Reuters / Oct 4, 2006

OTTAWA -- Canada's Conservative government has notified auto industry chief executives that it plans to impose mandatory vehicle emissions standards after a current voluntary agreement expires in 2010.

In a meeting brokered by Finance Minister Jim Flaherty, who has strong ties to the Ontario-based auto manufacturers, the government said on Tuesday, Oct. 3, that it would bring in tougher environmental rules for the industry after top-level consultations with industry representatives over the next few months.

Flaherty said all major industries would eventually be subject to new regulations, including oil and gas.

"We can't have one sector or industry not involved in environmental regulation and the effort for clean air and improving health in Canada," Flaherty told reporters after the meeting. "All sectors of the Canadian economy are involved in the regulatory effort. They will all be regulated."

The Conservatives are under criticism for dismissing the Kyoto agreement on curbing greenhouse gases as unworkable and have set out to show Canadians they are serious about the environment by drafting up their own "green plan", focusing on clean air.

Clean air legislation would be introduced "shortly," a government official said earlier on Tuesday.

In an usual show of force, ministers for the environment, transport, industry and natural resources attended Tuesday's meeting, facing off with the top five carmakers in Canada -- DaimlerChrysler AG, Ford Motor Co., General Motors, Honda Motor Co. and Toyota Motor Corp.

Buzz Hargrove, president of the Canadian Auto Workers, also participated and emerged slightly relieved because his worst fear -- California-style emissions standards -- was not confirmed.

"They certainly didn't say they're coming in with the California standards so I feel a little better in that sense," Hargrove said.

Canadian media had reported Environment Minister Rona Ambrose as eyeing California's stringent vehicle emissions rules as a model for Canada, something Hargrove said would spell disaster for workers.

"At the end of the day, after the debate is all over, they talked about mandatory standards, or regulations, that will kick in following the end of the MOU (current voluntary agreement) in 2010."

Carmakers tout the success of a voluntary accord signed with the government last year that they say has led to improved fuel-efficiency and smog reduction. That accord aims to cut 5.3 megatons in annual greenhouse-gas emissions by 2010.

In the months to come, they will likely present their case for voluntary measures rather than imposed regulations.

"That would be our preference," said Mark Nantais, president of the Canadian Vehicle Manufacturers' Association. "We have a proven track record."

Because Canada's car manufacturing sector is so integrated with the United States, it is pretty much forced to adopt U.S. standards, but Nantais sees little future in California's initiative, which is bogged down in lawsuits with automakers.