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In January, 2008, the federal government first indicated plans to revise fuel consumption regulations for new vehicles. At the time, the U.S. government was going down the same road. Our emission, fuel economy and safety regulations have been in lockstep with the Americans because the same vehicles are either built in or sold in both countries, so the tighter standards made sense.

The very ambitious U.S. targets are 35 miles per gallon - or 6.7 litres/100 km - for the average fuel economy of vehicles sold in 2020 with new standards beginning in the 2011 model year.

But this past January, the U.S. Department of Transportation put the proposal on hold, to be dealt with by the new administration. That is not the case in Canada.

The Canadian market is so small - about 10 per cent of the U.S. market - that to have different regulations would mean building different cars. Tougher emission or fuel economy regulations drive up costs - which of course gets passed on to the consumer.

Cleaner and more economical vehicles are a good thing - but they are a tough sell when the manufacturers are losing money and the consumer is unemployed.

Canada has not delayed the regulations and this brings us to the crunch - and the inevitable power or influence struggle between the auto and oil industries.

The issue is how to meet the tougher standards.

Auto makers, struggling to stay afloat, are loathe to add to the cost of producing, and thus selling, vehicles. They argue that further gains in engine efficiency can only come if the fuel that is producing the exhaust emissions is cleaner.

The powerful oil industry, on the other hand, says producing cleaner fuel will add to the cost of doing so and that increase will have to be reflected at the pumps.

It also says that many refineries are not capable of producing the cleaner fuel and will have to be shut down, resulting in decreased availability and layoffs.

It is easy for politicians to pass regulations making it the job of vehicle manufacturers to meet standards, as compared to raising the price at the pump which hits every taxpayer. But it also puts us out of step with the rest of the world.

The Association of International Automobile Manufacturers of Canada is calling for cleaner Canadian fuels as the more equitable solution. It argues that fuel quality directly impacts vehicle performance, fuel economy and emissions. The association says characteristics such as sulphur and detergency in gasoline and other elements in diesel can either optimize or degrade vehicle components, affecting the performance not only of new vehicles, but also those currently on the road.

"Compared to other jurisdictions, Canada has some of the fewest mandatory requirements of fuel quality and weak monitoring practices," AIAMC says in asking Ottawa to revisit its strategy. It says the poor quality of Canadian gas and diesel has a direct negative impact on tailpipe emissions and overall fuel consumption.

John White, AIAMC chairman and president and CEO of Volkswagen Group Canada Inc., says vehicle manufacturers are engineering improvements, but can't do it alone.

"No question, we need better fuel quality in this country just to bring us to the levels utilized in other jurisdictions around the world," he says. "The reality is improved fuel quality can assist vehicle manufacturers to better meet fuel consumption targets, and will further improve the emissions of the 18 million vehicles on the road today."

A new generation of "lean-burn" engines has been developed and is in use in markets where clean fuel is available, resulting in fuel economy improvements of up to 15 per cent. For example, the same VW Golf TDi uses 10 per cent less fuel in Europe than it does in Canada, due solely to cleaner fuel.

Currently the gasoline refined and sold in Canada is far too "dirty" to allow use of these engines. AIAMC says jurisdictions such as the European Union, Australia and Japan have already recognized fuel quality as a critical pillar in their emissions and fuel consumption reduction strategies. It is critical of not only Canadian fuel quality but also "weak monitoring and enforcement practices."

The permitted level of sulphur in gasoline sold in Canada calls for a minimum "yearly pool average" of 30 parts per million (ppm) and a maximum of 80. In Japan, the limit is 10 ppm and, in Europe, that same minimum comes into effect this year. The California standard is 15 ppm.

The same discrepancy applies to the cetane (ignition quality) of diesel fuel.

globeauto@globeandmail.com