Regulations Amending the Canadian Aviation Regulations (CO2 Emissions): SOR/2020-251

Canada Gazette, Part II, Volume 154, Number 25

Registration
SOR/2020-251 November 23, 2020

AERONAUTICS ACT

P.C. 2020-909 November 20, 2020

Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to section 4.9 footnote a of the Aeronautics Act footnote b, makes the annexed Regulations Amending the Canadian Aviation Regulations (CO2 Emissions).

Regulations Amending the Canadian Aviation Regulations (CO2 Emissions)

Amendments

1 Section 521.32 of the Canadian Aviation Regulations footnote 1 is amended by striking out “and” at the end of paragraph (b), by adding “and” at the end of paragraph (c) and by adding the following after paragraph (c):

2 Section 521.159 of the Regulations is amended by adding the following after subsection (4):

(5) An applicant for the approval of a change to the type design of an aircraft shall demonstrate that the aircraft meets the carbon dioxide (CO2) emissions standards specified in Subchapter C of Chapter 516 — Aircraft Emissions of the Airworthiness Manual.

Coming into Force

3 These Regulations come into force on the day on which they are published in the Canada Gazette, Part II.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The International Civil Aviation Organization (ICAO) has adopted a new aeroplane Carbon Dioxide Emissions Certification Standard (the Carbon Dioxide Standard) as one of several measures to address greenhouse gas emissions from international aviation. Canada is bound by the ICAO Convention on International Civil Aviation (CICA) and must make this amendment to the Canadian Aviation Regulations (CARs) to adopt the ICAO Carbon Dioxide Standard.

Background

The United Nations Framework Convention on Climate Change (PDF) [the Convention] is an international environmental treaty, which was adopted on May 9, 1992, and came into force on March 21, 1994. Canada ratified the Convention on December 4, 1992, and Canada is one of 197 countries who have ratified the Convention. The Convention provides guidelines on which other international measures have been developed, such as the Paris Agreement. Article 2 of the Convention states:

At the Conference of the Parties (COP 21) in Paris, on December 12, 2015, Parties to the Convention reached an agreement (the Paris Agreement [PDF]) to combat climate change, and to accelerate the actions and investments needed for a sustainable low carbon future. Canada’s emissions targets include commitments made through the Paris Agreement, of a non-sector specific greenhouse gas reduction of 30%, compared to 2005, by 2030. The Paris Agreement does not address transportation-related emissions because these emissions are difficult to attribute to an individual country’s national target. Therefore, targets for international aviation are determined through ICAO.

ICAO’s targets for international aviation are carbon-neutral growth from 2020, and a 2% annual fuel efficiency improvement from 2021 to 2050. In July 2017, the ICAO Council adopted a new aeroplane Carbon Dioxide Standard which will reduce the impact of aviation greenhouse gas emissions on the global climate. The Carbon Dioxide Standard is an international standard that was developed by ICAO over a six-year period. The ICAO Working Group for the Carbon Dioxide Standard consisted of international technical experts and representatives from certification authorities, regulators, aeroplane and aircraft engine manufacturers, air operators, and non-governmental organizations. Manufacturers provided proprietary information to the Working Group via non-disclosure agreements.

Transport Canada (TC) and the only Canadian aeroplane manufacturer producing aeroplanes affected by the Carbon Dioxide Standard at the time footnote 5 were active participants in the ICAO process. The final decision on the Carbon Dioxide Standard is supported by a data-informed process that includes a cost-effectiveness modelling analysis of various stringency and applicability options for all aeroplane manufacturers. It is the first design certification standard governing carbon dioxide emissions for any industry sector.

In February 2016, the ICAO Committee on Aviation Environmental Protection, which agreed on the technical details of the new Carbon Dioxide Standard, recommended the standard to ICAO Council for adoption. On March 16, 2016, the United States and Canada issued a Joint Statement on Climate, Energy and Arctic Leadership, in which the leaders “expressed their strong commitment to work together through … ICAO to reduce emissions from international aviation by … implementing the new carbon standard for airplanes . . . .”

