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Policy
| 11/02/16

Quebec requires carmakers to offer zero-emission vehicles

TCE

Quebec is to require that carmakers offer a minimum number of zero-emission vehicles for sale under a new law passed last week, the first Canadian province to adopt such legislation.

Starting in 2018, 3.4 percent of all cars sold or leased by automobile manufacturers must be plug-in electric, hybrid or hydrogen fuel-cell vehicles. The required market share of such models is to rise to 6.9 percent in 2020 and 15.5 percent in 2025.

Plug-in-electric vehicles currently represent just 0.7 percent of all new vehicle sales in the province.

Quebec is the first Canadian jurisdiction to approve such a law, although ten US states have zero-emission vehicle (ZEV) mandate legislation, notably California, which pioneered the concept. That state hopes to achieve a 15 percent market share for clean vehicles by 2025, while Oregon and eight northeastern seaboard states make up the remainder.

ZEV mandate laws aim to increase the supply of available zero-emission models on the market. But they cannot force customers to purchase them. If a company is not able to or does not choose to meet the target, they may purchase credits from companies who have exceeded the target, such as Tesla Motors, which only produces electric vehicles.

Under the proposed Quebec system—which was approved unanimously in the National Assembly but whose details have yet to be ironed out—a company would not receive just one credit if they sell one clean car. Instead, they can receive between 0.3 and 1.1 credits, with cars enjoying the furthest range offered the most.

To make it easier for manufacturers, the province will allow firms to accumulate credits for vehicles sold from 2014-2017 that can be counted towards the 2018 target.

Tesla has benefited substantially from such a tradable-credit structure, as many firms have felt that purchasing credits is cheaper than developing new clean-vehicle models. The firm owned by serial entrepreneur Elon Musk has reported some $600 million in the sale of such credits. Indeed, Tesla lobbied Quebec lawmakers heavily in favour of a ZEV mandate law.

The mandate in California has been successful in increasing the number of clean vehicle models on the market, expected to climb from a current 58 to 92 by 2018. But the system has also resulted in companies like Tesla being so successful that the market is swamped with a glut of clean-vehicle credits. Firms are able to meet their full mandate requirement with such cars representing just six percent of their fleets. Overall, plug-in electric (meaning both plug-in hybrid electric and fully battery electric vehicles) make up four percent of all new sales in the state. As a result, California lawmakers are currently considering upping the target to soak up the glut, a move that automakers are resisting.

Quebec’s latest move comes atop existing incentives of up to $8,000 for car buyers aiming to increase demand, not just supply.

 

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Quebec is first Canadian province to require carmakers offer a minimum number of zero-emission vehicles for sale

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