No. GC 018/07
For release May 15, 2007

CANADA'S NEW GOVERNMENT AND THE RAILWAY
ASSOCIATION OF CANADA ARE ON TRACK
TOWARDS A CLEANER, GREENER RAIL SYSTEM

OTTAWA - The Honourable Lawrence Cannon, Minister of Transport, Infrastructure and Communities and the Honourable John Baird, Minister of the Environment together with Mr. Cliff Mackay, president and chief executive officer of the Railway Association of Canada (RAC) today announced a new agreement that will help reduce air pollution and greenhouse gas (GHG) emissions in the rail sector.

"Canada's New Government is serious about tackling climate change and protecting the air we breathe," said Minister Cannon. "Actions taken under this agreement are expected to reduce air pollutants from the railway industry and improve railway fuel efficiency, which reduces greenhouse gas emissions."

"This is another good example of industry and government working together to address climate change and improve Canada's air quality," explained Minister Baird. "We will begin to regulate emissions from the rail industry in 2011, but while regulations are being put in place, this agreement provides a framework for realizing reductions in both air pollutants and greenhouse gas emissions."

This Memorandum of Understanding (MOU) with the four large Canadian railway companies (Canadian National, Canadian Pacific, Via Rail and Go Transit) is a first step in a broader plan to reduce air pollution from railway operations consistent with the requirements of the world-leading standards of the United States Environmental Protection Agency (EPA). The MOU will help Canada turn the corner on climate change and build towards its goal of a 150 megatonne absolute GHG reduction by 2020.

In short, the railways have collectively agreed to:

• adopt greenhouse gas targets that will reduce GHG emissions;
• prepare an action plan for GHG emissions reduction;
• purchase only new, EPA-certified locomotives; and
• upgrade existing in-service locomotives when they are overhauled, beginning in 2010, to the EPA standards in effect at that time.

This agreement is similar to the approach taken in the auto sector in which voluntary action is to be followed by a regulation. This approach delivers immediate actions to address air pollutant and GHG emissions from railways while regulations are being prepared. Next steps include the Government of Canada working with the rail industry to reach MOU goals and consulting with them to put regulations in place in 2011.

"This new MOU is the result of careful negotiations," stated Mr. Mackay. "It will help ensure significant reductions of greenhouse gas emissions without compromising the railway industry's ability to provide a high quality of service to its customers."

A backgrounder on the specifics of the MOU and its contribution to cleaner air for Canadians is attached.

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Backgrounders

MEMORANDUM OF UNDERSTANDING BETWEEN THE GOVERNMENT OF CANADA AND THE RAILWAY ASSOCIATION OF CANADA

Greenhouse gases (GHGs) and air pollution represent serious threats to human health and the environment. Climate change results from the emission of GHGs. Air quality issues, such as smog and acid rain, result from the presence and interaction of air pollutants, including nitrogen oxides, hydrocarbons, sulphur oxides, particulate matter and carbon monoxide.

The Railway Association of Canada (RAC), Environment Canada and Transport Canada have signed a Memorandum of Understanding (MOU) on rail emissions that will protect the health of Canadians and the environment. It establishes a framework for reducing air pollution and GHG emissions from railway locomotives operated by Canadian railway companies in Canada.

Building on success

This MOU is effective until December 31, 2010. The agreement:

• reflects targets and action plans from the rail industry's emission reduction and fleet renewal strategies for the period 2006-2015; and
• protects the health of Canadians and the environment.

This MOU will help Canada turn the corner on climate change and air pollution as Canada's major railway companies — Canadian National, Canadian Pacific, VIA Rail and Go Transit — have committed to:

• buy only new and freshly manufactured locomotives that meet United States Environmental Protection Agency (EPA) emissions standards;
• retire 130 medium-horsepower locomotives built between 1973 and 1999;
• upgrade, upon remanufacturing, all high-horsepower locomotives to EPA emissions standards; and
• upgrade, upon remanufacturing, all medium-horsepower locomotives built after 1972 to EPA emissions standards.

Under the MOU, RAC will also encourage all of its members to make every effort to reduce their collective GHG emissions from railway operations. Specific GHG targets were set for major freight railways, short line railways, intercity passenger rail and commuter rail services. The 2010 GHG reduction target for the major freight railways represents a 44 per cent improvement from 1990-2010.

The MOU's GHG targets and actions align with EPA emissions standards and will produce continuous and measurable progress in eliminating pollution entering the air from Canada's rail system.

May 2007