July 29, 2010 / 7:15 PM / in 7 years

Canada think tank sees loophole in emissions plans

OTTAWA (Reuters) - Proposed Canadian regulations to cut emissions from cars and trucks may have little to no effect as early “action credits” banked by automakers may be able to carry them through the compliance period, an environmental think tank said on Thursday.

The Pembina Institute said its analysis of the planned measures showed that automakers might be able to avoid improving fuel economy beyond “business-as-usual” levels until 2016, or even for the full life span of the regulations.

The new standards are due to come into effect this fall for 2011 model year vehicles.

Early action credits, awarded to automakers if certain measures are exceeded in a specific time frame, may be collected in the lead-up to the new standards. In turn, these credits may be used at a later date. However, that effectively creates a loophole for automakers, Pembina said.

“It looks quite plausible ... (that) companies would manage to comply with regulations for the entire period, up to and including 2016, without having to make any changes to fuel economy beyond business as usual,” said Matthew Bramley, director of the institute’s Climate Change Program.

He cautioned that Pembina’s analysis used the best available information, and that there were some inadequacies in some of the government’s numbers.

“We didn’t release our analysis immediately because, frankly, we were a little bit shocked by the conclusions,” he added.

That is why Bramley is calling on Environment Minister Jim Prentice to publish a fully transparent analysis of the proposed regulations before they are finalized in the fall.

In May, Prentice said Ottawa expects to release draft regulations this autumn that will spell out the requirements for heavy-duty vehicles and engines, starting between the 2014 and 2018 model years.

That followed an earlier agreement between Canada and the United States on common rules governing greenhouse gas (GHG) emissions from cars and light trucks.

At the time, automakers praised the plans, which to Bramley, suggested “a bit of a hint that the industry got pretty much what it wanted in the regulations.”

Prentice’s office dismissed the criticism on Thursday, and said other environmental groups had praised the proposals.

“The proposed regulations are realistic and ambitious and will contribute greatly to reducing vehicle GHGs in Canada and the U.S.” the government said in an e-mailed statement.

By 2016, the government projects the new measures will cut greenhouse gas emissions from vehicles by about 25 percent from those sold in 2008. Transportation accounts for about one-quarter of Canada’s total greenhouse gas emissions.

The North American auto industry is highly interlinked, and Canada has said its strategy for emissions also hinges on U.S. policy because of the two nations’ integrated economies.

Prentice has previously said the two countries will “effectively share common standards” for limiting vehicle greenhouse gas emissions. A spokesman for the minister was not immediately available for comment on Thursday.

Pembina’s Bramley said Ottawa should not follow the U.S. lead because Canadians will not only lose the advantage of lower gasoline bills, it means the country will be making less progress environmentally than the United States.

Canada is frequently criticized by green groups for not doing enough to protect the environment and for allowing emissions of greenhouse gases to rise steadily over the last two decades.

Reporting by Ka Yan Ng, Allan Dowd; editing by Rob Wilson

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