Impact of Canada’s Voluntary Agreement on Greenhouse Gas Emissions from Light Duty Vehicles

On April 5, 2005, a voluntary agreement between the automobile industry and government officials of Canada was reached to commit to greenhouse gas emission reductions through the year 2010. This report compares Canada’s voluntary agreement with other voluntary and mandatory greenhouse gas reduction programs around the world in terms of what technologies are likely to be deployed and how much vehicle fuel consumption is likely to improve. It investigates various methods and measurement approaches for implementing the agreement, incorporating the potential effects of criteria pollutant emission reductions, fuel use modifications (including the effects of lower sulfur fuels and ethanol), and vehicle technology adoption (including mobile air conditioning systems). The findings of this study suggest that the decisions of the official MOU oversight committee on how to credit various existing automobile technology trends could substantially impact total emission reductions and the deployment of fuel efficiency technology in Canada. Based on the committee’s determinations, Canada’s voluntary agreement could result in substantially improved fuel economy, or it could have little or no effect. This analysis raises broader questions regarding the efficacy and effectiveness of voluntary agreements, relative to regulatory initiatives.