Annex 16 (Environmental Protection) to the ICAO CICA contains the environmental certification standards that all aircraft are required to meet. Volume III of Annex 16 introduced the Carbon Dioxide Standard, which focuses on reducing carbon dioxide emissions through the integration of fuel efficiency technologies into aeroplane type designs. Medium-term mitigation for carbon dioxide emissions from the aviation sector can come from improved fuel efficiency. The Carbon Dioxide Standard is based on three elements associated with aeroplane technology and design: fuel burn performance, aeroplane size (based on a floor area calculation), and aeroplane mass.

Type design is defined in the CARs and is essentially the drawings and specifications that define the design features of an aeronautical product (i.e. a master plan), including dimensions, materials, manufacturing processes and any other data or documentation that is necessary to determine the airworthiness of the aeronautical product.

The integration of improved fuel-efficient technologies into aeroplane type designs will reduce aviation-related carbon dioxide emissions. ICAO has estimated that the new carbon dioxide standard would reduce emissions of carbon dioxide on an international basis by as much as 650 million tonnes between 2020 and 2040, or the equivalent of taking 140 million cars off the road during the same period. Emissions related to Canadian air transportation make up a small portion of the international carbon dioxide emissions.

Canada’s Action Plan to Reduce Greenhouse Gas Emissions from Aviation, released in 2012, outlines ongoing and planned activities to reduce greenhouse gas emissions from Canada’s international and domestic aviation, and it commits Canada to annual reporting to summarize and track progress on emission reduction and supporting activities.

Canada made an international commitment to adopt the Carbon Dioxide Standard by January 1, 2020. Due to unforeseen delays, the Carbon Dioxide Standard was not implemented by January 1, 2020. However, the delay to date has not resulted in an inconsistent application of the standard or any other adverse consequences. No stakeholders in Canada have been affected by this delay as no aircraft manufactured in Canada have required certification against the standard since January 1, 2020.

Objective

The objective of this amendment to the CARs and the associated changes to the Airworthiness Manual (AWM), which is incorporated by reference into the CARs, is to comply with Canada’s international and domestic commitments to reduce carbon dioxide emissions by aligning Canada’s regulatory framework with the ICAO Carbon Dioxide Standard.

This amendment ensures that Canada meets its international commitments by having the Carbon Dioxide Standard in effect on the day it is published in the Canada Gazette, Part II.

Description

The amendment makes the changes necessary to incorporate by reference the Carbon Dioxide Standard, including adding two requirements: (1) that the aircraft must meet the Carbon Dioxide Standard, as specified in Chapter 516 of the AWM in order for a new type design to be approved; and (2) that the applicant for the approval of a change to the type design of an aircraft must demonstrate that the aircraft meets the Carbon Dioxide Standard, as specified in Chapter 516 of the AWM. In addition, TC will make a corresponding change to Chapter 516 of the AWM to incorporate by reference the Carbon Dioxide Standard (Annex 16, Volume III). Chapter 516 of the AWM provides the regulatory framework for environmental standards and practices for aviation in Canada.

Annex 16, Volume III applies to new aeroplane type designs greater than 60 000 kg for subsonic jet aeroplanes and 8 168 kg for propeller-driven aeroplanes as of January 1, 2020, except for subsonic jet aeroplanes greater than 5 700 kg and less than or equal to 60 000 kg and with a maximum passenger seating capacity of less than or equal to 19 seats, for which the applicability date is January 1, 2023. The Carbon Dioxide Standard will apply to changes to existing aeroplane type designs greater than 5 700 kg for subsonic jet aeroplanes or greater than 8 168 kg for propeller-driven aeroplanes as of January 1, 2023. Individual aeroplanes greater than 5 700 kg for subsonic jet aeroplanes or greater than 8 168 kg maximum take-off mass for propeller-driven aeroplanes that are already in production will also be required to meet the new Carbon Dioxide Standard by January 1, 2028. Manufacturers will be required to certify their aeroplanes against the new Carbon Dioxide Standard (i.e. prove that their aeroplanes are compliant with the Carbon Dioxide Standard).

Compliance with the new Carbon Dioxide Standard is confirmed during the aircraft certification process for new type designs or changes to type designs.

