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Report on Business Ottawa to work with California on rules to cut greenhouse-gas pollution from vehicles

The Canadian government is allying itself with California to advance regulations for vehicle fuel efficiency as the state battles the Trump administration over its plan to roll back existing rules.

In a joint teleconference Wednesday, Environment Minister Catherine McKenna and California Governor Gavin Newsom said the two governments signed an agreement to work together on clean transportation.

The memorandum of understanding released Wednesday commits Canada and California to work together on their respective regulations to cut greenhouse gas (GHG) pollution from vehicles such as cars, pickup trucks and SUVs.

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The two governments said that regulations, currently in effect in California and Canada, help ensure people can purchase fuel-efficient cars that cut pollution and save money in fuel costs. However, the automakers have warned tougher regulations that extend to 2025 will add nearly US$1,800 to the average price of passenger vehicles.

Ms. McKenna stopped short of explicitly taking California’s side in the legal dispute between U.S. President Donald Trump and Mr. Newsom over the state’s determination to set its own vehicle fuel-efficiency standards.

The Trump administration is rolling back regulations set by former president Barack Obama in 2012 that would force automakers to increase the average fuel efficiency of the vehicles they sell by 50 per cent between 2008 and 2025. Washington also wants to end a waiver provided to California that allows it to set its own regulations in order to combat smog and other air pollution. Talks between the state and U.S. federal government broke down this spring and they now appear to be heading to court.

“We look forward to working with California to fight climate change, keep the air clean and give drivers better options for cleaner, more affordable vehicles,” Ms. McKenna said.

Earlier this month, the world’s largest automakers urged the White House and the state of California to resume negotiations to come up with one set of GHG standards for cars.

The companies – including Ford Motor Co., General Motors Co., Toyota Motor Corp., Honda Motor Co. and Volkswagen AG – sent letters to both governments, saying industry jobs are at stake and that one set of standards would be more effective at reducing emissions than two.

Mr. Newsom said the state remains open to talks with the Trump administration on harmonizing fuel-efficiency rules, but indicated it is committed to the more stringent standards.

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“For us, these vehicle-emission standards are fundamental and critical to achieving our audacious [GHG reduction] goals,” the Governor said.

He noted that Washington had refused a request for further consultation on the issue by automakers who fear the consequences of a split market on their highly integrated supply chains. As many as 13 states have indicated they would follow California’s lead.

“We’re not a small, isolated state. California moves markets,” he told reporters on Wednesday.

Ms. McKenna would not say whether Canada would align with the more aggressive standards adopted by California. But the minister said she has stressed the need for a “single, ambitious standard across the board” in conversations with California Air Resources Board chair Mary Nichols, as well as the current and former heads of the U.S. Environmental Protection Agency.

Ottawa is currently conducting a scheduled review of the rules and won’t decide on its standard until that work in completed and the U.S. situation is clearer, Ms. McKenna said.

Ottawa is relying in part on reductions in transport-related emissions – which currently account for one-quarter of Canada’s overall emissions – to help meet targets agreed to under the Paris climate accord.

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The Canadian Vehicles Manufacturers Association – which represents the Canadian units of Ford, GM and Fiat Chrysler Automobiles NV – said in a release that Canada needs to continue to align with a single national standard within the United States given the highly integrated and long lead development nature of the automotive industry.

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