Automakers need to keep a close eye on environmental regulations
At the time of writing this piece, it was unclear exactly what kind of a motor vehicle sales record Canada was going to set in 2014, only that it was going to be a record year for vehicle sales. At the end of November, Canada’s vehicle sales for the year were already 1.718 million units, or about 25,000 units less than 2013’s total vehicle sales of 1.743 million units, which was itself an all-time record. So it seems a pretty safe bet at this point that 2014 will be a record year for vehicle sales in Canada.
Another record that is likely to be set for 2014 is that this year will be recorded as the hottest year for global temperatures since records started being kept in the 1850’s. It is this record and other turbulent global weather that has captured the attention of international governments that met in Lima, Peru recently, for the United Nations Framework Convention on Climate Change (UNFCC) Conference of the Parties 20th (COP 20). This set of climate change negotiations is intended to set the stage for a post 2020 climate agreement to replace the Kyoto Protocol, which was signed in 1997 but entered into force in 2005 and included 192 countries, with the goal of reducing greenhouse gas emissions by 5.2 per cent from 1990 levels between 2008 and 2012.
With that in mind, in 2008, the United Nations Intergovernmental Panel on Climate Change (IPCC) released a comprehensive study suggesting that developed countries needed to decrease their emissions by 25-40 per cent below 1990 levels in order to limit the average global temperature increase to two degrees Celsius. While there may not be full consensus on this point, it has been suggested that an increase in the average global temperature of two degrees Celsius or more is considered to be tipping point after which we start to lose control of our ability to mitigate climate change and end up firmly down the path of adapting to climate change that can no longer be “undone.” We need to remember most greenhouse gases (carbon dioxide accounts for roughly 75 per cent of all greenhouse gases) stay in the atmosphere for hundreds, if not thousands, of years.
Earlier this fall, the IPCC released its most recent study, in which the authors noted that it was “extremely likely” that anthropogenic (or man-made) greenhouse gas emissions “have been the dominant cause of observed warming since the mid-20th century,” as well as suggesting that “It is very likely that heat waves will occur more often and last longer, and that extreme precipitation events will become more intense and frequent in many regions.”
For those of us in Toronto who experienced torrential downpours that caused severe flooding in some parts of the city in the summer of 2013 followed by a wicked ice storm that knocked out power across the city for anywhere from a few hours to more than a week around late December last year, it doesn’t take much to convince us that climate change is real. It might be a stretch to get folks across much of Canada to buy into “global warming” given the severe winter we had last year, but such severe weather can be traced back to a warming planet.
So what’s being done? Well, you may have noticed the issue of climate change has garnered a higher profile over the course of the last year or so for perhaps the first time since the economic downturn at the end of the last decade.
This most recent IPCC report also came on the heels of “Climate Summit” in New York City this past September that was initiated by the UN Secretary General, Ban Ki-moon, which attempted to set the stage for the adoption of a post -2020 climate agreement by 2015. I attended a special stakeholder meeting on the fringe of the summit with our federal Environment Minister, Leona Aglukkaq, at which she confirmed Canada would be moving ahead with a final regulation to amend the light duty vehicle greenhouse gas emissions regulations to establish greenhouse gas emission standards for the 2017-2025 time period in tandem with similar regulations in the U.S.
This will mean that light duty vehicles will consume 50 per cent less fuel than a 2008 model year vehicle. The Minister also announced the intention to regulate greenhouse gas emissions for heavy duty vehicles beyond 2018, as well as moving forward with Tier III emission standards for vehicles and engines that will reduce smog-causing emissions by a further 80 per cent from the 99 per cent reductions that have already taken place since the pre-control era.
It was also announced that, in conjunction with these Tier III standards, Canada would also be moving forward in regulating ultra-low sulphur gasoline, which will enable advanced emission control technologies.
We’ve also seen activity at the provincial level with both the new governments in Ontario and Quebec giving prominence to climate change by renaming their environment ministries to recognize the importance attached to the issue of climate change. In Ontario’s case, Minister Glen Murray presides over the new Ministry of the Environment and Climate Change, while his Québec counterpart, David Heurtel, is the Minister of Sustainable Development, the Environment and the Fight Against Climate Change. Québec has implemented an emissions cap and trade system in conjunction with California, and that program will be expanded to include fuel distributors in 2015.
Meanwhile, Ontario has eliminated all coal-fired electricity generation plants in 2014 and has in place a GHG emissions reporting regulation for large industrial emitters.
It is also clear that Premier Wynne is looking to move ahead in the climate change space based on the mandate letter provided to Minister Murray, in which GHG reduction initiatives were targeted.
Additionally, in early December, the provinces of Ontario and Québec, along with British Columbia and California, issued a Joint Statement on Climate Change that was released during the COP20 UNFCC negotiations in Lima to “collaborate on mid-term greenhouse gas emissions reductions to maintain momentum toward 2050 targets.”
So, 2015 promises to be an interesting year for both the auto industry and the climate change file on a global, national, and sub-national level.
There is an important nexus here, however, barring unforeseen circumstances the Canadian automotive industry is positioned to have another record year in 2015, or one close to it. Globally, the world passed the one billion automobiles on the road in 2010 and some have suggested that we will be at 1.7 billion by 2035.
That’s a lot of vehicles — and a whole lot of carbon dioxide.
The industry is making great strides, however, on its own, by taking a long-term view and corresponding regulations to reduce both the amount of fuel consumed and concomitantly greenhouse gas emissions from vehicles. Personal vehicle transportation is not only important but vital to the livelihood of many Canadians. All policy makers need to ensure that the industry is fully involved and engaged in the necessary discussions leading up to the UNFCC COP21 negotiations in Paris on Dec. 2015.
