Canadian Legislative News

The U.S. administration announced intentions to revise downward its CAFE standards after the current round expires in 2021. For the 2022-2025 model years, the previously-agreed upon fuel economy regulations for light vehicles may be reviewed by the American government. This has serious implications for Canada, which agreed to the initial stringent fuel economy rules with an understanding that industry harmonization was crucial.

The eventual resolution may turn on a legal process through which the U.S. federal government is set to challenge the state of California which currently has the ability to independently set regulatory standards.

Canada is launching its own review of fuel economy regulations. Catherine mcKenna, Federal Minister of the Environment, has said that Canadian rules should become more stringent, signalling a possible break with the U.S. post 2021. In contrast, industry groups indicate that, given the highly continental nature of automotive production and consumption in North America, a common set of rules between Canada and the U.S. will be vital for the industry.

An immediate impact from any change in policy should not be felt by the fleet profession, since there will be no changes until at least the 2022 model year. However, if Canada and the U.S. break away from one another on fuel economy rules post-2021, it could cause significant challenges for Canadian managers. Most OEMs would tailor their product to the U.S. rules, given its clout on the continent. Canadian fleets and consumers could face product challenges north of the border.