The Decibel - Carney shifts gears on EV and climate policies

Episode Date: February 10, 2026

The federal government recently announced that it is scrapping the zero emissions vehicle mandate – brought in by the Trudeau government in 2022. Zero emissions vehicles such as EVs were supposed to make up 20 per cent of all new car sales this year, increasing to 100 per cent by 2035. This is the latest Trudeau-era climate policy that Prime Minister Mark Carney has rolled back or outright abandoned.Today, we speak with Adam Radwanski, The Globe’s policy columnist and feature writer. He’ll explain why the electric vehicle mandate was scrapped, what Carney has brought in instead, and what his strategy is towards climate change more broadly.Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The electric vehicle sales mandate is officially dead. It was a policy from former Prime Minister, Justin Trudeau, trying to get more EVs on the roads in Canada. 20% of new car sales were supposed to be zero-emission vehicles by now. And we were supposed to hit 100% by 2035. While Prime Minister Mark Carney has brought in other measures around EVs, this is one of many Trudeau-era climate policies that Carney has reached. reduced or outright abandoned.

So today we're talking to Adam Rewanski. He's a writer and columnist at The Globe who reports on government policy on energy, climate, and the economy. He'll tell us why this EV mandate failed, what's replacing it, and what it says about Carney's approach to climate policies. I'm Cheryl Sutherland, and this is the Decibel from the Globe and Mail. Hi, Adam, thanks so much for coming on the show.

Great to be back, and I'll apologize in advance that my voice is kind of shot getting over a cold the last couple days. So sorry about that if it sounds rough. Well, thank you so much for making the time and especially under these conditions. So thank you. So to start, can you remind me of this policy that's been scrapped, the zero emissions vehicle mandate? What was it? This is a policy that was put in place under Justin Trudeau with the idea of ensuring essentially

that there is an appealing supply of electric vehicles, available to Canadian consumers and that automakers are under some degree of pressure to actually sell those. It essentially starts from the premise that absent this, the automakers weren't doing enough to sell them here. And so they needed to not only provide a greater supply of them total, but a greater variety, greater marketing, all of that stuff. And the way the government thought this would achieve that would be by setting sales requirements essentially. This was something that was supposed to effectively require automakers to make EVs account for a growing share of their total sales. So starting in 2026, that was supposed to be 20% of all new vehicle sales in Canada,

would be electric, or at least zero emissions, but that effectively means electric, building up until ultimately by 2030, it would be 60%. And by 2035, it would be 100%. I didn't mean exactly that, you know, it would be illegal to sell other forms of vehicles here. There was a whole system of credit trading between different companies, some sold more and some sold less and all of that. But the general idea was that over that period, this would nudge them to make the sales consistently go up. Right. Yeah. So more electric vehicles sales and then in turn, more electric vehicles on the road. Can you explain what these auto credits are and how they work?

The idea under the EV standard was that companies would earn credits for selling EVs, as well as investing in charging infrastructure, but let's not get bogged down that. If they exceeded their requirements, they would be able to sell credits to companies that were not meeting their requirements. So the idea was that it would provide extra incentive to sell them and effectively you can monetize your sales further. Oh, okay. Why did they bring in this mandate in the first place? Like, what was it trying to accomplish?

The mandate was, of course, part of the Trudeau government's general climate agenda and, you know, one of many different regulatory policies they brought in. and, you know, the broad goal, of course, was to hit Canada's national emissions targets. In this specific case, the thinking was that although everybody knew that the EV transition was happening, and in fact, automakers were and are investing heavily in new EV lines and so on, that the automakers were nevertheless slow rolling yet, that, you know, perhaps they were trying to milk everything they could out of gas-field vehicles for as long as possible, and that absent this, They would not put as much effort into selling EVs here.

And, you know, you would hear stories depending on where you were in Canada about, you know, people looking to buy EVs and maybe it taking, you know, six months or a year to be able to get one. And interestingly, where EV sales were strongest in Canada, British Columbia and Quebec, was where they actually had provincial policies along these lines. So that was the thinking that absent this, sure EVs would still happen, but it would be a lot slower. Okay. So, yeah, so you mentioned the provinces of B. in Quebec. So they had some policies in there that were mandating more vehicles and it actually worked. So there was some sort of thinking around that that it would also make sense on a national level. It at least seemed to work there. It's a little hard to separate out because those provinces

also had more supportive policies like pretty strong rebates for buying EVs and that kind of thing. You know, maybe culturally even a place like BC might be more inclined toward EV purchases in terms of the consumer base and their interest than it might be elsewhere in Canada. So it's hard to separate out. But certainly there was some indication of that. And also there was a sense at that time, because those two provinces had that, that the automakers were essentially sending almost all of their Canadian EV inventory to those two provinces and not making much available elsewhere. So there was a feeling as well that you kind of need to balance it out and perhaps the national mandate would help with that. Okay. So now we know that this policy has been scrapped.

