Vol. 147, No. 6 — March 13, 2013

Registration

SOR/2013-24 February 22, 2013

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations

P.C. 2013-160 February 22, 2013

Whereas, pursuant to subsection 332(1) (see footnote a) of the Canadian Environmental Protection Act, 1999 (see footnote b), the Minister of the Environment published in the Canada Gazette, Part I, on April 14, 2012, a copy of the proposed Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations, substantially in the annexed form, and persons were given an opportunity to file comments with respect to the Regulations or to file a notice of objection requesting that a board of review be established and stating the reasons for the objection;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of the Environment, pursuant to sections 160 and 162 of the Canadian Environmental Protection Act, 1999 (see footnote c), makes the annexed Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations.

(This table is not part of the Regulations.)

HEAVY-DUTY VEHICLE AND ENGINE GREENHOUSE GAS EMISSION REGULATIONS

INTERPRETATION

1. Definitions

PURPOSE

2. Purpose

BACKGROUND

3. Background

MODEL YEAR

4. Model year

PRESCRIBED CLASSES OF VEHICLES AND ENGINES

5. Heavy-duty vehicles

NATIONAL EMISSIONS MARK

6. Application
7. National emissions mark

LABELLING

8. Non EPA-certified engines
9. Non EPA-certified vehicles

10. Requirements

VEHICLES MANUFACTURED IN STAGES

11. Requirements

GREENHOUSE GAS EMISSION STANDARDS

GENERAL

Heavy-duty Vehicles of the 2014 Model Year

12. January 1, 2014

Heavy-duty Vehicles and Engines Covered by an EPA Certificate

13. Conforming to EPA certificate

Emission Control Systems

14. On-Road Vehicle and Engine Emission Regulations

Adjustable Parameters

15. Definition

Air Conditioning Systems

16. Standards

Small Volume Companies — Tractors and Vocational Vehicles

17. Exemption

Composition of Fleets

18. Definition of “fleet”

Grouping into Fleets

19. Election applicable to all vehicles and engines

CLASS 2B AND CLASS 3 HEAVY-DUTY VEHICLES

N₂O and CH₄ Emissions

20. Standards

CO₂ Emissions

21. Average standard
22. Calculation of average standard
23. Calculation of average values

Test Methods and Calculations

24. General

Alternative Standards

25. Spark-ignition engines

VOCATIONAL VEHICLES

26. CO₂ emission standards

TRACTORS

27. CO₂ emission standard

VOCATIONAL TRACTORS

28. Alternative standards

HEAVY-DUTY ENGINES

N₂O and CH₄ Emissions

29. Standards

CO₂ Emissions

30. Standard
31. Alternative emission standard — model years 2014 to 2016
32. Value
33. Calculation using fleets and subfleets

CO₂ EMISSION CREDIT SYSTEM

Calculation of Credits and Deficits

34. Credits
35. Calculation

Additional Credits

36. Limitation
37. Credit multiplier — Class 2B and Class 3 vehicles
38. Equivalent conventional vehicle and footprint
39. Definitions
40. Calculation — Rankine-cycle engines
41. Innovative technologies

Averaging Sets

42. Calculation
43. Date of credits or deficits
44. Use of credits — time limit
45. Deficits
46. Acquisition or merger

Early Action Credits

47. Eligibility

REPORTS

END OF MODEL YEAR REPORT

48. Deadline

EARLY ACTION CREDITS

49. Contents

FORMAT OF REPORTS

50. Submission

INSTRUCTIONS

51. Engine installation
52. Tire maintenance

RECORDS

EVIDENCE OF CONFORMITY

53. Sold concurrently in Canada and United States
54. Paragraph 153(1)(b) of Act
55. Subsection 153(2) of Act

FLEET AVERAGE EMISSIONS

56. Contents

ENGINES SOLD CONCURRENTLY

57. Evidence of number of engines sold

VOCATIONAL TRACTORS

58. Meets definition “vocational tractor”

MAINTENANCE AND SUBMISSION OF RECORDS

59. Maintenance of records

IMPORTATION DOCUMENT

60. Importation for exhibition, demonstration, evaluation or testing

RENTAL RATE

61. Rental rate

APPLICATION FOR EXEMPTION

62. Application

DEFECT INFORMATION

63. Notice of defect

COMING INTO FORCE

64. Registration

HEAVY-DUTY VEHICLE AND ENGINE GREENHOUSE GAS EMISSION REGULATIONS

INTERPRETATION

Definitions

1. (1) The following definitions apply in these Regulations.

“Act”
« Loi »
“Act” means the Canadian Environmental Protection Act, 1999.
“adjusted loaded vehicle weight”
« poids ajusté du véhicule chargé »
“adjusted loaded vehicle weight” means the numerical average of the curb weight and the GVWR, and in the case of vehicles referred to in subsection 26(6) with an adjusted loaded vehicle weight of more than 6 350 kg (14,000 pounds), the value corresponding to the nearest 225 kg (500 pounds) increment.
“aftertreatment device”
« dispositif de traitement postcombustion »
“aftertreatment device” means a catalytic converter, particulate filter or any other system or component mounted downstream of the exhaust valve or exhaust port that is designed to decrease engine exhaust emissions before they are released into the environment.
“A to B testing”
« essais A à B »
“A to B testing” means testing performed in pairs to allow comparison of vehicle A to vehicle B or engine A to engine B, as the case may be.
“auxiliary emission control device”
« dispositif antipollution auxiliaire »
“auxiliary emission control device” means any element of design that senses temperature, vehicle speed, engine RPM, transmission gear, manifold vacuum, or any other parameter for the purpose of activating, modulating, delaying or deactivating the operation of any part of an emission control system.
“averaging set”
« groupe de calcul de points »
“averaging set” means, for the purpose of a company’s participation in the CO₂ emission credit system set out in sections 34 to 47, any of the following groups of fleets of vehicles or engines:

(a) Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, excluding those referred to in the definition “vocational vehicle”;
(b) Class 2B, Class 3, Class 4 and Class 5 vocational vehicles and incomplete vocational vehicles;
(c) Class 6 and Class 7 heavy-duty vehicles and heavy-duty incomplete vehicles;
(d) Class 8 heavy-duty vehicles and heavy-duty incomplete vehicles;
(e) heavy-duty engines that are spark-ignition engines;
(f) light heavy-duty engines that are compression-ignition engines;
(g) medium heavy-duty engines that are compression-ignition engines; or
(h) heavy heavy-duty engines that are compression-ignition engines.

“basic vehicle frontal area”
« surface frontale du véhicule de base »
“basic vehicle frontal area” means the area enclosed by the geometric projection of the basic vehicle — including tires but not mirrors or air deflectors — along the longitudinal axis of the vehicle onto a plane perpendicular to that axis.
“cab-complete vehicle”
« véhicule à cabine complète »
“cab-complete vehicle” means a heavy-duty incomplete vehicle with either a completed occupant compartment that requires only the addition of a cargo-carrying surface, work-performing equipment or load-bearing component to perform its intended functions or with the back of the cab cut out for the intended installation of a structure that permits access from the driver’s area to the back of the vehicle.
“calibration”
« calibrages »
“calibration” means the set of specifications and tolerances specific to a particular design, version or application of a component or assembly that describes its operation over its working range.
“CFR”
« CFR »
“CFR” means the Code of Federal Regulations of the United States, as amended from time to time.
“CH₄”
« CH₄ »
“CH₄” means methane.
“Class 2B”
« classe 2B »
“Class 2B” means a class of heavy-duty vehicle that has a GVWR of more than 3 856 kg (8,500 pounds) but not more than 4 536 kg (10,000 pounds).
“Class 3”
« classe 3 »
“Class 3” means a class of heavy-duty vehicle that has a GVWR of more than 4 536 kg (10,000 pounds) but not more than 6 350 kg (14,000 pounds).
“Class 4”
« classe 4 »
“Class 4” means a class of heavy-duty vehicle that has a GVWR of more than 6 350 kg (14,000 pounds) but not more than 7 257 kg (16,000 pounds).
“Class 5”
« classe 5 »
“Class 5” means a class of heavy-duty vehicle that has a GVWR of more than 7 257 kg (16,000 pounds) but not more than 8 845 kg (19,500 pounds).
“Class 6”
« classe 6 »
“Class 6” means a class of heavy-duty vehicle that has a GVWR of more than 8 845 kg (19,500 pounds) but not more than 11 793 kg (26,000 pounds).
“Class 7”
« classe 7 »
“Class 7” means a class of heavy-duty vehicle that has a GVWR of more than 11 793 kg (26,000 pounds) but not more than 14 969 kg (33,000 pounds).
“Class 8”
« classe 8 »
“Class 8” means a class of heavy-duty vehicle that has a GVWR of more than 14 969 kg (33,000 pounds).
“compression-ignition engine”
« moteur à allumage par compression »
“compression-ignition engine” means an engine that operates as a reciprocating internal combustion engine, but does not include an engine that operates under characteristics significantly similar to the theoretical Otto combustion cycle or an engine that uses a spark plug or other sparking device.
“CO₂”
« CO₂ »
“CO₂” means carbon dioxide.
“CO₂ family certification level”
« niveau de certification de la famille applicable au CO₂ »
“CO₂ family certification level” means the maximum CO₂ emission level that is determined by a company for heavy-duty engines.
“curb weight”
« masse en état de marche »
“curb weight” means the actual or manufacturer’s estimated weight of a heavy-duty vehicle in operational status with all standard equipment and includes the weight of fuel at nominal tank capacity and the weight of optional equipment.
“day cab”
« cabine de jour »
“day cab” means a tractor cab that is not a sleeper cab.
“deteriorated emission level”
« niveau d’émissions détérioré »
“deteriorated emission level” means the emission level that results from applying the applicable deterioration factor to the emission test results for a vehicle or engine.
“deterioration factor”
« facteur de détérioration »
“deterioration factor” means the relationship between the emission level measured at the end of useful life or at the point where it is the highest during the useful life 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 a maximum of 125 hours of operation in relation to an engine that has stabilized emissions, determined in accordance with

(a) section 1823(m) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, and section 104(d)(5) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR, in the case of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, excluding those referred to in the definition “vocational vehicle”;
(b) section 241(c) of Title 40, chapter I, subchapter U, part 1037, subpart C, of the CFR, in the case of vocational vehicles, incomplete vocational vehicles, tractors and incomplete tractors; and
(c) section 150(g) of Title 40, chapter I, subchapter U, part 1036, subpart B, of the CFR, and section 241(c) of Title 40, chapter I, subchapter U, part 1036, subpart C, of the CFR, in the case of heavy-duty engines.

“electric vehicle”
« véhicule électrique »
“electric vehicle” means a heavy-duty vehicle that is not equipped with an internal combustion engine and is powered solely by an external source of electricity or solar power or a combination of both electricity and solar power.
“element of design”
« élément de conception »
“element of design” means, in respect of a vehicle or engine,

(a) any control system, including computer software, electronic control systems and computer logic;
(b) any control system calibrations;
(c) the results of systems interaction; or
(d) any hardware items.

“emission control system”
« système antipollution »
“emission control system” means any emission control device, auxiliary emission control device, engine modification and strategy, and other element of design used to reduce exhaust emissions from a vehicle or engine.
“engine configuration”
« configuration de moteur »
“engine configuration” means a unique combination of heavy-duty engine hardware and calibration that has an effect on measured emissions.
“engine family”
« famille de moteurs »
“engine family” means the classification unit of a company’s product line of heavy-duty engines for the purposes of testing selection, determined in accordance with section 230 of Title 40, chapter I, subchapter U, part 1036, subpart C, of the CFR.
“EPA”
« EPA »
“EPA” means the United States Environmental Protection Agency.
“EPA certificate”
« certificat de l’EPA »
“EPA certificate” means a certificate of conformity with U.S. federal standards issued by the EPA.
“family emission limit”
« limite d’émissions de la famille »
“family emission limit” means, as the case may be,

(a) the value corresponding to the product of 1.03 multiplied by the CO₂ family certification level in the case of a heavy-duty engine’s CO₂ emissions; or
(b) the maximum emission level determined by a company, in the case of
- (i) a heavy-duty vehicle’s CO₂ emissions, and,
- (ii) a heavy-duty vehicle and heavy-duty engine’s N₂O or CH₄ emissions.

“FTP-based city test”
« essai en ville »
“FTP-based city test” means the Federal Test Procedure set out in section 127 of Title 40, chapter I, subchapter C, part 86, subpart B, of the CFR, to comply with the FTP emission standards.
“GAWR”
« PNBE »
“GAWR” means the gross axle weight rating that is specified by a manufacturer as the load-carrying capacity of a single axle system, as measured at the tire-ground interface.
“GCWR”
« PNBC »
“GCWR” means the gross combination weight rating that is specified by a manufacturer as the maximum design loaded weight of a vehicle and trailer.
“GEM computer simulation model”
« modèle de simulation informatique GEM »
“GEM computer simulation model” means the EPA’s GEM computer simulation model referred to in section 520 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR.
“GVWR”
« PNBV »
“GVWR” means the gross vehicle weight rating that is specified by a manufacturer as the maximum design loaded weight of a vehicle.
“heavy-duty completed vehicle”
« véhicule lourd complet »
“heavy-duty completed vehicle” means a heavy-duty vehicle that has a cargo-carrying surface, work-performing equipment or primary load-carrying device or that is capable of pulling a trailer.
“heavy-duty engine”
« moteur de véhicule lourd »
“heavy-duty engine” means an engine that is designed to be used for motive power in a vocational vehicle or a tractor.
“heavy-duty incomplete vehicle”
« véhicule lourd incomplet »
“heavy-duty incomplete vehicle” means a heavy-duty vehicle that is manufactured by assembling components — none of which, taken separately, constitutes a heavy-duty incomplete vehicle — and 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 heavy-duty completed vehicle, but that requires further manufacturing operations to become so.
“heavy-duty vehicle”
« véhicule lourd »
“heavy-duty vehicle” means an on-road vehicle that has a GVWR of more than 3 856 kg (8,500 pounds), a curb weight of more than 2 722 kg (6,000 pounds) or a basic vehicle frontal area in excess of 4.2 m² (45 square feet), but does not include a medium-duty passenger vehicle as defined in subsection 1(1) of the On-Road Vehicle and Engine Emission Regulations or a vehicle regulated under the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations.
“heavy heavy-duty engine”
« gros moteur de véhicule lourd »
“heavy heavy-duty engine” means a heavy-duty engine that has cylinder liners designed for multiple rebuilds and is designed to be used in Class 8 heavy-duty vehicles.
“heavy heavy-duty vehicle”
« gros véhicule lourd »
“heavy heavy-duty vehicle” means a Class 8 heavy-duty vehicle.
“HFET-based highway test”
« essai sur route »
“HFET-based highway test” means the Highway Fuel Economy Test Procedure referred to in subpart B of Title 40, chapter I, subchapter Q, part 600, of the CFR.
“high-roof”
« toit élevé »
“high-roof”, in relation to a tractor, means having a roof height of 376 cm (148 inches) or more.
“hybrid engine” or “hybrid powertrain”
« moteur hybride » ou
« groupe motopropulseur hybride »
“hybrid engine” or “hybrid powertrain” means an engine or a powertrain that is equipped with energy storage features — other than a conventional battery system or conventional flywheel — such as supplemental electric batteries and hydraulic accumulators.
“hybrid vehicle”
« véhicule hybride »
“hybrid vehicle” means a heavy-duty vehicle that is equipped with energy storage features — other than a conventional battery system or conventional flywheel — such as supplemental electric batteries and hydraulic accumulators, in addition to an internal combustion engine or other engine that uses fuel.
“incomplete tractor”
« tracteur routier incomplet »
“incomplete tractor” means a heavy-duty incomplete vehicle that is designed to become a tractor on completion of manufacturing operations.
“incomplete vocational vehicle”
« véhicule spécialisé incomplet »
“incomplete vocational vehicle” means a heavy-duty incomplete vehicle that is designed to become a vocational vehicle on completion of manufacturing operations.
“innovative technology”
« technologie innovatrice »
“innovative technology” means a greenhouse gas emission reduction technology for which the total emission reduction attributable to it cannot be measured by either GEM computer simulation modelling or the test procedures specified under these Regulations.
“light heavy-duty engine”
« petit moteur de véhicule lourd »
“light heavy-duty engine” means a heavy-duty engine that is designed to be used in Class 2B, Class 3, Class 4 or Class 5 heavy-duty vehicles.
“light heavy-duty vehicle”
« petit véhicule lourd »
“light heavy-duty vehicle” means a Class 2B, Class 3, Class 4 or Class 5 heavy-duty vehicle.
“low-roof”
« toit bas »
“low-roof”, in relation to a tractor, means having a roof height of 305 cm (120 inches) or less.
“medium heavy-duty engine”
« moteur moyen de véhicule lourd »
“medium heavy-duty engine” means a heavy-duty engine that is designed to be used in Class 6 and Class 7 heavy-duty vehicles.
“medium heavy-duty vehicle”
« véhicule mi-lourd »
“medium heavy-duty vehicle” means a Class 6 or Class 7 heavy-duty vehicle.
“mid-roof”
« toit moyen »
“mid-roof”, in relation to a tractor, means having a roof height of more than 305 cm (120 inches) but less than 376 cm (148 inches).
“model year”
« année de modèle »
“model year” means the year, determined in accordance with section 4, that is used by a manufacturer to designate a model of vehicle or engine.
“nominal tank capacity”
« capacité nominale du réservoir à carburant »
“nominal tank capacity” means the fuel tank’s volume that is specified by a manufacturer to the nearest three eighths of a litre (one tenth of a U.S. gallon).
“N₂O”
« N₂O »
“N₂O” means nitrous oxide.
“on-road vehicle”
« véhicule routier »
“on-road vehicle” means a self-propelled vehicle that is designed for or capable of transporting persons, property, material or permanently or temporarily affixed apparatus on a highway, but does not mean a vehicle that

(a) cannot exceed a speed of 40 km/h (25 miles per hour) on a level paved surface;
(b) lacks features customarily associated with safe and practical highway use such as a reverse gear, a differential or safety features that are required by federal or provincial laws;
(c) exhibits features that render its use on a highway unsafe, impractical or highly unlikely, such as tracked road contact means or inordinate size; or
(d) is a military vehicle that is designed for use in combat or combat support.

“power take-off”
« prise de mouvement »
“power take-off” means a secondary engine shaft or other system of a vehicle that provides substantial auxiliary power for purposes unrelated to vehicle propulsion or the functioning of customary vehicle accessories such as air conditioning, power steering and basic accessories.
“sleeper cab”
« cabine couchette »
“sleeper cab” means a tractor cab that has a compartment located behind the driver’s seat that is designed to be used as a sleeping accommodation and that is accessible either from the driver’s compartment or from outside the vehicle.
“spark-ignition engine”
« moteur à allumage commandé »
“spark-ignition engine” means an engine that operates under characteristics significantly similar to the theoretical Otto combustion cycle and uses a spark plug or other sparking device.
“static loaded radius”
« rayon sous charge statique »
“static loaded radius” means the distance between the level surface where the vehicle is located and the axle centre measured at curb weight when the vehicle is stationary, with the wheels parallel to the vehicle’s longitudinal centre line and the tires inflated to the manufacturer’s recommended cold tire inflation pressure.
“steady state duty cycle”
« cycle de service permanent »
“steady state duty cycle” means the test cycle that is referred to in section 1362 of Title 40, chapter I, subchapter C, part 86, subpart N, of the CFR.
“test weight”
« masse à l’essai »
“test weight” means the vehicle weight that is used or represented during testing.
“tire rolling resistance level”
« niveau de résistance au roulement du pneu »
“tire rolling resistance level” means the rolling resistance of a tire configuration, expressed in kilograms per tonne.
“tractor”
« tracteur routier »
“tractor” means a Class 7 or Class 8 heavy-duty vehicle that is manufactured primarily for pulling a trailer but not for carrying cargo other than cargo in the trailer.
“transient duty cycle”
« cycle de service transitoire »
“transient duty cycle” means the test cycle that is referred to in section 1333 of Title 40, chapter I, subchapter C, part 86, subpart N, of the CFR.
“vehicle configuration”
« configuration de véhicule »
“vehicle configuration” means, in respect of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, a configuration as defined in section 104(d)(12)(i) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR.
“vehicle service class”
« classe de service d’un véhicule »
“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.

“vehicle subconfiguration”
« sous-configuration de véhicule »
“vehicle subconfiguration” means, within a vehicle configuration of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, a unique combination of equivalent test weight and road load horsepower, and any other operational characteristics or parameters that may significantly affect CO₂ emissions within the vehicle configuration.
“vocational tractor”
« tracteur routier spécialisé »
“vocational tractor” means any of the following tractors that are not designed primarily to operate at high and constant speeds such as on highways, or that would not benefit from efficiency improvements designed for line-haul tractors:

(a) a low-roof tractor that is designed for local pickup and delivery;
(b) a tractor that is designed for both on-road and off-road use, such as a tractor with a reinforced frame and increased ground clearance; or
(c) a tractor that has a GCWR of more than 54 431 kg (120,000 pounds).

“vocational vehicle”
« véhicule spécialisé »
“vocational vehicle” means any of the following:

(a) a Class 4, Class 5 or Class 6 heavy-duty vehicle;
(b) a Class 7 or Class 8 heavy-duty vehicle that is not a tractor;
(c) a vocational tractor;
(d) a heavy-duty incomplete vehicle that is not a cab-complete vehicle and is equipped with an engine conforming to the alternative standard referred to in section 25; or
(e) a Class 2B or Class 3 heavy-duty vehicle referred to in section 104(f) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR.

CFR

(2) Standards that are incorporated by reference in these Regulations from the CFR are those expressly set out in the CFR and must be read as excluding

(a) references to the EPA or the Administrator of the EPA exercising discretion in any way;
(b) references to the Secretary of Transportation exercising discretion in any way;
(c) alternative standards related to fleet averages, other averages, emission credits, small volume manufacturers or financial hardship; and
(d) standards or evidence of conformity of any authority other than the EPA.

Interpretation

(3) For the purposes of subsection (2), a reference in the CFR to “carbon-related exhaust emissions” and “CREE” must be read as “CO₂ emissions”.

Rounding

(4) The calculations and measurements in these Regulations must be rounded in accordance with section 20(e) of Title 40, chapter I, subchapter U, part 1065, subpart A, of the CFR, unless otherwise provided in

(a) these Regulations;
(b) part 1037 of Title 40, chapter I, subchapter U, of the CFR, for the applicable standards and test procedures in the case of heavy-duty vehicles; or
(c) part 1036 of Title 40, chapter I, subchapter U, of the CFR, for the applicable standards and test procedures in the case of heavy-duty engines.

Useful life

(5) “Useful life”, unless otherwise provided in these Regulations, 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 referred to in the definition “vocational vehicle” in subsection (1) — namely, 11 years or 193 121 km (120,000 miles), whichever occurs first;
(b) Class 2B, Class 3, Class 4 and Class 5 vocational vehicles and incomplete vocational vehicles, heavy-duty engines that are sparkignition engines and light heavy-duty engines that are compression-ignition engines, namely, 10 years or 177 027 km (110,000 miles), whichever occurs first;
(c) Class 6 and Class 7 vocational vehicles and incomplete vocational vehicles, Class 7 tractors and incomplete tractors and medium heavy-duty engines that are compression-ignition engines, namely, 10 years or 297 728 km (185,000 miles), whichever occurs first;
(d) Class 8 vocational vehicles, incomplete vocational vehicles, tractors and incomplete tractors, namely, 10 years or 700 064 km (435,000 miles), whichever occurs first; or
(e) heavy heavy-duty engines that are compression-ignition engines, namely, as set out 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).

Roof height — tractors

(6) Subject to subsections (7) and (8), “roof height” refers to the maximum height of a tractor, rounded to the nearest inch, excluding small accessories such as exhaust pipes and antennas, but including large accessories such as roof fairings, and measured with tires inflated to the manufacturer’s recommended cold tire inflation pressure and without occupants or cargo onboard.

Roof height measurement — tractors

(7) The roof height of a tractor must be measured with a static loaded radius equal to the arithmetic mean of the largest and smallest static loaded radius of the tires that are recommended for the tractor by the manufacturer.

Adjustable roof fairing — tractors

(8) In the case of a tractor equipped with an adjustable roof fairing, the roof height must be measured with the fairing in its lowest setting.

Family emission limit

(9) A family emission limit and a CO₂ family certification level must be expressed to the same number of decimal places as the emission standard they replace.

Spark-ignition engines

(10) For the purposes of these Regulations, a spark-ignition engine 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.

Compression-ignition engines

(11) For the purposes of these Regulations, a compression-ignition engine 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.

PURPOSE

Purpose

2. The purpose of these Regulations is to reduce greenhouse gas emissions from heavy-duty vehicles and engines by establishing emission standards and test procedures that are aligned with the federal requirements of the United States.

BACKGROUND

Background

3. These Regulations set out

(a) prescribed classes of vehicles and engines for the purposes of section 149 of the Act;
(b) requirements respecting the conformity of heavy-duty vehicles and heavy-duty engines with greenhouse gas emission standards for the purposes of section 153 of the Act;
(c) requirements respecting the conformity of fleets of heavy-duty vehicles and heavy-duty engines to greenhouse gas emission standards and other requirements for carrying out the purposes of Division 5 of Part 7 of the Act; and
(d) a credit system for the purposes of section 162 of the Act.

MODEL YEAR

Model year

4. (1) 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 or heavy-duty engine does not include January 1 of a calendar year, correspond to the calendar year during which the period of production falls; or
(b) if the period of production of a model of heavy-duty vehicle or heavy-duty engine 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 or heavy-duty engine must include only one January 1.

PRESCRIBED CLASSES OF VEHICLES AND ENGINES

Heavy-duty vehicles

5. (1) The following classes of vehicles are prescribed for the purposes of the definition “vehicle” in section 149 of the Act:

(a) Class 2B and Class 3 heavy-duty vehicles;
(b) vocational vehicles;
(c) tractors; and
(d) heavy-duty incomplete vehicles.

Heavy-duty engines

(2) Heavy-duty engines are prescribed for the purposes of the definition “engine” in section 149 of the Act.

Exclusion

(3) The prescribed classes of vehicles and engines referred to in subsections (1) and (2) do not include heavy-duty vehicles or heavy-duty engines 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.

Transportation within Canada — heavy-duty vehicles

(4) For the purposes of section 152 of the Act, the prescribed vehicles are the vehicles referred to in subsection (1) for which the main assembly is completed in Canada, other than a vehicle that will be used in Canada solely for purposes of exhibition, demonstration, evaluation or testing.

Transportation within Canada — heavy-duty engines

(5) For the purposes of section 152 of the Act, the prescribed engines are the engines referred to in subsection (2) that are manufactured in Canada, other than

(a) an engine that will be used in Canada solely for purposes of exhibition, demonstration, evaluation or testing;
(b) an engine that is to be installed in a heavy-duty vehicle before sale to the vehicle’s first retail purchaser; and
(c) an engine that is to be installed as a replacement engine in a heavy-duty vehicle that has a national emissions mark applied to it, if the replacement engine is
- (i) of the same model year as the original engine, and
- (ii) identical to or better than the original engine with respect to emissions.

NATIONAL EMISSIONS MARK

Application

6. (1) A company that intends to apply a national emissions mark to a vehicle or engine for the purposes of these Regulations must apply to the Minister to obtain an authorization in accordance with paragraphs 7(2)(a) to (c) and (e) of the On-Road Vehicle and Engine Emission Regulations and the application must include the street address where the records referred to in section 59 of these Regulations will be maintained.

Exception

(2) Subsection (1) does not apply to a company that, on the day on which these Regulations come into force, is authorized to apply the national emissions mark to a vehicle or engine under the On-Road Vehicle and Engine Emission Regulations.

National emissions mark

7. A company that applies a national emissions mark to a vehicle or engine must comply with section 8 of the On-Road Vehicle and Engine Emission Regulations.

