Regulations Amending the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations and Other Regulations Made Under the Canadian Environmental Protection Act, 1999: SOR/2018-98

Canada Gazette, Part II, Volume 152, Number 11

Registration

May 16, 2018

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

P.C. 2018-538 May 14, 2018

Whereas, pursuant to subsection 332(1)^footnotea of the Canadian Environmental Protection Act, 1999^footnoteb, the Minister of the Environment published in the Canada Gazette, Part I, on March 4, 2017, a copy of the proposed Regulations Amending the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations and Other Regulations Made Under the Canadian Environmental Protection Act, 1999, substantially in the annexed form, and persons were given an opportunity to file comments with respect to the proposed Regulations or to file a notice of objection requesting that a board of review be established and stating the reasons for the objection;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of the Environment, pursuant to sections 160^footnotec and 162 of the Canadian Environmental Protection Act, 1999^footnoteb, makes the annexed Regulations Amending the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations and Other Regulations Made Under the Canadian Environmental Protection Act, 1999.

Regulations Amending the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations and Other Regulations Made Under the Canadian Environmental Protection Act, 1999

Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations

1 (1) The definitions heavy-duty completed vehicle and vehicle service class in subsection 1(1) of the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations^footnote1 are repealed.

(2) The definitions A to B testing, CO₂ family certification level, engine configuration, engine family, family emission limit, heavy-duty incomplete vehicle, heavy heavy-duty vehicle, medium heavy-duty vehicle, model year and vehicle configuration in subsection 1(1) of the Regulations are replaced by the following:

A to B testing means testing performed in pairs to allow comparison of a vehicle A to a vehicle B, an engine A to an engine B or equipment A to equipment B, as the case may be. (essais A à B)

CO₂ family certification level, in respect of a company’s heavy-duty engines, means the maximum CO₂ emission level determined by the company for a fleet, which is greater than or equal to the maximum CO₂ deteriorated emission level value calculated in accordance with subsection 32(1) for the engines that are included in the fleet. (niveau de certification de la famille applicable au CO₂)

engine configuration means a unique combination of heavy-duty engine hardware and calibration that has an effect on measured emissions within an engine family. (configuration de moteur)

engine family, in respect of a company’s heavy-duty engines other than those referred to in section 25, means

(a) if they are covered by an EPA certificate, the grouping for which the EPA certificate was issued; or
(b) if they are not covered by an EPA certificate, the grouping determined in accordance with section 230 of Title 40, chapter I, subchapter U, part 1036, subpart C, of the CFR. (famille de moteurs)

family emission limit means

(a) in the case of CO₂ emissions,
- (i) in respect of a company’s vocational vehicles and incomplete vocational vehicles, the maximum CO₂ emission level determined by the company for a fleet or subfleet, which is greater than or equal to the maximum CO₂ emission rate determined in accordance with subsection 26(2) for the vocational vehicles and incomplete vocational vehicles that are included in the fleet or subfleet,
- (ii) in respect of a company’s tractors and incomplete tractors, the maximum CO₂ emission level determined by the company for a fleet or subfleet, which is greater than or equal to the maximum CO₂ emission rate determined in accordance with subsection 27(2) for the tractors and incomplete tractors that are included in the fleet or subfleet, and
- (iii) in respect of a company’s full-aero box van trailers, the maximum CO₂ emission level determined by the company for a subfleet, which is greater than or equal to the maximum CO₂ emission rate determined in accordance with subsection 33.1(3) for the trailers that are included in the subfleet; and
(b) in the case of N₂O or CH₄ emissions,
- (i) in respect of a company’s Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those that are vocational vehicles or incomplete vocational vehicles — the maximum N₂O or CH₄ emission level determined by the company for a fleet or subfleet, which is greater than or equal to the maximum N₂O or CH₄ emission value determined in accordance with section 24 for the vehicles or vehicle configurations that are included in the fleet or subfleet, and
- (ii) in respect of a company’s heavy-duty engines, the maximum N₂O or CH₄ emission level determined by the company for a fleet, which is greater than or equal to the maximum N₂O or CH₄ deteriorated emission level value calculated using the applicable emission value determined in accordance with subsection 29(2) for the engine configurations that are included in the fleet. (limite d’émissions de la famille)

heavy-duty incomplete vehicle means a heavy-duty vehicle that consists of, at a minimum, a chassis structure, a powertrain and wheels in the state in which all of those components are to be part of the vehicle, but that requires further manufacturing operations to be completed. (véhicule lourd incomplet)

heavy heavy-duty vehicle means

(a) for the 2020 model year and earlier model years, a Class 8 heavy-duty vehicle; and
(b) for the 2021 model year and subsequent model years,
- (i) a Class 6, Class 7 or Class 8 vocational vehicle that is equipped with a heavy heavy-duty engine, or
- (ii) a Class 8 tractor. (gros véhicule lourd)

medium heavy-duty vehicle means

(a) for the 2020 model year and earlier model years, a Class 6 or Class 7 heavy-duty vehicle; and
(b) for the 2021 model year and subsequent model years,
- (i) a Class 6, Class 7 or Class 8 vocational vehicle that is equipped with an engine other than a heavy heavy-duty engine, or
- (ii) a Class 7 tractor. (véhicule mi-lourd)

model year means the year, determined in accordance with section 4, that is used by a manufacturer to designate a model of vehicle, engine or trailer. (année de modèle)

vehicle configuration means, in respect of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, a configuration as defined in section 1819(d)(12)(i) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR. (configuration de véhicule)

(3) The definition dispositif antipollution auxiliaire in subsection 1(1) of the French version of the Regulations is replaced by the following:

dispositif antipollution auxiliaire Tout élément de conception qui perçoit la température, la vitesse du véhicule, le régime du moteur, le rapport de transmission, la dépression dans la tubulure ou tout autre paramètre dans le but d’activer, de moduler, de retarder ou de désactiver le fonctionnement de toute partie du système antipollution. (auxiliary emission control device)

(4) The portion of the definition averaging set in subsection 1(1) of the Regulations before paragraph (f) is replaced by the following:

averaging set means, for the purpose of a company’s participation in the CO₂ emission credit system set out in sections 34 to 47 or sections 47.1 to 47.5, as the case may be, any of the following groups of fleets of vehicles, engines or trailers:

(a) Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, excluding those that are vocational vehicles or incomplete vocational vehicles;
(b) vocational vehicles that are light heavy-duty vehicles and incomplete vocational vehicles that are to become light heavy-duty vehicles;
(c) medium heavy-duty vehicles and heavy-duty incomplete vehicles that are to become medium heavy-duty vehicles, other than those that are of a type referred to in the table to subsection 26(1.2) and in respect of which the company has made the election referred to in that subsection;
(d) heavy heavy-duty vehicles and heavy-duty incomplete vehicles that are to become heavy heavy-duty vehicles, other than those that are of a type referred to in the table to subsection 26(1.2) and in respect of which the company has made the election referred to in that subsection;
(d.1) vocational vehicles that are all of the same type referred to in the table to subsection 26(1.2) and in respect of which the company has made the election referred to in that subsection;
(e) light heavy-duty engines and medium heavy-duty engines that are spark-ignition engines;

(5) The definition averaging set in subsection 1(1) of the Regulations is amended by striking out “or” at the end of paragraph (g) and by replacing paragraph (h) with the following:

(h) heavy heavy-duty engines;
(i) full-aero box van trailers that are short dry box van trailers and full-aero box van trailers that are short refrigerated box van trailers; or
(j) full-aero box van trailers that are long dry box van trailers and full-aero box van trailers that are long refrigerated box van trailers. (groupe de calcul de points)

(6) The portion of the definition deterioration factor in subsection 1(1) of the Regulations before paragraph (b) is replaced by the following:

deterioration factor means the factor used to account for the variation, if any, between the maximum emission level during the useful life of a vehicle or engine and the undeteriorated emission level measured at the point corresponding to a maximum of 6 437 km (4,000 miles) of operation in relation to a vehicle that has stabilized emissions and to a maximum of 125 hours of operation in relation to an engine that has stabilized emissions, determined in accordance with

(a) sections 1819(d)(5) and 1823(m) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, in the case of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, excluding those that are vocational vehicles or incomplete vocational vehicles;

(7) The portion of the definition element of design in subsection 1(1) of the Regulations before paragraph (a) is replaced by the following:

element of design means, in respect of a vehicle, engine or trailer,

(8) Paragraph (c) of the definition vocational tractor in subsection 1(1) of the Regulations is replaced by the following:

(c) a tractor of the 2020 model year or an earlier model year that has a GCWR of 54 431 kg (120,000 pounds) or more. (tracteur routier spécialisé)

(9) Paragraph (e) of the definition vocational vehicle in subsection 1(1) of the Regulations is replaced by the following:

(e) a Class 2B or Class 3 heavy-duty vehicle that is not subject to section 1819 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR. (véhicule spécialisé)

(10) Subsection 1(1) of the Regulations is amended by adding the following in alphabetical order:

automatic tire inflation system means a pneumatically or electronically activated system that is installed on a vehicle or a trailer to maintain tire pressure at a specified value. (dispositif automatique de gonflage des pneus)

box van trailer means a trailer — other than a tank trailer that is designed to transport liquids or gases — that has an enclosed cargo space that is permanently attached to the trailer chassis, has fixed sides and a fixed nose and roof. (remorque fourgon)

brake horsepower or BHP means a unit of brake power that is equal to 745.7 watts, expressed in horsepower. (BHP)

bus means a vocational vehicle that is designed to carry more than 15 passengers. (autobus)

coach bus means a bus that is designed for intercity passenger transport and that is not equipped with features to accommodate standing passengers. (autocar)

concrete mixer means a vocational vehicle that is designed to mix and transport concrete in a revolving drum that is permanently mounted. (bétonnière)

dry box van trailer means a box van trailer other than a refrigerated box van trailer. (remorque fourgon non frigorifique)

emergency vehicle means a vocational vehicle that is designed for use as an ambulance or fire truck. (véhicule d’urgence)

full-aero, in respect of a box van trailer, means that the trailer does not have any of the following features:

(a) a belly box that occupies at least half of the length of both sides of the trailer between the centreline of the landing gear when it is extended and the leading edge of the front wheels;
(b) a drop deck;
(c) a side-mounted, pull-out platform;
(d) one or more steps for side-door access;
(e) a side lift gate;
(f) a rear hinged loading ramp;
(g) a rear mount for a forklift;
(h) a rear lift gate or, for the 2023 model year or an earlier model year, a roll-up rear door. (totalement aérodynamique)

heavy-haul tractor means a tractor of the 2021 model year or a subsequent model year that has a GCWR of 63 503 kg (140,000 pounds) or more. (tracteur routier à chargement lourd)

long, in respect of a trailer, means more than 15.24 metres (50 feet) in length. (longue)

mixed-use vocational vehicle means a vocational vehicle that

(a) is designed to operate at low speeds that are unsuitable for normal highway operation, has affixed components that are designed to operate in an off-road environment or has both of those characteristics; or
(b) has one or more of the following characteristics:
- (i) it has an axle that has a GAWR of 13 154 kg (29,000 pounds) or more,
- (ii) it cannot attain a speed of more than 53 km/h (33 miles per hour) over 3.2 km (2 miles),
- (iii) it cannot attain a speed of more than 72 km/h (45 miles per hour) over 3.2 km (2 miles), it has an unloaded vehicle weight that is not less than 95% of its GVWR and it cannot carry occupants other than the driver and operating crew,
- (iv) it cannot attain a speed of more than 87 km/h (54 miles per hour)
  - (A) due to parameters that are not adjustable parameters as defined in subsection 15(1), or
  - (B) without the engine with which it is equipped being at 95% or more of its maximum test speed in the highest available gear ratio. (véhicule spécialisé à usages divers)

motor home means a vocational vehicle that is designed to provide temporary residential accommodations and that is equipped with at least four of the following features:

(a) a cooking appliance;
(b) a refrigerator;
(c) a self-contained toilet;
(d) a heating or air-conditioning system;
(e) a potable water supply system, including a faucet and a sink;
(f) a 110-125 volt alternating current (VAC) electrical supply system or propane supply system. (autocaravane)

multi-purpose vocational vehicle means a vocational vehicle that is neither a regional vocational vehicle nor an urban vocational vehicle. (véhicule spécialisé à usages multiples)

non-aero box van trailer means

(a) a box van trailer that is at least 10.67 metres (35 feet) in length and that has
- (i) at least one of the following rear features:
  - (A) a hinged loading ramp,
  - (B) a lift gate,
  - (C) a mount for a forklift,
  - (D) for the 2023 model year or an earlier model year, a roll-up door, and
- (ii) at least one of the following side features:
  - (A) a belly box that occupies at least half of the length of both sides of the trailer between the centreline of the landing gear when it is extended and the leading edge of the front wheels,
  - (B) a drop deck,
  - (C) a mounted, pull-out platform,
  - (D) one or more steps for side-door access,
  - (E) a lift gate; or
(b) a short refrigerated box van trailer that is less than 10.67 metres (35 feet) in length and has at least one of the side features listed in clauses (a)(ii)(A) to (E). (remorque fourgon non aérodynamique)

non-box trailer means a tank trailer that is designed to transport liquids or gases, a trailer that is designed to carry a temporarily mounted shipping container or a trailer that is designed to accommodate side-loading cargo onto a single, continuous load-bearing surface that runs from the rear of the trailer to at least the trailer’s kingpin and that may have curtains, straps or other devices to restrain or protect the cargo during transport, including side walls that do not completely enclose the cargo space. (remorque sans fourgon)

partial-aero, in respect of a box van trailer other than a non-aero box van trailer, means that the trailer

(a) has at least one of the following side features:
- (i) a belly box that occupies at least half of the length of both sides of the trailer between the centreline of the landing gear when it is extended and the leading edge of the front wheels,
- (ii) a drop deck,
- (iii) a mounted, pull-out platform,
- (iv) one or more steps for side-door access,
- (v) a lift gate; or
(b) in the case of a long dry box van trailer or a long refrigerated box van trailer, has at least one of the following rear features:
- (i) a hinged loading ramp,
- (ii) a lift gate,
- (iii) a mount for a forklift,
- (iv) for the 2023 model year or an earlier model year, a roll-up door. (partiellement aérodynamique)

plug-in hybrid vehicle means a hybrid vehicle that has an energy storage system that can be recharged from an electric source that is not on board the vehicle. (véhicule hybride rechargeable)

refrigerated box van trailer means a box van trailer that has a self-contained heating, ventilation or air-conditioning system. (remorque fourgon frigorifique)

regional vocational vehicle means a vocational vehicle that has any of the characteristics of a vehicle to which the regional duty cycle is applicable under section 510 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR. (véhicule spécialisé régional)

short, in respect of a trailer, means not more than 15.24 metres (50 feet) in length. (courte)

test group, in respect of a company’s Class 2B and Class 3 heavy-duty vehicles, excluding those that are vocational vehicles or incomplete vocational vehicles, and the company’s engines referred to in section 25, means

(a) if they are covered by an EPA certificate, the grouping for which the EPA certificate was issued; and
(b) if they are not covered by an EPA certificate, the grouping determined in accordance with section 1827 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR. (groupe d’essai)

tire pressure monitoring system means a system that is installed on a vehicle or a trailer to monitor the air pressure in each tire and alert the driver when the tire pressure falls below a specified value. (système de surveillance de la pression des pneus)

trailer means equipment with wheels that is designed to carry cargo and be pulled by a tractor when coupled to the tractor’s fifth wheel, excluding equipment that

(a) is less than 10.67 metres (35 feet) in length and has three axles;
(b) has four or more axles;
(c) has adjacent axles whose centrelines are at least 305 cm (120 inches) apart and, if the distance between the axles is adjustable, cannot be set closer together;
(d) is intended to be used as a temporary or permanent residence or as an office or other work space; or
(e) is designed for use in military combat or combat support. (remorque)

trailer family, in respect of a company’s trailers, means

(a) if they are covered by an EPA certificate, the grouping for which the EPA certificate was issued; or
(b) if they are not covered by an EPA certificate, the trailers within a grouping referred to in section 230 of Title 40, chapter I, subchapter U, part 1037, subpart C, of the CFR, except that a reference to “vehicle” in sections 230(b) and (d)(3) of Title 40, chapter I, subchapter U, part 1037, subpart C, of the CFR must be read as a reference to “trailer”. (famille de remorques)

urban vocational vehicle means a vocational vehicle that has any of the characteristics of a vehicle to which the urban duty cycle is applicable under section 510 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR. (véhicule spécialisé urbain)

vehicle family, in respect of a company’s tractors or vocational vehicles, means

(a) if they are covered by an EPA certificate, the grouping for which the EPA certificate was issued; or
(b) if they are not covered by an EPA certificate, the grouping determined in accordance with section 230 of Title 40, chapter I, subchapter U, part 1037, subpart C, of the CFR. (famille de véhicules)

(11) Subsection 1(1) of the Regulations is amended by adding the following in alphabetical order:

vehicle service class means any one of the following groups:

(a) light heavy-duty vehicles;
(b) medium heavy-duty vehicles; or
(c) heavy heavy-duty vehicles. (classe de service)

(12) Paragraph 1(4)(b) of the Regulations is replaced by the following:

(b) part 1037 of Title 40, chapter I, subchapter U, of the CFR, for the applicable standards and test procedures in the case of trailers and heavy-duty vehicles other than those referred to in paragraph (b.1);
(b.1) section 1819 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, for the applicable standards and test procedures in the case of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, excluding those that are vocational vehicles or incomplete vocational vehicles; or

(13) Subsection 1(5) of the Regulations is replaced by the following:

Useful life

(5) Unless otherwise provided in these Regulations, useful life refers to the period of time or use in respect of which an emission standard applies to, as the case may be,

(a) Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those that are vocational vehicles or incomplete vocational vehicles — namely,
- (i) for the 2020 model year and earlier model years, 11 years or 193 121 km (120,000 miles), whichever occurs first, and
- (ii) for the 2021 model year and subsequent model years, 15 years or 241 401 km (150,000 miles), whichever occurs first;
(b) vocational vehicles that are light heavy-duty vehicles and incomplete vocational vehicles that are to become light heavy-duty vehicles, namely,
- (i) for the 2020 model year and earlier model years, 10 years or 177 027 km (110,000 miles), whichever occurs first, and
- (ii) for the 2021 model year and subsequent model years, 15 years or 241 401 km (150,000 miles), whichever occurs first;
(c) vocational vehicles that are medium heavy-duty vehicles, incomplete vocational vehicles that are to become medium heavy-duty vehicles, Class 7 tractors and incomplete tractors that are to become Class 7 tractors, namely, 10 years or 297 728 km (185,000 miles), whichever occurs first;
(d) vocational vehicles that are heavy heavy-duty vehicles, incomplete vocational vehicles that are to become heavy heavy-duty vehicles, Class 8 tractors and incomplete tractors that are to become Class 8 tractors, namely, 10 years or 700 064 km (435,000 miles), whichever occurs first;
(e) heavy-duty engines, namely,
- (i) in the case of spark-ignition engines and of light heavy-duty engines that are compression-ignition engines of the 2021 model year or a subsequent model year, 15 years or 241 401 km (150,000 miles), whichever occurs first, and
- (ii) in any other case, the same useful life as that which is set out for the type of engine in question in section 2 of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR for emissions of oxides of nitrogen (NO_X), hydrocarbon (HC), particulate matter (PM) and carbon monoxide (CO); and
(f) trailers, namely, 10 years.

(14) Section 1 of the Regulations is amended by adding the following after subsection (8):

Length — trailer

(8.1) The length of a trailer corresponds to

(a) the outer dimensions of its load-carrying structure, excluding any aerodynamic devices and any heating, ventilating or air-conditioning systems; and
(b) in the case of a B-train trailer, the outer dimensions of its load-carrying structure, excluding its rear fifth-wheel coupling section, any aerodynamic devices and any heating, ventilating or air-conditioning systems.

Number of axles

(8.2) The number of axles on a vehicle or trailer includes any axles that can be used to carry the loaded or unloaded weight of the vehicle or the trailer while in motion, including lift axles.

(15) Subsections 1(10) and (11) of the Regulations are replaced by the following:

Spark-ignition engines

(10) For the purposes of these Regulations, a spark-ignition engine of the 2020 model year or an earlier model year that is regulated as a diesel engine under part 86 of Title 40, chapter I, subchapter C, of the CFR must conform to the standards, test procedures and calculation methods applicable to a compression-ignition engine of the same model year.

Compression-ignition engines

(11) For the purposes of these Regulations, a compression-ignition engine of the 2020 model year or an earlier model year that is regulated as an Otto-cycle engine under part 86 of Title 40, chapter I, subchapter C, of the CFR must conform to the standards, test procedures and calculation methods applicable to a spark-ignition engine of the same model year.

Various engines

(12) For the purposes of these Regulations, the following engines must conform to the standards, test procedures and calculation methods applicable to a compression-ignition engine of the same model year:

(a) a gas turbine heavy-duty engine; and
(b) a heavy-duty engine that is not a spark-ignition engine or compression-ignition engine.

2 Sections 1.1 to 3 of the Regulations are replaced by the following:

Concurrent sale

1.1 For the purposes of these Regulations, a vehicle, engine or trailer of a given model year that is sold in Canada is considered to be sold concurrently in Canada and in the United States if a vehicle, engine or trailer of that model year that belongs to the same test group, vehicle family, engine family or trailer family is offered for sale in the United States during the 365 days preceding

(a) in the case of a vehicle, engine or trailer that is imported into Canada, the day on which it is imported; and
(b) in the case of a vehicle, engine or trailer that is manufactured in Canada,
- (i) the day on which the national emissions mark is applied to the vehicle, engine or trailer, if known, or
- (ii) if the day referred to in subparagraph (i) is not known, the day on which the main assembly of the vehicle or the manufacture of the engine or the trailer, as the case may be, is completed.

Application

Prescribed vehicles, engines and equipment

2 These Regulations apply to the vehicles, engines and equipment that are prescribed by subsections 5(1) to (3).

3 Section 4 of the Regulations is replaced by the following:

Model year

4 (1) Subject to subsection (3), a year that is used by a manufacturer as a model year must,

(a) if the period of production of a model of heavy-duty vehicle, heavy-duty engine or trailer does not include January 1 of a calendar year, correspond to the calendar year during which the period of production falls; and
(b) if the period of production of a model of heavy-duty vehicle, heavy-duty engine or trailer includes January 1 of a calendar year, correspond to that calendar year.

Period of production

(2) The period of production of a model of heavy-duty vehicle, heavy-duty engine or trailer must include only one January 1.

Vocational vehicles and tractors — as of 2021

(3) For vocational vehicles, incomplete vocational vehicles, tractors and incomplete tractors whose main assembly is completed on or after January 1, 2021, the vehicle’s model year is the calendar year corresponding to the calendar year during which its main assembly is completed. However, a company may choose to designate the vehicle’s model year as being the model year that corresponds to the calendar year before the calendar year during which the vehicle’s main assembly is completed if,

(a) in the case of a vehicle whose engine is installed in the United States, the engine’s model year is also from an earlier year in accordance with section 601(a)(2) of Title 40, chapter I, subchapter U, part 1037, subpart G, of the CFR and, if the engine is installed after March 31 of the calendar year during which the vehicle’s main assembly is completed, the company has obtained prior approval from the EPA; and
(b) in the case of a vehicle whose engine is installed in Canada,
- (i) the engine’s model year is also from an earlier year and the standards applicable under these Regulations to engines of that earlier model year are the same as those applicable to engines of a model year that corresponds to the calendar year during which the vehicle’s main assembly is completed; or
- (ii) the engine’s model year is the model year that corresponds to the calendar year before the calendar year during which the vehicle’s main assembly is completed and the engine is installed before March 31 of the calendar year during which the vehicle’s main assembly is completed.

4 The heading before section 5 of the Regulations is replaced by the following:

Prescribed Classes of Vehicles, Engines and Equipment

5 (1) Subsection 5(3) of the Regulations is replaced by the following:

Trailers

(2.1) Box van trailers and non-box trailers are prescribed for the purposes of the definition equipment in section 149 of the Act.

Exclusion

(3) The prescribed classes of vehicles, engines and equipment set out in subsections (1), (2) and (2.1), respectively, do not include heavy-duty vehicles, heavy-duty engines or trailers that are to be exported and that are accompanied by written evidence establishing that they will not be sold for use or used in Canada.

(2) Section 5 of the Regulations is amended by adding the following after subsection (5):

Transportation within Canada — trailers

(6) For the purposes of section 152 of the Act, the prescribed equipment is box van trailers and non-box trailers that are manufactured in Canada, other than trailers that will be used in Canada solely for purposes of exhibition, demonstration, evaluation or testing.

6 Subsection 6(1) of the Regulations is replaced by the following:

Application

6 (1) A company that intends to apply a national emissions mark to a vehicle, engine or trailer must apply to the Minister for authorization.

Contents of application

(1.1) The application must be signed by a person who is authorized to act on behalf of the company and must include

(a) the name and street address of the company’s head office and, if different, its mailing address;
(b) the classes of vehicles, engines or trailers for which the authorization is requested;
(c) the street address of the location at which the national emissions mark will be applied to the vehicles, engines or trailers;
(d) the street address where the records referred to in section 59 will be maintained; and
(e) information demonstrating that the company is capable of verifying compliance with the standards set out in these Regulations.

7 Section 7 of the Regulations is replaced by the following:

National emissions mark

7 (1) The national emissions mark is the mark set out in the schedule.

Dimensions

(2) The national emissions mark must be at least 7 mm in height and 10 mm in width.

Location

(3) Subject to subsection 11(2), the national emissions mark must be displayed

(a) on or immediately beside the U.S. emission control information label or U.S. engine information label referred to in paragraph 53(d);
(b) on or immediately beside the compliance label applied in accordance with the Motor Vehicle Safety Regulations; or
(c) on or immediately beside the compliance label referred to in section 8, 9 or 9.1, as the case may be.

Requirements

(4) The national emissions mark must be displayed on a label that

(a) is permanently applied to the vehicle, engine or trailer;
(b) is resistant to or protected against any weather condition; and
(c) bears inscriptions that are legible and indelible and that are indented, embossed or in a colour that contrasts with the background of the label.

Authorization number

(5) Subject to subsection (6), a company that has been authorized to apply the national emissions mark must display the authorization number assigned by the Minister in figures that are at least 2 mm in height, immediately below or to the right of the national emissions mark.

Exception

(6) A company is not required to display its authorization number on a vehicle or trailer if

(a) the company is authorized by the Minister of Transport to apply the national safety mark in accordance with the Motor Vehicle Safety Act;
(b) the company applies both the national emissions mark and the national safety mark to the vehicle or the trailer; and
(c) the national emissions mark is displayed on the same label as the national safety mark.

8 (1) Paragraph 8(1)(a) of the Regulations is replaced by the following:

(a) subject to subsection (2), the statement “THIS ENGINE CONFORMS TO ALL APPLICABLE STANDARDS PRESCRIBED BY THE CANADIAN REGULATIONS ENTITLED Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations IN EFFECT FOR MODEL YEAR [insert model year] / CE MOTEUR EST CONFORME AUX NORMES QUI LUI SONT APPLICABLES PRÉVUES AU RÈGLEMENT CANADIEN INTITULÉ Règlement sur les émissions de gaz à effet de serre des véhicules lourds et de leurs moteurs EN VIGUEUR POUR L’ANNÉE DE MODÈLE [inscrire l’année de modèle]”;

(2) Paragraph 8(1)(i) of the Regulations is replaced by the following:

(i) the engine family’s or test group’s identification code, as the case may be;

(3) Subsection 8(1) of the Regulations is amended by striking out “and” at the end of paragraph (l), by adding “and” at the end of paragraph (m) and by adding the following after paragraph (m):

(n) in the case of a heavy-duty engine that is exempted under subsection 17(1.1), the engine’s model year and a statement, in both official languages, that the engine is exempted under that subsection.

(4) Paragraph 8(4)(b) of the Regulations is replaced by the following:

(b) the statement referred to in section 1819(k)(8)(v) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR.

9 (1) Paragraph 9(1)(a) of the Regulations is replaced by the following:

(a) subject to subsection (2), the statement “THIS VEHICLE CONFORMS TO ALL APPLICABLE STANDARDS PRESCRIBED BY THE CANADIAN REGULATIONS ENTITLED Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations IN EFFECT FOR MODEL YEAR [insert model year] / CE VÉHICULE EST CONFORME AUX NORMES QUI LUI SONT APPLICABLES PRÉVUES AU RÈGLEMENT CANADIEN INTITULÉ Règlement sur les émissions de gaz à effet de serre des véhicules lourds et de leurs moteurs EN VIGUEUR POUR L’ANNÉE DE MODÈLE [inscrire l’année de modèle]”;

(2) Paragraphs 9(1)(d) to (j) of the Regulations are replaced by the following:

(d) subject to subsection (3), the date on which the vehicle’s main assembly is completed;
(e) the type of vehicle, in both official languages, referred to in paragraph 18(3)(a);
(f) the vehicle family’s or test group’s identification code, as the case may be;
(g) except in the case of a vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor of the 2021 model year or a subsequent model year, the identification of the vehicle’s emission control system;
(h) in the case of a vocational vehicle or incomplete vocational vehicle referred to in subsection 26(3), the vehicle’s model year and a statement, in both official languages, that the vehicle is exempted under that subsection;
(i) in the case of a vocational tractor or vocational tractor that is an incomplete tractor, a statement, in both official languages, that the vehicle is a vocational tractor;
(j) in the case of a vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor that is exempted under subsection 17(1), the vehicle’s model year and a statement, in both official languages, that the vehicle is exempted under that subsection;

(3) Subsection 9(1) of the Regulations is amended by adding the following after paragraph (k):

(l) in the case of a vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor referred to in subsection 12.2(2), a statement, in both official languages, that the vehicle is equipped with an engine that meets the conditions set out in that subsection 12.2(2) and conforms to the standards referred to in subsection 12.2(3);
(m) in the case of a hybrid vehicle referred to in subsection 12.2(4), a statement, in both official languages, that the vehicle is equipped with an engine that conforms to the applicable alternative standards referred to in that subsection; and
(n) in the case of a vocational vehicle or incomplete vocational vehicle in respect of which the company makes an election referred to in subsection 26(1.2), a statement to that effect, in both official languages, and the type of vocational vehicle or incomplete vocational vehicle referred to in column 1 of the table to that subsection.

(4) Subsections 9(2) and (3) of the Regulations are replaced by the following:

National emissions mark

(2) Paragraph (1)(a) does not apply if a national emissions mark is applied to the vehicle or if the information referred to in paragraph (1)(h) or (j) is set out on the label.

Date on which main assembly is completed

(3) The date referred to in paragraph (1)(d) may, instead of being set out on the label, be permanently affixed, engraved or stamped on the vehicle.

10 The Regulations are amended by adding the following after section 9:

Trailers not certified by EPA

9.1 (1) Every box van trailer and non-box trailer that is imported or manufactured in Canada — other than EPA-certified trailers that bear the U.S. emission control information label referred to in subparagraph 53(d)(i) — must bear a compliance label that sets out the following information:

(a) subject to subsection (2), the statement “THIS TRAILER CONFORMS TO ALL APPLICABLE STANDARDS PRESCRIBED BY THE CANADIAN REGULATIONS ENTITLED Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations IN EFFECT FOR MODEL YEAR [insert model year] / CETTE REMORQUE EST CONFORME AUX NORMES QUI LUI SONT APPLICABLES PRÉVUES AU RÈGLEMENT CANADIEN INTITULÉ Règlement sur les émissions de gaz à effet de serre des véhicules lourds et de leurs moteurs EN VIGUEUR POUR L’ANNÉE DE MODÈLE [inscrire l’année de modèle]”;
(b) the name of the trailer’s manufacturer;
(c) the trailer’s model year if a national emissions mark is applied to it;
(d) subject to subsection (3), the trailer’s date of manufacture;
(e) the type of trailer, in both official languages;
(f) the trailer family’s identification code; and
(g) in the case of a trailer that is exempted under section 17.1 or 17.2, a statement in both official languages that the trailer is exempted under that section and, if not already indicated under paragraph (c), the trailer’s model year.

National emissions mark

(2) Paragraph (1)(a) does not apply if a national emissions mark is applied to the trailer.

Date of manufacture

(3) The trailer’s date of manufacture may, instead of being set out on the label, be permanently affixed, engraved or stamped on the trailer.

11 (1) The portion of section 10 of the Regulations before paragraph (a) is replaced by the following:

Requirements

10 Any label that is required by these Regulations, other than a U.S. emission control information label or U.S. engine information label referred to in paragraph 53(d), must

(2) Paragraph 10(b) of the Regulations is replaced by the following:

(b) be permanently applied to the vehicle or the trailer and, in the case of an engine, be permanently applied to an engine part that is necessary for normal engine operation and does not normally require replacement during the engine’s useful life;

12 (1) The portion of subsection 11(1) of the Regulations before paragraph (b) is replaced by the following:

Requirements

11 (1) If a company alters a heavy-duty vehicle or heavy-duty incomplete vehicle that was in conformity with these Regulations in such a manner that its stated type of vehicle referred to in paragraph 18(3)(a) is no longer accurate, or if the company alters the emission control system, alters an engine configuration in a way that might affect emissions or replaces any of the components of the vehicle that might alter the value of a parameter used in the GEM computer simulation model, the company must

(a) ensure that the U.S. emission control information label referred to in subparagraph 53(d)(i), the compliance label referred to in section 9 and the national emissions mark, as the case may be, remain applied to the altered vehicle;

(2) Paragraph 11(1)(b) of the English version of the Regulations is replaced by the following:

(b) ensure that the vehicle, once altered, conforms to all applicable standards;

(3) The portion of paragraph 11(1)(c) of the Regulations before subparagraph (i) is replaced by the following:

(c) apply to the altered vehicle an additional label that sets out the following information:

(4) Subparagraphs 11(1)(c)(iii) and (iv) of the Regulations are replaced by the following:

(iii) the national emissions mark, and
(iv) the type of vehicle referred to in paragraph 18(3)(a), if it differs from the type set out on the compliance label referred to in section 9 or if the regulatory subcategory that is set out on the U.S. emission control information label referred to in subparagraph 53(d)(i) is changed, as the case may be; and

(5) Subsection 11(2) of the Regulations is replaced by the following:

National emissions mark

(2) The national emissions mark referred to in subparagraph (1)(c)(iii) must be displayed on a label applied to the vehicle immediately beside any previously applied label on which the national emissions mark appears or immediately beside the U.S. emission control information label referred to in subparagraph 53(d)(i).

13 The heading “Heavy-duty Vehicles of the 2014 Model Year” before section 12 of the Regulations is replaced by the following:

Application

14 The heading before section 13 of the Regulations is replaced by the following:

January 1, 2020

12.1 These Regulations apply to trailers whose manufacture is completed on or after January 1, 2020.

Engine Installed in Heavy-duty Vehicle

Vocational vehicles or tractors

12.2 (1) Subject to subsections (2) and (4), every vocational vehicle, incomplete vocational vehicle, tractor and incomplete tractor whose main assembly is completed after the coming into force of this section must be equipped with a heavy-duty engine that conforms to the following standards:

(a) the standards set out in the On-Road Vehicle and Engine Emission Regulations that are applicable to heavy-duty engines as defined in subsection 1(1) of those Regulations that are of the following model year:
- (i) in the case of a vehicle whose main assembly is completed before January 1, 2021, the model year of the engine with which the vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor is equipped, and
- (ii) in the case of a vehicle whose main assembly is completed on or after January 1, 2021, the model year that corresponds to
  - (A) the calendar year during which the main assembly of the vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor in which the engine is installed is completed, or
  - (B) if the conditions set out in paragraph 4(3)(a) or subparagraph 4(3)(b)(i) or (ii) are met, the calendar year before the calendar year during which the main assembly of the vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor in which the engine is installed is completed; and
(b) the standards set out in these Regulations that are applicable to engines that are of the following model year:
- (i) in the case of a vehicle whose main assembly is completed before January 1, 2021, the model year of the engine with which the vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor is equipped, and
- (ii) in the case of a vehicle whose main assembly is completed on or after January 1, 2021, the model year that corresponds to
  - (A) the calendar year during which the main assembly of the vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor in which the engine is installed is completed, or
  - (B) if the conditions set out in paragraph 4(3)(a) or subparagraph 4(3)(b)(i) or (ii) are met, the calendar year before the calendar year during which the main assembly of the vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor in which the engine is installed is completed.

