Obama's nationwide auto emissions standards gives Canada what it wanted
U.S. President Barack Obama's plan to curb vehicle emissions is a double-edged sword for Canada — while Ottawa is getting the universal standards it was hoping for, automakers will now have to meet costly new regulations four years earlier than expected.
"The new standard is near impossible to meet from a number of perspectives … with engineering and consumer acceptance leading the way," Dennis DesRosiers, a Canadian automotive analyst, said Tuesday.
In the White House Rose Garden earlier in the day, Obama outlined his administration's sweeping plan to end dependence on overseas oil by curbing vehicle emissions, calling the initiative a historic turning point toward a "clean-energy economy."
What do the new U.S. fuel and pollution standards mean for Canada?
In Canada, both fuel economy standards and emissions standards were set to be comparable to U.S. regulations.
Canada's Motor Vehicle Fuel Consumption Standards Program began in 1978 and proposes a voluntary standard, called the company average fuel consumption standard. The CAFC standard is similar to the mandatory corporate average fuel economy standard in the U.S.
Canada's vehicle emissions regulations are governed under the Canadian Environmental Protection Act of 1999. The law makes frequent references to the U.S. Environmental Protection Agency and EPA certificates, and seeks to "establish emission standards … that are aligned with those of the EPA."
"As a result of this agreement, we will save 1.8 billion barrels of oil over the lifetime of the vehicles sold in the next five years," said Obama, joined in his announcement by leaders of the auto industry, labour, government officials and key national and state political leaders.
"And at a time of historic crisis in our auto industry, this rule provides the clear certainty that will allow these companies to plan for a future in which they are building the cars of the 21st century."
Most importantly from a Canadian perspective, the plan effectively ends a feud between the Big Three automakers and state legislatures over emission standards as the car companies get the single national standard they've been seeking.
"We will continue to work with the United States toward a single, dominant standard that will provide both consumers in North America and as well manufacturers with the certainty that they need to be on the cutting edge," Environment Minister Jim Prentice said in Calgary.
"There is only one single North American auto industry. Therefore it doesn't profit any of us, either as consumers or manufacturers, to have competing standards."
The new national standard roughly mirrors the proposed California clean car standards — cutting global warming emissions approximately 30 per cent by 2016, four years earlier than the original deadline of 2020.
Canada was desperately hoping for nationwide guidelines they could match back home, amounting to a North American standard. Canadian officials argued that a number of differing standards from state to state and province to province would spell chaos for the auto industry.
"The good news for Canada is that at least there will now be some consistency," said Anthony Faria, a professor of marketing at the University of Windsor's auto research centre.
"The big headache that could have been facing the auto industry is that it would go state by state, so essentially they would have needed to build cars for differing sets of standards."
Meeting the new standards by 2016 instead of 2020, however, will be expensive for both automakers and consumers, Faria said.
The new regulations will cost consumers an extra $1,300 US per vehicle by 2016, although Obama said savings at the gas pumps will offset the higher price of vehicles in three years.
The new rules, Obama added, will result in 177 million gas-guzzlers being removed from U.S. roads over the next 6½ years.
Industry officials — many of them now running their companies on federal bailout dollars — said Obama's plan would help them because they would not face multiple emissions requirements, and because it gives them more certainty as they develop their vehicles for the next decade.
But governments can't force consumers to buy cars they don't want, said DesRosiers, who noted that the many fuel-efficient vehicles currently on the market, including those manufactured in North America, have yet to capture the imagination of the American consumer.
Sixty per cent of the vehicles purchased by Canadians are smaller, fuel-efficient vehicles, but Americans still love their gas-guzzling SUVs, he said.
"Americans have the identical vehicles for sale in their country yet only about 30 per cent of Americans buy this size of vehicle," DesRosiers said.
"Rather than tell the (automakers) that they have to produce more fuel-efficient products, why doesn't Obama tell Americans they have to buy more fuel-efficient products? He could do this quite easily by, say, doubling or tripling gas prices, for instance."
But that's not something Obama has an appetite for, DesRosiers said, adding it's politically easier to lean on the automakers.