6 April 2005

A voluntary agreement on greenhouse gas (GHG) emissions was signed between the Canadian government and the automobile industry. Under the Memorandum of Understanding (MOU), automobile manufacturers agreed to reduce total GHG emissions from new light-duty vehicles in Canada by 5.3 megatons by 2010, relative to a “business-as-usual” reference case projection of vehicle emissions in 2010. The MOU was signed by the Ministry of Natural Resources Canada, the Canadian Vehicle Manufacturers’ Association, and the Association of International Automobile Manufacturers of Canada. All major companies of Canada’s automobile industry are part of the MOU.

The GHG emission impact of the agreement relative to today’s emission levels was not communicated by the government, with contradictory figures being quoted in the media. According to the MOU, the projected 2010 GHG emissions under the “business-as-usual” reference case are 90.51 Mt (CO2 equivalent). Thus, the reduction relative to the 2010 reference case is only 5.8%. The MOU allows for an increase of the GHG emissions, rather than reduction, relative to today’s emission levels (due to the increased vehicle population). According to calculations by Canadian environmental groups—David Suzuki and Pembina Institute—the agreement allows emissions in 2010 to rise by 18% relative to 1990.

According to earlier reports by the Canadian media, a GHG emission reduction target of 25% (on an average vehicle basis) was discussed at the negotiation stage. But the automakers apparently feared that making a percentage commitment could undermine their lawsuit in the USA, which was launched to block the California’s GHG emission standards.

The California standards would phase in from 2009 to 2016, with an average GHG emission reduction of 22% in 2012 and 30% in 2016, relative to today’s vehicles. If the California standard is implemented, it is believed to eventually require better fuel economy in new cars than the Canadian MOU. However, it is not clear what average percentage fuel economy improvement was deemed necessary to reach the 5.3 Mt target.

Light-duty vehicles were responsible for 10% of Canada’s GHG emissions in 2002. Under the Kyoto Protocol, Canada should reduce its emissions to 6% below the 1990 level during 2008-12. The Canadian automotive industry, most of which is located in Ontario, employs directly about 60,000 people and accounts for 12% of Canada’s manufacturing gross domestic product.

Memorandum of Understanding
Natural Resources Canada: press release | backgrounder
Canadian Press editorial
David Suzuki press release