Election

(2) A company may elect not to comply with subsection (1) for a vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor if the company reports this election in its end of model year report in accordance with section 48 and the vehicle’s engine has previously been sold to a first retail purchaser and

(a) has not reached the end of its useful life since its original date of manufacture;
(b) has accumulated less than 160 935 km (100,000 miles) of operation since its original date of manufacture;
(c) less than three years have passed since its original date of manufacture; or
(d) is of the 2010 model year or a subsequent model year.

Standards — engine installed in vehicle

(3) The engine referred to in subsection (2) must conform to

(a) the standards set out in the On-Road Vehicle and Engine Emission Regulations that are applicable to heavy-duty engines as defined in subsection 1(1) of those Regulations that are of the model year corresponding to the engine’s original date of manufacture; and
(b) the standards set out in these Regulations that are applicable to engines that are of the model year corresponding to the engine’s original date of manufacture.

Hybrid vehicles — alternate engine standards

(4) In the case of vocational vehicles, incomplete vocational vehicles, tractors and incomplete tractors that are or are to become hybrid vehicles whose engine provides energy to the vehicle’s energy storage features, if there are no engines on the market that conform to the standards referred to in subsection (1) and that have the physical or performance characteristics necessary for the operation of the vehicle, a company may, for any given model year up to and including the 2027 model year, elect to equip up to 100 such vehicles with a heavy-duty engine that, instead of conforming to the standards referred to in that subsection, conforms to the alternative standards set out in section 10(g) or 11(g), as the case may be, of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR.

Heavy-duty Vehicles, Heavy-duty Engines and Trailers Covered by EPA Certificate

15 (1) The portion of subsection 13(1) of the Regulations before paragraph (a) is replaced by the following:

Conforming to EPA certificate

13 (1) Subject to subsections (4), (7.1) and (8), a heavy-duty vehicle, heavy-duty engine or trailer of a given model year that is covered by an EPA certificate and bears the U.S. emission control information label or U.S. engine information label referred to in paragraph 53(d) must conform to the certification and in-use standards referred to in the EPA certificate instead of to the following standards, whichever apply:

(2) Paragraphs 13(1)(b) to (d) of the Regulations are replaced by the following:

(b) sections 14 to 16 and, as the case may be, subsection 26(1), (1.1), (1.2) or (1.3) for vocational vehicles and incomplete vocational vehicles;
(c) sections 14 to 16 and, as the case may be, subsection 27(1) or paragraph 27(1.1)(a) for tractors and incomplete tractors;
(d) sections 14 and 15 and subsection 29(1) and, as the case may be, section 30 or subsection 31(1), (2) or (5) for heavy-duty engines; and
(e) section 15 and, as the case may be, subsection 16.1(1) or 33.1(1) or (2) for trailers.

(3) Subsection 13(2) of the Regulations is replaced by the following:

Exceeding N₂O or CH₄ emission standard — vehicles

(2) Subsections 20(3) to (6) apply in respect of a company’s Class 2B or Class 3 heavy-duty vehicles or cab-complete vehicles — excluding those that are vocational vehicles or incomplete vocational vehicles — that are covered by an EPA certificate and, as the case may be, conform to a N₂O or CH₄ family emission limit that exceeds the N₂O or CH₄ emission standard applicable to their model year under these Regulations.

(4) Paragraphs 13(4)(a) and (b) of the French version of the Regulations are replaced by the following:

a) au moins 50 % de ses véhicules spécialisés et véhicules spécialisés incomplets et au moins 50 % de ses tracteurs routiers et tracteurs routiers incomplets de l’année de modèle 2015 si le nombre de véhicules lourds vendus au Canada par l’entreprise est de plus de 500;
b) au moins 75 % de ses véhicules spécialisés et véhicules spécialisés incomplets et au moins 75 % de ses tracteurs routiers et tracteurs routiers incomplets de l’année de modèle 2016 si le nombre de véhicules lourds vendus au Canada par l’entreprise est de plus de 500;

(5) Section 13 of the Regulations is amended by adding the following after subsection (7):

Exceeding N₂O or CH₄ emission standard — engines

(7.1) Subsections 29(4) to (7) apply in respect of a company’s heavy-duty engines that are covered by an EPA certificate if

(a) the engines conform to a N₂O or CH₄ family emission limit that exceeds the N₂O or CH₄ emission standard applicable to engines of their model year under these Regulations; and
(b) the number of engines referred to in paragraph (a) that are sold in Canada by the company
- (i) is greater than 100 but less than or equal to 1000 and is more than twice the number of engines sold in the United States that are of the same engine family, or
- (ii) is greater than 1000 and exceeds the number of engines sold in the United States that are of the same engine family.

(6) Subparagraphs 13(8)(b)(i) and (ii) of the Regulations are replaced by the following:

(i) is greater than 100 but less than or equal to 1000 and is more than twice the number of engines sold in the United States that are of the same engine family, or
(ii) is greater than 1000 and exceeds the number of engines sold in the United States that are of the same engine family.

(7) Subsection 13(9) of the Regulations is replaced by the following:

Comply with CO₂ emission credit system

(8.1) Despite subsection (1), if a company participates in the CO₂ emission credit system set out in sections 47.1 to 47.5 for its full-aero box van trailers that are covered by an EPA certificate, it must comply with the CO₂ emission credit system provisions that relate to the emission standards referred to in subsection (1).

Fleets — trailers

(8.2) A company that manufactures or imports a full-aero box van trailer of the 2027 model year or a subsequent model year that is covered by an EPA certificate and conforms to a CO₂ family emission limit that exceeds the CO₂ emission standard applicable to the model year of that trailer under these Regulations must group all of its full-aero box van trailers of that model year into fleets or subfleets, as the case may be, in accordance with section 18 and participate in the CO₂ emission credit system set out in sections 47.1 to 47.5.

Subsection 153(3) of Act

(9) For the purposes of subsection 153(3) of the Act, the provisions of the CFR that are applicable under an EPA certificate to a vehicle, engine or trailer referred to in subsection (1) correspond to the standards referred to in paragraphs (1)(a) to (e).

16 Section 14 of the Regulations is amended by adding the following after subsection (2):

Exception — emergency vehicles

(2.1) Despite subsection (2), an emergency vehicle may be equipped with a defeat device if the device is one that is activated during emergency response operations to maintain speed, torque or power in either of the following circumstances:

(a) the emission control system is in an abnormal state;
(b) the device acts to maintain the emission control system in a normal state.

17 Sections 15 and 16 of the Regulations are replaced by the following:

Definition of adjustable parameter

15 (1) In this section, adjustable parameter means a device, system or element of design that is capable of being adjusted to affect the emissions or performance of a heavy-duty vehicle, heavy-duty engine or trailer during emission testing or normal in-use operation, but does not include a device, system or element of design that is permanently sealed by the manufacturer or that is inaccessible using ordinary tools.

Standards

(2) A heavy-duty vehicle, heavy-duty engine or trailer that is equipped with adjustable parameters must conform to the applicable standards under these Regulations for any specification within the adjustable range.

Fairings

(3) A tractor’s roof fairing and a trailer’s rear fairing are not adjustable parameters for the purposes of this section.

Air-conditioning Systems

Standards

16 A heavy-duty vehicle or heavy-duty incomplete vehicle that is equipped with an air-conditioning system must conform to

(a) section 1819(h) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR in the case of a Class 2B or Class 3 heavy-duty vehicle or cab-complete vehicle, other than a vocational vehicle or incomplete vocational vehicle; or
(b) section 115(e) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR in the case of a vocational vehicle or incomplete vocational vehicle of the 2021 model year or a subsequent model year or a tractor or incomplete tractor.

Non-box Trailers and Non-aero Box Van Trailers

Standards

16.1 (1) For the 2020 model year and subsequent model years, every non-box trailer and non-aero box van trailer must be equipped with

(a) an automatic tire inflation system or tire pressure monitoring system for each wheel that is mounted on an axle; and
(b) tires with a tire rolling resistance level of
- (i) in the case of non-box trailers,
  - (A) for the 2020 model year, 6 kg/t or less, or
  - (B) for the 2021 model year and subsequent model years, 5.1 kg/t or less, and
- (ii) in the case of non-aero box van trailers,
  - (A) for the 2020 model year, 5.1 kg/t or less, or
  - (B) for the 2021 model year and subsequent model years, 4.7 kg/t or less.

Determination of tire rolling resistance level

(2) The tire rolling resistance level must be determined in accordance with the procedures described in sections 515(b) and 520(c) of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR.

18 The heading before section 17 of the Regulations is replaced by the following:

Small Volume Companies

19 (1) The portion of subsection 17(1) of the Regulations before paragraph (a) is replaced by the following:

Exemption

17 (1) A company may elect, for a given model year, not to comply with the standards set out in any of subsections 26(1), (1.1), (1.2), (1.3) and (5) and 27(1), (1.1), (1.2) and (7), as the case may be, for its vocational vehicles, incomplete vocational vehicles, tractors and incomplete tractors and, in the case of vocational vehicles, incomplete vocational vehicles, tractors and incomplete tractors that are covered by an EPA certificate, the company may elect not to comply with subsection 13(4), if the following conditions are met:

(2) Paragraph 17(1)(b) of the Regulations is replaced by the following:

(b) the number of vocational vehicles and tractors of the model year in question that it manufactures or imports for sale in Canada is fewer than 200; and

(3) Subsections 17(2) to (4) of the Regulations are replaced by the following:

Exemption — engines

(1.1) A company that makes an election referred to in subsection (1) may also make one or both of the elections set out in one of the following paragraphs in respect of the engines of a given model year that are installed in its vocational vehicles and tractors referred to in subsection (1) if it reports the election in its end of model year report in accordance with section 48:

(a) in the case of heavy-duty engines other than those that are covered by an EPA certificate, not to comply with
- (i) the N₂O and CH₄ emission standards set out in section 29, or
- (ii) the CO₂ emission standards set out in section 30 or subsection 31(1), (2) or (5); and
(b) in the case of heavy-duty engines that are covered by an EPA certificate, not to comply with subsection 13(7.1) or (8).

CO₂ emission credit system

(2) A company that makes an election referred to in subsection (1) or (1.1) must not participate in the CO₂ emission credit system set out in sections 34 to 47 for the model year in question.

Merger

(3) If a company merges with one or more companies after the day on which these Regulations come into force, the company that results from the merger may make an election referred to in subsection (1) or (1.1) if the combined number of vocational vehicles and tractors manufactured or imported for sale in Canada by the merged companies under each of paragraphs (1)(a) and (b) is fewer than 200.

Acquisition

(4) If a company acquires one or more companies, it must

(a) in the case where the company made an election referred to in subsection (1) or (1.1) before the acquisition, recalculate the number of vocational vehicles and tractors that it manufactured or imported for sale in Canada under each of paragraphs (1)(a) and (b) by adding to that number the number of vocational vehicles and tractors that were manufactured or imported for sale in Canada by each of the acquired companies and report the total number in its first end of model year report following the acquisition; and
(b) in the case where the company makes an election referred to in subsection (1) or (1.1) after the acquisition, calculate the number of vocational vehicles and tractors that it manufactured or imported for sale in Canada under each of paragraphs (1)(a) and (b) by adding to that number the number of vocational vehicles and tractors that were manufactured or imported for sale in Canada by each of the acquired companies.

20 The Regulations are amended by adding the following after section 17:

Exemption — trailers manufactured before January 1, 2021

17.1 A company may elect not to comply with the standards set out in section 16.1 or 33.1, as the case may be, for its trailers whose manufacture is completed before January 1, 2021, if

(a) in 2020 it manufactures or imports for sale in Canada fewer than 100 trailers in total; and
(b) it reports the election in its end of model year report in accordance with section 48.

Exemption — trailers of the 2020 to 2026 model years

17.2 For trailers of the 2020 to 2026 model years, a company may elect not to comply with the standards set out in section 16.1 or 33.1, as the case may be, for a certain number of its trailers of a given model year if

(a) the number of trailers in respect of which it makes the election does not exceed
- (i) in the case of box van trailers, 20% of the number of box van trailers of the model year in question that it manufactures or imports for sale in Canada or 25, whichever is less, and
- (ii) in the case of non-box trailers, 20% of the number of non-box trailers of the model year in question that it manufactures or imports for sale in Canada or 20, whichever is less; and
(b) it reports the election in its end of model year report in accordance with section 48.

21 (1) Subsections 18(1) and (2) of the Regulations are replaced by the following:

Definition of fleet

18 (1) In these Regulations, fleet refers to the heavy-duty vehicles, heavy-duty engines and full-aero box van trailers that a company imports or manufactures in Canada for the purpose of sale in Canada to the first retail purchaser and that are grouped in accordance with this section for the purpose of conforming to sections 21 to 23 or for the purpose of participation in the CO₂ emission credit system set out in sections 34 to 47 or 47.1 to 47.5, as the case may be.

Exclusions

(2) A company may elect to exclude from its fleets

(a) the heavy-duty vehicles, heavy-duty engines and full-aero box van trailers that it manufactures and that are to be used in Canada solely for the purpose of exhibition, demonstration, evaluation or testing, if it reports that election in its end of model year report; and
(b) the heavy-duty vehicles, heavy-duty engines and full-aero box van trailers that it imports and that are to be used in Canada solely for the purpose of exhibition, demonstration, evaluation or testing, if it makes a declaration in accordance with section 60 and it reports that election in its end of model year report.

(2) The portion of subsection 18(3) of the Regulations before paragraph (b) is replaced by the following:

Fleet composition

(3) A company may group all of its heavy-duty vehicles or heavy-duty engines of the same type and model year into more than one fleet as follows:

(a) in the case of heavy-duty vehicles and subject to subsections (4) to (7), section 25 and subsections 26(6), (7.1) and (7.2) and 27(8.1) and (8.2), each fleet is composed solely of the vehicles referred to in one of the following subparagraphs or clauses, as the case may be:
- (i) Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, excluding those that are vocational vehicles or incomplete vocational vehicles,
- (ii) for vocational vehicles and incomplete vocational vehicles of the 2020 model year or an earlier model year,
  - (A) those vehicles that are or are to become light heavy-duty vehicles,
  - (B) those vehicles that are or are to become medium heavy-duty vehicles, or
  - (C) those vehicles that are or are to become heavy heavy-duty vehicles,
- (iii) for multi-purpose vocational vehicles and incomplete vocational vehicles that are to become multi-purpose vocational vehicles of the 2021 model year or a subsequent model year that are equipped with a compression-ignition engine,
  - (A) those vehicles that are or are to become light heavy-duty vehicles,
  - (B) those vehicles that are or are to become medium heavy-duty vehicles, or
  - (C) those vehicles that are or are to become heavy heavy-duty vehicles,
- (iv) for regional vocational vehicles and incomplete vocational vehicles that are to become regional vocational vehicles of the 2021 model year or a subsequent model year that are equipped with a compression-ignition engine,
  - (A) those vehicles that are or are to become light heavy-duty vehicles,
  - (B) those vehicles that are or are to become medium heavy-duty vehicles, or
  - (C) those vehicles that are or are to become heavy heavy-duty vehicles,
- (v) for urban vocational vehicles and incomplete vocational vehicles that are to become urban vocational vehicles of the 2021 model year or a subsequent model year that are equipped with a compression-ignition engine,
  - (A) those vehicles that are or are to become light heavy-duty vehicles,
  - (B) those vehicles that are or are to become medium heavy-duty vehicles, or
  - (C) those vehicles that are or are to become heavy heavy-duty vehicles,
- (vi) for multi-purpose vocational vehicles and incomplete vocational vehicles that are to become multi-purpose vocational vehicles of the 2021 model year or a subsequent model year that are equipped with a spark-ignition engine,
  - (A) those vehicles that are or are to become light heavy-duty vehicles, or
  - (B) those vehicles that are or are to become medium heavy-duty vehicles,
- (vii) for regional vocational vehicles and incomplete vocational vehicles that are to become regional vocational vehicles of the 2021 model year or a subsequent model year that are equipped with a spark-ignition engine,
  - (A) those vehicles that are or are to become light heavy-duty vehicles, or
  - (B) those vehicles that are or are to become medium heavy-duty vehicles,
- (viii) for urban vocational vehicles and incomplete vocational vehicles that are to become urban vocational vehicles of the 2021 model year or a subsequent model year that are equipped with a spark-ignition engine,
  - (A) those vehicles that are or are to become light heavy-duty vehicles, or
  - (B) those vehicles that are or are to become medium heavy-duty vehicles,
- (ix) Class 7 low-roof tractors and incomplete tractors,
- (x) Class 7 mid-roof tractors and incomplete tractors,
- (xi) Class 7 high-roof tractors and incomplete tractors,
- (xii) for Class 8 tractors and incomplete tractors of the 2020 model year or an earlier model year,
  - (A) those that are low-roof and are equipped with a day cab,
  - (B) those that are low-roof and are equipped with a sleeper cab,
  - (C) those that are mid-roof and are equipped with a day cab,
  - (D) those that are mid-roof and are equipped with a sleeper cab,
  - (E) those that are high-roof and are equipped with a day cab, or
  - (F) those that are high-roof and are equipped with a sleeper cab,
- (xiii) for Class 8 tractors and incomplete tractors of the 2021 model year or a subsequent model year that have a GCWR of less than 43 998 kg (97,000 pounds),
  - (A) those that are low-roof and are equipped with a day cab,
  - (B) those that are low-roof and are equipped with a sleeper cab,
  - (C) those that are mid-roof and are equipped with a day cab,
  - (D) those that are mid-roof and are equipped with a sleeper cab,
  - (E) those that are high-roof and are equipped with a day cab, or
  - (F) those that are high-roof and are equipped with a sleeper cab,
- (xiv) for Class 8 tractors and incomplete tractors of the 2021 model year or a subsequent model year that have a GCWR of 43 998 kg (97,000 pounds) or more, but less than 54 431 kg (120,000 pounds),
  - (A) those that are low-roof and are equipped with a day cab,
  - (B) those that are low-roof and are equipped with a sleeper cab,
  - (C) those that are mid-roof and are equipped with a day cab,
  - (D) those that are mid-roof and are equipped with a sleeper cab,
  - (E) those that are high-roof and are equipped with a day cab, or
  - (F) those that are high-roof and are equipped with a sleeper cab,
- (xv) for Class 8 tractors and incomplete tractors of the 2021 model year or a subsequent model year that have a GCWR of 54 431 kg (120,000 pounds) or more, other than those that are or are to become heavy-haul tractors,
  - (A) those that are low-roof and are equipped with a day cab,
  - (B) those that are low-roof and are equipped with a sleeper cab,
  - (C) those that are mid-roof and are equipped with a day cab,
  - (D) those that are mid-roof and are equipped with a sleeper cab,
  - (E) those that are high-roof and are equipped with a day cab, or
  - (F) those that are high-roof and are equipped with a sleeper cab,
- (xvi) heavy-haul tractors and incomplete tractors that are to become heavy-haul tractors;

(3) Subparagraph 18(3)(b)(i) of the Regulations is replaced by the following:

(i) spark-ignition engines other than heavy heavy-duty engines of the 2021 model year or a subsequent model year,

(4) Subparagraph 18(3)(b)(iv) of the Regulations is replaced by the following:

(iv) heavy heavy-duty engines that are spark-ignition engines of the 2021 model year or a subsequent model year or compression-ignition engines and that are designed to be used in vocational vehicles and incomplete vocational vehicles,

(5) Subparagraph 18(3)(b)(vi) of the Regulations is replaced by the following:

(vi) heavy heavy-duty engines that are spark- ignition engines of the 2021 model year or a subsequent model year or compression-ignition engines and that are designed to be used in tractors and incomplete tractors.

(6) Subsection 18(3) of the Regulations is amended by adding the following after paragraph (b):

(c) in the case of full-aero box van trailers and subject to subsection (10), each fleet is composed solely of the trailers referred to in one of the following subparagraphs:
- (i) short dry box van trailers,
- (ii) long dry box van trailers,
- (iii) short refrigerated box van trailers,
- (iv) long refrigerated box van trailers.

(7) Paragraph 18(4)(a) of the Regulations is replaced by the following:

(a) for the 2020 model year or an earlier model year, hybrid vehicles that have regenerative braking;

(8) Subsection 18(4) of the Regulations is amended by striking out “and” at the end of paragraph (d), by adding “and” at the end of paragraph (e) and by adding the following after paragraph (e):

(f) for the 2021 model year and subsequent model years, plug-in hybrid vehicles.

(9) Subsection 18(5) of the Regulations is replaced by the following:

Subfleets — Class 2B and Class 3

(5) For the purposes of subparagraph (3)(a)(i) and subsection 20(3), the vehicles in the fleet that exceed the standards set out in subsection 20(1) and have more than one N₂O or CH₄ family emission limit must be grouped into subfleets that include vehicles with identical N₂O or CH₄ family emission limits, as the case may be, and that are of the same test group.

(10) The portion of subsection 18(6) of the Regulations before paragraph (b) is replaced by the following:

Vocational vehicles and tractors

(6) For the purposes of subparagraphs (3)(a)(ii) to (xvi), all heavy-duty vehicles of a fleet must

(a) if applicable, be hybrid vehicles of the 2020 model year or an earlier model year that have regenerative braking, vehicles equipped with an engine that includes a Rankine-cycle or other bottoming cycle exhaust energy recovery system, electric vehicles, fuel cell vehicles, vehicles manufactured with innovative technologies or plug-in hybrid vehicles of the 2021 model year or a subsequent model year; and

(11) Section 18 of the Regulations is amended by adding the following after subsection (6):

Vocational tractors

(6.1) For the purposes of paragraph (3)(a), if a company has made the election referred to in subsection 28(2) in respect of a number of its vocational tractors, those vocational tractors must be grouped into fleets composed solely of vocational tractors that meet the description set out in, as the case may be, subparagraph (3)(a)(ii), (iii), (iv), (v), (vi), (vii) or (viii).

Vocational vehicles — election under subsection 26(1.2)

(6.2) For the purposes of subparagraphs (3)(a)(ii) to (viii), vocational vehicles that are of a type referred to in the table to subsection 26(1.2) and in respect of which a company has made the election referred to in that subsection must be grouped into separate fleets with each fleet being composed solely of vehicles of the same type.

(12) Subsection 18(9) of the Regulations is replaced by the following:

Engines not sold in United States

(9) For the purposes of subsection (8), the CO₂ family certification level and the N₂O and CH₄ family emission limits for the model year in question are determined using the engine sales in Canada if none of the engines in the engine family is sold in the United States.

Subfleets — full-aero box van trailers

(10) For the purposes of paragraph (3)(c), if the full-aero box van trailers in a fleet have more than one family emission limit, a company must group those trailers into subfleets that include trailers with an identical CO₂ family emission limit.

22 (1) Subsection 20(1) of the Regulations is replaced by the following:

Standards

20 (1) For the 2014 model year and subsequent model years, every Class 2B and Class 3 heavy-duty vehicle and cab-complete vehicle that is not a vocational vehicle or incomplete vocational vehicle must, for the duration of its useful life, have N₂O and CH₄ emission values that do not exceed 0.05 g/mile.

(2) Subsection 20(2) of the French version of the Regulations is replaced by the following:

Calcul

(2) Les valeurs des émissions de N₂O et de CH₄ sont calculées conformément à l’article 24.

(3) The portion of subsection 20(3) of the Regulations before the formula is replaced by the following:

Fleet calculation

(3) A company that manufactures or imports vehicles referred to in subsection (1) whose N₂O emission value or CH₄ emission value exceeds the emission standard set out in that subsection must group those vehicles of a given model year into a fleet and, if applicable, subfleets in accordance with section 18 and must calculate the N₂O or CH₄ emission deficit, as the case may be, for that fleet or each of those subfleets, expressed in megagrams of CO₂, using the formula

(4) The descriptions of A and B in subsection 20(3) of the Regulations are replaced by the following:

A is 0.05 g/mile;
B is the N₂O or CH₄ family emission limit for the fleet or subfleet, as the case may be, expressed in g/mile;

(5) The descriptions of D and E in subsection 20(3) of the Regulations are replaced by the following:

D is the vehicle’s useful life, expressed in miles; and
E is the global warming potential and is equal to the following number of CO₂ emission credits, expressed in megagrams of CO₂, needed to offset a deficit of N₂O or CH₄:
- (a) for each megagram of N₂O, 298, and
- (b) for each megagram of CH₄,
  - (i) for the 2020 model year and earlier model years, 25, and
  - (ii) for the 2021 model year and subsequent model years, 34.

(6) Subsection 20(4) of the Regulations is replaced by the following:

Separate calculation

(3.1) For the purposes of subsection (3), if both the N₂O emission value and the CH₄ emission value exceed 0.05 g/mile, the N₂O and CH₄ emission deficits must be calculated separately.

Family emission limit

(4) For the purposes of subsection (3), every vehicle within a fleet or subfleet must conform to the N₂O or CH₄ family emission limit for the fleet or subfleet, as the case may be.

23 Subsection 21(1) of the Regulations is replaced by the following:

Average standard

21 (1) For the 2014 model year and subsequent model years, a company must group all of its Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those that are vocational vehicles or incomplete vocational vehicles — into a fleet based on model year in accordance with section 18 and must ensure that the fleet average CO₂ emission value calculated in accordance with section 23 for that fleet does not exceed the applicable fleet average CO₂ emission standard calculated in accordance with section 22 for the useful life of the vehicles of that fleet.

24 (1) Subsections 22(1) and (2) of the Regulations are replaced by the following:

Calculation of average standard

22 (1) Subject to subsection (6), a company must calculate the fleet average CO₂ emission standard for a given model year, expressed in grams of CO₂ per mile and rounded to the nearest gram of CO₂ per mile, for its fleet of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those that are vocational vehicles or incomplete vocational vehicles — using the formula

where

A is the CO₂ emission target value calculated for each vehicle subconfiguration in the fleet using the applicable formula set out in subsection (2) and rounded to the nearest gram of CO₂ per mile;
B is the number of vehicles of that vehicle subconfiguration in the fleet; and
C is the number of vehicles in the fleet.

Vehicle subconfiguration

(2) Subject to subsection (4), the CO₂ emission target value for each vehicle subconfiguration in a fleet must be calculated using the applicable formula set out in one of the following paragraphs:

(a) for vehicles that are equipped with a spark-ignition engine, the formula set out in column 2 of the table to this paragraph for the model year set out in column 1, where WF is the work factor for each vehicle subconfiguration, calculated using the formula set out in subsection (3) and rounded to the nearest pound;

TABLE

Item	Column 1 Model Year	Column 2 CO₂ Emission Target (grams/mile)
1	2014	(0.0482 × WF) + 371
2	2015	(0.0479 × WF) + 369
3	2016	(0.0469 × WF) + 362
4	2017	(0.0460 × WF) + 354
5	2018 to 2020	(0.0440 × WF) + 339
6	2021	(0.0429 × WF) + 331
7	2022	(0.0418 × WF) + 322
8	2023	(0.0408 × WF) + 314
9	2024	(0.0398 × WF) + 306
10	2025	(0.0388 × WF) + 299
11	2026	(0.0378 × WF) + 291
12	2027 and subsequent	(0.0369 × WF) + 284

(b) for vehicles that are equipped with a compression-ignition engine or that operate without an internal combustion engine, the formula set out in column 2 of the table to this paragraph for the model year set out in column 1, where WF is the work factor for each vehicle subconfiguration, calculated using the formula set out in subsection (3) and rounded to the nearest pound.

TABLE

Item	Column 1 Model Year	Column 2 CO₂ Emission Target (grams/mile)
1	2014	(0.0478 × WF) + 368
2	2015	(0.0474 × WF) + 366
3	2016	(0.0460 × WF) + 354
4	2017	(0.0445 × WF) + 343
5	2018 to 2020	(0.0416 × WF) + 320
6	2021	(0.0406 × WF) + 312
7	2022	(0.0395 × WF) + 304
8	2023	(0.0386 × WF) + 297
9	2024	(0.0376 × WF) + 289
10	2025	(0.0367 × WF) + 282
11	2026	(0.0357 × WF) + 275
12	2027 and subsequent	(0.0348 × WF) + 268

(2) Subsections 22(4) and (5) of the Regulations are replaced by the following:

Alternative target value calculation — 2016 to 2018 model years

(4) For vehicles of the 2016 to 2018 model years, a company may, instead of calculating the CO₂ emission target value in accordance with subsection (2), elect to calculate that target value for each of those model years using the formula set out in either of the following paragraphs, whichever applies:

(a) for vehicles that are equipped with a spark-ignition engine,

(0.0456 × WF) + 352

where
WF is the work factor for each vehicle subconfiguration, calculated using the formula set out in subsection (3) and rounded to the nearest pound;
(b) for vehicles that are equipped with a compression-ignition engine or that operate without an internal combustion engine,

(0.0440 × WF) + 339

where
WF is the work factor for each vehicle subconfiguration, calculated using the formula set out in subsection (3) and rounded to the nearest pound.

25 (1) Subparagraphs 24(1)(b)(i) and (ii) of the Regulations are replaced by the following:

(i) sections 1819(d)(4) and (5) and 1819(k)(6) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, and
(ii) the altitude testing conditions set out in sections 1819(a)(5) and 1865(h)(3) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR.

(2) Subparagraph 24(4)(b)(ii) of the Regulations is replaced by the following:

(ii) by calculating the CO₂ emission rate in accordance with section 1819(g) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR.

26 The heading before section 25 of the Regulations is replaced by the following:

Special Grouping — Vehicles and Engines

27 (1) The portion of section 25 of the Regulations before paragraph (a) is replaced by the following:

Spark-ignition engines

25 A company may elect to include heavy-duty engines of the 2023 model year or an earlier model year that are spark-ignition engines in a fleet of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those that are vocational vehicles or incomplete vocational vehicles — if the following conditions are met:

(2) Paragraph 25(b) of the Regulations is replaced by the following:

(b) the engines are
- (i) installed in emergency vehicles, motor homes or heavy-duty incomplete vehicles that are not cab-complete vehicles, or
- (ii) sold without being installed in a vehicle;

(3) The portion of paragraph 25(d) of the Regulations before subparagraph (i) is replaced by the following:

(d) instead of conforming to sections 29 and 30, the engines referred to in paragraph (b) conform to

(4) Subparagraph 25(d)(ii) of the Regulations is replaced by the following:

(ii) the CO₂ emission target value and test result determined in accordance with section 1819(k)(8)(vii) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR; and

28 (1) Subsections 26(1) to (5) of the Regulations are replaced by the following:

CO₂ emission standards — 2014 to 2020 model years

26 (1) Subject to subsections (3) and (5) to (7) and section 28, for the 2014 to 2020 model years, every vocational vehicle and incomplete vocational vehicle of a service class referred to in column 1 of the table to this subsection must, for the duration of its useful life, have a CO₂ emission rate that does not exceed the CO₂ emission standard set out in column 2 or 3 for the model year in question.

TABLE

Item	Column 1 Vehicle Service Class	Column 2 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2014 to 2016 Model Years	Column 3 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2017 to 2020 Model Years
1	Light heavy-duty vehicles	388	373
2	Medium heavy-duty vehicles	234	225
3	Heavy heavy-duty vehicles	226	222

CO₂ emission standards — 2021 model year and subsequent model years

(1.1) Subject to subsections (1.2), (1.3), (3) and (5) to (7) and section 28, for the 2021 model year and subsequent model years, every vocational vehicle and incomplete vocational vehicle that is referred to in this subsection and that is of a service class referred to in column 1 of the table to one of following subparagraphs must, for the duration of its useful life, have a CO₂ emission rate that does not exceed the CO₂ emission standard set out in column 2, 3 or 4 of that table for the model year in question:

(a) for multi-purpose vocational vehicles that are equipped with
- (i) a spark-ignition engine, or

TABLE

Item	Column 1 Vehicle Service Class	Column 2 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2021 to 2023 Model Years	Column 3 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2024 to 2026 Model Years	Column 4 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2027 and Subsequent Model Years
1	Light heavy-duty vehicles	407	385	372
2	Medium heavy-duty vehicles	293	279	268

(ii) a compression-ignition engine,

TABLE

Item	Column 1 Vehicle Service Class	Column 2 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2021 to 2023 Model Years	Column 3 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2024 to 2026 Model Years	Column 4 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2027 and Subsequent Model Years
1	Light heavy-duty vehicles	373	344	330
2	Medium heavy-duty vehicles	265	246	235
3	Heavy heavy-duty vehicles	261	242	230

(b) for regional vocational vehicles that are equipped with
- (i) a spark-ignition engine, or

TABLE

Item	Column 1 Vehicle Service Class	Column 2 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2021 to 2023 Model Years	Column 3 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2024 to 2026 Model Years	Column 4 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2027 and Subsequent Model Years
1	Light heavy-duty vehicles	335	324	319
2	Medium heavy-duty vehicles	261	251	247

(ii) a compression-ignition engine, and

TABLE

Item	Column 1 Vehicle Service Class	Column 2 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2021 to 2023 Model Years	Column 3 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2024 to 2026 Model Years	Column 4 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2027 and Subsequent Model Years
1	Light heavy-duty vehicles	311	296	291
2	Medium heavy-duty vehicles	234	221	218
3	Heavy heavy-duty vehicles	205	194	189

(c) for urban vocational vehicles that are equipped with
- (i) a spark-ignition engine, or

TABLE

Item	Column 1 Vehicle Service Class	Column 2 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2021 to 2023 Model Years	Column 3 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2024 to 2026 Model Years	Column 4 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2027 and Subsequent Model Years
1	Light heavy-duty vehicles	461	432	413
2	Medium heavy-duty vehicles	328	310	297

(ii) a compression-ignition engine,

TABLE

Item	Column 1 Vehicle Service Class	Column 2 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2021 to 2023 Model Years	Column 3 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2024 to 2026 Model Years	Column 4 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2027 and Subsequent Model Years
1	Light heavy-duty vehicles	424	385	367
2	Medium heavy-duty vehicles	296	271	258
3	Heavy heavy-duty vehicles	308	283	269

Alternative standards for certain vehicles

(1.2) Subject to subsection (1.3), for the 2021 model year and subsequent model years, a company may elect to have one or more of its vocational vehicles or incomplete vocational vehicles that are of a type referred to in column 1 of the table to this subsection conform, for the duration of their useful life, to the CO₂ emission standard set out in column 2 or 3 for the model year in question instead of the CO₂ emission standards set out in subsection (1.1).

TABLE

Item	Column 1 Type	Column 2 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2021 to 2026 Model Years	Column 3 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2027 and Subsequent Model Years
1	Motor home	228	226
2	School bus	291	271
3	Coach bus	210	205
4	Other bus	300	286
5	Waste collection vehicle (see note)	313	298
6	Concrete mixer	319	316
7	Mixed-use vocational vehicle	319	316
8	Emergency vehicle	324	319
Note: For the purposes of item 5, *waste collection vehicle* means a vocational vehicle designed primarily to collect, compact and transport solid waste or recyclable materials.