LABELLING

Non EPA-certified engines

8. (1) Heavy-duty engines and the engines referred to in section 25 that are imported or manufactured in Canada — other than EPA-certified engines — must bear a compliance label that sets out the following information:

(a) subject to subsection (2), the statement “THIS ENGINE CONFORMS TO ALL APPLICABLE STANDARDS PRESCRIBED BY THE CANADIAN HEAVY-DUTY VEHICLE AND ENGINE GREENHOUSE GAS EMISSION REGULATIONS IN EFFECT FOR MODEL YEAR [MODEL YEAR] / CE MOTEUR EST CONFORME À TOUTES LES NORMES QUI LUI SONT APPLICABLES EN VERTU DU RÈGLEMENT SUR LES ÉMISSIONS DE GAZ À EFFET DE SERRE DES VÉHICULES LOURDS ET DE LEURS MOTEURS DU CANADA EN VIGUEUR POUR L’ANNÉE DE MODÈLE [ANNÉE DE MODÈLE]”;
(b) the name of the engine’s manufacturer;
(c) the engine’s model year if a national emissions mark is applied to the engine;
(d) subject to subsection (3), the engine’s date of manufacture;
(e) subject to subsection (3), the engine’s unique identification number;
(f) the model designations;
(g) the engine displacement;
(h) the identification of the emission control system;
(i) the engine family or the test group, as the case may be;
(j) the limits on the types of use for the engine to ensure that the emission standards set out in these Regulations are complied with;
(k) the engine specifications and adjustments recommended by the engine’s manufacturer;
(l) in the case of a spark-ignition engine, the valve lash, idle speed, ignition timing and idle air-fuel mixture setting procedure and value; and
(m) in the case of a compression-ignition engine, the engine power specified by the manufacturer and expressed in HP, the RPM at the specified horsepower, the fuel rate at the specified horsepower expressed in mm³ per stroke, the valve lash, idle speed and initial injection timing.

National emissions mark

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

Date of manufacture and unique identification number

(3) The engine’s date of manufacture referred to in paragraph (1)(d) and unique identification number referred to in paragraph (1)(e) may, instead of being set out on the label, be permanently affixed, engraved or stamped on the engine.

Engines referred to in section 25

(4) In the case of spark-ignition engines referred to in section 25, the label referred to in subsection (1) must also set out one of the following statements, whichever applies:

(a) a statement in both official languages that the engine conforms to the alternative greenhouse gas emission standards for engines of Class 2B and Class 3 heavy-duty vehicles; or
(b) the statement referred to in section 150(m)(4) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR.

Engines referred to in subsection 31(1)

(5) In the case of compression-ignition engines referred to in subsection 31(1), the label referred to in subsection (1) must also set out one of the following statements, whichever applies:

(a) a statement in both official languages that the engine conforms to the alternative CO₂ emission standard based on model year 2011 compression-ignition engines; or
(b) the statement referred to in section 620(d) of Title 40, chapter I, subchapter U, part 1036, subpart G, of the CFR.

Non EPA-certified vehicles

9. (1) Heavy-duty vehicles that are imported or manufactured in Canada — other than EPA-certified heavy-duty vehicles — must bear a compliance label that sets out the following information:

(a) subject to subsection (2), the statement “THIS VEHICLE CONFORMS TO ALL APPLICABLE STANDARDS PRESCRIBED BY THE CANADIAN HEAVY-DUTY VEHICLE AND ENGINE GREENHOUSE GAS EMISSION REGULATIONS IN EFFECT FOR MODEL YEAR [MODEL YEAR] / CE VÉHICULE EST CONFORME À TOUTES LES NORMES QUI LUI SONT APPLICABLES EN VERTU DU RÈGLEMENT SUR LES ÉMISSIONS DE GAZ À EFFET DE SERRE DES VÉHICULES LOURDS ET DE LEURS MOTEURS DU CANADA EN VIGUEUR POUR L’ANNÉE DE MODÈLE [ANNÉE DE MODÈLE]”;
(b) the name of the vehicle’s manufacturer;
(c) the vehicle’s model year if a national emissions mark is applied to the vehicle;
(d) subject to subsection (3), the vehicle’s date of manufacture;
(e) the type of vehicle, in both official languages, referred to in subparagraphs 18(3)(a)(i) to (xiii);
(f) the vehicle family or the test group, as the case may be;
(g) the identification of the emission control system;
(h) in the case of a vocational vehicle referred to in subsection 26(3), a statement, in both official languages, that the vehicle is exempted under that subsection;
(i) in the case of a vocational tractor, a statement, in both official languages, that the vehicle is a vocational tractor;
(j) in the case of a vocational vehicle or a tractor that is exempted under section 17, a statement to that effect, in both official languages; and
(k) in the case of a Class 2B or Class 3 heavy-duty vehicle or cab-complete vehicle — excluding those referred to in the definition “vocational vehicle” in subsection 1(1) — the engine displacement and the CO₂ emission value determined by variable A in accordance with subsection 23(1) for that vehicle configuration and if applicable, the N₂O and CH₄ family emission limits.

National emissions mark

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

Date of manufacture

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

Requirements

10. All the labels applied to a vehicle or engine, as the case may be, in accordance with sections 8 and 9, must

(a) be applied to a conspicuous and readily accessible location;
(b) be permanently attached to the vehicle and, in the case of an engine, be permanently attached to an engine part that is necessary for normal engine operation and does not normally require replacement during the engine’s useful life;
(c) be resistant to or protected against any weather condition;
(d) have lettering that is
- (i) clear and indelible,
- (ii) indented, embossed or in a colour that contrasts with the background colour of the label, and
- (iii) in block capitals and numerals that are not less than 2 mm in height; and
(e) have units that are identified by the appropriate name or symbol.

VEHICLES MANUFACTURED IN STAGES

Requirements

11. (1) If a company alters a heavy-duty vehicle or heavy-duty incomplete vehicle that was in conformity to these Regulations in such a manner that its stated type of vehicle referred to in subparagraphs 18(3)(a)(i) to (xiii) 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 paragraph 53(d), the compliance label referred to in section 9 and the national emissions mark, as the case may be, remain applied to the altered vehicle;
(b) in respect of the work carried out by the company to alter the vehicle, ensure that the vehicle conforms to all applicable standards;
(c) subject to subsection (2), apply to the altered vehicle an additional label that sets out the following information:
- (i) the words “THIS VEHICLE WAS ALTERED BY / CE VÉHICULE A ÉTÉ MODIFIÉ PAR”, followed by the name of the company that altered the vehicle,
- (ii) the month and year during which the alteration was made to the vehicle,
- (iii) the national emissions mark referred to in section 6, and
- (iv) the type of vehicle referred to in subparagraphs 18(3)(a)(i) to (xiii), 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 is changed, as the case may be; and
(d) obtain and produce the evidence of conformity referred to in section 54 for the altered vehicle in a form and manner that is satisfactory to the Minister before the vehicle leaves its possession or control.

National emissions mark

(2) The national emissions mark referred to in subparagraph (1)(c)(iii) may also be displayed on a label applied to the vehicle immediately beside the U.S. emission control information label or the compliance label referred to in section 9, as the case may be.

Non-participation in credit system

(3) A company that alters a vehicle in accordance with this section must not participate in the CO₂ emission credit system set out in sections 34 to 47 with respect to that altered vehicle.

GREENHOUSE GAS EMISSION STANDARDS

GENERAL

Heavy-duty Vehicles of the 2014 Model Year

January 1, 2014

12. (1) Subject to subsection (2), these Regulations apply to vehicles for which the main assembly is completed on or after January 1, 2014.

Election

(2) A company may elect to comply with these Regulations with respect to its heavy-duty vehicles of the 2014 model year for which the main assembly is completed before January 1, 2014 for the purpose of participation in the CO₂ emission credit system set out in sections 34 to 47.

Heavy-duty Vehicles and Engines Covered by an EPA Certificate

Conforming to EPA certificate

13. (1) Subject to subsections (4) and (8), a heavy-duty vehicle or heavy-duty engine of a given model year that is covered by an EPA certificate and that is sold concurrently in Canada and the United States must conform to the certification and in-use standards referred to in the EPA certificate instead of to the following standards, whichever apply:

(a) sections 14 to 16 and subsection 20(1) for Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, excluding those referred to in the definition “vocational vehicle” in subsection 1(1);
(b) sections 14 and 15 and subsection 26(1) for vocational vehicles and incomplete vocational vehicles;
(c) sections 14 to 16 and subsection 27(1) for tractors and incomplete tractors; and
(d) sections 14 and 15 and subsection 29(1) and, as the case may be, section 30 or subsection 31(1) or (2) for heavy-duty engines.

Exceeding N₂O or CH₄ emission standard

(2) For greater certainty, a company that manufactures or imports a Class 2B or Class 3 heavy-duty vehicle or cab-complete vehicle — excluding those referred to in the definition “vocational vehicle” in subsection 1(1) — or a heavy-duty engine that is covered by an EPA certificate and that conforms to a N₂O or CH₄ family emission limit that exceeds the N₂O or CH₄ emission standard applicable to the model year of that vehicle or engine under these Regulations, must conform to subsections 20(3) to (6) or 29(4) to (7), as the case may be.

Comply with CO₂ emission credit system

(3) Despite subsection (1), when a company participates in the CO₂ emission credit system set out in sections 34 to 47 for its heavy-duty vehicles or heavy-duty engines 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 — vehicles

(4) A company that manufactures or imports a vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor 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 vehicle under these Regulations, must participate in the CO₂ emission credit system set out in sections 34 to 47 and must, in accordance with section 18, group into fleets

(a) at least 50% of its vocational vehicles and incomplete vocational vehicles and at least 50% of its tractors and incomplete tractors of the 2015 model year if the number of heavy-duty vehicles it sold in Canada is greater than 500;
(b) at least 75% of its vocational vehicles and incomplete vocational vehicles and at least 75% of its tractors and incomplete tractors of the 2016 model year if the number of heavy-duty vehicles it sold in Canada is greater than 500; and
(c) all its 2017 and subsequent model year heavy-duty vehicles.

Credits — heavy-duty vehicles of 2015 and 2016 model years

(5) Unless a company elects to group all its vocational vehicles, incomplete vocational vehicles, tractors and incomplete tractors into fleets, credits obtained under paragraph (4)(a) or (b), as the case may be, for an averaging set of heavy-duty vehicles of the 2015 or 2016 model year may only be used to offset a deficit incurred for that averaging set of the same model year, after which the credits are no longer valid.

If all vehicles grouped into fleets

(6) For the purposes of subsection (4),

(a) credits obtained for the 2014 model year may be used to offset a deficit for an averaging set of the 2015 model year if the company groups into fleets all its vehicles of the 2014 and 2015 model years;
(b) credits obtained for the 2014 and 2015 model years may be used to offset a deficit for an averaging set of the 2016 model year if the company groups into fleets all its vehicles of the 2014, 2015 and 2016 model years; and
(c) credits obtained for the 2014, 2015 and 2016 model years may be used to offset a deficit for an averaging set of the 2017 or subsequent model year if the company groups into fleets all its vehicles of the 2014, 2015 and 2016 model years.

Early action credits

(7) For the purposes of subsection (4), for an averaging set of the 2014, 2015 or 2016 model year, a company may use early action credits obtained in accordance with section 47 if the company groups into fleets all its vocational vehicles, incomplete vocational vehicles, tractors and incomplete tractors of the averaging set for the model year in which the early action credits are used.

Fleets — engines

(8) A company that manufactures or imports an engine that is covered by an EPA certificate must group all its engines into fleets in accordance with section 18 and must participate in the CO₂ emission credit system set out in sections 34 to 47 if the following conditions are met:

(a) the engine conforms to a CO₂ family certification level that exceeds the CO₂ emission standard applicable to that engine’s model year under these Regulations; and
(b) the number of engines referred to in paragraph (a) sold in Canada by the company
- (i) is more than 1000 and exceeds the number of engines of the same engine family that it sold in the United States, or
- (ii) is between 101 and 1000 and is more than twice the number of engines of the same engine family that it sold in the United States.

Subsection 153(3) of Act

(9) For the purposes of subsection 153(3) of the Act, the provisions of the CFR that apply to a vehicle or an engine referred to in subsection (1) under the EPA certificate correspond to the certification and in-use standards referred to in subsection (1).

EPA

(10) For the purposes of subsection 153(3) of the Act, the EPA is the prescribed agency.

Emission Control Systems

On-Road Vehicle and Engine Emission Regulations

14. (1) An emission control system that is installed in a heavy-duty vehicle or heavy-duty engine for the purpose of conforming to the standards set out in these Regulations must comply with subsection 11(1) of the On-Road Vehicle and Engine Emission Regulations.

Defeat device

(2) A heavy-duty vehicle or heavy-duty engine must not be equipped with a defeat device.

Test procedures

(3) Subsections 11(3) and (4) of the On-Road Vehicle and Engine Emission Regulations apply except that the test procedures in question are the ones set out in these Regulations.

Adjustable Parameters

Definition

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 or heavy-duty engine 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 vehicle or engine manufacturer or that is inaccessible using ordinary tools.

Standards

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

Adjustable roof fairing

(3) The adjustable roof fairing of a tractor is not an adjustable parameter for the purposes of this section.

Air Conditioning Systems

Standards

16. A heavy-duty vehicle or heavy-duty incomplete vehicle — other than a vocational vehicle or incomplete vocational vehicle — that is equipped with an air conditioning system must conform to section 115(c) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR.

Small Volume Companies — Tractors and Vocational Vehicles

Exemption

17. (1) A company may elect, for a given model year, to not comply with the CO₂ emission standards set out in subsection 26(1) or 27(1), as the case may be, for its tractors and vocational vehicles and, in the case of tractors and vocational vehicles covered by an EPA certificate, the company may elect to not comply with subsection 13(4), if the following conditions are met:

(a) it manufactured or imported in 2011 for sale in Canada in total less than 200 tractors and vocational vehicles;
(b) its average number of tractors and vocational vehicles manufactured or imported for sale in Canada for the three most recent consecutive model years preceding the model year is less than 200; and
(c) it reports this election in its end of model year report in accordance with section 48.

CO₂ emission credit system

(2) A company that makes the election referred to in subsection (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 the election referred to in subsection (1) if the 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 less than 200.

Acquisition

(4) If a company acquires one or more companies after the day on which these Regulations come into force, it must

(a) in the case where the company made the election referred to in subsection (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 tractors and vocational vehicles of each of the acquired companies and report it in its first end of model year report following the acquisition; or
(b) in the case where the company makes the election referred to in subsection (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 tractors and vocational vehicles of each of the acquired companies.

Composition of Fleets

Definition of “fleet”

18. (1) In these Regulations, “fleet” refers to the heavy-duty vehicles and heavy-duty engines that a company imports or manufactures in Canada for the purpose of sale in Canada to the first retail purchaser, 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.

Exclusions

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

(a) the heavy-duty vehicles and heavy-duty engines that it manufactures and that will 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 and heavy-duty engines that it imports 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.

Fleet composition

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

(a) in the case of heavy-duty vehicles and subject to subsections (4) to (7), each fleet is composed solely of the vehicles referred to in one of the following subparagraphs:
- (i) subject to section 25 and subsection 26(6), Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, excluding those referred to in the definition “vocational vehicle” in subsection 1(1),
- (ii) Class 2B, Class 3, Class 4 and Class 5 vocational vehicles and incomplete vocational vehicles,
- (iii) Class 6 and Class 7 vocational vehicles and incomplete vocational vehicles,
- (iv) Class 8 vocational vehicles and incomplete vocational vehicles,
- (v) Class 7 low-roof tractors and incomplete tractors,
- (vi) Class 7 mid-roof tractors and incomplete tractors,
- (vii) Class 7 high-roof tractors and incomplete tractors,
- (viii) Class 8 low-roof day cab tractors and incomplete tractors,
- (ix) Class 8 low-roof sleeper cab tractors and incomplete tractors,
- (x) Class 8 mid-roof day cab tractors and incomplete tractors,
- (xi) Class 8 mid-roof sleeper cab tractors and incomplete tractors,
- (xii) Class 8 high-roof day cab tractors and incomplete tractors, or
- (xiii) Class 8 high-roof sleeper cab tractors and incomplete tractors; and
(b) in the case of heavy-duty engines and subject to subsections (8) and (9), each fleet is composed solely of the engines referred to in one of the following subparagraphs:
- (i) spark-ignition engines,
- (ii) light heavy-duty engines that are compression-ignition engines and that are designed to be used in vocational vehicles and incomplete vocational vehicles,
- (iii) medium heavy-duty engines that are compression-ignition engines and that are designed to be used in vocational vehicles and incomplete vocational vehicles,
- (iv) heavy heavy-duty engines that are compression-ignition engines and that are designed to be used in vocational vehicles and incomplete vocational vehicles,
- (v) medium heavy-duty engines that are compression-ignition engines and that are designed to be used in tractors and incomplete tractors, or
- (vi) heavy heavy-duty engines that are compression-ignition engines and that are designed to be used in tractors and incomplete tractors.

Class 2B and Class 3 heavy-duty vehicles

(4) For the purposes of subparagraph (3)(a)(i), all of the following heavy-duty vehicles must be grouped into one separate fleet of Class 2B and Class 3 heavy-duty vehicles:

(a) hybrid vehicles with regenerative braking;
(b) vehicles equipped with an engine that includes a Rankine-cycle or other bottoming cycle exhaust energy recovery system;
(c) electric vehicles;
(d) fuel cell vehicles; and
(e) vehicles that are manufactured with innovative technologies.

Grouping into subfleets

(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 limits, 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, as described in section 1827 of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR.

Tractors and vocational vehicles

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

(a) if applicable, be vocational tractors, hybrid vehicles with 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 or vehicles manufactured with innovative technologies; and
(b) be grouped into subfleets that include vehicles with identical CO₂ family emission limits if the vehicles in the fleet have more than one family emission limit.

Roof heights, cab types and GVWR

(7) If a vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor model straddles a roof height, cab type or GVWR division, a company may elect to group all those vehicles into the same fleet if they conform to the most stringent standards applicable to a vehicle in the fleet.

Heavy-duty engines

(8) For the purposes of paragraph (3)(b), all heavy-duty engines of a fleet must be of the same engine family and have, taking into account section 205(e) of Title 40, chapter I, subchapter U, part 1036, subpart C, of the CFR,

(a) an identical CO₂ family certification level; and
(b) identical N₂O and CH₄ family emission limits.

Fleet of 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 fleet are sold in the United States.

Grouping into Fleets

Election applicable to all vehicles and engines

19. If a company makes the election referred to in subsection 22(4), 26(7), 27(8) or 33(1) for a fleet of heavy-duty vehicles or heavy-duty engines that it manufactures or imports, that election applies to all the vehicles and engines of that fleet.

CLASS 2B AND CLASS 3 HEAVY-DUTY VEHICLES

N₂O and CH₄ Emissions

Standards

20. (1) Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles of the 2014 and subsequent model years — excluding those referred to in the definition “vocational vehicle” in subsection 1(1) — must have N₂O and CH₄ emission values that do not exceed 0.05 g/mile for N₂O or 0.05 g/mile for CH₄ for the applicable useful life of the vehicle.

Calculation

(2) The N₂O and CH₄ emission values must be calculated in accordance with section 24.

Fleet calculation

(3) A company that manufactures or imports vehicles referred to in subsection (1) that exceed any of the standards set out in that subsection must group those vehicles of a given model year into a fleet and subfleets in accordance with section 18 and must calculate the N₂O and CH₄ emission deficits for that fleet, expressed in megagrams of CO₂ and rounded in accordance with subsection 35(2), by adding the deficits for all those subfleets, if applicable, using the formula

(A − B) × C × D × E
1 000 000

where

A is 0.05 g/mile for N₂O and 0.05 g/mile for CH₄;

B is the N₂O or CH₄ family emission limit for the fleet or subfleet, as the case may be, and corresponds to the N₂O or CH₄ emission value calculated in accordance with section 24;

C is the number of vehicles in the fleet or subfleet, as the case may be;

D is the useful life for the vehicle, namely, 120,000 miles; and

E is the global warming potential and is equal to the following number of credits needed to offset a N₂O and CH₄ deficit:

(a) an emission credit of 298 Mg of CO₂ to offset a deficit of 1 Mg of N₂O; and
(b) an emission credit of 25 Mg of CO₂ to offset a deficit of 1 Mg of CH₄.

Family emission limit

(4) For the purposes of subsection (3), every vehicle within the fleet or subfleet, as the case may be, must conform to the N₂O or CH₄ family emission limit corresponding to the emission value determined for B in the formula set out in that subsection.

Offsetting deficit

(5) The deficit calculated under subsection (3) must be offset by using the CO₂ emission credits obtained in accordance with sections 34 to 47 for the averaging set in which the fleet is included.

No credits

(6) For greater certainty, the company must not obtain CO₂ emission credits with respect to N₂O and CH₄ emissions for the purpose of participation in the CO₂ emission credit system set out in sections 34 to 47.

CO₂ Emissions

Average standard

21. (1) A company must group all its Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles of the 2014 and subsequent model years — excluding those referred to in the definition “vocational vehicle” in subsection 1(1) — 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 that fleet for that model year.

Offsetting deficit

(2) When a company incurs a deficit based on the calculation referred to in subsection (1), it must offset the deficit by using the CO₂ emission credits obtained in accordance with sections 34 to 47 for the averaging set in which the fleet is included.

Calculation of average standard

22. (1) Subject to subsection (6), a company must determine the fleet average CO₂ emission standard for a given model year, expressed in grams of CO₂ per mile and rounded to the nearest 0.1 gram of CO₂ per mile, for its fleet of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those referred to in the definition “vocational vehicle” in subsection 1(1) — using the formula

Detailed information can be found in the surrounding text

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 0.1 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 formula set out in one of the following paragraphs, whichever applies:

(a) for vehicles equipped with a spark-ignition 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; or
(b) for vehicles equipped with a compression-ignition engine and vehicles that operate without an internal combustion engine,

(0.0416 × WF) + 320

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.

Work factor

(3) The work factor for each vehicle subconfiguration is calculated using the formula

0.75 × (GVWR – curb weight + xwd) + 0.25 × (GCWR – GVWR)

where

GVWR

is the GVWR as defined in subsection 1(1), expressed in pounds;

curb weight

is the curb weight as defined in subsection 1(1), expressed in pounds;

xwd

is 500 pounds if the vehicle has four-wheel drive or all-wheel drive and is 0 pounds for all other vehicles; and

GCWR

is the GCWR as defined in subsection 1(1), expressed in pounds.

Alternative target value calculation for 2014 to 2018 model years

(4) A company may elect to use the CO₂ emission target values set out in the table of paragraph (a) or (b), as the case may be, instead of the emission target value calculated in accordance with subsection (2):

(a) for the 2014 to 2017 model years,

Item	Column 1	Column 2	Column 3
Item	Model Year	Engine Cycle	Alternate CO₂ Emission Target (grams/mile)
1.	2014	Spark-ignition engine Compression-ignition engine	(0.0482 × WF) + 371 (0.0478 × WF) + 368
2.	2015	Spark-ignition engine Compression-ignition engine	(0.0479 × WF) + 369 (0.0474 × WF) + 366
3.	2016	Spark-ignition engine Compression-ignition engine	(0.0469 × WF) + 362 (0.0460 × WF) + 354
4.	2017	Spark-ignition engine Compression-ignition engine	(0.0460 × WF) + 354 (0.0445 × WF) + 343

(b) for the 2014 to 2018 model years,

Item	Column 1	Column 2	Column 3
Item	Model Year	Engine Cycle	Alternate CO₂ Emission Target (grams/mile)
1.	2014	Spark-ignition engine Compression-ignition engine	(0.0482 × WF) + 371 (0.0478 × WF) + 368
2.	2015	Spark-ignition engine Compression-ignition engine	(0.0479 × WF) + 369 (0.0474 × WF) + 366
3.	2016 to 2018	Spark-ignition engine Compression-ignition engine	(0.0456 × WF) + 352 (0.0440 × WF) + 339

Election

(5) If a company elects to use the CO₂ emission target values set out in paragraph (4)(a) or (b), the applicable targets continue to apply for all the model years referred to in that paragraph, unless it elects to comply with subsection (2) for the remaining model years.

Grouping subconfigurations into configurations

(6) A company may group vehicle subconfigurations of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those referred to in the definition “vocational vehicle” in subsection 1(1) — within a vehicle configuration for the purpose of calculating the fleet average CO₂ emission standard if

(a) the vehicles of each subconfiguration have the same test weight, GVWR and GCWR, and the work factor and target value are calculated assuming a curb weight equal to two times the test weight minus the GVWR; or
(b) the lowest target value of a vehicle subconfiguration is used for all vehicle subconfigurations.

Calculation of average values

23. (1) A company must calculate the fleet average CO₂ emission value for a given model year, expressed in grams of CO₂ per mile for its fleet of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those referred to in the definition “vocational vehicle” in subsection 1(1) — by using the formula

Detailed information can be found in the surrounding text

where

A is the CO₂ emission value for each vehicle configuration calculated in accordance with section 24 and taking into account subsection (2);

B is the number of vehicles of that vehicle configuration in the fleet; and

C is the number of vehicles in the fleet used for the purposes of subsection (2).

Representative data

(2) When a company calculates the fleet average CO₂ emission value in accordance with this section, it must use the data and values from one or more vehicle configurations that represent at least 90% of its number of vehicles for the fleet.

Test Methods and Calculations

General

24. (1) The N₂O, CH₄ and CO₂ emission values for Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those referred to in the definition “vocational vehicle” in subsection 1(1) and the vehicles referred to in subsection (2) — must be determined in accordance with subsection (3) or (4), as the case may be, and

(a) using
- (i) the test procedures, fuels and calculation methods set out for the FTP-based city test and the HFET-based highway test, and
- (ii) the adjusted loaded vehicle weight and the deterioration factors determined using the durability procedures and method prescribed in section 1823(m) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR; and
(b) taking into account
- (i) sections 104(d)(5) and 150(e) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR, and
- (ii) the altitude testing conditions set out in section 1865(h)(3) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR.

Electric vehicles and fuel cell vehicles

(2) In the case of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those referred to in the definition “vocational vehicle” in subsection 1(1) — that are electric vehicles or fuel cell vehicles, the N₂O, CH₄ and CO₂ emission values are considered to be 0 grams per mile.

Multi-fuel, dual fuel or flexible fuel

(3) In the case of Class 2B or Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those referred to in the definition “vocational vehicle” in subsection 1(1) — that are designed to operate on two or more different fuel types, either separately or simultaneously, the N₂O, CH₄ and CO₂ emission values for a given vehicle or vehicle configuration, as the case may be, must be determined using

(a) in the case of N₂O and CH₄ emissions, the highest of the following averages:
- (i) the arithmetic average of the FTP-based city test and HFET-based highway test emission values, determined in accordance with this section, for that vehicle configuration, weighted 0.55 and 0.45 respectively, tested on gasoline or diesel fuel, and
- (ii) the arithmetic average of the FTP-based city test and HFET-based highway test emission values, determined in accordance with this section, for that vehicle configuration, weighted 0.55 and 0.45 respectively, tested on the alternative fuel; and
(b) in the case of CO₂ emissions, the formula
(F × A) + ((1 – F) × B)
where
F is 0.00 unless the company provides the Minister with evidence demonstrating that an alternative value determined for F is more representative for that vehicle configuration,
A is the arithmetic average of the FTP-based city test and HFET-based highway test emission values, determined in accordance with this section, for that vehicle configuration, weighted 0.55 and 0.45 respectively, tested on the alternative fuel, and
B is the arithmetic average of the FTP-based city test and HFET-based highway test emission values, determined in accordance with this section, for that vehicle configuration, weighted 0.55 and 0.45 respectively, tested on gasoline or diesel fuel.

Other cases

(4) In the case of other Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those referred to in the definition “vocational vehicle” in subsection 1(1) — the N₂O, CH₄ and CO₂ emission values must be determined as follows:

(a) in the case of N₂O and CH₄ emissions, by calculating the arithmetic average of the FTP-based city test and HFET-based highway test emission values, weighted 0.55 and 0.45 respectively; and
(b) in the case of CO₂ emissions,
- (i) by making the calculation set out in paragraph (a), or
- (ii) by calculating the CO₂ emission rate in accordance with section 104(g) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR.

