Clean Energy Canada | Five must-haves for an effective zero emission vehicle standard
February 22, 2022

With a looming deadline to deliver a clear plan for reaching Canada’s 2030 climate target, the Liberal government has put all climate policies on the table. Elected officials and government staff are now in a mad dash to decide which policies are in, which policies are out, and where these emission reductions are going to come from.

One of the most important ways to cut carbon pollution is by enacting a national zero-emission vehicle standard, which requires carmakers to sell an increasing proportion of electric vehicles in Canada. And it’s not just emission reductions this policy will deliver—it will also create more choice for Canadian car buyers and support a globally competitive electric vehicle industry.

But as policymakers kick the can around on policy design options, let’s talk about how different design options could impact Canada’s future. If the federal government wants a zero-emission vehicle standard to be meaningful and deliver the best environmental and economic bang for the buck, these are the five hallmarks we need to see.

(1) Implemented by 2023. As Environment Minister Steven Guilbeault has indicated, the national standard must be in place by 2023 to maximize short-term emission reductions and even the playing field when it comes to the currently lopsided supply of EVs for sale between provinces. Every year we delay is a year that hundreds of thousands of Canadians buy a new gas car that will be on the road for 15 years. Waiting until 2025 or 2030 before any requirements kick in would mean carmakers could continue selling high-polluting gas cars in Canada to fund their EV transition elsewhere, while Canadians struggle to find an EV to buy in the face of short supply.

(2) Annual sales requirements. A national standard must include strong zero-emission vehicle sales requirements for every year en route to 100% sales by 2035—as all other zero-emission vehicle standards implemented in North America now do. These annual requirements will hold carmakers’ feet to the fire. Look at what happened in the EU: the year we saw the market share of EVs triple and quadruple in EU member countries was the same year the region’s much stronger tailpipe emission standards came into place. Annual requirements also provide the market certainty key players like charging station providers, electric utilities, raw material suppliers and battery recyclers need to ensure they’re ready for rising levels of EV uptake.

(3) EV sales trajectories that are both reasonable and ambitious. Biden’s new tailpipe emission standards—which were released last December and automatically apply in Canada too—have changed the baseline EV sales Canada should expect to see in 2025 and 2026. Indeed, the U.S. . projects the new rules will deliver 14% zero-emission vehicle sales by 2025 and 17% by 2026. If Canada wants to enact an ambitious zero-emission vehicle standard that actually drives change, our updated EV sales targets must go above and beyond what we’re expecting to see in a “business as usual” scenario. Post-2026, Canada should follow the EV sales trajectories being proposed by other North American jurisdictions on a path to 100% sales by 2035. B.C., Quebec, and California all have zero-emission vehicle standards in place, and their policies are working: all three jurisdictions have significantly higher EV market shares than the national average and account for outsized portions of national sales. Fourteen other states have adopted a zero-emission vehicle standard modeled after California’s, which together account for 36% of new U.S. car sales. Adding the rest of Canada would put 42% of the car market under a zero-emission vehicle standard.

(4) Consequences for inaction. Carmakers must face penalties if they fail to comply with a zero-emission vehicle standard. This seems obvious, but it’s a glaring omission in the current tailpipe emission standards, which impose no consequences if carmakers fail to clean up the cars they sell. (This may help to explain why passenger vehicle emissions have actually risen by nearly 10% over the last decade, while other sector emissions have declined.) Moreover, penalties must be high enough to actually change automaker behaviour and motivate them to sell more EVs. Experts recommend a minimum of $10,000 to $20,000 for every EV a carmaker falls short.

(5) Limits on loopholes. One of the best parts of a zero-emission vehicle standard is the flexibility of its design. Carmakers can meet their requirements in many different ways, whether by selling EVs, trading credits, or banking credits to use in future years. But there must be limits on these flexibilities to ensure the policy doesn’t get too watered down. Ample research shows that too many compliance flexibilities can defeat clean transportation policy goals, whether cleaning up our cars or reducing harmful pollution in heavy trucks. To avoid these risks, California and Quebec are currently revisiting their zero-emission vehicle standards to tighten limits around banking credits for future use and phase out alternative pathways to comply in later years. These changes will help the policies deliver the EV sales and emission reductions they are meant to deliver.

Done right, a national zero-emission vehicle standard will drive down carbon pollution in Canada’s highest-emitting sectors (directly in the transportation sector and indirectly in the oil and gas sector by decreasing fuel demand) while ensuring Canadians from coast to coast are able to buy the clean cars they want. What’s more, this key measure will create the market certainty industry needs to build up Canada’s EV industry.

Simply put, the benefits of a zero-emission vehicle standard are too significant to just leave on the table.