Why is the government getting rid of it? The government has been under pressure from the auto industry domestically to get rid of this policy for a long time. and, you know, their argument has effectively been that there simply isn't enough demand in the Canadian market to meet these targets. And atop that, that the charging infrastructure, for which the government is somewhat responsible, is also not where it needs to be, and those two things tied together. That pressure ramped up from the industry over the past year and a bit since Donald Trump's return to the White House in the U.S., where obviously the industry is under a old. lot of pressure because of the tariff situation. At the same time, the U.S. has also been rolling back its EV-friendly policies. But the primary thing here, the primary argument has been, we can't afford yet more pressure on the industry from this atop everything else that we're

dealing with. That pressure ramped up even further, starting in January, when the federal government reached a deal with China to allow up to 49,000 Chinese made electric vehicles into the country. The reason for that is that the domestic industry argued that because of the way the system works and the credit mechanism within the ZEV mandate that essentially allows companies that sell a lot of EVs to sell credits to those that don't, that the government was not only going to be letting these in, but through the ZEV mandate actually kind of subsidizing the Chinese EVs that came in. So that added to the pressure that the industry was putting on the government to get rid of it. Okay. So let's talk about demand

because the audio industry argues that there's not enough demand for EVs, right? So the goal of this program was to help spur demand for EVs. What is the demand looking like right now in Canada? Through 2024, demand in Canada did seem to be going up pretty steadily. And it was starting to approach 20% of all new vehicle sales being EVs, at least heading in that direction. But in 2025, it took a big dip and went down somewhere in the range of 30% in terms of the share of total vehicle sales. It's hard to know the exact reason for that. But part of the part of the time of Part of the factor, at least, is that the federal government had a program that was encouraging these purchases through purchase rebates back to consumers of up to $5,000, essentially up to $5,000

off the purchase cost. That expired in 2025. And along with some other factors, I think, contributed to that demand dropping significantly. So now it's actually backed down under 10%. Not anywhere close to the 20% that we're supposed to be at by this year. It's not. And it's also out of sync with what's happening around a lot of the world right now, where you did see demand things arise and somewhere in the range of about a quarter of all

vehicle sales around the world right now are EVs, but in Canada, it's far below that right now. You mentioned other reasons. What were the other reasons? A couple of the other factors, I suppose, would be that one is in general, the economic uncertainty of the past year, has not been great for vehicle sales in general, and EVs tend to be the more expensive ends. That doesn't help. There's also been some degree of just sort of negative attention toward them. I think that flows out of the U.S., you know, the sort of the narrative of sort of been that the momentum is slowing around them. So that probably affected it a bit. The other thing related to the rebates is that it's not just that they expired. What hurt the sales even more

probably, probably indicated that they would probably bring them back at some point, at least hinted at that, but until very recently had not actually done so. And so that was anything more disincentive to buy then because it was like, if you're going to buy one, you're going to wait, you don't want to get caught in that period, we're not getting anything. Yeah, probably waiting just for that, you know, if there's another rebate going to be announced and you want to wait for that. Exactly. So that might help explain why EV cells actually suffered more even in Canada than the U.S. in the last year. So the government announced some new or revamp measures instead of the mandate. The two big ones for our discussion are rebates and tailpipe emission standards. Let's start

with the rebates. What did Cardi announce? What the prime minister announced on rebates is something fairly similar to what existed previously in the Trudeau government, which is at least initially, although these go down over time, up to $5,000 off the cost of a new EV. A wrinkle in this case is that it's limited to vehicles under $50,000 retail price, which wasn't the case previously, with the exception of any vehicles that are made in Canada, which could be over $50,000. So that's a little bit of a domestic industrial play. The other wrinkle is that they've effectively written it in a way that rules out the subsidies going to imports in China.

Okay, so this rebate doesn't apply to Chinese EVs. Is that correct? Basically, yes, because the provision as proposed is that it only applies to vehicles made in a place with which we have a free trade agreement, which excludes China. Okay. What about this tailpipe emission standards? Can you explain, first off, what that is and what was announced? So tailpipe emission standards are what Canada has used for a long time to try to reduce road pollution. And what they effectively do is just require across fleets of use.

vehicles and across the entire sector, really, better fuel efficiency declining emissions from vehicles overall, but they're less prescriptive about how you go there. So they don't require it to be EVs. That's one of the primary ways of getting there, but it could also be through things like improved fuel efficiency or alternate fuels or whatever. So they're generally preferred by industry because of that flexibility. Okay. So what would that actually look like, this tailpipe emissions standard?

