Correction to Advanced Vehicle Credit Formula

Summary#

This Order approves the Minister’s second interim correction to the formula that counts greenhouse gas credits for advanced-technology cars and light trucks under the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations. The interim fix was approved by the Governor in Council on August 11, 2021 and is meant to last up to a year while a permanent regulatory amendment is prepared.

What it does#

• Corrects the multiplier formula used to calculate CO2-equivalent emission credits for advanced-technology vehicles (electric, plug-in hybrid, fuel-cell, and certain natural-gas vehicles) in the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations.
• Makes the correction retroactive to the 2017 model year, matching a fix the U.S. Environmental Protection Agency published on April 23, 2020.
• Lets companies choose either the corrected method or the previous method when calculating credits.
• Keeps the change in place for up to one year under the authority of the Canadian Environmental Protection Act, 1999 while a permanent amendment is developed (the department expects a final amendment possibly by 2022).

Who's affected#

• Manufacturers and importers of new cars and light trucks in Canada.
• Companies that earn, bank, or trade greenhouse-gas emission credits under the regulations.
• Industry groups and non-government organizations that asked for the correction.
• Consumers are not directly regulated by this Order, but car availability and manufacturer incentives could be indirectly affected.

Why it matters#

• It ensures companies get the level of emission credits that the rules intended. That can ease compliance costs for manufacturers that sell many advanced-technology vehicles.
• It keeps Canada’s rules aligned with the U.S., avoiding a mismatch that could change how many credits automakers earn for low-emission vehicles.
• The change is temporary; a permanent regulatory fix is expected later. Without this interim measure, companies would not have received the intended credits for vehicles sold since 2017.