If the American “Big Three” can’t cater to it, I’m sure the Japanese and the Germans will. I really think that Canada would benefit more in the long term by establishing its own culture and economic base, and be more independent of the American commercial juggernaut south of the border.

        When I come to visit Montreal, I don’t want to see a reworking of NYC, any more than when I visit London or Paris and would find a plastic reproduction of Midwestern Americana.

        And yes, this is one of your American friends saying so…..

        ——————

      • 0 avatar
        car_guy2010

        Unfortunately, your approach is exactly what got us into this warming mess in the first place.

        If Canada wanted to make some real change, they’d toss Harper in a hamper and find a leader that doesn’t still suck up to G.W Bush, even if he’s been out of office for a while now.

      • 0 avatar
        danio3834

        NMGOM,
        Perhaps we should have a référend-UM. What could be more Canadian than that?

  • avatar
    Wacko

    The reason Canada is doing this is :
    1. Our prime minister wants to be an american,
    2. Like this they can say they are doing something for the environement, when really we all know that cars are not the big polluters here but Big industry is, example oil companies, that happen to own our Prime Minister

  • avatar

    Many truths have been written about our Right Leaning Government, besides wanting to keep your President happy and also the Queen in the UK, Canada is giving our Alberta Oil to the Government of China,seeing that your President didn’t want it(Pipe line to Texas) the Deal with China will be sealed on Dec.10th, there would have been a better chance to send the Oil to our Eastern Markets, but its cheaper to import Crude in Barrels to a large Refinery near Quebec City the Oil we get here is from North Africa and even the North Sea! crazy eh? Just wanting you all to understand a bit about Canada!

    • 0 avatar
      dolorean

      @GentleTed. Let’s get back to what’s truly important, eh? WTF happened to the Calgary Stamps in the 100th Grey Cup?? Thought they were sur thing this year.

    • 0 avatar
      Kendahl

      Crude oil is a commodity. If it’s cheaper to sell Alberta crude to China and import crude to feed a Quebec refinery than to send Alberta crude to Quebec, that’s the smart thing to do. I would much rather Canada sent it to the US, but politics interfered.

    • 0 avatar
      Chicago Dude

      The pipelines probably weren’t going to be built anyway. You have to expend considerable energy to heat up the oil enough that it can easily be pumped by pipe, and once you do that you are limited to selling it wherever the pipeline goes.

      A significant portion of the oil and gas from the Bakken shale is being shipped via rail cars. The rail infrastructure already exists, costs are known, environmental studies don’t have to be done, the rail cars go anywhere and everywhere buyers exist, you don’t need to spend any energy keeping the oil warm, etc.

      Railroads are the future!

      • 0 avatar
        CalgaryGuy

        You don’t heat the oil. You use condensate.

        Shipping by rail costs far more than shipping by pipeline. It also creates more greenhouse gases (if you happen to care about such things).

  • avatar
    Landcrusher

    Derek,
    I don’t accept your premise about picking on motorists because they aren’t organized. What percentage of every political party are motorists?

    The reason they pull these stunts is because the legislation is beyond the understanding of the voters. They say its good for the planet, and as long as the influential types go along, then it gets passed without political pain. The reality is that the unholy marriage of the distributionists and the environmentalists manages to keep real environmental progress squashed to protect the power of the leadership of both groups.

    • 0 avatar

      I think we’re saying the same thing, just with the added bit about how motorists never organize to protest things that affect them (the “50 over” law in Ontario being another example)

      • 0 avatar
        mikey

        @ Derek…Dude {the “50 over law”} is a joke. When was the last time you saw it enforced?

        BTW Firty over means, if you get caught driving 50 KLMs {35 mph} over the posted limit,your wheels get impounded for a week,and it costs you about 2 grand to get out of it.

      • 0 avatar
        Mikemannn

        @mikey: It’s a farce.. But, a coworker got nabbed earlier this year on 417 between Ottawa and Montreal. In a rental car. That was expensive.

      • 0 avatar
        danio3834

        @mikey,
        Cops LOVE enforcing this one. What a catch for them. Even if you’re acquitted, you’re still out your vehicle for a week, have to pay impound fees and show up to court.

        It doesn’t matter that theres less than a 1/3 conviction rate, or that this statute has been ruled unconstitutional many times, it’s a nice grab so they keep on keepin on.

        Oh and Derek, I am an organized, mobilized politcally vocal motorist and work hard for the cause. In the last election, I even ran for MPP.

  • avatar
    Beerboy12

    One thing I don’t know, does the US government do anything to align it’s regulations with Canada’s laws. If not it’s a one sided alignment, yes?