Alternative standards for certain vehicles — tires

(1.3) For the 2021 model year and subsequent model years, a company may elect to have one or more of its motor homes, concrete mixers, mixed-use vocational vehicles and emergency vehicles conform to the following standards instead of the CO₂ emission standards set out in subsection (1.1) or (1.2):

(a) in the case of motor homes, the vehicles must be equipped with an automatic tire inflation system or tire pressure monitoring system for each wheel that is mounted on an axle; and
(b) in the case of vocational vehicles or incomplete vocational vehicles that are of a type referred to in column 1 of the table to this paragraph, the vehicles must be equipped with tires that have a tire rolling resistance level that is not more than the maximum level set out in column 2 or 3 for the model year in question.

TABLE

Item	Column 1 Type	Column 2 Maximum Tire Rolling Resistance Level (kilograms per tonne) for 2021 to 2026 Model Years	Column 3 Maximum Tire Rolling Resistance Level (kilograms per tonne) for 2027 and Subsequent Model Years
1	Motor home	6.7	6.0
2	Concrete mixer	7.6	7.1
3	Mixed-use vocational vehicle	7.6	7.1
4	Emergency vehicle	8.7	8.4

Modelling CO₂ emissions to demonstrate compliance

(2) The CO₂ emission rate must be determined in accordance with sections 501 and 520 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR,

(a) using the version of the GEM computer simulation model that is applicable to the model year in question;
(b) in the case of vocational vehicles and incomplete vocational vehicles of the 2021 model year or a subsequent model year, using the applicable duty cycle in accordance with section 150(z) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR; and
(c) in the case of vocational vehicles and incomplete vocational vehicles of the 2021 model year or a subsequent model year that are plug-in hybrid vehicles or fuel cell vehicles powered by any fuel other than hydrogen, taking into account the powertrain testing procedure set out in section 550 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR.

Reference in CFR — interpretation

(2.1) For the purposes of subsection (2),

(a) a reference in the CFR to “regulatory subcategory” is to be read as a reference to the fleet referred to in one of subparagraphs 18(3)(a)(ii) to (viii) that includes the same type of vehicles as those to which the simulation model is being applied; and
(b) motor homes and coach buses are to be treated as regional vocational vehicles and the other types of vocational vehicles or incomplete vocational vehicles referred to in column 1 of the table to subsection (1.2) are to be treated as urban vocational vehicles.

Electric vehicles

(2.2) For the purposes of this section and sections 34 to 47, the CO₂ emission rate of vocational vehicles and incomplete vocational vehicles of the 2021 model year or a subsequent model year that are electric vehicles is zero grams of CO₂ per short ton-mile.

Exemption for certain vocational vehicles

(3) The vocational vehicles and incomplete vocational vehicles referred to in subsections (1) and (1.1) do not include

(a) vehicles whose main assembly is completed before January 1, 2021 and that are equipped with tires with a maximum speed rating of not more than 88 km/h (55 miles per hour); and
(b) vehicles
- (i) that are designed to operate at low speeds unsuitable for normal highway operation or that have affixed components designed to operate in an off-road environment, and
- (ii) that
  - (A) have an axle that has a GAWR of 13 154 kg (29,000 pounds) or more,
  - (B) cannot attain a speed of more than 53 km/h (33 miles per hour) over 3.2 km (2 miles),
  - (C) cannot attain a speed of more than 72 km/h (45 miles per hour) over 3.2 km (2 miles), have an unloaded vehicle weight that is not less than 95% of their GVWR and cannot carry occupants other than the driver and operating crew, or
  - (D) cannot attain a speed of more than 87 km/h (54 miles per hour)
    - (I) due to parameters that are not adjustable parameters as defined in subsection 15(1), or
    - (II) without the engine with which it is equipped being at 95% or more of its max= imum test speed in the highest available gear ratio.

Non-eligible vehicles

(4) The vehicles referred to in subsections (1.3) and (3) are not eligible for participation in the CO₂ emission credit system set out in sections 34 to 47.

Weight reduction technologies

(4.1) For greater certainty, CO₂ emission credits for weight reduction technologies other than those that are referred to in section 520(e) of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR may be obtained under section 41.

Election to conform to standards for heavier vehicles

(5) For any given vehicle referred to in subsection (1) or (1.1), a company may elect to have the vehicle conform to the emission standards set out in subsection (1) or (1.1) that are applicable to a vehicle service class that includes vehicles that are heavier than those included in the vehicle service class to which the vehicle belongs, for a period that is equivalent to the useful life of those heavier vehicles, instead of the standards set out in subsection (1) or (1.1) that are applicable to the vehicle service class to which the vehicle belongs.

(2) The portion of subsection 26(6) of the Regulations before paragraph (c) is replaced by the following:

Alternative standards

(6) In the case of vocational vehicles and cab-complete vocational vehicles that are equipped with a sparkignition engine, a company may elect to have one or more of its vehicles conform to the standards referred to in sections 20 to 23 that are applicable to Class 2B and Class 3 heavy-duty vehicles, taking into account section 1819(j) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, instead of the standards set out in subsection (1) or (1.1) and sections 29 and 30, if the following conditions are met:

(a) those vehicles are grouped into the fleet referred to in subparagraph 18(3)(a)(i);
(b) the company participates in the CO₂ emission credit system set out in sections 34 to 47 as if the vocational vehicles and cab-complete vocational vehicles were Class 2B or Class 3 heavy-duty vehicles that are subject to the standards referred to in sections 20 to 23; and

(3) Subsections 26(7) to (9) of the Regulations are replaced by the following:

Calculation using fleets and subfleets

(7) A company may, instead of complying with subsection (1), (1.1) or (1.2) for all of its vocational vehicles and incomplete vocational vehicles of a given model year, elect to group those vocational vehicles and incomplete vocational vehicles into fleets or subfleets, as the case may be, in accordance with section 18 and participate in the CO₂ emission credit system set out in sections 34 to 47.

Calculation — election under subsection (5)

(7.1) If a company makes an election under subsection (5) in respect of a vocational vehicle or incomplete vocational vehicle, the company may group all of its vocational vehicles and incomplete vocational vehicles of a given model year into fleets or subfleets, as the case may be, in accordance with section 18 and participate in the CO₂ emission credit system set out in sections 34 to 47, but must not obtain any credits or additional credits in respect of the vehicles that conform to that standard, except in accordance with sections 34 to 41 in the following cases:

(a) if the company elects to have all of its vocational vehicles or incomplete vocational vehicles of a given service class and model year conform to the standards that apply in respect of a vehicle service class that includes vehicles that are heavier than those included in the vehicle service class to which the vehicles belong, for a period that is equivalent to the useful life of those heavier vehicles, the vehicles must be grouped in the same fleet or subfleet, as the case may be, as those heavier vehicles; or
(b) if the company elects to have one or more of its medium heavy-duty vehicles that are or are to become Class 8 hybrid vehicles equipped with a light heavy-duty engine or medium heavy-duty engine conform to the compression-ignition engine standards that apply in respect of vehicles of the heavy heavy-duty vehicle service class, for a period that is equivalent to the useful life of those heavier vehicles, the vehicles must be grouped in the same fleet or subfleet, as the case may be, as those heavier vehicles.

Vehicles exceeding standard under subsection (5)

(7.2) If a company makes an election under subsection (5) in respect of one or more of its vocational vehicles or incomplete vocational vehicles and the CO₂ emission rate of one or more of those vehicles exceeds the CO₂ emission standard that applies in respect of the vehicle service class that includes vehicles that are heavier than those included in the vehicle service class to which the vehicles belong, the vehicles must be grouped in the same fleet or subfleet, as the case may be, as those heavier vehicles in accordance with section 18 and the company must participate in the CO₂ emission credit system set out in sections 34 to 47.

Family emission limit

(8) For the purposes of subsections (7) to (7.2), every vocational vehicle and incomplete vocational vehicle included within a fleet or subfleet must conform to the CO₂ family emission limit for the fleet or subfleet, as the case may be.

29 (1) Subsections 27(1) to (5) of the Regulations are replaced by the following:

CO₂ emission standards — 2014 to 2020 model years

27 (1) Subject to subsections (7) and (8) and section 28, for the 2014 to 2020 model years, every tractor and incomplete tractor of a class referred to in column 1 of the table to this subsection and possessing the characteristics referred to in column 2 must, for the duration of its useful life, have a CO₂ emission rate that does not exceed the CO₂ emission standard set out in column 3 or 4 for the model year in question.

TABLE

Item	Column 1 Class	Column 2 Characteristics	Column 3 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2014 to 2016 Model Years	Column 4 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2017 to 2020 Model Years
1	Class 7	Low-roof	107	104
2	Class 7	Mid-roof	119	115
3	Class 7	High-roof	124	120
4	Class 8	Low-roof with day cab	81	80
5	Class 8	Low-roof with sleeper cab	68	66
6	Class 8	Mid-roof with day cab	88	86
7	Class 8	Mid-roof with sleeper cab	76	73
8	Class 8	High-roof with day cab	92	89
9	Class 8	High-roof with sleeper cab	75	72

CO₂ emission standards — 2021 model year and subsequent model years

(1.1) Subject to subsections (1.2), (7) and (8) and section 28, for the 2021 model year and subsequent model years, every tractor and incomplete tractor of a class referred to in column 1 of the table to one of the following paragraphs and possessing the characteristics referred to in column 2 must, for the duration of its useful life, have a CO₂ emission rate that does not exceed the CO₂ emission standard set out in column 3, 4 or 5 of that table for the model year in question:

(a) in the case of a tractor or incomplete tractor that has a GCWR of less than 43 998 kg (97,000 pounds),

TABLE

Item	Column 1 Class	Column 2 Characteristics	Column 3 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2021 to 2023 Model Years	Column 4 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2024 to 2026 Model Years	Column 5 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2027 and Subsequent Model Years
1	Class 7	Low-roof	105.5	99.8	96.2
2	Class 7	Mid-roof	113.2	107.1	103.4
3	Class 7	High-roof	113.5	106.6	100.0
4	Class 8	Low-roof with day cab	80.5	76.2	73.4
5	Class 8	Low-roof with sleeper cab	72.3	68.0	64.1
6	Class 8	Mid-roof with day cab	85.4	80.9	78.0
7	Class 8	Mid-roof with sleeper cab	78.0	73.5	69.6
8	Class 8	High-roof with day cab	85.6	80.4	75.7
9	Class 8	High-roof with sleeper cab	75.7	70.7	64.3

(b) in the case of a tractor or incomplete tractor that has a GCWR of 43 998 kg (97,000 pounds) or more, but less than 54 431 kg (120,000 pounds), or

TABLE

Item	Column 1 Class	Column 2 Characteristics	Column 3 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2021 to 2023 Model Years	Column 4 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2024 to 2026 Model Years	Column 5 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2027 and Subsequent Model Years
1	Class 8	Low-roof with day cab	82.8	79.1	76.6
2	Class 8	Low-roof with sleeper cab	74.8	71.2	67.8
3	Class 8	Mid-roof with day cab	87.9	84.0	81.4
4	Class 8	Mid-roof with sleeper cab	80.8	76.9	73.6
5	Class 8	High-roof with day cab	88.2	83.5	79.0
6	Class 8	High-roof with sleeper cab	78.4	73.9	68.0

(c) in the case of a tractor or incomplete tractor that has a GCWR of 54 431 kg (120,000 pounds) or more,

TABLE

Item	Column 1 Class	Column 2 Characteristics	Column 3 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2021 to 2023 Model Years	Column 4 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2024 to 2026 Model Years	Column 5 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2027 and Subsequent Model Years
1	Class 8	Low-roof with day cab	53.5	50.8	48.9
2	Class 8	Low-roof with sleeper cab	47.1	44.5	42.4
3	Class 8	Mid-roof with day cab	55.6	52.8	50.8
4	Class 8	Mid-roof with sleeper cab	49.6	46.9	44.7
5	Class 8	High-roof with day cab	54.5	51.4	48.6
6	Class 8	High-roof with sleeper cab	47.1	44.2	41.0

Alternative standards — heavy-haul tractors

(1.2) For the 2021 model year and subsequent model years, a company may elect to have one or more of its heavy-haul tractors and incomplete tractors that are to become heavy-haul tractors conform, for the duration of their useful life, to a CO₂ emission rate that does not exceed the following CO₂ emission standard instead of having them conform to the applicable standard set out in paragraph (1.1)(c):

(a) for the 2021 to 2023 model years, 52.4 grams of CO₂ per short ton-mile;
(b) for the 2024 to 2026 model years, 50.2 grams of CO₂ per short ton-mile; and
(c) for the 2027 model year and subsequent model years, 48.3 grams of CO₂ per short ton-mile.

Modelling CO₂ emissions to demonstrate compliance

(2) The CO₂ emission rate must be determined in accordance with sections 501 and 520 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR,

(a) using the version of the GEM computer simulation model applicable for the model year in question; and
(b) in the case of tractors and incomplete tractors of the 2021 model year or a subsequent model year that are plug-in hybrid vehicles or fuel cell vehicles powered by any fuel other than hydrogen, taking into account the powertrain testing procedure set out in section 550 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR.

Reference in CFR — interpretation

(3) For the purposes of subsection (2), a reference in the CFR to “regulatory subcategory” is to be read as a reference to the fleet referred to in one of subparagraphs 18(3)(a)(ix) to (xvi) that includes the same type of tractors and incomplete tractors as those to which the simulation model is being applied but, in the case of tractors and incomplete tractors of the 2021 model year or a subsequent model year that have a GCWR of 43 998 kg (97,000 pounds) or more, but less than 54 431 kg (120,000 pounds), is to be read as a reference to the fleet referred to in subparagraph 18(3)(a)(xiii).

Electric vehicles

(4) For the purposes of this section and sections 34 to 47, the CO₂ emission rate of tractors and incomplete tractors of the 2021 model year or a subsequent model year that are electric vehicles is zero grams of CO₂ per short ton-mile.

Weight reduction technologies

(5) For greater certainty, CO₂ emission credits for weight reduction technologies other than those that are referred to in section 520(e) of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR may be obtained under section 41.

(2) The portion of subsection 27(6) of the Regulations before paragraph (b) is replaced by the following:

Alternative method for measuring drag area

(6) Instead of the coastdown method referred to in section 525 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR, a company may elect to measure the tractor’s drag area (C_dA) in accordance with any other method referred to in that section if the test results are adjusted to correlate with test results that would be obtained if the coastdown method were used, as specified in that section, and if

(a) in the case of a tractor that is covered by an EPA certificate, the election has been approved by the EPA for that tractor and the company provides the Minister with evidence of the EPA approval; and

(3) Subsections 27(7) to (10) of the Regulations are replaced by the following:

Election to conform to standards for heavier tractors

(7) For any given tractor or incomplete tractor referred to in subsection (1) or (1.1) that is or is to become a Class 7 tractor, a company may elect to have it conform to the emission standards set out in subsection (1) or (1.1) that are applicable to a Class 8 tractor of the same model year with the same characteristics, for a period that is equivalent to the useful life of those Class 8 tractors, instead of the standards set out in subsection (1) or (1.1) that are applicable to Class 7 tractors.

Calculation using fleets and subfleets

(8) A company may, instead of complying with subsection (1), (1.1) or (1.2) for all of its tractors and incomplete tractors of a given model year, elect to group those tractors and incomplete tractors into fleets or subfleets, as the case may be, in accordance with section 18 and participate in the CO₂ emission credit system set out in sections 34 to 47.

Calculation — election under subsection (7)

(8.1) If a company makes an election under subsection (7) in respect of a tractor or incomplete tractor, the company may group all of its tractors and incomplete tractors of a given model year into fleets or subfleets, as the case may be, in accordance with section 18 and participate in the CO₂ emission credit system set out in sections 34 to 47, but must not obtain any credits or additional credits in respect of the vehicles that conform to that standard, except in accordance with sections 34 to 41 in the following cases:

(a) if the company elects to have all of its tractors or incomplete tractors that are or are to become Class 7 tractors conform to the standards that apply in respect of a Class 8 tractor of the same model year with the same characteristics, for a period that is equivalent to the useful life of those Class 8 tractors, the tractors must be grouped in the same fleet or subfleet, as the case may be, as those Class 8 tractors; and
(b) if the company elects to have one or more of its tractors or incomplete tractors that are or are to become Class 7 tractors with a heavy heavy-duty engine and a single rear axle conform to the standards that apply in respect of a Class 8 tractor of the same model year with the same characteristics, for a period that is equivalent to the useful life of those Class 8 tractors, the tractors must be grouped in the same fleet or subfleet, as the case may be, as those Class 8 tractors.

Tractors exceeding standards under subsection (7)

(8.2) If a company makes an election under subsection (7) in respect of one or more of its tractors or incomplete tractors and the CO₂ emission rate of one or more of those tractors exceeds the CO₂ emission standard that applies in respect of Class 8 tractors of the same model year with the same characteristics, the tractors must be grouped in the same fleet or subfleet, as the case may be, as those Class 8 tractors in accordance with section 18 and the company must participate in the CO₂ emission credit system set out in sections 34 to 47.

Family emission limit

(9) For the purposes of subsections (8) to (8.2), every tractor and incomplete tractor included within a fleet or subfleet must conform to the CO₂ family emission limit for the fleet or subfleet, as the case may be.

30 The heading before section 28 of the French version of the Regulations is replaced by the following:

Tracteurs routiers spécialisés

31 Section 28 of the Regulations is replaced by the following:

CO₂ emission standards

28 (1) Subject to subsection (2), section 27 applies to vocational tractors.

Maximum number

(2) A company that manufactures or imports vocational tractors for sale in Canada may elect to have a maximum of 5 250 of the Class 7 and Class 8 vocational tractors that it manufactures or imports in any period of three consecutive model years conform to the emission standards applicable to vocational vehicles instead of those applicable to vocational tractors, if it reports the election in its end of model year report.

32 (1) Subsection 29(1) of the Regulations is replaced by the following:

Standards

29 (1) Subject to paragraph 25(d), every heavy-duty engine that is a compression-ignition engine of the 2014 model year or a subsequent model year and every heavy-duty engine that is a spark-ignition engine of the 2016 model year or a subsequent model year must, for the duration of their useful life, have N₂O and CH₄ emission values that do not exceed 0.10 g/BHP-hr.

(2) The portion of subsection 29(4) of the Regulations before the description of C is replaced by the following:

Fleet calculation

(4) A company that manufactures or imports engines referred to in subsection (1) whose N₂O emission value or CH₄ emission value exceeds the emission standard set out in that subsection must group those engines of a given model year into fleets in accordance with section 18 and must calculate the N₂O or CH₄ emission deficit, as the case may be, for each of those fleets, expressed in megagrams of CO₂, using the formula

where

A is 0.10 g/BHP-hr;
B is the N₂O or CH₄ family emission limit for the fleet, as the case may be, expressed in g/BHP-hr;

(3) The descriptions of D to F in subsection 29(4) of the Regulations are replaced by the following:

D is the transient cycle conversion factor calculated in accordance with the applicable variable “CF” in section 705(b) of Title 40, chapter I, subchapter U, part 1036, subpart H, of the CFR, except that a reference to “production volumes” in that section must be read as a reference to “number of engines of that engine family that a company imports or manufactures in Canada for the purpose of sale in Canada to the first retail purchaser”;
E is the engine’s useful life, expressed in miles; and
F is the global warming potential and is equal to the following number of CO₂ emission credits, expressed in megagrams of CO₂, needed to offset a deficit of N₂O or CH₄:
- (a) for each megagram of N₂O, 298; and
- (b) for each megagram of CH₄,
  - (i) for the 2020 model year and earlier model years, 25, and
  - (ii) for the 2021 model year and subsequent model years, 34.

(4) Subsection 29(5) of the Regulations is replaced by the following:

Separate calculation

(4.1) For the purposes of subsection (4), if both the N₂O emission value and the CH₄ emission value exceed 0.10 g/BHP-hr, the N₂O and CH₄ emission deficits must be calculated separately.

Family emission limit

(5) For the purposes of subsection (4), every heavy-duty engine within a fleet must conform to the N₂O or CH₄ family emission limit for the fleet.

(5) The portion of subsection 29(8) of the Regulations before the formula is replaced by the following:

Credits for low N₂O emissions

(8) If a company’s heavy-duty engines from a fleet of the 2014, 2015 or 2016 model year conform to an N₂O family emission limit that is less than 0.04 g/BHP-hr, the company may obtain CO₂ emission credits for the purpose of participation in the CO₂ emission credit system set out in sections 34 to 47. The credits must be calculated using the following formula, for each fleet, and be expressed in megagrams of CO₂:

(6) The descriptions of A and B in subsection 29(8) of the Regulations are replaced by the following:

A is 0.04 g/BHP-hr;
B is the N₂O family emission limit for the fleet, expressed in g/BHP-hr;

(7) The descriptions of D and E in subsection 29(8) of the Regulations are replaced by the following:

D is the transient cycle conversion factor calculated in accordance with the applicable variable “CF” in section 705(b) of Title 40, chapter I, subchapter U, part 1036, subpart H, of the CFR, except that a reference to “production volumes” in that section must be read as a reference to “number of engines of that engine family that a company imports or manufactures in Canada for the purpose of sale in Canada to the first retail purchaser”;
E is the engine’s useful life, expressed in miles; and

33 Section 30 of the Regulations is replaced by the following:

Standard

30 (1) Subject to subsection (2), paragraph 25(d) and sections 31 and 33, every heavy-duty engine of a given model year must, for the duration of its useful life, have a CO₂ emission value that does not exceed the following CO₂ emission standard:

(a) in the case of a spark-ignition engine of the 2016 to 2020 model years, 627 g/BHP-hr;
(b) in the case of a spark-ignition engine of the 2021 model year or a subsequent model year other than a heavy heavy-duty engine, 627 g/BHP-hr;
(c) in the case of a compression-ignition engine of the 2014 to 2020 model years that is of a type referred to in column 1 of the table to this paragraph, the standard set out in column 2 or 3 for the model year in question; or

TABLE

Item	Column 1 Type	Column 2 CO₂ Emission Standard (g/BHP-hr) for 2014 to 2016 Model Years	Column 3 CO₂ Emission Standard (g/BHP-hr) for 2017 to 2020 Model Years
1	Light heavy-duty engine	600	576
2	Medium heavy-duty engine designed to be used in vocational vehicles	600	576
3	Heavy heavy-duty engine designed to be used in vocational vehicles	567	555
4	Medium heavy-duty engine designed to be used in tractors	502	487
5	Heavy heavy-duty engine designed to be used in tractors	475	460

(d) in the case of a compression-ignition engine of the 2021 model year or a subsequent model year or a heavy heavy-duty engine that is a spark-ignition engine of the 2021 model year or a subsequent model year that is of a type referred to in column 1 of the table to this paragraph, the standard set out in column 2, 3 or 4 for the model year in question.

TABLE

Item	Column 1 Type	Column 2 CO₂ Emission Standard (g/BHP-hr) for 2021 to 2023 Model Years	Column 3 CO₂ Emission Standard (g/BHP-hr) for 2024 to 2026 Model Years	Column 4 CO₂ Emission Standard (g/BHP-hr) for 2027 and Subsequent Model Years
1	Light heavy-duty engine	563	555	552
2	Medium heavy-duty engine designed to be used in vocational vehicles	545	538	535
3	Heavy heavy-duty engine designed to be used in vocational vehicles	513	506	503
4	Medium heavy-duty engine designed to be used in tractors	473	461	457
5	Heavy heavy-duty engine designed to be used in tractors	447	436	432

Election — spark-ignition engines

(2) A company may elect to have any of its spark-ignition engines referred to in paragraph (1)(a) or (b) conform to the emission standard set out in paragraph (1)(c) or (d) that is applicable to compression-ignition engines of the same model year, as if they were compression-ignition engines, instead of the standard set out in paragraph (1)(a) or (b).

34 (1) Subsections 31(1) and (2) of the Regulations are replaced by the following:

Alternative emission standard — 2014 to 2016 model years

31 (1) Heavy-duty engines that are compression-ignition engines of the 2014 to 2016 model years may conform to the CO₂ emission standard referred to in section 620 of Title 40, chapter I, subchapter U, part 1036, subpart G, of the CFR instead of the standard set out in paragraph 30(1)(c) if there are no remaining credits that can be used under sections 42 to 46 for the averaging set of those engines for the model years in question.

Alternative emission standard — 2013 to 2016 model years

(2) Heavy-duty engines that are compression-ignition engines of the 2013 to 2016 model years may conform to the CO₂ emission standard referred to in section 150(e) of Title 40, chapter I, subchapter U, part 1036, subpart B, of the CFR instead of the standard set out in paragraph 30(1)(c) or in subsection (1).

(2) Section 31 of the Regulations is amended by adding the following after subsection (4):

Alternative emission standard — 2024 to 2026 model years

(5) For the 2024 to 2026 model years, a company may elect to have its medium heavy-duty engines or heavy heavy-duty engines conform to the applicable alternative CO₂ emission standard referred to in section 150(p)(2) of Title 40, chapter I, subchapter U, part 1036, subpart B, of the CFR instead of the applicable standard set out in paragraph 30(1)(d).

35 The portion of subsection 32(1) of the Regulations before paragraph (a) is replaced by the following:

Value

32 (1) The CO₂ emission value for the following heavy-duty engines corresponds to the emission value of the tested engine configuration referred to in section 235(a) of Title 40, chapter I, subchapter U, part 1036, subpart C, of the CFR for the engine family, measured in accordance with the following duty cycles, taking into account sections 108(d) to (f) and 150(g) and (m) of subpart B, sections 235(b) and 241(c) and (d) of subpart C and subparts E and F of Title 40, chapter I, subchapter U, part 1036, of the CFR:

36 Section 33 of the Regulations is replaced by the following:

Calculation using fleets and subfleets

33 (1) A company may, instead of complying with section 30 or subsection 31(2) or (5), as the case may be, for all of its heavy-duty engines of a given model year, elect to group those engines into fleets in accordance with section 18 and participate in the CO₂ emission credit system set out in sections 34 to 47.

CO₂ family certification level

(2) For the purposes of subsection (1), every heavy-duty engine within a fleet must conform to the CO₂ family certification level for the fleet.

Trailers

CO₂ emission standards — full-aero box van trailers

33.1 (1) Subject to subsection (5), every full-aero box van trailer of the 2020 model year or a subsequent model year of a type referred to in column 1 of the table to this subsection must, for the duration of its useful life, have a CO₂ emission rate that does not exceed the CO₂ emission standard set out in column 2, 3, 4 or 5 for the model year in question.

TABLE

Item	Column 1 Type	Column 2 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2020 Model Year	Column 3 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2021 to 2023 Model Years	Column 4 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2024 to 2026 Model Years	Column 5 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2027 and Subsequent Model Years
1	Short dry box van trailer	125.4	123.7	120.9	118.8
2	Long dry box van trailer	81.3	78.9	77.2	75.7
3	Short refrigerated box van trailer	129.1	127.5	124.7	122.7
4	Long refrigerated box van trailer	83.0	80.6	78.9	77.4

CO₂ emission standards — partial-aero box van trailers

(2) For the 2020 model year and subsequent model years, every partial-aero box van trailer of a type referred to in column 1 of the table to this subsection must, for the duration of its useful life, have a CO₂ emission rate that does not exceed the CO₂ emission standard set out in column 2 or 3 for the model year in question.

TABLE

Item	Column 1 Type	Column 2 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2020 Model Year	Column 3 CO₂ Emission Standard (grams of CO₂ per short ton-mile) for 2021 and Subsequent Model Years
1	Short dry box van trailer	125.4	123.7
2	Long dry box van trailer	81.3	80.6
3	Short refrigerated box van trailer	129.1	127.5
4	Long refrigerated box van trailer	83.0	82.3

Demonstrating compliance

(3) The CO₂ emission rate for each trailer must be determined in accordance with sections 501 and 515 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR, taking into account section 150(x) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR.

Alternative method for measuring drag area

(4) Instead of the default method referred to in section 526 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR, a company may elect to measure a trailer’s drag area (C_dA) in accordance with any other method referred to in that section, if the test results are adjusted to correlate with the test results that would be obtained if the default method were used, as specified in that section, and if

(a) in the case of a trailer that is covered by an EPA certificate, the election has been approved by the EPA for that trailer and the company provides the Minister with evidence of the EPA approval; and
(b) in the case of a trailer that is not covered by an EPA certificate, the company provides the Minister with evidence demonstrating that the alternative method for measuring the trailer’s drag area referred to in this subsection is more representative of that trailer’s drag area.

Calculation using fleets and subfleets

(5) For the 2027 model year and subsequent model years, a company may elect to comply with subsection (1) by grouping all of its full-aero box van trailers of a given model year into fleets or subfleets, as the case may be, in accordance with section 18 and participating in the CO₂ emission credit system set out in sections 47.1 to 47.5.

Family emission limit

(6) For the purposes of subsection (5), every full-aero box van trailer included within a fleet or subfleet, as the case may be, that is of a type referred to in column 1 of the table to this subsection must, for the duration of its useful life, conform to a CO₂ family emission limit that does not exceed the CO₂ emission limit set out in column 2.

TABLE

Item	Column 1 Type	Column 2 CO₂ Emission Limit (grams of CO₂ per short ton-mile)
1	Short dry box van trailer	125.4
2	Long dry box van trailer	81.3
3	Short refrigerated box van trailer	129.1
4	Long refrigerated box van trailer	83.0

37 The heading “CO₂ Emission Credit System” before section 34 of the Regulations is replaced by the following:

CO₂ Emission Credit System — Vehicles and Engines

38 Section 34 of the Regulations is replaced by the following:

Credits

34 (1) For the purposes of subparagraph 162(1)(b)(i) of the Act and subject to subsections 26(7.1) and 27(8.1), a company obtains CO₂ emission credits if the CO₂ emissions for a fleet or subfleet, as the case may be, of heavy-duty vehicles or heavy-duty engines of a given model year are lower than the CO₂ emission standard applicable

(a) in the case of a fleet of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, to that fleet for the model year in question; and
(b) in any other case, to the vehicles or engines of that fleet or subfleet, as the case may be, for the model year in question.

Deficits

(2) A company incurs deficits if the CO₂ emissions for a fleet or subfleet, as the case may be, of heavy-duty vehicles or heavy-duty engines of a given model year are higher than the CO₂ emission standard applicable

(a) in the case of a fleet of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, to that fleet for the model year in question; and
(b) in any other case, to the vehicles or engines of that fleet or subfleet, as the case may be, for the model year in question.

End of model year report

(3) The company must report any credits obtained and any deficits incurred in its end of model year report in accordance with section 48.

39 (1) The description of ECD in paragraph 35(1)(a) of the Regulations is replaced by the following:

ECD is the number of credits, if the result is positive, or the number of deficits, if the result is negative, expressed in megagrams of CO₂,

(2) The description of D in paragraph 35(1)(a) of the Regulations is replaced by the following:

D is the useful life of the vehicles of the fleet, expressed in miles;

(3) The descriptions of ECD to E in paragraph 35(1)(b) of the Regulations are replaced by the following:

ECD is the number of credits, if the result is positive, or the number of deficits, if the result is negative, expressed in megagrams of CO₂,
A is the CO₂ emission standard under subsection 26(1), (1.1) or (1.2) that applies to the vehicles of the fleet or subfleet, as the case may be, expressed in grams of CO₂ per short ton-mile,
B is the CO₂ family emission limit for the fleet or subfleet, as the case may be, expressed in grams of CO₂ per short ton-mile,
C is the payload for the class of vehicles, which is
- (i) 2.85 short tons for light heavy-duty vehicles,
- (ii) 5.6 short tons for medium heavy-duty vehicles, and
- (iii) 7.5 short tons for heavy heavy-duty vehicles,
D is the number of vehicles in the fleet or subfleet, as the case may be, and
E is the useful life of the vehicles of the fleet or subfleet, as the case may be, expressed in miles;

(4) The descriptions of ECD to E in paragraph 35(1)(c) of the Regulations are replaced by the following:

ECD is the number of credits, if the result is positive, or the number of deficits, if the result is negative, expressed in megagrams of CO₂,
A is the CO₂ emission standard under subsection 27(1), (1.1) or (1.2) that applies to the tractors and incomplete tractors of the fleet or subfleet, as the case may be, expressed in grams of CO₂ per short ton-mile,
B is the CO₂ family emission limit for the fleet or subfleet, as the case may be, expressed in grams of CO₂ per short ton-mile,
C is the payload for the tractors and incomplete tractors, which is
- (i) 12.5 short tons for Class 7 tractors and incomplete tractors,
- (ii) 19 short tons for Class 8 tractors and incomplete tractors of the 2020 model year or an earlier model year and for Class 8 tractors and incomplete tractors of the 2021 model year or a subsequent model year that have a GCWR of less than 54 431 kg (120,000 pounds), and
- (iii) 43 short tons for Class 8 tractors and incomplete tractors of the 2021 model year or a subsequent model year that have a GCWR of 54 431 kg (120,000 pounds) or more,
D is the number of tractors and incomplete tractors in the fleet or subfleet, as the case may be, and
E is the useful life of the tractors or incomplete tractors of the fleet or subfleet, as the case may be, expressed in miles; and

(5) The descriptions of ECD to C in paragraph 35(1)(d) of the Regulations are replaced by the following:

ECD is the number of credits, if the result is positive, or the number of deficits, if the result is negative, expressed in megagrams of CO₂,
A is the CO₂ emission standard that applies to the fleet of heavy-duty engines under section 30 or subsection 31(2) or (5), as the case may be, expressed in grams per brake horsepower-hour,
B is the CO₂ family certification level for the fleet, subject to subsection (3), expressed in grams of CO₂ per brake horsepower-hour,
C is the transient cycle conversion factor calculated in accordance with the applicable variable “CF” in section 705(b) of Title 40, chapter I, subchapter U, part 1036, subpart H, of the CFR, except that a reference to “production volumes” in that section must be read as a reference to “number of engines of that engine family that a company imports or manufactures in Canada for the purpose of sale in Canada to the first retail purchaser”,

(6) The description of E in paragraph 35(1)(d) of the Regulations is replaced by the following:

E is the useful life of the engines of the fleet, expressed in miles.

(7) Subsection 35(2) of the Regulations is repealed.

40 Section 36 of the Regulations is replaced by the following:

Obtaining additional credits

36 (1) A company may obtain additional credits for vehicles or engines as follows:

(a) for the 2020 model year and earlier model years, in accordance with sections 37 to 41;
(b) for the 2021 to 2027 model years, in accordance with sections 40.1 and 41; and
(c) for the 2028 model year and subsequent model years, in accordance with section 41.

Limitation

(2) Additional credits may only be obtained once for a vehicle or engine with regard to the same type of greenhouse gas emission reduction technology.