Alternative Standards

Spark-ignition engines

25. A company may elect to include heavy-duty engines that are spark-ignition engines in a fleet of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those referred to in the definition “vocational vehicle” in subsection 1(1) — if the following conditions are met:

(a) the fleet is composed of vehicles equipped with engines of the same model year, design and hardware;
(b) the engines are installed in heavy-duty incomplete vehicles that are not cab-complete vehicles, or are sold without being installed in a vehicle;
(c) the number of engines referred to in paragraph (b) represent not more than 10% of the number of engines — whether they are installed in vehicles or not — that are of the same model year, design and hardware in the fleet;
(d) instead of conforming to sections 29 and 30, the engines referred to in paragraph (b) must conform to
- (i) the N₂O and CH₄ emission standards and the calculations of the emission values referred to in section 20, and
- (ii) the CO₂ emission target value and test result determined in accordance with section 150(m)(6) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR; and
(e) the company reports its election in its end of model year report.

VOCATIONAL VEHICLES

CO₂ emission standards

26. (1) Subject to subsections (3) and (5) to (7), every vocational vehicle and incomplete vocational vehicle of the 2014 and subsequent model years must have a CO₂ emission rate that does not exceed the applicable CO₂ emission standard set out in the following table for the model year in question for its applicable useful life:

Item	Column 1 Class of Vocational Vehicle	Column 2 CO₂ Emission Standard (grams of CO₂ per tonne-mile) for the 2014 to 2016 Model Years	Column 3 CO₂ Emission Standard (grams of CO₂ per tonne-mile) for the 2017 and Subsequent Model Years
1.	Classes 2B, 3, 4 and 5	388	373
2.	Classes 6 and 7	234	225
3.	Class 8	226	222

Modelling CO₂ emissions to demonstrate compliance

(2) The CO₂ emission rate must be determined using the GEM computer simulation model with the following parameters:

(a) the “regulatory subcategory” referred to in the GEM computer simulation model corresponds to a type of vocational vehicle referred to in subparagraphs 18(3)(a)(ii) to (iv), whichever applies to the class of vocational vehicle being modelled; and
(b) the steer tire rolling resistance level and the drive tire rolling resistance level measured for each tire configuration in accordance with section 520(c) of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR.

Exemption for certain vocational vehicles

(3) The vocational vehicles and incomplete vocational vehicles referred to in subsection (1) do not include vehicles that either

(a) have tires with a maximum speed rating at or below 88 km/h (55 miles per hour); or
(b) are designed to perform work in an off-road environment or to operate at low speeds that are unsuitable for normal highway operation and meet one of the following criteria:
- (i) have an axle that has a GAWR of 13 154 kg (29,000 pounds) or more,
- (ii) attain a speed of 53 km/h (33 miles per hour) or less over 3.2 km (2 miles), or
- (iii) attain a speed of 72 km/h (45 miles per hour) or less over 3.2 km (2 miles), have an unloaded vehicle weight that is not less than 95% of its GVWR, and have no capacity to carry occupants other than the driver and operating crew.

Non-eligible vehicles

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

Option to conform to higher vehicle service class

(5) For any given vehicle referred to in subsection (1), a company may elect to conform to the emission standards and useful life applicable to a higher vehicle service class, in which case the company must not obtain credits for those vehicles when participating in the CO₂ emission credit system set out in sections 34 to 47.

Alternative standards

(6) In the case of a vocational vehicle or a cab-complete vocational vehicle equipped with a spark-ignition engine, a company may elect to comply with the standards referred to in sections 20 to 23 applicable to Class 2B and Class 3 heavy-duty vehicles, taking into account section 150(l) of Title 40, chapter I, subchapter U, part 1037, subpart B, of the CFR, instead of complying with subsection (1) and sections 29 and 30 if the following conditions are met:

(a) all 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; and
(c) the company reports its election in its end of model year report.

Calculation using fleets and subfleets

(7) A company may elect to comply with subsection (1) by grouping all 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 participating in the CO₂ emission credit system set out in sections 34 to 47.

Family emission limit

(8) For the purposes of subsection (7), every vocational vehicle and incomplete vocational vehicle within a fleet or subfleet, as the case may be, must conform to the CO₂ family emission limit determined by the company for the fleet or subfleet of the vehicle, as the case may be, and corresponding to the value determined for B in the formula set out in paragraph 35(1)(b).

Engines meeting requirements

(9) Every vocational vehicle and incomplete vocational vehicle of the 2014 and subsequent model years must be equipped with a heavy-duty engine that meets the requirements of these Regulations.

TRACTORS

CO₂ emission standard

27. (1) Subject to subsections (7) and (8), every tractor and incomplete tractor of the 2014 and subsequent model years must have a CO₂ emission rate that does not exceed the applicable CO₂ emission standard set out in the following table for the model year in question for the applicable useful life of the tractor:

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

Modelling CO₂ emissions to demonstrate compliance

(2) The CO₂ emission rate must be determined using the GEM computer simulation model with the following parameters:

(a) the “regulatory subcategory” referred to in the GEM computer simulation model corresponds to a type of tractor referred to in any of subparagraphs 18(3)(a)(v) to (xiii), whichever applies to the tractor being modelled;
(b) the coefficient of aerodynamic drag determined in accordance with subsection (4);
(c) the steer tire rolling resistance level and the drive tire rolling resistance level measured for each tire configuration in accordance with section 520(c) of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR;
(d) in the case of a tractor equipped with a vehicle speed limiter, the maximum speed, expressed in miles per hour and rounded to the nearest 0.1 mile per hour, to which the tractor is limited, determined in accordance with section 640 of Title 40, chapter I, subchapter U, part 1037, subpart G, of the CFR;

(e) the weight reduction value, calculated by adding the applicable values set out in the tables in the following subparagraphs:

(i) in the case of tires and wheels, the weight reduction value corresponds to the sum of the applicable weight reduction values set out in column 3 for each of the tractor’s wheels that are set out in the following table:

Item	Column 1 Tire Type	Column 2 Wheel Type	Column 3 Weight Reduction Value (pounds per wheel)
1.	Single-wide drive tire	Steel wheel	84
2.	Single-wide drive tire	Aluminum wheel	139
3.	Single-wide drive tire	Light-weight aluminum wheel (weighs at least 9.5 kg (21 pounds) less than a similar steel wheel)	147
4.	Steer tire or dual-wide drive tire	High-strength steel wheel (steel with tensile strength of 350 MPa or more)	8
5.	Steer tire or dual-wide drive tire	Aluminum wheel	21
6.	Steer tire or dual-wide drive tire	Light-weight aluminum wheel (weighs at least 9.5 kg (21 pounds) less than a similar steel wheel)	30

(ii) in the case of the following components, the weight reduction value corresponds to the sum of the applicable weight reduction values for each of the tractor’s components that are set out in the following table:

Item	Column 1 Component	Column 2 Aluminum Weight Reduction Value (pounds)	Column 3 High-strength Steel (steel with tensile strength of 350 MPa or more) Weight Reduction Value (pounds)
1.	Door	20	6
2.	Roof	60	18
3.	Cab rear wall	49	16
4.	Cab floor	56	18
5.	Hood support structure system	15	3
6.	Fairing support structure system	35	6
7.	Instrument panel support structure	5	1
8.	Brake drums – drive (4 units)	140	11
9.	Brake drums – non-drive (2 units)	60	8
10.	Frame rails	440	87
11.	Crossmember – cab	15	5
12.	Crossmember – suspension	25	6
13.	Crossmember – non-suspension (3 units)	15	5
14.	Fifth wheel	100	25
15.	Radiator support	20	6
16.	Fuel tank support structure	40	12
17.	Steps	35	6
18.	Bumper	33	10
19.	Shackles	10	3
20.	Front axle	60	15
21.	Suspension brackets and hangers	100	30
22.	Transmission case	50	12
23.	Clutch housing	40	10
24.	Drive axle hubs (8 units)	160	4
25.	Non-drive front hubs (2 units)	40	5
26.	Driveshaft	20	5
27.	Transmission and clutch shift levers	20	4

(f) in the case of a Class 8 sleeper cab, if the tractor is equipped with idle reduction technology that conforms to section 660 of Title 40, chapter I, subchapter U, part 1037, subpart G, of the CFR, and that automatically shuts off the main engine after 300 seconds or less, the corresponding value is 5 grams of CO₂ per tonne-mile or if applicable, is calculated in accordance with section 660(c) of Title 40, chapter I, subchapter U, part 1037, subpart G, of the CFR.

Weight reduction technologies

(3) For greater certainty, CO₂ emission credits for weight reduction technologies that are not referred to in paragraph (2)(e) may be obtained under section 41.

Calculation of coefficient of aerodynamic drag

(4) Subject to subsections (5) and (6), the coefficient of aerodynamic drag (C_D) is determined by

(a) measuring the drag area (C_DA) in accordance with the coastdown testing referred to in subpart F of Title 40, chapter I, subchapter U, part 1037, of the CFR, rounded to two decimal places and taking into account the following criteria:
- (i) high-roof tractors must be tested with the standard trailer referred to in section 501(g) of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR, and low-roof and mid-roof tractors must be tested without a trailer, unless they are tested with a trailer to evaluate innovative technologies, and
- (ii) the tractors and standard trailers referred to in section 501(g) of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR must be equipped with tires that are mounted on steel rims in accordance with section 521(b)(2) of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR; and
(b) determining, in accordance with section 520(b) of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR, the tractor’s coefficient of aerodynamic drag (C_D) and bin level that correspond to the tractor’s drag area (C_DA) calculated in paragraph (a).

Alternative bin level

(5) For low-roof and mid-roof tractors, the bin level may be determined using the bin level of an equivalent high-roof tractor as follows:

(a) if the equivalent high-roof tractor is in Bin I or Bin II, the low-roof and mid-roof tractors must be in Bin I; or
(b) if the equivalent high-roof tractor is in Bin III, Bin IV or Bin V, the low-roof and mid-roof tractors must be in Bin II.

Alternative method for measuring drag area

(6) Instead of the method referred to in paragraph (4)(a), a company may elect to measure the tractor’s drag area (C_DA) in accordance with any other method described in subpart F of Title 40, chapter I, subchapter U, part 1037, of the CFR, 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, under section 521(c) of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR, and the company provides the Minister with evidence of the EPA approval; and
(b) in the case of a tractor that is not covered by an EPA certificate, the company provides the Minister with evidence demonstrating that the alternative method for measuring the tractor’s drag area referred to in this subsection is more representative of that tractor’s drag area.

Option to conform to higher vehicle service class

(7) For any given vehicle referred to in subsection (1), a company may elect to conform to the emission standards and useful life applicable to a higher vehicle service class in which case the company must not obtain credits for those vehicles when participating in the CO₂ emission credit system set out in sections 34 to 47.

Calculation using fleets and subfleets

(8) A company may elect to comply with subsection (1) by grouping all 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 participating in the CO₂ emission credit system set out in sections 34 to 47.

Family emission limit

(9) For the purposes of subsection (8), every tractor and incomplete tractor within a fleet or subfleet, as the case may be, must conform to the CO₂ family emission limit determined by the company for the fleet or subfleet of the vehicle, as the case may be, and corresponding to the value determined for B in the formula set out in paragraph 35(1)(c).

Engines meeting requirements

(10) Every tractor and incomplete tractor of the 2014 and subsequent model years must be equipped with a heavy-duty engine that meets the requirements of these Regulations.

VOCATIONAL TRACTORS

Alternative standards

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

HEAVY-DUTY ENGINES

N₂O and CH₄ Emissions

Standards

29. (1) Every heavy-duty engine that is a compression-ignition engine of the 2014 and subsequent model years and heavy-duty engine that is a spark-ignition engine of the 2016 and subsequent model years must have N₂O and CH₄ emission values that do not exceed an emission standard of 0.10 g/BHP-hr for N₂O and 0.10 g/BHP-hr for CH₄ for the applicable useful life of the engine.

Values

(2) The N₂O and CH₄ emission values for the engines referred to in subsection (1) correspond to the emission values 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 transient duty cycle, taking into account sections 108(d) to (f) and 150(g) of subpart B, sections 235(b) and 241(c) and (d) of subpart C and subparts E and F of part 1036, Title 40, chapter I, subchapter U, of the CFR.

Engine configuration

(3) For the purposes of subsection (2), the tested engine configuration for the model year in question is determined using the engine sales in Canada if none of the engines of the engine family are sold in the United States.

Fleet calculation

(4) A company that manufactures or imports engines referred to in subsection (1) that exceed any of the standards 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 and CH₄ emission deficits for each fleet, expressed in megagrams of CO₂ and rounded in accordance with subsection 35(2), using the formula

(A − B) × C × D × E × F
1 000 000

where

A is 0.10 g/BHP-hr for N₂O and 0.10 g/BHP-hr for CH₄;

B is the N₂O or CH₄ family emission limit for the fleet and corresponds to the N₂O or CH₄ deteriorated emission level value, calculated using the applicable emission value determined in accordance with subsection (2);

C is the number of engines in the fleet;

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;

E is the useful life for the engine, as follows:

(a) 110,000 miles for a spark-ignition engine; and
(b) the following number of miles for a compression-ignition engine:
- (i) 110,000 miles for a light heavy-duty engine,
- (ii) 185,000 miles for a medium heavy-duty engine, and
- (iii) 435,000 miles for a heavy heavy-duty engine; and

F is the global warming potential and is equal to the following number of credits needed to offset a N₂O and CH₄ deficit:

(a) an emission credit of 298 Mg of CO₂ to offset a deficit of 1 Mg of N₂O; and
(b) an emission credit of 25 Mg of CO₂ to offset a deficit of 1 Mg of CH₄.

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 determined by the company for the fleet that corresponds to the deteriorated emission level value determined for B in subsection (4).

Offsetting fleet emission deficit

(6) The deficit calculated under subsection (4) must be offset by using the CO₂ emission credits obtained in accordance with sections 34 to 47 for the averaging set in which the fleet is included.

No credits

(7) For greater certainty, and subject to subsection (8), the company must not obtain CO₂ emission credits with respect to N₂O and CH₄ emissions for the purpose of participation in the CO₂ emission credit system set out in sections 34 to 47.

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, using the following formula for each fleet, expressed in megagrams of CO₂ and rounded in accordance with subsection 35(2):

(A − B) × C × D × E × F
1 000 000

where

A is 0.04 g/BHP-hr for N₂O;

B is the N₂O family emission limit for the fleet and corresponds to the N₂O deteriorated emission level value, calculated using the applicable emission value determined in accordance with subsection (2);

C is the number of engines in the fleet;

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;

E is the useful life for the engine, as follows:

(a) 110,000 miles for a spark-ignition engine; and
(b) the following number of miles for a compression-ignition engine:
- (i) 110,000 miles for a light heavy-duty engine,
- (ii) 185,000 miles for a medium heavy-duty engine, and
- (iii) 435,000 miles for a heavy heavy-duty engine; and

F is the global warming potential and is equal to 298 Mg of CO₂.

CO₂ Emissions

Standard

30. Subject to sections 31 and 33, every heavy-duty engine must have a CO₂ emission value that does not exceed the following emission standard for the applicable useful life of the engine:

(a) for a spark-ignition engine of the 2016 and subsequent model years, a CO₂ emission standard of 627 g/BHP-hr; and

(b) for any other engine of the 2014 and subsequent model years, the applicable CO₂ emission standard set out in the following table:

Item	Column 1 Model Year	Column 2 Light Heavy-duty Engines (g/BHP-hr)	Column 3 Medium Heavy-duty Engines Designed To Be Used in Vocational Vehicles (g/BHP-hr)	Column 4 Heavy Heavy-duty Engines Designed To Be Used in Vocational Vehicles (g/BHP-hr)	Column 5 Medium Heavy-duty Engines Designed To Be Used in Tractors (g/BHP-hr)	Column 6 Heavy Heavy-duty Engines Designed To Be Used in Tractors (g/BHP-hr)
1.	2014 to 2016	600	600	567	502	475
2.	2017 and subsequent model years	576	576	555	487	460

Alternative emission standard — model years 2014 to 2016

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(b) 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 — model years 2013 to 2016

(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(b) or in subsection (1).

No early action credits

(3) The engines referred to in subsection (2) are not eligible for early action credits in accordance with section 47.

Election to comply with subsection (2)

(4) A company that elects to conform to the alternative CO₂ emission standard referred to in subsection (2) must continue to comply with that subsection for the other model years referred to in that subsection.

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) of subpart B, sections 235(b) and 241(c) and (d) of subpart C and subparts E and F of part 1036, Title 40, chapter I, subchapter U, of the CFR:

(a) for medium heavy-duty engines and heavy heavy-duty engines that are compression-ignition engines designed to be used in tractors or incomplete tractors, the steady state duty cycle;
(b) for medium heavy-duty engines and heavy heavy-duty engines that are compression-ignition engines designed to be used in both vocational vehicles or incomplete vocational vehicles and tractors or incomplete tractors, the steady state duty cycle and transient duty cycle; and
(c) for engines other than those referred to in paragraphs (a) and (b), the transient duty cycle.

Engine configuration

(2) For the purposes of subsection (1), the tested engine configuration for the model year in question is determined using the engine sales in Canada if none of the engines of the engine family are sold in the United States.

Calculation using fleets and subfleets

33. (1) A company may elect to comply with section 30 or subsection 31(2) by grouping all its heavy-duty engines of a given model year into fleets in accordance with section 18 and participating 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 that corresponds to the deteriorated emission level value determined for B in the formula set out in paragraph 35(1)(d).

CO₂ EMISSION CREDIT SYSTEM

Calculation of Credits and Deficits

Credits

34. (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 heavy-duty vehicles or heavy-duty engines of a given model year are lower than the CO₂ emission standard applicable to that fleet or subfleet, as the case may be, and for that model year, and the company reports the credits in its end of model year report in accordance with section 48.

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 to that fleet or subfleet, as the case may be, and for that model year, and the company reports the deficits in its end of model year report in accordance with section 48.

Calculation

35. (1) A company must calculate the credits or deficits for each of its fleets or subfleets, as the case may be, using the equation set out in one of the following paragraphs, whichever applies:

(a) for Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, excluding those referred to in the definition “vocational vehicle” in subsection 1(1),
- 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 and rounded in accordance with subsection 35(2),
- A is the fleet average CO₂ emission standard calculated in accordance with section 22, expressed in grams of CO₂ per mile,
- B is the fleet average CO₂ emission value calculated in accordance with section 23, expressed in grams of CO₂ per mile,
- C is the number of vehicles in the fleet, and
- D is the useful life for the vehicle, namely, 120,000 miles;
(b) for vocational vehicles and incomplete vocational vehicles and subject to subsection 38(2) and clause 41(1)(b)(ii)(A),
- 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 and rounded in accordance with subsection 35(2),
- A is the CO₂ emission standard under subsection 26(1) that applies to the vehicles of the subfleet, expressed in grams of CO₂ per tonne-mile,
- B is the CO₂ family emission limit and corresponds to the CO₂ emission rate for the subfleet of vehicles, expressed in grams of CO₂ per tonne-mile, determined in accordance with subsection 26(2),
- C is the payload for the class of vehicles, as follows:
  - (i) 2.85 tonnes for Class 2B, Class 3, Class 4 and Class 5,
  - (ii) 5.6 tonnes for Class 6 and Class 7, and
  - (iii) 7.5 tonnes for Class 8,
- D is the number of vehicles in the subfleet, and
- E is the useful life for the class of vehicles, as follows:
  - (i) 110,000 miles for Class 2B, Class 3, Class 4 and Class 5,
  - (ii) 185,000 miles for Class 6 and Class 7, and
  - (iii) 435,000 miles for Class 8;
(c) for tractors and incomplete tractors and subject to subsection 38(2) and clause 41(1)(b)(ii)(B),
- 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 and rounded in accordance with subsection 35(2),
- A is the CO₂ emission standard under subsection 27(1) that applies to the tractors and incomplete tractors of the subfleet, expressed in grams of CO₂ per tonne-mile,
- B is the CO₂ family emission limit and corresponds to the CO₂ emission rate for the subfleet of tractors and incomplete tractors, expressed in grams of CO₂ per tonne-mile, determined in accordance with subsection 27(2),
- C is the payload for the class of tractors and incomplete tractors, as follows:
  - (i) 12.5 tonnes for Class 7, and
  - (ii) 19 tonnes for Class 8,
- D is the number of tractors and incomplete tractors in the subfleet, and
- E is the useful life for the class of tractors or incomplete tractors, as the case may be, as follows:
  - (i) 185,000 miles for Class 7, and
  - (ii) 435,000 miles for Class 8; and
(d) for heavy-duty engines and subject to subparagraph 41(1)(c)(iii),
- 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 and rounded in accordance with subsection 35(2),
- 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 per BHP-hr,
- B is the CO₂ family certification level for the fleet and corresponds to the CO₂ deteriorated emission level value, using the applicable emission value calculated in accordance with section 32 and subject to subsection (3), expressed in grams of CO₂ per BHP-hr,
- 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,
- D is the number of engines in the fleet, and
- E is the useful life for the engine, as follows:
  - (i) 110,000 miles for spark-ignition engines, and
  - (ii) for the following compression-ignition engines:
    - (A) 110,000 miles for light heavy-duty engines,
    - (B) 185,000 miles for medium heavy-duty engines, and
    - (C) 435,000 miles for heavy heavy-duty engines.

Fleets

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

Duty cycle

(3) In the case of medium heavy-duty engines and heavy heavy-duty engines that are designed to be used in both vocational vehicles or incomplete vocational vehicles and in tractors or incomplete tractors, a company must select the duty cycle set out in paragraph 32(1)(b) that corresponds to the vehicle in which the engine is installed for the purpose of calculating the value determined for B in the formula set out in paragraph (1)(d).

Additional Credits

Limitation

36. A company must not obtain additional credits in accordance with sections 37 to 41 more than once for a vehicle or an engine with regard to the same type of greenhouse gas emission reduction technology.

Credit multiplier — Class 2B and Class 3 vehicles

37. A company that obtains credits under paragraph 35(1)(a) for Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles that are electric vehicles, fuel cell vehicles, hybrid vehicles or are equipped with an engine that includes a Rankine-cycle or other bottoming cycle exhaust energy recovery system, may multiply the number of credits obtained for those vehicles by 1.5.

Equivalent conventional vehicle and footprint

38. (1) For the purpose of the calculation in subsection (2),

(a) “equivalent conventional vehicle” means a vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor that is being compared with a vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor that is an electric vehicle, a fuel cell vehicle, a hybrid vehicle, or that is equipped with an engine that includes a Rankine-cycle or other bottoming cycle exhaust energy recovery system that has, as a minimum, the same footprint, class, coefficient of aerodynamic drag, tires and wheels, and has the same number of power take-off circuits and the equivalent take-off power as the vehicle in question; and
(b) “footprint” means the result of the product of the average width, measured in inches and rounded to the nearest tenth of an inch, of the lateral distance between the centrelines of the front and rear base tires at ground level, multiplied by the longitudinal distance between the front and rear wheel centrelines, measured in inches and rounded to the nearest tenth of an inch, divided by 144 and rounded to the nearest tenth of a square foot.

Calculation — tractors and vocational vehicles

(2) In the case of vocational vehicles, incomplete vocational vehicles, tractors or incomplete tractors that are electric vehicles, fuel cell vehicles, hybrid vehicles or that are equipped with an engine that includes a Rankine-cycle or other bottoming cycle exhaust energy recovery system, a company may obtain additional credits by replacing the value determined for (A – B) in the equation set out in paragraph 35(1)(b) or (c), as the case may be, with the following benefit to emission credits, expressed in grams of CO₂ per tonne-mile and determined by the equation

(A − B) = improvement factor x modelling
result B

where

improvement factor is the value determined by the formula

emission rate A − emission rate B
emission rate A

where

emission rate A is the emission test result, expressed in grams of CO₂ per tonne-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 tonne-mile, obtained by the vehicle in question, as follows:

(a) for an electric vehicle, the result corresponds to 0 grams of CO₂ per tonne-mile, and
(b) for any other vehicle, subject to subsection (3), the result obtained 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 525 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR; and

modelling result B is the CO₂ emission rate obtained for the vocational vehicle, incomplete vocational vehicle, tractor or incomplete tractor that is an electric vehicle, a fuel cell vehicle, a hybrid vehicle, or that is equipped with an engine that includes a Rankinecycle or other bottoming cycle exhaust energy recovery system, when modelled in accordance with subsection 26(2) or subsection 27(2), as the case may be.

Emission rate B

(3) In the case of fuel cell vehicles, the company may use the alternative procedure referred to in section 615 of Title 40, chapter I, subchapter U, part 1037, subpart G, of the CFR to calculate emission rate B in the equation set out in subsection (2).

Credit multiplier — tractors and vocational vehicles

(4) The additional credits calculated in subsection (2) may be multiplied by 1.5 if the company does not use the early action credit multiplier referred to in subsection 47(6) for the same vehicles.

Definitions

39. (1) The following definitions apply in this section:

“post-transmission hybrid system”
« système hybride post-transmission »
“post-transmission hybrid system” means a powertrain that includes features that recover and store energy from braking but that cannot function as a hybrid system without the transmission.
“pre-transmission hybrid system”
« système hybride pré-transmission »
“pre-transmission hybrid system” means an engine system that includes features that recover and store energy during engine motoring operation but not from the vehicle wheels.

Calculation — post-transmission and pre-transmission hybrid systems

(2) In the case of vocational vehicles, incomplete vocational vehicles, tractors and incomplete tractors that are equipped with post-transmission hybrid systems or pre-transmission hybrid systems, a company may obtain additional credits, expressed in megagrams of CO₂, using the following formula:

A × B × C × D
1 000 000

where

A is the grams of CO₂ per tonne-mile benefit from A to B testing determined in accordance with,

(a) in the case of a post-transmission hybrid system, section 550 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR, and 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 550 of Title 40, chapter I, subchapter U, part 1037, subpart F, of the CFR, and 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, as follows:

(a) 2.85 tonnes for Class 2B, Class 3, Class 4 and Class 5 vocational vehicles and incomplete vocational vehicles,
(b) 5.6 tonnes for Class 6 and Class 7 vocational vehicles and incomplete vocational vehicles,
(c) 7.5 tonnes for Class 8 vocational vehicles and incomplete vocational vehicles,
(d) 12.5 tonnes for Class 7 tractors and incomplete tractors, and
(e) 19 tonnes for Class 8 tractors and incomplete tractors;

C is the number of vehicles in the fleet or subfleet, as the case may be; and

D is the useful life for the class of vehicles, as follows:

(a) 110,000 miles for Class 2B, Class 3, Class 4 and Class 5,
(b) 185,000 miles for Class 6 and Class 7, and
(c) 435,000 miles for Class 8.

Credit multiplier

(3) The additional credits calculated in subsection (2) may be multiplied by 1.5 if the company does not use the early action credit multiplier referred to in subsection 47(6) for the same vehicles.

Calculation — Rankine-cycle engines

40. (1) In the case of heavy-duty engines that include a Rankine-cycle or other bottoming cycle exhaust energy recovery system, a company may obtain additional credits, expressed in megagrams of CO₂, using the following formula:

A × B × C × D
1 000 000

where

A is the benefit obtained from A to B testing, expressed in grams of CO₂ per BHP-hr, determined in accordance with subpart F of Title 40, chapter I, subchapter U, part 1037, of the CFR, or using an alternative procedure if,

(a) in the case of an engine that is covered by an EPA certificate, the alternative procedure has been approved by the EPA for that technology and the company provides the Minister with evidence of the EPA approval, or
(b) in the case of an engine that is not covered by an EPA certificate, the company provides the Minister with evidence demonstrating that the alternative procedure provides a more representative benefit than A to B testing for that technology;

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;

C is the number of engines in the fleet; and

D is the useful life for the engine, as follows:

(a) 110,000 miles for spark-ignition engines, and
(b) for compression-ignition engines,
- (i) 110,000 miles for light heavy-duty engines,
- (ii) 185,000 miles for medium heavy-duty engines, and
- (iii) 435,000 miles for heavy heavy-duty engines.

Credit multiplier

(2) The additional credits calculated in subsection (1) may be multiplied by 1.5 if the company does not use the early action credit multiplier referred to in subsection 47(6) for the same engines.

