New levy can add $4,000 to price of SUVs

Canadians are being enticed out of their H3 Hummers and into Toyota Priuses as part of a surprise new "green levy" introduced in the federal budget.

A fee of up to $4,000 will be added to the price of gas-guzzling SUVs and supercharged sports cars to pay for new incentives aimed at getting Canadians behind the wheel of new hybrid cars or other fuel-efficient vehicles.

The incentives would be worth up to $2,000 and can be combined with similar offers by several provinces, reducing the purchase cost of hybrids by as much as $4,000.

The measure steals a page from the Green Party's platform, and combined with incentives for renewable-fuel production, it makes vehicle emissions the top target of Ottawa's environmental spending plan.

Although environmentalists welcomed the rebates for hybrids, they criticized the budget yesterday for falling well short of the "massive scale-up" of climate-change efforts that former environment commissioner Johanne Gélinas called for last September.

The Conservative budget contains more than $4-billion over seven years for environmental issues, including incentives for domestic ethanol production and protection for Canadian lakes and forests.

Half of that money follows the government's announcement last year that 5 per cent of all gasoline sold in Canada must be from renewable sources such as ethanol by 2010. Two per cent of all diesel must also be from renewable sources.

But environmentalists note that the $2-billion is not new money, because it is being paid for by ending an existing tax break for ethanol.

"If you want to subsidize corn producers, that's fine, but it's barely an environmental program," said Aaron Freeman of Environmental Defence.

Environmentalists argue the budget does not qualify as a climate-change plan because it makes no mention of how many megatonnes of greenhouse gases would be reduced as a result of the new spending. That criticism was shared by the NDP and Liberal environment critic David McGuinty, who said the green levy is another name for a carbon tax -- something Conservatives have said they oppose.

The green levy on fuel-inefficient vehicles will not apply to pickup trucks, thereby avoiding a backlash from rural Canada. Finance officials said it would be unfair to penalize pickups because many Canadians require them for work.

Some industry officials said they have told Ottawa for years that the combined scheme of rebates for fuel-sippers and penalties for gas-guzzlers is the wrong approach.

One key reason is that fuel-efficient vehicles are already extremely popular in Canada, which means rebates on fuel-efficient vehicles won't have much of an impact.

More than 50 per cent of the 1.6 million vehicles purchased in Canada last year were in the subcompact and compact car segments, said industry analyst Dennis DesRosiers.

"These are people who are already doing their bit," said Mark Nantais, president of the Canadian Vehicle Manufacturers Association, which represents DaimlerChrysler, Ford and General Motors.

However, Toyota Canada, which has been a leader in hybrid technology, issued a statement applauding the budget.

In addition, the budget's environmental spending includes:

The already announced $1.5-billion EcoTrust, which funds projects jointly with the provinces to reduce greenhouse-gas emissions;.

The previously announced $250-million Natural Areas Conservation Program, which encourages the private sector to protect ecologically sensitive lands.;

$110-million to protect the habitat of species at risk;

$93-million for a national water strategy, which includes cleanup projects for the Great Lakes, Lake Simcoe and Lake Winnipeg, and fisheries research.

3

Number of vehicle models eligible for the full $2,000 fuel-consumption rebate.

$4,000

The extra levy new-car drivers will pay for autos with the worst fuel-efficiency ratings.

100

The number of new environmental enforcement officers, bringing the total to 300.

"It a milestone day obviously for people who are in the biofuels industry, but also for farmers and the environment"

KORY TENECYKE, EXECUTIVE DIRECTOR OF THE CANADIAN RENEWABLE FUELS ASSOCIATIONS

"The are making it look like they are doing something when they aren't doing much. They are letting all the horses out, and then they're going to close the corral.

JOHN BENNET, CLIMATE ACTION NETWORK

"From a purely UTS perspective, this is not catastrophic and it certainly doesn't affect the viability of our oil-sands business going forward.

WILL ROACH, CEO OF UTS ENERGY CORP.

Green machines

An illustrative list of 2007 model fuel-efficient vehicles that will be eligible for a rebate as part of a program to promote cleaner transportation.

*Based on 55 per cent city/45 per cent highway fuel-consumption rating.

**Engine that uses fuel that contains up to 85% ethanol.

SOURCE: DEPARTMENT OF FINANCE

Guzzler's levy

A sampling of 2007 model vehicles that would be subject to a green surcharge. The rate increases as the number of litres per 100 km rises.

*Based on 55 per cent city/45 per cent highway fuel-consumption rating.

SOURCE: DEPARTMENT OF FINANCE

Pay up or paid back

New cars with a combined fuel consumption rating of 6.5 l/100 km

or less, and minivans, SUVs and other light trucks with a rating of 8.3

l/100 km or less will also be eligible for rebates. And a green levy will be

imposed on new passenger vehicles (excluding trucks) with fuel efficiency

ratings of 13 l/100 km or more, to be paid by the manufacturer

or importer when cars are delivered to the Canadian market.