41 The descriptions of emission rate A and emission rate B in subsection 38(2) of the Regulations are replaced by the following:

emission rate A: is the emission test result, expressed in grams of CO₂ per short ton-mile, obtained by an equivalent conventional vehicle when tested using the duty cycle test set out in section 510 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR, taking into account section 501 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR; and
emission rate B: is the emission test result, expressed in grams of CO₂ per short ton-mile, obtained by the vehicle in question, which is

(a) for an electric vehicle, zero grams of CO₂ per short ton-mile, and
(b) for any other vehicle, subject to subsection (3), the result obtained by the vehicle when tested using the duty cycle test set out in section 510 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR, taking into account sections 501 and 540 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR; and

42 (1) The descriptions of A and B in subsection 39(2) of the Regulations are replaced by the following:

A is the benefit obtained from A to B testing, expressed in grams of CO₂ per short ton-mile, determined in accordance with,
- (a) in the case of a post-transmission hybrid system, section 555 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR, taking into account section 525 of Title 40, chapter I, subchapter U, part 1036, subpart F, of the CFR, and
- (b) in the case of a pre-transmission hybrid system, part 1065 of Title 40, chapter I, subchapter U, of the CFR, or section 555 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR, taking into account section 525 of Title 40, chapter I, subchapter U, part 1036, subpart F, of the CFR;
B is the payload for the class of vocational vehicles, incomplete vocational vehicles, tractors or incomplete tractors, as the case may be, which is
- (a) 2.85 short tons for vocational vehicles that are light heavy-duty vehicles and incomplete vocational vehicles that are to become light heavy-duty vehicles,
- (b) 5.6 short tons for vocational vehicles that are medium heavy-duty vehicles and incomplete vocational vehicles that are to become medium heavy-duty vehicles,
- (c) 7.5 short tons for vocational vehicles that are heavy heavy-duty vehicles and incomplete vocational vehicles that are to become heavy heavy-duty vehicles,
- (d) 12.5 short tons for Class 7 tractors and incomplete tractors, and
- (e) 19 short tons for Class 8 tractors and incomplete tractors;

(2) The description of D in subsection 39(2) of the Regulations is replaced by the following:

D is the useful life of the vehicles of the fleet or subfleet, as the case may be, expressed in miles.

43 (1) The portion of the description of A in subsection 40(1) of the Regulations before paragraph (a) is replaced by the following:

A is the benefit obtained from A to B testing, expressed in grams of CO₂ per brake horsepower-hour, determined in accordance with section 615 of Title 40, chapter I, subchapter U, part 1036, subpart G of the CFR, or using an alternative procedure if,

(2) The description of B in subsection 40(1) of the Regulations is replaced by the following:

B is the transient cycle conversion factor calculated in accordance with the applicable variable “CF” in section 705(b) of Title 40, chapter I, subchapter U, part 1036, subpart H, of the CFR, except that a reference to “production volumes” in that section must be read as a reference to “number of engines of that engine family that a company imports or manufactures in Canada for the purpose of sale in Canada to the first retail purchaser”;

(3) The description of D in subsection 40(1) of the Regulations is replaced by the following:

D is the useful life of the engines of the fleet, expressed in miles.

44 The Regulations are amended by adding the following after section 40:

Credit multipliers — 2021 to 2027 model years

40.1 A company that obtains credits under section 35 for its heavy-duty vehicles of the 2021 to 2027 model years that are plug-in hybrid vehicles, electric vehicles or fuel cell vehicles may multiply the number of credits obtained for those vehicles by the following number:

(a) 4 in the case of plug-in hybrid vehicles;
(b) 5 in the case of electric vehicles; and
(c) 5.5 in the case of fuel cell vehicles.

45 (1) The description of C in paragraph 41(1)(a) of the Regulations is replaced by the following:

C is the useful life of the vehicles of the fleet, expressed in miles;

(2) The descriptions of C to E in subparagraph 41(1)(b)(i) of the Regulations are replaced by the following:

C is the number of vehicles manufactured with the innovative technology in question in the fleet or subfleet, as the case may be,
D is the payload for the class of vehicles, which is
- (A) 2.85 short tons for vocational vehicles that are light heavy-duty vehicles and incomplete vocational vehicles that are to become light heavy-duty vehicles,
- (B) 5.6 short tons for vocational vehicles that are medium heavy-duty vehicles and incomplete vocational vehicles that are to becomes medium heavy-duty vehicles,
- (C) 7.5 short tons for vocational vehicles that are heavy heavy-duty vehicles and incomplete vocational vehicles that are to become heavy heavy-duty vehicles,
- (D) 12.5 short tons for Class 7 tractors and incomplete tractors,
- (E) 19 short tons for Class 8 tractors and incomplete tractors of the 2020 model year or an earlier model year and for Class 8 tractors and incomplete tractors of the 2021 model year or a subsequent model year that have a GCWR of less than 54 431 kg (120,000 pounds), and
- (F) 43 short tons for Class 8 tractors and incomplete tractors of the 2021 model year or a subsequent model year that have a GCWR of 54 431 kg (120,000 pounds) or more, and
E is the useful life of the vehicles of the fleet or subfleet, as the case may be, expressed in miles, or

(3) The formula in clause 41(1)(b)(ii)(A) of the Regulations is replaced by the following:

(4) The descriptions of A to F in clause 41(1)(b)(ii)(A) of the Regulations are replaced by the following:

A is the CO₂ emission standard under subsection 26(1) or (1.1) that applies to the vocational vehicles and incomplete vocational vehicles of the fleet or subfleet, as the case may be, expressed in grams of CO₂ per short ton-mile,
B is the CO₂ family emission limit for the fleet or subfleet, as the case may be, expressed in grams of CO₂ per short ton-mile,
C is the improvement factor calculated in accordance with sections 610(b)(1) and (c) of Title 40, chapter I, subchapter U, part 1037, subpart G, of the CFR, for the fleet or subfleet, as the case may be, of vocational vehicles and incomplete vocational vehicles or, in the case of vocational vehicles and incomplete vocational vehicles of the 2018 to 2020 model years, is the applicable improvement factor set out in section 150(y)(2) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR, for the fleet or subfleet, as the case may be,
D is the payload for the class of vocational vehicles and incomplete vocational vehicles, which is
- (I) 2.85 short tons for vocational vehicles that are light heavy-duty vehicles and incomplete vocational vehicles that are to become light heavy-duty vehicles,
- (II) 5.6 short tons for vocational vehicles that are medium heavy-duty vehicles and incomplete vocational vehicles that are to become medium heavy-duty vehicles, and
- (III) 7.5 short tons for vocational vehicles that are heavy heavy-duty vehicles and incomplete vocational vehicles that are to become heavy heavy-duty vehicles,
E is the number of vocational vehicles and incomplete vocational vehicles manufactured with the innovative technology in question in the fleet or subfleet, as the case may be, and
F is the useful life of the vehicles of the fleet or subfleet, as the case may be, expressed in miles, or

(5) The formula in clause 41(1)(b)(ii)(B) of the Regulations is replaced by the following:

(6) The descriptions of A to F in clause 41(1)(b)(ii)(B) of the Regulations are replaced by the following:

A is the CO₂ emission standard under subsection 27(1), (1.1) or (1.2) that applies to the tractors and incomplete tractors of the fleet or subfleet, as the case may be, expressed in grams of CO₂ per short ton-mile,
B is the CO₂ family emission limit for the fleet or subfleet, as the case may be, expressed in grams of CO₂ per short ton-mile,
C is the improvement factor calculated in accordance with sections 610(b)(1) and (c) of Title 40, chapter I, subchapter U, part 1037, subpart G, of the CFR, for the fleet or subfleet, as the case may be, of tractors and incomplete tractors or, in the case of tractors and incomplete tractors of the 2018 to 2020 model years, is the applicable improvement factor set out in section 150(y)(2)(i) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR, for the fleet or subfleet, as the case may be,
D is the payload for the class of tractors, which is
- (I) 12.5 short tons for Class 7 tractors or incomplete tractors,
- (II) 19 short tons for Class 8 tractors and incomplete tractors of the 2020 model year or an earlier model year and for Class 8 tractors and incomplete tractors of the 2021 model year or a subsequent model year that have a GCWR of less than 54 431 kg (120,000 pounds), and
- (III) 43 short tons for Class 8 tractors and incomplete tractors of the 2021 model year or a subsequent model year that have a GCWR of 54 431 kg (120,000 pounds) or more,
E is the number of tractors and incomplete tractors manufactured with the innovative technology in question in the fleet or subfleet, as the case may be, and
F is the useful life of the tractors or incomplete tractors of the fleet or subfleet, as the case may be, expressed in miles; or

(7) The descriptions of D and E in subparagraph 41(1)(c)(i) of the Regulations are replaced by the following:

D is the payload, if applicable, for the class of vehicles, which is
- (A) 2.85 short tons for vocational vehicles that are light heavy-duty vehicles and incomplete vocational vehicles that are to become light heavy-duty vehicles,
- (B) 5.6 short tons for vocational vehicles that are medium heavy-duty vehicles and incomplete vocational vehicles that are to become medium heavy-duty vehicles,
- (C) 7.5 short tons for vocational vehicles that are heavy heavy-duty vehicles and incomplete vocational vehicles that are to become heavy heavy-duty vehicles,
- (D) 12.5 short tons for Class 7 tractors and incomplete tractors,
- (E) 19 short tons for Class 8 tractors and incomplete tractors of the 2020 model year or an earlier model year and for Class 8 tractors and incomplete tractors of the 2021 model year or a subsequent model year that have a GCWR of less than 54 431 kg (120,000 pounds), and
- (F) 43 short tons for Class 8 tractors and incomplete tractors of the 2021 model year or a subsequent model year that have a GCWR of 54 431 kg (120,000 pounds) or more, and
E is the useful life of the vehicles of the fleet, expressed in miles,

(8) The description of (A – B) in subparagraph 41(1)(c)(ii) of the English version of the Regulations is replaced by the following:

(A – B) is the difference between the in-use emission rate of the engine manufactured without the innovative technology and the in-use emission rate of the engine manufactured with the innovative technology, determined in accordance with engine dynamometer A to B testing of pairs of engines differing only with respect to the innovative technology in question and expressed in grams of CO₂ per brake horsepower-hour,

(9) The description of C in subparagraph 41(1)(c)(ii) of the Regulations is replaced by the following:

C is the transient cycle conversion factor calculated in accordance with the applicable variable “CF” in section 705(b) of Title 40, chapter I, subchapter U, part 1036, subpart H, of the CFR, except that a reference to “production volumes” in that section must be read as a reference to “number of engines of that engine family that a company imports or manufactures in Canada for the purpose of sale in Canada to the first retail purchaser”,

(10) The description of E in subparagraph 41(1)(c)(ii) of the Regulations is replaced by the following:

E is the useful life of the engines of the fleet, expressed in miles, or

(11) The formula in subparagraph 41(1)(c)(iii) of the Regulations is replaced by the following:

(12) The description of A in subparagraph 41(1)(c)(iii) of the English version of the Regulations is replaced by the following:

A is the CO₂ emission standard that applies to the fleet of heavy-duty engines under section 30 or subsection 31(2), as the case may be, expressed in grams of CO₂ per brake horsepower-hour,

(13) The description of B in subparagraph 41(1)(c)(iii) of the Regulations is replaced by the following:

B is the CO₂ family certification level for the fleet, subject to subsection 35(3), expressed in grams of CO₂ per brake horsepower-hour,

(14) The description of C in subparagraph 41(1)(c)(iii) of the English version of the Regulations is replaced by the following:

C is the improvement factor calculated in accordance with section 610(b)(1) of Title 40, chapter I, subchapter U, part 1036, subpart G, of the CFR, based on results of A to B testing, chassis A to B testing or in-use A to B testing of pairs of engines using an engine dynamometer or of pairs of vehicles equipped with the engines in question, as the case may be, differing only with respect to the innovative technology in question,

(15) The description of D in subparagraph 41(1)(c)(iii) of the Regulations is replaced by the following:

D is the transient cycle conversion factor calculated in accordance with the applicable variable “CF” in section 705(b) of Title 40, chapter I, subchapter U, part 1036, subpart H, of the CFR, except that a reference to “production volumes” in that section must be read as a reference to “number of engines of that engine family that a company imports or manufactures in Canada for the purpose of sale in Canada to the first retail purchaser”,

(16) The description of F in subparagraph 41(1)(c)(iii) of the Regulations is replaced by the following:

F is the useful life of the engines of the fleet, expressed in miles.

46 Section 42 of the Regulations is replaced by the following:

Calculation

42 The credits or deficits for each averaging set of heavy-duty vehicles or heavy-duty engines are calculated by adding the credits obtained and deficits incurred for all fleets and, if applicable, subfleets of that averaging set. The credits and deficits must be added together before rounding and the result must be rounded to the nearest megagram of CO₂.

47 Section 44 of the Regulations is replaced by the following:

Use of credits — time limitations

44 (1) For the purposes of section 45, credits obtained by a company for an averaging set of heavy-duty vehicles or heavy-duty engines of a given model year may be used only in respect of the same averaging set of heavy-duty vehicles or heavy-duty engines of

(a) a model year that is up to three model years before the model year for which the credits are obtained; or
(b) a model year that is up to five model years after the model year for which the credits are obtained.

Election — subsection 26(1.2)

(2) Paragraph (1)(b) does not apply in the case of vocational vehicles in respect of which a company has made the election referred to in subsection 26(1.2).

Exception — heavy-duty vehicles

(3) Despite paragraph (1)(b), credits obtained by a company for an averaging set of vocational vehicles that are light heavy-duty vehicles or medium heavy-duty vehicles of the 2018 to 2021 model years may be used only in respect of the same averaging set of heavy-duty vehicles of any subsequent model year, ending with the 2027 model year.

Exception — heavy-duty engines

(4) Despite paragraph (1)(b), credits obtained by a company for an averaging set of medium heavy-duty engines or heavy heavy-duty engines of the 2018 to 2024 model years may be used only in respect of the same averaging set of heavy-duty engines of any subsequent model year, ending with the 2030 model year.

48 Subsection 45(2) of the Regulations is replaced by the following:

Remaining credits

(2) Except in the case of an averaging set of vocational vehicles in respect of which a company has made the election referred to in subsection 26(1.2), a company may bank any remaining credits to offset a future deficit for that averaging set or it may transfer the remaining credits to another company.

Credit multiplier

(2.1) Credits obtained by a company for any of the averaging sets of the 2016 to 2020 model years referred to in paragraph (a) or (b) that are used to offset a deficit incurred for the same averaging set of the 2021 model year or a subsequent model year may be multiplied by

(a) 1.36, in the case of the averaging sets referred to in paragraph (b), (e) or (f) of the definition averaging set in subsection 1(1); and
(b) 1.25, in the case of the averaging set referred to in paragraph (a) of the definition averaging set in subsection 1(1).

49 Subsection 46(1) of the French version of the Regulations is replaced by the following:

Fusion ou acquisition

46 (1) Il incombe à l’entreprise issue d’une fusion d’entreprises ou qui en acquiert une autre de compenser tout déficit existant des entreprises fusionnées ou acquises.

50 Subsection 47(6) of the Regulations is replaced by the following:

Credit multiplier

(6) Early action credits obtained for vocational vehicles, tractors or heavy-duty engines may be multiplied by 1.5 if the company does not use the additional credit multiplier referred to in subsection 38(4), 39(3) or 40(2) for the same vehicles or engines.

51 The Regulations are amended by adding the following after section 47:

CO₂ Emission Credit System — Full-aero Box Van Trailers

Calculation of Credits and Deficits

Credits

47.1 (1) For the purposes of subparagraph 162(1)(b)(i) of the Act, a company obtains CO₂ emission credits if the CO₂ emissions for a fleet or subfleet, as the case may be, of full-aero box van trailers of a given model year are lower than the CO₂ emission standard applicable to the trailers of that fleet or subfleet, as the case may be, for that model year.

Deficits

(2) A company incurs deficits if the CO₂ emissions for a fleet or subfleet, as the case may be, of full-aero box van trailers of a given model year are higher than the CO₂ emission standard applicable to the trailers of that fleet or subfleet, as the case may be, for that model year.

End of model year report

(3) The company must report any credits obtained and any deficits incurred in its end of model year report in accordance with section 48.

Calculation

47.2 A company must calculate the credits or deficits for each of its fleets or subfleets, as the case may be, of full-aero box van trailers using the formula

where

ECD is the number of credits, if the result is positive, or the number of deficits, if the result is negative, expressed in megagrams of CO₂;
A is the CO₂ emission standard under subsection 33.1(1) that applies to the trailers of the fleet or subfleet, as the case may be, expressed in grams of CO₂ per short ton-mile;
B is the CO₂ family emission limit for the fleet or subfleet, as the case may be, expressed in grams of CO₂ per short ton-mile;
C is the payload for the type of trailer, which is
- (a) 10 short tons for short box van trailers, and
- (b) 19 short tons for long box van trailers;
D is the number of trailers in the fleet or subfleet, as the case may be; and
E is 250,000 miles.

Averaging Sets

Calculation

47.3 (1) The credits or deficits for each averaging set of full-aero box van trailers are calculated by adding the credits obtained and deficits incurred for all fleets and, if applicable, subfleets of that averaging set. The credits and deficits must be added together before rounding and the result must be rounded to the nearest megagram of CO₂.

Date of credits or deficits

(2) A company obtains credits or incurs deficits for an averaging set of full-aero box van trailers on the day on which the company submits the end of model year report for that model year.

Offsetting

47.4 (1) A company must use the credits obtained for an averaging set of full-aero box van trailers of a given model year to offset any outstanding deficits incurred for that averaging set. Deficits are offset by an equivalent number of credits.

Use of credits — time limitations

(2) Credits obtained by a company for an averaging set of full-aero box van trailers of a given model year may be used only to offset an outstanding deficit in respect of the same averaging set of full-aero box van trailers of a model year that is up to three model years before the model year for which the credits are obtained. The company must offset the deficit not later than the day on which the company submits the end of model year report in accordance with section 48.

Acquisition or merger
47.5 (1) A company that acquires another company or that results from a merger of companies must offset any outstanding deficit of the purchased or merged companies.

Ceasing activities

(2) If a company ceases to manufacture, import or sell full-aero box van trailers, it must offset all outstanding deficits for its averaging sets before submitting its last end of model year report.

52 (1) Subsection 48(1) of the Regulations is replaced by the following:

Deadline

48 (1) A company must submit to the Minister an end of model year report, signed by a person who is authorized to act on behalf of the company, for all heavy-duty vehicles and heavy-duty engines of the 2014 model year or of a subsequent model year, and all trailers of the 2020 model year or a subsequent model year, that it imported or manufactured in Canada, not later than June 30 of the calendar year following the calendar year that corresponds to the model year in question.

Exclusion

(1.1) Subsection (1) does not apply to a company in respect of any of their heavy-duty vehicles or heavy-duty incomplete vehicles that they have altered in accordance with subsection 11(1).

(2) The portion of subsection 48(2) of the Regulations before paragraph (a) is replaced by the following:

Statement

(2) The end of model year report must indicate the model year for which the report is made and must include the following statements by the company for its vehicles, engines and trailers, as applicable:

(3) Subparagraph 48(2)(b)(v) of the Regulations is replaced by the following:

(v) are exempted under subsection 17(1),

(4) Paragraph 48(2)(b) of the Regulations is amended by striking out “and” at the end of subparagraph (vi) and by adding the following after that subparagraph:

(vii) are equipped with an engine that meets the conditions set out in subsection 12.2(2) and conforms to the standards referred to in subsection 12.2(3), or
(viii) are equipped with an engine that conforms to the alternate standards referred to in subsection 12.2(4);

(5) Subparagraph 48(2)(c)(i) of the Regulations is amended by striking out “or” at the end of clause (C), by replacing “and” with “or” at the end of clause (D) and by adding the following after clause (D):

(E) are exempted under subparagraph 17(1.1)(a)(ii) or paragraph 17(1.1)(b), and

(6) Subparagraph 48(2)(c)(ii) of the Regulations is amended by striking out “or” at the end of clause (B) and by adding the following after that clause:

(B.1) are covered by an EPA certificate, bear the U.S. engine information label referred to in subparagraph 53(d)(ii), conform to a N₂O or CH₄ family emission limit, as the case may be, that exceeds the N₂O or CH₄ emission standard applicable to the model year of the engines under these Regulations and, in accordance with subsection 13(7.1), do not conform to subsections 29(4) to (7),

(7) Subparagraph 48(2)(c)(ii) of the Regulations is amended by adding “or” at the end of clause (C) and by adding the following after that clause:

(D) are exempted under subparagraph 17(1.1)(a)(i) or paragraph 17(1.1)(b); and

(8) Subsection 48(2) of the Regulations is amended by striking out “and” at the end of paragraph (b) and by adding the following after paragraph (c):

(d) in the case of trailers, that
- (i) its trailers conform to the applicable standards set out in subsection 16.1(1) or section 33.1, as the case may be,
- (ii) its trailers are covered by an EPA certificate, bear the U.S. emission control information label referred to in subparagraph 53(d)(i) and conform either to the emission standard referred to in the EPA certificate or, in the case of full-aero box van trailers, to a CO₂ family emission limit that is lower than the CO₂ emission standard applicable to the model year of the trailers under these Regulations,
- (iii) its full-aero box van trailers are grouped into one or more fleets in accordance with section 18 for the purpose of participation in the CO₂ emission credit system,
- (iv) its trailers are exempted under section 17.1, or
- (v) a certain number of its trailers are exempted under section 17.2.

(9) Subsection 48(3) of the Regulations is replaced by the following:

Statement when conforming to standards

(3) If an end of model year report contains any of the statements referred to in clause (2)(a)(ii)(A), subparagraph (2)(b)(i), clauses (2)(c)(i)(A) and (ii)(A) and subparagraph (2)(d)(i) for a given model year, it must contain

(a) the number of heavy-duty vehicles or heavy-duty engines for each type referred to in paragraph 18(3)(a) or (b) or the number of trailers for each type referred to in subsection 16.1(1) or 33.1(1) or (2), as the case may be; and
(b) the CO₂ emission standard and, if applicable, the N₂O and CH₄ emission standards to which the vehicles, engines or trailers, as the case may be, conform.

(10) The portion of subsection 48(4) of the Regulations before paragraph (d) is replaced by the following:

Statement when covered by EPA certificate

(4) If an end of model year report contains any of the statements referred to in clause (2)(a)(ii)(B), subparagraphs (2)(b)(ii) and (iii), clauses (2)(c)(i)(B) and (C) and (ii)(B) and (B.1) and subparagraph (2)(d)(ii) for a given model year, it must contain the following information for each type of heavy-duty vehicle, heavy-duty engine or trailer, as the case may be:

(a) the number of vehicles or engines for each type referred to in paragraph 18(3)(a) or (b) or the number of trailers for each type referred to in subsection 16.1(1) or 33.1(1) or (2);
(b) in the case of vehicles and trailers, the CO₂ family emission limit and, in the case of engines, the CO₂ family certification level;
(c) the number of vehicles, trailers or engines for each CO₂ family emission limit or CO₂ family certification level, as the case may be;

(11) Paragraph 48(4)(f) of the Regulations is replaced by the following:

(f) if an end of model year report contains the statement referred to in clause (2)(c)(i)(C) or (ii)(B.1), the number of heavy-duty engines sold in the United States that are of the same engine family.

(12) Subsection 48(5) of the Regulations is amended by adding “and” at the end of paragraph (a) and by repealing paragraph (b).

(13) Section 48 of the Regulations is amended by adding the following after subsection (5):

Statement — vehicle referred to in subsection 12.2(2)

(5.1) If an end of model year report contains the statement referred to in subparagraph (2)(b)(vii) for a given model year, the report must contain the following information:

(a) the number of vocational vehicles and tractors that the company manufactured or imported for sale in Canada for that model year; and
(b) the model year of the engine installed in each vehicle and, in each case, which of the conditions set out in paragraphs 12.2(2)(a) to (d) the engine meets.

Statement — vehicle referred to in subsection 12.2(4)

(5.2) If an end of model year report contains the statement referred to in subparagraph (2)(b)(viii) for a given model year, the report must contain the number of hybrid vehicles that the company elected to equip with an engine that conforms to the alternate standards referred to in subsection 12.2(4).

Statement — exempted engines

(5.3) If an end of model year report contains the statement referred to in clause (2)(c)(i)(E) or (ii)(D) for a given model year, the report must contain the number of engines that are installed in the vocational vehicles and tractors referred to in subsection 17(1) that the company has elected to exempt under subsection 17(1.1).

Statement — exempted trailers

(5.4) If an end of model year report contains the statement referred to in subparagraph (2)(d)(iv) or (v) for a given model year, the report must contain the following information:

(a) in the case of the statement referred to in subparagraph (2)(d)(iv), the number of trailers that the company manufactured or imported for sale in Canada in 2020; and
(b) in the case of the statement referred to in subparagraph (2)(d)(v),
- (i) for each type of trailer, the number of trailers that the company manufactured or imported for sale in Canada for the model year in question, and
- (ii) the number of trailers that the company has elected to exempt under section 17.2 for that model year.

(14) The portion of subsection 48(7) of the Regulations before paragraph (b) is replaced by the following:

Contents

(7) If an end of model year report contains any statement referred to in subparagraph (2)(a)(i), clause (2)(a)(ii)(C), subparagraph (2)(b)(iv), clauses (2)(c)(i)(D) and (ii)(C) and subparagraph (2)(d)(iii) for a given model year, the report must contain the following information for each averaging set:

(a) if applicable, a statement that the company has elected to exclude from its fleets heavy-duty vehicles, heavy-duty engines or full-aero box van trailers in accordance with subsection 18(2);

(15) Subparagraphs 48(7)(d)(ii) and (iii) of the Regulations are replaced by the following:

(ii) for vocational vehicles and incomplete vocational vehicles, the CO₂ emission standard that applies to the vehicles of each fleet or subfleet, as the case may be, determined for A in paragraph 35(1)(b),
(iii) for tractors and incomplete tractors, the CO₂ emission standard that applies to the vehicles of each fleet or subfleet, as the case may be, determined for A in paragraph 35(1)(c),

(16) Paragraph 48(7)(d) of the Regulations is amended by adding “and” at the end of subparagraph (iv) and by adding the following after that subparagraph:

(v) for full-aero box van trailers, the CO₂ emission standard that applies to the trailers of each fleet or subfleet, as the case may be, determined for A in section 47.2;

(17) Paragraph 48(7)(e) of the Regulations is amended by striking out “and” at the end of subparagraph (iii), by adding “and” at the end of subparagraph (iv) and by adding the following after subparagraph (iv):

(v) for each fleet of full-aero box van trailers, the CO₂ family emission limit for each fleet or subfleet, as the case may be;

(18) Subsection 48(7) of the Regulations is amended by adding the following after paragraph (f):

(f.1) the number of full-aero box van trailers in each averaging set, fleet and subfleet;

(19) Paragraph 48(7)(n) of the French version of the Regulations is replaced by the following:

n) s’il y a lieu, le nombre de points relatifs aux émissions de CO₂ calculé conformément au paragraphe 29(8) pour une limite d’émissions de la famille applicable au N₂O inférieure à 0,04 g/BHP-h;

(20) Paragraph 48(7)(o) of the Regulations is replaced by the following:

(o) in the case of heavy-duty vehicles or heavy-duty engines, the number of credits and deficits, calculated in accordance with section 35 for each fleet and subfleet, and the value of each variable — along with its description — used in calculating them;
(o.1) in the case of full-aero box van trailers, the number of credits and deficits, calculated in accordance with section 47.2 for each fleet and subfleet, and the value of each variable — along with its description — used in calculating them;

(21) Paragraph 48(7)(t) of the Regulations is replaced by the following:

(t) an identification of every instance in each fleet or subfleet, as the case may be, when the following credit multipliers were used:
- (i) the 1.5 credit multiplier referred to in section 37 and subsections 38(4), 39(3) and 40(2), and
- (ii) the credit multipliers referred to in section 40.1;

(22) Paragraph 48(7)(u) of the English version of the Regulations is replaced by the following:

(u) if applicable, the number of CO₂ emission credits and early action credits that are used to offset a deficit incurred for the model year or an outstanding deficit and the averaging set and the model year for which the credits were obtained;

(23) Paragraph 48(7)(v) of the Regulations is replaced by the following:

(v) if applicable, an accounting of the CO₂ emission credits, early action credits and deficits and, for each averaging set in respect of which the credit multiplier referred to in paragraph 45(2.1)(a) or (b) was used, a statement that the multiplier was used; and

53 The heading before section 51 and sections 51 to 55 of the Regulations are replaced by the following:

Documentation

Engine installation

51 (1) A company that manufactures or imports a heavy-duty engine must ensure that every engine that is installed in a vehicle in Canada is accompanied by documentation respecting the engine and emission controls or by the address of the place or the website where that documentation may be obtained.

Contents

(2) The documentation must contain the following information:

(a) detailed installation procedures for the exhaust system, emission control system, aftertreatment devices and their components;
(b) all necessary steps for installing any diagnostic system required under part 86 of Title 40, chapter I, subchapter C, of the CFR;
(c) the limits on the types of use for the engine to ensure that the emission standards set out in these Regulations are complied with; and
(d) for each engine configuration, the fuel map results and other information described in section 510 of Title 40, chapter I, subchapter U, part 1036, subpart F, of the CFR.

Language

(3) The documentation must be provided in English, French or both official languages, as requested by the installer. However, in the case of a fuel map input file used for running the GEM computer simulation model, if the installer requests that the fuel map input file be provided in French, it must be provided in both official languages.

Tire maintenance

52 (1) In the case of vocational vehicles, tractors and trailers, a company must ensure that the documentation respecting tire maintenance and replacement is provided to the first retail purchaser of every vehicle or trailer.

Language

(2) The documentation must be provided in English, French or both official languages, as requested by the purchaser.

Records

Evidence of Conformity

Vehicle, engine or trailer covered by EPA certificate

53 For a heavy-duty vehicle, heavy-duty engine or trailer that is covered by an EPA certificate and that is sold concurrently in Canada and the United States or has a national emissions mark applied to it, evidence of conformity in respect of a company for the purposes of paragraph 153(1)(b) of the Act consists of

(a) a copy of the EPA certificate covering the vehicle, the engine or the trailer and, if applicable, a copy of the evidence of the EPA approval concerning the vehicle, the engine or the trailer as referred to in paragraph 27(6)(a) or 33.1(4)(a), paragraph (a) of the description of A in subsection 40(1) or paragraph 41(2)(a), as the case may be;
(b) one or both of the following:
- (i) a document demonstrating that the vehicles, the engines or the trailers covered by the EPA certificate are sold concurrently in Canada and the United States,
- (ii) a document demonstrating that the vehicle, the engine or the trailer covered by the EPA certificate bears the national emissions mark;
(c) a copy of the records submitted to the EPA in support of the application for the EPA certificate in respect of the vehicle, engine or trailer and any application for an amendment to that EPA certificate and any records submitted to the EPA to maintain that EPA certificate; and
(d) a U.S. emission control information label or, in the case of a heavy-duty engine, a U.S. engine information label that is permanently affixed to the vehicle, the engine or the trailer in the form and location set out in
- (i) section 35 of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR, section 1807 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR and section 135 of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR, for the applicable model year of the heavy-duty vehicle or trailer, and
- (ii) section 35 of Title 40, chapter I, subchapter C, part 86, subpart A, of the CFR and section 135 of Title 40, chapter I, subchapter U, part 1036, subpart B, of the CFR, for the applicable model year of the heavy-duty engine.

Paragraph 153(1)(b) of Act

54 (1) For the purposes of paragraph 153(1)(b) of the Act, a company must obtain and produce evidence of conformity for a heavy-duty vehicle, heavy-duty engine or trailer — other than one referred to in section 53 — in a form and manner satisfactory to the Minister.

Submission of evidence of conformity

(2) Subject to section 55, a company must submit the evidence of conformity to the Minister before importing a heavy-duty vehicle, heavy-duty engine or trailer or applying a national emissions mark to it.

Subsection 153(2) of Act

55 For greater certainty, a company that imports a heavy-duty vehicle, heavy-duty engine or trailer or applies a national emissions mark to it under subsection 153(2) of the Act must submit the evidence of conformity referred to in subsection 54(1) to the Minister before the vehicle, the engine or the trailer leaves the possession or control of the company and, in the case of a vehicle, before it is presented for registration under the laws of a province or of an Aboriginal government.

54 (1) Paragraphs 56(1)(b) and (c) of the Regulations are replaced by the following:

(b) for each fleet and, if applicable, subfleet of vocational vehicles and incomplete vocational vehicles,
- (i) the model year,
- (ii) the applicable CO₂ emission standard,
- (iii) the CO₂ emission rate,
- (iv) the values and data, including the GEM computer simulation model inputs and results, used in calculating the CO₂ emission rate, and
- (v) the values and data used in calculating the number of CO₂ emission credits and, if applicable, the number of early action credits;
(c) for each fleet and, if applicable, subfleet of tractors and incomplete tractors,
- (i) the model year,
- (ii) the applicable CO₂ emission standard,
- (iii) the CO₂ emission rate,
- (iv) the values and data, including the GEM computer simulation model inputs and results, used in calculating the CO₂ emission rate, and
- (v) the values and data used in calculating the number of CO₂ emission credits and, if applicable, the number of early action credits;

(2) Subparagraphs 56(1)(d)(ii) and (iii) of the Regulations are replaced by the following:

(ii) the applicable CO₂ emission standard,
(iii) the CO₂ deteriorated emission level value, and

(3) Subsection 56(1) of the Regulations is amended by adding “and” at the end of paragraph (d) and by adding the following after paragraph (d):

(e) for each fleet and, if applicable, subfleet of full-aero box van trailers,
- (i) the model year,
- (ii) the applicable CO₂ emission standard,
- (iii) the CO₂ emission rate,
- (iv) the values and data, including the inputs and result of the compliance equation set out in section 515(a) of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR, used in calculating the CO₂ emission rate, and
- (v) the values and data used in calculating the number of CO₂ emission credits.

(4) Paragraph 56(2)(c) of the Regulations is replaced by the following:

(c) for a vehicle that is covered by an EPA certificate, the vehicle family or the applicable test group;

(5) Paragraph 56(3)(f) of the Regulations is replaced by the following:

(f) the engine family’s identification code;

(6) Section 56 of the Regulations is amended by adding the following after subsection (3):

Contents — trailers

(4) A company must maintain records containing the following information for each of its full-aero box van trailers in the fleets referred to in paragraph (1)(e):

(a) the model year;
(b) the type of trailer;
(c) the CO₂ emission standard that applies to the type of trailer;
(d) for a trailer that is covered by an EPA certificate, the trailer family’s identification code;
(e) the name and street address of the plant where the trailer was manufactured;
(f) the trailer’s identification number;
(g) the CO₂ emission rate that applies to the trailer and the values and data used in calculating that rate; and
(h) the name and the street or mailing address of the first retail purchaser of the trailer in Canada.

55 Section 57 of the Regulations is replaced by the following:

Evidence of number of engines sold

57 If subsection 13(7.1) or (8) applies in respect of a company’s heavy-duty engines, the company must maintain records demonstrating the number of heavy-duty engines sold in the United States that are of the same engine family.

56 Section 58 of the Regulations is replaced by the following:

Vocational tractor

58 For the purposes of section 28, in the case of a tractor that conforms to the emission standards applicable to vocational vehicles instead of those applicable to tractors, the company must maintain records demonstrating that the tractor is a vocational tractor.

57 (1) The portion of subsection 59(1) of the Regulations before paragraph (a) is replaced by the following:

Maintenance of records

59 (1) For heavy-duty vehicles, heavy-duty engines and trailers, a company must maintain in writing or in a readily readable electronic or optical form for each model year

(2) Paragraph 59(1)(b) of the Regulations is replaced by the following:

(b) the evidence of conformity and records referred to in sections 53 and 54 for a period of at least eight years after the day on which the main assembly of the vehicle or manufacture of the engine or the trailer was completed;

(3) Paragraph 59(1)(d) of the English version of the Regulations is replaced by the following:

(d) the records referred to in section 58 for a period of at least three years after the end of the calendar year that corresponds to the model year.

58 Paragraph 59.1(d) of the Regulations is replaced by the following:

(d) the make, model, if applicable, and model year of the vehicles, engines and trailers that are covered by the EPA certificate.