Innovative technologies

41. (1) A company may obtain additional credits, expressed in megagrams of CO₂, for its fleet or subfleet, as the case may be, of heavy-duty vehicles or heavy-duty engines for the use of innovative technologies by

(a) in the case of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, excluding those referred to in the definition “vocational vehicle” in subsection 1(1), using the following formula:
- A × B × C
  1 000 000
- where
- A is the five-cycle credit value determined in accordance with section 1869(c) of Title 40, chapter I, subchapter C, part 86, subpart S, of the CFR, and expressed in grams of CO₂ per mile,
- B is the number of vehicles manufactured with the innovative technology in question in the fleet, and
- C is the useful life for the vehicle, namely, 120,000 miles;
(b) in the case of vocational vehicles and incomplete vocational vehicles, or tractors and incomplete tractors, either
- (i) by using the following formula:
- (A − B) × C × D × E
  1 000 000
- where
- (A − B) is the difference between the in-use emission rate of the vehicle manufactured without the innovative technology and the in-use emission rate of the vehicle manufactured with the innovative technology and determined in accordance with section 610(c) of Title 40, chapter I, subchapter U, part 1037, subpart G, of the CFR, expressed in grams of CO₂ per tonne-mile,
- C is the number of vehicles manufactured with the innovative technology in question in the subfleet,
- D is the payload for the class of vehicles, as follows:
  - (A) 2.85 tonnes for Class 2B, Class 3, Class 4 and Class 5 vocational vehicles and incomplete vocational vehicles,
  - (B) 5.6 tonnes for Class 6 and Class 7 vocational vehicles and incomplete vocational vehicles,
  - (C) 7.5 tonnes for Class 8 vocational vehicles and incomplete vocational vehicles,
  - (D) 12.5 tonnes for Class 7 tractors and incomplete tractors, and
  - (E) 19 tonnes for Class 8 tractors and incomplete tractors, and
- E is the useful life for the class of vehicles, as follows:
  - (A) 110,000 miles for Class 2B, Class 3, Class 4 and Class 5,
  - (B) 185,000 miles for Class 6 and Class 7, and
  - (C) 435,000 miles for Class 8, or
- (ii) by substituting the result obtained in accordance with paragraph 35(1)(b) or (c), as the case may be, with the result obtained in accordance with one of the following formulas, whichever applies:
  - (A) for vocational vehicles and incomplete vocational vehicles:
  - [(A − B) + (B × C)] × D × E × F
    1 000 000
  - where
  - A is the CO₂ emission standard under subsection 26(1) that applies to the vocational vehicles and incomplete vocational vehicles of the subfleet, expressed in grams of CO₂ per tonne-mile,
  - B is the CO₂ family emission limit and corresponds to the CO₂ emission rate for the subfleet of vocational vehicles and incomplete vocational vehicles, expressed in grams of CO₂ per tonne-mile, determined in accordance with subsection 26(2),
  - C is the improvement factor determined 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 subfleet of vocational vehicles and incomplete vocational vehicles,
  - D is the payload for the class of vocational vehicles and incomplete vocational vehicles, as follows:
    - (I) 2.85 tonnes for Class 2B, Class 3, Class 4 and Class 5,
    - (II) 5.6 tonnes for Class 6 and Class 7, and
    - (III) 7.5 tonnes for Class 8,
  - E is the number of vocational vehicles and incomplete vocational vehicles manufactured with the innovative technology in question in the subfleet, and
  - F is the useful life for the class of vocational vehicles and incomplete vocational vehicles, as follows:
    - (I) 110,000 miles for Class 2B, Class 3, Class 4 and Class 5,
    - (II) 185,000 miles for Class 6 and Class 7, and
    - (III) 435,000 miles for Class 8, or
  - (B) for tractors and incomplete tractors:
  - [(A − B) + (B × C)] × D × E × F
    1 000 000
  - where
  - A is the CO₂ emission standard under subsection 27(1) that applies to the tractors and incomplete tractors of the subfleet, expressed in grams of CO₂ per tonne-mile,
  - B is the CO₂ family emission limit and corresponds to the CO₂ emission rate for the subfleet of tractors and incomplete tractors, expressed in grams of CO₂ per tonne-mile, determined in accordance with subsection 27(2),
  - C is the improvement factor determined 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 subfleet of tractors and incomplete tractors,
  - D is the payload for the class of tractors or incomplete tractors, as the case may be, as follows:
    - (I) 12.5 tonnes for Class 7, and
    - (II) 19 tonnes for Class 8,
  - E is the number of tractors and incomplete tractors manufactured with the innovative technology in question in the subfleet, and
  - F is the useful life for the class of tractors or incomplete tractors, as the case may be, as follows:
    - (I) 185,000 miles for Class 7, and
    - (II) 435,000 miles for Class 8; or
(c) in the case of heavy-duty engines,
- (i) by using the following formula for engines tested on a chassis:
  - (A − B) × C × D × E
    1 000 000
  - where
  - (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 chassis A to B testing or in-use A to B testing of pairs of vehicles equipped with the engines differing only with respect to the innovative technology in question, and expressed in grams of CO₂ per tonne-mile,
  - C is the number of vocational vehicles, incomplete vocational vehicles, tractors or incomplete tractors with engines manufactured with the innovative technology in the fleet,
  - D is the payload, if applicable, for the class of vehicles, as follows:
    - (A) 2.85 tonnes for Class 2B, Class 3, Class 4 and Class 5 vocational vehicles and incomplete vocational vehicles,
    - (B) 5.6 tonnes for Class 6 and Class 7 vocational vehicles and incomplete vocational vehicles,
    - (C) 7.5 tonnes for Class 8 vocational vehicles and incomplete vocational vehicles,
    - (D) 12.5 tonnes for Class 7 tractors and incomplete tractors, and
    - (E) 19 tonnes for Class 8 tractors and incomplete tractors, and
  - E is the useful life for the class of vehicles, as follows:
    - (A) 110,000 miles for Class 2B, Class 3, Class 4 and Class 5,
    - (B) 185,000 miles for Class 6 and Class 7, and
    - (C) 435,000 miles for Class 8,
- (ii) by using the following formula for engines tested on an engine dynamometer:
  - (A − B) × C × D × E
    1 000 000
  - where
  - (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 BHP-hr,
  - 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,
  - D is the number of engines manufactured with the innovative technology in the fleet,
  - E is the useful life for the engine, as follows:
    - (A) 110,000 miles for spark-ignition engines, and
    - (B) for the following compressionignition engines:
      - (I) 110,000 miles for light heavy-duty engines,
      - (II) 185,000 miles for medium heavy-duty engines, and
      - (III) 435,000 miles for heavy heavy-duty engines, or
- (iii) by substituting the result obtained in accordance with paragraph 35(1)(d) with the result determined in accordance with the following formula:
  - [(A − B) + (B × C)] × D × E × F
    1 000 000
  - where
  - 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 BHP-hr,
  - B is the CO₂ family certification level for the fleet and corresponds to the COdeteriorated emission level value, using the applicable emission value calculated in accordance with section 32 and subject to subsection 35(3), expressed in grams of CO₂ per BHP-hr,
  - C is the improvement factor determined 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,
  - 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,
  - E is the number of engines manufactured with the innovative technology in the fleet, and
  - F is the useful life for the engine, as follows:
    - (A) 110,000 miles for spark-ignition engines, and
    - (B) for the following compressionignition engines:
      - (I) 110,000 miles for light heavy-duty engines,
      - (II) 185,000 miles for medium heavy-duty engines, and
      - (III) 435,000 miles for heavy heavy-duty engines.

Calculation — alternative procedure

(2) If the five-cycle credit value referred to in the description of A in the formula set out in paragraph (1)(a) cannot adequately measure the emission reduction attributable to an innovative technology, the company may calculate that five-cycle credit value using the alternative procedure set out in section 1869(d) of Title 40, chapter I, subchapter C, part 86, of the CFR, if

(a) in the case of a vehicle that is covered by an EPA certificate, the alternative procedure has been approved by the EPA for that technology and the company provides the Minister with evidence of the EPA approval; or
(b) in the case of a vehicle that is not covered by an EPA certificate, the company provides the Minister with evidence demonstrating that the alternative procedure provides a more representative benefit for that technology.

Averaging Sets

Calculation

42. The credits or deficits for each averaging set of heavy-duty vehicles or heavy-duty engines are determined by adding the credits obtained and deficits incurred for all fleets of that averaging set.

Date of credits or deficits

43. A company obtains credits or incurs deficits for an averaging set of heavy-duty vehicles or heavy-duty engines on the day on which the company submits the end of model year report for that model year.

Use of credits — time limit

44. Credits obtained for an averaging set of heavy-duty vehicles or heavy-duty engines of a given model year may be used for that averaging set up to five model years after the model year for which the credits were obtained, after which the credits are no longer valid.

Deficits

45. (1) Subject to subsections (4) and (6), a company must use the credits obtained for an averaging set of heavy-duty vehicles or heavy-duty engines of a given model year to offset any outstanding deficits incurred for that averaging set.

Remaining credits

(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.

Offsetting

(3) Subject to subsection (4), a company may offset a deficit that it incurs for an averaging set of heavy-duty vehicles or heavy-duty engines with an equivalent number of credits obtained in accordance with section 35 or transferred from another company for that averaging set.

Transfer of credits

(4) A company that obtains credits in accordance with sections 37 to 40 for an averaging set may transfer them to one of its other averaging sets to offset a deficit incurred in accordance with any of paragraphs 35(1)(a) to (d) if the following conditions are met:

(a) if the company obtained credits in accordance with section 37, they are used to offset any deficits for other vehicles in that averaging set before transferring any remaining credits to other averaging sets; and
(b) not more than 6 000 Mg of CO₂ emission credits per model year are transferred between any of the following groups of averaging sets:
- (i) averaging sets of spark-ignition engines, light heavy-duty engines that are compression-ignition engines and light heavy-duty vehicles,
- (ii) averaging sets of medium heavy-duty engines that are compression-ignition engines and medium heavy-duty vehicles, or
- (iii) averaging sets of heavy heavy-duty engines that are compression-ignition engines and heavy heavy-duty vehicles.

Exception

(5) The credit transfer limit between the groups set out in paragraph (4)(b) does not apply when the credits are used between the averaging sets of the engines and vehicles referred to in each of the subparagraphs of that paragraph.

Offsetting deficits — time limit

(6) A company must offset a deficit incurred for an averaging set of heavy-duty vehicles or heavy-duty engines of a given model year no later than the day on which the company submits the end of model year report in accordance with section 48 for vehicles or engines of the third model year after the model year for which the company incurred the deficit.

Acquisition or merger

46. (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 heavy-duty vehicles or heavy-duty engines, it must offset all outstanding deficits for its averaging sets before submitting its last end of model year report.

Early Action Credits

Eligibility

47. (1) A company may obtain early action credits for an averaging set of heavy-duty vehicles or heavy-duty engines that are compression-ignition engines of the 2013 model year or for an averaging set of heavy-duty engines that are spark-ignition engines of the 2015 model year, if the number of credits calculated for that averaging set is greater than the number of deficits incurred for that model year and the company reports the credits

(a) in its 2014 end of model year report, in the case of heavy-duty vehicles and heavy-duty engines that are compression-ignition engines; or
(b) in its 2016 end of model year report, in the case of heavy-duty engines that are spark-ignition engines.

Electric vehicles

(2) A company may obtain early action credits by grouping its fleets of electric vehicles of the 2011 to 2013 model years into the applicable averaging sets and if the company reports the credits in its 2014 end of model year report.

What to include

(3) For the purpose of obtaining early action credits, a company must group

(a) into the applicable fleet, all its vocational vehicles, tractors, Class 2B and Class 3 heavy-duty vehicles equipped with a spark-ignition engine or Class 2B and Class 3 heavy-duty vehicles equipped with a compression-ignition engine, except in the case of electric vehicles; and
(b) into the applicable averaging set, all its heavy-duty engines.

Date

(4) A company obtains early action credits on the day on which its 2014 end of model year report is submitted in the case of heavy-duty vehicles and heavy-duty engines that are compression-ignition engines, and on the day on which its 2016 end of model year report is submitted in the case of heavy-duty engines that are spark-ignition engines.

Calculation

(5) Early action credits obtained or deficits incurred within each averaging set for the following fleets must be calculated in accordance with sections 35 to 41, as applicable, using the following standards:

(a) in the case of heavy-duty vehicles and heavy-duty engines that are compression-ignition engines of the 2013 model year, the emission standards applicable to the 2014 model year;
(b) in the case of electric vehicles of the 2011 to 2013 model years, the emission standards applicable to the 2014 model year; and
(c) in the case of heavy-duty engines that are spark-ignition engines of the 2015 model year, the emission standards applicable to the 2016 model year.

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.

Time limit

(7) Early action credits may be used as follows:

(a) credits obtained for heavy-duty vehicles or heavy-duty engines that are compression-ignition engines of the 2013 model year may be used for the 2014 to 2018 model years;
(b) credits obtained for electric vehicles of the 2011 to 2013 model years may be used for the 2014 to 2018 model years; and
(c) credits obtained for heavy-duty engines that are spark-ignition engines of the 2015 model year may be used for the 2016 to 2020 model years.

Use

(8) The rules set out in sections 45 and 46 with respect to credits also apply to early action credits.

REPORTS

END OF MODEL YEAR REPORT

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 and subsequent model years that it imported or manufactured in Canada, no later than June 30 of the calendar year following the calendar year that corresponds to the model year in question.

Statement

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

(a) in the case of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, excluding those referred to in the definition “vocational vehicle” in subsection 1(1),
- (i) in respect of the fleet average CO₂ emission standard, that all its vehicles are grouped into one or more fleets in accordance with section 18, and
- (ii) in respect of the N₂O and CH₄ emission standards, that its vehicles
  - (A) conform to the applicable N₂O and CH₄ emission standards,
  - (B) are covered by an EPA certificate, sold concurrently in Canada and the United States and conform either to the emission standards referred to in the EPA certificate or to a N₂O or CH₄ family emission limit, as the case may be, that is lower than the N₂O or CH₄ emission standard applicable to the model year of the vehicles under these Regulations, or
  - (C) are grouped into one or more fleets in accordance with section 18 for the purpose of offsetting a deficit in accordance with subsection 20(5);
(b) in the case of tractors and vocational vehicles, that its vehicles
- (i) conform to the applicable CO₂ emission standard,
- (ii) are covered by an EPA certificate, sold concurrently in Canada and the United States and conform either to the emission standard referred to in the EPA certificate or to a CO₂ family emission limit that is lower than the CO₂ emission standard applicable to the model year of the vehicles under these Regulations,
- (iii) are covered by an EPA certificate, sold concurrently in Canada and the United States, conform to a CO₂ family emission limit that exceeds the CO₂ emission standard applicable to the model year of the vehicles under these Regulations and are not grouped into one or more fleets pursuant to subsection 13(4),
- (iv) are grouped into one or more fleets in accordance with section 18 for the purpose of participation in the CO₂ emission credit system,
- (v) are exempted under section 17, or
- (vi) in the case of vocational tractors, conform to the emission standards applicable to vocational vehicles in accordance with section 28; and
(c) in the case of heavy-duty engines,
- (i) in respect of the CO₂ emission standard, that its engines
  - (A) conform to the applicable CO₂ emission standard,
  - (B) are covered by an EPA certificate, sold concurrently in Canada and the United States and conform either to the emission standard referred to in the EPA certificate or to a CO₂ family certification level that is lower than the CO₂ emission standard applicable to the model year of the engines under these Regulations,
  - (C) are covered by an EPA certificate, sold concurrently in Canada and the United States, conform to a CO₂ family certification level that exceeds the CO₂ emission standard applicable to the model year of the engines under these Regulations and are not grouped into one or more fleets pursuant to subsection 13(8), or
  - (D) are grouped into one or more fleets in accordance with section 18 for the purpose of participation in the CO₂ emission credit system, and
- (ii) in respect of the N₂O and CH₄ emission standards, that its engines
  - (A) conform to the applicable N₂O and CH₄ emission standards,
  - (B) are covered by an EPA certificate, sold concurrently in Canada and the United States and conform either to the emission standards referred to in the EPA certificate or to a N₂O or CH₄ family emission limit, as the case may be, that is lower than the N₂O or CH₄ emission standard applicable to the model year of the engines under these Regulations, or
  - (C) are grouped into one or more fleets in accordance with section 18 for the purpose of offsetting a deficit in accordance with subsection 29(6).

Statement when conforming to standards

(3) If an end of model year report contains any statement referred to in clause (2)(a)(ii)(A), subparagraph (2)(b)(i) and clauses (2)(c)(i)(A) and (ii)(A) for a given model year, it must contain the number of heavy-duty vehicles or heavy-duty engines for each type referred to in subparagraphs 18(3)(a)(i) to (xiii) or (b)(i) to (vi).

Statement when covered by EPA certificate and sold concurrently

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

(a) the number of vehicles or engines for each type referred to in subparagraphs 18(3)(a)(i) to (xiii) or (b)(i) to (vi);
(b) in the case of vehicles, the CO₂ family emission limit and, in the case of engines, the CO₂ family certification level;
(c) the number of vehicles or engines for each CO₂ family emission limit or CO₂ family certification level, as the case may be;
(d) if applicable, the N₂O or CH₄ family emission limit;
(e) if applicable, the number of vehicles or engines for each N₂O or CH₄ family emission limit; and
(f) if an end of model year report contains the statement referred to in clause (2)(c)(i)(C), the number of heavy-duty engines sold in the United States that are grouped into the same engine family.

Statement for exempted tractors and vocational vehicles

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

(a) the number of tractors and vocational vehicles that the company manufactured or imported in 2011 for sale in Canada;
(b) the average number of tractors and vocational vehicles that the company manufactured or imported for sale in Canada for the three most recent consecutive model years preceding that model year; and
(c) the number of tractors and vocational vehicles that the company manufactured or imported for sale in Canada for that model year.

Alternative standards for engines — section 25

(6) If the company includes in a fleet, in accordance with section 25, spark-ignition engines that are not installed in vehicles or that are installed in heavy-duty incomplete vehicles that are not cab-complete vehicles, it must provide the number of those engines, along with the total number of engines in that vehicle fleet — whether they are installed in vehicles or not — that are of the same model year, design and hardware.

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) and clauses (2)(c)(i)(D) and (ii)(C) 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 or heavy-duty engines in accordance with subsection 18(2);
(b) if applicable, a statement that the company has elected to comply with the alternative standards for vocational vehicles equipped with sparkignition engines referred to in subsection 26(6);
(c) an identification of all fleets and subfleets referred to in section 18 within the averaging set;
(d) in relation to CO₂ emission standards and, if applicable, the N₂O and CH₄ emission standards:
- (i) for Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, excluding those referred to in the definition “vocational vehicle” in subsection 1(1),
  - (A) the N₂O and CH₄ emission standards applicable to each fleet,
  - (B) the fleet average CO₂ emission standard, determined for A in the formula set out in paragraph 35(1)(a),
  - (C) the CO₂ emission target value for each vehicle subconfiguration of each fleet, determined for A in the formula set out in subsection 22(1),
  - (D) the work factor for each vehicle subconfiguration calculated in accordance with subsection 22(3), and
  - (E) the GVWR, curb weight, GCWR, type of transmission, gear ratio, axle ratio and type of engine for each vehicle configuration,
- (ii) for vocational vehicles and incomplete vocational vehicles, the CO₂ emission standard that applies to the vehicles of each subfleet, determined for A in the formula set out in paragraph 35(1)(b),
- (iii) for tractors and incomplete tractors, the CO₂ emission standard that applies to the vehicles of each subfleet, determined for A in the formula set out in paragraph 35(1)(c), and
- (iv) for heavy-duty engines, the CO₂ emission standard and N₂O and CH₄ emission standards that apply to the engines of each fleet;
(e) in relation to CO₂ emissions, and if applicable, to N₂O and CH₄ emissions,
- (i) for each fleet of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles — excluding those referred to in the definition “vocational vehicle” in subsection 1(1) — the following values:
  - (A) the fleet average CO₂ emission value, determined for B in the formula set out in paragraph 35(1)(a),
  - (B) the CO₂ emission value for each vehicle configuration, determined for A in the formula set out in subsection 23(1) and taking into account subsection 23(2), and
  - (C) if applicable, the N₂O or CH₄ family emission limit, determined for B in the formula set out in subsection 20(3),
- (ii) for each fleet of vocational vehicles and incomplete vocational vehicles, the CO₂ family emission limit for each subfleet, determined for B in the formula set out in paragraph 35(1)(b),
- (iii) for each fleet of tractors and incomplete tractors, the CO₂ family emission limit for each subfleet, determined for B in the formula set out in paragraph 35(1)(c), and
- (iv) for each fleet of heavy-duty engines,
  - (A) the CO₂ family certification level, determined for B in the formula set out in paragraph 35(1)(d), and
  - (B) if applicable, the N₂O and CH₄ family emission limits, determined for B in the formula set out in subsection 29(4);
(f) the number of heavy-duty vehicles or heavy-duty engines in each averaging set, fleet, subfleet, vehicle configuration, engine configuration and the number of vehicles in each vehicle subconfiguration;
(g) if applicable, the evidence of the variable F referred to in the formula set out in paragraph 24(3)(b);
(h) if applicable, the evidence of the EPA approval referred to in paragraph 27(6)(a);
(i) if applicable, the evidence referred to in paragraph 27(6)(b);
(j) if applicable, evidence of the EPA approval referred to in paragraph (a) of the description of A in the formula set out in subsection 40(1);
(k) if applicable, the evidence referred to in paragraph (b) of the description of A in the formula set out in subsection 40(1);
(l) if applicable, the evidence of the EPA approval referred to in paragraph 41(2)(a);
(m) if applicable, the evidence referred to in paragraph 41(2)(b);
(n) if applicable, the number of CO₂ emission credits calculated in accordance with subsection 29(8) for an N₂O family emission limit that is less than 0.04 g/BHP-hr;
(o) 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;
(p) the number of additional credits, calculated in accordance with section 38 for each fleet, including the following values:
- (i) the improvement factor,
- (ii) the emission rate A,
- (iii) the emission rate B,
- (iv) the modelling result B, along with the value and description of each parameter used in determining that result, and
- (v) the values determined for C, D and E;
(q) the number of additional credits, calculated in accordance with section 39 for each fleet and subfleet, and the value of each variable used in calculating them;
(r) the number of additional credits, calculated in accordance with section 40, for each fleet and subfleet, and the value of each variable used in calculating them;
(s) the number of additional credits, calculated in accordance with section 41, for each fleet and subfleet, and the value of each variable used in calculating them;
(t) an identification of every instance in each fleet or subfleet, as the case may be, when the 1.5 credit multiplier referred to in section 37 and subsections 38(4), 39(3) and 40(2) was used;
(u) the number of CO₂ emission credits and early action credits, if any, 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;
(v) an accounting of the CO₂ emission credits, early action credits and deficits; and
(w) for the purposes of paragraphs 13(4)(a) and (b), in the company’s end of model year reports for the 2015 and 2016 model years, the percentage of its vocational vehicles and incomplete vocational vehicles and the percentage of its tractors and incomplete tractors that are grouped into one or more fleets in accordance with section 18 for the purpose of participation in the CO₂ emission credit system.

Statement — subparagraph (2)(b)(vi)

(8) If an end of model year report contains the statement referred to in subparagraph (2)(b)(vi) for a given model year, the company must provide in its end of model year report the number of Class 7 and Class 8 vocational tractors that conform to the emission standards applicable to vocational vehicles in accordance with section 28 and that it manufactures or imports for that model year and for the two previous model years.

Additional information — emission credit transfers

(9) The end of model year report must also contain the following information for each CO₂ emission credit transfer and early action credit transfer to or from the company since the submission of the previous end of model year report:

(a) the name, street address and, if different, the mailing address of the company that transferred the credits and the model year for which that company obtained those credits;
(b) the name, street address and, if different, the mailing address of the company that received the credits;
(c) the date of the transfer; and
(d) the number of credits transferred, expressed in megagrams of CO₂.

EARLY ACTION CREDITS

Contents

49. (1) To obtain early action credits under section 47, a company must include in its 2014 or 2016 end of model year report, as the case may be, the following information for each averaging set of the 2011 to 2013 model years or of the 2015 model year, as the case may be:

(a) for each fleet of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, excluding those referred to in the definition “vocational vehicle” in subsection 1(1),
- (i) the number of credits or deficits calculated in accordance with paragraph 35(1)(a),
- (ii) the N₂O and CH₄ emission standards applicable to each fleet,
- (iii) the fleet average CO₂ emission standard, determined for A in the formula set out in paragraph 35(1)(a),
- (iv) the CO₂ emission target value for each vehicle subconfiguration of each fleet, determined for A in the formula set out in subsection 22(1),
- (v) the work factor for each vehicle subconfiguration calculated in accordance with subsection 22(3),
- (vi) the GVWR, curb weight, GCWR, type of transmission, gear ratio, axle ratio and type of engine for each vehicle configuration,
- (vii) the fleet average CO₂ emission value, determined for B in the formula set out in paragraph 35(1)(a),
- (viii) the CO₂ emission value for each vehicle configuration, determined for A in the formula set out in subsection 23(1) and taking into account subsection 23(2),
- (ix) if applicable, the N₂O or CH₄ family emission limit, determined for B in the formula set out in subsection 20(3),
- (x) the number of vehicles of each vehicle configuration and subconfiguration,
- (xi) the number of vehicles in each fleet, and
- (xii) the number of vehicles in the averaging set;
(b) for each fleet of vocational vehicles and incomplete vocational vehicles,
- (i) the number of credits or deficits for each fleet and subfleet, calculated in accordance with paragraph 35(1)(b),
- (ii) the CO₂ emission standard that applies to the vehicles of each fleet or subfleet, as the case may be, determined for A in the formula set out in paragraph 35(1)(b),
- (iii) the CO₂ family emission limit for each fleet or subfleet, as the case may be, determined for B in the formula set out in paragraph 35(1)(b), and
- (iv) the number of those vehicles in each averaging set, fleet and subfleet;
(c) for each fleet of tractors and incomplete tractors,
- (i) the number of credits or deficits for each fleet and subfleet, calculated in accordance with paragraph 35(1)(c),
- (ii) the CO₂ emission standard that applies to the vehicles of each fleet or subfleet, as the case may be, determined for A in the formula set out in paragraph 35(1)(c),
- (iii) the CO₂ family emission limit for each fleet or subfleet, as the case may be, determined for B in the formula set out in paragraph 35(1)(c), and
- (iv) the number of tractors and incomplete tractors in each averaging set, fleet and subfleet;
(d) for each fleet of heavy-duty engines,
- (i) the number of credits or deficits for each fleet, calculated in accordance with paragraph 35(1)(d),
- (ii) the N₂O and CH₄ emission standards that apply to the engines of each fleet,
- (iii) the CO₂ emission standard that applies to the engines of each fleet, determined for A in the formula set out in paragraph 35(1)(d),
- (iv) the CO₂ deteriorated emission level value for each fleet, determined for B in the formula set out in paragraph 35(1)(d), and
- (v) the number of engines in each averaging set, fleet and engine configuration; and
(e) an identification of every instance in each fleet or subfleet, as the case may be, when the 1.5 credit multiplier was used in accordance with subsection 47(6).

Additional credits

(2) To obtain additional early action credits under section 47, a company must include in its 2014 or 2016 end of model year report, as the case may be, the values referred to in paragraphs 48(7)(q) to (t).

FORMAT OF REPORTS

Submission

50. Any report to be submitted under these Regulations must be submitted electronically in the format provided by the Minister, but the report must be submitted in writing if

(a) no such format is provided; or
(b) it is, owing to circumstances beyond the control of the person required to submit the report, impracticable to submit the report electronically in the format provided.

INSTRUCTIONS

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 with written instructions for installing the engine and emission control system or with the address of the place or the website where those instructions may be obtained.

Contents

(2) The instructions 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; and
(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.

Language

(3) The instructions must be provided in English, French or both official languages, as requested by the installer.

Tire maintenance

52. (1) In the case of tractors and vocational vehicles, a company must ensure that the written instructions respecting tire maintenance and replacement are provided to the first retail purchaser of every vehicle.

