Canada freezes CO2 emissions targets for cars until 2029

The Canadian government is freezing fleet emission targets for passenger cars and light commercial vehicles at the 2026 level through 2029. This move aims to give automakers more flexibility. However, stricter annual targets are set to resume starting from the 2030 model year.

Stellantis plant in Ontario, Canada

Image: Stellantis

The decision is part of a joint package of measures by the Canadian federal government and the province of Ontario, which was introduced on October 21. Under it, the limit for greenhouse gas emissions per vehicle remains at 172 grams per mile, which is approximately 107 grams per kilometer. Annual tightening measures are set to take effect again starting from the 2030 model year. To achieve the goal of 75 percent electric vehicle sales by 2035, the fleet target is to eventually drop to 74 grams of CO2 per mile, or about 46 grams per kilometer.

The governments cite the industry’s challenging situation as the reason for the pause. “Maintaining a fleet-based average provides manufacturers with short-term flexibility at a time when the industry is under trade-related pressure,” states the joint statement by Canadian Prime Minister Mark Carney and Ontario Premier Doug Ford. Additionally, manufacturers could build up greenhouse gas credits for future years while gradually improving the emissions profile of their vehicles and their fuel efficiency.

Canada wants more flexibility for the auto industry

The relaxation of emission standards is accompanied by additional government support for Canada’s automotive industry. The federal government and the province of Ontario plan to provide another 2.5 billion Canadian dollars (approximately 1.6 billion euros) over two years for larger investment projects. Up to 1.5 billion dollars are expected to come from the federal government, and up to 1 billion dollars from Ontario. These funds are intended to help companies adapt to changing economic conditions, enhance their competitiveness, and secure jobs throughout the supply chain.

The underlying factors are primarily the trade policy pressures from the U.S., along with the 25 percent tariffs imposed in March 2025 on imports of cars and auto parts from Canada to the U.S., tariffs that the Trump administration may even intend to raise further. Canadian Prime Minister Carney said during the introduction of these plans that Canada’s car exports to the U.S. have declined by more than 10 percent since then, while U.S. exports to Canada have fallen by over 20 percent. The components of an average car crossed the border between the two countries as many as eight times. “Their course has changed — and ours must too,” Carney said, referring to the U.S. administration.

The Canadian auto industry is closely linked to U.S. production and faces pressure since U.S. President Donald Trump’s trade policies have strained cross-border supply chains. Ontario is the heart of Canada’s auto industry. The provincial government under Doug Ford has repeatedly warned about negative consequences for competitiveness and employment due to stricter regulations.

The current decision builds on the reorientation of Canada’s automotive strategy announced in February. At that time, Carney’s government eliminated the mandatory sales quotas for electric vehicles or zero-emission vehicles that had been introduced under his predecessor, Justin Trudeau. Instead, Ottawa focused on stricter greenhouse gas targets for vehicle fleets, purchase incentives, and the expansion of charging infrastructure. The goal of achieving 75 percent electric vehicle sales among new car purchases by 2035 remained in place — though as a political target rather than a mandatory sales quota.

Criticism of Delay in Emission Reductions

The further delay in implementing stricter regulations has drawn criticism from environmental and energy organizations. Clean Energy Canada warned that the pause would increase pressure on the remaining years and could make it harder to achieve long-term goals. The organization also pointed out potential consequences for the adoption of electric vehicles, investments in charging infrastructure, and household fuel costs.

The Pembina Institute also doubted that the goal of 75 percent electric vehicle sales by 2035 was still achievable under the changed circumstances. The auto industry, however, welcomed the additional time frame. Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers’ Association, said the measures created a more predictable and competitive regulatory environment that could help protect jobs, production, and investments.

It remains uncertain whether Canada can achieve its target electric vehicle share despite the extended delay. While the government sticks to the long-term goal, it is pushing some of the regulatory pressure back to after 2030. This gives manufacturers more flexibility in the short term — yet emission targets will need to drop significantly in the coming years if the 2035 goal is to be met.