Regulatory development

Consultation

The ICAO Working Group, which was made of up regulators, manufacturers, air operators and non-governmental organizations, was the main route for affected parties to provide input into the development of the Carbon Dioxide Standard. TC and the sole Canadian aeroplane manufacturer to which the Carbon Dioxide Standard applied at the time of adoption by ICAO were active participants in the ICAO process.

Notice of proposed amendment

TC communicated this change to the aviation industry through a Notice of Proposed Amendment (NPA) posted on the Canadian Aviation Regulation Advisory Council (CARAC) activity reporting system on December 11, 2018. TC received four comments on the NPA. Two of the comments indicated that the stakeholder had no issues with the amendment and two of the comments identified minor errors in the NPA.

Exemption from prepublication in the Canada Gazette, Part I

Canada has made an international commitment to adopt the ICAO aeroplane Carbon Dioxide Standard, by January 1, 2020, to reduce the impact of aviation greenhouse gas emissions on the environment. This amendment affects three of the four footnote 6 Canadian manufacturers of aeroplanes. One of the Canadian manufacturers (the only Canadian manufacturer affected by the Carbon Dioxide Standard at the time) was a participant on the ICAO Committee on Aviation Environmental Protection, which developed this new international emissions certification standard and supports this amendment. Two other Canadian manufacturers (new stakeholders who acquired type certificates from the original Canadian manufacturer in 2018 and 2019) may be affected by the Carbon Dioxide Standard and have indicated their support for the amendment. All three stakeholders support the publication of the amendment directly in the Canada Gazette, Part II. Furthermore, these Carbon Dioxide certified aeroplanes are more fuel-efficient, which is also of value to the air operators as it reduces the cost of operating, due to reduced fuel burn.

Canada must expeditiously implement the Carbon Dioxide Standard in its domestic regulations to ensure that Canadian manufacturers can have their aeroplanes carbon dioxide certified by the Canadian Airworthiness Authority, demonstrating that the aeroplanes meet the latest international environmental standards. If Canada does not implement the new Carbon Dioxide Standard, then manufacturers will have to apply for certification against the new Carbon Dioxide Standard in Europe or the United States in order to be able to sell their aeroplanes and to ensure that the international market remains open to them. Air operators will only purchase aeroplanes that meet the Standard so that they will be able to fly internationally to all countries that align with ICAO standards, and so that their assets retain their value.

In summary, stakeholders were consulted on the amendment through the NPA or through subsequent contact and support the amendment; implementation of the Standard will be low cost; and the amendment will have a positive environmental impact.

For all of these reasons, the proposed amendments were not prepublished in the Canada Gazette, Part I.

Modern treaty obligations and Indigenous engagement and consultation

In accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, analysis was undertaken to determine whether the amendment is likely to give rise to modern treaty obligations. This assessment examined the geographic scope and subject matter of the amendment in relation to modern treaties in effect and no modern treaty obligations were identified.

Instrument choice

To comply with international commitments, as well as to harmonize with ICAO and other civil aviation certification authorities around the world, Canada must make a regulatory amendment to incorporate the Carbon Dioxide Standard into its regulatory framework. Adopting standards is required by the Convention on International Civil Aviation, to which Canada is a party. The amendment indicates that the applicable aircraft emissions standard is the Carbon Dioxide Standard specified in Chapter 516 of the Airworthiness Manual. The Airworthiness Manual is being updated in conjunction with the regulatory amendment to incorporate by reference the Carbon Dioxide Standard (i.e. ICAO Annex 16, Volume III). All of these changes are required to adopt the Carbon Dioxide Standard in Canada.

Regulatory analysis

The amendment has been assessed in accordance with the Treasury Board Secretariat Canadian Cost-Benefit Analysis Guide. footnote 7 Where possible, impacts are quantified and monetized, with only the direct costs and benefits for stakeholders considered in the cost-benefit analysis.

Benefits and costs

The total monetized costs in the baseline scenario are 1.56 million dollars, while the total monetized costs in the regulatory scenario are 1.20 million dollars. This results in a net benefit or a cost saving of 0.37 million dollars and a benefit-cost ratio of 1.31.

Analytical framework

The costs and benefits were analyzed over a 10-year analytical timeframe from 2020 to 2029 and discounted to 2020 using a 7% discount rate. All estimates presented in the following section are in present value 2019 Canadian dollars.

