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Hand-in-hand on auto emissions United States, Canada take joint approach that could reduce oil needs by 500,000 bpd by 2016, but critics doubt goals attainable Gary Park For Petroleum News
The United States and Canadian governments have delivered on a year-old pledge to set “common standards” for motor vehicle fuel consumption as they chase ambitious cuts to greenhouse gas emissions.
Their tandem approach to improving the average emission performance of new cars and trucks by 25 percent over the next six years is calculated to lower oil needs by more than 500,000 barrels per day and reduce carbon emissions by the equivalent of taking 58 million vehicles off the road.
It’s a key element of the goal set by the two governments to reduce GHGs by 17 percent from 2005 levels by 2020.
But not everyone believes the U.S. and Canada can even achieve their goal of an average 35.5 miles per gallon for cars and trucks by 2016.
“It is impossible to meet these new rules, pure and simple,” said Dennis DesRosiers, head of a Canadian consulting firm.
He described the measures as the “most negative piece of regulation ever to hit” the automotive industry.
DesRosiers said it generally takes “at least eight years to implement any new technology in this sector and the normal implementation period is close to 16 years. So even if the technology existed, which it doesn’t in any way, shape or form, the 2016 goal could not be met.”
Angry industry response The angriest response came from vehicle manufacturers faced with an admission by the two governments that electric-powered vehicles will lose the “zero-emission” status they had originally been promised.
Under the new rules for 2012 to 2016, carmakers can count the first 200,000 electric vehicles they sell as “pollution-free.” Beyond that sales point, the manufacturers will have to account for the emissions from the utility that created the electricity to power the vehicles.
A spokeswoman for the Alliance of Automobile Manufacturers said the 11 automakers in the alliance have no control over “where the energy comes from. It’s just another barrier.”
Charles Drevna, president of the National Petrochemical and Refiners Association in the U.S., also attacked the rules as a “misguided and flawed policy that has the potential for devastating consequences to American consumers, businesses, jobs and the economy.”
Officials call it win-win But EPA Administrator Lisa Jackson said the two countries have “developed a clean car program that is a win for innovators and entrepreneurs and a win for our planet.”
Canada’s Environment Minister Jim Prentice said Canada and the U.S. will take further steps this spring to set fuel economy standards for larger trucks, which contribute the fastest growing source of transportation emissions, followed by regulations on trains, ships and commercial airliners.
The Canadian government estimates that the transportation sector accounts for 25 percent of Canada’s greenhouse gas emissions.
Prentice said the emissions cuts for larger vehicles will “take us a long way to meeting our climate-change goals.”
The new fuel standards will result in higher sticker prices for cars and trucks and manufacturers’ production costs will start rising with the 2011 model year.
Environment Canada estimates that 2016 model year vehicles will carry an extra cost of C$1,195, while the EPA said the price of vehicles in the U.S. will go up by an average US$1,300.
But both governments claim the increased selling price will be offset by fuel savings, which the U.S. estimates will amount to US$2,800 over the life of a vehicle.
Joint plan praised David Mondragon, chief executive officer of Ford Motor Company of Canada, hoped the program would “avoid a patchwork of competing provincial and federal regulations that would have led to unnecessary duplication, market disruption and increased compliance costs for manufacturers.”
Automobile manufacturers said they were pleased the joint approach recognized the integrated nature of the North American market and the importance of harmonizing standards for cars and light trucks.
Mark Nantais, president of the Canadian Vehicle Manufacturers’ Association, which represents General Motors, Ford and Chrysler, said the standards are “aggressive, but they do give us the clarity we need for the next five years and allow is to properly put the resources where we need them to deliver the technologies needed to comply.”
While that debate starts to unfold, Prentice has taken his first steps toward a “national, coherent climate change approach for all Canadians” by signing an agreement with British Columbia to avoid duplication of regulatory measures.
However, by moving in lockstep with the U.S. on auto emissions, Canada has signaled that the chances of cap-and-trade legislation to curb GHGs — an approach that has few friends within the petroleum industry, or the producing provinces — are disappearing fast.
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