This is an extract from a recent working paper published by the International Council on Clean Transportation titled “Canada’s path to 100% zero-emission light-duty vehicle sales: Regulatory options and greenhouse gas impacts”
Canada has set economy-wide greenhouse gas (GHG) reduction targets of 40%–45% below 2005 levels by 2030 and net-zero GHG emissions by 2050. Decarbonization of the transport sector is crucial to meeting these targets since the sector accounts for a quarter of Canada’s GHG emissions. Light-duty vehicles (LDV), including passenger cars and light trucks, are the largest source of transport GHG emissions in Canada, accounting for close to half of total transport emissions. In December 2021, Environment and Climate Change Canada (ECCC) launched consultations on how it should achieve Canada’s targets of at least 50% zero-emission LDV sales by 2030 and 100% by 2035. In March 2022, it announced plans to develop a sales mandate to require at least 20% electric vehicle (EV) sales by 2026 and 60% by 2030.
Canada has previously committed to align with “the most stringent performance standards in North America post-2025.” Yet, because such regulations are still under development by California Air Resource Board (CARB) and U.S. Environmental Protection Agency (EPA), Canada’s position could have a material impact on the stringency and degree of alignment with these regulatory pathways. In addition to EV sales targets, several other elements of Canada’s regulations could influence their overall CO2 emissions benefits. These include the extent of vehicle efficiency improvements for internal combustion engine (ICE) vehicles and EVs, as well as whether PHEVs are phased out or continue to account for a significant share of EV sales.
The analysis uses ICCT’s Roadmap model updated with historical province-level stock and sales data from Statistics Canada, and future stock and sales projections from Transport Canada. It additionally assumes that due to COVID-19, vehicle mileage is affected in 2020 and 2021 but returns to the 2019 level from 2022. The policy scenarios are then overlaid to calculate stock turnover, energy consumption, and CO2 emission impacts for the provinces of British Columbia, Quebec, Ontario, all other provinces (combined as the Rest of Canada), and at the national level.
Four policy scenarios have been developed: a Baseline scenario that accounts for the impacts of currently adopted policies and three Alternative scenarios representing possible regulatory pathways to achieve Canada’s target of 100% light duty EV sales in 2035.
The Baseline scenario accounts for the impacts of adopted policies, including British Columbia’s EV regulation and Canada’s LDV GHG standards that are aligned with EPA’s through 2026. This implies that in terms of fleet emission standards, EPA’s and Canada’s reduction pathway between 2022 and 2026 are expected to be roughly similar. It also assumes that Quebec, which has not finalized its EV regulations, follows the same pathway as British Columbia’s and that Canada will eventually meet its International ZEV Alliance commitment of 100% EV sales by 2050 and achieve gradual reductions in electricity grid carbon intensity. The projection for British Columbia and Quebec is slightly more conservative than Transport Canada’s EV baseline projections but higher for the Rest of Canada.
Alternative 1 reflects the ambition of ECCC’s December 2021 consultation, which is aligned with Biden’s goal of 50% EV sales in the United States by 2030. Meanwhile, Alternative 2 reflects the ambition of ECCC’s March 2022 Emissions Reduction Plan, which is roughly aligned with CARB’s draft ACC II regulation. Alternative 3 goes even further than Alternative 2, assuming post-2026 performance standards that further improve LDV efficiency and a phase out of PHEV sales by 2035.
Electric vehicle sale shares
The Baseline scenario reflects the growth in EV uptake based on provincial and national policies and goals as of April 2022. In 2019, British Columbia enacted the Zero-Emission Vehicle Act that requires a 30% EV sale share by 2030 and 100% by 2040. The analysis assumes a linear growth in EV uptake in British Columbia from 2020 to reach the 2030 target, resulting in 20% uptake in 2025. Quebec has been working to amend its EV regulation but it has not yet been adopted. To reflect Quebec’s commitment to advance EV regulation, it assumes Quebec follows the same ZEV pathway as British Columbia in this scenario. The study bases the Rest of Canada EV sale share from 2025 to 2030 on Transport Canada’s ZEV business-as-usual (BAU) model projection. The national target of 100% EV sales by 2050 reflects Canada’s participation in the International ZEV Alliance and its mission to reach 100% EV sales of passenger vehicles no later than 2050.
Alternative 1 builds on the Baseline scenario and considers more stringent EV regulations. In this scenario, British Columbia accelerates its EV uptake to 26% by 2025, 90% by 2030, and 100% by 2035 based on its Roadmap to 2030. In addition, the study assumes Quebec adopts its EV draft regulation of 65% EV sales by 2030 and 100% by 2035. At the national level, the government achieves its target of 50% EV sales by 2030, similar to the Biden administration’s goal in the United States, and 100% by 2035. The 2035 goal in turn affects the EV sales share assumptions for the Rest of Canada.
Alternatives 2 and 3 reflect more ambitious local and national goals. In these scenarios, British Columbia reaches 95% EV sales by 2030, Quebec achieves a slightly higher 2025 EV share to catch up with British Columbia, and Quebec reaches a 75% EV sales share by 2030. Canada achieves its interim target of 61% EV sales by 2030, aligning with CARB’s draft ACC II regulation. The main differences between Alternative 2 and Alternative 3 are the split between PHEV and BEV sales, and the assumptions for post 2026 GHG standard stringency and required annual ICE efficiency improvements.
PHEVs currently account for a sizeable fraction of Canada’s EV market; in 2020, PHEVs made up 28% of total EV sales in Canada. The attractiveness of PHEVs is expected to fall over time as BEVs become increasingly cost-competitive. However, as EV uptake broadens to eventually cover all new LDV sales, it is also possible that certain consumers will prefer the fueling flexibility and greater range of PHEVs. Without policy intervention, there is no guarantee that PHEVs will be phased out completely or even capped at a certain share of EV sales.
The total LDV stock in Canada is projected to grow 39% from 2020 to 2050, although it slows down after 2035, at which point the stock growth is 33% compared to 2020. There are considerable differences in provincial growth rates between 2020 and 2050: Quebec grows the fastest at 69%, followed by British Columbia at 56% and Ontario at 46%. Like the national stock, the growth rates in these provinces are considerably higher between 2020 and 2035 than between 2035 and 2050. In the Rest of Canada, a slight decrease in total LDV stock (8%) is projected from 2020 to 2050.
In the Baseline scenario, ICE vehicles still account for 36% of the national LDV stock in 2050; however, in the three Alternative scenarios, ICE vehicles account for only a small percentage of the stock by 2050. By 2050, BEVs are projected to reach 46% of total LDV stock in the Baseline scenario, 71% in Alternative 1, 80% in Alternative 2, and 98% in Alternative 3.
At the province level in the Baseline scenario, British Columbia’s and Quebec’s strong EV policies result in most of the stock being comprised of EVs by 2050 (72% in British Columbia and 59% in Quebec). This is in stark contrast to Ontario, which accounts for approximately 40% of the nationwide LDV fleet, but where only 34% of vehicles are projected to be EVs by 2050. In the Alternative scenarios, the differences in EV uptake are greatest in Ontario and the Rest of Canada, which have not yet adopted strong EV policies but are assumed to reach 100% EV sales by 2035 driven by national regulations.
The complete report can be accessed here