Language

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

RECORDS

EVIDENCE OF CONFORMITY

Sold concurrently in Canada and United States

53. For a heavy-duty vehicle or heavy-duty engine that is covered by an EPA certificate and that is sold concurrently in Canada and the United States, 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 or the engine and, if applicable, a copy of the evidence of the EPA approval concerning the vehicle or engine as referred to in paragraph 27(6)(a), in paragraph (a) of A in the formula set out in subsection 40(1) or in paragraph 41(2)(a), as the case may be;
(b) a document demonstrating that the vehicle or engine that is covered by the EPA certificate is sold concurrently in Canada and the United States;
(c) a copy of the records submitted to the EPA in support of the application or amended application for the EPA certificate in respect of the vehicle or engine; 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 or engine 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, 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, 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 or heavy-duty engine — other than one referred to in section 53 — in a form and manner satisfactory to the Minister instead of as specified in that section.

Time of submission

(2) For greater certainty, a company must submit the evidence of conformity to the Minister before importing a heavy-duty vehicle or heavy-duty engine 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 or heavy-duty engine or applies a national emissions mark to it under subsection 153(2) of the Act is not required to provide the Minister with the evidence of conformity referred to in subsection 54(1) before importing it or applying a national emissions mark to it, but must provide that evidence in accordance with subsection 153(2) of the Act before the vehicle or engine leaves the possession or control of the company and before the vehicle is presented for registration under the laws of a province or of an Aboriginal government.

FLEET AVERAGE EMISSIONS

Contents

56. (1) A company that participates in the CO₂ emission credit system must maintain records containing the following information for each of its fleets:

(a) for each fleet of Class 2B and Class 3 heavy-duty vehicles and cab-complete vehicles, excluding those referred to in the definition “vocational vehicle” in subsection 1(1),
- (i) the model year,
- (ii) the fleet average CO₂ emission standard,
- (iii) the fleet average CO₂ emission value and, if applicable, the N₂O and CH₄ emission values,
- (iv) the values and data used in calculating the fleet average CO₂ emission standard and the fleet average CO₂ emission value and, if applicable, in calculating the N₂O and CH₄ emission values,
- (v) the values and data used in calculating the number of CO₂ emission credits and, if applicable, the number of early action credits,
- (vi) the number of CO₂ emission credits used to offset a N₂O or CH₄ emission deficit, if applicable, and
- (vii) the GVWR, curb weight, GCWR, type of transmission, gear ratio, axle ratio and type of engine for each vehicle configuration;
(b) for each fleet of vocational vehicles and incomplete vocational vehicles,
- (i) the model year,
- (ii) the CO₂ emission standard that applies to the vehicles of each subfleet,
- (iii) the CO₂ emission rate for each subfleet,
- (iv) the values and data, including the GEM computer simulation model inputs and results, used in calculating the CO₂ emission rate for each subfleet, and
- (v) the values and data used in calculating the number of CO₂ emission credits and, if applicable, the number of early action credits, for each fleet and subfleet;
(c) for each fleet of tractors and incomplete tractors,
- (i) the model year,
- (ii) the CO₂ emission standard that applies to the vehicles of each subfleet,
- (iii) the CO₂ emission rate for each subfleet,
- (iv) the values and data, including the GEM computer simulation model inputs and results, used in calculating the CO₂ emission rate for each subfleet, and
- (v) the values and data used in calculating the number of CO₂ emission credits and, if applicable, the number of early action credits, for each fleet and subfleet; and
(d) for each fleet of heavy-duty engines,
- (i) the model year,
- (ii) the CO₂ emission standard that applies to the engines of each fleet,
- (iii) the CO₂ deteriorated emission level value for each fleet, and
- (iv) the values and data used in calculating the number of CO₂ emission credits and, if applicable, the number of early action credits.

Contents — heavy-duty vehicles

(2) A company must maintain records containing the following information for each heavy-duty vehicle in the fleets referred to in paragraphs (1)(a) to (c):

(a) the model year and vehicle configuration or subfleet of the vehicle, as the case may be;
(b) the CO₂ emission standard that applies to the vehicles of each subfleet and the fleet average CO₂ emission standard;
(c) for a vehicle covered by an EPA certificate, the vehicle family described in section 230 of subpart C of Title 40, chapter I, subchapter U, part 1037, of the CFR, or the applicable test group described in section 1827 of subpart S of Title 40, chapter I, subchapter C, part 86, of the CFR;
(d) the name and street address of the plant where the vehicle was assembled;
(e) the vehicle identification number;
(f) the CO₂ emission value that applies to the fleet of the vehicle or the CO₂ emission rate that applies to the subfleet of the vehicle, as the case may be, and the values and data used in calculating that value or rate; and
(g) the name and the street or mailing address of the first retail purchaser of the vehicle in Canada.

Contents — engines

(3) A company must maintain records containing the following information for each heavy-duty engine in the fleets referred to in paragraph (1)(d):

(a) the model year, the engine configuration and the fleet of the engine;
(b) the date of manufacture;
(c) the gross power;
(d) the identification of the emission control system;
(e) the CO₂ emission standard that applies to the engines of the fleet;
(f) the applicable engine family;
(g) the name of the engine manufacturer;
(h) the unique identification number of the engine;
(i) the deterioration factor and whether it constitutes a multiplicative deterioration factor or an additive deterioration factor, and the values and data used in calculating that factor; and
(j) the name and the street or mailing address of the first retail purchaser of the engine in Canada.

ENGINES SOLD CONCURRENTLY

Evidence of number of engines sold

57. For the purposes of subsection 13(8), in the case of a heavy-duty engine covered by an EPA certificate and sold concurrently in Canada and the United States that conforms to a CO₂ family certification level exceeding the CO₂ emission standard applicable to the model year under these Regulations, the company must maintain records demonstrating the number of heavy-duty engines sold in the United States that are of the same engine family.

VOCATIONAL TRACTORS

Meets definition “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 tractors, the company must maintain records demonstrating that the tractor meets the definition “vocational tractor” in subsection 1(1).

MAINTENANCE AND SUBMISSION OF RECORDS

Maintenance of records

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

(a) a copy of the reports referred to in sections 48 and 49 for a period of at least eight years after the end of the calendar year that corresponds to the model year;
(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 was completed;
(c) the records referred to in sections 56 and 57 for a period of at least eight years after the end of the calendar year that corresponds to the model year; and
(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 in question.

Records maintained on behalf of company

(2) If the copy of the reports, the evidence of conformity and the records referred to in subsection (1) are maintained on behalf of a company, the company must keep a record of the name, street address and, if different, the mailing address of the person who maintains those records.

Time limits

(3) If the Minister makes a written request for the evidence of conformity or the records referred to in subsections (1) and (2), or a summary of any of them, the company must provide the Minister with the requested information, in either official language, within

(a) 40 days after the day on which the request is delivered to the company; or
(b) if the evidence of conformity or records referred to in section 53 or 54 must be translated from a language other than French or English, 60 days after the day on which the request is delivered to the company.

IMPORTATION DOCUMENT

Importation for exhibition, demonstration, evaluation or testing

60. The declaration referred to in paragraph 155(1)(a) of the Act must be made in accordance with section 41 of the On-Road Vehicle and Engine Emission Regulations.

RENTAL RATE

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 or engine is made available, is the rate prescribed in section 43 of the On-Road Vehicle and Engine Emission Regulations.

APPLICATION FOR EXEMPTION

Application

62. A company applying under section 156 of the Act for an exemption from conformity to any standard specified under these Regulations must submit in writing to the Minister the information set out in section 44 of the On-Road Vehicle and Engine Emission Regulations.

DEFECT INFORMATION

Notice of defect

63. (1) The notice of defect referred to in subsections 157(1) and (4) of the Act must be given in writing and must contain the information set out in subsection 45(1) of the On-Road Vehicle and Engine Emission Regulations.

Reports

(2) In respect of a notice of defect issued under these Regulations, a company must comply with subsections 45(2) and (3) of the On-Road Vehicle and Engine Emission Regulations.

Applicable standard

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

(a) to a Class 2B and Class 3 heavy-duty vehicle and cab-complete vehicle — excluding those referred to in the definition “vocational vehicle” in subsection 1(1) — or to a spark-ignition engine that conforms 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 0.1 gram per mile;
(b) to a vocational vehicle is the result of the GEM computer simulation model using the parameters specified in subsection 26(2);
(c) to a tractor — other than a low-roof or mid-roof tractor referred to in subsection 27(5) — 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 a low-roof or mid-roof tractor referred to in subsection 27(5), is the result of the GEM computer simulation model using the parameters specified in subsection 27(2);
(e) to a heavy-duty engine — other than an engine referred to in paragraphs (f) and (g) — 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 deteriorated emission level applicable to the fleet;
(f) to a heavy-duty engine of the 2014 to 2016 model years that conforms 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; and
(g) to a heavy-duty engine of the 2013 to 2016 model years that conforms 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.

COMING INTO FORCE

Registration

64. These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

1. Executive summary

Issue: As a result of human activities, predominantly the combustion of fossil fuels, the atmospheric concentrations of greenhouse gases (GHGs) have increased substantially since the onset of the Industrial Revolution. In view of the historical emissions of GHGs from anthropogenic sources, and the quantity of emissions expected in the near future, GHGs, as significant air pollutants, are expected to remain a key contributor to climate change.

The transportation sector is a significant source of GHG emissions in Canada, accounting for 28% of total emissions in 2010. Within this sector, heavy-duty vehicles account for nearly 24% of GHG emissions, or approximately 7% of total emissions in Canada. (see footnote 1) Heavy-duty vehicle emissions rose by nearly 3 megatonnes (Mt) of carbon dioxide equivalent (CO₂e) from 2005 to 2010.

Description: The objective of the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations (the Regulations) is to reduce GHG emissions by establishing mandatory GHG emission standards for new on-road heavy-duty vehicles and engines that are aligned with U.S. national standards. The development of common North American standards will provide a level playing field that will lead North American manufacturers to produce more advanced vehicles, which enhances their competitiveness.

The Regulations will apply to companies manufacturing and importing new on-road heavy-duty vehicles and engines of the 2014 and later model years for the purpose of sale in Canada including the whole range of on-road heavy-duty full-size pickup trucks, vans, tractors and buses, as well as a wide variety of vocational vehicles such as freight, delivery, service, cement, and dump trucks. The Regulations will also include provisions that establish compliance flexibilities which include a system for generating, banking and trading emission credits. The Regulations will include additional credits for hybrid vehicles and electric vehicles, as well as for innovative technologies to reduce GHG emissions. The Regulations will include further flexibilities for companies to use a phased-in approach for model year 2014 through 2016 tractors and vocational vehicles. Companies will also be required to submit annual reports and maintain records relating to the GHG emission performance of their vehicles and fleets.

Cost-benefit statement: The Regulations are estimated to result in a reduction of approximately 19.1 Mt of CO₂e in GHG emissions over the lifetime operation of vehicles produced in the model years 2014–2018 (MY2014–2018) cohort.

The present value of the total costs of the Regulations is estimated at $0.8 billion, largely due to the additional vehicle technology costs required by the Regulations. The total benefits are estimated at $5.3 billion, including GHG reductions valued at $0.5 billion and fuel savings of $4.8 billion. Over the lifetime of vehicles produced in MY2014–2018, the present value of the net benefit of the Regulations is estimated at $4.5 billion.

“One-for-One” Rule: In 2012, the Government of Canada implemented a “One-for-One” Rule to control the administrative burden that regulations place on business. Environment Canada has reviewed the administrative burden estimated to result from the proposed Regulations published in the Canada Gazette, Part I, to identify a means of minimizing this burden, while achieving compliance. As a result of this exercise and based on comments received during the consultation period, changes were made to the proposed Regulations to limit the increase in overall administrative burden. Notable changes include reduced administrative requirements for vehicles manufactured in stages and simplified reporting requirements.

Business and consumer impacts: Although owners and operators of heavy-duty vehicles will not be subject to the Regulations, they are expected to face higher purchase prices for new heavy-duty vehicles. The technologies embedded in the vehicles in order to comply with the Regulations will bring fuel savings that will outweigh the costs of these technologies. These available technologies were carefully selected to ensure broad industry support through the increased use of safe, existing technologies (see footnote 2) to achieve significant GHG emissions and fuel consumption reductions. For all three heavy-duty vehicle regulatory classes, the payback period is less than one year. The increased fuel efficiencies of the vehicles are also expected to make the trucking industry more competitive with other modes of shipping. Despite their benefits, and while there will likely be some vehicle technology improvement, it is not expected that those technologies would be introduced to the same extent in the market place in the absence of the Regulations.

Domestic and international coordination and cooperation: Consultations were conducted with industry, provincial and territorial governments, other federal government departments and environmental non-governmental organizations (ENGOs). Environment Canada and Transport Canada co-hosted four consultation group meetings that included representatives from the above-mentioned stakeholders.

Environment Canada also released two consultation documents. (see footnote 3) Comments received during consultation, both before and after the publication of the proposed Regulations in the Canada Gazette, Part I, served to inform the development of the Regulations. In addition, Environment Canada has conducted joint testing and research with the United States Environmental Protection Agency (U.S. EPA) to support the development of common standards.

2. Background

2.1. Background on policy development

2.1.1. National context

In 2009, the Government of Canada committed in the Copenhagen Accord and the Cancun Agreements to reducing, by 2020, total GHG emissions by 17% from 2005 levels, a target that is aligned with that of the United States. An important step toward meeting that goal included the 2010 publication in the Canada Gazette, Part II, of the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations that are aligned with those of the United States.

On May 21, 2010, the Government of Canada and the Government of the United States each announced the development of new regulations to limit GHG emissions from new on-road heavy-duty vehicles. Canada announced that the Regulations would be made under CEPA 1999 and in alignment with those of the United States. On October 25, 2010, the Government of Canada released an initial consultation document describing the key elements being considered in the development of Canadian regulations to seek stakeholder views early in the process.

On August 9, 2011, Environment Canada published a second and more detailed consultation document to provide an additional opportunity for stakeholders to provide comments and to participate in the regulatory development process.

On April 14, 2012, Environment Canada published the proposed Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations in the Canada Gazette, Part I. This began a formal 60-day comment period. Environment Canada considered all comments received during the comment period in developing the Regulations.

2.1.2. Canada’s collaboration with the U.S. EPA

Environment Canada, in partnership with Canada’s National Research Council, has conducted joint aerodynamic testing and research with the U.S. EPA as well as heavy-duty vehicle emissions testing at Environment Canada facilities to support regulatory development. This collaboration is taking place under the Canada-U.S. Air Quality Committee and builds on the joint work with the United States on the development and implementation of GHG emission standards for vehicles. This collaboration served to inform the development of the Regulations in Canada.

2.1.3. Actions in other Canadian jurisdictions

Provinces and territories have not indicated any intention to regulate GHG emissions from new on-road heavy-duty vehicles. Furthermore, provincial environment ministries have communicated strong support for federal Canadian regulations aligned with those of the United States.

The provincial and territorial governments set requirements for in-use vehicles including tractor-trailer weights and trailer dimensions. All provinces will continue to be consulted to ensure a consistent pan-Canadian approach to regulating on-road heavy-duty vehicle emissions.

2.1.4. Actions in international jurisdictions

2.1.4.1. United States

On November 30, 2010, the National Highway Traffic Safety Administration (NHTSA) and the U.S. EPA jointly published a Proposed Rule describing a set of complementary new proposed regulations for heavy-duty vehicles and engines for model years 2014 and later. On September 15, 2011, the Final Rule was published in the U.S. Federal Register. The U.S. rules establish coordinated federal regulations to address the closely intertwined issues of energy efficiency and climate change under a joint Heavy-Duty National Program. In this joint rulemaking, the NHTSA implements fuel economy standards under the Energy Independence and Security Act of 2007, while the U.S. EPA regulations under the Clean Air Act implement the GHG emission standards for heavy-duty vehicles.

The U.S. National Program is based on a common set of principles, which includes, as stated in the Final Rule, (see footnote 4) “increased use of existing technologies to achieve significant GHG emissions and fuel consumption reductions; a program that starts in 2014 and is fully phased in by 2018; a program that works towards harmonization of methods for determining a vehicle’s GHG and fuel efficiency, recognizing the global nature of the issues and the industry; standards that recognize the commercial needs of the trucking industry; and incentives leading to the early introduction of advanced technologies.”

In 2004, the U.S. EPA launched SmartWay, a voluntary program that encourages the trucking sector to identify strategies and technologies for reducing fuel consumption and CO₂e emissions and allows companies to be SmartWay certified.

The SmartWay program has allowed the U.S. EPA to work closely with heavy-duty vehicle manufacturers and fleet operators in evaluating numerous technologies and developing test procedures that achieve fuel and CO₂e reductions. The experience and knowledge acquired with SmartWay served in developing the Heavy-Duty National Program of the GHG regulations of the United States.

2.1.4.2. California

The California Air Resources Board adopted a GHG emission regulation for heavy-duty vehicles in 2008. This regulation is to reduce GHG by improving the fuel efficiency of heavy-duty vehicles through aerodynamic enhancement of vehicles and the use of low rolling resistance tires. This regulation covers tractors that pull a 53-foot or longer box-type semi-trailer, and covers the trailers themselves, and applies to the users of these tractor-trailer vehicles.

Since January 1, 2010, 2011 and later model year sleeper-cab heavy-duty tractors pulling a 53-foot or longer box-type trailer operating on a highway within California must be U.S. EPA Certified SmartWay, which requires certified aerodynamic equipment and low rolling resistance tires. As for day-cab tractors, the regulation requires that they be equipped with SmartWay verified low rolling resistance tires. The California regulation also requires that existing tractors, mainly all 2010 model year and older sleeper-cab and day-cab tractors, be equipped with SmartWay verified low rolling resistance tires starting in January 2012. The regulation also includes similar requirements for 53-foot or longer box-type trailers.

2.1.4.3. Other international regulatory actions to reduce GHGs/fuel consumption of vehicles

Other international jurisdictions have established or are developing regulatory regimes that directly or indirectly serve to reduce GHG emissions from new heavy-duty vehicles.

Japan has implemented the Top-Runner Program, which identifies and designates as the “top-runner” the most fuel-efficient vehicle in each weight range. The program has the objective to improve the fleet average fuel-efficiency of all vehicles in a particular weight range to match that of its top-runner. In the case of heavy-duty vehicles, the most fuel-efficient vehicle of model year 2002 (excluding hybrids) was set as the baseline, and regulation will start with model year 2015.

The European Commission is currently developing a new certification procedure and a strategy targeting fuel consumption and CO₂e emissions from heavy-duty vehicles. Simulation modelling is being considered. A draft regulation is expected to be completed by the end of 2012. (see footnote 5) It is expected that mandatory reporting would be effective in 2013–2014 and that possible regulation would be in a 2018–2020 timeframe.

2.2. Sector profile

2.2.1. Heavy-duty vehicle manufacturing and importing

The Regulations have divided these vehicles into three different categories:

Class 2B and Class 3 heavy-duty vehicles (full-size pick-up trucks and vans);
Vocational vehicles; and
Tractors.

Heavy-duty vehicles have a gross vehicle weight rating (GVWR) greater than 3 856 kg (8 500 lb) and span several GVWR classes:

Tractors (often called combination tractors) are contained mainly within classes 7 and 8; and
Vocational vehicles, which span from Class 2B through Class 8, including various types of buses.

There are currently only two Canadian manufacturers of heavy-duty trucks, Hino and Paccar, which produce approximately 6 400 vehicles annually that are primarily exported to the United States. There is little to no manufacturing of heavy-duty engines in Canada although there are some Canadian body manufacturers that produce finished vocational vehicles. Canadian bus manufacturers hold an important share of the North American market, notably MCI in Manitoba and Prevost in Quebec, which produce intercity buses; New Flyer and Nova Bus, which produce transit buses; and Girardin Minibus, which produces school buses and smaller buses. All of these manufacturers sell in both American and Canadian markets.

2.2.2. Statistics of manufacturing and trade

The Canadian industry, classified in national statistics as Heavy-Duty Truck Manufacturing in the North American Industry Classification System (NAICS 33612), includes producers of complete heavy-duty vehicles and chassis, which are either tractors or vocational vehicles under the Regulations. Output of the industry has fallen sharply since the recent recession: from 11 321 vehicles in 2009 to 5 630 in 2010. (see footnote 6) Most of the vehicles produced in Canada are exported to the United States: over 90% in 2009, and about 80% in 2010. The decline in output reflects a reduction in total vehicles purchased in the United States in consequence of reduced economic activity. The industry defined as Motor Vehicle Body Manufacturing (NAICS 336211) included 197 Canadian establishments producing vocational vehicles in 2009.

Manufacturing revenues for Heavy-Duty Truck Manufacturing decreased from $3.6 billion in 2001 to $1.9 billion in 2010, or at an average compound annual rate of 7.1% per year. Between 2009 and 2010, manufacturing revenues decreased by 14.9%. (see footnote 7) The total number of employees in the sector decreased from 6 961 workers in 2001 to 4 985 workers in 2010, an average annual decrease of 3.6% over this time span. There was an increase of 4.5% in employment between 2009 and 2010. (see footnote 8)

Exports of heavy-duty truck manufacturing declined 60% from $3.1 billion in 2007 to $1.2 billion in 2011, largely the result of reduced exports to the United States, where approximately 97% of exports are destined, falling from $3 billion in 2007 to $1.2 billion in 2011. Imports of heavy-duty truck manufacturing grew 23% from $4.3 billion in 2007 to $5.2 billion in 2011, largely originating in countries other than the United States, the origin of 88% of our imports in 2007 and 78% of our imports in 2011.

2.2.3. Truck carriers

In 2009, there were some 750 000 heavy-duty trucks of GVWR over 4 536 kg in operation in Canada (Canadian Vehicle Survey, 2009). There were approximately 435 000 medium heavy-duty trucks below 14 970 kg GVWR and 314 000 heavier heavy-duty trucks. The medium heavy-duty truck usage was 8.2 billion vehicle-kilometres, an average of 18 900 km per truck, while the heavy heavy-duty truck usage totalled 21.2 billion vehicle-kilometres, an average of 67 500 km per vehicle, as shown below in Table 1:

Table 1: Heavy-duty truck distance travelled in 2009, by weight class

Vehicle Type	Weight	Number in Operation	Average Distance Travelled (Kilometres)	Combined Distance Travelled (Billions of kilometres)
Medium heavy-duty trucks	< 14 970 kg	435 000	18 900	8.2
Heavy heavy-duty trucks		314 000	67 500	21.2
Sum, all heavy-duty trucks	> 4 536 kg	750 000		29.4

Source: Canadian Vehicle Survey, 2009, Statistics Canada

There were 194 000 trucks described as “for-hire,” only 26% of the total fleet, but responsible for 46% of total vehicle-kilometres. A further 128 000 trucks were owned by owner-operators, responsible for 21% of total vehicle-kilometres. Such trucks are usually contracted to a larger carrier or company. Some 319 000 vehicles were used in “private trucking,” the term used to describe trucks that are not for hire, but are used to carry the owners’ goods, including trucks owned by major manufacturers and retailers to transport the goods they own, and also trucks owned by farmers or tradesmen, for example. Such trucks were 43% of the fleet, but were used for only 23% of total vehicle-kilometres, at an average of only 21 000 km per vehicle.

Table 2: Heavy-duty truck distance travelled, 2009, by ownership/use

Ownership/ Use	Vehicles (thousands)				Kilometres Driven (per vehicle)			Vehicle-kilometres (billions)
Ownership/ Use	Medium	Heavy	Total	%	Medium	Heavy	Total	Medium	Heavy	Total	%
For-hire	51.8	142.5	194.3	26%	22 236	88 421	70 510	1.1	12.6	13.7	46.4%
Owner-operator	63.3	64.2	127.6	17%	28 436	70 093	49 373	1.8	4.5	6.3	22.1%
Private	240.0	79.0	319.0	43%	19 250	34 177	21 003	3.9	2.7	6.7	22.7%
Other	79.5	28.5	108.0	14%	17 610	49 123	25 926	1.4	1.4	2.8	9.5%
Total/ Average	434.6	314.2	748.8	100%	18 868	67 473	39 391	8.2	21.2	29.5	100%

Source: Canadian Vehicle Survey, 2009, Statistics Canada

2.2.4. Trade by transport mode

Table 3 shows preliminary 2010 values of Canada’s merchandise trade with the United States and Mexico, combining imports and exports. Trucking is responsible for the largest proportion of North American merchandise trade by value — 57% in 2010.

Table 3: Total North American merchandise trade by transport mode

Mode	Trade 2010 (millions of U.S. dollars)	Percentage
Road	298,832	58.1%
Rail	87,151	16.9%
Pipeline and other	71,652	13.9%
Air	29,267	5.7%
Marine	27,305	5.3%
Total	514,208	100%

Source: North American Transportation Statistics Database

In 2008, employment in the for-hire trucking industry in Canada was estimated at 415 000. It included 182 000 full- and part-time employees of the medium and large for-hire carriers with annual operating revenues of $1 million or more; 26 000 employees of small for-hire carriers with annual operating revenues between $30,000 and $1 million; 104 000 owner-operators with annual operating revenues of $30,000 or more; and 103 000 delivery drivers. Of this total for-hire trucking employment, 36% were in Ontario, 20% in Quebec and 27% in the Prairie provinces, with smaller proportions in the other provinces and territories.

2.2.5. Bus carriers

Bus carrier companies operate in several sub-markets or sub-industries. A total of 1 371 companies earned service revenues of $6.4 billion, and received an additional $7.2 billion in government contributions, primarily for urban transit services. Urban transit services earned 53% of total industry revenues excluding those contributions, and school bus services earned another 23%. Scheduled intercity, charter and shuttle services together earned 16% of total revenues.

3. Issue

As a result of human activities, predominantly the combustion of fossil fuels, the atmospheric concentrations of GHGs have increased substantially since the onset of the Industrial Revolution. In view of the historical emissions of GHGs from anthropogenic sources, and the quantity of emissions expected in the near future, GHGs are expected to remain a key contributor to climate change.

Across Canada we are witnessing the negative impacts of a changing climate first-hand. For example, a warming climate has been linked to the melting of permafrost in the North that has destabilized the foundations of homes and schools. While the specific impacts vary by region, all of Canada’s provinces and territories are experiencing the effects of a changing climate. (see footnote 9)

While Canada accounts for just 2% of global GHG emissions, its per capita emissions are among the highest in the world and continue to increase. In 2010, GHG emissions in Canada totalled 692 megatonnes (Mt) of CO₂e as shown in Table 4 below:

Table 4: Canada’s GHG emissions

Source (Mt)	2005	2010
Total	731	692
Transportation	193	195
Heavy-duty vehicles	44	47

Source: National Inventory Report: 1990–2010

As Table 4 indicates, the transportation sector (air, marine, rail, road and other modes) is a significant source of GHG emissions in Canada, accounting for 28% of total emissions in 2010. Within this sector, heavy-duty vehicles account for nearly 24% of GHG emissions, or approximately 7% of total emissions in Canada. (see footnote 10) Heavy-duty vehicle GHG emissions rose by nearly 3 Mt of CO₂e from 2005 to 2010.

Accordingly, taking action to reduce GHG emissions from new on-road heavy-duty vehicles and their engines is an essential element of the Government of Canada’s strategy to reduce GHG emissions to protect the environment and the health of Canadians. COis the predominant GHG emitted by motor vehicles and is directly related to the amount of fuel that is consumed by vehicles. Vehicles also emit other GHGs, including tailpipe emissions of methane (CH₄), and the leakage of air-conditioning system refrigerant, gases which all have higher global warming potential than CO₂. Reductions of those emissions are not related to or do not significantly contribute to fuel savings.

4. Objectives

4.1. GHG reductions

The Government of Canada is committed to reducing Canada’s total GHG emissions to 17% below its 2005 levels by 2020 (i.e. from 731Mt to 607 Mt) — a target that is identified in the Copenhagen Accord and the Cancun Agreements. By establishing mandatory GHG emission standards for new on-road heavy-duty vehicles and engines beginning in 2014, Canada will move closer to its Copenhagen 2020 target.

