Canada will hold its fleet-average greenhouse gas standard for new cars and light trucks at 2026 levels through the 2029 model year, giving automakers what Ottawa called “near-term flexibility” as they absorb US tariffs.
The standard will stay at 172 grams of carbon dioxide per mile, the federal and Ontario governments said in a joint backgrounder on October 21. Annual tightening will resume in the 2030 model year, “in line with Canada’s new target of 75% EV car sales by 2035,” they said.
Prime Minister Mark Carney announced the freeze in Ottawa alongside Ontario Premier Doug Ford, as part of a broader plan to support industries hit by US tariffs.
“Federal performance standards that apply to vehicle fleets will be maintained at the same level from 2027 through 2029,” Carney said. “This will give vehicle manufacturers more leeway in the short term.”
Holding the standard flat will also let automakers “generate greenhouse gas credits for use in later years,” according to the backgrounder.
Carmakers welcome it
The Canadian Vehicle Manufacturers’ Association (CVMA), which represents Ford, General Motors and Stellantis in Canada, welcomed the decision.
“Today’s announcement is an important step toward a more predictable, competitive, and achievable regulatory environment needed to protect Canadian auto jobs, production, and investment,” CVMA President and Chief Executive Officer Brian Kingston said.
“We welcome the measures to support Canada’s auto industry through this challenging period,” he said.
Climate groups warn
Environmental groups said the pause pushes the hardest cuts into the next decade.
Clean Energy Canada warned that delaying tougher standards “puts significantly more pressure on the policy’s later years and could undermine success down the road,” Electric Autonomy reported. The group said the delay also affects potential fuel savings for drivers and up to $21 billion in charging investment.
The Pembina Institute said the government had “promised stronger vehicle pollution standards starting in 2027” but was now “delaying that to 2029,” according to the same report. It called the 75% EV sales goal for 2035 “next to impossible.”
Meeting that goal would require the fleet average to fall to about 74 grams per mile by 2035, less than half the level being frozen.
From mandate to standard
The freeze follows Carney’s decision in February to scrap his predecessor Justin Trudeau’s Electric Vehicle Availability Standard, which required zero-emission vehicles to make up 20% of new sales in the 2026 model year, rising to 60% in 2030 and 100% in 2035.
Ottawa said it would instead rely on tailpipe emissions standards, a plan that drew fire from both industry and climate groups in March.
The government published draft amendments in the Canada Gazette on August 15 that would repeal all of the sales requirements introduced in 2023. The tougher greenhouse gas standards would be proposed in a later amendment, the notice said.
The notice cited falling demand. Zero-emission vehicles’ share of new sales in Canada fell from about 14% in 2024 to about 9% in 2025, it said.
It also cited US policy. The US Environmental Protection Agency rescinded its 2009 endangerment finding on February 18, 2026 and repealed its vehicle greenhouse gas rules, the notice said, and President Donald Trump has since approved weaker fuel economy targets.
The government’s own analysis estimated a net cost of 90.3 billion Canadian dollars ($64.4 billion) from keeping standards at 2026 levels over the long term, mainly from 326 million metric tons of forgone emission reductions.
Canada has also opened its market to more Chinese-built EVs this year. Under a January deal with Beijing, it replaced a 100% surtax with an annual quota of 49,000 vehicles at a 6.1% tariff. Imports under the quota have since stalled.
Canada had used 15,931 of the 49,000 permits for the first quota year, or 32.5%, as of October 23, according to Global Affairs Canada. The second six-month window, which opened on September 1 with 33,397 permits, had recorded 328 vehicles, about 1%.
Demand for those cars may be holding back purchases of others. In a poll commissioned by Clean Energy Canada and published on October 9, 42% of likely EV buyers said they might wait for more Chinese EVs to become available, according to Abacus Data.
Tariffs and cash
Canadian-made vehicles have faced a 25% US tariff on their non-US content since April 2025, the Gazette notice said.
The tariffs have also shifted Canadian buying away from US-built cars. Vehicles made in the US accounted for 28.4% of Canadian new-vehicle sales in the first half of 2026, down from 35.4% a year earlier, according to JD Power Canada data.
Kingston has pushed for a broader fix. “Restoring USMCA tariff-free trade would strengthen the industry across Canada, the U.S., and Mexico,” he wrote on X in September.
Alongside the freeze, the federal and Ontario governments will put an additional C$2.5 billion ($1.8 billion) over two years into large-scale automotive capital projects. Up to C$1.5 billion ($1.1 billion) will come from Ottawa and up to C$1 billion ($713.5 million) from Ontario.
That builds on February measures that included C$3 billion ($2.1 billion) through the Strategic Response Fund and C$100 million ($71.4 million) through the Regional Tariff Response Initiative, according to the backgrounder. A joint federal-provincial task force will oversee the auto measures.
Ford has campaigned against EV mandates. In March, the Ontario premier pressed Quebec and British Columbia to drop theirs, citing the threat to auto workers. In August, he said US tariffs had cost carmakers and buyers $110 billion.
Carney said the stricter standards coming by 2035 would “reduce emissions as much as if 75% of vehicles were electric.”
