November 12, 2007

Ottawa proclaims 25-year-old vehicle fuel efficiency standards act

Twenty-five years after it was passed, the Motor Vehicle Fuel Consumption Standards Act (MVFCSA) has been proclaimed into law.

The legislation, originally passed by the Canadian Parliament in 1982, provided for mandatory fuel consumption standards, establishing the legal authority to regulate fuel consumption for prescribed classes of motor vehicles. The government did not proclaim the act, however, because auto manufacturers voluntarily committed to continue providing vehicles that meet U.S. standards. The voluntary commitment was broadly consistent with the framework and authorities established by the Act.

In 2005, the federal government and the Canadian automotive industry signed a Memorandum of Understanding (MOU) committing the industry to take actions to voluntarily reduce greenhouse gas (GHG) emissions of new vehicles in Canada. The agreement called on the auto industry to cut GHG emissions from light-duty vehicles (cars, minivans, sport utility vehicles and pickup trucks) with the goal of cutting annual emissions to 5.3 megatonnes (Mt) by 2010.

The potential entry into force and use of the MVFCSA has been a regulatory backstop for the last 25 years, while previous governments have pursued voluntary approaches with the auto industry. The Harper government has decided to use regulation over voluntary agreements, saying it provides a greater degree of certainty, predictability and accountability.

Under the act as proclaimed, fuel consumption standards will be established for light-duty road motor vehicles. The government says these standards will be designed specifically for Canada to maximize environmental and economic benefits, will be achievable within the integrated North American market and will be benchmarked against a stringent, dominant North American standard.

The MVFCSA standards will be developed with input from stakeholders and published by the end of 2008. They will come into effect once the current MOU between the auto industry and the federal government expires in 2010 and will apply to model year 2011 vehicles.

Under the Motor Vehicle Fuel Consumption Standards Act:

*all motor vehicle fuel consumption values must be registered with Transport Canada;

*each motor vehicle must bear a fuel consumption label and a national fuel consumption mark;

*Company Average Fuel Consumption (CAFC) standards will be set for specific classes of motor vehicles;

*each vehicle maker or importer must submit the data required to calculate their CAFC values for comparison against the standards;

*fines will be set for each vehicle maker or importer whose CAFC value for a particular class of motor vehicle is higher than the standard for that class; and

*CAFC credits will be recorded for each vehicle maker or importer whose CAFC value for a particular class of motor vehicle is lower than the standard. If a penalty year occurs, credits may be taken from any or all of the three years before or from the year following the penalty year, to reduce the fine.

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