59 Sections 60 to 63 of the Regulations are replaced by the following:

Importation for exhibition, demonstration, evaluation or testing

60 (1) The declaration referred to in paragraph 155(1)(a) of the Act must be signed by the person referred to in that paragraph or their authorized representative and must contain

(a) the importer’s name, email address, telephone number, street address and, if different, mailing address;
(b) the name of the manufacturer of the vehicle, engine or trailer;
(c) the expected date of the importation;
(d) in the case of a vehicle, the vehicle’s class, make, model, model year and identification number;
(e) in the case of an engine, a description of the engine;
(f) in the case of a trailer, the trailer’s make, model year, identification number and model or, if there is no model, its type, length and axle configuration;
(g) a statement that the vehicle, engine or trailer will be used in Canada solely for purposes of exhibition, demonstration, evaluation or testing; and
(h) the date on which the vehicle, engine or trailer will be removed from Canada or destroyed.

Filing of declaration

(2) The declaration must be filed with the Minister

(a) before the import of the vehicle, engine or trailer; or
(b) in the case of a company whose annual world production of vehicles, engines or trailers is 2 500 or more, as described in paragraph (a) or quarterly.

Rental Rate

Annual rental rate

61 The annual rental rate to be paid to a company by the Minister under subsection 159(1) of the Act, prorated on a daily basis for each day that a vehicle, engine or trailer is made available, is 21% of the manufacturer’s suggested retail price of the vehicle, engine or trailer.

Application for Exemption

Application

62 (1) A company applying under section 156 of the Act for an exemption from conformity with any standard prescribed under these Regulations must, before importing a vehicle or engine or applying a national emissions mark to a vehicle or engine, submit in writing to the Minister

(a) its name, street address and, if different, its mailing address;
(b) the province or country under the laws of which it is established;
(c) the section number, title and text or substance of the standards from which an exemption is sought;
(d) the duration requested for the exemption;
(e) the reason for requesting an exemption; and
(f) if the company is requesting that the information submitted be treated as confidential under section 313 of the Act, the reasons for the request.

Exemption — paragraph 156(1)(a) of the Act

(2) If the basis of an application for an exemption is the substantial financial hardship referred to in paragraph 156(1)(a) of the Act, the company must include in the submission to the Minister

(a) the world production of vehicles or engines manufactured by the company or by the manufacturer of the model that is the subject of the application in the 12-month period beginning two years before the beginning of the period in respect of which the exemption is sought;
(b) the total number of vehicles or engines manufactured for, or imported into, the Canadian market in the 12-month period beginning two years before the beginning of the period in respect of which the exemption is sought;
(c) technical and financial information demonstrating in detail why conformity to the standards referred to in paragraph (1)(c) would create substantial financial hardship, including
- (i) a list of each of the items that would have to be altered in order to achieve conformity,
- (ii) an itemized and detailed description of the estimated cost to make the alterations referred to in subparagraph (i)
  - (A) at the end of one year after the day on which the application is submitted, if the duration of the requested exemption is for a period of one year or more but less than two years,
  - (B) at the end of two years after the day on which the application is submitted, if the duration of the requested exemption is for a period of two years or more but less than three years, or
  - (C) at the end of three years after the day on which the application is submitted, if the duration of the requested exemption is for a period of three years,
- (iii) the estimated price increase per vehicle or engine to counter the total costs incurred under subparagraph (ii) and a statement of the anticipated effect of each such price increase, and
- (iv) corporate balance sheets and income statements for the three fiscal years before the filing of the application;
(d) a description of the company’s efforts to have its vehicles or engines conform to the standards from which the exemption is sought, including
- (i) a description of any other means of achieving conformity that were considered and the reasons for rejecting each of them, and
- (ii) a description of the steps to be taken while the exemption is in effect and the estimated date by which conformity will be achieved through design changes to or the termination of the production of non-conforming vehicles or engines; and
(e) a copy of the research, development and testing documentation establishing that an exemption would not substantially diminish the control of emissions of the vehicle or the engine, including
- (i) the reasons why not conforming to the prescribed standards would not substantially diminish the control of emissions of the vehicle or the engine, and
- (ii) a description of other means of achieving conformity with the prescribed standards that were considered by the company and the reasons for rejecting each of them.

Exemption — paragraph 156(1)(b) of Act

(3) If the basis of an application for an exemption is the development of new emission monitoring or emission control features referred to in paragraph 156(1)(b) of the Act, the company must include in the submission to the Minister

(a) a description of the new features;
(b) a copy of the research, development and testing documentation establishing the innovative nature of the new features;
(c) an analysis of how the level of performance of the new features is equivalent or superior to the level of performance required by the prescribed standards, including
- (i) a detailed description of how a vehicle or engine equipped with the new features would, if exempted, differ from a vehicle or engine that conforms to the prescribed standards, and
- (ii) the results of tests conducted on the new features that demonstrate a level of performance that is equivalent or superior to that required by the prescribed standards;
(d) evidence that an exemption would facilitate the development or the field evaluation of the vehicle or the engine; and
(e) a statement as to whether the company intends, at the end of the exemption period,
- (i) to have the vehicle or the engine conform to the prescribed standards,
- (ii) to apply for a further exemption, or
- (iii) to request that the prescribed standards be amended to incorporate the new features.

Exemption — paragraph 156(1)(c) of Act

(4) If the basis of an application for an exemption is the development of new kinds of vehicles, engines or vehicle or engine systems or components referred to in paragraph 156(1)(c) of the Act, the company must include in the submission to the Minister

(a) a copy of the research, development and testing documentation establishing that an exemption would not substantially diminish the control of emissions of the vehicle or the engine, including
- (i) a detailed description of how the vehicle or the engine equipped with the new kinds of vehicle systems or components would, if exempted, differ from one that conforms to the prescribed standards,
- (ii) the reasons why not conforming to the prescribed standards would not substantially diminish the control of emissions of the vehicle or the engine, and
- (iii) a description of other means of achieving conformity that were considered and the reasons for rejecting each of them;
(b) evidence that an exemption would facilitate the development or the field evaluation of the vehicle or the engine; and
(c) a statement as to whether the company intends, at the end of the exemption period, to have the vehicle or the engine conform to the prescribed standards.

New exemption

(5) If a company wishes to obtain a new exemption to take effect after the expiry of an exemption referred to in subsection (3) or (4), the company must submit, in writing, to the Minister

(a) the information required under subsection (3) or (4), as the case may be; and
(b) a statement of the total number of vehicles or engines sold in Canada under the expiring exemption.

Defect Information

Notice of defect

63 (1) The notice of defect referred to in subsections 157(1) and (4) of the Act must contain the following information:

(a) the name of the company giving the notice and its street address and, if different, mailing address, and the name, email address, telephone number and, if any, facsimile number of the appropriate contact person;
(b) in the case of vehicles, the range or ranges of vehicle identification numbers for the vehicles in respect of which the notice is given, if known, and, for each of those vehicles, its make, model and model year and the period during which it was manufactured;
(c) in the case of engines, for each engine in respect of which the notice is given, its make, model and model year and the period during which it was manufactured;
(d) in the case of trailers, the range or ranges of trailer identification numbers for the trailers in respect of which the notice is given, if known, and, for each of those trailers,
- (i) its make,
- (ii) its model or, if there is no model, its type, length and axle configuration,
- (iii) its model year, and
- (iv) the period during which it was manufactured;
(e) the total number of vehicles, engines or trailers in respect of which the notice is given or, if the total number is not known, the estimated number, and the number or estimated number of vehicles, engines or trailers in each identifying classification;
(f) the estimated percentage of the potentially affected vehicles, engines or trailers that contain the defect;
(g) a description of the defect;
(h) an evaluation of the pollution risk arising from the defect;
(i) a statement of the measures to be taken to correct the defect; and
(j) a chronology of the principal events that led to the determination of the existence of the defect, if known.

Form of notice

(2) The notice of defect must be given in writing and, when given to a person other than the Minister, must be

(a) in both official languages; or
(b) in the person’s official language of choice, if known.

Initial report

(3) A company must, within 60 days after the day on which a notice of defect is given, submit to the Minister the initial report referred to in subsection 157(7) of the Act containing

(a) any changes to the information referred to in subsection (1);
(b) if not already provided in the notice, the range or ranges of vehicle or trailer identification numbers;
(c) if not already provided in the notice, the total number of vehicles, engines or trailers in respect of which the notice was given and the number of vehicles, engines or trailers in each identifying classification;
(d) if not already provided in the notice, a chronology of the principal events that led to the determination of the existence of the defect; and
(e) copies of all notices, bulletins and other circulars issued by the company in respect of the defect, including a detailed description of the nature and physical location of the defect with diagrams and other illustrations, as necessary.

Quarterly reports

(4) If a company submits an initial report under subsection (3), it must, within 45 days after the day on which each quarter ends, submit quarterly reports to the Minister respecting the defect and its correction that contain the following information:

(a) the number, title or other identification assigned by the company to the notice of defect;
(b) if applicable, the revised number of vehicles, engines or trailers in respect of which the notice of defect was given;
(c) the date on which the notice of defect was given to the current owners of the affected vehicles, engines or trailers and the dates of any follow-up communications with those owners in respect of the notice; and
(d) the total number or percentage of vehicles, engines or trailers repaired by or on behalf of the company, including vehicles, engines or trailers requiring inspection only.

Applicable standard — CO₂ emissions

(5) For the application of section 157 of the Act, the CO₂ emission standard that applies

(a) to Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those that are vocational vehicles or incomplete vocational vehicles — or to spark-ignition engines that conform to the alternative CO₂ emission standard referred to in section 25 is the product of 1.1 multiplied by the CO₂ emission value for that vehicle configuration, rounded to the nearest gram per mile;
(b) to vocational vehicles is the result of the GEM computer simulation model using the parameters specified in subsection 26(2);
(c) to tractors of the 2020 model year or an earlier model year is the result of the GEM computer simulation model using the parameters specified in subsection 27(2), except that the coefficient of aerodynamic drag may originate from a bin for which the coefficient of aerodynamic drag is higher than that of the bin of the subject vehicle;
(d) to tractors of the 2021 model year or a subsequent model year is the result of the GEM computer simulation model using the parameters specified in subsection 27(2);
(e) to heavy-duty engines — other than engines referred to in paragraph (f), (g) or (h) — is the product of 1.03 multiplied by the applicable standard set out in section 30 for that engine, or in the case of an engine that is grouped into a fleet referred to in section 18, the product of 1.03 multiplied by the CO₂ deteriorated emission level applicable to the fleet;
(f) to heavy-duty engines of the 2014 to 2016 model years that conform to the alternative CO₂ emission standard referred to in subsection 31(1) is the product of 1.03 multiplied by the alternative CO₂ emission standard;
(g) to heavy-duty engines of the 2013 to 2016 model years that conform to the alternative CO₂ emission standard referred to in subsection 31(2) is the product of 1.03 multiplied by the alternative CO₂ emission standard;
(h) to heavy-duty engines of the 2024 to 2026 model years that conform to the alternative CO₂ emission standard referred to in subsection 31(5) is the product of 1.03 multiplied by the alternative CO₂ emission standard, or in the case of an engine that is grouped into a fleet referred to in section 18, the product of 1.03 multiplied by the CO₂ deteriorated emission level applicable to the fleet; and
(i) to full-aero and partial-aero box van trailers is the result of the compliance equation set out in section 515(a) of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR.

Applicable standard — design

(6) For the purposes of section 157 of the Act, the standard that applies to a non-box trailer or a non-aero box van trailer is the one that is set out in section 16.1.

60 The Regulations are amended by replacing “excluding those referred to in the definition vocational vehicle in subsection 1(1)” with “excluding those that are vocational vehicles or incomplete vocational vehicles” in the following provisions:

(a) paragraph 9(1)(k);
(b) paragraph 13(1)(a);
(c) the portion of subsection 22(6) before paragraph (a);
(d) the portion of subsection 23(1) before the formula;
(e) the portion of subsection 24(1) before paragraph (a), subsection 24(2), the portion of subsection 24(3) before paragraph (a) and the portion of subsection 24(4) before paragraph (a);
(f) the portion of paragraph 35(1)(a) before the formula;
(g) the portion of paragraph 41(1)(a) before the formula;
(h) the portion of paragraph 48(2)(a) before subparagraph (i), the portion of subparagraph 48(7)(d)(i) before clause (A) and the portion of subparagraph 48(7)(e)(i) before clause (A);
(i) the portion of paragraph 49(1)(a) before subparagraph (i); and
(j) the portion of paragraph 56(1)(a) before subparagraph (i).

61 The Regulations are amended by replacing “tonne-mile” with “short ton-mile” in the following provisions:

(a) the portion of subsection 38(2) before the formula; and
(b) the description of (A – B) in subparagraph 41(1)(b)(i) and the description of (A – B) in subparagraph 41(1)(c)(i).

62 The Regulations are amended by adding, after section 64, the schedule set out in the schedule to these Regulations.

On-Road Vehicle and Engine Emission Regulations

63 (1) The definition useful life in subsection 1(1) of the On-Road Vehicle and Engine Emission Regulations ^{footnote 2} is replaced by the following:

useful life, in respect of a vehicle or engine, means the period of time or use, whether full or intermediate, during which an emission standard applies as set out in the CFR. (durée de vie utile)

(2) Subsection 1(1) of the Regulations is amended by adding the following in alphabetical order:

auxiliary power unit means a device that is installed on a tractor and that is equipped with a diesel engine to generate power for purposes other than propelling the tractor. (groupe électrogène d’appoint)

tractor means a heavy-duty vehicle that has a GVWR of more than 11 793 kg (26,000 lb) and that is manufactured primarily for pulling a trailer but not for carrying cargo other than cargo in the trailer. (tracteur routier)

(3) Paragraph 1(2)(c) of the Regulations is replaced by the following:

(c) standards or evidence of conformity of any authority other than the EPA and, in the case of the standards referred to in paragraph 12(b), the California Air Resources Board.

64 Paragraph 11(4)(a) of the Regulations is replaced by the following:

(a) the conditions referred to in subsection (3) are substantially included in the test procedures referred to in section 18;

65 Subparagraph 13(a.1)(iii) of the Regulations is replaced by the following:

(iii) the family emission limit established by the company for the evaporative emission family to which the vehicle belongs, which shall not exceed the applicable family emission limit cap set out in section 1813 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR;

66 The Regulations are amended by adding the following after section 15:

Tractors Equipped with Auxiliary Power Unit

15.1 Tractors of the 2021 and later model years that are equipped with an auxiliary power unit must, in respect of that unit, conform to the following particulate matter exhaust emission standards for the model year of tractor in question for the duration of the unit’s useful life, which is set out in section 101(g) of Title 40, chapter I, subchapter U, part 1039, subpart B, of the CFR:

(a) for the 2021 to 2023 model years, the particulate matter exhaust emission standard set out in section 106(g)(1) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR; and
(b) for the 2024 and later model years, the particulate matter exhaust emission standard set out in section 699 of Title 40, chapter I, subchapter U, part 1039, subpart G, of the CFR.

67 Sections 24.6 and 24.7 of the Regulations are replaced by the following:

24.6 For the 2017 and later model years, the average cold NMHC value for a company’s fleet that is composed of all of its light-duty vehicles and light light-duty trucks of a specific model year that are fueled by gasoline shall not exceed the applicable fleet average cold NMHC standard set out in Table 5 to section 1811 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR.

24.7 For the 2017 and later model years, the average cold NMHC value for a company’s fleet that is composed of all of its heavy light-duty trucks and medium-duty passenger vehicles of a specific model year that are fueled by gasoline shall not exceed the fleet average cold NMHC standard set out for heavy light-duty trucks in Table 5 to section 1811 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR.

68 The portion of subsection 32.7(3) of the French version of the Regulations before paragraph (a) is replaced by the following:

(3) Si, dans une année de modèle, l’un ou l’autre des sous-parcs de l’entreprise comprend une ou plusieurs motocyclettes qui respectent une limite d’émissions de la famille supérieure à la norme d’émissions de HC+NO_x applicable prévue à l’article du CFR qui est mentionné à l’alinéa 17a) ou prévue au paragraphe 17.1(2) ou à la norme d’émissions par perméation du réservoir de carburant prévue à cet article, l’entreprise inclut, dans son rapport de fin d’année de modèle, les renseignements suivants pour chaque sous-parc en cause :

69 Subsection 33(1) of the Regulations is amended by striking out “and” at the end of paragraph (b), by adding “and” at the end of paragraph (c) and by adding the following after paragraph (c):

(d) tractors that are equipped with an auxiliary power unit, in respect of the unit, in section 125 of Title 40, chapter I, subchapter U, part 1039, subpart B, of the CFR.

70 (1) The portion of subsection 35(1) of the Regulations before paragraph (b) is replaced by the following:

35 (1) Subject to subsection (1.1), in the case of a vehicle or engine that is covered by an EPA certificate and that, as authorized by subsection 19(1), conforms to the certification and in-use standards referred to in the EPA certificate instead of the standards set out in sections 11 to 17, evidence of conformity for the purpose of paragraph 153(1)(b) of the Act in respect of a company shall consist of

(a) a copy of the EPA certificate covering the vehicle or the engine and, in the case of a tractor that is equipped with an auxiliary power unit, a copy of the EPA certificate covering the unit;

(2) Subsection 35(1) of the Regulations is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (d) and by adding the following after paragraph (d):

(e) in the case of a tractor of a specific model year that is equipped with an auxiliary power unit, the U.S. engine information label that is permanently affixed to the auxiliary power unit in the form and location set out in
- (i) for the 2021 to 2023 model years, section 135 of Title 40, chapter I, subchapter U, part 1039, subpart B, of the CFR, and
- (ii) for the 2024 and later model years, section 699(k) of Title 40, chapter I, subchapter U, part 1039, subpart G, of the CFR.

(3) Subsection 35(1.1) of the Regulations is replaced by the following:

(1.1) For the purpose of paragraph 153(1)(b) of the Act, if it is impracticable for a company to obtain the evidence of conformity referred to in subparagraph (1)(b)(i) or (ii) in respect of a vehicle or engine referred to in subsection (1), the company shall obtain and produce evidence of conformity for the vehicle or the engine in a form and manner satisfactory to the Minister, instead of as specified in subsection (1), and submit that evidence to the Minister before importing the vehicle or the engine or applying a national emissions mark to it.

71 The portion of paragraph 38(1)(a) of the Regulations before subparagraph (i) is replaced by the following:

(a) the records referred to in paragraph 153(1)(g) of the Act and the evidence of conformity referred to in paragraphs 35(1)(a) to (c), subsection 35(1.1), paragraphs 35.1(1)(a) to (c) and, if applicable, (e) and subsection 36(1) for a period of

72 Paragraph 39.1(1)(b) of the Regulations is replaced by the following:

(b) an indication of whether the import consists of
- (i) a heavy-duty vehicle and, if applicable, a tractor that is equipped with an auxiliary power unit, or
- (ii) a heavy-duty engine; and

Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations

73 Subsection 6(1) of the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations ^{footnote 3} is replaced by the following:

Application

6 (1) Any company that intends to apply the national emissions mark set out in Schedule 2 to the On-Road Vehicle and Engine Emission Regulations to a vehicle must apply to the Minister for authorization in accordance with subsection 7(2) of those Regulations.

74 Section 18.4 of the Regulations is amended by adding the following after subsection (2):

Description of A_H

(2.1) If the percentage in the fleet of full-size pick-up trucks of a model year that are equipped with mild hybrid electric technologies or strong hybrid electric technologies is less than the percentage set out for the model year in, depending on the technology used, section 1870(a)(1) or (2) of Title 40, chapter I, subchapter C, part 86, of the CFR, the allowance for the use of hybrid electric technologies referred to in the description of A_H in subsection (1) is 10 grams of CO₂ per mile for those trucks, if the percentage in the fleet of full-size pick-up trucks that are equipped with either mild hybrid electric technologies or strong hybrid electric technologies is equal to or greater than the percentage referred to in section 1870(a)(3) of Title 40, chapter I, subchapter C, part 86, of the CFR. The allowance may be calculated only for full-size pick-up trucks of the 2017 to 2021 model years.

Coming into Force

75 These Regulations come into force on the day that, in the sixth month after the month in which they are registered, has the same calendar number as the day on which they are registered or, if that sixth month has no day with that number, the last day of that sixth month.

SCHEDULE

(Section 62)

SCHEDULE

(Subsection 7(1))

National Emissions Mark

Detailed information can be found in the surrounding text.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: Emissions of greenhouse gases (GHGs) are contributing to a global warming trend that is associated with long-term climate change. In 2015, on-road heavy-duty vehicles were the source of about 9% of total GHG emissions in Canada. The annual amount of GHGs emitted by these vehicles in Canada increased from 22 to 63 megatonnes (Mt) of carbon dioxide equivalent (CO₂e) per year between 1990 and 2015. In 2013, Canada began regulating GHG emissions from on-road heavy-duty vehicles and engines. However, without additional action, annual GHG emissions from the on-road heavy-duty sector are projected to continue to increase and surpass annual GHG emissions from on-road light-duty vehicles by 2035.

Description: The Regulations Amending the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations and Other Regulations Made Under the Canadian Environmental Protection Act, 1999 (the Amendments) introduce more stringent GHG emission standards that begin with the 2021 model year for on-road heavy-duty vehicles and engines. Further, the Amendments introduce new GHG emission standards that apply to trailers hauled by on-road transport tractors for which the manufacture is completed on or after January 1, 2020. These emission standards for heavy-duty vehicles, engines and trailers increase in stringency up to the 2027 model year and maintain full stringency thereafter. The Amendments also introduce minor modifications to two other regulations made under the Canadian Environmental Protection Act, 1999 to ensure consistency with existing on-road vehicle and engine emission regulations in Canada, and with corresponding regulatory provisions in the United States (U.S.).

Cost-benefit statement: The Amendments are estimated to lead to CO₂e emission reductions of approximately 73 Mt from heavy-duty vehicles (including engines and trailers) of model years 2020 to 2029 (MY2020–2029) over the portion of their lifetime operation that occurs during the 2020–2050 period, and to CO₂e emission reductions of about 6 Mt from all heavy-duty vehicles in 2030. The total benefits of the Amendments are estimated at $23.8 billion for MY2020–2029 vehicles, mostly due to fuel savings of approximately $19.4 billion, GHG emission reductions valued at $2.8 billion and increased travel opportunities valued at $1.2 billion. The total costs associated with the Amendments are projected to be $6.1 billion for MY2020–2029 vehicles, largely due to additional costs of about $5.1 billion for the technologies that are expected to be adopted to meet the more stringent GHG emission standards for these vehicles. On the whole, the net benefits of the Amendments are estimated to be $17.7 billion for MY2020–2029 vehicles.

“One-for-One” Rule and small business lens: The Amendments add trailers used with transport tractors into the federal regulatory framework relating to GHG emissions and Canadian companies that manufacture or import trailers will be faced with new reporting obligations. The Amendments will also lead to minor reductions in reporting burden for small volume companies that manufacture or import heavy-duty engines installed in exempt vehicles. The net annualized administrative costs that will be introduced are projected to be approximately $14,000, or $110 per company.

The Amendments will have an effect on about 125 companies that manufacture or import trailers, or small volumes of heavy-duty engines, for sale in Canada. The majority of trailer companies are small businesses, and regulatory flexibility has been included in the Amendments to reduce impacts of increased costs. Altogether, it is estimated that the Amendments will result in annualized costs of about $57 million for these companies, or $450,000 per company.

Domestic and international coordination and co-operation: The Amendments are expected to decrease the growth of GHG emissions in Canada from the on-road heavy-duty vehicle sector. They are an important regulatory policy developed under the Government of Canada’s Pan-Canadian Framework on Clean Growth and Climate Change (the Pan-Canadian Framework) that complements GHG pollution pricing policies and will contribute to Canada’s international commitments made under the Paris Agreement. The Amendments will also build on the history of collaboration achieved under the Canada–U.S. Air Quality Agreement with respect to the development of vehicle and engine emission regulations and their coordinated implementation.

Background

The Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations (the Regulations), made under the Canadian Environmental Protection Act, 1999 (CEPA), were published in the Canada Gazette, Part II, on March 13, 2013. ^{footnote 4} The objective of the Regulations is to reduce greenhouse gas (GHG) emissions by establishing performance-based emission standards for heavy-duty vehicles and engines while minimizing the overall regulatory burden for companies operating in the Canada–U.S. market. The Regulations apply to companies that manufacture or import new on-road heavy-duty vehicles and engines for sale in Canada. The GHG emission standards in the Regulations apply to vehicles and engines of the 2014 model year and subsequent model years, and reach full stringency with model year 2018. The Regulations apply to the entire range of on-road heavy-duty vehicles, from full-size pick-up trucks and vans to transport tractors manufactured primarily for hauling trailers, including a wide variety of specialized (vocational) vehicles, such as school, transit and intercity buses, and freight, delivery, service, cement, garbage and dump trucks.

In July 2015, the United States (U.S.) Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) released a proposed rule concerning a second phase of GHG emission and fuel efficiency standards for heavy-duty vehicles, engines and trailers (the Phase 2 standards). ^{footnote 5} Subsequently, on October 25, 2016, these two U.S. federal agencies published their final rule. The Phase 2 standards, which increase in stringency up to model year 2027, build upon the existing standards that were established for model years 2014 to 2018. In addition, new standards have been introduced for trailers hauled by on-road transport tractors, as trailer design has an impact on the GHG emissions and fuel consumption of the vehicles hauling them.

Policy context

Under the framework of the Canada–U.S. Air Quality Agreement, there is a history of aligning vehicle emission standards as a means of reducing transboundary air pollution. The 2000 Ozone Annex to the Canada–U.S. Air Quality Agreement included specific obligations for the Government of Canada to align with emission standards for on-road vehicles and engines established by the Government of the U.S. Since 2003, the Canadian Department of the Environment (the Department) has introduced a range of standards within its suite of on-road and off-road vehicle and engine emission regulations, which align with the corresponding standards of the U.S. EPA. In 2011, the Canada–U.S. Regulatory Cooperation Council was established with a goal of enhancing the alignment of regulatory approaches, where possible, between Canada and the U.S. in a broad range of areas, including vehicle emissions.

Maintaining alignment with U.S. GHG emission standards for vehicles and engines is consistent with the objectives of the Canada–U.S. Air Quality Agreement and Regulatory Cooperation Council. In keeping with this approach, the Government of Canada is amending the Regulations to establish stricter limits on GHG emissions from heavy-duty pick-up trucks and vans, vocational vehicles, transport tractors, and heavy-duty engines of the 2021 model year and subsequent model years, in alignment with the final U.S. Phase 2 standards; and as of January 1, 2020, to introduce limits on GHG emissions that result from the operation of trailers used with transport tractors, in alignment with the final U.S. Phase 2 standards. ^{footnote 6}

At the United Nations Framework Convention on Climate Change (UNFCCC) conference in December 2015, the international community, including Canada, concluded the Paris Agreement, an accord intended to reduce GHG emissions to limit the rise in global average temperature to less than two degrees Celsius (2°C) and to pursue efforts to limit it to 1.5°C above pre-industrial levels. As part of its commitments made under the Paris Agreement, Canada pledged to reduce national GHG emissions by 30% below 2005 levels by 2030.

On December 9, 2016, Canada’s First Ministers committed to further action on climate change by adopting the Pan-Canadian Framework, which is Canada’s plan to meet its 2030 target of a 30% reduction below 2005 levels of GHG emissions, promote sustainable economic growth and build resilience to a changing climate. ^{footnote 7} The Pan-Canadian Framework was developed in conjunction with provincial and territorial governments and in consultation with Indigenous peoples. It establishes a plan to reduce emissions through the pricing of GHG pollution, along with complementary measures that will further reduce emissions across the economy by addressing market barriers where GHG pollution pricing alone is expected to not be sufficient or timely enough to reduce emissions in the pre-2030 time frame. Regarding on-road heavy-duty vehicles, the Government of Canada committed within the Pan-Canadian Framework to the complementary measures of updating emissions standards and developing new requirements relating to the installation of fuel-saving devices on in-use vehicles.

Issues

The Government of Canada is committed to reducing GHG emissions to help limit global warming and the effects of climate change. The combustion of fuels for road transportation is an important source of such emissions. In 2015, the GHG emissions in Canada from road transportation sources totalled 173 megatonnes (Mt) of carbon dioxide equivalent (CO₂e). Approximately 24% of total GHG emissions in the Canadian economy came from the transportation sector, making it the economic sector with the second-largest share of such emissions in Canada. ^{footnote 8} Heavy-duty vehicles accounted for about 9% of total GHG emissions in Canada. The latest historical emissions trends show that the annual amount of GHGs emitted by on-road heavy-duty vehicles in Canada increased from 22 to 63 Mt of CO₂e per year between 1990 and 2015 (Table 1). ^{footnote 9}

Table 1: GHG emissions in Canada (Mt of CO₂e)

	1990	2005	2010	2011	2013	2015
Total	611	738	701	707	729	722
Transportation (economic sector)	122	163	171	171	176	173
On-road heavy-duty vehicles	22	50	58	61	65	63

In 2013, Canada began regulating GHG emissions from on-road heavy-duty vehicles and engines by means of the Regulations, which are expected to lead to decreases in the growth of GHG emissions from the heavy-duty vehicle sector. However, without additional action, annual GHG emissions from on-road heavy-duty vehicles are currently projected by the Department to continue to increase and surpass annual GHG emissions from on-road light-duty vehicles (i.e. passenger automobiles and light trucks) by 2035. ^{footnote 10}

Objectives

The objective of the Regulations Amending the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations and Other Regulations Made Under the Canadian Environmental Protection Act, 1999 (the Amendments) is to reduce GHG emissions in Canada from new on-road heavy-duty vehicles, engines and trailers by establishing more stringent emission standards to help protect Canadians and the environment from the effects of climate change. Additionally, the Amendments align with U.S. GHG emission requirements for heavy-duty vehicles, engines and trailers to contribute to minimizing the overall regulatory burden for companies operating in the Canada–U.S. market.

Description

The Amendments modify the Regulations, which apply to on-road vehicles that have a gross vehicle weight rating (GVWR) above 3 856 kilograms (kg) [8 500 pounds (lb)], with the exception of medium-duty passenger vehicles (e.g. certain large passenger vans), which are defined in the On-Road Vehicle and Engine Emission Regulations and subject to the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations. ^{footnote 11} The Regulations, as amended, apply to companies that manufacture or import vehicles, engines or trailers for the purpose of sale in Canada.

New and more stringent emission standards

The Amendments introduce more stringent GHG emission standards for heavy-duty pick-up trucks and vans, vocational vehicles, transport tractors, and heavy-duty engines designed for vocational vehicles and tractors. The more stringent emission standards begin with the 2021 model year and increase in stringency for most vehicle and engine types with model years 2024 and 2027. ^{footnote 12} Further, the Amendments introduce new standards for GHG emissions that result from the operation of trailers used with transport tractors. These standards apply to trailers for which the manufacture is completed on or after January 1, 2020, increasing in stringency for most trailer types with model years 2021, 2024 and 2027. These GHG emission standards are expressed in grams emitted per unit of work and provide companies with flexibility when choosing the methods and technologies to comply with them.

Heavy-duty pick-up trucks and vans

The Amendments include progressively more stringent standards for carbon dioxide (CO₂) emissions from heavy-duty pick-up trucks and vans, starting with model year 2021 vehicles. The emission standards continue to be fleet average standards for all applicable vehicles of a company’s fleet and determined based on a work factor value, which is a function of the payload, towing and four-wheel drive capabilities of the vehicles in the fleet. Vehicle emission performance will be measured using prescribed test cycles on a chassis dynamometer.

Vocational vehicles

The Amendments include more stringent standards for CO₂ vehicle emissions from vocational vehicles, starting with model year 2021 vehicles. The emission performance of vocational vehicles will be assessed using an enhanced version of the Greenhouse Gas Emissions Model (GEM), a simulation model developed by the U.S. EPA. ^{footnote 13}

The CO₂ vehicle emission standards for vocational vehicles vary based on the type of operation (urban, regional or multi-purpose operation) that applies to the vehicle and on the type of engine (compression-ignition or spark-ignition) installed in the vehicle in question. Also, the Amendments include alternative emission standards for certain classes of vocational vehicles with specific applications, such as emergency vehicles, motor homes, coach and school buses, waste collection vehicles, and concrete mixers. Finally, a leakage standard for refrigerants from air conditioning systems in vocational vehicles of the 2021 model year and subsequent model years is established in the Amendments, matching the current leakage standard in the Regulations for heavy-duty pick-up trucks and vans and tractors.

Tractors

The Amendments include more stringent CO₂ vehicle emission standards corresponding to the U.S. standards for transport tractors that have a gross combined weight rating (GCWR) of less than 43 998 kg (97 000 lb), starting with model year 2021 vehicles. ^{footnote 14} As described below, the Amendments also establish new CO₂ vehicle emission standards for sets of transport tractors that have greater GCWRs to take Canadian-specific circumstances into account. The emission performance of all transport tractors will be assessed using the enhanced version of GEM.

Heavy line-haul tractors

To account for greater weights that are permitted on Canadian roads by provincial and territorial jurisdictions compared to the weights allowed on most U.S. roads, the Amendments establish two additional sets of CO₂ vehicle emission standards for transport tractors starting with the 2021 model year: one set for tractors that have a GCWR of 97 000 lb or more, but less than 54 431 kg (120 000 lb), and one set for tractors that have a GCWR of 120 000 lb or more. These vehicles are referred to here as “heavy line-haul tractors,” which are designed for on-road applications that mainly involve hauling higher payloads over long distances on highways. These standards take powertrain characteristics required for tractors with higher payload capabilities into consideration and, at the same time, reflect improvements in technologies reducing GHG emissions that are appropriate for highway hauling applications in Canada, such as technologies that reduce aerodynamic drag and main engine idling.

The standards for heavy line-haul tractors have been set based on the results from GEM simulations where the technology adoption rates and specifications modelled for these vehicles were more representative of these weight categories. The results of these simulations have led to the establishment of emission standards for heavy line-haul tractors that are slightly less stringent than the standards for tractors that have a GCWR of less than 97 000 lb, due to differences in the feasible adoption of applicable technologies that reduce emissions. The emission performance of tractors that have a GCWR of 97 000 lb or more, but less than 120 000 lb, will be assessed using the set of regulatory subcategories in GEM for standards for tractors that have a GCWR of less than 120 000 lb in the U.S. The emission performance of tractors that have a GCWR of 120 000 lb or more will be assessed using the set of regulatory subcategories in GEM for the corresponding optional U.S. tractor standards.

Heavy-haul tractors

The Amendments establish alternative CO₂ vehicle emission standards for transport tractors that have a GCWR of at least 63 503 kg (140 000 lb), which are defined as “heavy-haul tractors,” starting with the 2021 model year. Heavy-haul tractors are designed for on-road specialty applications that typically involve hauling very high payloads over shorter distances. Given that greater weights are permitted on Canadian roads relative to the U.S., and that standards are established for heavy line-haul tractors to account for this context, the Amendments introduce a Canadian-specific definition of a heavy-haul tractor. In Canada, a heavy-haul tractor is defined as any tractor that has a GCWR of 140 000 lb or more, whereas in the U.S., a heavy-haul tractor is defined as any tractor that has a GCWR of 120 000 lb or more. The emission standards for heavy-haul tractors in Canada, which are less stringent than those for heavy line-haul tractors, correspond to the standards for heavy-haul tractors in the U.S. Companies operating in Canada can elect for their tractors that have a GCWR of 140 000 lb or more to conform to the standards for heavy-haul tractors, or to the more stringent standards for heavy line-haul tractors that have a GCWR of 120 000 lb or more.