The analysis presents the costs associated with the baseline and regulatory scenarios, which allows for the determination of the total incremental effects of the amendments. In the context of this amendment, the baseline scenario is the one where the Carbon Dioxide Standard is not adopted in Canada. Canadian manufacturers would therefore need to apply to a foreign certification authority such as EASA (European Union Aviation Safety Agency) to certify their type designs to the new standard. In the regulatory scenario, the Carbon Dioxide Standard is adopted in Canada, and Canadian manufacturers would apply to TC for certification to the new standard, as they do with all other emissions standards.

It is important to note that this analysis does not estimate any carbon dioxide emission reductions as a result of the publication of these Regulations as it is the expectation that manufacturers will meet the standard in both the baseline and regulatory scenarios.

Affected stakeholders

It is expected that three Canadian manufacturers of aeroplanes will incur costs as a result of this amendment. Across these three manufacturers, it is assumed that five existing type designs and one new type design will be certified over the 10-year analytical timeframe. The estimated schedule of type design certification is laid out in Table 1.

Table 1: Estimated type design certification schedule
  2020–2023 2024 2025 2026 2027 2028 2029
Existing type designs - 2 - - 3 - -
New type designs - - - - 1 - -

The Government of Canada (the Government), more specifically TC, will also be an affected stakeholder as there are costs associated with implementing or not implementing the Carbon Dioxide Standard into the CARs.

Baseline and regulatory costs

In both the baseline and regulatory scenarios, manufacturers will incur identical costs related to demonstrating compliance for certification. For existing type designs, manufacturers will employ a modelling analysis to demonstrate compliance, and it is estimated to cost roughly $10,000 per design. This will include a modification to an existing in-production aeroplane, or a case where the manufacturer voluntarily chooses to certify an in-production aeroplane that has not had any change to the new Carbon Dioxide Standard. For new type design certification, manufacturers would incur an estimated pre-certification cost of $100,000. This higher cost is due to the need for flight testing to demonstrate compliance when developing a new type design. As these compliance costs are identical in both the baseline and regulatory scenarios, there is no resulting incremental cost.

Baseline costs

As described above, the baseline scenario is one in which this amendment is not put in place, which would mean Canadian manufacturers would need to go to an out-of-country certification body such as EASA to certify their type designs. In this scenario, manufacturers would incur a total monetized cost of 0.90 million dollars in fees to EASA as well as incurring an estimated $56,310 associated with the travel of EASA officials. There would also be Government costs for TC, associated with the administration of the foreign certification. These Government costs are estimated to be 0.61 million dollars. In total the monetized costs in the baseline scenario are estimated to be 1.56 million dollars in present value over the 10-year analytical timeframe.

Baseline industry costs

If Canada does not implement the Carbon Dioxide Standard, manufacturers would need to have their aeroplanes certified by a regulator in another country and would therefore incur two major costs: domestic flat fee and travel costs. As the cost of certification to the new Carbon Dioxide Standard is minimal in comparison to the total cost of manufacturing aeroplanes, even if it must be done out of country, it is assumed that all six type designs presented in Table 1 would still be certified over the 10-year analytical timeframe.

It is estimated that manufacturers would be required to pay fees to EASA of between 19,520 euros and 39,030 euros footnote 8 ($37,149 and $57,140 in Canadian dollars) footnote 9 per existing in-production type design for certification by the foreign certification authority. These are the fixed EASA fees for European domestic manufacturers footnote 10 and are determined by the weight of the aeroplane. The total industry cost associated with flat fee payments to EASA for existing type designs is estimated to be $138,201 in present value over the 10-year period.

The flat fee for EASA certification for a new type design is estimated to be 0.89 million euros ($1.31 million in Canadian dollars) footnote 11 for European domestic manufacturers. As presented in Table 1, this new type design is expected to occur later in the analytical timeframe (2027). The total industry cost associated with flat fee payments to EASA for new type designs is estimated to be 0.76 million dollars in present value over the 10-year period.

