Quebec is bucking the recommendations of the auto industry and moving ahead with a mandate for zero emission vehicles (ZEVs). With only minor tinkering, Quebec has approved a draft regulation released in early July 2017.
Effective January 11, 2018, under the Regulation respecting the application of the Act to increase the number of zero-emission motor vehicles in Québec in order to reduce greenhouse gas and other pollutant emissions (O.C. 1217-2017), automakers doing business in Quebec must earn a minimum number of credits from the sale of ZEVs in the province or pay a price for falling short. The number of credits earned per vehicle sale will depend on the range and efficiency of the vehicle. The requirement kicks in for the 2018 model year, and compliance will be calculated on the basis of the previous three years worth of sales. As a result, initial compliance won’t be tested until 2021 (for the 2018-2020 model years).
For the 2018 model year, automakers are required to earn credits representing 3.5% of passenger vehicle sales. That percentage rises steeply through 2025, when it reaches 22%. However, that does not mean that ZEVs must represent 22% of passenger vehicle sales. A ZEV may earn as many as four credits if it has zero emissions and long-range. Low-emission vehicles (LEVs) (e.g., hybrids) and shorter-range ZEVs will earn fewer credits.
During the initial periods of the mandate, manufacturers will be allowed to count past ZEV and LEV sales over the period 2004 to 2017. Vehicles that have been reconditioned and registered for the first time in Quebec may also earn credits. However, there will be limits on the number of “grandfathered” credits that may be used in any compliance period.
Quebec fully expects the development of a secondary market for credits. A manufacturer such as Tesla, which only makes ZEVs, will be in a position to put all its credits on the market.
Global Automakers of Canada, the association that represents 15 top international automakers in Canada, says Quebec’s regulation is more stringent than California’s — often held up as the model for ZEV mandates.
“Our members will do their part to meet the requirements of the regulation. Unfortunately, as currently structured the regulation will result in the government collecting charge payments as opposed to significantly increasing the number of ZEVs on the road – which was the stated objective of the legislation. Ultimately, consumers will decide which vehicle is best suited to their needs,” said President David Adams in a release.
Mark Nantais, president of the Canadian Vehicle Manufacturers’ Association, warned that consumers may ultimately pay a heavy price for the mandate.
“[This regulation creates] unique requirements and burden which may result in unintended consequences for consumers, automobile dealers, industry and ultimately, Québec's economy,” Nantais said in a December 27, 2017 statement.
ZEVs still command a very small share of the total Canadian passenger vehicle market. However, the research firm FleetCarma, which keeps its finger on the pulse of the ZEV and LEV market in Canada, says sales continue to accelerate, most notably in Quebec and Ontario. In the third quarter of 2017, Quebecers bought 868 new ZEVs (33.5% of total Canadian sales) and 938 plug-in hybrids (43.3% of total Canadian sales).