Auxiliary power units

Important GHG emission reductions can be realized from the operation of auxiliary power units (APUs) installed in transport tractors as an alternative to main engine idling. Nevertheless, diesel-powered APUs are sources of particulate matter emissions; consequently, an increase in such emissions is likely to result from an increased use of APUs powered by auxiliary diesel engines. For these reasons, the Amendments modify the On-Road Vehicle and Engine Emission Regulations to include standards for particulate matter emissions from tractors equipped with APUs.

Heavy-duty engines

The Amendments include more stringent standards for CO₂ emissions from compression-ignition engines designed for vocational vehicles and tractors, starting with model year 2021 engines. Engine emission performance will be measured using prescribed test cycles on an engine dynamometer.

Alternative engine emission standards

The Amendments introduce alternative emission standards for some engines of the model years 2024 to 2026 that align with the corresponding alternative standards in the U.S., while accounting for Canadian-specific circumstances. In the U.S., a company that chooses to have all of its model year 2020 engines designed for vehicles that have a GVWR of 8 845 kg (19 500 lb) or more conform in advance to the standards applicable to model year 2021 engines is allowed to have its engines of model years 2024 to 2026 comply with alternative emission standards with a slightly lower level of stringency, and is allowed to extend, until 2030, the life of any CO₂ emission credits obtained for its engines of model years 2018 to 2024. Since heavy-duty engines are predominantly imported into Canada, a company operating in Canada may be importing engines from various engine manufacturers operating in the U.S. that follow different compliance strategies. Therefore, the Amendments allow companies operating in Canada to import any engines of the model years 2024 to 2026 that comply with the alternative emission standards and extend, until 2030, the life of any CO₂ emission credits obtained for their engines of model years 2018 to 2024 designed for vehicles that have a GVWR of 19 500 lb or more. ^{footnote 15}

In the case of a vocational vehicle or tractor that is a hybrid vehicle powered by a heavy-duty engine which provides energy to the energy storage feature of the vehicle in question, there may not be an engine on the market in the near term that both conforms to the applicable CO₂ emission standard and has the physical or performance characteristics necessary for the operation of the hybrid vehicle. For these reasons, the Amendments include a transitional flexibility that allows a company for any given model year, up to and including the 2027 model year, to equip no more than 100 of its vocational vehicles and tractors that are hybrid vehicles with engines meeting alternative emission standards that are similar to those applying to off-road compression-ignition engines.

Vehicles equipped with an engine that has previously been sold to a first retail purchaser

The Amendments specify that every vocational vehicle or tractor for which the main assembly is completed on or after January 1, 2021, must be equipped with a heavy-duty engine that meets the emission standards applicable to the model year corresponding to the calendar year during which the main assembly of that vocational vehicle or tractor is completed or, if certain conditions are met, corresponding to an earlier calendar year. However, some vocational vehicles and tractors are made up of new body parts, which include the chassis structure, frame, front axle and brakes, but they are powered by engines that have previously been sold to a first retail purchaser. These vocational vehicles and tractors are commonly referred to as “glider vehicles.” The Amendments take glider vehicles into account by allowing a company to equip a vocational vehicle or tractor with an engine that meets the emission standards applicable to a model year that is different than the model year of that vocational vehicle or tractor, provided that the engine has previously been sold to a first retail purchaser and one of the following conditions is satisfied:

(i) The engine has not reached the end of its useful life since its original date of manufacture;
(ii) The engine has accumulated less than 160 935 kilometres (100 000 miles) of operation since its original date of manufacture;
(iii) Less than three years have passed since the original date of manufacture of the engine; or
(iv) The engine is of the 2010 model year or a subsequent model year.

Trailers

The Amendments introduce new standards for CO₂ emissions attributable to trailers hauled by transport tractors. Standards for box van trailers have been set according to the type of box van trailer and take into account technologies installed on trailers to reduce GHG emissions, such as devices to reduce aerodynamic drag, low rolling resistance tires, lightweight components, and tire pressure monitoring and automatic tire inflation systems. ^{footnote 16} The emission performance of box van trailers will be assessed using a prescribed equation with a set of coefficients for calculating CO₂ emissions related to each of the technologies installed on trailers to reduce emissions. Also, the Amendments introduce design-based standards for certain non-box trailers and for box van trailers that cannot be equipped with devices to reduce aerodynamic drag due to their distinct applications. The non-box trailers that are covered by the Amendments are tank trailers designed to transport liquids or gases, flatbed trailers and container chassis trailers. The design-based standards require these trailers to be equipped with low rolling resistance tires and tire pressure monitoring or automatic tire inflation systems.

Compliance flexibility

The Amendments offer the following flexibility to facilitate compliance with the emission standards.

CO2 emission credit systems

The Amendments extend the existing system of CO₂ emission credits for heavy-duty vehicles and engines to help meet overall environmental objectives in a manner that provides companies with compliance flexibility. The system will continue to allow companies to generate, bank and trade emission credits for vehicles and engines in the same manner as in the Regulations. ^{footnote 17} The Amendments allow a company to be eligible for additional emission credits by means of enhanced credit multipliers for plug-in hybrid, electric or fuel cell vehicles of the model years 2021 to 2027, if the company chooses to participate in the CO₂ emission credit system. If a company incorporates innovative technologies into its vehicles or engines which generate reductions in CO₂ emissions that cannot be measured during prescribed emission testing or through the use of GEM, the Amendments continue to allow the company to be eligible for additional emission credits.

Also, the Amendments provide a company that manufactures or imports full-aero box van trailers with the flexibility of participating in a separate CO₂ emission credit system for trailers, starting with trailers of the 2027 model year. This system will help reduce the compliance burden associated with the new emission standards by allowing a company to generate and use CO₂ emission credits for a given model year in order to meet the standards applicable to full-aero box van trailers on average for that model year, or to offset any emission deficit associated with these trailers that has occurred within the three previous model years.

Exemptions for small volume companies

Under the Regulations, some companies have the option to exempt their vocational vehicles and tractors of a given model year from complying with the CO₂ vehicle emission standards. This exemption is available for companies that manufactured or imported fewer than 200 vocational vehicles and tractors for sale in Canada in 2011 and fewer than 200 vocational vehicles and tractors for sale in Canada, on average, over the three most recent consecutive model years. Starting with the coming into force of the Amendments and the corresponding model year, the Amendments will simplify the requirements that companies manufacturing or importing vocational vehicles and tractors must satisfy to qualify for the existing exemption for small volume companies, and this exemption will also be expanded to include the engines installed in exempt vocational vehicles and tractors. Further, the Amendments contain a temporary, one-year exemption from the CO₂ emission standards for small volume companies that manufacture or import fewer than 100 trailers for sale in Canada in 2020.

Transitional exemption for trailers

The Amendments include a transitional exemption for companies that manufacture or import trailers of model years 2020 to 2026. This transitional exemption allows a company to exempt a number of box van and non-box trailers from the CO₂ emission standards under the two following conditions:

(i) the number of box van or non-box trailers exempt must not exceed 20% of the total number of box van or non-box trailers that the company manufactures or imports for sale in Canada for a given model year; and
(ii) this number must not exceed 25 in the case of box van trailers, or 20 in the case of non-box trailers, for a given model year.

Reporting requirements

The Amendments expand the scope of the annual end-of-model-year report to manufacturers and importers of trailers used with transport tractors for which the manufacture is completed on or after January 1, 2020. The information required to be included in this report concerning trailers has been streamlined to minimize additional administrative burden.

Minor amendments to other regulations under CEPA

Minor amendments to other regulations under CEPA are being made to ensure consistency with the Department’s suite of on-road vehicle and engine emission regulations, and with corresponding regulatory provisions in the U.S. In particular, the Amendments modify the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations to incorporate a provision that allows companies to be eligible for an expanded CO₂ emission allowance for their full-size hybrid pick-up trucks of the model years 2017 to 2021. Also, the Amendments modify the On-Road Vehicle and Engine Emission Regulations to update references to the U.S. Code of Federal Regulations, address discrepancies between the English and French versions, and improve the clarity of the regulatory text.

Regulatory and non-regulatory options considered

The Government of Canada considered maintaining the regulatory status quo or updating the regulatory requirements in order to achieve reductions in GHG emissions from on-road heavy-duty vehicles and engines relative to current baseline emission projections.

Maintaining status quo

The Regulations establish Phase 1 standards for heavy-duty vehicles and engines that begin in the 2014 model year and increase in stringency to the 2018 model year. In the absence of the Amendments, the 2018 model year standards would apply to all heavy-duty vehicles and engines of the 2019 model year and subsequent model years, and GHG emissions attributable to trailers would remain unregulated.

Without the Amendments, vehicles and engines compliant with the Phase 1 standards and unregulated trailers would continue to be allowed to be manufactured and imported for sale in Canada. Consequently, the additional GHG emission reductions and other benefits that are associated with the Phase 2 standards for vehicles, engines and trailers would not be fully realized. Since the vehicle and trailer manufacturing sectors in Canada and the U.S. are highly integrated, maintaining the status quo would create a non-level playing field for manufacturers and importers operating in the Canada–U.S. market. It would allow Canadian companies that manufacture or import less expensive heavy-duty vehicles and trailers that do not meet the Phase 2 standards to place competitive pressure on other companies operating in Canada that would comply with the Phase 2 standards. For these reasons, this option was rejected.

More stringent and new regulatory requirements

Updating the regulatory requirements and implementing common Canada–U.S. regulatory standards is the approach that has been selected. It is expected that important incremental reductions in GHG emissions will result from the introduction of more stringent emission standards for heavy-duty vehicles and engines, as well as new emission standards for trailers hauled by transport tractors, relative to current baseline emission projections.

The vehicle and trailer manufacturing sectors in Canada and the U.S. are highly integrated, and there is a long history of collaboration in working towards the establishment of common emission standards. This approach will provide regulatory certainty to facilitate investment decisions and minimize regulatory burden by allowing manufacturers and importers to use common information, data and emission testing results to demonstrate compliance with the Phase 2 standards and other regulatory requirements. This approach will also help preserve the competitiveness of the heavy-duty vehicle and trailer manufacturing sectors in Canada and help maximize efficiencies relating to the development and administration of the respective programs in the two countries.

Benefits and costs

An analysis of the incremental impacts was conducted using reference and regulatory cases. The costs and benefits of the Amendments have been assessed in accordance with the Canadian Cost-Benefit Analysis Guide published by the Treasury Board Secretariat (TBS). ^{footnote 18}

The expected impacts of the Amendments are presented in the logic model (Figure 1) below. Compliance with the stricter limits in the Amendments for GHG emissions from heavy-duty vehicles will lead to important GHG emission reductions and fuel savings by means of more effective vehicle emission technologies. These fuel savings are anticipated to result in reduced refuelling time for vehicle operators and lead to additional opportunities for vehicle operators to transport goods and provide services (i.e. travel benefits). Compliance with the Amendments will also result in health and environmental benefits for Canadians through improvements in air quality.

Figure 1: Logic model for the analysis of the Amendments

Amendments to the Regulations: Introduction of new GHG emission (Phase 2) standards for on-road heavy-duty vehicles which, in turn, are expected to lead to the adoption of a suite of technologies to comply with these standards	→	Application of more effective GHG emission technologies: Costs to vehicle owners and operators	→	Reductions in GHG and air pollutant emissions from vehicles	→	Reduced climate change impacts and improvements in air quality	→	Net societal benefits
	→		→	Reductions in GHG and air pollutant emissions from vehicles		Accidents, congestion and noise resulting from rebound effect	→	Net societal benefits
		↓
		Reductions in fuel consumption and refuelling time	→	Increases in distance travelled by vehicles (“rebound effect”)	→	Opportunities to transport goods and provide services (travel benefits) resulting from rebound effect	→	Net sectoral benefits
		Reductions in fuel consumption and refuelling time	→	Net reductions in expenditures (payback) for vehicle owners and operators			→	Net sectoral benefits

Analytical framework

Incremental impacts are analyzed in terms of changes to vehicle technologies, emissions, and associated costs and benefits, in the regulatory case compared to the reference case. To the extent possible, benefits and costs are quantified and monetized, and the monetized impacts are expressed in 2016 Canadian dollars. The analysis begins in 2020 and ends in 2050, with 2018 being the present value base year. Unless otherwise indicated, the monetized impacts are analyzed in present value terms, applying a 3% discount rate for future years, in accordance with TBS guidance for environmental and health regulatory analyses. Other identified impacts have been considered qualitatively.

The Department conducted two distinct types of analysis that show the projected impacts of the Phase 2 standards from different perspectives. First, a model year analysis was conducted to estimate the costs and benefits associated with the lifetime operation of Phase 2 vehicles of model years 2020 to 2029 (MY2020–2029). ^{footnote 19} In addition, an alternative calendar year analysis was conducted to provide estimates of the cumulative impacts attributable to all Phase 2 vehicles from 2020 to 2050. Results from both analyses are presented below.

The reference case assumes that emission rates corresponding to the Phase 1 standards in the Regulations for MY2018 engines, heavy-duty pick-up trucks and vans, vocational vehicles, and transport tractors are extended indefinitely into the future, with no change in stringency. ^{footnote 20} Further, the reference case does not include any emission standards for trailers used with transport tractors. ^{footnote 21}The regulatory case assumes that new GHG emission standards are introduced for trailers used with transport tractors beginning with MY2020, and that more stringent GHG emission standards are introduced for the currently regulated categories of vehicles (heavy-duty pick-up trucks and vans, vocational vehicles, and transport tractors) and engines beginning with MY2021. These emission standards, which are collectively referred to as the “Phase 2 standards,” increase in stringency up to MY2027 and maintain full stringency thereafter. Overall emission reductions, relative to reference case emission projections, are expected to increase over time as vehicles and trailers that are compliant with the Phase 2 standards become a larger percentage of the in-use fleet. It is projected that most on-road heavy-duty vehicles in Canada will be compliant with these standards by 2050 in the regulatory case.

In order to assess the impacts of the Amendments, it was necessary to obtain Canadian estimates of future vehicle sales, fuel prices and monetary values for GHG emission reductions; to identify the technologies that manufacturers will likely adopt and the costs they will incur; and to then model future vehicle emissions, fuel consumption and distance travelled, with and without the Phase 2 standards. The key sources of data that were used to complete these tasks, including the final U.S. Phase 2 rule and its associated regulatory impact analysis, are described throughout this analysis. ^{footnote 22}

Updates to the analysis following the publication of the proposed Amendments in the Canada Gazette, Part I

The Department conducted its modelling of the costs and benefits of the proposed Amendments prior to the publication of the final U.S. Phase 2 rule, and the resulting impact analysis thus considered the proposed U.S. Phase 2 rule and its proposed Phase 2 standards which were published by the U.S. EPA in July 2015. When the proposed Amendments were published in the Canada Gazette, Part I on March 4, 2017, the Department committed to update the modelling of impacts in a Canadian context and reassess the costs and benefits associated with the Phase 2 standards that were finalized by the EPA in October 2016. Relative to the proposed U.S. Phase 2 rule, the final rule includes CO₂ emission standards that are more stringent for diesel engines and better tailored to vehicle application for vocational vehicles, as well as new standards for particulate matter emissions from auxiliary power units (APUs).

Various updates were made to the modelling and analysis following the publication of the proposed Amendments and the accompanying regulatory impact analysis statement in the Canada Gazette, Part I. Consequently, the estimated results have changed in a noticeable manner. The key modifications to the analysis that have been made since the publication in the Canada Gazette, Part I are summarized below:

using updated historical vehicle sales and registration data to better inform the forecasts of on-road heavy-duty vehicle populations in Canada, including the forecasts of population distributions within the heavy-duty vehicle fleet and how these populations change over time for a given model year;
updating price levels, exchange rate forecasts, and energy price and demand forecasts;
incorporating into this analysis the emission standards from the final U.S. Phase 2 rule and the latest vehicle technology package costs that were used in the U.S. EPA’s analysis of the final Phase 2 rule;
applying the new emission standards for trailers hauled by transport tractors starting in 2020 (instead of 2018);
aligning with the U.S. EPA’s estimate of the rebound effect for vocational vehicles in the analysis of the final U.S. Phase 2 rule, which was revised from 15% to 5%; and
modifying the present value base year from 2016 to 2018.

As a result of these updates to the modelling and analysis, the overall costs and benefits of the Amendments are projected to be greater than the costs and benefits of the proposed Amendments. Nevertheless, the increase in total benefits exceeds the increase in total costs, so the Amendments are still anticipated to lead to substantial net benefits for Canadians.

Costs

The analysis of costs assumes full compliance with the Phase 2 standards finalized by the U.S. EPA in October 2016, which will impose upfront vehicle technology costs and ongoing maintenance costs on industry stakeholders. Compliance will lead to fuel savings which, in turn, will lead to relatively small increases in the distance travelled by heavy-duty vehicles. This additional “rebound effect” driving is expected to lead to corresponding (i.e. relatively small) increases in accidents, congestion and noise caused by these vehicles. To help ensure that compliance with the Phase 2 standards is maximized, there will also be some business administrative and government costs.

Vehicle technology and maintenance costs

In the regulatory case, the Phase 2 standards were applied to all newly manufactured or imported trailers of the 2020 model year and subsequent model years hauled by on-road transport tractors, and to all newly manufactured or imported on-road heavy-duty pick-up trucks and vans, vocational vehicles, tractors, and the engines used to power vocational vehicles and tractors, of the 2021 model year and subsequent model years (“Phase 2 vehicles”). Phase 2 vehicles may be powered by a range of energy sources, such as gasoline, diesel, electricity, compressed natural gas, liquefied petroleum gas, or a combination of energy sources. Nonetheless, it is anticipated that Phase 2 vehicles will be predominately powered by gasoline and diesel engines. Consequently, this analysis assumes that all Phase 2 vehicles are powered by gasoline and diesel engines, including hybrid electric engine types.

Multiple Canadian sources of information on historical vehicle sales and registration, and vehicle sales forecasts, were used as inputs into the Motor Vehicle Emission Simulator (MOVES) to project sales of heavy-duty vehicles for use in Canada for each required vehicle class and model year. These projections are summarized in Table 2 in the form of average sales for four periods covering model years 2020 to 2029. Future sales of trailers for use in Canada were projected using the historical sales ratio of trailers to tractors that was estimated to be about 1.6 to 1 in a study conducted for the Department by the International Council on Clean Transportation (ICCT) in 2016 (i.e. the 2016 ICCT study). ^{footnote 23}

Table 2: Average sales of new vehicles per year by engine fuel type and vehicle category

Engine fuel type	Vehicle category	MY 2020	MYs 2021–2023	MYs 2024–2026	MYs 2027–2029
Diesel	Tractors	32,310	32,697	31,245	32,130
	Vocational vehicles	24,750	25,362	24,797	26,520
	Heavy-duty pick-up trucks and vans	22,687	22,795	21,615	21,509
Gasoline	All categories	79,417	79,931	75,859	76,030
No engine	Trailers	51,697	52,316	49,992	51,407

Note: The estimated sales ratio of trailers to tractors of 1.6 to 1 from the 2016 ICCT study was used to project trailer sales.

Phase 2 vehicles, engines and trailers will be required to comply with GHG emission standards that increase in stringency from model years 2020 to 2027 for trailers, and from model years 2021 to 2027 for vehicles and engines, as previously described. Given that these standards are primarily performance-based standards, manufacturers and importers in most cases will be free to choose what technology packages to adopt in order to comply with the standards and achieve emission reductions. However, this will not be the case for certain non-box trailers, and for box van trailers that cannot be equipped with devices to reduce aerodynamic drag due to their distinct applications, for which design-based standards are being introduced. These trailers will be required to be equipped with lower rolling resistance tires, and automatic tire inflation or tire pressure monitoring systems.

The Phase 2 standards were modelled to align with the GHG emission standards of the U.S. EPA for the 2020 model year and subsequent model years, which will provide manufacturers with a common set of Canada–U.S. standards for heavy-duty vehicles, engines and trailers. As a result, the analysis assumes that manufacturers supplying the Canadian and American markets will likely adopt similar technologies to meet these emission standards. Table 3 presents a list of technologies that manufacturers are likely to choose to comply with the Phase 2 standards.

Table 3: Key vehicle technologies expected to be adopted to meet the Phase 2 standards

Vehicle category	Vehicle technology
Tractors	engine efficiency improvements lower rolling resistance tires aerodynamic drag improvements mass reduction use of idle-reducing technologies, such as APUs predictive cruise control speed limiters	driveline, axle and transmission efficiencies low friction lubricants electric and high efficiency accessories tire pressure monitoring systems automatic tire inflation systems
Trailers	devices to reduce aerodynamic drag, such as side skirts, underbody and rear fairings, and gap reducers lower rolling resistance tires	lightweight components tire pressure monitoring systems automatic tire inflation systems
Vocational vehicles	engine efficiency improvements lower rolling resistance tires axle and transmission efficiencies mass reduction workday idle reduction systems	hybrid applications powertrain optimization reduced air conditioning leakage tire pressure monitoring systems automatic tire inflation systems
Heavy-duty pick-up trucks and vans	engine efficiency improvements lower rolling resistance tires aerodynamic drag improvements mass reduction	improved transmissions reduced accessory loads engine stop-start powertrain hybridization

Based on engineering and market analyses, the U.S. EPA determined technology packages that were most likely to be adopted from existing and anticipated sets of vehicle, engine and trailer technologies. Next, the EPA projected the rates of adoption for these technology packages that will be necessary to comply with the Phase 2 standards, and estimated the redesign and application costs per vehicle for those technology packages. The EPA’s assessment of technologies that will be available for each vehicle, engine and trailer category, and the estimates of their relative effectiveness and costs, were guided by published research and independent assessments. For each vehicle, engine and trailer category, technologies that could be applied practically and cost effectively have been identified.

The availability and increase in market penetration rates of technologies have been assessed by the U.S. EPA, together with effectiveness and costs, for each model year from 2018 to 2027. The technology costs are incremental to the costs in the reference case (Phase 1). In the regulatory case, technologies and compliance options are applied to vehicles, engines and trailers in order for companies to meet the standards. The estimated incremental cost per vehicle or trailer is calculated on this basis. Given the integration of the Canada–U.S. vehicle and trailer manufacturing sectors, and the alignment with the Phase 2 standards, the same technology choices and adoption rates assumed by the EPA are used in this analysis. This leads to similar costs per vehicle, adjusted for inflation and exchange rates, as those calculated in the analysis of the final U.S. Phase 2 rule.

The Department has also estimated increased maintenance costs associated with the installation and use of technologies that are expected to be adopted to meet the Phase 2 standards, such as lower rolling resistance tires, APUs and hybrid systems. An effort has been made here to account for differences in climatic conditions in Canada relative to the U.S. and their potentially greater (negative) impact on these technologies. Specifically, from the maintenance costs calculated by the U.S. EPA in its analysis of the final Phase 2 rule, the upper-bound estimate of lifetime maintenance costs per model year was selected for each vehicle category. These upper-bound approximations were then divided by the total vehicle technology costs for the model year and vehicle category in question to produce maintenance cost “premiums.” Lifetime maintenance costs were calculated for the purposes of this analysis by applying these premiums to the applicable vehicle technology costs for each model year. The maintenance cost premiums that were derived from this methodology are expressed as a percentage of vehicle technology costs for each vehicle category, as follows:

for the 2020 model year, 8% for trailers only; and
for the 2021 model year and subsequent model years, 3% for heavy-duty pick-up trucks and vans, 6% for vocational vehicles, and 11% for transport tractors and trailers hauled by these tractors (collectively referred to herein as “tractor-trailers”).

Table 4 presents the estimates of the vehicle technology and maintenance costs incurred by Canadian manufacturers and importers due to the adoption of the Phase 2 standards for MY2020–2029 vehicles.

Table 4: Vehicle technology and maintenance costs for MY2020–2029 Phase 2 vehicles (millions of dollars)

	MY 2020	MYs 2021–2023	MYs 2024–2026	MYs 2027–2029	MYs 2020–2029 (total)
Vehicle technology costs
Tractor-trailers	56	917	1,174	1,337	3,484
Vocational vehicles	0	135	218	281	634
Heavy-duty pick-up trucks and vans	14	218	349	385	966
Total	70	1,270	1,741	2,002	5,084
Maintenance costs
Tractor-trailers	5	101	129	147	382
Vocational vehicles	0	8	13	17	38
Heavy-duty pick-up trucks and vans	0	7	10	12	29
Total	5	116	153	175	449

Note: Costs are discounted to present value at 3% per year. Totals may not sum due to rounding.

Accidents, congestion and noise

In the context of heavy-duty vehicles, increased vehicle fuel efficiency is expected to lead to more intensive vehicle use. This increase in vehicle use in response to lower vehicle operating costs is referred to as the “rebound effect,” and is measured in vehicle-kilometres (distance) travelled. The rebound effect is expected to lead to more accidents, congestion and noise.

The rebound effect in this analysis refers to the fraction of gasoline and diesel savings expected to result from an increase in fuel efficiency that is offset by additional vehicle use. Overall, increases in annual distance travelled per vehicle in the regulatory case, in response to total vehicle operating cost savings due to fuel savings, are estimated to be small, averaging around 0.8% over the 2020–2050 period.

There are no identified Canadian estimates of heavy-duty vehicle costs per kilometre for accidents, congestion and noise. The Department used the central estimates from the analysis of the final U.S. Phase 2 rule for marginal accident, congestion and noise costs due to increases in vehicle distance travelled. The per-kilometre cost estimates were applied in this analysis to the Canadian estimates of distance travelled due to the rebound effect in order to obtain estimates of the overall value of accidents, congestion and noise for each vehicle category.

Table 5 presents the estimates of the accident, congestion and noise costs due to increases in distance travelled by MY2020–2029 vehicles over the 2020–2050 period.

Table 5: Additional costs due to accidents, congestion and noise for MY2020–2029 Phase 2 vehicles (millions of dollars)

	MY 2020	MYs 2021–2023	MYs 2024–2026	MYs 2027–2029	MYs 2020–2029 (total)
Costs due to accidents, congestion and noise
Tractor-trailers	30	80	68	62	239
Vocational vehicles	0	45	38	36	118
Heavy-duty pick-up trucks and vans	0	58	49	43	149
Total	30	183	154	140	507

Note: Costs are discounted to present value at 3% per year. Totals may not sum due to rounding.

Business administrative and government costs

The Amendments will introduce incremental administrative costs for trailer manufacturers and importers, while reductions in administrative burden are expected for small volume companies that manufacture or import vocational vehicles and tractors. Business administrative costs are discussed in further detail in the section of this statement concerning the “One-for-One” Rule. The annualized business administrative costs are estimated to be approximately $23,000 per year (undiscounted).

As a result of the addition of the CO₂ emission standards for trailers, there will be federal government costs for additional compliance promotion, enforcement activities and regulatory administration. The annualized government costs are estimated to be up to $600,000 per year (undiscounted). No incremental government costs related to ongoing administration, enforcement activities or emission verification operations for the categories of heavy-duty vehicles and engines that are currently subject to the Phase 1 standards are anticipated. The existing implementation strategy for executing the GHG regulatory program for MY2014–2018 heavy-duty vehicles and engines will be extended to vehicles and engines of the 2019 model year and subsequent model years.

Calendar year analysis of costs

In the regulatory case, the Phase 2 standards will be phased in starting with MY2020, reach full stringency with MY2027, and maintain this level of stringency until 2050. A calendar year analysis was conducted to estimate the costs attributable to all Phase 2 vehicles from 2020 to 2050. From this perspective, the costs are estimated at $18.9 billion, largely due to the additional costs of the vehicle technologies expected to be adopted to meet the Phase 2 standards. Table 6 shows the breakdown of these costs for all heavy-duty vehicles in select years and over the 2020–2050 period.

Table 6: Monetized costs for all Phase 2 vehicles in select years (millions of dollars)

	2020	2030	2040	2050	2020–2050 (total)
Vehicle technology costs	70	631	535	438	16,289
Maintenance costs	5	55	47	39	1,429
Costs due to accidents, congestion and noise	6	40	43	41	1,146
Total	81	726	625	517	18,864

Note: Costs are discounted to present value at 3% per year. Totals may not sum due to rounding.

Benefits

The Department adapted and employed the U.S. EPA’s peer-reviewed MOVES model to estimate the impact of the Phase 2 standards in a Canadian context. Key data for Canadian vehicle operating conditions, fuel properties and vehicle characteristics were incorporated into MOVES. Emission and fuel consumption estimates were modelled in MOVES annually at the national level for the reference and regulatory cases for the years 2020 to 2035, 2040, 2045 and 2050. In order to estimate cumulative impacts at the national level in the reference and regulatory cases, linear growth rates between the years 2035, 2040, 2045 and 2050 were applied.

For the reference case, emissions from heavy-duty vehicles and engines of the 2014 model year and subsequent model years were assumed to meet the existing Phase 1 emission standards. Fuel quality parameters were estimated from reporting data collected annually from fuel refiners and importers under several departmental regulations. Historical vehicle sales and registration data used for the Phase 1 regulatory analysis were complemented by a key dataset purchased by the Department from R.L. Polk & Company (acquired by IHS Markit), covering the Canadian heavy-duty vehicle fleet up to 2015. Forecasts of future vehicle sales were informed by a study conducted in 2015 for the Department by Environ (acquired by Ramboll), while estimates of historical sales of trailers were obtained from the 2016 ICCT study.

For the regulatory case, vehicle emission rates were assumed to meet the Phase 2 standards for the 2020 model year and subsequent model years, with increasing stringency over model years 2020 to 2027, as previously described. Vehicle fleet composition and size were assumed to be the same in the reference and regulatory cases. In terms of vehicle fleet activity, the Canadian analysis used the same rebound effect estimates as those employed by the U.S. EPA in the analysis of the final U.S. Phase 2 rule; specifically, 5% for tractor-trailers; 10% for heavy-duty pick-up trucks and vans; and 5% for vocational vehicles. These rebound effect estimates were applied to annual Canadian estimates of the baseline distance travelled by the vehicle fleet to project the increase in distance travelled attributable to the rebound effect in the regulatory case.

GHG emission reductions

The Regulations and Amendments address emissions of three GHGs: CO₂, methane (CH₄), and nitrous oxide (N₂O). In order to comply with the Phase 2 standards, manufacturers are expected to adopt various technologies that will increase the fuel efficiency associated with the operation of on-road heavy-duty vehicles. As a result of the anticipated adoption of technologies improving fuel efficiency, the Phase 2 standards will lead to significant GHG emission reductions.

The Phase 2 standards are estimated to result in lifetime reductions of CO₂e emissions for the cohort of vehicles in the model year analysis, increasing from 0.4 Mt for MY2020 vehicles to 32.6 Mt for MY2027–2029 vehicles.^footnote24 The emission reductions from MY2020 vehicles are fully attributable to the standards that will apply to MY2020 trailers hauled by transport tractors. Overall, the Phase 2 standards are estimated to result in a cumulative reduction of around 73.1 Mt of CO₂e emissions with respect to the portion of the lifetime operation of MY2020–2029 vehicles that occurs over the 2020–2050 period.

The Phase 2 standards will reach full stringency with model year 2027 and remain in full effect for all on-road heavy-duty vehicles of subsequent model years. The average reduction in GHG emissions per model year during the lifetime operation of these vehicles will thus likely be similar to the reduction of 10.8 Mt of CO₂e emissions that has been estimated with respect to the lifetime operation of MY2027 Phase 2 vehicles that occurs over the 2020–2050 period.

Figure 2 presents the modelled trends in GHG emission reductions attributable to the Phase 2 standards with respect to the lifetime operation of MY2020–2029 heavy-duty vehicles over the 2020–2050 period. The increasing stringency of these standards, which occurs with model years 2021, 2024 and 2027, is clearly shown.

Figure 2: Lifetime GHG emission reductions from MY2020–2029 Phase 2 vehicles over the 2020–2050 period

Graph - Detailed information can be found in the surrounding text.

The estimated value of avoided damages from GHG emission reductions is based on the avoided climate change damages due to emissions of CO₂, CH₄ and N₂O. The social cost of CO₂, commonly referred to as the social cost of carbon, and the social costs of CH₄ and N₂O, are monetary measures of the global climate change damages expected from the atmospheric emissions in a given year of an additional tonne of CO₂, CH₄ and N₂O, respectively. Alternatively, these social costs can be used to measure the value (benefits) of avoided damages from marginal decreases in emissions of CO₂, CH₄ and N₂O. The central estimates of the social costs of CO₂, CH₄ and N₂O have been recently updated and published by the Department.^footnote25 These central estimates are employed throughout this analysis to generate estimates of the value of the projected changes in emissions of these three GHGs.

The estimates of GHG emission reductions from MY2020–2029 Phase 2 vehicles are summarized in Table 7, along with the associated monetized benefits that have been calculated with the central estimates of the social costs of CO₂, CH₄ and N₂O.

Table 7: GHG emission reductions from MY2020–2029 Phase 2 vehicles

	MY 2020	MYs 2021–2023	MYs 2024–2026	MYs 2027–2029	MYs 2020–2029 (total)
GHG emission reductions (Mt of CO₂e)
Tractor-trailers	0.4	11.8	16.7	21.6	50.4
Vocational vehicles	0.0	2.4	4.4	6.1	12.9
Heavy-duty pick-up trucks and vans	0.0	1.3	3.6	4.9	9.8
Total	0.4	15.6	24.6	32.6	73.1
Benefits due to GHG emission reductions (millions of dollars)
Tractor-trailers	15	467	638	802	1,922
Vocational vehicles	0	96	167	225	488
Heavy-duty pick-up trucks and vans	0	53	135	180	369
Total	15	616	941	1,207	2,779

Note: Benefits are discounted to present value at 3% per year. Totals may not sum due to rounding.

Fuel savings

Manufacturers are expected to meet the Phase 2 standards by adopting heavy-duty vehicle, engine and trailer technologies that will improve vehicle energy efficiency, and these gains in vehicle energy efficiency are anticipated to yield important gasoline and diesel savings for the owners and operators of on-road heavy-duty vehicles. MOVES was used to estimate the energy efficiency gains due to technological improvements, and these energy savings were then converted to fuel savings using standard conversion procedures.

For the cohort of vehicles in the model year analysis, the technological improvements made to meet the Phase 2 standards will lead to fuel savings that increase from 0.1 billion litres for MY2020 vehicles to 12.4 billion litres for MY2027–2029 vehicles. Similar to the GHG emission reductions from MY2020 vehicles, fuel savings from these vehicles are fully attributable to the standards that will apply to MY2020 trailers used with transport tractors. Altogether, the Phase 2 standards are estimated to result in cumulative fuel savings of about 27.7 billion litres with respect to the portion of the lifetime operation of MY2020–2029 vehicles that occurs over the 2020–2050 period.

Fuel price forecasts for both gasoline and diesel were adopted from the Department’s Energy-Emissions-Economy Model for Canada (E3MC) for the years 2017 to 2035. The E3MC model is an end-use model that incorporates current Canadian projections of energy supply, and of petroleum and natural gas prices, from the National Energy Board. It uses these data to generate energy demand forecasts that are primarily based on consumer-choice modelling and historical relationships between macroeconomic and fuel price variables. Fuel prices beyond 2035 were projected based on the average growth rate of fuel prices for the years 2020 to 2035 in the E3MC model.

