1225 I Street NW

Suite 900
Washington DC 20005
+1 202.534.1600
www.theicct.org

May 17, 2017

Stphane Couroux, Director

Transportation Division
Energy and Transportation Directorate
Environmental Protection Branch
Department of the Environment
351 Saint-Joseph Boulevard, 13th Floor
Gatineau, Quebec K1A 0H3

Re: Proposed Regulations Amending Greenhouse Gas Emissions Regulations and Other
Regulations Made Under the Canadian Environmental Protection Act, 1999

Dear Mr. Couroux,

The International Council on Clean Transportation (ICCT) welcomes the opportunity to provide
comments on Environment and Climate Change Canadas (ECCC) proposed rulemaking for
heavy-duty vehicle greenhouse gas (GHG) emission standards. The ICCT is an independent
nonprofit organization founded to provide unbiased research and technical analysis to
governments in major vehicle markets around the world. Our mission is to improve the
environmental performance and energy efficiency of road, marine, and air transportation, as well
as their fuels, in order to benefit public health and mitigate climate change

We commend ECCCs strong technical work and proposal to align its rulemaking with the
regulation finalized by the U.S. Environmental Protection Agency (EPA) and the National
Highway Traffic and Safety Administration (NHTSA) in October 2016.

We would be glad to clarify or elaborate on any points made in the attached comments. If there
are any questions, ECCC staff can feel free to contact our Canada lead, Ben Sharpe
(ben@theicct.org).

Best regards,

Drew Kodjak,
Executive Director
International Council on Clean Transportation

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International Council on Clean Transportation comments on the
Proposed Regulations Amending Greenhouse Gas Emissions
Regulations and Other Regulations Made Under the Canadian
Environmental Protection Act, 1999

Public submission to

Environment and Climate Change Canada

May 17, 2017

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Summary of comments

Our comments are organized in terms of three issues: 1) recognizing the positive impact of this
proposal for continuing the alignment of heavy-duty GHG regulatory programs in Canada and
the U.S., 2) emphasizing our support of the proposed compliance procedures requiring
accounting based on sales-weighted averaging within the Canada market, and 3)
recommending ECCC continue to collect as much data as possible on heavy tractor-trailers.
We address each of these three issues in the following sections.

1. Benefits of continued U.S.-Canada regulatory alignment

The U.S. and Canada vehicle markets are highly integrated, and we are very encouraged
ECCC is proposing standards highly aligned with the U.S. regulation in all the key areas of
regulation, including regulatory timing, stringency, and test procedures. Following the model of
the Phase 1 standards, the development of harmonized Phase 2 standards is critical for
seamless coordination of industry investment, marketing, and deployment of new emission-
reduction technologies across the U.S. and Canada. Close alignment will also minimize the
administrative burden for both regulators and manufacturers. The Canada proposal is
continuing this strong example for the substantial simultaneous public and private benefits that
come from aligned regulations.

Beyond North America, engines and vehicles are sold in a global marketplace by globally
focused manufacturers, which makes the case for policy alignment increasingly attractive to
help achieve multiple objectives:
1. Higher sales volume for manufacturers for deploying common technology over a larger
market to recover capital investments throughout new products lifecycle (i.e., through
research and development, testing, certification, marketing, distribution, etc.).
2. Lower per-unit technology cost to suppliers and manufacturers due to higher economies of
scale, and therefore lower overall regulatory compliance costs.
3. Reduced vehicle operator expenses as lower-cost technology packages make their way
into the market, meaning improved payback period and return on investment for fleets.
4. Greater environmental cost-effectiveness in terms of reduced emissions or petroleum
consumption per financial investment (or per vehicle).
5. Greater overall environmental benefits, as low-emission technologies reach additional
markets and achieve higher volumes (including additional spill over into other markets in
which the same manufacturers conduct business).

Unlike the passenger vehicle sector, the heavy-duty vehicle industry is distinguished by
relatively high capital costs for vehicle development and relatively low sales volumes. The
addition of powertrain improvements and vehicle road load reduction technologies (e.g.
aerodynamic enhancements, lower rolling resistance tires, and reduced weight vehicle
components) result in increased purchase prices. The ability to spread costs over a multi-
national/regional marketplace allows for the accelerated introduction of these advanced
technologies, which is attractive from both a commercial as well as an environmental
perspective. This win-win for industry and society is a compelling justification for aligning
national regulatory programs, and ECCCs proposal represents a continuation of the highly
effective harmonization that began in the first phase of GHG regulations for heavy-duty vehicles

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in the U.S. and Canada.

2. Importance of Canada-specific sales-weighted averaging

The ICCT is very supportive of the ECCC proposals stipulation that manufacturers and
importers of heavy-duty vehicles meet the standards based on sales-weighted averaging in the
Canada market. The ICCT believes independent Canada-specific compliance is important to
ensure the certainty of the rules emissions reductions, fuel savings, and economic benefits for
Canada.

It is important ECCC, as well as other government agencies and stakeholders, can

independently understand and verify changes in vehicle technology and the associated
emission and energy consumption effects. There does not seem to be any evidence that
tracking sales by engine and vehicle model in Canada and preparing regulatory compliance
reports for ECCC represented a significant burden to industry under the Phase 1 regulation.
Canada-specific compliance and reporting allows for far more accurate accounting of how new
vehicle performance standards translate into real-world emission benefits. While a Canada-
specific ABT program does not necessarily provide greater GHG or petroleum reductions, it
does provide critical assurances the regulatory program is yielding accurately quantifiable
impacts.

