If California loses its war over auto emissions, where does that leave Canada?

WATCH: Trump won’t allow California to set auto emissions standards

The Trump administration doesn’t want California to set its own standards for car emissions. So much so, the U.S. president moved to revoke its authority.

Trump’s long-anticipated action has set off a massive legal battle — but where does that leave Canada?

In June, Canada and California made a pact to advance cleaner vehicles and fuels.

Canada partners with California in push for greener vehicles, fuel

Environment Minister Catherine McKenna and California Gov. Gavin Newsom agreed to work together to reduce greenhouse gases from vehicles and accelerate the transition to “cleaner, more affordable” vehicles.

In the U.S., the move was largely seen as a response to Trump pulling out of the Paris climate accord.

In Canada, it was in line with the Trudeau Liberals’ climate change agenda. The Canadian government has committed to cut emissions by 30 million tonnes in 2030 — equivalent to taking seven million cars off the road.

Trump’s clampdown on California was imminent, according to Chris Sands, the director at the Center for Canadian Studies at John Hopkins University.

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He said the legal fight is one California is likely to lose.

If that happens, Sands argues Canada should replace California as a pacesetter on emissions standards.

“You know the phrase, you see it on the internet — ‘Hold my beer.’ I think California is essentially saying, ‘Hold my beer, Canada. I’m going to go toe-to-toe with the Trump administration,’” Sands said.

“This would be a way to keep things going so that the car business stays prosperous. It would keep those standards alive and on the books… It would be a way for somebody to hold California’s beer.”

He believes Canada could “create something tangible” on climate action by adopting California’s rules, largely seen as a serious approach to climate change.

“It would keep those standards alive and on the books,” he said.

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Trump might not take it well, Sands said, but he can’t stop Canada from regulating its auto sector.

“It would kind of brand Canada as the high watermark,” he said.

For decades, California has been a pioneer in low-carbon fuel standards. The Golden State has routinely worked to reduce pollution by pushing automakers to adopt more fuel-efficient vehicles.

Its authority to set such high standards dates back to 1970 when the U.S. Congress issued a waiver to the state during the passage of the Clean Air Act. The waiver effectively allows California to set stricter emissions standards than the rest of the country. More than a dozen states have since adopted California’s rules.

If Trump succeeds in revoking California’s waiver, Canadian automakers could face increased uncertainty.

WATCH: California governor calls Trump block on emission rules ‘aggressive move’

The U.S. follows a single national standard for vehicle emissions — set in the Obama era — with which Canada is aligned.

With the waiver in question, there are fears it could result in a double standard on emissions — one for California and the states on board with its standards and another for those following national standards.

“You could end up with a double standard, maybe even three standards, multiple standards,” Mark Nantais, the president of the Canadian Vehicle Manufacturers’ Association, told Global News. “That’ll add cost and complexity.”

Nantais said a single set of standards is what the industry continues to support.

For environmental considerations to stay the course, he said Canada and the U.S. need to stay aligned on those standards.

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“We don’t build vehicles strictly for Canada. We build vehicles on an integrated basis for North America,” he said. “Our view is that integrated industry and market means more choice for consumers, better affordability of technology, more technology quicker and sooner into the marketplace, which is only better for the environment.”

But the situation with California could force Canada to choose between standards, Sands said, which would only exacerbate volatility in the auto industry.

“The carmakers need predictability. They’ve been fighting with the unpredictability with NAFTA this year because we’ve been renegotiating and who knows what the final text is going to look like,” he said. “Right now they’re not building the car they’re going to sell tomorrow, they’re designing the car they’re going to sell in four or five years. You need lead time to be able to reach that target — especially if it’s ambitious.

“It’s not high times in Detroit by any stretch.”

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The Canadian government said Wednesday its agreement with California will continue despite Trump’s action.

“The memorandum between the government of Canada and the state of California will remain operational regardless of developments concerning California’s waiver,” Gabrielle Lamontagne, a spokesperson for Environment and Climate Change Canada, said in a statement.

Bruce Heyman, the former U.S. ambassador to Canada, said the fight between Washington and California will be an ongoing issue, especially for the winning party in October’s federal election.

Heyman said the outcome of a U.S. antitrust investigation into top automakers who went against Trump on emissions could also be telling.

“Remember, we make cars together. That’s the challenge. Our cars are made together across the border,” he told Global News in a previous interview.

“If it is determined that the automobile companies make cars that don’t fit its standard, then you’re going to have this conflict between the U.S. and Canada on these standards. So, does Donald Trump disrupt what we make together and manufacture together to have a different environmental footprint? And what impact will that have on the Canadian auto industry?”

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Under current Canadian standards, new 2025 model year vehicles are expected to burn up to 50 per cent less fuel and emit 50 per cent less greenhouse gas compared with vehicles built in 2008.

Trump has said his action would result in less expensive, safer cars. He also claimed that Americans would ultimately buy more new cars, which would reduce pollution as older models die off. The administration is also on pace to roll back fuel economy targets set in the Obama era.

Nantais said it’s “not feasible” for Canada to consider its own standards.

“We just spent two years negotiating the new NAFTA,” he said. “There’s a whole chapter on this realignment and co-operation — why would we undermine that?”

But, according to Sands, Canada has a chance to prove its climate change agenda “without really having done much.”

“I think it would be applauded by a lot of people, not only in the industry but the environmental community in Canada,” he said.

“And, if we are heading into a recession, which a lot of people think we might be, it’s not a time you want to have more uncertainty plaguing the industry.”

 — with files from the Associated Press

© 2019 Global News, a division of Corus Entertainment Inc.

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