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Environment Minister Steven Guilbeault announces details of Ottawa's plan to eventually phase out the sale of gas-powered vehicles in Canada, on Dec. 19.Frank Gunn/The Canadian Press

Ottawa has tweaked its planned system of credits for plug-in hybrid vehicles in new electric vehicle regulations, following a year of consultations during which automobile industry raised concerns about the lack of charging infrastructure in parts of the country.

But the ultimate goal of the regulations – to ensure that 100 per cent of light-duty vehicles for sale in Canada will be zero-emissions vehicles (ZEVs) by 2035 – remains the same, with the federal government saying its new standard will result in cleaner air and access to more affordable cars, while auto industry groups raise concerns about costs and access to charging.

Environment Minister Steven Guilbeault on Tuesday announced the new Electric Vehicle Availability Standard, which confirms EV sales targets announced in draft form in December, 2022. The rules apply to cars, SUVs, crossovers and light-duty pickup trucks. They exclude emergency and firefighting vehicles.

The standard sets annual minimum ZEV requirements as a percentage of the new light-duty vehicles a company offers for sale, with sellers able to comply by selling ZEVs, using credits or investing in charging infrastructure. Interim targets, unchanged from last December’s draft proposal, call for 20 per cent of all sales to be ZEVs by 2026, at least 60 per cent by 2030 and hit 100 per cent by 2035.

In a background document released Tuesday, Ottawa said it made several changes in response to feedback from automakers, including refining credits for plug-in hybrid EVs. In the new regulations, plug-in hybrids with a range of at least 80 kilometres will earn as many credits as battery-electric or fuel cell vehicles. Draft regulations published last December had slightly different criteria for PHEVs.

“I think it is a recognition that in Canada, we do have unique driving conditions, over one million kilometres of public two-lane road, cold weather conditions – and that’s where a plug-in hybrid can be a great solution for a lot of Canadians,” said Brian Kingston, chief executive officer of the Canadian Vehicle Manufacturers’ Association.

Dear Ottawa: Mandating electric-vehicle sales is a bad idea

While welcoming those changes, Mr. Kingston said the CVMA remains concerned about the new regulations, saying there is still a significant price gap between gasoline-powered vehicles and EVs, putting low-income Canadians at a disadvantage when it comes to shopping for vehicles. The lack of charging infrastructure in the much of the country also remains a challenge.

“If you don’t address those 100 per cent by 2035, this [target] is nothing more than a pipe dream,” Mr. Kingston said.

Non-governmental organizations, however, praised the government’s move, saying it is in keeping with Canada’s broader climate goals and the experiences of individual provinces and other jurisdictions, including British Columbia and Quebec, that have used sales targets to encourage consumers to shift to EVs.

“Both B.C. and Quebec, which lead Canada in EV sales, have their own versions of this policy, as do 17 U.S. states, representing nearly 40 per cent of the U.S. car market,” Joanna Kyriazis, director of public affairs at Clean Energy Canada, said Tuesday in a statement.

“It’s no coincidence that, until now, automakers have prioritized sending new EVs to these jurisdictions, leaving many Canadians with fewer options. The new standard announced today is essential for levelling the playing field,” she added.

Quebec and B.C. both have provincial incentive programs for EVs.

Asked what he would say to provincial governments that have not come up with their own rebates or incentives to complement federal measures, Mr. Guilbeault said that he would tell them to “get on board.”

“The federal government is making multibillion-dollar investments in the EV supply chain [in Ontario]. There’s no reason the government of Ontario shouldn’t do what the government of B.C. is doing, or Nova Scotia, Prince Edward Island and Quebec,” he said at a news conference in Toronto.

Mr. Guilbeault added that the federal government would welcome Ontario resuming an EV rebate program that had been in place under the provincial Liberals until Premier Doug Ford’s Progressive Conservative government dismantled it in 2018.

Canada’s long, difficult road to becoming an electric vehicle ‘superpower’

The new federal policy will be regulated under the Canadian Environmental Protection Act, and will issue credits to automakers for the EVs they sell.

Generally, a fully electric model will generate one credit, with plug-in hybrids getting partial or full credit depending on how far they can go on a single charge.

Manufacturers that sell more EVs than they need to meet each year’s target can either bank those credits to meet their targets in future years, or sell them to companies that didn’t sell enough.

They can also cover up to 10 per cent of the credits they need each year by investing in public fast-charging stations. Every $20,000 spent on DC fast chargers that are operating before 2027 can earn the equivalent of one credit.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said the credit system amounts to penalties for manufacturers that don’t meet sales targets.

“Every single car you’re short, every unit, you pay a $20,000 fine,” Mr. Volpe said.

He also argued the regulations would favour imported vehicles over those made in Canada, especially at the lower end of the market, saying “there isn’t a solution available for Canadian consumers in the low end of the market unless it’s an import from China.”

With a report from Canadian Press

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