Canadian Province Launches Establishes Cap and Trade Program

Feb 26, 2016

Ontario’s introduction of New Climate Change Legislation enables the establishment of a cap and trade program. The step toward a lower carbon economy takes a broad-based approach to reducing greenhouse gas emissions (GHG) from all sectors. Automakers have participated in consultations with government officials since the outset and are part of the solution to this important issue, according to the Canadian Vehicle Manufacturers’ Association (CVMA).

“The auto industry is a high risk for carbon leakage and highly trade exposed as it exports almost 99 percent of what it builds,” said Mark Nantais, president of CVMA. “To that end, Ontario has recognized that transitional allowances for the first compliance period and beyond are needed, as is the reinvestment of cap and trade program revenues into energy efficiency projects to further reduce greenhouse gas emissions and offset additional costs incurred. CVMA is committed to working with the Ontario government on the development of an appropriate regulatory framework suitable for the globally competitive environment in which we operate.”

Auto manufacturing contributes less than 1 percent of total greenhouse gas emissions in the province, which has been achieved through many successive years of energy efficiency improvements across all facilities in Ontario, according to CVMA. 

New light-duty vehicles are already regulated for vehicle greenhouse gas emission reductions at the federal level on a harmonized basis in Canada and the U.S. Under these very stringent greenhouse gas emission regulations for model years 2017-2025, fleet fuel consumption will be reduced by 50 percent in the final year compared to a 2010 model year vehicle, according to CVMA. Compliance will be achieved by vehicle manufacturers using a multi-technology and fuels pathway, which includes a growing number of electric vehicles.