This weblog describes why Canada’s tailpipe emission requirements are a vital a part of the brand new federal auto technique, outlines how these requirements work, and gives suggestions for methods to design the following section of those laws most successfully.
Within the new auto technique launched in February, Prime Minister Mark Carney introduced the federal authorities can be changing the EV Availability Normal with tailpipe emission requirements that can ship on Canada’s new EV gross sales targets of 75% by 2035 and 90% by 2040. These requirements work by requiring carmakers to promote cleaner and extra gas environment friendly automobiles yr after yr. Within the near-term, this method gives extra flexibility as a result of carmakers can meet requirements by bettering the gas effectivity of fuel vehicles or focusing extra on hybrids, along with electrification. However because the coverage ramps up, carmakers must provide extra EVs within the Canadian market to satisfy the usual.
Tailpipe emission requirements have the potential to drive a shift to EVs—however provided that we get the small print proper. As an example, each the EU and the U.S. have relied on tailpipe emission requirements as the principle regulatory lever to scrub up their passenger car fleets. Within the EU, EV gross sales reached almost 30% in 2025, up from 3% in 2019. The EU now has a broad collection of EVs available on the market, together with extra EV fashions at higher worth factors than Canada, and is the quickest rising main EV market on this planet as we kick off 2026. The U.S., in distinction, has comparatively low EV uptake (7.8% in 2025, when almost 40 international locations globally have already surpassed 10% EV gross sales) and a dearth of reasonably priced EV fashions.
Whereas Canada’s extra EV-supportive coverage panorama has helped us outcompete the U.S. on EV uptake and mannequin availability thus far (for example, there are a number of situations the place carmakers are providing sure EV fashions within the Canadian market however not the U.S. because of our diverging coverage landscapes, seen right here, right here and right here), we threat falling additional and additional behind a lot of the world, together with our main non-U.S. commerce companions, if we change the EV Availability Normal with tailpipe emission requirements which might be too weak.
Canada will even fail to make a dent in its passenger car emissions with requirements which might be too weak, as we’ve seen prior to now. Certainly, regardless of having a model of this coverage in place since 2011, our automobile emissions have dropped a mere 1% in almost 15 years. The truth is, Canada’s on-road fleet emits extra at the moment than it did within the Nineties (see determine beneath).
Supply: Authorities of Canada 2026
In sum, this coverage has the potential to ship key advantages to Canadians and act as a enough substitute for the now-repealed EV Availability Normal—if designed proper. Particularly, it could:
- Make sure the Canadian market is prioritized when carmakers are deciding the place to ship EV stock
- Assist safe extra reasonably priced EV fashions within the Canadian market
- Enhance the gas effectivity of fuel vehicles to assist Canadians get monetary savings on the pump
- Drive down emissions in Canada’s second highest polluting sector
- Provide the market certainty wanted to assist and de-risk investments in Canada’s EV provide chain, together with in our charging community
Listed below are the 5 key design options that should form the following model of Canada’s tailpipe emission requirements to get us on monitor for 75% EV gross sales by 2035, make a significant dent in our passenger car emissions and safe the opposite key shopper and trade advantages this coverage has the potential to ship:
- Implement by 2027 and till 2035. Canada’s present tailpipe emission requirements (previously referred to as the Passenger Car and Gentle Truck Greenhouse Fuel Emission Laws) apply to automobiles of mannequin yr 2017 to 2025. With the Electrical Car Availability Normal (EVAS) now repealed, Canada has no coverage on the books regulating the emissions from (or bettering the gas effectivity of) the vehicles and vans Canadians drive after 2026. This must be addressed rapidly by implementing the following model of those requirements in 2027 on the newest. The following model must also cowl as much as mannequin yr 2035—the same eight-year timeline just like the final section—to supply trade the longer-term certainty wanted for planning and funding and to align with the primary auto technique EV gross sales goal: 75% by 2035.
- Set a regular sufficiently stringent to ship 75% EV gross sales by 2035. The brand new requirements will even have to be sufficiently stringent to safe EV provide, meet Canada’s new goal of 75% EV gross sales by 2035 and make up for the emission reductions EVAS would have achieved. Whereas early indicators counsel federal officers could also be contemplating a regular of about 74 grams of carbon per mile by 2035, new modelling by the Pembina Institute signifies this is not going to be stringent sufficient to ship 75% EV gross sales. As a substitute, Canada would wish to pursue a regular of 40 g/mile by 2035 to realize that degree of EV gross sales and protect a significant portion of the GHG emission reductions the EVAS would have achieved (see determine beneath). (For comparability, the EU’s present coverage requires that each one new vehicles offered by 2035 obtain a 0 grams/mile normal. The European Fee not too long ago proposed to weaken that to an ~18 g/mile normal by 2035. Even when that much less stringent normal is adopted, Canada’s proposal is 4 instances weaker than that.) Furthermore, as we work to land on the precise Canada-specific requirements to realize our objectives, it could be prudent to make use of a “grams per kilometre” metric to align with our car fleet and measurement system.