Manufacturers would also be required to pay for all travel costs for EASA officials coming to Canada to provide certification. It is estimated that for each type design certification, in-production or new, manufacturers would incur $15,000 dollars in travel costs. The total industry cost associated with EASA travel is estimated to be $56,310 in present value dollars over the 10-year period.

Furthermore, the certification of Canadian airplanes to the Carbon Dioxide Standard by EASA would likely have to wait until EASA has conducted the certification of its own domestic manufacturers. This could potentially result in a competitive disadvantage for Canadian manufacturers, as they may incur significant delays in achieving certification and therefore sales of their products.

Baseline government costs

TC would incur administrative costs associated with Canadian manufacturers certifying their type designs through a foreign certification body such as EASA, as it would have to be the intermediary and submit the application to the foreign authority on behalf of its domestic applicants. This would require increased effort on the part of TC’s National Aircraft Certification (NAC) team, in the order of 0.5 full-time equivalents (FTEs) per year over the 10-year period.

The work would be completed by engineering specialists (ENG-04) and engineering managers (ENG-05). It is estimated that 80% of the work required would be completed by those classified as an ENG-04, with the remaining 20% being completed by employees in the ENG-05 classification. In order to account for overhead and potential travel associated with these incremental tasks, an additional 50% on top of the salaries has been included in the estimated costs. These dollar estimates are provided in Table 2.

Table 2: Salary estimates
Job Classification Estimated Salary Salary + 50%
ENG-04 $112,186 $168,279
ENG-05 $128,806 $193,209

Over the 10-year period, it is estimated that the total government costs in the baseline scenario would be 0.609 million dollars.

Regulatory costs

As described above, the regulatory scenario is that in which the Carbon Dioxide Standard is implemented in Canada, allowing Canadian manufacturers to certify their aeroplanes domestically. TC is expected to incur costs due to increasing resources in the National Aircraft Certification team. Total monetized costs in the regulatory scenario are expected to be 1.19 million dollars in present value over the 10-year analytical timeframe.

Regulatory industry costs

It is estimated that the certification of both existing and new type design certification will not result in any further fees paid by industry to TC. The total cost of certification per type design in Canada is capped at a specified level, and the applicant (the manufacturer) will have expended this amount during the process well before the certification to the Carbon Dioxide Standard occurs.

Industry may incur minor costs associated with paying for the travel of TC officials to the United States (U.S.) to facilitate the certification of their type designs. This is because some of the manufacturers have facilities or do flight testing in the U.S. Each type design being certified that requires U.S. travel would result in roughly $5,000 in fees paid from industry to government. It is estimated that four of the six type designs in question will require travel. The total estimated cost for TC travel paid by industry is $12,295.

No change in the production or maintenance processes for manufacturers is expected. In both the baseline and regulatory scenario, all affected manufacturers are expected to implement these changes to their processes. As a result, there will not be different equipment or expertise required in the regulatory scenario as composite materials are already being used that will help meet the standard. Adopting the standard will formalize design activities that are already being undertaken. Therefore, there are no incremental production or manufacturing costs associated with the introduction of these amendments.

Regulatory government costs

TC will incur costs associated with these regulatory amendments. TC’s NAC team will be performing most of the incremental work identified for this proposal. It is estimated that the total discounted costs to government over the 10-year analytical timeframe will be 1.19 million dollars.

The type of activities that TC’s NAC team will be involved in throughout the course of a specific type design application will include initial briefings from the applicant, certification plan review and acceptance, and establishing and fulfilling the level of involvement for the application. The level of involvement may include activities such as test plan acceptance, test witnessing, reviewing and accepting test/analysis reports, compliance plans and compliance reports, as well as other certification-related tasks to ensure the applicant is able to show compliance with the new standard.

Furthermore, there will be work related to delegations for each Design Approval Organization (DAO) to establish the letter of authorization for appropriate Authorized Persons for the new standard.

In the first three years in the analytical timeframe (2020–2022), the workload necessary will be the equivalent of 0.5 FTEs. Between 2023 and 2025 (years 4–6 of the analytical timeframe), TC’s workload will increase. Over these four years, it is estimated the work required will be the equivalent of one (1) FTE. Between 2026 and 2029 (years 7–10 of the analytical timeframe), it is anticipated TC’s involvement will increase further. It is estimated that this level of effort will be the equivalent of 1.5 FTEs. Table 3 below presents the estimated government effort as a function of FTEs over the 10-year analytical timeframe.

