March 21, 2005

Pollution Probe examines options for developing new fuel efficiency standard

A new in-depth study recently released by Pollution Probe examines the options Canada can pursue to develop a new vehicle fuel efficiency standard which would contribute to reducing greenhouse gas (GHG) emissions and help Canada meet its now legally binding commitment under the Kyoto Protocol. A new standard would also help achieve the target presented in the Climate Change Plan for Canada, namely a 25% improvement in vehicle fuel efficiency by 2010.

The study illustrates the need for a comprehensive approach to the design of a standard, in order to help Canada develop an effective GHG and fuel efficiency standard. It outlines options for designing a standard which would bring efficient, GHG emission-reducing technologies onto the market, and maintains that the target can be met through cost-effective technologies now available.

Technologies to improve fuel efficiency and reduce GHG emissions have been entering the markets for decades, the report points out. Since about the mid-1980s, however, once fuel efficiency levels to comply with mandatory U.S. and voluntary Canadian standards were reached, most of these technological improvements have been directed toward increasing vehicle power, weight and acceleration rather than reducing fuel consumption.

There are now numerous energy efficiency and GHG reduction technologies now available and others approaching market readiness, the report continues. With the proper standards in place, these technologies can be used to improve fuel efficiency and reduce GHG emission levels in the light-duty vehicle fleet.

The ability of a vehicle fuel efficiency standard to deliver the intended reductions in fuel consumption and GHG emissions depends to a large extent upon its structure. This structure, in turn, must take into account the selection of a baseline and a target, says the report. The baseline is simply the point of comparison to mark progress. For Canadian standards, this could be 1990 levels, or levels for any year for which comparable data exist.

Determining a target must consider the availability of technology and the time period required by industry to achieve the target. For example, says the report, the Climate Change Plan for Canada includes a target of 25% improvement in vehicle fuel efficiency for a reduction of 5.2 megatonnes of GHG emissions by 2010, based on a baseline of 2005 levels. In addition to a near-term target such as this, a standard should include either longer-term targets or a process for developing such targets, to allow industry to plan for the longer term.

The structure of a standard for fuel efficiency and GHG emission reductions can take many forms, but is essentially defined by its metrics and constraints. The metric describes the type of targeted improvement required under the standard, while the constraint determines how the target is applied to the fleet.

The report cites examples of metrics, including: a common fuel consumption target for all manufacturers, based on a sales-weighted average; a uniform percentage improvement in fuel consumption for each manufacturer; and a standard based on some vehicle attribute, such as weight or size.

Examples of constraints outlined include: industry-wide, in which the target is applied to the whole industry as if it were a single manufacturer; industry-wide by vehicle type, which views the industry as a single manfacturer but applies separate targets for cars and trucks; manufacturer-specific, in which a target is applied separately to each manfacturer; and manfacturer-specific by vehicle type, which applies separate targets for cars and trucks produced by each manfacturer.

Given enough comprehensive fleet data, it is possible to model the impacts of different options for structuring a standard, says the report. There are, it adds, several other aspects to consider when evaluating a standard and its structure, such as effectiveness, efficiency, fair distribution of impacts, side effects, political acceptability and alignment with societal norms and priorities.

The study also emphasizes the importance of complementary measures: supportive programs designed to promote understanding and encourage the use of fuel-efficient and low-GHG-emitting vehicles are key to a successful standard, says the report. Programs will also be needed to take advantage of the opportunities that early action on fuel efficiency measures offers Canadian industry. Setting standards to reduce GHG emissions from vehicles can provide an impetus for industry to develop and use more innovative technology which could also serve a growing world market for more fuel-efficient vehicles, the report explains.

The study, "Greenhouse Gas Emissions and Vehicle Fuel Efficiency Standards for Canada," may be viewed on Pollution Probe's Web site, More information is also available from Mary Pattenden, director of Pollution Probe's climate change program, 416/926-1907, ext 243.

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