Canada: Light-Duty ZEV Standard

Background

In December 2023, Environment and Climate Change Canada (ECCC) finalized the Electric Vehicle Availability Standard [6120], a new regulation that sets a mandatory national target of 100% “zero-emission” vehicle (ZEV) sales by 2035. The regulation has been published as an amendment under the Canadian Environmental Protection Act, 1999 (CEPA) [3288].

The regulation is applicable to new light-duty vehicles, including passenger automobiles and light trucks. Excluded from the ZEV targets are vehicles exported from Canada. Companies may also elect to exclude emergency vehicles and fire fighting vehicles, subject to annual reporting requirements.

While the ZEV standard is not harmonized with US regulations, the 2035 requirement for a 100% ZEV fleet is aligned with the California ZEV program.

ZEV Targets

The regulation introduces a mandatory ZEV sales target schedule, where the ZEV percentage of all new light-duty vehicle sales increases every year from 20% in 2026 to 100% in 2035, Figure 1.

Zero-emission vehicles (ZEV) are defined as electric vehicles, plug-in hybrid electric vehicles (PHEV), or fuel cell vehicles. PHEVs with an all-electric range of more than 80 km will receive full credit throughout the entire lifetime of the regulation. PHEVs with an all-electric range less than 80 km may receive credits for model years 2026 to 2028.

Automakers can also earn credits for bringing more electric vehicles to market ahead of the target dates and for investing in EV charging infrastructure.

The enforcement of the regulation will be undertaken in accordance with the Compliance and Enforcement Policy for CEPA, which sets out a range of possible enforcement responses to alleged violations, such as imprisonment, fines, and forfeiture of profits that were earned as a result of the offense.