Canadian automakers urge moves to offset carbon emissions costs

MONTREAL, OTTAWA (Reuters) - Canadian auto industry executives are asking government ministers on Wednesday to mitigate the costs of reducing carbon emissions under a new program designed to help fight climate change, two sources familiar with the matter said.

Unifor President Jerry Dias speaks during the Unifor convention in Ottawa, Ontario, Canada on August 24, 2016. REUTERS/Chris Wattie/File Photo

The demand has taken on greater urgency with U.S. President-elect Donald Trump’s talk of rolling back environmental regulations, which would subject automakers in Canada to costs not imposed in the United States, the sources said.

At a meeting in Detroit on Wednesday, executives will urge federal and Ontario government ministers to ensure that the province’s cap-and-trade program will not hurt the Canadian auto industry’s long-term competitiveness with U.S. rivals.

Under the program, which came into effect on Jan. 1, companies that are the biggest polluters must buy permits if they exceed set limits on greenhouse gas emissions.

Automakers and other large companies are exempt from the plan until 2020 and some want that exemption to be extended, a third source said. They also want federal and provincial governments to share the cost of investments in new technology that would cut emissions and energy consumption, the person added.

All three sources spoke on condition of anonymity before the closed-door meeting.

Canada’s automakers, the country’s largest exporters, received a boost in 2016, after they agreed to C$2 billion ($1.5 billion) in investments during union negotiations.

“This could be more burdensome for manufacturers, if Canada is doing cap-and-trade but Trump is cutting back regulations,” said one of the sources.

Stephen Carlisle, managing director of General Motors Co in Canada, said automakers are committed to reducing greenhouse gas emissions, but described potential higher costs from cap-and-trade after 2020 as “headwinds.” He would like governments to support automakers which invest in technological improvements to reduce energy consumption and emissions.

Jerry Dias, president of Unifor, which represents Canadian autoworkers, noted a deal this week by the Ontario and Canadian governments to defray up to 17 percent of Honda Motor Co’s C$492 million investment to modernize its Alliston paint shop. The investment, which would reduce Honda’s emissions and energy costs, could serve as a model for other automakers, he said.

The Honda investment “fits in well with the direction we’re going in,” said Ontario Economy Minister Brad Duguid in an interview on Tuesday.

Duguid said Ontario would ensure cap and trade is “done in a way that they (companies) are not placed at a competitive disadvantage with other jurisdictions.”

Reporting By Allison Lampert; Editing by Richard Chang