On April 5, 2005, the Government of Canada and the Canadian automotive industry signed a major agreement on climate change. Under this Memorandum of Understanding (MOU), the Canadian automotive industry will take actions to voluntarily reduce greenhouse gas (GHG) emissions of new vehicles in Canada so that by 2010, annual emissions reductions will reach 5.3 megatonnes (Mt).

Details of the MOU

This agreement calls on the automotive industry to cut GHG emissions from light-duty vehicles (cars, minivans, sport utility vehicles and pick-up trucks) so that by 2010, annual emissions reductions will reach 5.3 Mt. While carbon dioxide (CO₂) is the primary GHG produced from fossil fuel use in vehicles, this MOU recognizes that vehicles also produce several other greenhouse gases, such as methane, nitrous oxide and hydrofluorocarbons. This agreement targets all of these gases, which are smaller in quantity than CO₂ but are more potent in terms of climate change. This approach allows the industry to use the most appropriate and cost-effective means to reduce GHG emissions associated with vehicle use. To meet this reduction target, the automotive industry has committed to significantly reduce GHG emissions from vehicles through the introduction of advanced technologies.

While the MOU is in effect until 2010, the introduction of the enhanced technologies it would foster will lead to growing reductions in greenhouse gas emissions after 2010 as new vehicles replace older ones in the vehicle stock.

Memorandum of Understanding

Joint Government/Industry Monitoring Committee

A key part of this agreement is the establishment of a joint government/industry committee (known as the Joint GHG MOU Committee) to track and report on progress to the target. The Committee consists of eight members in total, with four representatives each from government and industry and its work is primarily technical in nature. Information on the work of the committee, including progress updates and reports, will be available to the public as it is released.

As provided in the MOU, the Committee was formed in June 2005, within 60 days from signing the MOU.

Key Deliverables

1. Committee Progress Updates – Three progress updates will be published in advance of the reports on interim goals provided for in the MOU, to provide information to the public on the work of the committee and progress being made.

   Joint GHG MOU Committee report	Period Ending
   First Committee progress update	1st quarter 2006
   Second Committee progress update	4th quarter 2006
   Third Committee progress update	2nd quarter 2007

2. Report on emissions and interim goal for 2007

3. Notice of mutual termination

Independent Verification

NRCan retained a third party to carry out an independent verification of the Motor Vehicle GHG Accounting Model. This tracking model was developed to measure progress in reducing GHG emissions relative to interim goals and the final target set in the MOU between the Government of Canada and the Canadian automotive industry.

This MOU established an annual reduction target of 5.3 Mt for GHG emissions from automobiles and light-duty trucks for the year 2010 relative to a benchmark/reference level. The tracking model compared GHG emissions calculated in a Performance Case (actual level) to those calculated in a Reference Case (benchmark level) using a series of Microsoft Excel spreadsheets. The inputs to the model include Canadian data from existing federal and provincial government data collection systems, data that are publically available or that can be purchased, as well as data from recognized international bodies.

The objectives of the verification were to:

• Evaluate the choice and sources of data used to populate the tracking model;
• Evaluate the calculation methodology; and
• Evaluate the accuracy of the calculation algorithms and results within the tracking model.

The key inputs to this tracking model are as follows:

• vehicle stock and fuel consumption by class (passenger car and light truck) and model year;
• vehicle kilometres travelled by class and model year;
• vehicle fuel type (gasoline or diesel);
• adjustment factor between lab tested and actual on road fuel consumption; and
• GHG emission factors by class, fuel type and model year.

After having reviewed the proposed tracking model and supporting documentation provided by NRCan to measure progress against auto GHG MOU targets, the third party reported the following:

• The tracking model methodology and input data have been verified using the references in files that make up the tracking model, and supporting documentation;
• In general the structure and implementation of the tracking model is supported by the references provided, and relies on the best available data;
• There were no assumptions reported in the methodology or implicit in the tracking model structure that would misrepresent the final result; and
• No calculation errors were found in the excel spreadsheets that were provided.

Therefore the output of the tracking model provides an appropriate method of measuring the progress against auto GHG MOU targets.