Pre-tax gasoline and diesel prices were used to generate estimates of the benefits due to fuel savings from MY2020–2029 vehicles, which are summarized in Table 8.^footnote26

Table 8: Fuel savings from MY2020–2029 Phase 2 vehicles

	MY 2020	MYs 2021–2023	MYs 2024–2026	MYs 2027–2029	MYs 2020–2029 (total)
Fuel savings (millions of litres)
Tractor-trailers	145	4,400	6,212	8,063	18,820
Vocational vehicles	0	920	1,660	2,310	4,890
Heavy-duty pick-up trucks and vans	0	553	1,456	2,005	4,014
Total	145	5,872	9,329	12,378	27,723
Benefits from fuel savings (millions of dollars)
Tractor-trailers	106	3,337	4,438	5,412	13,294
Vocational vehicles	0	690	1,174	1,537	3,401
Heavy-duty pick-up trucks and vans	0	404	1,008	1,307	2,720
Total	106	4,432	6,620	8,256	19,415

Note: Fuel savings include reductions in both diesel and gasoline use, and are monetized using pre-tax fuel prices. Benefits are discounted to present value at 3% per year. Totals may not sum due to rounding.

Since the projected fuel savings shown above should be more than enough on their own to motivate further GHG emission reductions, reasons that help explain why vehicle owners are not expected to fully respond to future fuel savings and adopt more efficient technologies in the absence of the Amendments have been considered. To begin, comprehensive and reliable information on the effectiveness and efficiency of new technologies is not always available, and buyers may as a result be reluctant to purchase heavy-duty vehicles equipped with these new technologies. Further, if buyers are not directly responsible for future fuel costs, then there are reduced (or “split”) incentives for them to invest in vehicles with technologies that improve fuel efficiency. Buyers may also underestimate future fuel savings due to uncertainty regarding future fuel prices and the effectiveness of new technologies in reducing fuel consumption. Altogether, costly information, split incentives and uncertainty concerning future market conditions are expected to limit the adoption of new technologies in the absence of further government intervention.

Additional benefits related to fuel savings

In addition to directly reducing the fuel expenditures of owners and operators of on-road heavy-duty vehicles, improved fuel efficiencies will generate two additional effects. All else being equal, increased fuel efficiencies will lead to less time spent refuelling for operators, while these improved efficiencies and less time spent refuelling will yield increases in the distance travelled by heavy-duty vehicles which, in turn, will increase the opportunities to transport goods and provide services with these vehicles.

Fuel savings are expected to reduce refuelling frequency, which is a time-saving benefit for vehicle operators. The calculation of refuelling time savings uses the reduced number of litres of fuel consumed in a given year, for each of the main vehicle categories, and divides that value by fuel tank volume and refill amount to obtain the number of refills. This result is multiplied by the time taken per refill to determine the time saved in that year. The inputs used in this calculation were taken from the analysis of the final U.S. Phase 2 rule, with the wage rate estimates by vehicle type being converted to 2016 Canadian dollars. Using these inputs, the benefits of refuelling time savings are expected to be $414 million for the MY2020–2029 fleet (Table 9).

The increase in travel associated with the rebound effect will produce additional benefits to vehicle owners and operators, which reflect the value of the increase in opportunities that will become accessible with additional travel. Given that vehicles are projected to make more frequent or longer trips when the cost of driving declines, the economic benefits from this supplementary travel are estimated to exceed supplementary expenditures for the fuel consumed.

The total travel benefits from increased distance travelled due to the rebound effect are estimated by adding the benefits realized from the additional fuel expenditures resulting from increased vehicle use, and the additional benefits (surplus) to vehicle owners and operators from increased distance travelled (“owner/operator surplus”). Owner/operator surplus was calculated by multiplying the estimated reduction in vehicle operating costs per kilometre by the projected increase in the annual number of kilometres driven. This result was then multiplied by one half, given that linear demand for vehicle-kilometres travelled was assumed. The value of benefits from increased vehicle use was estimated separately for each of the three main vehicle categories, as it depends on the extent of improvement in fuel efficiency.

Table 9: Additional benefits related to fuel savings from MY2020–2029 Phase 2 vehicles (millions of dollars)

	MY 2020	MYs 2021–2023	MYs 2024–2026	MYs 2027–2029	MYs 2020–2029 (total)
Benefits related to refuelling time savings
Tractor-trailers	1	41	53	63	158
Vocational vehicles	0	27	45	58	130
Heavy-duty pick-up trucks and vans	0	19	47	60	126
Total	1	87	145	181	414
Travel benefits
Tractor-trailers	85	217	182	166	649
Vocational vehicles	0	78	66	62	206
Heavy-duty pick-up trucks and vans	0	117	99	89	305
Total	85	412	347	317	1,161

Note: Benefits are discounted to present value at 3% per year. Totals may not sum due to rounding.

Calendar year analysis of benefits

From a calendar year point of view, from 2020 to 2050, the Phase 2 standards could lead to a cumulative reduction of 241.4 Mt of CO₂e emissions from all Phase 2 vehicles. In terms of fuel savings, these standards could lead to a cumulative reduction in fuel consumption from all Phase 2 vehicles of 91.7 billion litres from 2020 to 2050. Over this period, the total benefits for the calendar year analysis are projected to be $68.1 billion, mostly due to fuel savings ($55.7 billion), the value of increased travel opportunities ($2.7 billion) and the value of GHG emission reductions ($8.4 billion). The main results of the calendar year analysis of benefits are presented in Table 10.

Table 10: Benefits from all Phase 2 vehicles in select years

	2020	2030	2040	2050	2020–2050 (total)
Quantified benefits
GHG emission reductions (Mt of CO₂e)	0.1	5.8	10.8	13.8	241.4
Fuel savings (millions of litres)	27	2,199	4,101	5,252	91,653
Monetized benefits (millions of dollars)
Benefits due to GHG emission reductions	3	230	377	415	8,419
Benefits from fuel savings	24	1,654	2,448	2,573	55,747
Reduced refuelling time benefits	0	36	52	50	1,166
Travel benefits	18	94	102	103	2,734
Total	46	2,014	2,978	3,141	68,066

Note: Fuel savings include reductions in both diesel and gasoline use and are monetized using pre-tax fuel prices. Benefits are discounted to present value at 3% per year. Totals may not sum due to rounding.

Other impacts considered

The Amendments will lead to impacts in addition to those analyzed above. These additional impacts are expected to be relatively small in magnitude when compared to the total benefits and costs and would not change the net benefit results in a meaningful way. These additional impacts have thus been considered outside of the scope of the main analysis and are discussed below.

Additional reductions in GHG emissions

The Amendments will establish a leakage standard for refrigerants from air conditioning systems in vocational vehicles, which will serve to minimize leaks from these systems and thereby reduce emissions of hydrofluorocarbons (HFCs) and other refrigerants.^footnote27 Although the impacts of reducing refrigerant emissions have not been quantified or monetized, these impacts are expected to add, to a small extent, to the overall benefits of GHG emission reductions estimated above.

Reductions in air pollutant emissions

The vehicles subject to the Amendments are significant sources of air pollutants, such as fine particulate matter (PM_2.5), nitrogen oxides (NO_x), sulphur dioxide (SO₂), volatile organic compounds (VOCs), carbon monoxide (CO) and other toxic substances. These pollutants affect ambient levels of secondarily formed PM_2.5 and ozone. Exposure to ozone and PM_2.5 (two principal sources of smog) is linked to adverse health impacts, including premature death, and chronic and short-term respiratory problems, as well as negative environmental effects on vegetation, buildings and visibility.

The vehicle, engine and trailer technologies that are expected to be adopted will lead to decreases in fuel consumption and hence reductions in emissions of smog-forming air pollutants, which will positively impact the health and environment of Canadians. In particular, APUs are anticipated to be installed in transport tractors to provide power and climate control for drivers during extended idle operations. The operation of APUs as an alternative to main engine idling will lead to significant reductions in GHG emissions, as well as in emissions of NO_x and VOCs. However, APUs powered by diesel are sources of particulate matter emissions. To eliminate the unintended consequence of increased emissions of particulate matter from a more intensive use of APUs, the Amendments include a standard for these emissions from APUs installed in MY2021–2023 tractors, which increase in stringency for tractors of the 2024 model year and subsequent model years.

Notwithstanding emissions of particulate matter from transport tractors equipped with diesel-powered APUs, the Amendments will not directly regulate emissions of other air pollutants. Nevertheless, technologies that are anticipated to result in decreases in the fuel consumption of heavy-duty vehicles, such as decreases in total operating mass, aerodynamic drag and tire rolling resistance, as well as improvements in engine efficiency, will also lead to reductions in air pollutant emissions.

In order to assess the impacts of these anticipated changes, primary emissions of air pollutants were modelled for the reference and regulatory cases in MOVES for the year 2035 at the provincial/territorial level for NO_x, VOCs, SO₂ and PM_2.5. Table 11 presents the changes in primary emissions of air pollutants from all Phase 2 vehicles in 2035. It is expected that PM_2.5 emissions will in fact decrease, given that the Amendments incorporate standards for particulate matter emissions from APUs in alignment with the final U.S. Phase 2 rule.

Table 11: Emission reductions of key air pollutants from all Phase 2 vehicles in 2035

Air pollutant	Emission reduction (tonnes)	Emission reduction (percentage)
	2035
NO_x	3,080	4.1%
VOCs	240	1.9%
PM_2.5	17	0.6%
SO₂	47	12.5%
CO	1,219	0.8%

Health and environmental benefits

The Department of the Environment and the Department of Health conducted a scenario analysis to evaluate the potential direction and magnitude of the health and environmental impacts of the changes in primary emissions of air pollutants expected to result from the Phase 2 standards. Specifically, the detailed primary emissions that were modelled in MOVES at the provincial/territorial level for the reference and regulatory cases for the year 2035 were used as inputs for ambient air quality modelling within A Unified Regional Air-Quality Modelling System (AURAMS). AURAMS was then used by the Department to estimate the impacts on ambient air quality resulting from the interaction of changes in vehicle emissions with existing ambient air quality, daily weather and wind patterns.

The Department of Health then applied the Air Quality Benefits Assessment Tool (AQBAT) to estimate the health and economic impacts associated with the air quality projections generated by AURAMS for 2035. In particular, the modelled changes in ambient air quality levels were allocated to each Canadian census division and used as inputs for AQBAT. Based on changes in local ambient air quality, AQBAT estimated the likely reductions in average per capita risks for a range of health impacts known to be associated with air pollution exposure. These changes in per capita health risks were then multiplied by the affected populations in order to estimate the reduction in the number of adverse health outcomes across the Canadian population. AQBAT also applied economic values drawn from the available literature to estimate the average per capita economic benefits of lowered health risks.

Similarly, the Department used the air quality modelling results from AURAMS for 2035 as inputs into the Air Quality Valuation Model (AQVM) to assess environmental impacts. Air pollutants such as NO_x, VOCs, SO₂ and PM_2.5 are precursors to the formation of secondary particulate matter and ground-level ozone, which impact air quality and the environment by damaging forest ecosystems, crops and wildlife. The deposition of excess nitrogen on surface waters may also lead to lake and stream eutrophication, which poses a threat to aquatic life. Finally, smog and deposition of suspended particles may impair visibility and result in the soiling of surfaces, thereby reducing the welfare of residents and recreationists, and potentially increasing cleaning expenditures.

Based on this scenario analysis, it was estimated that air quality improvements in 2035 will generate health benefits valued at $48 million and environmental benefits valued at $0.7 million. These values likely represent the minimum annual health and environmental benefits for years after 2035, as an increasing portion of the on-road heavy-duty vehicle fleet will be subject to the Phase 2 standards in these years due to vehicle fleet turnover and changes in vehicle fleet activity. The estimates of potential health and environmental benefits in this scenario analysis have not been included in the main results, as detailed primary emissions at the provincial/territorial level were only modelled for one reference year, which did not allow for a complete analysis of how fleet turnover and changes in fleet activity might influence the magnitude of the health and environmental impacts. By not including these impacts in the net benefit calculations, the total monetized benefits have been underestimated.

Impacts of fuel savings on the upstream petroleum sector

Canada has a small, open economy and is a price-taker in the world petroleum market. Any impact on the prices of petroleum or refined petroleum products resulting from reductions in domestic fuel consumption due to the Amendments is expected to be negligible. Any reduced domestic consumption from fuel savings is expected to be redirected from domestic consumption to increased exports or result in decreased imports, with minimal incremental impacts on the upstream petroleum sector in Canada.

Summary of benefits and costs: Model year analysis

The model year analysis considered the impacts attributable to MY2020–2029 vehicles (i.e. those vehicles produced within the time frame of the regulatory implementation), and the portion of their lifetime operation occurring from 2020 to 2050. From this point of view, the costs of the Phase 2 standards are estimated at $6.1 billion, largely due to the additional costs of the vehicle technologies expected to be adopted to meet these standards ($5.1 billion). The total benefits for this model year analysis are projected to be $23.8 billion, mostly due to fuel savings ($19.4 billion), the value of increased travel opportunities ($1.2 billion) and the value of GHG emission reductions ($2.8 billion). Overall, the net benefits for MY2020–2029 vehicles are estimated at $17.7 billion. The results of this model year analysis are summarized in Table 12.

Table 12: Statement of benefits and costs for the model year analysis

	MY 2020	MYs 2021–2023	MYs 2024–2026	MYs 2027–2029	MYs 2020–2029 (total)
*Monetized impacts (millions of dollars)*
Sectoral benefits
Pre-tax fuel savings	106	4,432	6,620	8,256	19,415
Refuelling time savings	1	87	145	181	414
Travel benefits	85	412	347	317	1,161
Societal benefits
GHG emission reductions	15	616	941	1,207	2,779
Total benefits	207	5,548	8,054	9,961	23,769
Sectoral costs
Vehicle technology costs	70	1,270	1,741	2,002	5,084
Maintenance costs	5	116	153	175	449
Business administrative costs	<1	<1	<1	<1	<1
Societal costs
Accidents, congestion and noise	30	183	154	140	507
Government costs	1	2	1	1	5
Total costs	105	1,570	2,050	2,320	6,045
Net benefits	102	3,977	6,004	7,641	17,725
*Quantified impacts*
GHG emission reductions (Mt of CO₂e)	0.4	15.6	24.6	32.6	73.1
Fuel savings (millions of litres)	145	5,872	9,329	12,378	27,723
*Other impacts considered* additional benefits due to reductions in GHG (refrigerant) emissions from air conditioning systems in vocational vehicles positive health and environmental impacts as a result of reductions in air pollutant emissions from decreases in the amount of fuel consumed by all heavy-duty vehicles minimal net impacts expected relating to the upstream petroleum sector

Note: Benefits and costs are discounted to present value at 3% per year. Totals may not sum due to rounding.

The time frame for assessing impacts in the model year analysis was 2020 to 2050. The emission reductions, fuel savings and related impacts resulting from MY2020–2029 Phase 2 vehicles during the portion of their lifetime operation that occurs after 2050 are not accounted for in the analysis. However, the magnitude of these impacts is anticipated to be relatively small, with benefits that outweigh the associated costs.

Summary of benefits and costs: Calendar year analysis

The calendar year analysis evaluated the cumulative impacts attributable to all Phase 2 vehicles from 2020 to 2050. The incremental costs of the technologies expected to be adopted over this time frame to meet the more stringent GHG emission standards are projected to be $16.3 billion. The total benefits are estimated at $68.1 billion, including fuel savings of $55.7 billion, GHG emission reductions valued at $8.4 billion and additional travel opportunities valued at $2.7 billion. Altogether, the net benefits for all heavy-duty vehicles are projected to be $49.2 billion. The annualized benefits and costs are estimated to be $3.3 billion and $0.9 billion, and hence the annualized net benefits are estimated to be $2.4 billion.

The time frame for the calendar year analysis was 2020 to 2050. Vehicle fleet turnover is expected to result in escalating GHG emission reductions and fuel savings over this period, as an increasing portion of the on-road fleet will meet more stringent emission standards. As a result of this turnover, the GHG emission reductions and fuel savings from Phase 2 vehicles are estimated to be considerably larger in 2050 than in 2030 (or earlier years), since a larger portion of the fleet will meet the Phase 2 standards in this later year. After 2050, as Phase 2 vehicles continue to replace pre-Phase 2 vehicles, benefits that outweigh the associated costs are expected over the lifetime of these new Phase 2 vehicles. In addition, the emission reductions and related benefits resulting from MY2020–2050 Phase 2 vehicles during the portion of their lifetime operation that occurs after 2050 are not accounted for in the analysis.

By 2030, the Phase 2 standards are estimated to achieve cumulative reductions of CO₂e emissions of 28.6 Mt, as shown in Table 13. To attain these GHG emission reductions over the 2020–2030 period, industry stakeholders will incur sectoral costs of around $6.2 billion and realize sectoral benefits of about $9.5 billion. Overall, the anticipated reductions in GHG emissions over this period will be achieved at a sectoral (industry) cost per tonne of $217, and at an industry cost per tonne that takes sectoral benefits into account (i.e. a net industry cost per tonne) of –$116.

However, the vast majority of the emission reductions from Phase 2 vehicles will take place after 2030, given that over 80% of the total distance travelled by these vehicles, from 2020 to 2050, is expected to occur after 2030. Over the 2020–2050 period, industry stakeholders will incur sectoral costs of about $17.7 billion and realize sectoral benefits of around $59.6 billion. The projected reductions in CO₂e emissions of 241.4 Mt will be achieved over this period at an industry cost per tonne of $73, and at a net industry cost per tonne of –$174.

Table 13: Cost per tonne of GHG emissions reduced from Phase 2 vehicles

Type of cost per tonne	Sectoral costs (millions)	GHG emission reductions (Mt of CO₂e)	Cost per tonne of GHG emissions reduced
2020–2030
Industry cost per tonne	$6,218	28.6	$217
Net industry cost per tonne	–$3,331	28.6	–$116
2020–2050 (total)
Industry cost per tonne	$17,718	241.4	$73
Net industry cost per tonne	–$41,929	241.4	–$174

Note: Net industry costs are calculated by subtracting sectoral benefits from sectoral costs associated with all Phase 2 vehicles for the specified period. Benefits and costs are discounted to present value at 3% per year.

These cost-per-tonne results do not account for the value that society places on avoided climate change impacts or the timing of the emissions within the specified period.

Sensitivity analysis

The results of this analysis are based on key parameter estimates, which could be higher or lower than indicated by available evidence. Given this uncertainty, alternative impact estimates have been considered to assess their effects on the expected net benefit results. In particular, a worst-case scenario of both higher costs and lower benefits was considered. As shown in Table 14, there are expected net benefits using discount rates of 3% and 7%, and over a range of alternative impact estimates, which is evidence that the net benefit results are likely robust.

Table 14: Sensitivity analysis — Alternative impact estimates and discount rate (millions of dollars)

Alternatives (model year analysis)	Benefits (B)	Costs (C)	Net benefits (B–C)	Benefit-cost ratio (B/C)
Central case (from Table 12)	23,769	6,045	17,725	3.9
Impacts discounted at 7% per year	14,033	4,520	9,513	3.1
Costs 50% higher than estimated	23,769	9,067	14,702	2.6
Benefits 50% lower than estimated	11,885	6,045	5,840	2.0
Costs 50% higher and benefits 50% lower	11,885	9,067	2,817	1.3

Note: Benefits and costs are discounted to present value at 3% per year, except in the cases in which a 7% rate is used. Totals may not sum due to rounding.

The reference case assumes, for the most part, that vehicle technologies affecting GHG emissions will remain unchanged over the analytical time frame (i.e. that the rate of technology change in the absence of the Phase 2 standards is close to zero). However, this assumption does not account for most natural technological changes that could occur in the heavy-duty vehicle market in the absence of any regulations, or for complementary technological changes that could occur in Canada either in direct response to the final U.S. Phase 2 rule or in anticipation of the Phase 2 standards being introduced in Canada. Under such circumstances, the incremental costs and benefits attributable to the Phase 2 standards will be proportionately reduced, but net benefits for Canadians are still expected.

In the regulatory case, all transport tractors in Canada beginning with MY2021 are assumed to meet more stringent CO₂ vehicle emission standards which correspond to the final U.S. Phase 2 standards for transport tractors that have a gross combined weight rating (GCWR) of less than 54 431 kg (120 000 lb). Due to limitations related to the modelling of vehicle fleet characteristics and activity, the CO₂ vehicle emission standards in the Amendments that are specific to Canada for heavy line-haul tractors and heavy-haul tractors have not been incorporated into the modelling and analysis. Any potential differences in impacts resulting from these Canadian-specific standards are anticipated to be small in comparison to the total impacts in the central case.

Distributional impacts

The heavy-duty vehicle and trailer manufacturing sectors in Canada are concentrated within Ontario, Quebec and the Prairies, with a range of smaller companies dispersed throughout Canada. The Phase 2 standards will require manufacturers to comply by adopting GHG emission-reducing technologies in new vehicles. The analysis of the Phase 2 standards assumes that manufacturers and importers will be able to pass on some of the costs related to technologies that reduce GHG emissions to vehicle purchasers because these increased purchase costs can be shown to be recovered relatively quickly through fuel savings. The distribution of these costs, across Canada, is expected to be consistent with the distribution of future purchases of new heavy-duty vehicles. It is not expected that there will be significant disproportional impacts on any region within Canada.

The Phase 2 standards will increase costs for the Canadian on-road heavy-duty vehicle manufacturing and importing sectors. The average vehicle production costs are expected to increase starting with MY2020 for trailers and with MY2021 for vehicles, and to reach their highest levels with MY2027 when the Phase 2 standards reach full stringency. Consequently, the technologies that are projected to be adopted to meet these standards will be most costly in this model year, making MY2027 a practical point of reference to estimate an upper bound of the average costs per vehicle.

Table 15: Average incremental cost per MY2027 Phase 2 vehicle

Vehicle category	Aggregate incremental costs for new MY2027 vehicles	MY2027 vehicle sales forecast	Average incremental cost per new vehicle	Average cost increase per new vehicle
Tractors	$452,524,543	31,758	$14,249	9%
Vocational vehicles	$100,464,843	32,855	$3,058	3%
Heavy-duty pick-up trucks and vans	$177,334,629	90,492	$1,960	4%
Trailers	$60,110,995	50,813	$1,183	4%

Note: Only vehicle technology and maintenance costs are included in these calculations. Costs are discounted to present value at 3% per year. The estimated total costs per new vehicle that follow are used to calculate the average cost increases per vehicle: $150,000 for tractors; $120,000 for vocational vehicles; $50,000 for heavy-duty pick-up trucks and vans; and $30,000 for trailers.

Table 15 presents estimates of the average incremental costs and average cost increases per new MY2027 vehicle. The analysis of the Phase 2 standards assumes that manufacturers will pass some of the technology costs on to their purchasers. Since these technologies are projected to also generate substantial fuel savings for vehicle owners and operators, these standards are assumed not to impact sales of new heavy-duty vehicles and trailers. A complete analysis of price impacts is beyond the scope of this analysis; nonetheless, a simple payback analysis for the three vehicle categories is presented below.

Payback (cost recovery) analysis

All new heavy-duty vehicle purchasers are assumed to be businesses, not consumers, given that heavy-duty vehicles are generally used for commercial applications. Businesses are expected to evaluate costs and benefits in terms of the expected payback on investment costs. For simplicity, it is assumed that manufacturers pass all of the technology costs on to vehicle owners. Retail (post-tax) fuel prices, taken from the E3MC model, are used as these are the prices paid by vehicle owners. Due to regional variations in fuel taxes, post-tax fuel prices were calculated by weighting fuel sales by regional fuel demand and then adding regional taxes accordingly.

For the reasons mentioned above, MY2027 Phase 2 vehicles were selected for this payback analysis. The payback year is defined as the year of vehicle ownership during which cumulative sectoral benefits exceed cumulative sectoral costs. All calculations are for the average vehicle that drives the average number of kilometres each year. Sectoral costs have been marked up by 15% to account for extra charges that vehicle owners may have to pay, such as additional sales taxes and increases in insurance premiums, to purchase and operate vehicles equipped with new (and more expensive) vehicle technologies. Using a 3% discount rate, the estimated cost recovery is estimated to occur in year three of ownership for heavy-duty pick-up trucks and vans and vocational vehicles, and in year four of ownership for tractor-trailers.

“One-for-One” Rule

With the addition of trailer manufacturers and importers into the federal regulatory framework relating to GHG emissions, the total number of regulated parties will rise. These new stakeholders will face new reporting requirements and associated administrative burden due to the Amendments. In particular, the scope of the annual end-of-model-year report that a company is required to submit under the Regulations will be expanded. In addition to heavy-duty vehicles and engines of the 2014 model year and subsequent model years, the annual report will incorporate the trailers hauled by transport tractors that a company manufactures or imports for sale in Canada, starting with trailers for which the manufacture is completed on or after January 1, 2020. To comply with the new administrative requirements, regulated parties will have to collect data, maintain records, and prepare and submit reports pertaining to their trailers and the CO₂ emission performance of these trailers.

Conversely, the Amendments are expected to result in minor decreases in administrative burden costs incurred by small volume companies that manufacture or import vocational vehicles and tractors under the Regulations. The existing provisions that exempt the vocational vehicles and tractors manufactured or imported by small volume companies from the CO₂ emission standards will be expanded to include the heavy-duty engines installed in these vehicles. Accordingly, the obligations for small volume companies to collect data, maintain records, and prepare and submit reports relating to the GHG emission performance of their heavy-duty engines will be removed.

The “One-for-One” Rule applies to the Amendments. Given the estimated net increases in administrative burden, the Amendments are considered an “IN” under the Rule, and they will require equal and offsetting reductions in administrative costs imposed by other federal regulations.^footnote28 As the Amendments modify the Regulations and do not introduce a new regulatory title, there is no requirement to repeal existing regulations.

The total increase in annualized administrative costs for companies that manufacture or import trailers used with transport tractors is projected to be $15,000, while the total reduction in annualized administrative costs for small volume companies that import heavy-duty engines is estimated to be $1,000. Overall, a new net administrative burden of approximately $14,000 in annualized costs to industry stakeholders will be introduced. Net administrative impacts per stakeholder are projected to be, on average, 5.5 hours per year for about 125 stakeholders, corresponding to approximately $110 in annualized costs per company when allocated over the first 10 years of administrative cost impacts (2020–2029).^footnote29

Small business lens

The small business lens applies to the Amendments since the trailer manufacturing and importing industry in Canada comprises many small companies and new standards for CO₂ emissions attributable to the operation of trailers are being introduced. It is assumed that, on average, the Amendments will have an impact on approximately 115 businesses manufacturing trailers in Canada or importing them, and that about 70% of these stakeholders are small businesses. All trailer companies have been included in this small business lens analysis.

Most of the other companies to which the Amendments apply are Canadian subsidiaries or branches of multinational manufacturers and are not considered small businesses. Nevertheless, there are some independent businesses that import small numbers of heavy-duty vehicles and engines for the purpose of sale in Canada. There are also small independent manufacturers that import incomplete heavy-duty vehicles into Canada for the purpose of completing and selling these vehicles to the end user. It is projected that, on average, 10 businesses that manufacture or import vocational vehicles and tractors will qualify as small volume companies under the Amendments.^{footnote 30}

Regulatory flexibility analysis statement

In total, it is anticipated that the Amendments will result in administrative and compliance cost impacts for about 125 companies that manufacture or import trailers, or small volumes of heavy-duty engines, for sale in Canada. Two regulatory options have been considered for the purposes of analyzing possible avenues through which the costs imposed on these companies could be minimized: an initial option and a flexible option.

Under the initial option, all trailers hauled by transport tractors would be subject to the Amendments and required to fully comply with the CO₂ emission standards, starting with trailers for which the manufacture is completed on or after January 1, 2020, with no flexibility offered to regulated parties. In addition, under this option, the Amendments would not expand the current exemption for small volume companies that manufacture or import vocational vehicles and tractors for sale in Canada to the engines installed in the exempt vehicles.

Under the flexible option, a temporary exemption from the CO₂ emission standards is included for small volume companies that manufacture or import fewer than 100 trailers for sale in Canada in 2020. For businesses that manufacture or import trailers of model years 2020 to 2026, the flexible option will also incorporate a transitional exemption from the CO₂ emission standards under two conditions. First, the number of box van or non-box trailers exempted by a company for a given model year must not exceed 20% of the total number of box van or non-box trailers that the company manufactures or imports for sale in Canada. Second, the number of trailers exempt by a company for a given model year must not exceed 25 in the case of box van trailers, or 20 in the case of non-box trailers.

The flexible option will provide an exemption from the emission standards applicable to the engines installed in exempt vocational vehicles and tractors that are manufactured or imported for sale in Canada by small volume companies. This exemption will also result in eligible companies no longer being required to collect data, maintain records and prepare reports relating to the GHG emission performance of their heavy-duty engines.

Fewer GHG emission reductions will be realized through the flexible option relative to the initial option. However, any incremental risk resulting from the flexible option is anticipated to be negligible. First, the temporary exemption for trailers will only apply to trailers manufactured in 2020, while the transitional exemption for trailers will not apply to the 2027 model year and subsequent model years. Additionally, it is estimated that the temporary and transitional provisions for trailer companies will each result in an exemption of less than 5% of applicable trailers. Concerning heavy-duty engines, it is projected that the compliance flexibility for small volume companies will result in an exemption of less than 1% of all engines for a given model year.

The Amendments will therefore address the vast majority of GHG emissions from the on-road heavy-duty vehicle sector while providing regulatory flexibility to Canadian companies that manufacture or import heavy-duty engines and trailers, many of which are small businesses. Under the flexible option, all mandatory information concerning engines and trailers will be collected by means of end of model year reports that all companies are obligated to prepare and submit to the Department at the end of each model year.

Table 16: Regulatory flexibility analysis

	Annualized value	Present value	Annualized value	Present value
	Initial option (full compliance with final standards)		Flexible option (some trailers and engines exempt)
Incremental costs: Trailers	$58,800,000	$603,000,000	$57,000,000	$584,000,000
Incremental costs: Vocational vehicles and tractors	$0	$0	–$400,000	–$4,400,000
Incremental costs: Trailers, vocational vehicles and tractors	$58,800,000	$603,000,000	$56,600,000	$579,600,000
Incremental cost per company (125 companies)	$470,000	$4,800,000	$450,000	$4,600,000
Risk considerations	Relative to the initial option, the flexible option is expected to result in a slight decrease in GHG emission reductions, as well as a loss of information related to emission performance for some heavy-duty engines and trailers in end of model year reports submitted to the Department. However, any additional risk introduced by the flexible option is anticipated to be low and manageable.

Note: The values in this table are the estimated incremental technology, maintenance and administrative costs that will be incurred by manufacturers and importers of MY2020–2029 trailers, and small volumes of MY2020–2029 vocational vehicles and tractors. Costs are discounted to present value at 3% per year.

Table 16 provides estimates of the incremental vehicle technology costs and administrative costs under the initial and flexible options for Canadian manufacturers and importers of MY2020–2029 trailers, and small volumes of MY2020–2029 vocational vehicles and tractors. The annualized costs per company are estimated to be about $470,000 under the initial option and approximately $450,000 under the flexible option. Thus, the annualized cost savings under the flexible option are around $20,000 per company, for approximately 125 companies. Approximately 70% of these companies are anticipated to be small businesses. The impacts of the Amendments are not expected to affect the ability of these small businesses to operate in Canada, given the following:

(i) The average (per business) costs estimated to be incurred by all 125 companies, which are presented above in Table 16, are expected to be higher than the average costs incurred by small businesses, since small businesses are a subset of all businesses that can qualify for the exemptions in question.
(ii) The total costs incurred by a business will be proportional to the volume of heavy-duty vehicles, engines and trailers that it manufactures or imports, meaning that lower volume businesses will incur relatively lower costs.
(iii) The Amendments create a level playing field for manufacturers and importers in Canada and the U.S., and all businesses will be able to pass some costs on to purchasers.
(iv) The Amendments only apply to three types of non-box, specialty trailers hauled by on-road transport tractors (i.e. container chassis, flatbed and tanker trailers), and it is anticipated that small businesses manufacturing trailers in Canada or importing them will tend to focus their efforts on these and other non-box, specialty trailers.

The Department consulted throughout 2016 and 2017 with the industry association representing Canadian manufacturers of trailers used with transport tractors to better understand the potential impacts of the Amendments on the trailer sector in Canada, which is composed of many small businesses. The comments received from this key stakeholder were taken into consideration during the development of the Amendments, prior to and following their publication in the Canada Gazette, Part I. For the reasons mentioned above, the flexible option is included in the Amendments.

Consultation

Consultations prior to the publication of the proposed Amendments in the Canada Gazette, Part I

On October 4, 2014, the Government of Canada published a notice of intent in the Canada Gazette, Part I to announce its plans to introduce more stringent GHG emission standards in Canada for heavy-duty vehicles and engines for model years following the 2018 model year. The publication of this notice initiated a public comment period that provided an opportunity to conduct early consultations with interested parties and seek input on the development of the proposed Amendments. Altogether, the Department received eight submissions relating to the notice of intent. The comments received were generally supportive of further reducing GHG emissions from heavy-duty vehicles and engines through amendments to the Regulations that would align, where possible, with the emission standards of the U.S. EPA. Some industry stakeholders raised concerns relating to lead time prior to the implementation of the proposed Amendments. Others requested that the Department take Canadian-specific considerations into account in maintaining common standards with the U.S., especially in regard to transport tractors.

On March 3, 2016, the Department held a general consultation session in Toronto, Ontario. The session was attended by approximately 30 participants, including representatives from provincial and territorial governments; other federal government departments; environmental non-governmental organizations; heavy-duty vehicle, engine and trailer manufacturers and importers; vehicle owners and operators; and the associations representing industry stakeholders. The Department received four written submissions following this general consultation session — three from associations representing manufacturers and one from an environmental non-governmental organization. The comments indicated general support for the proposed Amendments, including for the addition of trailers used with transport tractors into the regulatory framework. Further, the comments included recommendations concerning the CO₂ emission credit system for heavy-duty vehicles and engines, compliance flexibility for vehicles and engines covered by a certificate of conformity to emission standards issued by the U.S. EPA (i.e. an EPA certificate of conformity), the exemption for small volume companies that manufacture or import vocational vehicles and tractors, and alignment of test procedures with those of the EPA.

Officials from the Department met bilaterally throughout the remainder of 2016 with industry associations, provincial and territorial governments, an environmental non-governmental organization, and other federal government departments to discuss various technical aspects of the proposed Amendments. These follow-up consultations further supported the development of the proposed Amendments. In 2016, officials from the Department also worked with their U.S. EPA counterparts and consulted with key industry stakeholders to develop additional GHG emission standards for transport tractors with heavier payload capabilities. This work and consultation were carried out in an effort to take Canadian-specific considerations into account, such as higher weight allowances and different rates of adoption for some technologies that reduce emissions. Stakeholders expressed support for the elements of the regulatory proposal that are specific to Canada, and they were offered additional opportunities to provide comments following the publication of the proposed Amendments in the Canada Gazette, Part I.

Consultations following the publication of the proposed Amendments in the Canada Gazette, Part I

The publication of the proposed Amendments in the Canada Gazette, Part I on March 4, 2017, initiated a 75-day comment period where interested parties were invited to submit their written comments. At the same time, the Department published a link to the proposed Amendments on its CEPA Environmental Registry website to make them broadly available to interested parties. The Department also sent an email to a wide range of interested parties to distribute information on the formal consultation process. Finally, the Department reached out separately to representatives of the provincial and territorial governments, Indigenous leadership groups and organizations, industry associations and their members, and environmental non-governmental organizations, in order to provide an overview of the proposed Amendments and answer questions to better inform possible written submissions.

