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Federal Environment Minister Catherine McKenna, shown in this file photo, insists the Liberal government has a plan for Canada to meet its target to reduce greenhouse gas emissions by 30 per cent from 2005 levels by 2030.Andrew Vaughan/The Canadian Press

The Trump administration’s move to roll back vehicle mileage standards threatens a key component of the Liberal government’s climate strategy, and would reduce the need for car makers to sell electric vehicles in North America.

Canada and the United States jointly adopted regulations in 2014 that would dramatically increase average fuel efficiency of vehicles sold between 2022 and 2025, significantly reducing greenhouse gas emissions from cars and light trucks.

Now, the Trump administration has signalled its intent to ease those standards as a result of a review that looked at whether the regulations are appropriate given current market conditions. That review period expired Sunday and the administration has indicated it will set new rules, a process that could take months, if not years.

However, Environmental Protection Agency administrator Scott Pruitt faces a fight from California, which has the right to set its own emissions standards and is vowing to stick with the tougher rules. Mr. Pruitt is expected to announce the results of the EPA’s review and a new standard-setting exercise this week.

If Washington and California can’t agree, Prime Minister Justin Trudeau would be forced to choose sides between looser U.S. federal regulations, which industry is demanding, and the stricter state standards that would help Canada achieve its greenhouse gas emission targets in 2030. Several states − including New York and Pennsylvania − have allied themselves with California.

Environment Minister Catherine McKenna insists the Liberal government has a plan for Canada to meet its target to reduce greenhouse gas emissions by 30 per cent from 2005 levels by 2030. Reducing gasoline consumption over the next 12 years is a big part of that effort.

“Improving the fuel efficiency of our vehicles cuts pollution and saves drivers money,” Ms. McKenna’s press secretary, Caroline Thériault, said Sunday.

“We are paying close attention to the U.S. mid-term review of vehicle fuel-efficiency standards ,” she said. “Any decisions regarding vehicle regulatory changes will be informed by our own midterm evaluation and by careful considerations of environmental and economic impacts.”

Under the 2014 regulations, auto makers are required to roughly double the average fuel economy of the vehicles they sell by 2025, to 54.5 miles per gallon (mpg) in the U.S. or the equivalent of 5.2 litres per 100 kilometres in Canada.

The Detroit-based industry began lobbying President Donald Trump soon after he took office last year to ease those rules, saying they would be virtually impossible to achieve as consumers continue to prefer trucks, SUVs and crossovers to fuel-sipping sedans, hybrids or electric vehicles.

“It’s in Canadians’ best interest that the federal government join California and the dozen other states that intend to keep the fuel efficiency standards as they are, as the auto sector had agreed to before Trump assumed office,” said Dan Woynillowicz , policy director for the Vancouver-based advocacy group Clean Energy Canada.

“Failing to do so means that Canadian drivers won’t benefit from the estimated $900 per year in fuel cost savings, and carbon pollution will be significantly higher than it needs to be,” Mr. Woynillowicz said Sunday. “The technology exists, the costs to car companies are reasonable, and the benefits are clear.”

In an analysis of the regulatory impact, released in 2014, Environment Canada said the new rules could add $1,829 to the cost of a new car by 2025, but the consumer would save $900 in fuel costs.

Transportation accounts for 24 per cent of Canada’s greenhouse gas emissions, with most of that coming from passenger vehicles and light trucks.

As it implements its 2016 federal-provincial agreement on climate change, Ottawa is looking at a number of measures to reduce emissions from transportation, including support for electric-vehicle sales and clean-fuel standards. The new measures will be building on existing regulations, including the planned higher fuel-efficiency standards, the government has said.

The regulations passed in 2014 provide incentives for manufacturers to sell hybrids and electric vehicles in order to lower the average fuel consumption of the fleet of vehicles they sell.

Manufacturers are also in something of a bind. While they have argued for a relaxation of the fuel efficiency regulations, they worry that they will be faced with two sets of rules: one governing California and the states that follow its approach, and another set by Washington.

Auto makers would face higher costs if they had to manage fuel economy by each individual state, Toyota Motor Corp.’s North American head, Jim Lentz, said last week in New York.

The average fuel efficiency of new cars sold in the U.S fell by 0.5 mpg between its high point in August, 2014, and December, 2017, the University of Michigan’s Transportation Research Institute says.

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