On the path to reaching net-zero emissions by 2050, the Liberal government will impose new standards for fuel this coming July 1.
Consumers are unlikely to notice an immediate difference at the pump, but there will be an incremental impact over the next few years.
Environment and Climate Change Canada (ECCC)
estimates that its new Clean Fuel Regulations (CFR), when fully implemented in 2030, will have increased the price of gasoline by up to 17 cents per litre and diesel 16 cents per litre.
On top of the federal carbon tax, which will add between
37 cents and
40 cents to a litre of gasoline by 2030 based on various estimates, this means consumers could end up paying close to 60 cents more per litre by 2030.
The
CFR is replacing the Renewable Fuels Regulations and seeks to gradually reduce the carbon intensity of gasoline and diesel used in Canada by 15 percent below 2016 levels by 2030.
ECCC is adopting the
policy to encourage investments in new technologies and the development and adoption of fuels containing less carbon.
Producers will be required to increase the amount of fuel derived from canola and other agricultural crops in gasoline and diesel, in order to lower their carbon intensity incrementally each passing year.
The new regulations also establish a credit market for fuel producers and importers in which they’ll be able to create or buy credits to comply with the requirements.
The incurred cost for the businesses to adopt these new standards is likely to be passed on to the consumer, but Environment Minister Steven Guilbeault
says there is “simply no reason that they need to push costs onto consumers on July 1.”
“Oil companies and refiners have the time and the ability to invest to update their operations to meet the very small, incremental costs that the Clean Fuel Regulations require,” he said in a May 26 statement to The Epoch Times.
ECCC says the CFR will help to
remove up to 26 megatonnes of greenhouse gas (GHG) emissions in 2030, which is equal to removing about two weeks of GHG from the Canadian economy.
The department also estimates that the CFR will
decrease Canada’s real gross domestic product (GDP) by up to 0.3 percent, or up to $9 billion, by 2030.
Reaction
The Parliamentary Budget Officer (PBO) has
called the new regulations “broadly regressive” relative to household disposable income.
“Since lower income households generally spend a larger share of their income on transportation and other energy-intensive goods and services compared to higher income households, on average the Clean Fuel Regulations will have a greater impact on these households,” said PBO Yves Giroux in a May 18 news release.
He estimates that at the national level, in 2030, the cost of the new regulations on households will range from $231 (or 0.62 percent of disposable income) for lower-income households to $1,008 (or 0.35 percent of disposable income) for higher-income households.
The PBO also said provincial economies that are more involved in fuel production or transformation will be disproportionately affected, noting that “households in Saskatchewan, Alberta, and Newfoundland and Labrador will have the highest cost.”
This point was noted by the Atlantic premiers at the end of May after their meeting with Guilbeault, where the premiers
requested a delay in the implementation of the new regulations.
In a
joint statement issued on May 25, they said they were concerned the “detrimental and disproportionate impact they will have on Atlantic Canadians.”
“These increases will further add to inflationary pressures that will increase the costs of other goods imported to the region.”
In his May 26 statement emailed to The Epoch Times, Guilbeault said the increased profits made by refineries in the region means they don’t have to offload the cost of the new regulations onto consumers.
“Refineries in Atlantic Canada are reaping whopping new profits and have the ability to be part of the solution,” he said.
Saskatchewan Premier Scott Moe added his voice to those of his Atlantic colleagues this week, also asking for a delay “to ensure that the minister is doing proper and appropriate consultation,” he
said, according to CBC.
The Conservative Party has
called the new regulations a “second carbon tax” and tabled a
motion in the House in
early June to call for their cancellation. However, the motion was defeated. The Bloc Québécois and the NDP are aligned with the Liberal government on the matter.
The carbon tax goes up every new financial year and increased from $50 to $65 a tonne on April 1. This raised the price of gasoline by 14 cents, according to
Department of Finance figures.
With the yearly increments, the carbon tax could increase gasoline costs by over 37 cents per litre by 2030, according to department, and close to 40 cents per litre by 2030, according to the
Canadian Energy Centre.