On April 11, 2017, the Department hosted a second general consultation session in Toronto, Ontario. This session was attended by approximately 25 participants representing mainly the same stakeholder groups that attended the first general consultation session held in March 2016, prior to publication of the proposed Amendments in the Canada Gazette, Part I. This second session consisted of a presentation by officials from the Department on the main elements of the proposed Amendments published in the Canada Gazette, Part I and presentations by interested parties, including a presentation on the final U.S. Phase 2 rule by a representative from the U.S. EPA. All participants were invited to share their views relating to the proposed Amendments during a general discussion which closed the session.

On May 9, 2017, the Department held an additional consultation session with manufacturers and importers of trailers hauled by transport tractors and their industry associations. The goal of this session was to provide supplemental information related to the Regulations and the proposed Amendments since these manufacturers and importers were not initially regulated parties under the Regulations.

The Department received a total of 18 written submissions from a range of stakeholders during the 75-day comment period. Overall, there was broad support from stakeholders for reducing emissions of GHGs and other air pollutants from on-road heavy-duty vehicles. Some stakeholders requested changes to the proposed regulatory text to address unique Canadian considerations, improve the clarity of some definitions and other administrative provisions, and add precision with respect to corresponding U.S. provisions. Some stakeholders also requested clarifications regarding the regulatory text and its applicability. The Department has provided detailed explanations to stakeholders and, where appropriate, has made modifications to the regulatory text. In addition, the Department held an information session via webinar on January 18, 2018, to present to interested parties how feedback received during the 75-day comment period had been addressed and to share program-level recommendations on how to finalize the Amendments. The following paragraphs summarize the major issues raised by interested parties and the Department’s consideration and analysis of these issues leading to the finalization of the Amendments.

Alignment with U.S. requirements

Comment: The vast majority of commenters expressed support for the new and more stringent emission standards aligned with corresponding standards set out in the final U.S. Phase 2 rule. Test procedures, as well as continuing to accept EPA certificates of conformity to demonstrate compliance for concurrently sold vehicles and engines, were noted as being most important to stakeholders. However, some manufacturers and owner and operator associations stated that the Amendments should take into account potential differences in Canada relative to the U.S. with respect to climatic conditions, weight and dimension limits, consumer preferences, and market penetration rates of technologies that reduce GHG emissions.

Response: To account for differences in the Canadian heavy-duty vehicle fleet, such as weight and dimension limits and market penetration rates of technologies that reduce GHG emissions, the Amendments contain emission standards for transport tractors that have higher payload capabilities. The Department is aware of the U.S. EPA’s intent announced on August 17, 2017, to revisit provisions of the final rule following concerns raised by stakeholders in the trailer and glider industry, and of the EPA’s publication on November 16, 2017, of a notice of proposed rulemaking to repeal the glider vehicle provisions in the final rule. The Department is closely monitoring these developments, especially in the context of regulatory requirements in Canada that establish emission standards which correspond to U.S. standards and that incorporate U.S. test procedures. Depending on the outcomes of any amendment process in the U.S., the Department will assess whether future amendments to the applicable Canadian regulations are warranted.

Operating conditions in Canada

Comment: Owner and operator associations requested that the Department take into account the suitability of certain vehicle technologies expected to be adopted to meet the Phase 2 standards in the context of Canadian operating conditions. The main technologies of concern mentioned by these stakeholders were low rolling resistance tires, tire pressure monitoring systems and automatic tire inflation systems for trailers hauled by transport tractors.

Response: Canadian-specific circumstances were considered when the Department set the Phase 2 standards in the Amendments, which is consistent with the comments received. For example, different technology specifications and adoption rates were taken into account for tires to establish the standards for transport tractors that have higher weight allowances in Canada. For most other technologies, the projected rates of technology adoption that were used by the U.S. EPA to set the Phase 2 standards were deemed to be applicable to other vehicle and trailer categories in the Canadian market following a review of available data by the Department. In particular, the Phase 2 standards for vehicles are expected to allow companies to choose technologies that are suitable for the complete range of heavy-duty vehicle applications in Canada while complying with the emission standards.

In 2017, Transport Canada conducted a survey of Canadian heavy-duty vehicle operating fleets, and tire, tractor and trailer manufacturers, to assess the availability, performance and market trends in Canada with respect to tire technologies. The survey results indicate that approximately half of the tires that are currently installed on Canadian transport tractors and trailers are low rolling resistance tires to some extent. Operating fleet representatives did not indicate concerns about potential differences relating to low rolling resistance tires, such as tread life, retreadability, costs, availability or replacement schedules, but they did perceive that low rolling resistance tires may have lower traction capabilities in snow.

Tire pressure monitoring and automatic tire inflation systems have been available on the market for several years. The Department notes that manufacturers of these systems follow industry standards and offer warranties for their products.

Within the regulatory impact analysis of the Amendments, proportionally higher maintenance costs estimates relative to the U.S. were applied to all vehicle categories to account for the possibility of decreased reliability and durability of trucking equipment in Canadian climatic conditions, which was a topic raised by some stakeholders. No comprehensive data were found to substantiate that technologies would be less reliable or durable in Canada. Nevertheless, this conservative approach was taken in an effort to reflect maintenance costs that could be potentially higher in Canada relative to the U.S. due to the different conditions for trucking equipment in the two countries.

Compliance flexibility for heavy-duty engines

Comment: An industry association and its members commented that the Amendments should not require companies to participate in the CO₂ emission credit system for heavy-duty engines if they import engines that are covered by an EPA certificate of conformity and sold concurrently in Canada and the U.S., regardless of the emission rates of these certified engines. Manufacturers indicated that engine emission levels should be appropriately considered since the Amendments will employ a new version of GEM that uses an engine’s fuel map as an input to calculate total vehicle emissions.

One environmental non-governmental organization supported the continuation of the inclusion of engines in the credit system, stating that this approach provides more certainty with respect to emissions in Canada and allows for better monitoring of the performance of the Amendments. One provincial government also recommended the addition of a maximum emission limit for individual engines to prevent higher-emitting units from disproportionately contributing to GHG and other air pollutant emissions.

Response: Participation in the CO₂ emission credit system for heavy-duty engines is not required unless one or more engines, including those covered by an EPA certificate of conformity, do not meet the applicable emission standard. There is flexibility within the Regulations that exempts companies from participating in the credit system if they import or manufacture engines covered by an EPA certificate of conformity that do not meet the applicable CO₂ emission standard. The Amendments add to this flexibility by including the N₂O and CH₄ emission standards. Whether or not a company can be exempted depends on the number of engines that they sell in Canada and on a ratio of the number of engines that they sell in Canada and in the U.S. This additional flexibility allows a company that sells a small number of engines in a specialized (niche) market segment to avoid triggering a requirement to participate in the CO₂ emission credit system, while also preventing a disproportionate amount of higher-emitting engines from coming into Canada that are not subject to an averaging requirement.

The Department considers that heavy-duty engines certified by the U.S. EPA should not be completely exempted from the requirement to average engine emission performance, as this would reduce the likelihood of achieving GHG emission reductions from engines, as well as the Government of Canada’s ability to properly evaluate the performance of the Amendments. The latest version of GEM includes engine CO₂ emissions as part of total vehicle emissions; however, the separate engine emission standards and their associated credit system enhance the certainty of actual emission reductions from engines. These measures help ensure that engine improvements contribute to reductions in overall vehicle GHG emissions.

Phase 2 standards for heavier tractors

Comment: Manufacturers and owner and operator associations requested specific standards for tractors with higher payload capabilities, in addition to the standards in the proposed Amendments for heavy line-haul tractors. They stated that there should be additional vehicle regulatory subcategories in Canada with distinct standards for tractors that have a gross combined weight rating (GCWR) of 43 998 kg (97 000 lb) or more, but less than 54 431 kg (120 000 lb). Their reasoning was that transport tractors in this weight range make up a significantly larger portion of the Canadian heavy-duty vehicle fleet, compared to the U.S. fleet, due to the relatively higher weights allowed on roads in Canada. Industry stakeholders recommended that the stringency of the standards be set for these new regulatory subcategories based on more realistic specifications and technology adoption rates for the Canadian context. Modifications to the GEM simulation model were also recommended to accommodate a payload of 27 216 kg (60 000 lb), as opposed to a payload of 17 237 kg (38 000 lb) which is currently assumed for these tractors.

In addition to extra vehicle regulatory subcategories, industry stakeholders recommended that the technology adoption rates that are used for setting the emission standards in the proposed Amendments for tractors that have a GCWR of 120 000 lb or more be maintained with some exceptions. Specifically, it was proposed that heavy line-haul tractors with a low- or mid-roof, and that have a GCWR of 120 000 lb or more, be considered heavy-haul tractors.

Response: The Department reviewed the comments received from manufacturers and determined that certain rates of adoption for technologies used to set emission standards for heavy line-haul tractors were more appropriate for tractors with higher payload capabilities. As a result, the Department has introduced new regulatory subcategories in the Amendments for tractors that have a GCWR of 97 000 lb or more, but less than 120 000 lb. The Department has also finalized regulatory subcategories in the Amendments for tractors that have a GCWR of 120 000 lb or more. The emission standards for the new regulatory subcategories are generally based on the technology adoption rates that are used to set the standards for tractors that have a GCWR of less than 97 000 lb, but draw on specifications for engines, drive ratios, and transmissions that are more typical of tractors with higher payload capabilities. These standards are specific to Canada and account for the allowance of heavier vehicles on Canadian roads relative to the U.S. They will help ensure that the level of productivity of freight movement in Canada is maintained, while making achievable improvements in the GHG emission performance of on-road heavy-duty vehicles. The CO₂ emission standards for heavy line-haul tractors were established based on the results of GEM simulations with technology specifications and adoption rates modelled for these vehicles that are more representative of vehicles in these weight categories, as recommended by industry stakeholders. For tractors that have a GCWR of 97 000 lb or more, but less than 120 000 lb, the emission standards are slightly less stringent than the standards for tractors that have a GCWR of less than 97 000 lb due to differences in their applicable technologies that reduce GHG emissions.

The CO₂ emission standards in the proposed Amendments for tractors that have a GCWR of 120 000 lb or more were revised to account for technology adoption rates that were proposed by industry stakeholders for some technologies that are less suitable for such tractors. In regard to the proposal to consider heavy line-haul tractors with a low- or mid-roof, and that have a GCWR of 120 000 lb or more, as heavy-haul tractors, the Department is not pursuing this recommendation in order to maintain incentives to make technological improvements that will reduce aerodynamic drag and main engine idling, as the standards for heavy-haul tractors do not consider these technologies. In setting the emission standards for heavy line-haul tractors with a low- or mid-roof, the Department revised the adoption rates of aerodynamic technologies based on technical information received from industry stakeholders.

The emission performance of tractors that have a GCWR of 97 000 lb or more, but less than 120 000 lb, will be assessed using the set of regulatory subcategories in GEM for the standards developed in the U.S. for tractors that have a GCWR of less than 120 000 lb. The standards specific to Canada for these tractors were established with the version of GEM that was released by the U.S. EPA in October 2016. However, the Department agrees that a modified version of the GEM simulation model with a higher payload setting would be more appropriate to assess the compliance of these heavy line-haul tractors. If an updated compliance model becomes available, the Department intends to consider amending the Regulations to allow for the use of such a model.

Overall, the introduction of the new regulatory subcategories for heavier tractors in the Amendments, in comparison with simply aligning with the Phase 2 standards for heavy-haul tractors that were initially proposed by the U.S. EPA, better reflects the type of on-road applications in Canada which haul higher payloads and generate higher freight efficiency when they are used to their full capability.

Transitional adjustments for tractors

Comment: An industry association and its members requested a temporary reduction in the stringency of the tractor emission standards in the proposed Amendments. In particular, these stakeholders asked for a reduction in stringency of 2% for tractors of the model years 2021 and 2022 and 1% for tractors of the model years 2023 and 2024. They highlighted that the standards set by the U.S. EPA for model years 2021 to 2023 accounted for a period of over-compliance that had occurred in the U.S. They mentioned that a period of over-compliance has not been mirrored in Canada, mainly because the market penetration rates of certain technologies, such as devices that reduce aerodynamic drag and low rolling resistance tires, are not the same in the two countries. They stated that this requested reduction in stringency would result in a compliance burden associated with the Phase 2 standards in Canada that is more comparable to the corresponding compliance burden in the U.S.

Response: Transitional adjustments would reduce the stringency of the Phase 2 standards. The Department is not introducing any new transitional adjustments given that the Amendments establish a phase-in schedule for the Phase 2 standards, with regular increases in stringency up to the 2027 model year, as in the final U.S. Phase 2 rule. For the Phase 1 standards, the Department provided transitional measures in the Regulations that applied to vehicles of model years 2014 to 2016, allowing a certain percentage of a company’s vocational vehicles and tractors covered by an EPA certificate of conformity to be exempted from participating in the CO₂ emission credit system. This exemption was designed to assist in shifting the rates of adoption for technologies that reduce emissions and bringing the Canadian heavy-duty vehicle fleet closer to the U.S. fleet in this regard at the end of the phase-in schedule for the Phase 1 standards. One of the reported reasons for the current discrepancy between the GHG emission performances of the heavy-duty vehicle fleets in Canada and the U.S. is the larger share of tractors with higher payload capabilities in Canada. Therefore, the Canadian-specific Phase 2 standards for heavy line-haul tractors that are set out in the Amendments take technology specifications and adoption rates into account for engines, drive ratios, and transmissions that are typical of heavier tractors used in Canada.

Lead time for implementation of the trailer standards

Comment: Multiple requests were made by stakeholders from the trailer industry to delay the implementation of the trailer standards by one year after the publication of the Amendments in the Canada Gazette, Part II, to provide sufficient lead time for compliance, as a result of the later implementation schedule in Canada in comparison to the U.S.

Response: The Department has delayed the date of entry into force associated with the new emission standards that apply to trailers hauled by transport tractors to provide sufficient lead time to the trailer industry. The Amendments apply to trailers for which the manufacture is completed on or after January 1, 2020. Accordingly, the temporary exemption for small volume trailer companies has been extended in the Amendments to now apply to trailers for which the manufacture is completed before January 1, 2021, for any company manufacturing or importing fewer than 100 trailers for sale in Canada in 2020.

CO₂emission credit multiplier for electric vehicles

Comment: Some manufacturers commented that Canada has a higher CO₂ emission credit multiplier relative to the U.S. for electric vehicles in the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations under CEPA (Canada’s GHG emission regulations for on-road light-duty vehicles). The justification for this difference between the two countries derives from the observation that the electrical grid in Canada is cleaner than in the U.S. from a point of view of GHG emissions intensity. These stakeholders indicated that this justification should also apply to the credit multiplier for electric vehicles in the heavy-duty vehicle sector, and thus the credit multiplier should be increased.

Response: In response to this comment, changes have been made to the values of advanced technology credit multipliers for heavy-duty vehicles. Specifically, the Department has increased the credit multiplier for heavy-duty plug-in hybrid vehicles from 3.5 in the proposed Amendments to 4.0 in the Amendments, as well as the credit multiplier for heavy-duty electric vehicles from 4.5 in the proposed Amendments to 5.0 in the Amendments. These values were increased to better reflect the cleaner mix of power sources that generate electricity in Canada. By increasing the values of these two credit multipliers, the Department also intends to provide additional incentives to increase the number of heavy-duty vehicles powered by electricity in use in Canada, in line with other initiatives being taken or under development by the Government of Canada to reduce GHG emissions from the transportation sector.

Exemption for small volume companies

Comment: The Department received various comments regarding the exemption from complying with the standards in the Regulations and the proposed Amendments for small volume companies that manufacture or import fewer than 200 vocational vehicles and tractors, including their engines. Some commenters agreed with providing such flexibility in order to reduce the compliance burden incurred by small volume businesses, while others indicated that flexibility for small volume companies is warranted but it should be transitional in nature, phasing out with time.

Response: The Department is finalizing the Amendments with the same additional regulatory flexibility that was included in the proposed Amendments for small volume companies. It is estimated that the current exemption for small volume companies accounts for less than 1% of all vocational vehicles and tractors manufactured or imported in Canada for a given model year. Moreover, the current exemption for small volume companies applies to companies that operated in Canada in 2011, which is a reference year before the coming into force of the Regulations. In this regard, the exemption is being phased out, as the number of companies using it will not grow over time and a new small volume company will not be eligible for the exemption.

Delegated assembly provisions

Comment: One vehicle equipment manufacturer association commented that, in the final U.S. Phase 2 rule, there are “delegated assembly” provisions which were not part of the proposed Amendments. These provisions allow a secondary manufacturer that modifies a vehicle to improve its GHG emission performance to enter into a contractual agreement with the primary manufacturer, in order to allow the primary manufacturer to generate CO₂ emission credits for the work performed by the secondary manufacturer. The stakeholders requested that such delegated assembly be permitted in Canada by incorporating additional provisions into the Regulations.

Response: The Regulations do not contain provisions within the regulatory text to allow for contractual agreements between regulated parties. Nevertheless, the Regulations do not prohibit commercial arrangements or agreements between persons or companies. Any person or company authorized to act on behalf of a regulated party must be identified as responsible for compliance and that person or company must produce and maintain proper evidence of conformity.

Alternative fuels

Comment: Some stakeholders indicated that the Regulations should aim to incentivize an increased use of alternative fuels; specifically, biofuels and renewable natural gas.

Response: The Department is maintaining a fuel-neutral approach to ensure that there is no direct regulatory incentive or obstacle for a given fuel, including biofuels and renewable natural gas. It should be noted that the Government of Canada has committed to supporting the deployment of lower-carbon fuels through infrastructure investments that support the deployment of natural gas and hydrogen refueling stations, and electric vehicle charging stations, as well as through renewable fuel requirements under the Renewable Fuels Regulations. The Department is also in the process of developing a new major regulatory proposal under CEPA, the proposed Clean Fuel Standard, which would set reduction targets for GHG emissions attributable to gas, liquid and solid fuels. It is expected that this regulatory proposal would incent the development and use of a broad range of lower-carbon fuels, energy sources and technologies across the economy.

Regulatory co-operation

As with the development of the Regulations, the Department worked closely with the U.S. EPA to maintain a common Canada–U.S. approach to regulating GHG emissions from on-road heavy-duty vehicles. The approach of establishing emission standards and test procedures that correspond to those of the federal emissions program of the EPA builds on the history of collaboration achieved under the Canada–U.S. Air Quality Agreement. This approach is also consistent with the goal of the Canada–U.S. Regulatory Cooperation Council of aligning regulatory approaches between the two countries, where possible.

The Department and the U.S. EPA have continued to share knowledge and collaborate closely in an effort to implement aligned regulatory standards and joint compliance verification programs, which help maximize efficiencies in the administration of the respective programs in the two countries. For instance, the Department of Transport, the National Research Council and the Department have worked collaboratively with the U.S. EPA during the development of the Phase 2 standards by conducting aerodynamic and chassis dynamometer emissions testing.

In 2016, officials from the Department and their U.S. EPA counterparts worked to develop GHG emission standards for tractors with heavier payload capabilities. As a result of this collaborative work, the EPA introduced optional GHG emission standards for heavy-haul tractors in the U.S. of the 2021 model year and subsequent model years in its final Phase 2 rule. The U.S. optional standards served as a basis for the development of the standards in the Amendments that reflect Canadian conditions for tractors with heavier payload capabilities that will begin with the 2021 model year and increase in stringency with model years 2024 and 2027. These standards are specific to Canada and account for the allowance of heavier vehicles on Canadian roads relative to the U.S. These standards will help ensure that the level of productivity of freight movement in Canada is maintained while making achievable improvements in the GHG emission performance of on-road heavy-duty vehicles.

Further, the Department worked closely with the Department of Transport through its ecoTECHNOLOGY for Vehicles Program.^{footnote 31} As part of the work carried out through this program, federal officials undertake tests and evaluations of current and emerging vehicle technologies, such as alternative drive axle designs, various tire technologies and innovative devices to reduce aerodynamic drag. Program tests and evaluations have taken vehicle operating conditions in the Canadian context into consideration. Accordingly, these tests and evaluations have informed the development of the Amendments.

Finally, as mentioned previously in the consultation section, the Department is aware of the U.S. EPA’s intent announced on August 17, 2017, to revisit provisions of the final U.S. Phase 2 rule following concerns raised by stakeholders in the trailer and glider industry, and of the EPA’s publication on November 16, 2017, of a notice of proposed rulemaking to repeal the glider vehicle provisions in the final rule. The Department is closely monitoring these developments.

Rationale

The Amendments are part of the Pan-Canadian Framework and introduce a second phase of GHG emission standards for on-road heavy-duty vehicles. They will contribute to Canada’s international commitments made under the Paris Agreement relating to GHG emission reductions and will help protect Canadians and the environment from the effects of long-term climate change. The preceding analysis estimates that the Amendments will lead to CO₂e emission reductions of approximately 73 Mt from heavy-duty vehicles (including engines and trailers) of model years 2020 to 2029 over the portion of their lifetime operation that occurs during the 2020–2050 period, and to CO₂e emission reductions of about 6 Mt from all heavy-duty vehicles in 2030, relative to current baseline emission projections.

The Amendments will complement the Government of Canada’s commitments to implement economy-wide GHG pollution pricing, which is a central component of the Pan-Canadian Framework. In the absence of government intervention, vehicle owners are not expected to fully respond to future fuel savings and adopt more fuel-efficient technologies due to costly information, split incentives and uncertainty concerning future market conditions. These market failures are not directly addressed by GHG pollution pricing policies. The Amendments will more fully address such market failures, and they are thus expected to yield greater emission reductions than likely pricing policies would achieve in isolation. In this context, the Amendments act as a regulatory measure to reduce emissions from the on-road heavy-duty vehicle sector that is complementary to policies that price GHG pollution.

Given that the Amendments introduce regulatory standards that are aligned with those of the U.S. EPA, they will help preserve the competitiveness of the Canadian manufacturing industry. Canadian companies will continue to benefit from common compliance and testing requirements, which are expected to help minimize the regulatory costs that they incur. This approach will also provide long-term regulatory certainty to industry stakeholders by maintaining common legislative requirements in both Canada and the U.S., allowing companies to take advantage of economies of scale. In addition, the adoption of common Canada–U.S. emission standards will enable the two countries to continue collaborating on the implementation of compliance verification programs, which helps maximize efficiencies in the administration of programs related to vehicles and engines on both sides of the border.

The Amendments build on the history of collaboration achieved through the framework of the Canada–U.S. Air Quality Agreement in relation to the development of aligned vehicle and engine emission regulations and their coordinated implementation. They are also consistent with the goal of the Canada–U.S. Regulatory Cooperation Council of aligning regulatory approaches between the two countries, where possible. The implementation of aggressive national programs for vehicles and engines by the U.S. EPA and the general integrated nature of markets in Canada and the U.S. are two key elements supporting the rationale that a policy of alignment with EPA regulatory standards is a logical approach for Canada to achieve important emission reductions in a cost-effective manner.

While the additional vehicle technology costs to meet the Phase 2 standards for heavy-duty vehicles of model years 2020 to 2029 are projected to be $5.1 billion, these costs will be more than offset by the benefits to the owners of these vehicles from reduced fuel consumption of about $19.4 billion. Overall, the implementation of the Phase 2 standards by means of the Amendments is anticipated to generate substantial net benefits for Canadians through the adoption of new technologies that reduce fuel consumption and GHG emissions. The total costs associated with these standards for heavy-duty vehicles of model years 2020 to 2029 are projected to be $6.1 billion. The total benefits attributable to these vehicles are estimated at $23.8 billion, resulting in net benefits of about $17.7 billion for Canadians.

Strategic environmental assessment

The Amendments have been developed under the Pan-Canadian Framework. A strategic environmental assessment was completed in 2016 and concluded that regulatory policies developed under the Pan-Canadian Framework are expected to reduce GHG emissions and are in line with the goal in the 2016–2019 Federal Sustainable Development Strategy of effective action on climate change.^{footnote 32}

Implementation, enforcement and service standards

The compliance promotion approach for the Amendments will be similar to that taken for the Regulations, which includes maintaining a departmental website containing guidance material, and responding to inquiries from stakeholders. As a result of the new requirements, the Department plans to update its reporting system to accommodate the increase in the amount of information anticipated to be received from regulated parties. The Department will continue to review and respond to submissions of evidence of conformity in a timely manner, in accordance with the response times set out in the guidance material for the Regulations.^{footnote 33}

Members of the regulated community will be responsible for complying with the Amendments, and for producing and maintaining evidence of conformity. To assist regulated parties in understanding the new requirements, the existing guidance material will be updated and posted on the Department’s website. The updated material will provide details on the more stringent GHG emission standards for vehicles and engines and the new GHG emission standards for trailers. This guidance material will also include more information to address frequently asked questions concerning evidence of conformity and the procedures to be followed when submitting required documents to the Department.

The Amendments will come into force six months after the day on which they are registered. Implementation and enforcement actions will be undertaken by the Department in accordance with the Compliance and Enforcement Policy for CEPA (the Policy), in the same manner as it is applied to the Regulations.^{footnote 34} As the Amendments will be made under CEPA, enforcement officers will apply the Policy when verifying compliance with the regulatory requirements. The Policy sets out the range of possible enforcement responses to alleged violations. Following an inspection or investigation, when an enforcement officer discovers an alleged violation, the officer will choose the appropriate enforcement action based on the Policy. The Amendments do not introduce any new service standard.

Performance measurement and evaluation

Regulated parties will be required to submit end of model year reports to the Department concerning the performance of the heavy-duty vehicles, engines and trailers that they manufacture or import for each model year. These reports will be used to assess compliance with the Amendments. These reports will indicate the emission standard and performance that apply to each vehicle, engine or trailer. The reports will also include the applicable information required to calculate the number of CO₂ emission credits or deficits, such as information related to the balance of credits or deficits, and any transfers of credits between companies.

The information within the end of model year reports will be used to monitor compliance with regulatory requirements, measure and evaluate the performance of the Amendments, and provide data to support enforcement activities, if required. The Department will also review evidence of conformity and other records that regulated parties must maintain. In addition, the Department will conduct tests of emissions from samples of heavy-duty vehicles, engines and trailers each year to verify compliance with the emission standards. The emission testing program will be largely based on current programs that are carried out to verify compliance with the Regulations and other regulations related to emissions from transportation sources.

Contacts

Stéphane Couroux
Director
Transportation Division
Energy and Transportation Directorate
Environmental Protection Branch
Department of the Environment
351 Saint-Joseph Boulevard, 13th Floor
Gatineau, Quebec
K1A 0H3
Telephone: 819-420-8020
Email: stephane.couroux@canada.ca

Matthew Watkinson
Director
Regulatory Analysis and Valuation Division
Economic Analysis Directorate
Strategic Policy Branch
Department of the Environment
200 Sacré-Cœur Boulevard, 10th Floor
Gatineau, Quebec
K1A 0H3
Email: ec.darv-ravd.ec@canada.ca

Footnotes

Footnote a

S.C. 2004, c. 15, s. 31

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Footnote b

S.C. 1999, c. 33

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Footnote c

S.C. 2011, c. 1, s. 5

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Footnote 1

SOR/2013-24

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Footnote 2

SOR/2003-2

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Footnote 3

SOR/2010-201

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Footnote 4

Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations (SOR/2013-24). Department of the Environment: www.ec.gc.ca/lcpe-cepa/eng/regulations/detailReg.cfm?intReg=214

Returns to footnote 4 referrer

Footnote 5

“Regulations for Greenhouse Gas Emissions from Commercial Trucks & Buses Final Rule for Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium – and Heavy-Duty Engines and Vehicles – Phase 2”. U.S. EPA: https://www.epa.gov/regulations-emissions-vehicles-and-engines/final-rule-greenhouse-gas-emissions-and-fuel-efficiency

Returns to footnote 5 referrer

Footnote 6

These trailers include dry and refrigerated box van trailers, and non-box trailers, such as container chassis, flatbed and tanker trailers.

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Footnote 7

“Pan-Canadian Framework on Clean Growth and Climate Change”: https://www.canada.ca/en/services/environment/weather/climatechange/pan-canadian-framework.html

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Footnote 8

GHG emissions from the Canadian oil and gas sector accounted for 26% of total emissions in 2015.

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Footnote 9

“National Inventory Report 1990-2015: Greenhouse Gas Sources and Sinks in Canada”. UNFCCC (National Inventory Submissions 2017): http://unfccc.int/national_reports/annex_i_ghg_inventories/national_inventories_submissions/items/10116.php

Returns to footnote 9 referrer

Footnote 10

“Canada’s Seventh National Communication on Climate Change and Third Biennial Report” (2017). Department of the Environment: https://www.canada.ca/en/environment-climate-change/services/climate-change/greenhouse-gas-emissions/seventh-national-communication-third-biennial-report.html

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Footnote 11

The GVWR is the maximum allowable weight of a fully loaded vehicle, as specified in the design of the manufacturer, excluding the weight of any trailer and its freight.

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Footnote 12

The emission standards for heavy-duty vehicles and engines of the 2018 model year will continue to apply to future model years until the standards in the Amendments come into effect.

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Footnote 13

“Greenhouse Gas Emissions Model (GEM) for Medium- and Heavy-Duty Vehicle Compliance.” U.S. EPA: https://www.epa.gov/regulations-emissions-vehicles-and-engines/greenhouse-gas-emissions-model-gem-medium-and-heavy-duty

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Footnote 14

The GCWR is the maximum allowable weight of a fully loaded vehicle, as specified in the design of the manufacturer, including the weight of any trailer and its freight.

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Footnote 15

Under the Regulations, CO2 emission credits may be banked to offset a future deficit for up to five model years after the year in which the credits are obtained.

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Footnote 16

Devices that may be applied to trailers to reduce aerodynamic drag include trailer side skirts, underbody and rear fairings, and gap reducers.

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Footnote 17

Some credits obtained under the Regulations that are used to offset a deficit incurred as a result of the Amendments will be multiplied by a set factor, in order to reflect the change to the applicable useful life of some vehicles and engines that is used to calculate credits.

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Footnote 18

www.tbs-sct.gc.ca/rtrap-parfa/analys/analystb-eng.asp

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Footnote 19

For analytical purposes, groups of consecutive model years (MYs) were formed, and MY2027 was grouped with MYs 2028 and 2029.

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Footnote 20

All references to years in this statement pertain to calendar years, unless it is stated that reference is being made to a given model year of vehicle, engine or trailer.

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Footnote 21

In this analysis, the term “vehicle” refers to the whole vehicle, including the engine and any associated equipment, such as a trailer.

Returns to footnote 21 referrer

Footnote 22

“Regulations for Greenhouse Gas Emissions from Commercial Trucks & Buses Final Rule for Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles – Phase 2”. U.S. EPA: https://www.epa.gov/regulations-emissions-vehicles-and-engines/final-rule-greenhouse-gas-emissions-and-fuel-efficiency

Returns to footnote 22 referrer

Footnote 23

“Market analysis of heavy-duty commercial trailers in Canada”. ICCT: https://www.theicct.org/publications/market-analysis-heavy-duty-commercial-trailers-canada

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Footnote 24

In this analysis, emissions of CO2, CH4 and N2O are converted into quantified GHG (CO2e) emissions using global warming potential (GWP) factors of 1, 25 and 298, respectively.

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Footnote 25

“Technical Update to Environment and Climate Change Canada’s Social Cost of Greenhouse Gas Estimates”. Department of the Environment: http://ec.gc.ca/cc/default.asp?lang=En&n=BE705779-1

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Footnote 26

Pre-tax fuel prices were used in the analysis as taxes constitute transfer payments from one group to another and they are not considered as economic costs.

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Footnote 27

HFCs are currently widely used as refrigerants and have a much higher global warming potential than CO₂.

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Footnote 28

In accordance with Canada’s Red Tape Reduction Regulations, all cost estimates in this section are presented in 2012 Canadian dollars using a 7% discount rate and a discounting base year of 2012.

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Footnote 29

The unrounded increase in annualized administrative costs is estimated to be $13,835, or $110 per stakeholder. The undiscounted wage rate is assumed to be $35 per hour (weighted hourly average).

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Footnote 30

The Amendments define small volume companies as manufacturers or importers of fewer than 200 vocational vehicles and tractors for sale in Canada in 2011, and fewer than 200 vocational vehicles and tractors for sale in Canada for the model year in question.

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Footnote 31

“ecoTECHNOLOGY for Vehicles (eTV) Program”. Department of Transport: http://www.tc.gc.ca/eng/programs/ecotechnology-vehicles-program.html

Returns to footnote 31 referrer

Footnote 32

“Federal Sustainable Development Strategy”. Department of the Environment: https://www.ec.gc.ca/dd-sd/default.asp?Lang=En&n=CD30F295-1

Returns to footnote 32 referrer

Footnote 33

Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations (SOR/2013-24). Department of the Environment: www.ec.gc.ca/lcpe-cepa/eng/regulations/detailReg.cfm?intReg=214

Returns to footnote 33 referrer

Footnote 34

“Canadian Environmental Protection Act: Compliance and Enforcement Policy”. Department of the Environment: www.ec.gc.ca/lcpe-cepa/default.asp?lang=En&n=5082BFBE-1

Returns to footnote 34 referrer

Regulations Amending the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations and Other Regulations Made Under the Canadian Environmental Protection Act, 1999: SOR/2018-98

Regulations Amending the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations and Other Regulations Made Under the Canadian Environmental Protection Act, 1999

Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations

Application

Prescribed Classes of Vehicles, Engines and Equipment

Application

Engine Installed in Heavy-duty Vehicle

Heavy-duty Vehicles, Heavy-duty Engines and Trailers Covered by EPA Certificate

Air-conditioning Systems

Non-box Trailers and Non-aero Box Van Trailers

Small Volume Companies

Special Grouping — Vehicles and Engines

Tracteurs routiers spécialisés

Trailers

CO2 Emission Credit System — Vehicles and Engines

CO2 Emission Credit System — Full-aero Box Van Trailers

Calculation of Credits and Deficits

Averaging Sets

Records

Evidence of Conformity

Vehicle, engine or trailer covered by EPA certificate

Rental Rate

Application for Exemption

Defect Information

On-Road Vehicle and Engine Emission Regulations

Tractors Equipped with Auxiliary Power Unit

Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations

Coming into Force

SCHEDULE

SCHEDULE

National Emissions Mark

REGULATORY IMPACT ANALYSIS STATEMENT

Executive summary

Background

Policy context

Issues

Objectives

Description

New and more stringent emission standards

Heavy-duty pick-up trucks and vans

Vocational vehicles

Tractors

Heavy line-haul tractors

Heavy-haul tractors

Auxiliary power units

Heavy-duty engines

Alternative engine emission standards

Vehicles equipped with an engine that has previously been sold to a first retail purchaser

Trailers

Compliance flexibility

CO2 emission credit systems

Exemptions for small volume companies

Transitional exemption for trailers

Reporting requirements

Minor amendments to other regulations under CEPA

Regulatory and non-regulatory options considered

Maintaining status quo

More stringent and new regulatory requirements

Benefits and costs

Analytical framework

Updates to the analysis following the publication of the proposed Amendments in the Canada Gazette, Part I

Costs

Vehicle technology and maintenance costs

Accidents, congestion and noise

Business administrative and government costs

Calendar year analysis of costs

Benefits

GHG emission reductions

Fuel savings

Additional benefits related to fuel savings

Calendar year analysis of benefits

Other impacts considered

Additional reductions in GHG emissions

Reductions in air pollutant emissions

Summary of benefits and costs: Calendar year analysis

Sensitivity analysis

Distributional impacts

Payback (cost recovery) analysis

“One-for-One” Rule

Small business lens

CO₂ Emission Credit System — Vehicles and Engines

CO₂ Emission Credit System — Full-aero Box Van Trailers

CO₂emission credit multiplier for electric vehicles