New fuel regulations will increase price of fuel and decrease GDP: budget watchdog.Atlantic premiers want federal government to postpone new clean fuel rules."It's like a cap-and-trade system for intensity as opposed to absolute emissions," said Jaccard. The regulations actually work more like a cap-and-trade system, which provincial governments used well before the federal carbon tax. "It's almost like a carbon tax, but it doesn't put the charge on every litre, so it can do more to encourage efficiency or fuel switching toward low carbon fuels or low carbon electricity without having the same price impacts on the fuel itself," said climate economist Mark Jaccard, a professor at Simon Fraser University and an expert on clean fuel standards. The Clean Fuel Regulations work differently, since they only penalize the dirtiest fuels. A carbon tax imposes a surcharge on every litre of fuel based on its carbon content. Given how much each tonne of carbon costs society in increased climate warming, the government calculates that it's a good bargain. The government estimates that by 2040, the regulations will have cut emissions by around 200 million tonnes at a cost to GDP of $30 billion. The economic cost will be a hit to GDP of roughly $9 billion and a cut to emissions of about 27 million tonnes in 2030, says an ECCC regulatory impact analysis. That's on top of the 37 cents the carbon tax will add to a litre of gasoline by 2030. The Parliamentary Budget Office (PBO) predicts a price increase of 17 cents per litre. It estimates a price increase at the pumps by 2030 of anywhere between six and 13 cents per litre for gasoline, depending on how refineries comply. The federal government says it doesn't think consumers will notice any added costs right away.Įnvironment and Climate Change Canada (ECCC) says the regulations' impact on gas prices will be "minimal" for the next few years - since producers should be able to meet the standards by taking steps they probably would have taken anyway.ĮCCC predicts that by 2030, consumers should see some added costs when filling their tanks, although the department isn't certain how big the price bump will be. The new Clean Fuel Regulations come into force on July 1 but refineries will have a year to comply. It's also possible for others to earn credits through investments in, for example, electric vehicle charging stations, and to sell those credits to fuel producers. Other producers can buy those credits if their fuels fall short. Producers that come in below the federal government's emissions intensity ceiling will earn extra credits they can sell. They could put more ethanol in their gasoline, use more biodiesel or find innovative ways of reducing their refineries' emissions through, for example, carbon capture and storage. Producers could comply with the new rules in different ways. By 2030, the rules will require a 15 per cent cut in emissions intensity compared to 2016 levels. The goal is to push companies that produce or import fuel to gradually reduce the emissions intensity of that process by setting a ceiling and dropping it each year. Unlike the current rules, the new ones cover the entire life cycle of fuels, from production and transport to consumption. The new regulations are meant to cut the "carbon intensity" of automotive fuels sold on the Canadian market - how much they generate in emissions for a given amount of energy. Starting July 1, a new regime will replace those rules. (Kirk Fraser/CBC)įederal regulations already require a minimum percentage of biofuels in gasoline and diesel. Saskatchewan Premier Scott Moe says the regulations could have a 'disproportionate impact' on some parts of the country.
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