The implementation of a comprehensive set of national standards reflecting a common North American approach for regulating GHG emissions from new on-road heavy-duty vehicles and engines will lead to environmental improvements for Canadians and provide regulatory certainty for Canadian manufacturers. Aligning Canadian standards with new U.S. regulations will also set a North American level playing field in the transportation sector.

The Regulations will require manufacturers selling heavy-duty vehicles and engines in Canada to deploy emission reduction technologies, which will benefit both the environment and Canadians.

4.2. Regulatory burden

The Regulations are designed to achieve the above objectives while minimizing the regulatory compliance burden of regulated Canadian industries through the alignment of heavy-duty vehicle regulations in Canada and in the United States. The reporting requirements were designed to assess the performance of the Regulations against the targets established in the Performance Measurement and Evaluation Plan (see section 14) while minimizing the reporting burden of industry. The Regulations will also allow regulatees to use the same GHG emissions model (GEM) as regulatees in the United States will use. This GEM is an accurate and cost-effective tool to assess compliance in either country (see section 5.4).

Implementation of a common Canada-U.S. approach to regulating GHG emissions from model year 2014 and later heavy-duty vehicles benefits not only the environment, but also consumers and the competitiveness of the North American auto industry. Aligning North American regulations not only provides manufacturers and importers with regulatory certainty, but also ensures common standards in both countries, which minimizes the administrative burden on Canadian companies. Common Canada-U.S. standards are important to preserve the competitiveness of the Canadian heavy duty vehicle sector, due to the high level of integration within the industry.

5. Description

5.1. Key elements of the Regulations

The Regulations introduce progressively more stringent GHG emission standards for new on-road heavy-duty vehicles and engines of the 2014 to 2018 model years in alignment with the national GHG emission standards and test procedures of the U.S. EPA. The Regulations apply to companies manufacturing and importing new on-road heavy-duty vehicles and engines for the purpose of sale in Canada.

5.2. Prescribed regulatory classes

The Regulations aim at reducing GHG emissions from the whole range of new on-road heavy-duty vehicles, comprising full-size pickup trucks and vans, tractors, and a wide variety of vocational vehicles, such as school, transit and intercity buses and freight, delivery, service, cement, garbage and dump trucks.

The Regulations are aimed at all on-road vehicles with a GVWR of more than 3 856 kg (8 500 lb), except medium-duty passenger vehicles and those vehicles that are subject to the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations. Trailers are not subject to the Regulations.

The Regulations recognize the utility of vehicles and introduce GHG emission standards that apply to three prescribed regulatory classes of heavy-duty vehicles. Under the Regulations, the full-size pickup trucks and vans would be regulated as “Class 2B and Class 3 heavy-duty vehicles,” and combination tractors as “tractors.” All other heavy-duty vehicles not covered by the two previously mentioned prescribed regulatory classes are regulated as “vocational vehicles,” which include buses. Furthermore, the Regulations establish a prescribed regulatory class for heavy-duty engines designed to be used in a vocational vehicle or a tractor.

5.3. Emission standards for CO₂, N₂O and CH₄

The standards in the Regulations address emissions of CO₂, N₂O and CH₄ from heavy-duty vehicles and engines. The Regulations also include measures to require reductions in leakage of the refrigerant used in cabin air-conditioning systems of tractors and class 2B and 3 vehicles.

For Class 2B and Class 3 heavy-duty vehicles, the Regulations include emission standards for CO₂, N₂O and CH₄. In regard to CO₂ emissions, the standard is a fleet average CO₂ emission standard for all vehicles of a company’s fleet and is determined based on a work factor, which is defined as a weighting of payload capacity, towing capacity and four-wheel drive capability. The standard is different for gasoline- and diesel-powered vehicles.

In regard to vocational vehicles and tractors, the Regulations include heavy-duty engine standards for CO₂, N₂O and CH₄, and also separate vehicle standards for CO₂. The vehicle emission standards are set according to the class of the vehicle, its characteristics, and the model year.

The standards are structured so as not to constrain the size and power of heavy-duty vehicles, recognizing that these vehicles are designed to perform work. The standards are expressed in grams per unit of work, therefore allowing a more powerful vehicle to proportionally emit more GHGs than a less powerful vehicle.

5.4. Compliance assessment and computer simulation model

For standards applicable to Class 2B and Class 3 heavy-duty vehicles, regulatees must measure the vehicle performance using prescribed test cycles on a chassis dynamometer, similarly to existing procedures for light-duty vehicles under the current Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations.

The performance of engines installed on vocational vehicles and tractors is measured using prescribed test cycles on an engine dynamometer, i.e. the same ones used to measure criteria air contaminants under the On-Road Vehicle and Engine Emission Regulations.

Compliance with the vehicle standards for vocational vehicles and tractors is assessed using the GEM computer simulation model. This model is readily available at no charge and assesses the emission reductions of a vehicle equipped with one or more non-engine-related technologies, such as aerodynamic fairings, low rolling resistance tires, a speed limiter, weight reduction technologies, and idle reduction technology. The simulation model also assigns to vehicles a pre-determined payload and engine size. As a result, Canadian manufacturers will not be disadvantaged compared to U.S. manufacturers due to the higher average payloads in Canada.

5.5. CO₂ emission credit system

The Regulations include a system of emission credits to help meet overall environmental objectives in a manner that provides the regulated industry with compliance flexibility. The system allows companies to generate, bank and trade emission credits. Under this system, companies are allowed to manufacture or import vehicles and engines with CO₂ emission levels worse than the applicable emission standard, and others performing better than the standard, provided that their average fleet emission level does not exceed the applicable emission standard.

In order to participate in the CO₂ emission credit system, a company must group into fleets its vehicles and engines and calculate its credits and deficits, expressed in units of megagrams of CO₂. Credits may be obtained by companies whose average fleet emission levels fall below the applicable standard, while deficits are incurred by companies whose fleet emissions exceed the applicable standard. A deficit must be compensated within three model years. Credits may be banked to offset a future deficit for up to five model years after the year in which the credits were obtained. Credits may also be transferred to another company.

5.6. Transitional measures and enhanced flexibilities for vehicles and engines covered by a U.S. EPA certificate

To provide additional flexibilities, companies will be exempt from the requirements the CO₂ emission credits system for all its 2014 model year vocational vehicles and tractors that are covered by a U.S. EPA certificate. In addition, companies will also be permitted to exempt up to 50% of these vehicles of the 2015 model year and up to 25% of these vehicles of the 2016 model year from these requirements. This exemption is not available for the 2017 and beyond model years. Some restrictions apply to the use of early action credits and credits obtained during the 2014–2016 model years if a company chooses to take advantage of the transitional measures.

The Regulations also provide additional flexibilities that exempt companies from having to participate in the CO₂ credit system if they import and manufacture engines that are covered by a U.S. EPA certificate with emission levels worse than the applicable standard. Whether companies can be exempted depends on the number of engines sold in Canada and on a ratio of the number of engines sold in Canada and in the United States.

Environment Canada’s analysis indicates that these additional flexibilities will not significantly impact the final positive outcome of the Regulations, as discussed in greater detail in section 7.1.2. There is an inherent purchaser demand for fuel efficient vehicles and companies would only be expected to use the flexibilities if required to respond to unexpected market demand or to allow additional lead time to set up effective trading systems.

5.7. Additional emission credits

The Regulations allow companies that incorporate certain technologies that provide improvements in reducing CO₂ emissions to be eligible for additional emission credits when participating in the credit system.

Companies that manufacture or import, prior to the coming into force of the applicable standards, heavy-duty vehicles or engines that have emissions that are below the required emissions standards also have the possibility to generate early action credits.

The methods to calculate the additional credits are aligned with those of the United States. A company is not allowed to obtain additional credits more than once for the same type of GHG emission reduction technology.

5.8. Small volume companies

Companies that manufactured or imported, in Canada, fewer than 200 vocational vehicles and tractors in 2011 and fewer than 200 vocational vehicles and tractors on average over the three most recent consecutive model years have the option to exempt their vocational vehicles and tractors of a given model year from complying with the CO₂ emissions standards.

5.9. Annual reporting requirements

Beginning with the 2014 model year, companies are required to submit to the Minister an annual end of model year report for all their heavy-duty vehicles and engines.

The report includes, for each type of vehicle or engine of a prescribed regulatory class, the number of heavy-duty vehicles and heavy-duty engines and all necessary information for the calculation of the company’s credits or deficits when the company participates in the CO₂ emission credit system. This includes, among other information, the applicable emission standards, emission values or rates, and family emission limits.

5.10. Vehicles manufactured in stages

The Regulations introduce requirements for heavy-duty vehicles manufactured in stages so that when a company alters a heavy-duty vehicle that is in conformity with the Regulations in a way that may affect emissions, it must, in respect of the work carried out to alter the vehicle, ensure that the vehicle still conforms to all applicable standards.

5.11. Other administrative provisions

Several administrative provisions are aligned with those under existing related regulations under the Canadian Environmental Protection Act, 1999 (CEPA 1999), including provisions respecting the national emissions mark, maintenance and submission of records, the cost for test vehicles, application for exemptions and notices of defect.

In 2012, the Government of Canada implemented a “One-for-One” Rule to control the administrative burden that regulations place on business. Environment Canada (EC) has reviewed the administrative burden as it was proposed in the Canada Gazette, Part I, in an attempt to identify areas in which the increase in burden could be reasonably minimized.

As a result of this exercise and based on comments received during the consultation period, several changes were made to the proposed Regulations to limit the increase in overall administrative burden. Companies are no longer required to submit annual preliminary reports given that they were not intended to establish company compliance with the Regulations, but rather to orient regulators as to the initial actions of the regulated companies during a model year. Also, as a result of comments received from industry stakeholders, the deadline for submitting end of model year reports was postponed by several weeks. This will allow companies sufficient time to cull and submit the necessary information. Finally, administrative requirements for vehicles manufactured in stages were reduced, given the low impact secondary manufacturers have on the emission performance of vehicles and given the relative small size of businesses involved in this sector.

Also, it should be noted that the Regulations incorporate all of the same test methods and procedures as used in the United States. This provides clear direction to regulated companies and allows test data produced to demonstrate compliance under U.S. regulations to be used to demonstrate compliance in Canada.

6. Regulatory and non-regulatory options considered

6.1. Status quo approach

Currently, there is no federal requirement in Canada to reduce GHG emissions from new on-road heavy-duty vehicles. Heavy-duty vehicles are an important contributor to overall emissions and reducing GHGs from these vehicles is a key element in meeting the Government’s climate change goals. Maintaining the status quo would make it more difficult for Canada to achieve this goal, while preventing Canadians from benefiting from the associated environmental improvements and economic benefits. Therefore, for the Government of Canada, maintaining the status quo is not an appropriate option for reducing GHG emissions from new heavy-duty vehicles in Canada.

6.2. Voluntary approach

New regulations in the United States will require manufacturers to adopt more GHG-reducing technologies in new heavy-duty vehicles sold in the United States beginning in 2014. However, because of the highly customized nature of the heavy-duty vehicle industry, manufacturers may choose not to install those technologies in vehicles sold in Canada. Therefore, while a voluntary program could result in some emission reductions, it would not necessarily result in the same level of emission reductions as a Canadian regulatory regime will.

6.3. Regulatory approach

Given the importance of addressing climate change, most industrialized countries are moving to establish regulated requirements for the control of fuel consumption and/or GHG emissions from new vehicles. The implementation of a comprehensive set of national standards reflecting a common North American approach for regulating GHG emissions from new on-road heavy-duty vehicles and engines will lead to environmental improvements for Canadians, and provide regulatory certainty for Canadian manufacturers. Aligning Canadian standards with U.S. standards would also set a level North American playing field in the transportation sector.

6.3.1. Regulations under the Motor Vehicle Fuel Consumption Standards Act

The Government of Canada has previously considered reducing GHG emissions through the adoption of vehicle fuel consumption standards under the Motor Vehicle Fuel Consumption Standards Act (MVFCSA). When the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations were developed in 2010, it was determined that significant amendments were required to the MVFCSA in order to be able to put in place regulations that would align with the U.S. fuel economy standards. Therefore, the approach of proceeding with Canadian fuel consumption regulations under the MVFCSA was then excluded in favour of regulating under CEPA 1999.

6.3.2. Regulations under CEPA 1999

CEPA 1999 enables the implementation of innovative compliance flexibilities, such as a system for the banking and trading of emission credits to help meet overall environmental objectives in a manner that provides the regulated industry with maximum compliance flexibility.

This approach is also consistent with the existing use of CEPA 1999 to establish standards limiting smog-forming air pollutant emissions from new vehicles and engines, as well as to regulate GHG emissions from light-duty vehicles under the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations.

The Government of Canada has determined that establishing regulated heavy-duty vehicle GHG emission standards under CEPA 1999 represents the best option to introduce these Regulations and to align Canada’s requirements with the national regulated standards of the United States.

7. Benefits and costs

The Regulations are estimated to result in a reduction of approximately 19.1 Mt of CO₂e in GHG emissions over the lifetime operation of new on-road heavy-duty vehicles sold between 2014 and 2018 (MY2014–2018), the period during which the Regulations first come into force (2014) and then are gradually phased into full effect (from 2015 to 2018). The Regulations are also expected to reduce fuel consumption by 7.2 billion litres over the lifetime of the MY2014–2018 fleet.

Over the lifetime of MY2014–2018 vehicles, the present value of the cost of the Regulations is estimated at $0.8 billion, largely due to the additional vehicle technology costs required by the Regulations. The total benefits are estimated at $5.3 billion, due to the value of GHG reductions ($0.5 billion) and fuel savings ($4.8 billion). Over the lifetime of MY2014–2018 vehicles, the present value of the net benefit of the Regulations is estimated at $4.5 billion. The detailed analysis of benefits and costs is presented below.

7.0. Regulatory updates from Canada Gazette, Part I

The proposed Regulations underwent a number of changes following publication in Canada Gazette, Part I, to address formal comments received during the 60-day comment period (see section 10). Those changes include a phased-in approach to provide transitional measures over the 2014–2016 model years; reductions in the administrative requirements for vehicles manufactured in stages; added flexibilities for small-volume companies; delayed deadlines for submitting end of model year reports; and additional flexibilities for tractors that are not designed to operate mainly on highways (“vocational tractors”). All of these changes are designed to provide greater flexibility, particularly in the first year of implementation.

Environment Canada’s analysis has indicated that these changes will not significantly affect the impacts of the Regulations. Both technology costs borne by industry, and GHG emission reductions are expected to be slightly reduced, while costs and benefits are both likely to fall at the same ratio. As a result, the benefit to cost ratio of the Regulations remain essentially unchanged. The consistency of the benefit to cost ratio, the small magnitude of these changes and the uncertainty inherent in forecasting emissions, costs and benefits into the future have led EC to deem it neither necessary nor cost-effective to quantify these minor changes in the analysis.

7.1. Analytical framework

The approach to the cost-benefit analysis identifies, quantifies and monetizes, to the extent possible, the incremental costs and benefits of the Regulations. The cost-benefit analysis framework applied to this study incorporates the following elements:

Incremental impacts: Impacts due to the Regulations are analyzed in terms of changes to vehicle technologies, emissions, and associated costs and benefits in the regulatory scenario compared to the business-as-usual (BAU) scenario. The two scenarios are presented in detail below. The incremental impacts are the differences between the estimated levels of technologies and emissions in the two scenarios, and the differences between the associated costs and benefits in the two scenarios. These differences (incremental impacts) are fully attributed to the Regulations (see section 7.2.3 on key assumptions).

Timeframe: The analysis considers new heavy-duty vehicles sold between 2014 and 2018 (MY2014–2018), the period during which the Regulations first come into force (2014) and then are gradually phased into full effect (2015 to 2018). The analysis assumes that new vehicles survive for up to 30 years. This timeframe is consistent with other analyses, and with Canadian data that shows that few vehicles survive beyond 30 years. Thus, the overall timeframe for the analysis is 35 years (2014 to 2048), the total lifespan of the MY2014–2018 new vehicle fleet. The impact of vehicles sold after 2018 is not considered in this analysis, but is expected to be similar to the impact for MY2018.

Benefits and costs have been estimated in monetary terms, to the extent possible and are expressed in 2011 Canadian dollars. Whenever this was not possible, due either to lack of appropriate data or difficulties in valuing certain components, incremental impacts were evaluated in qualitative terms. A social discount rate of 3% is used in the analysis for estimating the present value (2012 base year) of the costs and benefits under the central analysis. This level is within the range prescribed by the Treasury Board Secretariat’s cost-benefit analysis (CBA) guidelines. This is consistent with discount rates used for other GHG related measures in Canada, as well as those used by the U.S. EPA. Table 5 summarizes the benefits and costs which were evaluated quantitatively, monetized and discounted.

Table 5: Monetized benefits and costs

Benefits	Costs
Pre-tax fuel savings Avoided GHG damages	Technology costs and related administrative burden Noise, accidents, congestion Government administration

7.2. Analytical scenarios

This analysis considers two scenarios: a business-as-usual (BAU) scenario, which assumes the Regulations are not implemented, and a regulatory scenario, which assumes the Regulations are implemented. These two scenarios are based on the same volume of forecasted vehicle sales between 2014 and 2018. The differences between the scenarios are considered in terms of the estimated changes in vehicle technology choices in the regulatory scenario compared to the BAU, and the associated incremental changes in vehicle costs, GHG emissions, fuel consumption and related impacts.

7.2.1. Business-as-usual scenario

The business-as-usual (BAU) scenario assumes that the Regulations are not implemented and that vehicle technologies which affect GHG emissions will remain unchanged over the sales period of the analysis. This assumption may underestimate any “natural” technology changes that could occur throughout the North American market due to normal technological development in the absence of any regulations, or “complementary” technology changes that might occur in Canada either in response to similar regulations in the United States or in anticipation of the Regulations in Canada. These alternate rates of technology change are difficult to estimate, but are considered in a sensitivity analysis.

7.2.2. Regulatory scenario

The regulatory scenario assumes that certain GHG emission-reducing technologies will be chosen to comply with the Regulations. These are assumed to be existing technologies, and thus manufacturers can readily increase their usage in new vehicles in order to comply with the Regulations. It is also assumed that the costs of these technologies will be fully passed onto vehicle purchasers, and that vehicle sales will not be affected by technology changes. The analysis considers the same BAU projected vehicle sales for 2014 to 2018, and estimates the incremental impacts of the technical modifications to these vehicles in terms of changes in vehicle costs, GHG emissions, fuel consumption and related impacts.

7.2.3. Key assumptions

Under the business-as-usual scenario, technology choices for MY2014–2018 remain the same as for MY2010. This assumption is further discussed in section 7.2.1 and in the “Rationale” section, and is evaluated in “Sensitivity analysis” (section 7.8).

Under the regulatory scenario, all technology manufacturing costs will be passed onto vehicle purchasers, who will recoup these costs through fuel savings achieved by the technologies adopted to meet the Regulations. This assumption is evaluated in the payback analysis section.

7.3. Key modelling and data

To assess the impact of the Regulations, it was necessary to obtain Canadian estimates of future vehicle sales, fuel prices and monetary values for GHG reductions; to identify the technologies that manufacturers would likely adopt and the costs they would incur in order to comply with the Regulations; and then to model future vehicle emissions, fuel consumption and distance travelled, with and without the Regulations. These key sources of data and information are described below.

7.3.1. Canadian sales forecast

For years 2011 through 2018, a vehicle sales forecast from DesRosiers Automotive Consultants (DAC) was used in the analysis. For the purpose of this study, all historical (calendar year 2005 through year-to-date June 2010) medium- and heavy-duty vehicle data was provided by R. L. Polk (Polk). Using the Polk data file, DAC developed aggregate medium- and heavy-duty historical registration data and forecast data using proprietary DAC forecasting methodologies and input from industry representatives. This study required an in-depth review of core Canadian economic variables. A database containing historical and forecast economic factors from calendar year 2000 through 2018 was provided by Environment Canada’s Energy-Economy-Environment Model for Canada (E3MC) in March of 2011. DAC also considered provincial economic forecast data from Informetrica Limited (March 14, 2011), BMO Capital Markets Economics (March 14, 2011) and TD Economics (March 2011). The overall results of the DAC sales report are displayed below, with historical trends shown from 2000 to 2010, and projected trends shown from 2011 to 2018, based on DAC analysis and forecasts:

Figure 1: Sales forecast for Canadian medium and heavy-duty vehicles

Detailed information can be found in the surrounding text.

The analysis of the Regulations incorporates the same detailed DAC sales estimates, for each vehicle regulatory class, into the modelling of vehicle population growth from 2010 to 2018 for both the BAU and policy scenarios. DAC estimated total sales per calendar year, which are used as a proxy for model year sales in this analysis.

7.3.2. Canadian vehicle emissions modelling

Estimates of Canadian vehicle emissions were developed using methods aligned with those initially developed by the U.S. EPA, together with key Canadian data to reflect the impact of the Regulations. The emissions selected were those linked to climate change, air quality and human health, such as GHGs and criteria air contaminants (CACs). The primary modelling tool used to calculate vehicle emissions was the Motor Vehicle Emissions Simulator (MOVES), which is the U.S. EPA’s official mobile source emission inventory model for heavy-duty vehicles. Key data for Canadian heavy-duty vehicle populations and distance travelled were then incorporated into the most current version of MOVES (MOVES2010a) available in order to produce an analysis for Canada of the impacts of the Regulations. Vehicle data collected by gross vehicle weight rating (GVWR) was mapped into MOVES2010a and then categorized according to the vehicle classifications in the Regulations, as described in this RIAS and as shown in figure 2.

Figure 2: GVWR, MOVES and RIAS classes for this analysis

Detailed information can be found in the surronding text

Canadian vehicle populations were estimated for all calendar years 2005 through 2050. For the purposes of this analysis, data purchased from Polk and Co. on the heavy-duty fleet in Canada for calendar years 2005 through 2010, were used by Environment Canada to develop vehicle population and age estimates for those years. After 2010, future vehicle populations are forecasted based on new vehicle sales and the number, age and estimated survival rates of existing vehicles. For years 2011 through to 2018, the DesRosiers sales forecast were used, as discussed above. For years 2019 and beyond, the default MOVES sales rates were used in the absence of Canada specific sales rates beyond 2018. Comprehensive validated survival estimates for Canadian heavy-duty vehicles were not available for this analysis. Instead, MOVES default vehicle survival rate estimates were generally used. These MOVES survival rate estimates appear similar to available Canadian data for vehicles less than 30 years old, but appear to underestimate survival for Canadian vehicles aged 30 years or more. Therefore, an adjustment was made in MOVES for the survival rate of vehicles aged 30 years or more, to make this rate more consistent with available Canadian data.

Along with vehicle populations, vehicle distance travelled is also important in overall emissions estimation for Canada. Estimates of Canadian vehicle kilometres travelled (VKT) and kilometre accumulation rates (KAR) were developed for all calendar years from 2005 through 2050. KAR is the product of VKT divided by the number of vehicles (the population). In 2010, Environment Canada contracted Stewart-Brown Associates (SBA) to generate KARs from inspection and maintenance (I/M) program data in Canada. Specifically, this was the Drive Clean program in Ontario, and the AirCare program in British Columbia. KARs generated in this manner from Ontario and British Columbia were then applied to Canada as a whole. This baseline Canadian KAR data was used to generate Canadian VKT estimates for each vehicle type and age, for all calendar years 2005 through 2010. Then the default MOVES growth rates were used to estimate VKT for the Canadian fleet for the calendar years 2011 to 2050.

7.3.3. The social cost of carbon (SCC)

The SCC is used in the modelling of the cost-benefit analysis of environmental regulations in a RIAS to quantify the benefits of reducing GHG emissions. It represents an estimate of the economic value of avoided climate change damages at the global level for current and future generations as a result of reducing GHG emissions. The calculations of SCC are independent of the method used to reduce emissions. The SCC is also used by the United States in their cost-benefit analysis of regulations. The values used by Environment Canada are based on the extensive work of the U.S. Interagency Working Group on the Social Cost of Carbon.

The estimated value of avoided damages from GHG reductions is based on the climate change damages avoided at the global level. These damages are usually referred to as the social cost of carbon (SCC). Estimates of the SCC between and within countries vary widely due to challenges in predicting future emissions, climate change, damages and determining the appropriate weight to place on future costs relative to near-term costs (discount rate).

SCC values used in this assessment draw on ongoing work being undertaken by Environment Canada (see footnote 11) in collaboration with a federal interdepartmental working group, and in consultation with a number of external academic experts. This work involves reviewing existing literature and other countries’ approaches to valuing GHG emissions. Preliminary recommendations, based on current literature and, in line with the approach adopted by the U.S. Interagency Working Group on the Social Cost of Carbon, (see footnote 12) are that it is reasonable to estimate SCC values at $28.44/tonne of CO₂ in 2012, increasing at a given percentage each year associated with the expected growth in damages. (see footnote 13) Environment Canada’s review also concludes that a value of $112.37/tonne in 2012 should be considered, reflecting arguments raised by Weitzman (2011) (see footnote 14) and Pindyck (2011) (see footnote 15) regarding the treatment of right-skewed probability distributions of the SCC in cost-benefit analyses. (see footnote 16) Their argument calls for full consideration of low probability, high-cost climate damage scenarios in cost-benefit analyses to more accurately reflect risk. A value of $112.37 per tonne does not, however, reflect the extreme end of SCC estimates, as some studies have produced values exceeding $1,000 per tonne of carbon emitted.

As shown in Figure 3 below, the social cost of carbon values increase over time to reflect the increasing marginal damages of climate change as projected GHG concentrations increase. The time-varying schedule of SCC estimates for Canada has been derived from the work of the U.S. Interagency Working Group.

The federal interdepartmental working group on SCC also concluded that it is necessary to continually review the above estimates in order to incorporate advances in physical sciences, economic literature, and modelling to ensure the SCC estimates remain current. Environment Canada will continue to collaborate with the federal interdepartmental working group and outside experts to review and incorporate as appropriate new research on SCC into the future.

Figure 3: SCC estimates (2011 Canadian dollars/tonne)

Detailed information can be found in the surrounding text.

7.3.4. Fuel prices

Fuel price forecasts for both gasoline and diesel were adopted from Environment Canada’s E3MC model for the period of 2011 to 2035. The E3MC model is an end-use model that incorporates the National Energy Board’s (NEB) forecast for West Texas Intermediate crude oil price as reported in the NEB’s Energy Supply and Demand Projections to 2035 — Market Energy Assessment. (see footnote 17) The E3MC model uses this data to generate fuel price forecasts which 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 E3MC model average growth rate of fuel prices for the years 2020 to 2035. Uncertainty regarding these future fuel price forecasts was also considered in a sensitivity analysis.

Pre-tax fuel prices were used in the analysis as taxes are not generally considered in cost-benefit analyses given that they are a transfer rather than an economic cost. Post-tax gasoline and diesel price forecasts were used in a separate payback analysis. Due to regional variations in fuel taxes, post-tax fuel prices were calculated by weighting fuel sales by regional populations and then adding regional taxes accordingly.

Figure 4: Gasoline and diesel prices (2011 Canadian dollars/L)

Detailed information can be found in the surrounding text

7.3.5. Vehicle technologies that reduce GHG emissions

Information on vehicle technologies, costs and adoption rates was obtained from the U.S. EPA’s regulatory impact analysis of its Final Rulemaking to Establish Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles. (see footnote 18)

The technologies considered in this analysis are those most likely to be adopted during the period of the analysis (MY2014–2018) in response to the Regulations, having been developed and being available to some extent already, and already shown by the U.S. EPA to be cost-effective. Table 6 below presents a list of technologies that manufacturers are likely to choose in order to comply with the Regulations.

Table 6: Potential key technologies

Combination trucks	Engine improvements, more use of low rolling resistance tires, mass reduction, improved aerodynamics, increased use of auxiliary power units, reduced air conditioning leakage
Vocational vehicles	Engine improvements, more use of low rolling resistance tires
Heavy-duty pick-up trucks and vans	Engine improvements, more use of low rolling resistance tires, mass reduction, improved transmissions, reduced accessory loads

7.4. Benefits

7.4.1. GHG emission reductions

The MOVES emissions model was used to estimate the impact of the Regulations in terms of reductions in vehicle GHG emissions, as presented in Table 7 below (in Mt of CO₂e). The Regulations are estimated to result in a lifetime model-year reduction of 2.9 Mt beginning in MY2014 and increasing each year to 5.3 Mt for MY2018. Thus, as the Regulations come into full effect over the MY2014–2018 period, they will result in a cumulative lifetime GHG emission reduction of 19.1 Mt arising from new vehicles entering the market in these five years.