    • 0 avatar
      Landcrusher

      Align our laws with what? I have no idea what you are talking about. :)

      Actually, I think an old PM once got some acid rain regulations onto the books here. You know, if you had a bigger Army than we do you could surely hold more sway. In fact, if you could guarantee just the protection of the Europeans (who refuse to defend themselves) I could likely get our guys to go along with any auto emissions scheme you want and throw in an end to the lumber issues to boot.

      How aboot it, eh?

      • 0 avatar
        mikey

        @ Landcrusher..You nailed it! I’m a proud Canadian. That being said,we in Canada do whatever we want,whenever we want.

        All we need to do is clear it with Washington first.

      • 0 avatar
        mike978

        Lets be fair some European countries are more than happy and capable to look after themselves. The UK is the prime example but the French keep a small nuclear deterrent plus conventional land forces. The Danes and Dutch also (accounting from their small size) help out. Then there are the more stereotypical European countries (Belgium etc) that don`t do their fair share.

  • avatar
    Pch101

    The most effective way to reduce consumption is to tax it more heavily.

    But serious moves to substantially increase fuel taxes would be political suicide in the US. So in real world terms, increasing these taxes is not a realistic option here.

    If the US won’t do it, then Canada can’t, either. Much of the Canadian population lives within an hour or so of the border. European-level fuel prices in Canada would simply encourage Canadians to buy at least some of their fuel in the United States, which harms Canadian merchants and reduces Canadian GDP. And if those Canadians are driving to the US to buy gas, then you can expect those same Canadians to also do more of their shopping in the US, which makes the effect that much worse.

    CAFE exists so that we can pretend that we are doing something to reduce fuel consumption, while not doing anything meaningful about it. Just so long as the US has CAFE, it can’t hurt the Canadians to have it, too.

    • 0 avatar
      Dan

      Wrong. The most effective way to reduce consumption is to price it higher. Whether that price comes through taxes at the point of sale is wholly immaterial.

      Serious moves to substantially increase the cost of fuel have been in progress for years and the fruits of that are on display at the gas station right now. US gas prices this year have been at a seasonally adjusted all time high since mid August.

      • 0 avatar
        mikey

        @Dan..1.23 cents a litre,roughly converts to about 4.75 U.S per U.S gallon. I just put $46.74 in my Cobalt. The guy beside me had gone past the $100 mark in his Silverado. Behind him was an old Four Runner.

        Reduce consumption with higher price?….LOL

    • 0 avatar
      danio3834

      “The most destructive way to reduce consumption is to tax it more heavily.”

      FTFY

    • 0 avatar
      TW4

      Will you guys please read about price elasticity and stop making dumb blanket-statements about controlling the consumption function with price?

      • 0 avatar
        Landcrusher

        Fuel demand is only inelastic in a medium term of a few years. The refiners know this, i didn’t have to read it, I got an insider at a refiner to tell me. If they raise the price too quickly it effects demand. People immediately reduce trips and will even swap vehicles. Raise it over the long term and people will adjust behavior as well. Since the refiners can’t control their input costs very well, they absorb oil spikes whenever possible and make it up by dropping the price slowly on the downside.

        I suppose it’s written somewhere else, but I wouldn’t blame you for not finding it.

      • 0 avatar
        TW4

        Landcrusher, we are consuming oil at levels comparable to the mid-90s. What did it take to reduce our oil consumption by roughly 10%? A global credit meltdown, continuous 8% unemployment, a $100B-$200B trade deficit for petroleum, and a 400% increase in the price of gasoline from 2000-2008. People imagine that a paltry excise tax increase is going to fundamentally alter the consumption function by utilizing price elasticity?

        Our gasoline consumption is based on purchasing power, cultural consumptive behavior, mandatory/discretionary driving, and the efficiency of the vehicles we drive. If excise tax significantly reduces consumption, it will be due to cultural revulsion towards paying higher taxes. The oil price has already quadrupled so you’re not going to make significant economic headway by increasing the federal excise on gasoline.

        We haven’t even discussed the social rancor that would result from a regressive tax on the lower-middle class and fixed income elderly. Actually, it’s triply regressive b/c gasoline consumption makes up a larger percentage of their disposable income, price inflation affects a larger portion of their disposable income, and they lack the purchasing power to acquire advanced technologies to avoid paying the tax (e.g. Toyota Prius, Chevy Volt). You’d have to increase COLA adjustments for Social Security, an entitlement that is already racing towards insolvency, and you’d have to give refundable tax credits to lower middle-class citizens.