Specific to the engine dynamometer-based standard, certain stakeholders have stated that the
updated Greenhouse gas Emissions Model (GEM)which requires detailed engine
specificationsmakes engine-specific sales averaging and emissions accounting unnecessary.
Unlike the Phase 1 GEM simulation tool, which used generic engines that corresponded with
each vehicle regulatory subcategory, the Phase 2 GEM requires comprehensive engine data
based on a standardized engine mapping procedure. The position of these stakeholders is that
because detailed engine characteristics are now captured in GEM, there is no need to continue
the engine-specific averaging, banking, and trading (ABT) program. Our analysis indicates that
there are two key reasons why an engine-specific ABT program is warranted:
1) As in the Phase 1 regulation, methane (CH4) and nitrous oxide (N2O) cap limits (i.e.,
maximum levels allowed in term of grams per brake-horsepower) are also requirements
for engines in the proposed Phase 2 standards. A flexibility provision of the CH4 and N2O
standards are that manufacturers can over-comply with the CO2 standard and use those
CO2 credits if that engine exceeds the CH4 or N2O limit. A manufacturer choosing this
option would use global warming potential (GWP) values to convert its measured CH4
and N2O test results that are in excess of the applicable standards into CO2-equivalents
to determine the amount of CO2 credits required. As such, the engine-specific ABT
program is needed in Canada to maintain this flexibility mechanism and regulatory
alignment with the EPAs final Phase 2 standards.
2) Continuing the ABT program for engines allows ECCC to accurately track how engine
emissions and sales-weighted averages have changed from Phase 1 to Phase 2. Given
that the same test cyclesi.e., the heavy-duty Federal Test Procedure (FTP) and the
Supplemental Emissions Test (SET)from the Phase 1 regulation are proposed for the
Phase 2 standards, the engine-specific ABT program in Phase 2 will allow ECCC to
closely monitoring fleet-wide engine emissions trends.

As evidenced in Phase 1, the added planning and administrative costs to the heavy-duty vehicle

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industry of compliance reporting to ECCC is orders of magnitude lower than the costs of
developing, engineering, testing, marketing, and deploying efficiency technologies to comply
with the standards. The clear policy benefits of increased data accuracy, transparency, and
quantifiable environmental benefits easily justify the marginal increase in regulatory burden of
Canada-specific compliance and reporting. Moreover, ECCC has and will continue to
emphasize efforts to minimize the administrative burden on manufacturers and importers by
maintaining streamlined reporting procedures with the U.S. EPA and providing several Canada-
specific flexibility mechanisms.

3. Increased data collection on population and VMT of heavy tractor-trailers

Whereas the large majority of tractor-trailers in the U.S. have a gross combined vehicle weight
(GCVW) of 80,000 lbs. or less, Canada has a much larger percentage of heavy tractor-trailers
rated up to 140,000 lbs. or more. As such, ECCC is proposing additional requirements for these
tractor trucks designed for very heavy loads.

While the U.S. regulation has optional standards for tractors rated for 120,000 lbs. GCVW or
more, ECCC has proposed mandatory CO2 limits for two categories of heavy tractors: heavy
line haul tractors, which are defined as being able to support a gross combined vehicle weight
(GCVW) of between 120,000 and 140,000 lbs., and heavy-haul tractors, which are rated for
greater than 140,000 lbs.

The ICCT is supportive of ECCCs proposed mandatory limits for heavy line haul and heavy-
haul tractors. In the case of heavy line haul, many of these tractor-trailers are used in similar
duty cycles as those less than 120,000 lbs. and can realize the cost-effective benefits of
technologies such as aerodynamic improvements, low rolling resistance tires, and idle reduction
features.

From the consultation workshop on April 11th, 2017, it seems certain industry stakeholders
would like ECCC to revise the GCVW definitions of heavy line haul and heavy-haul tractors.
Given this recommendation, we encourage ECCC to continue to seek out data to better help
characterize the distribution of tractor-trailers in Canada in terms of weight distribution, activity
levels, and fuel consumption. Further analysis will help shed light on whether a modification of
the heavy tractor subcategories would be better aligned with the situation in Canada.

Conclusions

Overall, we commend Environment and Climate Change Canada for proposing its second
phase of standards for controlling GHG emissions from heavy-duty trucks and buses. The
impacts of the standards, in terms of reduced GHG emissions and petroleum consumption and
the associated economic benefits, will be profound for many decades to come. In addition, the
regulatory harmonization with the U.S. standards meets the primary industry demand to allow
for a coordinated, cost-effective technology deployment strategy. By mandating manufacturers
to independently track and monitor their sales in Canada, these proposed standards would
allow for appropriate and accurate accounting of Canadas actual progress toward reducing
GHG emissions and petroleum consumption. In turn, these improved quantifications of real-
world impacts will allow Canada to report on its progress towards the national goals for climate
change mitigation and energy use. These continued efforts in deploying regulatory programs for

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on-road commercial vehicles provide an excellent foundation for sustained long-term GHG and
energy efficiency programs in North America that provide further environmental, energy, and
economic benefits.

Thank you very much for the chance to provide comments on Canadas proposed Phase 2
heavy-duty vehicle GHG regulation. We are looking forward to working with Environment and
Climate Change Canada in finalizing this rulemaking and look forward to participating in future
efforts that will strengthen this program.