For MY2019 and subsequent model years, the Regulations will remain in full effect, and thus the lifetime reductions that would be observed under a regulatory scenario will likely be similar to the MY2018 level of 5.3 Mt for each subsequent MY, assuming similar sales and other modelling parameters. However, looking beyond MY2018, it also becomes more likely that some of these GHG emission reductions would have occurred even in the absence of the Regulations and could not therefore be fully attributed to the Regulations.

The estimated value of avoided damages from GHG reductions is based on the climate change damages avoided at the global level. Based on an estimated SCC (see footnote 19) of $28.44/tonne, the present value of incremental GHG emission reductions under the Regulations is estimated to be approximately $0.5 billion over the lifespan of the MY2014–2018 new vehicle fleet. Under the $112.37/tonne SCC estimate, the present value of incremental GHG emission reductions would be estimated at over $1.9 billion for the 2014–2018 model year vehicles.

Table 7: Summary of GHG benefits, by model year, in millions of 2011 Canadian dollars

Emissions	MY2014	MY2015	MY2016	MY2017	MY2018	Combined MYs 2014–18
Reduction in GHG emissions — undiscounted (Mt CO₂e)	2.9	3.0	3.2	4.7	5.3	19.1
Present value of the reduction in GHG emissions (SCC at $28/tonne)	77	78	84	120	135	493
Present value of the reduction in GHG emissions (SCC at $112/tonne)	304	310	333	476	537	1,961

MY = lifetime (30 years) impacts for each year of vehicle sales. Due to rounding, some of the totals may not match. Present value in 2011 Canadian dollars, using a 3% discount rate.

7.4.2. Fuel savings benefits

Manufacturers are expected to meet the requirements of the Regulations by adopting vehicle technologies that reduce GHG emissions. Most of these technologies (e.g. low rolling resistance tires and improved aerodynamics) will achieve these GHG emission reductions by improving vehicle energy efficiency. MOVES was used to estimate vehicle energy efficiency improvements due to vehicle technology improvements, and then these energy savings were converted to fuel savings using standard metrics. Thus, these technologies are expected to reduce fuel consumption by 7.2 billion litres (undiscounted) over the lifetime of the MY2014–2018 fleet, as presented in Table 8 below.

Based on projected fuel prices, the benefits to vehicle owners arising from these fuel reductions are estimated to be nearly $4.8 billion in fuel savings, and these cumulative savings are estimated to outweigh the technology costs ($0.7 billion) by a ratio of more than 6:1 over the lifetime of the MY2014–2018 fleet. Fuel prices are calculated pre-tax, so vehicle owners could expect higher savings than those resulting from this analysis. A post-tax payback analysis for vehicle owners is also presented in section 7.9.

Fuel savings are also expected to reduce the frequency of refuelling, which is a time-saving benefit for vehicle operators. The analysis used refuelling fill rates to calculate the total time saved due to reduced fuel consumption. The value of these time savings was calculated using an estimated mean wage rate for a typical truck driver ($23.75 per hour in 2011 Canadian dollars). (see footnote 20) Using these values, the benefits of refuelling time savings due to the Regulations are expected to be $36 million over the lifetime of the MY2014–2018 fleet, as presented in Table 8.

Table 8: Summary of fuel-related benefits, by model year, in millions of 2011 Canadian dollars

Values	MY2014	MY2015	MY2016	MY2017	MY2018	Combine MYs 2014–18
Fuel savings — undiscounted (million litres)	1,080	1,111	1,215	1,758	2,015	7,179
Present value of fuel savings	760	767	817	1,156	1,291	4,791
Present value of reduced refuelling time	5	5	6	9	11	36
Present value of the sum of fuel benefits	765	772	823	1,165	1,302	4,826

MY = lifetime (30 years) impacts for each year of vehicle sales. Due to rounding, some of the totals may not match. Fuel savings are pre-tax. Present value in 2011 Canadian dollars, using a 3% discount rate.

7.5. Costs

7.5.1. Vehicle technology and related administrative burden

The Regulations align with the national GHG emission standards of the U.S. EPA for the 2014 and later model years, in order to provide manufacturers with a common set of vehicle GHG emission standards. Therefore, the analysis of the Canadian Regulations assumes that manufacturers will likely adopt similar technologies to meet these common emission standards.

The U.S. EPA selected likely technology choices from existing technologies based on engineering analyses, estimated increased adoption rates for these technologies in order to comply with the U.S. EPA standards, and then estimated the redesign and application costs per vehicle for those technology packages. The U.S. EPA assessment of technologies that would be available for each of the engine classes and sub-categories of vehicles, the estimates of their effectiveness and costs were guided by published research and independent summary assessments. They first estimated the baseline emission and fuel consumption rates for each of the regulated subcategories of engines and vehicles. It was assumed that these rates would remain unchanged in the absence of the standards, then for each subcategory of engine, the U.S. EPA identified technologies which could be applied practically and cost-effectively. Effectiveness and costs of each technology were estimated and applied independently, then applied in combination. The availability and increase in penetration rates of technologies were assessed together with effectiveness and costs for each model year from 2014 to 2018. The technology costs reported by model year are incremental to the BAU costs. Under the regulatory scenario, technologies and compliance options are applied to vehicles in order for companies to meet their regulated standards. The estimated incremental cost per vehicle is calculated on this basis.

The Regulations will also include a CO₂ emission credit system to help meet overall environmental objectives in a manner that provides the regulated industry with compliance flexibility. As use of these credits is difficult to predict with any precision, the analysis did not model the benefits of these compliance flexibilities. It is therefore reasonable to conclude that the costs of vehicle technology may be somewhat overestimated.

There are also one-time costs largely associated with learning about new regulatory obligations and ongoing costs, largely associated with required record-keeping and reporting on technology compliance and use of regulatory flexibility options. These costs are collectively referred to as administrative costs, which are estimated to be highest in the first year of the Regulations (due to initial learning costs) and then constant in subsequent years (due to ongoing record-keeping and reporting costs, and an assumed rate of the use of compliance flexibilities). The present value of these administrative costs is shown in Table 9 below.

Given the integration of the North American vehicle manufacturing sector and the alignment of the Canadian Regulations with the U.S. EPA standards, the same U.S. EPA-estimated vehicle technology choices and adoption rates were used in our analysis. This leads to the same proportional costs per vehicle, adjusted for exchange rates, as those that were used in the U.S. EPA analysis. The resulting estimates of the present value of the costs of the technologies and the associated Canadian administrative requirements necessary to meet the Regulations are presented in Table 9.

Table 9: Summary of technology-related costs, by model year, in millions of 2011 Canadian dollars

Values	MY2014	MY2015	MY2016	MY2017	MY2018	Combined MYs 2014–2018
Present value of technology costs	142	136	139	141	154	712
Present value of administrative costs	0.2	0.1	0.1	0.1	0.1	0.5
Present value of total technology-related costs	142	136	139	141	154	713

MY = lifetime (30 years) impacts for each year of vehicle sales. Present value in 2011 Canadian dollars, using a 3% discount rate.

The analysis of the Regulations assumes that manufacturers will pass the GHG emission-reducing vehicle technology costs on to their purchasers. Because these technologies are estimated to also generate substantial fuel savings for vehicle owners and operators, the Regulations are assumed not to impact the volume of new heavy-duty vehicle sales. No other potential operating cost impacts of new technologies (e.g. maintenance and repairs) were considered in the analysis, as any such incremental costs are expected to be quite small in relation to expected fuel savings.

7.5.2. Government costs

Costs of the Regulations to the Government of Canada fall into three principal categories: compliance promotion costs, enforcement costs, and regulatory program costs. The estimates of these are described below:

Compliance promotion: The overall present value of costs over the 2014–2018 period is estimated at approximately $94 000. Compliance promotion activities include information sessions for manufacturers and importers on the main requirements of the Regulations, in particular new emission standards and report submission. In subsequent years, the annual costs will be approximately $20 000 (undiscounted) per year, and the compliance promotion activities will be adjusted according to the regulated community compliance level and to the compliance strategy.

Enforcement: The present value of overall costs over the 2014–2018 period is estimated at approximately $574 000 and will be used for inspections (which includes operation and maintenance costs, transportation and sampling costs), investigations, measures to deal with alleged violations (including warnings, environmental protection compliance orders and injunctions) and prosecutions.

Regulatory administration: The present value of overall costs over the 2014–2018 period is estimated at approximately $8.6 million. These costs include regulatory administration and verification testing, and also include salaries, operation and maintenance. Regulatory administration will be used to develop and maintain a reporting system to compile data submitted by companies related to their fleet emissions and related credits or deficits for each model year fleet. The costs for verification testing will be used to deliver and administer the testing and emissions verification program, including associated laboratory costs and vehicle and engine acquisition. These costs also include an upgrade to the testing facilities and associated equipment to accommodate heavy-duty vehicle and engine testing.

The present value of the costs related to these three categories is estimated to total $9.2 million over the 2014–2018 period in this analysis, and is presented in Table 10.

Table 10: Incremental cost to Government, 2014–2018, in millions of 2011 Canadian dollars

Values	2014	2015	2016	2017	2018	5-Year Total
Present value of compliance promotion costs	0.024	0.018	0.018	0.017	0.017	0.094
Present value of enforcement costs	0.122	0.118	0.115	0.111	0.108	0.574
Present value of regulatory program costs	1.767	1.709	1.728	1.699	1.650	8.554
Total Government costs	1.913	1.845	1.860	1.828	1.775	9.221

Due to rounding, some of the totals may not match. Present value in 2011 Canadian dollars, using a 3% discount rate.

7.5.3. Accidents, congestion and noise

As fuel savings lower vehicle operating costs, it is assumed that there will be some increase in vehicle distance travelled. The increase in vehicle distance travelled in response to lower vehicle operating costs is referred to as the “rebound” effect, and is measured here in vehicle-kilometres travelled (VKT). This rebound effect is expected to lead to more accidents, congestion and noise.

For heavy-duty vehicles, the U.S. EPA estimated the net rebound rate to be small overall and to vary by vehicle type: an approximate 0.5% to 1.5% increase in annual VKT per vehicle in response to total vehicle operating cost savings due to fuel savings. The Canadian analysis used the same rebound rates as the U.S. EPA, and applied them to annual Canadian fleet estimates of baseline VKT from MOVES in order to estimate the increase in VKT attributable to the rebound effect.

There are no identified Canadian estimates of heavy-duty vehicle costs per kilometre for accidents, congestion and noise. For Class 2B and Class 3 heavy-duty vehicles, this analysis used Canadian estimates for light-duty pickup trucks and vans. This is the same approach used by the U.S. EPA. The Canadian estimates for these vehicles are 46% lower than the U.S. EPA’s estimates. This analysis applied the U.S. EPA’s estimates per kilometre for heavy-duty vocational vehicles and tractors, assuming that Canadian estimates would also be 46% lower than the U.S. EPA’s estimates for the same heavy-duty vehicle classes. These per-kilometre cost estimates for accidents, congestion and noise were then applied to the Canadian VKT rebound estimates in order to obtain estimates of the overall value of accidents, congestion and noise for each vehicle class in this analysis. The results are presented below.

Table 11: Summary of costs of additional noise, accidents, and congestion, by model year, in millions of 2011 Canadian dollars

Value	MY2014	MY2015	MY2016	MY2017	MY2018	Combined MYs 2014–18
Present value of accidents, congestion, and noise	27	26	26	25	24	126

MY = lifetime (30 years) impacts for each year of vehicle sales. Present value in 2011 Canadian dollars, using a 3% discount rate.

7.6. Non-quantified impacts

7.6.1. Fuel savings impacts on upstream petroleum sector

Canada has a small, open economy and is a price-taker in the world petroleum market. The estimated reduction in domestic fuel consumption resulting from the Regulations will therefore not be expected to impact on the price of petroleum. Reduced domestic fuel consumption from any fuel savings resulting from the Regulations will therefore be expected to be redirected from domestic consumption to increased exports, with no incremental impact on the upstream petroleum sector.

7.6.2. Criteria air contaminant impacts

The Regulations are also expected to impact on criteria air contaminants (CACs) such as carbon monoxide (CO), nitrogen oxide (NO_x), particulate matter (PM_2.5, SO_x) and volatile organic compounds (VOCs). Overall it is expected that vehicle emissions of most CACs will decrease slightly in response to the Regulations, primarily due to anticipated fuel savings. Conversely, it is anticipated that emissions of PM_2.5 will rise slightly, primarily due to the expected increased use of diesel-powered auxiliary power units as a fuel saving measure for extended idling in tractors. The net impact of these changes in emissions of CACs on air quality, and the resulting impacts on human health are expected to be very minor. Given the small scale of the expected CAC emissions and the challenges in estimating their value, these impacts have not been quantified.

7.6.3. Regulatory certainty and reduced compliance costs for manufacturers

The Regulations are designed to align with similar regulations being introduced in the United States in 2014. The heavy-duty vehicle manufacturing sectors in Canada and the United States are highly integrated, so there are several benefits to regulatory alignment between the two countries. First, responding to new U.S. regulations with regulations in Canada provides a degree of regulatory certainty for Canadian manufacturers, which should facilitate their investment decision-making.

Second, by aligning regulations, as opposed to establishing regulatory requirements different than in the United States, the Regulations will further benefit Canadian companies subject to these regulations. Canadian companies manufacturing and/or importing into Canada vehicles that are concurrently sold in the United States, can use U.S. information and data, such as emission tests results, to demonstrate compliance with the standards. This significantly reduces the companies’ compliance assessment and administrative costs. Aligned regulations will also set a North American level playing field in the transportation sector by preventing any manufacturer from producing less expensive and higher emitting vehicles, and therefore putting other manufacturers in a competitive disadvantage. These benefits have been assessed qualitatively, as there are no available quantified estimates of the benefits of regulatory alignment.

7.7. Summary of costs and benefits

Over the lifetime operation of MY2014–2018 vehicles, the present value of the cost of the Regulations is estimated at $0.8 billion, largely due to the additional vehicle technology costs required by the Regulations. The total benefits for MY2014–2018 are estimated at $5.3 billion, due to the value of GHG reductions ($0.5 billion) and fuel savings ($4.8 billion). Over the lifetime operation of MY2014–2018 vehicles, the present value of the net benefits of the Regulations is estimated at $4.5 billion. The results of the cost-benefit analysis of the Regulations are presented in Table 12.

Table 12: Summary of main results, by model year, in millions of 2011 Canadian dollars

Incremental benefits and costs	MY2014	MY2015	MY2016	MY2017	MY2018	Combined MYs 2014–2018
Monetized benefits
A. Sector benefits
Pre-tax fuel savings	760	767	817	1,156	1,291	4,791
Reduced refuelling time	5	5	6	9	11	36
B. Societal benefits
Reduced GHG emissions (SCC at $28/tonne)	77	78	84	120	135	493
Total benefits	842	850	907	1,284	1,437	5,320
Monetized costs
A. Sector costs
Technology-related costs	142	136	139	141	154	713
B. Societal costs
Accidents, congestion, and noise	27	26	26	25	24	126
Government administration	2	2	2	2	2	9
Total costs	171	164	166	168	180	848
NET BENEFIT — with SCC at $28/tonne	671	686	741	1,117	1,257	4,472
NET BENEFIT — with alternate SCC at $112/tonne	899	918	990	1,473	1,659	5,939
Qualitative and non-monetized impacts	Positive regulatory alignment impacts
	No net criteria air contaminants impacts
	No net upstream fuel impacts

MY = lifetime (30 years) impacts for each year of vehicle sales. Present value in 2011 Canadian dollars, using a 3% discount rate. Due to rounding, some of the totals may not match.

The analysis indicates that in the first years of the Regulations (MY2014–16), the total lifetime costs will range from $164 to $171 million, the lifetime benefits will range from $842 to $907 million, and the lifetime net benefits will range from $671 to $741 million. These values reflect the impacts of the initial levels of compliance standards in the Regulations, and the level of vehicles sales over this period. For MY2017–18, the Regulations introduce higher compliance standards, resulting in higher costs ($168 to $180 million), higher benefits ($1,284 to $1,437 million) and higher net benefits ($1,117 to $1,257 million).

For MY2019 and subsequent model years, the Regulations maintain the MY2018 compliance standards, and, all else being equal, results would be expected to be similar to those for MY2018, given similar volumes of annual vehicle sales.

Table 13: Summary metrics

Values	MY2014	MY2015	MY2016	MY2017	MY2018	Combined MYs 2014–2018
Benefit to cost ratio — discounted at 3% (SCC at $28/tonne)	4.9	5.2	5.5	7.7	8.0	6.3
Fuel savings — undiscounted (billion litres)	1.1	1.1	1.2	1.8	2.0	7.2
Reduction in GHG emissions — undiscounted (Mt CO₂e)	2.9	3.0	3.2	4.7	5.3	19.1
Present value of CO₂e damages avoided (Mt CO₂e)						17.2
Present value of the socio-economic costs which equal total costs minus non-GHG benefits (in millions of 2011 CAN$)						–3,978
Present value of the socio-economic cost per tonne of CO₂e damages avoided ($/tonne)						–232

MY = lifetime (30 years) impacts for each year of vehicle sales. CO₂e damages are grown at 2% per year to reflect the growth in climate change damages over time as emissions cumulate in the atmosphere. Present value uses a 3% discount rate. Due to rounding, some of the totals may not match.

For the Regulations, the benefit to cost ratio is estimated to be 6.3 to 1 for the overall MY2014–2018 fleet of new heavy-duty vehicles. The benefit to cost ratio also increases from 4.9 to 1 for MY2014 to 8.0 to 1 for MY2018. This trend reflects the positive impact of fully implementing the Regulations.

Over the lifetime of the MY2014–2018 fleet, the Regulations are expected to reduce fuel consumption by 7.2 billion litres, and reduce GHG emissions (CO₂e) by 19.1 Mt.

In order to allow a comparison of social cost-effectiveness with other government climate change measures, we present the socio-economic cost per tonne of CO₂e emissions avoided. This ratio is calculated by subtracting the present value of the sum of all non-GHG benefits from the present value of the costs of the Regulations, and then dividing by the present value of the tonnes of CO₂e emissions avoided. This ratio measures the lifetime socioeconomic costs of reducing GHG emissions if the Regulations are implemented over the MY2014–2018 analysis period, on a per tonne basis. For the Regulations, the ratio of –$232/tonne is negative, indicating that the carbon emission reduction under the Regulations will result in a net benefit rather than net cost.

7.8. Sensitivity analysis

A sensitivity analysis was done to consider the impact of uncertainty in key variables (i.e. changes in estimated sales, technology costs, fuel prices and discount rates). The sensitivity analysis shows that the results are robust in terms of demonstrating positive net benefits for the Regulations across a broad range of plausible values for variables and assumptions.

Table 14: Results of sensitivity analysis

Sensitivity variables	Net Benefit
Sensitivity variables	Lower	Central	Higher
1. Sensitivity to sales forecasts: (–30%, central, +30%)	3,130	4,472	5,813
2. Sensitivity to technology costs: (+30%, central, –30%)	4,258	4,472	4,685
3. Sensitivity to fuel prices: (–30%, central, +30%)	3,034	4,472	5,909
4. Sensitivity to discount rates: (7%, 3%, undiscounted)	2,943	4,472	6,394

All values are in millions of 2011 Canadian dollars, using a 3% discount rate except where otherwise indicated.

A sensitivity analysis was also done to consider the impact of the assumption in the business-as-usual (BAU) scenario regarding the rate of technology change in the absence of the Regulations. Throughout the regulatory analysis, it is assumed that this rate is zero. This sensitivity analysis shows, however, that by assuming instead that some technology change would occur even in the absence of the Regulations, costs and benefits attributable to the Regulations would be reduced proportionately.

Table 15: BAU sensitivity analysis

BAU rate of technology adoption	0%	25%	50%
Costs	848	636	424
Benefits	5,320	3,990	2,660
Net benefit	4,472	3,354	2,236
Rate of technology adoption attributable to the Regulations	100%	75%	50%

All figures are in millions of 2011 Canadian dollars, using a 3% discount rate.

The regulatory analysis provides information to the public and stakeholders about the costs they can expect to bear and the benefits they can expect to receive over the lifetime of new heavy-duty vehicles sold with more GHG emission reducing technologies. It is unclear whether some or many of the technologies would be adopted in the absence of the Regulations. To the extent that they would, the costs and the benefits attributed to the Regulations would be overstated. The sensitivity analysis shows that even if the BAU rate of technology adoption was as high as 50%, the Regulations would still result in a positive net benefit.

7.9. Distributional impacts

The automotive manufacturing sector is concentrated within Ontario and Quebec, with other plants in Manitoba, Saskatchewan, Alberta, and British Columbia. (see footnote 21) The compliance costs of the Regulations are estimated to increase the production cost of vehicles for manufacturers by more than $136 million per year. These costs are expected to be distributed according to the future purchases and use of these regulated heavy-duty vehicles, and it is not expected that there will be significantly disproportionate impacts on any region within Canada.

The Regulations will require manufacturers to comply by adopting more GHG emission-reducing technologies in new vehicles. The analysis of the Regulations assumes that manufacturers will generally be able to pass on all GHG emission-reducing technology costs to vehicle purchasers, because these purchase costs can be shown to be quickly recouped through fuel savings. All new heavy-duty vehicle purchasers are assumed to be businesses, not consumers, given that heavy-duty vehicles are generally designed for commercial use. Businesses are expected to evaluate costs and benefits in terms of the expected payback on investment costs.

A simple payback analysis of MY2018 vehicle costs (Table 16) shows that average first-year fuel savings (including taxes) for owners and operators are expected to be greater than the manufacturer’s average costs for adding new technologies. For all three heavy-duty vehicle regulatory classes, the payback period is less than one year.

Table 16: Average technology costs per new vehicle and fuel savings, in 2011 Canadian dollars

MY2018	HD Pick-up Trucks and Vans	Vocation Vehicles	Combination Tractors
Technology costs per new vehicle	1,082	410	5,837
First-year fuel savings per new vehicle	1,212	1,041	8,006
Net first-year savings	129	631	2,169

Fuel prices are post-tax, by MY2018 vehicle class. All figures are in 2011 Canadian dollars.
Technology costs are a weighted average cost for vehicles in their respective RIAS class.

8. “One-for–One” Rule

The “One-for-One” Rule was implemented to control new administrative burden imposed on businesses as a result of regulations. In summary, the rule requires that departments

restrict the growth of administrative burden by ensuring that new administrative burden on business introduced by a regulatory change (IN) is offset by an equal decrease in administrative burden on business from the existing stock of regulations (OUT); and
control the number of regulations by repealing at least one existing regulation every time a new one imposing administrative burden on business is introduced.

Given that this is a new regulatory initiative, the changes that will be implemented through the Regulations will result in a net increase in administrative burden; therefore, the regulatory initiative is considered an “IN” under the rule. Increases in burden on the on-road heavy-duty sector will mainly take the form of reporting and record keeping requirements. The Regulations introduce a new administrative burden of $92,000 (in 2012 Canadian dollars) in annualized costs to the sector. These new costs will require equal and off-setting administrative cost reduction to existing regulations, and as this is a new regulation, Environment Canada will also be required to repeal at least one existing regulation.

Based on calculations carried out using the standard cost model methodology, these Regulations have been estimated to result in an annualized increase in total administrative costs to all businesses subject to the Regulations of approximately $92,000 (in 2012 Canadian dollars). The expected average annualized administrative costs per business subject to the Regulations is approximately $249 (in 2012 Canadian dollars).

9. Small business lens

The regulated community comprises manufacturers and importers of new on-road heavy-duty vehicles and engines sold in Canada. It excludes companies or individuals that

(a) purchase vehicles or engines outside of Canada and import them into Canada for use or for a purpose other than sale;
(b) sell used vehicles or engines; or
(c) sell vehicles or engines that do not meet the definitions of “heavy-duty vehicle” or “heavy-duty engine,” as prescribed in the Regulations.

Most of the companies to which the Regulations apply are Canadian subsidiaries or branches of multinational manufacturers, and are not considered to be “small businesses.”

That said, there are small independent importers that import small numbers of vehicles and engines for the purpose of sale into Canada. There are also a number of small and specialized secondary manufacturers that import incomplete vehicles into Canada for the purpose of completing and then selling those vehicles to the end user. Collectively, these companies are responsible for a small fraction of all Canadian sales of heavy-duty vehicles.

Nevertheless, the Regulations recognize the unique challenges of companies that import or manufacture small volumes of new on-road heavy-duty vehicles and engines for sale in Canada. First, under the Regulations, the majority of these small businesses would have very limited requirements given the exemption for companies importing or manufacturing fewer than 200 vehicles of any given model year. Also, requirements for a company that alters heavy-duty vehicles or heavy-duty incomplete vehicles — even those that are not exempted — are limited compared to original equipment manufacturers.

10. Consultation

10.1. Consultations before the publication of the proposed Regulations in the Canada Gazette, Part I

The Government of Canada first announced its commitment to take regulatory action to reduce GHG emissions from 2014 and later model year heavy-duty vehicles and engines on May 21, 2010. The announcement indicated the Regulations would be aligned with the U.S. EPA, while considering unique Canadian circumstances where appropriate. In October 2010, Canada released a consultation document detailing the main elements of Canada’s proposed Regulations to address GHG emissions from heavy-duty vehicles and engines. Canada subsequently released a second, more detailed consultation document in August 2011. Interested parties were invited to submit comments after the announcement and the release of the two consultation documents.

Environment Canada also held extensive consultation sessions with industry and other concerned stakeholders before the publication of the proposed Regulations. These included several meetings with manufacturers, vehicle owners, carriers, operators, ENGOs, provinces and territories. Environment Canada also co-hosted with Transport Canada three stakeholder working group meetings comprised of the above mentioned stakeholders, as well as other federal departments, such as Natural Resources Canada and Industry Canada.

The views of stakeholders provided during the above early consultations were taken into account in developing the proposed Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations prior to publication in the Canada Gazette, Part I.

10.2. Consultations after the publication of the proposed Regulations in the Canada Gazette, Part I

Publication of the proposed Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations in the Canada Gazette, Part I, on April 14, 2012, initiated a 60-day comment period where interested parties were invited to submit their written views on the proposed Regulations. The proposed Regulations were posted on Environment Canada’s CEPA Environmental Registry Web site (see footnote 22) to make them broadly available to interested parties. Environment Canada distributed an email to a broad range of interested parties to inform them of the formal consultation process. During the consultation period, Environment Canada held meetings with representatives of the provinces and territories, vehicle industry associations and ENGOs to provide an overview of the proposed Regulations, and answer questions to better inform possible written submissions. During the formal consultation period, Environment Canada also presented the proposed Regulations at the Heavy Duty Vehicle GHG Emissions & Fuel Efficiency in Canada Conference hosted by the University of Manitoba in Winnipeg, Manitoba. Environment Canada received comments at the event, and also invited participants to submit written comments during the consultation period.

Environment Canada received 19 written submissions from a range of commenters, including provinces, Canadian and U.S.- based original equipment manufacturers, dealers, truck owners and operators, and ENGOs. Environment Canada took these views into account when developing the final Regulations. The following paragraphs summarize the major issues raised by interested parties on the proposed Regulations and Environment Canada’s analysis leading to the development of the final Regulations.

10.2.1. Alignment with the U.S. EPA’s Greenhouse Gas Emissions Standards for Medium- and Heavy-Duty Engines and Vehicles

The vast majority of commenters generally expressed support for emission standards under the Heavy-Duty Vehicle and Engine Greenhouse Gas Emission Regulations aligned with the U.S. EPA’s Greenhouse Gas Emissions Standards for Medium- and Heavy-Duty Engines and Vehicles final rule. Alignment of test procedures, vehicle classes, flexibilities and administration were also specifically highlighted as important by many commenters. Some U.S.-based manufacturers, however, stated that alignment could possibly establish a more stringent approach in Canada, because

Canadian regulatees (mostly importers) have smaller and less diverse fleets which do not allow them to certify vehicles across a broader range of emission performance standards, as compared to their U.S. counterparts who generally have larger and more diverse fleets;
the current penetration of GHG-reducing technologies is reportedly lower in Canada than in the United States, which would require greater improvements to meet the standards in Canada compared to the United States; and
the lead time for complying with the Regulations is significantly shorter in Canada.

