The Fuse

Canada Announces Plans to Phase Out ICE Vehicles by 2035

by Nick Cunningham | July 06, 2021

The Canadian government announced a landmark new regulation that would ban gasoline and diesel vehicle sales by 2035, adding its name to lengthening list of governments phasing out the internal combustion engine.

The announcement is another step in the direction of global electrification of the transportation fleet.

 2035 EV target

On June 29, Canada’s Transport Minister Omar Alghabra said that all new cars and light-duty trucks sold will need to be zero-emissions by 2035. Roughly one-quarter of the country’s greenhouse gas emissions comes from transportation, so the new plan adds some momentum to a broader net-zero economy-wide emissions target by 2050.

The phaseout of the internal combustion engine will be mandatory, not simply a goal. The decision moves up a previous target by five years. Transport Canada said that it will develop interim targets for 2025 and 2030.

“Only bold climate policies lead to bold results. Through measures aimed at accelerating the transition to 100 percent zero-emission vehicles sales, we will continue building a cleaner and more resilient economy, while also creating good jobs and opportunities for all Canadians,” Transport Minister Alghabra said.

The 2035 target is important because the turnover of the transportation fleet is slow. Cars and trucks can stay on the road for as much as 15 years. Ensuring that all sales are either electric or some alternative zero-emissions technology by 2035 helps keep the country on track for a decarbonized transportation sector by mid-century.

The timeframe also comports with the net-zero pathway laid out in the landmark report issued in May by the International Energy Agency, which says the world needs to be well on its way to a decarbonized economy by the middle of the next decade in order to get there by 2050.

Canada has now joined a growing number of states and countries with 100 percent EV targets. The UK has a similar target by 2030, and France and Spain by 2040. California has announced its intention to implement a phaseout of the internal combustion engine by 2035, but the plan has not been finalized.

Mandatory phaseouts are becoming politically easier to pull off because global automakers themselves are pushing the transition forward. GM made a blockbuster announcement earlier this year that it aims to electrify its lineup by 2035, although left some wiggle room on that guarantee. In May, the unveiling of Ford’s electrified F-150, the most popular vehicle in the U.S., provided a jolt to the conversation.

Just days ago, VW, one of the world’s largest automakers, said that it would completely phaseout gasoline and diesel vehicles in Europe by 2035, but left open a longer transition for its sales in the U.S. and China. Automakers are adding new EV models all the time and there is a virtuous cycle at play – the corporate-led transition by automakers is smoothing the way for policy action, which accelerates the transition.

One piece of the puzzle

Canada offers between $2,500 and $5,000 for buyers of new EVs, but the government acknowledged that it will not be enough to hit its next target of 10 percent sales by 2025. Currently EVs account for between 3 and 4 percent of total sales in Canada.

Experts say that more supportive policy is needed to back up the 2035 plan. “It’s great to have a new, more ambitious target, but really, that target means nothing if we don’t have a clear plan and policy pathway to get there,” Joanna Kyriazis, a senior policy adviser at Clean Energy Canada, part of Simon Fraser University, told the CBC.

Various ministers of the Canadian government defended the 2035 plan as a vital piece of the overall transition. “If we don’t make progress on transportation, we do not meet our climate targets, simply full stop,” Environment Minister Jonathan Wilkinson said.

However, there is a more difficult issue in Canada that nobody seems to want to deal with. Roughly 10 percent of Canada’s economy comes from oil and gas production, and there is no plan to address that sector. At both the federal and provincial level, Canadian officials support the industry’s expansion.

A recent report from IHS Markit estimates that Canada’s oil sands production is set to grow to 3.8 million barrels per day by 2030, which would be an increase of 22 percent from the recent post-pandemic recovery to 2.95 million barrels per day. Key to the industry’s expansion are two key pipelines, which are fiercely opposed by environmental and Indigenous groups – the Trans Mountain Expansion and the Line 3 replacement.

“[I]n the absence of Keystone XL pipeline, there is the potential for high levels of export pipeline utilization, which would leave little room to absorb any system upsets and could contribute to regional price volatility,” IHS Markit said, highlighting the importance to the industry of the other two long-distance pipelines.

The Canadian government has been unflinching in its support for these projects, aiming to facilitate the growth of Alberta’s oil sands.

The Canadian government has not reconciled how it aims to achieve net-zero emissions with the fact that it supports an expansion of its oil sands operations, which are some of the dirtiest forms of oil production.

Top Canadian oil producers are promoting the Oil Sands Pathways to Net Zero initiative, a pledge to somehow achieve net-zero emissions by 2050. The plan is vague on details and seemingly relies heavily on carbon capture concepts that are not yet viable or commercial.

Nevertheless, the planned phaseout of the internal combustion engine marks a substantial step towards electrification, even as a lot of policy work needed to get there remains unfinished.

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