Market Snapshot: Vehicle emissions standards will reduce gasoline use

Release date: 2018-07-18

Fuel economy for light duty vehicles sold in Canada is projected to improve roughly 40% between 2011 and 2025Footnote 1. The improvements result from Canada’s greenhouse gas emission regulations set out in the Passenger Automobile and Light Truck Greenhouse Gas Emissions Regulations under the Canadian Environmental Protection Act, 1999. The regulations set limits on the grams of carbon dioxide, or CO2 equivalent emissions per mile for each manufacturer’s vehicle fleet and covers vehicle model years 2011-2025 with increasingly more stringent targets.Footnote 2 The regulation is harmonized with the U.S. fuel economy standards.

Calculated fuel economy, shown on the graph below, is an estimate based on the required emissions reductions.Footnote 3 Canada’s vehicle emissions regulations are expected to reduce gasoline demand in the projection period. In Canada’s Energy Future 2017 report, gasoline consumption is projected to decrease 8% from 2011 to 2025 despite an 11% population increase and more cars on the road. The graph below shows the trend of calculated fuel efficiencies for trucks and cars over the time period of the regulations. The full impact of the 2011-2025 standards would appear after 2025 due to the slow pace of vehicle turnover. Existing vehicles could be on the road for many years, possibly decades, before they are replaced with newer, more efficient models.

Source and Description

Source: U.S. National Highway Transportation Safety Authority (NHTSA), NHTSA 2017-2025, Canada’s Energy Future 2017, NEB calculations

Description: The line graph shows both passenger car and light truck fuel economy improving over the time period 2012-2025. For cars, estimated average fuel economy improves from 7.4 litre/100km in 2012 to 4.4 litre/100km in 2025. For trucks, fuel economy improves from 9.7 litre/100 km to 5.7 litre/100km. The graph also shows gasoline consumption from 2012 to 2025. Yearly gasoline consumption is shown to decline from 1 413 PJ in 2012 to 1 299 PJ in 2025. Data for 2017–2025 are projections.

While the automotive emissions standards are a major influence on gasoline consumption, other factors are influencing long-term transportation fuel demand. These include changing demographics, consumer preferences, and driving habits. For example, the increasing popularity of large vehicles puts upward pressure on gasoline demand, while emphasis by government on public transit and urban planning has a lowering influence.

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