So the government has set itself actually a kind of interesting challenge here because although we've used tailpipe emission standards for a long time, to this point, they've pretty much always been just the U.S. ones and we've adopted them. That is no longer a viable option because the Trump administration is completely gutting them. And the current ones expire in the U.S. at the end of this year, from 2027 onward, they're going to be very ineffective. So if you're all serious about reducing emissions, you can't rely on those. So Canada now has a challenge of designing its own, which again, it hasn't done a very long time, and it has to do so rather quickly because they're supposed to take effect in 2027. And, you know, if you're an automaker, actually, you've probably already done your vehicle plans for 2027. But at the minimum, they've got to get it done in a matter of months. So Canada has to go out at it alone for the first time in a long time.

Yes. I mean, what they can do is probably borrow from elsewhere. So the standards that were put in place under the Biden administration in the U.S., which is what we've used in recent years, they could build off of that. You know, Europe has pretty strong standards. They can borrow from those, but they are going to have to do a Canada-specific version.

And frankly, there'll be, as you would imagine, a lot of lobbying from the auto industry and from environmental groups. So they're going to have to wade through that as well. You know, the big question now will be, I mean, the industry people certainly prefer tailpipe emission standards to zero-emissions vehicle mandate. They have said they will accept all the time.

simply strict ones. But we'll see. I mean, they've also lobbied pretty hard against those in the past. So we'll see how willing they really are now to accept standards that are much more ambitious than the ones that are going to exist in the U.S. to the next few years. We'll be right back. So the government now has a goal of having 75% EV sales by 2035. Previously, it was a mandate of 100% by 2035. How significant is this change? It's significant because, I mean, first of all, it's not just that it's a lower target. It's that it's not as prescriptive. And there are other ways that the companies could get there. And we also don't know yet how stringent it will really be.

That's their aim. But again, you know, there's going to be months of lobbying now from the industry to try to soften it a bit. So it's definitely not going to be as stringent as before. It's not going to be insignificant. But it certainly won't require the shift to happen as quickly as previously. Right. In the wording here, you know, from mandate to goal, it does seem like there's something in that as well, right? because goal seems more aspirational.

Yes, in fact, it's quite funny because they actually have a reference in the announcement to by 2040 aiming for 100%, so that would be five years later than previously. But they actually use the word aspirational, which is funny. Government still usually actually use the word. Usually we use that for them, but in this case, they call it aspirational. So we're going to try. Yeah, they're definitely trying to indicate here that they're going to be flexible. And I think that's the overall message in ways, if demand is there, if the industry goes

that way, they're not judging them there. But they seem to essentially be saying we understand that there needs to be some flexibility because it may move slower than we previously thought. Okay. So the goal of having 100% EV sales by 2035 was a significant climate policy for Justin Trudeau. What does it say to you that it's now gone? Getting rid of the ZEV mandate or zero emissions vehicle mandate is part of a general, I don't want to say full retreat, but certainly scale back of the climate policy ambition that we saw in the Trudeau era. And of course, we've seen this on a budget. of fronts in the last year now.

You know, we, of course, saw the consumer carbon price scrapped, although that might have happened regardless of this prime minister. You know, we've seen a scrapping of plans for a cap on a long gas sector emissions. We've seen some retreat from the clean electricity regulations that were in place. So there's definitely a general retreat happening. And I think it reflects a sentence, correctly or not, from the current prime minister, that in the current economic climate, with all of the turmoil, global, that climate goals are not as top of mind for Canadians

as they were a couple of years ago or a few years ago and that they are more at odds, if too strict, with our economic interests and our economic dangers right now, then they would have been previously and are not practical at the moment. That's the general sense that's been given on a whole bunch of fronts. So I understand this idea that perhaps we're in a time when economics are top of mind for Canadians, and of course so Carney might be going that direction.

