Ottawa expected to release promised EV sales regulations Tuesday

Automakers are set to get a jolt Tuesday when Ottawa unveils its promised electric vehicle regulations.

CBC News has learned that Ottawa will release final regulations it says will ensure that all new passenger cars sold in Canada by 2035 are zero-emission vehicles, a senior government source said.

The source — who was not authorized to speak publicly — said the new regulations are meant to ensure that automakers produce enough affordable zero-emissions vehicles to meet the demand.

The regulations will be called the Electric Vehicle Availability Standard.

The source said Canada is concerned about other countries, notably the U.S., dominating the supply of zero-emission vehicles. Several states have adopted sales targets for zero-emissions vehicles already.

The regulations will apply to automakers, not dealerships. Under the legislation, manufacturers must earn enough credits to demonstrate they are meeting the targets.

Automakers earn credits for EV sales

Manufacturers will earn credits based on the number of low- and no-emissions vehicles they sell, and those credits determine whether they’re in compliance with the regulations. Different vehicles earn different amounts of credits, depending on how close they come to a zero-emissions standard.

The source added auto manufacturers could earn early credits through a compliance system — up to a maximum of 10 per cent of their overall compliance requirements for 2026 — if they bring more EVs onto the market before then.

Automakers can also earn more credits if they help build out EV charging infrastructure.

Companies that exceed or fall short of their targets can sell or purchase credits from other companies, or use banked ones.

The source said more details of the regulations, to be enacted under the Canadian Environmental Protection Act, will be revealed on Tuesday.

The regulations will apply to model year 2026 and sales targets will increase each year until 2035.

The federal government wants 20 per cent of all vehicles sold to be zero-emissions vehicles by 2026. That target rises to 60 per cent by 2030, and 100 per cent by 2035.

According to a 2022 government analysis, the total anticipated cost to consumers of zero-emissions vehicles and chargers will be $24.5 billion over 25 years, but Canadians can expect to save $33.9 billion in net energy costs.

These estimates are part of a draft and may change when the government releases its final analysis.

Policy would prevent 430 million tonnes of emissions

According to the same regulatory analysis, the policy would prevent the release of an estimated 430 million tonnes of greenhouse gas emissions.

Environmental Defence, a Canadian environmental think-tank, estimates the policy would prevent the consumption of enough gasoline to fill roughly 73,000 Olympic-sized swimming pools.

“Given that cars last on the road for 15 years, if not longer, after they’re bought, 2035 really needs to be the last year that we are selling gasoline cars in Canada brand new if we’re going to have any chance of actually, by 2050, reaching net-zero carbon emissions,” said Nate Wallace, the program manager for clean transportation at Environmental Defence.

Although emissions from Canada’s transport sector have fallen since 2005, they remain the second-highest source of greenhouse gas pollution.

The regulations are meant to both decarbonize the transportation sector and eliminate vast amounts of urban air pollution. Air pollution from vehicles, according to the analysis, increases the risk of developing lung cancer in adults and asthma and leukemia in children.

Emissions, the draft analysis noted, cause an estimated 1,200 premature deaths and millions of cases of non-fatal health outcomes annually.

EV targets too aggressive, auto industry says

But auto industry representatives say the sales mandates are too aggressive.

“Instead of attempting to dictate what individuals have to purchase, we suggest that the government create the right set of circumstances to stimulate demand,” said Tim Reuss of the Canadian Automobile Dealers Association.

Reuss also called on the government to consider the costs to families and challenges with charging electric vehicles, particularly for rural Canadians.

He also raised concerns about whether the electric grid is capable of handling the demand of all the EVs coming onto the market. 

“Regulating Canadians to buy EVs they can’t afford or charge will be a made-up policy failure in Canada,” Reuss said. “Let’s get this right.”

The Canadian Vehicle Manufacturers’ Association, which represents Ford, Stellantis and General Motors, said automakers are committed to electrifying their production. But its CEO, Brian Kingston, said stronger incentives are needed to make zero emission vehicles (ZEVs) more affordable.

“The forthcoming ZEV mandate will leave Canadians out in the cold,” said Kingston. “We’re calling on the government today to help Canadians make the switch to electric with the supports required. Not mandate what Canadians can and cannot buy.”

Challenges for low-income households

According to the draft regulatory analysis, the policy will be challenging for “northern and remote communities” and it notes that the government “is continuing to evaluate measures that could help facilitate this transition.”

While there will be fuel savings, the draft regulatory analysis says the regulations will disproportionately impact low-income households that might not be able to afford at-home charging equipment and could need to rely on publicly available charging stations “that may charge a premium on the cost of electricity.”

To ensure an easy, just transition, the draft analysis says the government will work on policies to ensure ZEVs and the needed charging infrastructure are accessible to everyone “despite economic or regional differences.” 

Independent think-tank Clean Energy Canada argues that EVs will save money for Canadians. 

A recent report from the organization found a typical Canadian household could save as much as $4,000 annually with an electric vehicle over a combustion engine vehicle.  

“EVs are a big money saver for Canadian households,” said Joanna Kyriazis, the director of public affairs for Clean Energy Canada. “That’s money that can be spent on anything else.”