Competing drivers of emissions are slowing progress.

Emissions reductions from passenger transport in Canada are showing some signs of progress, according to the latest data, with electric vehicles and new technologies gaining momentum. However, progress is still too slow to align with Canada’s climate goals, as persistent trends like rising travel demand and larger and heavier vehicles threaten to stall out emissions progress. We’ve taken a deeper dive into the data behind these dynamics to show a variety of factors that are pushing and pulling emissions in different directions. The takeaways for policymakers can help drive meaningful progress through targeted policy action.

What’s driving passenger vehicle emissions in Canada?

Passenger vehicles are a major contributor to Canada’s emissions—our latest estimates show the sector accounted for approximately 80 megatonnes (Mt) in 2023, or 11 per cent of the national total. While emissions were still below their 2019 peak of 91 Mt by 12 per cent, the rebound in travel demand following the COVID-19 pandemic has brought the challenges of reducing emissions from the sector back into focus. 

Over the longer-term, personal transport emissions are likely off path to Canada’s 2030 target and net zero beyond, after accounting for current policies by all orders of government and evolving technology deployment.  

Historical information on the vehicle fleet and fuels allows us to explore different drivers of greenhouse gas emissions in the passenger transport sector. This includes population growth, activity (total distance travelled), shifts between vehicle types, energy efficiency, fuel switching, and fuel decarbonisation (changes in the emission intensity of the fuels). Our method uses a Kaya decomposition applied to historical data to estimate the changes in emissions over time related to these drivers.

A dive into the data suggests that from 2005 to 2022, emissions were driven up by rising demand and the shift to SUVs and passenger trucks. At the same time, fuel efficiency improvements, growing electric vehicle (EV) adoption, and improvements in the emissions intensity of fuels provided counterbalancing reductions (Figure 1). 

Emerging trends to watch since 2016 include more emissions from increased travel demand due to population growth offset by fewer emissions due to less distance traveled per capita. There are also early signs that people switching to EVs are having an emissions impact and that this trend is accelerating. 

Let’s take a closer look at the drivers shaping passenger transport emissions.

1. Rising travel demand

Between 2005 and 2022, population growth and increasing vehicle kilometers traveled (VKT) added 17.3 Mt to emissions. However, per-capita VKT declined slightly after 2016, helping to mitigate total increases. In 2022, total VKT remained below 2019 levels but had risen 11 per cent since 2020, indicating a potential return to pre-pandemic peaks, placing an upward pressure on emissions.

2. Dominance of SUVs and trucks

The shift toward SUVs and trucks has added 5 Mt since 2005, making it one of the largest barriers to progress on emissions reductions. By 2022, these vehicles accounted for 66 per cent of kilometers traveled, up from 46 per cent in 2016, and sales data from 2023 shows this trend continuing, with light-duty trucks, including pick-up trucks and SUVs, reaching a record-high market share of 85.6 per cent.

3. Electrification is ramping up

Electric vehicles are starting to make a measurable impact. The latest quarterly data show EVs at more than 16 per cent of all new vehicle sales nationally. That said, it will take time to see the full emissions impact from those vehicles as they replace existing stock. 

Despite that lag, we estimate that EVs have already doubled their share of kilometers traveled in two short years, from 1.3 per cent in 2022 to 2.7 per cent in 2024. This has increased their estimated emissions reduction contribution from 1 Mt in 2022 to 2 Mt in 2024, relative to 2005 levels. Achieving Canada’s zero-emission vehicle (ZEV) targets—20 per cent of new vehicle sales by 2026 and 100 per cent by 2035—could reduce emissions by an estimated 30 Mt relative to 2005 levels by 2035.

4. Slowing fuel efficiency gains

Fuel efficiency improvements in internal combustion engines (ICE) have been by far the largest contributor to emissions reductions to date, cutting 18.2 Mt from 2005 to 2022. However, the adoption of new standards is not certain, and the growing dominance of heavier vehicles threatens to erode past gains even as efficiency standards drive improved performance.

5. Evolving fuel decarbonization

The trend in decarbonizing fossil fuels showed early promise, driven by increasing biofuel blending mandates and subsidies, which helped reduce the carbon intensity of gasoline and diesel. However, progress looks to have slowed somewhat between 2016 and 2022 as blending requirements remained unchanged and advanced biofuels struggled to scale up. However, recent analysis finds that biofuel use in Canada surged again in 2023, coinciding with the implementation of the Clean Fuel Regulations. This leading indicator is one to watch closely. 

Shifting gears to cut more emissions from passenger transport

Significantly reducing emissions from passenger vehicles, in line with Canada's emissions reduction targets, requires coordinated action across all levels of government, focused on a suite of solutions, including electrification, fuel efficiency, public and active transportation, and alternative fuels.   

1. Scale-up EVs and electrification infrastructure. Electrification will play a leading role in reducing emissions from passenger vehicles—contributing the lion’s share of emissions reductions by 2050—and is already gaining momentum with growing EV adoption. Policy tools like infrastructure investment, subsidies, and ZEV mandates are well-positioned to deliver significant emissions reductions. Scaling electrification provides long-term decarbonization benefits while lowering the costs of ownership.  

2. Ramp up fuel efficiency. Improving fuel efficiency is an effective near-term measure to reduce emissions from the ICE vehicles while the adoption of electric vehicles accelerates. According to our analysis of pathways to net zero, energy efficiency is expected to be the dominant driver of emissions reductions from passenger vehicles out to 2030, before leveling off. The federal government has committed to strengthen its fuel efficiency standards, in line with the most stringent standards in North America post-2025—whether at the federal or state level (likely California). Programs to retire older vehicles also garner public support by reducing household costs and improving fleet safety. 

3. Provide high-quality alternatives to personal vehicles. A growing emphasis on transit and active transportation can steadily shift travel demand away from personal vehicles, reducing emissions while also reducing congestion, improving public health, and contributing to safer urban environments. Reducing overall travel demand is also an effective means of reducing emissions from passenger transport. Encouraging remote work proved to be an effective means of managing travel demand post-pandemic.

4. Revitalize fuel decarbonization. In addition to improving the fuel efficiency of ICE vehicles, increasing the share of biofuel blending into gasoline can help reduce emissions in the near-term. While the longer-term role for biofuels in passenger vehicles is more uncertain, they can act as a transitional solution to complement electrification. This is true for passenger vehicles, but to a greater extent for hard-to-electrify transportation sectors like freight and long-haul trucking. Strengthening biofuel blending mandates and procurement efforts across all orders of government can drive immediate emissions reductions, while advancing Canadian biofuel production reduces reliance on imports and bolsters domestic capacity. 

5. Expanding consumer options beyond SUVs and trucks. Encouraging a shift to smaller cars can reduce emissions, as these vehicles consume less fuel and produce fewer greenhouse gases compared to larger models. However, rebalancing preferences away from SUVs and trucks requires significant cultural and behavioral shifts, making it politically and socially challenging. While impactful, policies face resistance and may take longer to yield results. 

Accelerating transport emissions progress 

Canada’s passenger vehicle emissions are shaped by rising travel demand, the dominance of SUVs and trucks, and the slow adoption of cleaner fuels and technologies. Electrification will be the leading driver of emissions reductions in passenger transport, making it essential to prioritize EV adoption and charging infrastructure. While electrification is central, enhancing fuel efficiency and fuel decarbonization are also necessary, especially as ICE vehicles remain on the road for years to come. Expanding consumer options—such as incentivizing the shift towards smaller, more efficient vehicles and increasing investments in public and active transportation—will also help reduce emissions. A well-coordinated policy approach centered on affordability can make climate action a win for both the planet and the wallet.