Response: Environment Canada has a long-standing policy of aligning transportation emissions standards with those of the U.S. EPA, as this provides significant environmental and economic benefits to Canada while minimizing compliance costs for industry and consumers. Alignment provides identical emission standards and test procedures to those of the U.S. EPA, which were found in the Canada Gazette, Part I, publication.

The vast majority of vehicles are imported into Canada by large corporations with sufficient volume and diversity so as to not make the standards more stringent in Canada than in the U.S. Also, the Regulations’ credit system allows Canadian companies to transfer credits amongst themselves, which effectively increases the pool of vehicles used for averaging and produces a similar fleet mix to the larger U.S. companies.

The data submitted by industry stakeholders suggest some differences in baseline vehicle performance between the United States and Canada, including a proportionally greater number of “vocational tractors” (see section 10.2.8 on vocational tractors for additional details on this issue).

In recognition of the transition to aligned standards, and to address industry concerns with a shorter lead time than that of the United States, Environment Canada is taking a phased-in approach by providing transitional measures over the 2014–2016 model years for vocational vehicles and tractors, as outlined in the regulatory description. Some restrictions apply to the use of early action credits and credits obtained during the phase-in period to ensure companies do not overly take advantage of the transitional measures (see section 5.6 for details). To address concerns specifically with regard to vocational tractors, Environment Canada has increased the threshold for vocational tractors (as described in section 10.2.8 below).

10.2.2. Low rolling resistance tires

There were many comments related to the safety, performance, availability and usage of low rolling resistance tires in Canada. Some U.S.-based manufacturers raised concerns that weather conditions such as mud, snow and ice were more severe or frequent in Canada than in the United States. They also noted that on average, Canadian heavy-duty vehicles are purchased with tires that have a higher rolling resistance than in the United States. Some vehicle operators stated that in the limited testing of low rolling resistance tires they had already conducted, they had seen no evidence of safety concerns and had so far obtained positive cost-benefit results. In general, there was a desire by commenters to see more data on the safety and performance of low-rolling resistance tires. Some commenters also stated a desire to see a standardized way of communicating tire rolling resistance information to vehicle and replacement tire purchasers.

Response: In addition to the testing results and comments provided by industry, the Government has conducted additional testing on low rolling resistance tires. Transport Canada conducted a broad study comparing the performance of tires with different rolling resistance in winter conditions. The results of these studies demonstrate that low rolling resistance tires can offer a similar level of snow traction performance as conventional tires, while reducing fuel consumption and emissions. In developing its final rule, the U.S. EPA conducted independent tire testing in both conventional and winter weather conditions. The results from that testing indicated that current low-rolling resistance targets can be met by a wide variety of tires currently on the market. The U.S. EPA studies also indicated no statistical relationship between rolling resistance and snow traction. Given the currently available data, standards anticipating the same penetration level of low-rolling resistance tire technology in both Canada and the United States are appropriate.

10.2.3. Fuels

Some commenters felt that the proposed Regulations should aim to increase the penetration of various alternative fuels, particularly liquefied natural gas and biofuels. One commenter also stated that before any new fuel requirements are introduced, the compatibility of these fuels with existing emission control technologies should be assured.

Response: Environment Canada is maintaining the standards of the proposed Regulations, which are fuel-neutral and do not provide regulatory incentives or obstacles to any particular fuel including biofuel and liquefied natural gas. It should be noted that Environment Canada has separate renewable fuel standards in the Renewable Fuels Regulations.

10.2.4. Vehicles manufactured in stages

Many manufacturers and industry associations expressed concern that the administrative burden and documentation requirements for multistage manufacturers were unnecessary and overly onerous. The commenters stressed that the great majority of these companies did not alter components which would affect a vehicle’s emissions value, principally the tires, engine and after-treatment system. They felt that for this reason, the reporting burden should be eliminated or substantially reduced. Some commenters advocated aligning multistage manufacturing requirements with those of the U.S. EPA.

Response: Environment Canada has reduced the administrative requirements for vehicles manufactured in stages, while maintaining the objectives of the Regulations. Environment Canada has modified the requirements of the proposed Regulations so that only manufacturers who alter components which will affect a vehicle’s emission performance will be required to ensure that the vehicle conforms to all applicable standards in the new configuration. Those multistage manufacturers who do not affect a vehicle’s conformity to the Regulations will not be subject to any data or documentation submission requirements.

10.2.5. Small volume companies

Some associations and companies stated that the threshold for companies to be considered for the provisions applying to small volume manufacturers and importers should be raised from 100, and some commenters also submitted data supporting this claim. Several other commenters also stated that the small volume provisions could lead to a proliferation of small volume companies in an effort to circumvent the standards, and one commenter stated that the provisions should be eliminated completely.

Response: Based on the data received, Environment Canada has increased the threshold for the small volume provisions to companies who manufactured or imported 200 or fewer vocational vehicles and tractors in 2011 and on average over the three most recent consecutive model years. Additionally, to address concerns that the exemption could lead to the proliferation of small-volume companies, Environment Canada has clarified in the regulatory text that a company must have been involved in the import or manufacture of fewer than 200 heavy-duty vehicles in 2011 (reference year) in order to be eligible for the small volume provisions. Finally, in response to the recommendation that the small-volume exemption be eliminated, Environment Canada is not eliminating this provision given its broad support from most commenters and in consideration of the unnecessary compliance burden for small businesses manufacturing and importing heavy-duty vehicles in Canada.

10.2.6. Reporting

Environment Canada received a number of comments related to several aspects of the reporting provisions contained in the proposed Regulations. Several commenters stated that the timing of the end of model year report should be later in the year, to allow Canadian subsidiaries to compile and prepare data from their American parent corporations.

Several large U.S.-based manufacturers were critical of the information requirements for vehicle importers, stating that the importers were unlikely to possess the information necessary to comply with the proposed Regulations. They noted that given the current market structure involving numerous and generally small companies importing various brands and products, Environment Canada would likely subsequently receive many reports, often with duplicate vehicle information. An association and several U.S.-based manufacturers advocated for the option of allowing large entities to report on behalf numerous small importers. One U.S.-based manufacturer stated that reporting in this manner was not a suitable long-term solution to the issue of a high reporting burden.

Response: The deadlines for end of model year report submissions have been revised to June 30 of each year, to allow more time for Canadian regulatees to acquire information from their U.S. parent companies where necessary. Also, in order to further limit administrative burden and to streamline reporting requirements, the provisions contained in the proposed Regulations that required submitting an annual preliminary report for Class 2B and Class 3 heavy-duty vehicles were removed.

Under CEPA 1999 and the Regulations, companies are responsible for compliance including fulfilling all the regulatory reporting obligations. Regulatees may seek to establish an agreement with a third-party, such as the original equipment manufacturer, which has the expertise to submit the requisite regulatory reports on its behalf. Environment Canada recognizes that such an approach can limit the regulatory reporting burden, and in certain cases, such as submitting defect information, facilitate the dissemination of information.

10.2.7. Compliance flexibilities

Manufacturers, associations and ENGOs all commented on the compliance flexibilities contained in the proposed Regulations, in particular the CO₂ emission credit system. In general, U.S.-based manufacturers noted that Canadian regulatees (mostly importers) have smaller and less diverse fleets which do not allow them to certify vehicles across a broader range of emission performance standards, as compared to their U.S. counterparts, who generally have larger and more diverse fleets. Because of this, they said, the CO₂ emission credit system provides less flexibility for Canadian regulatees compared to U.S. regulatees.

Some U.S.-based manufacturers further commented that the proposed Regulations should not require companies to participate in the credit system if they import vehicles and engines covered by a U.S. EPA certificate, even if one or more of those vehicles and engines have emission levels worse than the standard. In the case of engines, these manufacturers also advocated this approach even if sales in Canada of one engine exceed sales in the U.S. of that same engine as stipulated in the proposed Regulations. Commenters further expressed concerns that, because of differences between the Canadian and U.S. engine markets, a small number of engines sold into a niche market segment could trigger a requirement for a company’s entire engine line-up to be included in the CO₂ emission credit system.

On the other hand, several ENGOs emphasized the importance of a well-monitored CO₂ emission credit system to ensure that Canada does not become a pollution haven for high-emitting vehicles, and to ensure that the Government can verify the changes in technology and fuel efficiency at the fleet level.

Response: Participation in the CO₂ emission credit system is a compliance flexibility, and is not required unless one or more vehicles, including those covered by a U.S. EPA certificate, have emission levels worse than the applicable standard. The credit system cannot completely exclude U.S. EPA-certified vehicles and engines from its scope as this would reduce the Government’s ability to ensure GHG emission reductions and properly evaluate the performance of the Regulations.

The requirement to participate in the CO₂ emission credit system for engines covered by a U.S. EPA certificate and with GHG emissions above the applicable standards is based on the number of engines sold in Canada and on a ratio of the number of engines sold in Canada and in the United States. The requirement for companies to track Canadian sales of heavy-duty engines is to ensure there are no significant differences between Canada and the United Sales in sales of low-volume engines. Environment Canada has modified the Canada/U.S. sales threshold for lower volumes of engines, to ensure that the requirement to participate in the CO₂ emission credit system for engines is only triggered when there are significant Canadian sales of high-emitting engines.

10.2.8. Vocational tractors

The proposed Regulations contained provisions for vocational tractors, which are tractors that are not designed to operate mainly on highways, or that would not benefit from some of the technologies expected to be deployed for line-haul tractors. The proposed Regulations included an option for companies manufacturing or importing vocational tractors to comply with the CO₂ emissions standards applicable for vocational vehicles instead of those applicable for tractors, with a limit of no more than 2 100 vocational tractors, in any consecutive three model-year period.

Several U.S.-based manufacturers commented that Canada has a higher proportion of vehicles which would be considered vocational tractors than in the United States. The majority of these tractors have a gross combined weight rating (GCWR) of 120 000 lb or greater, and are also known as heavy-haulers. Commenters also stated that there is a greater need in Canada for vocational tractors due to the relatively higher percentage of Canada’s economy dedicated to resource extraction. Commenters proposed to raise the limit on the number of tractors a manufacturer or importer could declare as vocational tractors. Commenters suggested to raise the thresholds to between 4 500 and 12 000 vehicles per three-year period, instead of 2 100 vocational tractors as proposed in the proposed Regulations.

Response: Based on confidential market data received from U.S.-based manufacturers, Environment Canada has raised the limit on vocational tractors to 5 250 per three-year period, from 2 100 for the same period.

10.2.9. Labelling

Some commenters recommended requiring manufacturers and importers to label tractors and vocational vehicles with the emissions values used for the U.S. certification, as an indicator to purchaser of emission performance. These commenters felt that this information would allow purchasers to make more informed purchases, and would also allow the Government of Canada to track the penetration of GHG-reducing technologies. Other commenters felt that these certification values were confidential business information, and should not be shared with the general public.

Response: Placing GHG emissions values on tractors, vocational vehicles and engines would require additional Canada- specific labels and is not in alignment with the requirements of the U.S. EPA. Environment Canada is not requiring GHG emissions certification values on labels under the Regulations.

11. Regulatory cooperation

The Joint Action Plan for the Canada-United States Regulatory Cooperation Council indicated that “in addressing climate change, both Canada and the U.S. have implemented aggressive emissions targets in the transportation sector. Continuing progressive and aligned action to reduce GHGs from vehicles is a priority for both countries. There is an opportunity for regulators to work more closely with the aim of better synchronizing implementation of regulations and leveraging existing expertise.”

Throughout the regulatory development process in both Canada and the United States, Environment Canada and the U.S. EPA worked to support each other. Environment Canada’s contributions included emissions and aerodynamic testing, conducted at facilities run by both Environment Canada and the National Research Council Canada. Canada’s contributions were explicitly mentioned by the U.S. EPA in their rulemaking documents, including the following excerpt: “We expect the technical collaboration with Environment Canada to continue as we implement testing and compliance verification procedures for this rulemaking. We may also begin to develop a knowledge base enabling improvement upon this regulatory framework for model years beyond 2018 (for example, improvements to the means of demonstrating compliance). We also expect to continue our collaboration with Environment Canada on compliance issues.”

Environment Canada expects collaboration with the U.S. EPA to continue and expand as both countries work to address GHG emissions from heavy-duty vehicles, especially in the areas of joint testing, knowledge sharing and the implementation of the Regulations.

12. Rationale

The Regulations will achieve the Government of Canada’s objective to continue to reduce GHG emissions from heavy-duty vehicles and engines for model years 2014 and beyond. The Regulations align with the national GHG emission standards of the U.S. EPA for model years 2014 and later, providing long-term regulatory certainty to the heavy-duty vehicle and engine industry and common requirements in both jurisdictions, to allow for companies to take advantage of economies of scale. The implementation of these national GHG emission standards will require significant technological improvements to new heavy-duty vehicles and engines, which will lead to significant GHG emission reductions and improved fuel efficiency. The present value to vehicle purchasers of benefits from reduced fuel consumption alone is estimated to be $4.8 billion over the lifetime operation of model year 2014 to 2018 heavy-duty vehicles and engines.

In perfect markets, such fuel savings would be enough to motivate reductions in GHG emissions even in the absence of the Regulations. Accordingly, it may be reasonably asked why the Regulations are necessary in order to achieve these cost-effective results. To try to understand this issue, the U.S. EPA surveyed published literature and held discussions with numerous truck market participants. From these sources, five categories of possible explanations were derived.

First, comprehensive and reliable information on the effectiveness and efficiency of new technologies is not always available. Thus, buyers may understandably be reluctant to spend additional money to purchase vehicles equipped with these new technologies.

Second, although it seems reasonable to assume that people are willing to pay more for better vehicles, new or used, it is not clear whether buyers of used vehicles can tell which are the better vehicles. As a result, the purchasers of original equipment may expect the resale market to provide inadequate compensation for the new technologies, even when those technologies would reduce costs for resale buyers.

Third, if for some reason a truck purchaser will not be directly responsible for future fuel costs, or the individual who will be responsible for fuel costs does not decide which truck characteristics to purchase, then those price signals (higher vehicle prices offset by lower fuel costs) may not be transmitted effectively, and incentives can be described as “split.”

Fourth, there may be uncertainty about future fuel prices. When purchasers have less than perfect foresight about future operating expenses, they may implicitly apply much higher discount rates to future potential fuel savings, due to their uncertainty.

Fifth, transaction costs of changing to new technologies may slow or prevent their adoption. If a conservative approach to new technologies leads truck buyers to adopt new technologies slowly, then successful new technologies are likely to be adopted over time without market intervention, but with potentially significant delays in achieving fuel savings and environmental benefits.

It is unclear whether some or many of the technologies would be adopted in the absence of the Regulations. There is, however, highly imperfect information in the original and resale markets, split incentives, uncertainty about future fuel prices, and adjustment and transaction costs. These market failures would limit the adoption of these technologies in the absence of the Regulations. Therefore, regulations that force the adoption of these technologies can bring net benefits to Canadians, as demonstrated in the summary cost-benefit table for the Regulations (Table 12).

13. Implementation and enforcement

13.1. Implementation

Environment Canada currently administers a comprehensive program to verify compliance with the On-Road Vehicle and Engine Emission Regulations under CEPA 1999, which establish federal emission standards for smog-forming emissions. The Regulations will be implemented and enforced in a similar manner. Manufacturers and importers will be responsible for ensuring that their products comply with the Regulations and will be required to produce and maintain evidence of such conformity. The program will include

authorizing and monitoring the use of the national emissions mark;
reviewing company evidence of conformity;
monitoring data submission for compliance with the applicable GHG emission standards for heavy-duty vehicles and engines and the banking or trading of emission credits;
registering company notices of defects affecting emission controls;
inspections of test vehicles and engines and their emission-related components;
laboratory emissions tests on a sample of new vehicles and engines that are representative of products offered for sale in Canada; and
laboratory emissions tests on a sample of typical in-use vehicles.

Environment Canada plans to coordinate monitoring efforts with the U.S. EPA by sharing information to increase program efficiency and effectiveness.

In administering the Regulations, Environment Canada will respond to submissions and inquiries from the regulated community in a timely manner taking into account the complexity and completeness of the request.

13.2. Enforcement

Since the Regulations will be made under CEPA 1999, enforcement officers will, when verifying compliance with the Regulations, apply the Compliance and Enforcement Policy implemented under the Act. The Policy sets out the range of possible responses to violations, including warnings, directions, environmental protection compliance orders, ticketing, ministerial orders, injunctions, prosecution, and environmental protection alternative measures (which are an alternative to a court trial after the laying of charges for a CEPA 1999 violation). In addition, the Policy explains when Environment Canada will resort to civil suits by the Crown for costs recovery.

When, following an inspection or an investigation, an enforcement officer discovers an alleged violation, the officer will choose the appropriate enforcement action based on the following factors:

Nature of the alleged violation: This includes consideration of the damage, the intent of the alleged violator, whether it is a repeat violation, and whether an attempt has been made to conceal information or otherwise subvert the objectives and requirements of the Act.
Effectiveness in achieving the desired result with the alleged violator: The desired result is compliance within the shortest possible time and with no further repetition of the violation. Factors to be considered include the violator’s history of compliance with the Act, willingness to cooperate with enforcement officers, and evidence of corrective action already taken.
Consistency: Enforcement officers will consider how similar situations have been handled in determining the measures to be taken to enforce the Act.

Environment Canada will monitor the GHG emission performance of heavy-duty vehicles and engines and their fleets and compliance with the Regulations. In the situation where a vehicle or engine is found to exceed applicable standards or exceed the family emission limit specified by the company, the normal course of events will be to perform sufficient engineering assessment to determine if a notice of defect should be issued by the company to the owners of the particular model of vehicle. This may result in a product recall to fix the defect. In the case of the emission credit system, companies will have three years to offset a deficit. In the situation where a company fails to meet this requirement, the issue will be referred to the Enforcement Division to consider actions in accordance with its Compliance and Enforcement Policy for CEPA 1999.

13.3. Service standards

For the Regulations, Environment Canada, in its administration of the regulatory program, will provide these services in a timely manner:

Reviewing applications and preparing authorizations to use the national emissions mark; and
Assessing requests for exemptions from the Regulations.

In addition, Environment Canada will audit evidence of conformity for engines and vehicles and provide to manufacturers an acknowledgement of its receipt and whether it is presented “in a form and manner that is satisfactory” based on a set of criteria established by Environment Canada. Environment Canada intends to develop a technical guidance document describing the required evidence of conformity and the procedures to be followed when submitting required documentation.

14. Performance measurement and evaluation

The Performance Measurement and Evaluation Plan (PMEP) describes the desired outcomes of the Regulations and establishes indicators to assess the performance of the Regulations in achieving these outcomes. The PMEP package is composed of three documents:

The PMEP, which details the regulatory evaluation process;
The logic model, which provides a simplified visual walkthrough of the regulatory evaluation process; and
The table of indicators, which lists clear performance indicators and associated targets, where applicable, in order to track the progress of each outcome of the Regulations.

The three documents complement each other and allow the reader to gain a clear understanding of the outcomes of the Regulations, the performance indicators, as well as the evaluation process.

14.1. Outcomes

The PMEP details the suite of outcomes for each unit as they comply with the Regulations. These outcomes include the following:

Upon publication of the Regulations, the regulated community will become aware of the Regulations, start importing or manufacturing vehicles and engines that comply with the standards and meet the reporting requirements, when applicable (immediate outcome).
Then, as fuel-saving technologies enter the market, owners and operators of heavy-duty vehicles will experience fuel savings (intermediate outcome), which directly translates into GHG emission reductions and economic benefits (final outcome).

As a key feature of the Regulations, companies will be subject to progressively more stringent standards during the 2014 to 2018 model year period. Also, the Regulations only target new vehicles. Existing vehicles are not subject to the Regulations. As a result, the outcomes, such as anticipated reductions in GHG emissions, will take place progressively and accumulate over time as the Canadian vehicle fleet turns over.

14.2. Performance indicators and evaluation

Clear, quantitative indicators and targets, where applicable, were defined for each outcome — immediate, intermediate, and final — and will be tracked on a yearly basis or every five years, depending on the indicator and outcome. Examples of performance indicators include the annual percentage of regulatees who took advantage of compliance flexibilities, the annual percentage of total vehicles that are in compliance with the standards and the number of enforcement actions taken annually.

In addition, a compilation assessment will be conducted every five years starting in 2020 to gauge the performance of every indicator against the identified targets. This regular review process will allow Environment Canada to clearly detail the impact of the Regulations on the on-road heavy-duty vehicle sector as more and more low GHG-emitting vehicles enter the market, and to evaluate the performance of the Regulations in reaching the intended targets.

These performance indicators are available in the PMEP table of indicators, and make direct references to the outcomes listed in the logic model.

15. Contacts

Mark Cauchi
Director
Transportation Division
Environment Canada
351 Saint-Joseph Boulevard, 13th Floor
Gatineau, Quebec
K1A 0H3
Telephone: 819-994-3706
Fax: 819-953-7815
Email: GHGRegDev_Vehicles@ec.gc.ca

Yves Bourassa
Director
Regulatory Analysis and Valuation Division
Environment Canada
10 Wellington Street, 25th Floor
Gatineau, Quebec
K1A 0H3
Telephone: 819-953-7651
Fax: 819-953-3241
Email: RAVD.DARV@ec.gc.ca

Footnote a
S.C. 2004, c. 15, s. 31
Footnote b
S.C. 1999, c. 33
Footnote c
S.C. 1999, c. 33
Footnote 1
Canada’s Greenhouse Gas Inventory, 2009, 2010, www.ec.gc.ca/ges-ghg/default.asp?lang=En&n=8BAF9C6D-1.
Footnote 2
Federal Register, Vol. 76, No. 179, p. 57108, September 15, 2011, www.epa.gov/otaq/climate/regulations.htm#1-2.
Footnote 3
These consultation documents are available at www.ec.gc.ca/lcpe-cepa/default.asp?lang=En&n=A7A02DDF-1.
Footnote 4
Federal Register, Vol. 76, No. 179, p. 57108, September 15, 2011, www.epa.gov/otaq/climate/regulations.htm#1-2.
Footnote 5
The European Commission is due to adopt a strategy on HDV GHG emissions in 2013. For details, visit http://ec.europa.eu/clima/events/0054/index_en.htm.
Footnote 6
Industry Canada, www.ic.gc.ca/cis-sic/cis-sic.nsf/IDE/cis-sic33612tabe.html.
Footnote 7
Source: www.ic.gc.ca/cis-sic/cis-sic.nsf/IDE/cis-sic33612prde.html.
Footnote 8
Source: www.ic.gc.ca/cis-sic/cis-sic.nsf/IDE/cis-sic33612empe.html.
Footnote 9
Canada’s Action on Climate Change, www.climatechange.gc.ca/default.asp? lang=En&n=036D9756-1.
Footnote 10
Canada’s Greenhouse Gas Inventory, 2010, www.ec.gc.ca/ges-ghg/default.asp? lang=En&n=8BAF9C6D-1.
Footnote 11
Contact Environment Canada’s Economic Analysis Directorate for any questions regarding methodology, rationale, or policy.
Footnote 12
U.S. Interagency Working Group paper on SCC: IWGSCC, 2010, “Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866,” U.S. Government.
Footnote 13
The value of $28.44/tonne of CO₂ in 2012 (in 2011 Canadian dollars) and its growth rate have been estimated using an arithmetic average of the three models PAGE, FUND, and DICE.
Footnote 14
“Fat-Tailed Uncertainty in the Economics of Climate Change,” Review of Environmental Economic Policy, 5(2), pp. 275–292 (summer 2011).
Footnote 15
“Fat Tails, Thin Tails, and Climate Change Policy,” Review of Environmental Economics and Policy, summer 2011.
Footnote 16
The value of $112.37/tonne of CO₂ in 2012 (in 2011 Canadian dollars) and its growth rate have been estimated using an arithmetic average of the two models PAGE and DICE. The FUND model has been excluded in this estimate because it does not include low probability, high-cost climate damage.
Footnote 17
www.neb.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/nrgyftr/2011/nrgsppldmndprjctn2035-eng.html#s2_1
Footnote 18
www.epa.gov/otaq/climate/documents/420r11901.pdf
Footnote 19
See section 7.3.3.
Footnote 20
www.tc.gc.ca/media/documents/policy/report-final.pdf
Footnote 21
Canadian Industry Statistics, Industry Canada.
Footnote 22
www.ec.gc.ca/lcpe-cepa/default.asp?lang=En&n=D44ED61E-1

Vol. 147, No. 6 — March 13, 2013

Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations

TABLE OF CONTENTS

HEAVY-DUTY VEHICLE AND ENGINE GREENHOUSE GAS EMISSION REGULATIONS

INTERPRETATION

PURPOSE

BACKGROUND

MODEL YEAR

PRESCRIBED CLASSES OF VEHICLES AND ENGINES

NATIONAL EMISSIONS MARK

LABELLING

VEHICLES MANUFACTURED IN STAGES

GREENHOUSE GAS EMISSION STANDARDS

GENERAL

Heavy-duty Vehicles of the 2014 Model Year

Heavy-duty Vehicles and Engines Covered by an EPA Certificate

Emission Control Systems

Adjustable Parameters

Air Conditioning Systems

Small Volume Companies — Tractors and Vocational Vehicles

Composition of Fleets

Grouping into Fleets

CLASS 2B AND CLASS 3 HEAVY-DUTY VEHICLES

N2O and CH4 Emissions

CO2 Emissions

Test Methods and Calculations

Alternative Standards

VOCATIONAL VEHICLES

TRACTORS

VOCATIONAL TRACTORS

HEAVY-DUTY ENGINES

N2O and CH4 Emissions

CO2 Emissions

CO2 EMISSION CREDIT SYSTEM

Calculation of Credits and Deficits

Additional Credits

Averaging Sets

Early Action Credits

REPORTS

END OF MODEL YEAR REPORT

EARLY ACTION CREDITS

FORMAT OF REPORTS

INSTRUCTIONS

RECORDS

EVIDENCE OF CONFORMITY

FLEET AVERAGE EMISSIONS

ENGINES SOLD CONCURRENTLY

VOCATIONAL TRACTORS

MAINTENANCE AND SUBMISSION OF RECORDS

IMPORTATION DOCUMENT

RENTAL RATE

APPLICATION FOR EXEMPTION

DEFECT INFORMATION

COMING INTO FORCE

HEAVY-DUTY VEHICLE AND ENGINE GREENHOUSE GAS EMISSION REGULATIONS

INTERPRETATION

PURPOSE

BACKGROUND

MODEL YEAR

PRESCRIBED CLASSES OF VEHICLES AND ENGINES

NATIONAL EMISSIONS MARK

LABELLING

VEHICLES MANUFACTURED IN STAGES

GREENHOUSE GAS EMISSION STANDARDS

GENERAL

Heavy-duty Vehicles of the 2014 Model Year

Heavy-duty Vehicles and Engines Covered by an EPA Certificate

Emission Control Systems

Adjustable Parameters

Air Conditioning Systems

Small Volume Companies — Tractors and Vocational Vehicles

Composition of Fleets

Grouping into Fleets

CLASS 2B AND CLASS 3 HEAVY-DUTY VEHICLES

N2O and CH4 Emissions

CO2 Emissions

Test Methods and Calculations

Alternative Standards

VOCATIONAL VEHICLES

TRACTORS

N₂O and CH₄ Emissions

CO₂ Emissions

N₂O and CH₄ Emissions

CO₂ Emissions

CO₂ EMISSION CREDIT SYSTEM

N₂O and CH₄ Emissions

CO₂ Emissions

N₂O and CH₄ Emissions

CO₂ Emissions

CO₂ EMISSION CREDIT SYSTEM

5.3. Emission standards for CO₂, N₂O and CH₄

5.5. CO₂ emission credit system