        CAFE, with its Jevon’s paradox and higher auto prices, looks positively Utopian compared to the futility of raising gasoline excise taxes.

      • 0 avatar
        Landcrusher

        So, if it cost more to drive, everyone will drive the same except poor people, but that won’t be fair. Oh, and the cost doesn’t matter except when everyone is poorer, everyone drives less. But the cost really doesn’t matter because its inelastic. And, everyone should drive less to save energy except poor people because that would be bad, so we should subsidize their driving. Is it only bad for the environment when rich people drive? And this CAFE thing, it’s doing such a great job after a few decades we still need it?

        One more question, what’s up with the bazillions we spend on mass transit? You seem to understand this economics thing, but I can’t figure out how we save energy with all these buses riding around with 2 and 3 passengers. How does that work?

      • 0 avatar
        TW4

        “Is it only bad for the economy when rich people drive?”

        Not the issue. The issue is about the amount of gasoline consumed. A rich person can drive a lot farther on a gallon of gasoline b/c they have economic access to fuel-saving technology. The wealthy can also afford expensive clean alternatives to gasoline. A gasoline tax supposes that it is only bad for the environment when a poor person travels by automobile.

        The trouble with CAFE is the need for on-going adjustment. Excise tax suffers from the same problem. Basically every policy initiative does.

        If you want to get rid of buses, be my guest. I think you’ll find that bus programs do not exist to meet a fuel efficiency objective.

      • 0 avatar
        Landcrusher

        OMG. Okay. Lets agree fuel taxes are regressive and just quit.

      • 0 avatar
        TW4

        OMG. Better still, let’s agree that oil and gasoline consumption exhibits volatility and inelasticity. Then we will resolve not use specious arguments to write bad policy.

      • 0 avatar
        Pch101

        “Will you guys please read about price elasticity and stop making dumb blanket-statements about controlling the consumption function with price?”

        Er, it would appear that you don’t understand what the concept of elasticity is.

        Price elasticity of demand is a measure of the degree of response between a change in the price and the change in demand. If it is elastic, then the demand falls to a greater degree than the price increase. If it is inelastic, then the demand falls to a lesser degree than the price increase.

        Studies suggest that the price elasticity of demand for motor fuel is negative but inelastic, with that inelasticity decreasing over the long run. The demand falls, just not as much as the increase in price.

        A higher gasoline tax would reduce demand for gas. You would be hard pressed to find a credible study that says otherwise, while the high level of US per capita consumption of motor fuel compared to other developed nations illustrates what happens to demand when fuel is relatively cheap.

        With a considerably higher gas tax, the percentage decline in demand would not match the percentage increase in price, particularly over the short run. But demand would still decline, as drivers opt to drive less over the short run and increasingly switch to vehicles that use less fuel over the long run.

        There are few goods for which real price increases don’t negatively impact demand. (Luxury goods can be an exception, since the high prices contribute to their cachet value.) Gasoline is not one of those goods.

      • 0 avatar
        Landcrusher

        TW4,
        I would rather just quit. You claim the price is inelastic while saying that it will require subsidies so that poor people can keep up their demand. I point this out. You say my argument is specious offering no example why and not offering any explanation on why your argument isn’t.

        Keep it up and you will find you start getting ignored around here.

        PCH,
        Outside of economics classes and financial circles most people use elastic and inelastic to mean responsive or unresponsive. It’s no big deal except when an economist doesn’t realize his audience isn’t really getting it.

    • 0 avatar
      don1967

      I’ve given up trying to argue with big government, pro-CAFE types. They confuse the logic of why people should live a certain way with the moral right to force them to do so.

      • 0 avatar
        tedward

        don1967

        It seems like in the case of CAFE (which I think is very poorly done but that’s besides this point) it’s more a case of the government forcing companies to produce slightly more fuel-efficient vehicles, not the government forcing consumers to live their lives a certain way. I’d think that it would appeal to your libertarian tendencies more than a fuel tax would, or numerous other methods. That’s the silver lining I see (again, leaving aside the pragmatic judgements of CAFE).

        The government forcing you to live your life a certain way is bans on polygamy, narcotics nudity in public, or, extremely, state sponsored religious affiliation.

        Seeing that enough of the public see’s fuel over-use and various pollutions as a negative, it will be part of the political landscape and future legislation. CAFE is a tortured solution to this cold political fact which places the minimum onus on individual tax-payers, and forces (pretty minor) changes onto our manufacturing sector instead.

        It bothers me a lot more to see a reflexive jerk towards fuel, point of purchase or road use tax by those who think CAFE isn’t working fast enough. Those proposals are the enemy from a personal liberty point of view in my opinion. Again, basic premise is that too many people worry about pollution to just let this slide, it will remain a public/political issue.