But, you know, he made a name for himself by being a climate-focused central banker. I mean, is it concerning that Carney isn't focusing on this as much anymore? I mean, it is and certainly is to, you know, I talk to a lot of environmental groups around Canada, and they're certainly a little unsettled by the way the last year has gone. You know, an uncharitable read of it would be that he wasn't as sincere as people would have hoped in those goals before. a more charitable read would be that he and other liberals federally still take this stuff very seriously, but believe that it's too in odds with the current dynamics. And then if anything, if they pursued it too aggressively, they would set it back, certainly

in terms of public opinion by looking too single-minded about it. And that what they have to do right now is scale back a bit, you know, with a longer-term view of this is still our goal. But to pursue it in a responsible way and to be able to ramp up subsequently, we have to not go too hard now. So how would you describe Carney's approach to climate change policy in Canada? One of the words that comes to mind, which is probably a word they would like, or that the prime minister would like, is pragmatic.

You know, there is still a prioritization of it, but a flexibility based on current realities. I think the other word that would come to my mind still is uncertain or, you know, that the jury is out, which I know is not one word. even in this case, you know, they've signaled that they are going to develop these new tail by permission standards. They haven't done that yet. It's going to be hard.

We don't know what they'll look like yet. They couldn't fully tell us. You know, they made the announcement before they'd actually done the design work. You know, there's a whole bunch of policies that are tied up in the ongoing negotiations with Alberta. You know, there's an, you know, a memorandum of understanding announced in late fall. But we don't know a lot of what's happening since then. So we don't know where things stand on something like the industrial carbon.

price in Canada or the clean electricity regulations. So it has been something that I think they have struggled to articulate in terms of where we're landing exactly. And I think we almost have to wait until a lot of these negotiations or policy developments are set before we really know. In the meanwhile, a challenge is that for anything related to decarbonization in Canada and the transition to a cleaner economy, there's a lot of uncertainty which is not generally great for getting investment and those things. And it's already an certain climate and, you know, policy uncertainty just adds to that. So, Adam, how would you say Carney's approach differs from Trudeau's? It generally is a little heavier on carrots than sticks compared to the Trudeau approach.

Not that there's necessarily much greater number of carrots, but there shouldn't be fewer sticks. Under Trudeau, there was a lot of effort to regulate our way toward lower emissions. and those have been pulled back. And, you know, there was an argument even at the time that you'd hear, even from some people who believe strongly in the need for climate action, that there was a little too much of that, that there was a lot of layering of different policies. You know, you'd have, for instance, industrial carbon pricing,

but you'd also have a proposed capital on gas emissions, plus a bunch of other stuff. It does get maybe a little clunky and a little inefficient. That was an argument. On top of that, there's a general sense that, rightly or wrongly, that we're now in a time where we need to be used open for business if possible, that we need to remove things that are owners for businesses or industry and so on. So I think those things have combined to lead the current government to scale back a lot of the regulatory side.

Well, again, keeping in place or recommitting to a fair number of things on the more incentive-based front. Okay, so given what you're saying about Carney using more carrots and sticks, This EV policy is an example of Carney using the CARID approach because he's bringing back the rebates and investing in infrastructure. That's right. So, yeah, there's still a stick, but it's a gentler stick. And then the rebates are back, which they haven't been for a while and charging infrastructure. And there's also a bunch of money more for industry than for consumers,

but a bunch of money there to support industrial investments in Canada. Just lastly, what position is Canada in with the transition to electric vehicles and climate policy more broadly on the world stage? Canada is in a really interesting and challenging spot right now because I think one of the things the government needs to avoid and in fairness I think is trying to avoid federally is winding up on an island with the United States. You know, that is a country that currently is about as unambitious

to be generous on climate policy nationally as anyone could be. You know, on EVs is actively hostile. to them on other forms of clean energy, like renewables, pretty hostile as well. The rest of the world is going quite strongly in that direction. You know, EV sales, for instance, last year just by going down Canada went up quite a bit globally. And both in terms of, I guess, in a moral sense of not winding up as one of the few countries not taking climate action, but also in an economic sense, you don't want to wind up stuck as essentially a heavily fossil fuel-reliant economy when the rest of the world is going to be. in a different direction. On the other hand, the government, I think, does not want to be cavalier in that, you know,

this is still our biggest trading partner. We are still extremely tied to them. Things are very sensitive. If you go too far in unaligning with the U.S., it could add to the current challenges. So I think trying to find that kind of ground where you are more ambitious than them, but not so ambitious that it's just impractical for various industries and for consumers, is one of the government's big challenges right now. Adam, thanks so much for coming on the show.

Really appreciate it. Thank you. That was Adam Rewanski, the Globe's policy columnist and feature writer. That's it for today. I'm Cheryl Sutherland. Our producers are Madeline White, Mikhail Stein, and Rachel Levy McLaughlin. Our editor is David Crosby. Adrian Chung is our senior producer, and Angela Pichenza is our executive editor.

Thanks so much for listening. Thank you.