Table 3: Estimated government effort in FTEs
  2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Effort (FTEs) 0.5 0.5 0.5 1.0 1.0 1.0 1.5 1.5 1.5 1.5

Similar to the baseline scenario, it is assumed that 80% of the work will be completed by employees at the ENG-04 level, while 20% will be completed by employees at the ENG-05 level. As was the case in the baseline scenario, a 50% overhead is used.

Cost-benefit statement

The total monetized costs savings, i.e. the regulatory costs minus the baseline costs, associated with these amendments are estimated to be $366,196. The benefit-cost ratio or the cost savings over costs ratio is 1.306.

Table 4: Monetized regulatory costs (x 1 000)
Impacted Stakeholder Description of Cost 2020 2024 2027 2029 Total
(Present Value)		 Annualized
Value
Industry TC travel costs $0 $4 $9 $0 $12 $2
Government TC National Aircraft Certification $81 $124 $151 $132 $1,185 $169
All stakeholders Total costs $81 $127 $160 $132 $1,197 $170
Table 5: Monetized baseline benefits (avoided costs) [x 1 000]
Impacted Stakeholder Description of Benefit 2020 2024 2027 2029 Total
(Present Value)		 Annualized Value
Industry Fees to foreign certification body $0 $73 $826 $0 $898 $128
EASA travel costs $0 $21 $35 $0 $56 $8
Government Administration $81 $62 $50 $44 $609 $87
All stakeholders Total benefits $81 $157 $911 $44 $1,564 $223
Table 6: Summary of monetized costs and benefits (x 1 000)
Impacts 2020 2024 2027 2029 Total
(Present Value)		 Annualized Value
Total costs $81 $127 $160 $132 $1,197 $170
Total benefits
(avoided costs)		 $81 $157 $911 $44 $609 $87
NET IMPACT $0 $29 $751 ($88) $366 $52
Qualitative impacts
Positive impacts

Small business lens

The small business lens does not apply as there are no associated impacts on small businesses. None of the three aeroplane manufacturers deemed in-scope of the regulatory amendment are considered small businesses.

One-for-one rule

The one-for-one rule does not apply, as the amendment does not increase or decrease administrative burden on business. In both the baseline and regulatory scenarios, it is expected that manufacturers will comply with the standard. The administrative burden is not greater in the regulatory scenario than it is in the baseline scenario; therefore, there is no anticipated increase in administrative burden associated with the introduction of the amendments.

Regulatory cooperation and alignment

The amendment will align Canada with international standards, by harmonizing the CARs with ICAO’s standards and with those of other certification authorities. Reducing greenhouse gas emissions is a priority for the Government of Canada. Canada has committed to implementing this Carbon Dioxide Standard.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified for this amendment.

Rationale

The amendment brings Canada into compliance with ICAO’s new aeroplane Carbon Dioxide Standard and is a means to address greenhouse gas emissions from aviation.

The amendment benefits Canadian manufacturers by ensuring that they meet international standards and are able to market and sell their aeroplanes internationally. Implementation of the Carbon Dioxide Standard ensures Canada is in compliance with its international and domestic commitments to reduce carbon dioxide emissions by aligning Canada’s regulatory framework with the ICAO Carbon Dioxide Standard. Implementation also supports the priorities and objectives of Canada’s Climate Plan 2020.

Implementation, compliance and enforcement, and service standards

The amendment comes into force on the day it is published in the Canada Gazette, Part II.

Under section 6.8 of the Aeronautics Act, the Minister may refuse to issue or amend a Canadian aviation document. This section is applicable to any design approval that is subject to the conditions contained in this amendment.

Contact

Chief
Regulatory Development
Regulatory Affairs Branch
Civil Aviation
Safety and Security Group
Transport Canada
Place de Ville, Tower C
Ottawa, Ontario
K1A 0N5
Telephone: 613‑990‑1184 or 1‑800‑305‑2059
Fax: 613‑990‑1198
Email: carrac@tc.gc.ca
Website: www.tc.gc.ca