The Canadian government and auto makers operating in the country have reached an environmental deal that involves the companies cutting greenhouse gas emissions from their vehicles by 5.3 million tonnes by 2010, government and industry sources said.
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Officials are expected to sign an agreement within the next few weeks committing the industry to reaching that target on a voluntary basis as a way of contributing to Canada’s overall greenhouse gas reductions as part of the Kyoto Protocol on the environment.
The two sides had been in intense negotiations for months with the government holding out the threat of regulating the industry if auto makers did not make a voluntary commitment.
Canada’s environment minister Stephane Dion, had threatened earlier in the talks to force emissions cuts through regulation, but he appears to have been dissuaded by other ministers amid fears that more stringent requirements would hurt the economy in the province of Ontario, where all the auto makers are based and where all Canada’s auto assembly plants are located.
“The industry and the tax base is important and it would have been irresponsible to jeopardise that,” said one official close to the talks.
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By GlobalDataAuto makers employ just under 60,000 Canadians and are a key engine of the economy, especially in Ontario, where they account for 20% of the province’s manufacturing gross domestic product.
The companies will reduce the greenhouse gas emissions of their vehicles, mainly by improving fuel economy.
They will introduce more hybrid vehicles, use more fuel efficient technologies in existing internal combustion engines and join the Canadian government in education and advertising campaigns that will inform consumers about more fuel-efficient vehicles and encourage drivers to buy them.
So far, only Ford, General Motors, Honda and Toyota offer hybrids.
Those companies and some others, however, also offer technology that improves fuel economy by reducing the number of cylinders an engine is using when full power isn’t needed, such as when cruising on a highway.
Auto makers have been battling the government on the issue since 2002, when it declared they had to boost fuel economy by 25% as their contribution to Canada’s Kyoto commitments.
They fought the requirement and agreed to the voluntary deal instead, in part because they feared agreeing to a percentage cut would undermine a lawsuit in California, where they are trying to block tough new vehicle emission regulations.
The companies also argued that it made little sense for Canada to require them to meet Kyoto targets when the country’s largest trading partner – the United States – and destination for about 80% of the 2.6 million vehicles manufactured in Canada annually did not sign the environmental accord.
