DEVELOPMENT OF OPTIONS FOR A VEHICLE
FEEBATE IN CANADA

--Final Report--

Prepared by: Marbek Resource Consultants
in association with: Resources for the Future and DesRosiers Automotive Consultants

October 13, 2005

Table of Contents

EXECUTIVE SUMMARY

GLOSSARY

1. INTRODUCTION

1.1 Background
1.2 Objectives

2. MARKET AND SECTOR TRENDS

2.1 Sector Trends
2.2 Market Comparisons and Trends
2.3 On-Road Fuel Consumption and GHG Emissions
2.4 Technology Opportunities
2.5 Policy Issues
2.6 MOU Respecting Automobile GHG Emissions

3. FEEBATE OPTIONS

4. MODELING OF FEEBATE OPTIONS

4.1 Description of Models
4.2 Base Case and Assumptions
4.3 Limitations
4.4 Scenarios
4.5 Results
4.6 Observations
4.7 Implications

5. ASSESSMENT OF FEEBATE OPTIONS

5.1 Environmental Effectiveness
5.2 Fiscal Impact
5.3 Economic Efficiency
5.4 Fairness
5.5 Simplicity

6. CONCLUSIONS

7. REFERENCES

Appendix A: Finance Canada: Framework for Evaluation of Environmental Tax Proposals

Appendix B: Scenario Results

List of Figures

Figure 2.1: Total North American Vehicle Sales, 1960 – 2010F
Figure 2.2: Total Canadian Vehicle Sales, 1960 – 2010F
Figure 2.3: Canadian Nominal Price Changes – Purchasing & Leasing of New Vehicles
Figure 2.4: Manufacturer’s Share of Canadian Light-Duty Vehicle Market
Figure 2.5: Performance of Light-Duty Vehicles
Figure 2.6: Automotive Share of Transportation GHG Emissions
Figure 2.7: GHG Emissions from Light-Duty Vehicles (Mt)

List of Tables

Table 2.1: Light Vehicle Sales by Segment – 2004 Calendar Year
Table 2.2: Comparison of Average Light-Duty Vehicle Fuel Consumption (2002)
Table 2.3: Factors Important in Choice of New Vehicles – 2002
Table 2.4: Current and Future Fuel Economy Related Technology, Ranked by Availability
Table 2.5: Domestic Small Car Technology Cost Curve
Table 4.1: Specification of Scenarios
Table 4.2: Scenario Results
Table 4.3: Effect of Rate Change
Table 4.4: Effect of Consumer Valuation Assumption
Table 4.5: Effect of Segmentation
Table 4.6: Effect of Policy Integration with the U.S.
Table 4.7: Effect of Elasticity Assumptions
Table 4.8: Effect of Fuel Price