Quebec takes the road less travelled on zero emissions

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Automakers agree with the goals, just not the approach of some governments.

By the time this column is published, we may actually have the regulations for Bill 104 in Québec, otherwise known as “An Act to increase the number of zero emission vehicles in Québec in order to reduce greenhouse gas and other pollutant emissions” that was introduced and passed in the National Assembly last fall.   

If not the regulations, at least we might have a copy of the final legislation that received Royal Assent on October 26th but still remains unpublished in its final form — or not.

Unfortunately owing to the government lawyers’ and notaries’ strike which has been ongoing since late October last year, Bill 104 and its attendant regulations have been one of more than 16 pieces of legislation and over 60 regulatory amendments that have been stalled, according to media reports. The strike shows no signs of imminent resolution, so we wait.

While the final form of the legislation can be pieced together by taking the original Bill 10 and the separate amendments passed by the National Assembly and consolidating them, there is no real way to know for certain what’s in the regulations.   

Why are the regulations important?   

Well, because the legislation cannot be brought into effect until the supporting regulations are developed and implemented.

Moreover, most of the details for this Bill that sets out the requirements for a zero emission vehicle mandate, are found in the regulations.   

So, for instance, the regulations will prescribe things like: credit values; how the credits are calculated; how credits are verified; fines and penalties; classification of vehicles; information to be reported to government concerning zero emission vehicle sales; and the form of that reporting.   

All of these very important and pertinent details are in the currently non-existent regulations.

The challenge for the automotive industry is that the legislation as passed is applicable for the 2018 Model Year, which started in January of this year.    

Thus, manufacturers are in the unenviable position of being held accountable under the legislation for ensuring that the sale of plug-in hybrid electric, battery electric, and fuel cell electric vehicles  generate an unknown number of necessary credits to allow them to comply with the unknown standard.   

As noted, those details have yet to be articulated in the regulations, so you can see the pickle the situation creates for the industry.

Any plans automakers would have made for the production and allocation of 2018 model year vehicles would have been finalized long before the legislation was first introduced – let alone passed. 

It is of little comfort to the automotive industry that they are not alone in legal limbo awaiting final copies of Bills and regulations.

In fact, even without the lawyers’ strike there was heartburn within the industry over the fact that the Bill — introduced in 2017 — mandated a credit mechanism requiring manufacturers to have plug-in hybrid electric, battery electric and fuel cell electric vehicles  beginning with the 2018 model year.    

For those of you remotely familiar with product planning within the automotive industry, you know that that process is not simply a flick of the switch process.

Any plans automakers would have made for the production and allocation of 2018 model year vehicles would have been finalized long before the legislation was first introduced – let alone passed.   

Further, because we likely won’t know the essential details of the credit requirements to facilitate compliance with the Bill until likely sometime after the first quarter, even if we could simply flick the switch to secure more PEVs and FCEVs a significant chunk of 2017 (2018 MY) has been lost due to lack of detail.

To be fair, government officials have suggested that the industry has all of the detail that it needs because all we need to do is to look at the zero emission vehicle legislation in California because Québec has simply copied California’s regulations.   

The only way to “sense check” whether that is accurate or not is to take a look at both the California regulation and the cost benefit analysis the Ministry of Sustainable Development, Environment and the Fight Against Climate Change undertook in support of the Bill last year.   

A review of that document — which is essentially the only document that provides any indication with respect to the orientation of the government’s thinking on this matter — reveals that while the intention for Bill 104 is to be similar to the “new” California ZEV mandate for 2018, it is not going to be the same.   

There are differences in retroactive credit accumulation, reporting, and credit percentages required for the 2018 MY through the 2020 model year.  While the last difference is intended to help manufacturers — perhaps in recognition that California has been at the ZEV mandate for over 20 years while Québec is just starting, this adjustment in favour of the industry in no way makes compliance any easier with the cost benefit analysis modelled after California effectively being more difficult to achieve than California’s.

That’s not typical automotive industry rhetoric and no one should misconstrue any of what I have noted to imply that I am anti-EV.   

I think all of us in the industry know that the future of the automotive industry is decarbonized.

We agree with governments on the environmental goal for personal transportation, where we get hung up is on both “how” to achieve that goal, and “how long” that will take.   

Automotive consumers will not for much longer, tolerate personal transportation which adversely impacts their life via demonstrable and destructive climate change.   

If automakers are to succeed in the future they will need to respond to not only their customers’ environmental proclivities but also their changing mobility habits and desires.   

We agree with governments on the environmental goal for personal transportation, where we get hung up is on both “how” to achieve that goal, and “how long” that will take.   

Québec has taken the road less travelled by being the only jurisdiction in Canada to implement what is essentially a supply-side solution to the issue of how to increase the number of zero emission and near zero emission vehicles on the road as well as the time frame to get there.    

It needs to be noted as well that ZEV’s are neither the most cost effective, nor the most effective mechanism for reducing GHG emission from personal transportation.

The other two significant jurisdictions in Canada that have any sizeable quantity of zero emission vehicles and near zero emission vehicles on the road have taken a different approach and have recently announced changes to the Electric Vehicle Incentive Program in the case of Ontario, to renewed funding for the Clean Energy Vehicle Incentive Program and increased funding to provide an incentive for the purchase of ZEV when a consumer scraps and older vehicle under the very successful Scrap-it program in British Columbia.

The approach of both Ontario and British Columbia is to stimulate consumer demand for the ZEV’s through incentives to reduce the cost of the still nascent advanced propulsion technology to make it more comparable with what a consumer would pay for a conventional vehicle.    

This approach, combined with educational efforts and a government/industry commitment to collaboration for success in each of the two jurisdictions, should result in a successful outcome because it is in the DNA of auto manufacturers to be very quick to pick up on, and adjust to, marketplace demand

Québec is on a road less travelled, and that may indeed make all the difference — between demand initiatives implemented elsewhere — and a supply initiative which has significant potential to disrupt and distort the Québec automotive marketplace to the detriment of consumers.

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