        I think if enough people keep hating on CAFE we might end up with something far, far worse, like incredibly high fuel prices or taxes based on public road use by mile. My two cents. I do agree with your libertarian sentiment.

      • 0 avatar
        tedward

        I also think that if CAFE goes away we immediately go to a mandatory vehicle tracking system. The insurance industry is no motorists friend, and they are all teed up on this issue (for manifestly non-fuel use reasons). Republicans and Democrats are ready to vote their way here.

      • 0 avatar
        thelaine

        Amen Don. Freedom be damned.

      • 0 avatar
        Landcrusher

        Tedward,
        Fairly administered pollution taxes are a libertarian wet dream. Whatever the libertarian utopia is like, it’s likely got a really small government funded by pollution and consumption taxes.

    • 0 avatar
      01 ZX3

      Why does the government need to do anything? Other than to pander to environmentalists, I can’t think of a logical and morally right reason.

  • avatar
    TW4

    If Canadians burn less oil, they can export more energy. Canada ran a strong trade surplus as oil prices increased over the last decade, but their surplus evaporated when the oil price collapsed and the global economy rebalanced.

    I think the Canadian government wants to return to surplus.

  • avatar
    CanadianMechanic

    Canadians dont all drive small cars…

    Number one selling vehicle in Canada is the Ford F-150 followed by the Dodge RAM,then the Dodge Grand Caravan.Lots of trucks,suv’s larger V-8 cars ect…Yeah..small cars in Montreal because they want to be like Europe…in fact that is the onlyplace small cars sell well.

    Furthermore,the real reason they did this (brownie points for the left are just a cover-up)is because our cars are the same as American cars..Same size,specs,h.p, and makes and models,so I cant see any manufacturer just making cars for the Canadian market as it is alot smaller..Not the cars the sales of cars per year.

    We love our trucks,yes even in the City,and as daily drivers ! Ford,Chrysler are our best selling manufacturers here,followed by GM or Toyota (they keep switching)

    • 0 avatar
      danio3834

      For the sake of accuracy, the top 5 selling vehicles in Canada through October are:

      Ford F-Series (150-550)
      Ram pickup (1500-5500)
      Honda Civic
      Dodge Grand Caravan
      Hyundai Elantra

      Then aside from the GM pickups, it’s all small cars and CUVs through the top 10.

  • avatar
    WRohrl

    Derek, if you all stop putting the Canadian flag on your backpacks, then the Europeans are just going to assume that you are from the U.S. I guess it’s up to each individual Canadian to decide which fate is worse :-)

  • avatar
    wmba

    Well it’s one thing to clone CAFE and call it good.

    It’s quite another to allow manufacturers to quote highway mileage figures based on the old EPA system the Americans booted out 5 model years ago.

    Consequently, we have the Ford Focus, the Dodge Dart and god knows who else advertising 59 mpg highway, the Dodge RAM truck going for 36 , and similar horse-manure claims. Sure, our gallon is amost exactly 20% bigger than the tiddly US one, but that translates into 48mpg US for a Focus, and near infinite for an Elantra. Ludicrous. Nobody gets this kind of fuel economy. Not one Soul.

    Since Hyundai is regurgitating money for miffed US customers upset with poor economy, I’d suggest that the appropriate rebate for Canadian customers is a free car each for the outlandish exaggerations we get dished up with a straight face, along with contaminated beef.

    But the real problem is our government allowing these claims. Apparently the 9 member staff running the entire DOT outfit responsible for vehicle certification is overstaffed. Budget cuts will follow.

    What a simpleton outfit our federal government has turned into. Snide, vicious, small-minded politicos with a agenda that makes no sense to me at all. I used to think I was a conservative in the Canadian context, but I demand clarity of purpose, and right now, that’s a secret, just like everything this government does.

    What a shambles this country is in.

  • avatar
    RobertRyan

    “Despite loving small cars, Canadians love trucks even more. The Ford F-Series and RAM 1500 are Canada’s first and second best-selling vehicles respectively. A tailpipe emissions based standard like Euro VI would make these cars horribly unaffordable for the average Canadian, to the point where they would become toys for the rich.”

    We have a lot and a growing number SUV’s and Pickups in Australia and we will have Euro V. I do not see the implication of the standard changing our tastes in vehicles. Changing tastes has more to do with Lifestyle changes and your needs and wants.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Authors

  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Matthias Gasnier, Australia
  • J & J Sutherland, Canada
  • Tycho de Feyter, China
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Faisal Ali Khan, India