Canada freezes CO2 standards for passenger cars until 2029
Canada's government is freezing fleet emission standards for passenger cars and light commercial vehicles at 2026 levels through 2029. This move aims to give automakers more flexibility. However, annual tightening of standards will resume starting with the 2030 model year.
Stellantis plant in Ontario, Canada
Image: Stellantis
The decision is part of a joint package of measures introduced by the Canadian federal government and the province of Ontario on 21 October. Under the plan, the fleet-wide greenhouse gas emission limit will remain at 172 grams per mile, equivalent to approximately 107 grams per kilometre. Annual tightening of the standards will resume only from the 2030 model year. To achieve the target of 75 per cent electric vehicle sales by 2035, the fleet average must ultimately drop to 74 grams of CO₂ per mile, or about 46 grams per kilometre.
The governments justify the pause by citing the strained situation in the industry. “Maintaining the fleet average performance standard will provide manufacturers with near-term flexibility at a time when the industry is facing trade-related pressures,” stated a joint declaration by Canada’s Prime Minister Mark Carney and Ontario’s Premier Doug Ford. Additionally, manufacturers can accumulate greenhouse gas credits for future years while gradually improving the emissions performance of their vehicles and their fuel efficiency.
Canada seeks more flexibility for the automotive industry
The relaxation of emission standards is accompanied by additional government support for the Canadian automotive industry. The federal government and the province of Ontario plan to provide a further CA$2.5 billion (approx. EUR €1.6 billion) over two years for major investment projects. Of this, up to CA$1.5 billion will come from the federal government and up to CA$1 billion from Ontario. The funds are intended to help companies adapt to changing economic conditions, strengthen their competitiveness, and secure jobs along the supply chain.
The background to this is primarily the trade policy pressures from the US and the 25 per cent tariffs introduced in March 2025 on the import of cars and auto parts from Canada to the US, which the Trump administration may increase even further. Upon the presentation of the plans, Canada’s Prime Minister Carney stated that Canada’s car exports to the US had declined by more than ten per cent since then, while US exports to Canada had fallen by more than 20 per cent. Components of an average car cross the border between the two countries up to eight times. “Your course has changed – and ours must too,” Carney said, referring to the US government.
The Canadian automotive industry is closely intertwined with US production and has been under pressure since US President Donald Trump’s trade policy began straining cross-border supply chains. Ontario is the hub of Canada’s automotive industry. The provincial government under Doug Ford had repeatedly warned of the negative consequences of stricter regulations on competitiveness and employment.
The current decision continues the realignment of Canada’s automotive strategy announced in February. At that time, Carney’s government abolished the binding sales quotas for electric and zero-emission vehicles that had been introduced under his predecessor Justin Trudeau in 2023. Instead, Ottawa focused on stricter greenhouse gas standards for vehicle fleets, purchase incentives, and the expansion of charging infrastructure. The target of 75 per cent electric vehicle sales in new car registrations by 2035 remained in place – albeit as a political benchmark rather than a binding sales quota.
Criticism over delay in emission reductions
The renewed postponement of stricter standards has drawn criticism from environmental and energy organisations. Clean Energy Canada warned that the pause would increase pressure on the remaining years and could make it harder to achieve long-term targets. The organisation also pointed to potential consequences for electric vehicle adoption, investment in charging infrastructure, and household fuel costs.
The Pembina Institute also expressed doubts that the 75 per cent electric vehicle sales target by 2035 would still be achievable under the revised framework. The automotive industry, however, welcomed the additional time. Brian Kingston, President and CEO of the Canadian Vehicle Manufacturers’ Association, stated that the measures create a more predictable and competitive regulatory environment that could help protect jobs, production, and investment.
Whether Canada can still achieve its targeted electric vehicle share despite the extended pause remains uncertain. While the government maintains its long-term goal, it is shifting some of the regulatory pressure to the period after 2030. For manufacturers, this means more short-term flexibility – but the emission standards will need to drop significantly more steeply in subsequent years if the 2035 target is to remain viable.