Canada, U.S. team up to restrict auto emissions

The U.S. and Canadian governments are announcing Thursday they'll move in lockstep to enact more stringent emission controls for cars and trucks, measures that will force fuel-efficiency improvements of 40 per cent by 2016 and likely boost vehicle price tags.

The announcements will be made simultaneously at midday in both Washington and in Ottawa, where Canadian Environment Minister Jim Prentice will present the Canadian version of the new North American standard at a Ford dealership.

"It's very aggressive" one auto industry source familiar with Ottawa's plans said.

The U.S. Environmental Protection Agency last September predicted these standards, negotiated to satisfy more aggressive targets demanded by the state of California, would boost the average cost of a vehicle by less than $1,100 (U.S.) by 2016. However, the EPA estimated consumers would save several thousand dollars in fuel costs over the life of a car built in 2016.

Canadian vehicle makers are expected to accept the new standards on the grounds that they're being applied uniformly across the U.S. and Canada and will ensure a level playing field for all manufacturers.

The U.S. standards will require that an automaker's combined fleet of cars and trucks - the models it offered for sale - get on average 35.5 miles per gallon by 2016. Converted to metric in Canada, this would mean a standard of six litres of gas for every 100 kilometres travelled.

"It's going to really force some serious change," another industry source said. "It's not an easy standard to get to."

The stricter rules may not sit well with all Canadians. Trucks form a major part of business for Alberta auto dealers, and talk of change in fuel-efficiency standards has created worry.

"We need to get there but get there at a common-sense rate. You take a rancher and say, 'you can't drive a one-tonne dually any more,' you've just affected his living," said Alex Baum, a partner in Cochrane Dodge, which is a short drive northwest of Calgary.

"Trucks are a way of life here."

Still, Mr. Baum said, advances in more efficient truck diesel technology - plus the addition of fuel-sipping Fiats, which will arrive this fall, may allow the transition to happen, even on a short timeline.

"Technology's moving fast," Mr. Baum said.

Canada announced earlier this decade that it would harmonize Canadian emission regulations with those of the Bush administration, which targeted a major reduction in greenhouse-gas emissions, and hence improved fuel economy, by 2020.

But the Bush government got into a squabble with California, which wanted more aggressive reductions more quickly and had decided to enact its own regulations that were later also adopted by several northeastern U.S. states.

President Barack Obama, however, scrapped the Bush plan and began negotiating with California last year and the result will be harmonized U.S. and Canadian regulations, sources said.

That is also likely to include Quebec, which adopted its own standards earlier this year, but also said it would adopt the California standards.

Mr. Prentice is scheduled to make the announcement at the Donnelly Ford dealership in Ottawa and has asked other auto makers to join in to show support for the announcement.

But one auto industry source grumbled that such a move singles out Ford as an environmental hero at a time when all companies feel they are doing their part. Various manufacturers are working on hybrid autos, plug-in hybrids, electric vehicles and other ways to cut greenhouse-gas emissions and boost fuel economy.

Canada's vehicle fleet is already heavily weighted toward more fuel-efficient vehicles than the U.S. fleet because of higher gas prices here and lower disposable incomes.

The biggest segment of the Canadian market is compact cars. In the United States, mid-sized cars are the most popular.