Supply: Pembina 2026
Supply: Pembina 2026
- Guarantee an inexpensive ramp up pre-2035, together with a degree of stringency that will ship a 2030 EV gross sales goal of 40%. Canada will even want sufficiently stringent annual requirements in interim years main as much as 2035. Backloading coverage ambition till, for example, post-2030 will considerably sluggish EV uptake, lacking out on near- and medium-term emission reductions and limiting EV affordability advantages for Canadians. Sturdy interim necessities guarantee carmakers proceed shifting ahead with electrification yr after yr. On this case, Europe’s tailpipe emission requirements provide an instance of what to not do. The EU makes use of a step-wise normal that units growing necessities solely each 5 years. EV uptake surged in 2020-2021 after the area’s strict 2021 necessities kicked in. However then Europe’s EV market share began to flatline and even decline as carmakers confronted no regulatory strain to maintain shifting. It was solely in 2025, when the following step of the tailpipe emission requirements got here into impact, that Europe’s EV market share rose once more, with a 6.2 proportion level leap between 2024 and 2025. China, in distinction, noticed its EV market share develop constantly yr after yr resulting from robust annual necessities (see determine beneath). Sturdy interim necessities additionally present the market certainty key gamers like charging station suppliers, electrical utilities, uncooked materials suppliers and battery recyclers have to proceed investing in Canada’s EV provide chain.
Supply: ICCT 2026
- Apply one normal throughout automobiles of various sizes. There was a major shift in direction of bigger, extra polluting automobiles like pickup vans and SUVs over the past 20 years. In 2000, SUVs and pickups accounted for roughly half of all new passenger automobiles offered. Now they account for almost 90% (see determine beneath). So whereas automobiles inside their respective classes have develop into extra environment friendly, automakers—particularly U.S. automakers—have pushed extra shoppers towards bigger, extra worthwhile automobiles. The web impact has been that this shift in car sort reputation has just about canceled out emission reductions achieved by rising EV adoption in Canada. The present design of Canada’s tailpipe emission requirements has inadvertently contributed to this development by making use of two completely different requirements—one for vehicles and a separate, extra lenient normal for “mild vans” (i.e. pickup vans and SUVs). The following model of Canada’s tailpipe emission normal ought to apply a single normal throughout all car sizes, which latest analysis from SFU reveals would ship extra emissions reductions than separate requirements for vehicles and light-duty vans, whereas slowing the shift towards bigger, heavier automobiles.
Supply: Clear Power Canada 2020
- Restrict compliance flexibilities. One of many promoting options of the tailpipe emission requirements is the flexibleness of their design. Already, the coverage permits carmakers to satisfy their necessities in many various methods, whether or not by bettering the gas effectivity of their fuel vehicles, promoting extra standard hybrids, promoting extra EVs, buying and selling credit, or banking credit for as much as 5 years. Consequently, all automobile corporations in Canada have remained in compliance with the laws thus far, and there may be an extra of over 27 million credit for future use, in keeping with the most up-to-date compliance report (see desk beneath, taken from the report).
However too many flexibilities can begin to undermine coverage objectives and the integrity of the credit score market. As an example, latest evaluation by T&E of EU requirements discovered that implementing all the proposed flexibilities within the EU’s new proposed tailpipe emission laws would end in an extra 720 million tons of CO2 (MtCO₂e) between 2025 and 2050 (see determine beneath). As Canada considers design options corresponding to the flexibility to “financial institution” credit for future use, EV “supercredits” (i.e. double or typically even triple counting EV gross sales beneath the usual) and the carry over of early motion credit earned beneath the EV Availability Normal (a coverage that’s now repealed), it should stability flexibility for trade with coverage integrity. Placing cheap limits on compliance flexibilities will assist Canada keep away from the same consequence and make sure the coverage delivers the gas effectivity features, EV gross sales and emission reductions it’s meant to ship.
Supply: T&E 2026
Canada should observe by on its dedication to place robust tailpipe emission laws in place, and quick. Carried out proper, this coverage can drive down carbon air pollution in one among Canada’s highest-emitting sectors and supply regulatory certainty wanted to assist personal sector funding in Canada’s EV provide chain—all whereas making certain Canadians from coast to coast are in a position to purchase the clear vehicles they need.