Clean Fuel Regulations start on Canada Day, but consumer impact won’t hit for a few years: experts

Albertans shouldn’t feel a Canada Day pinch at the pumps as Ottawa’s new clean fuel regulations take effect on Saturday.

It will likely be a couple of years before the impacts are felt from the new rules — which are intended to cut emissions from fuels at every stage, from production to usage. The move is opposed by premiers in Alberta, Saskatchewan and Atlantic Canada.

Any jump in the price at the pump as Albertans head out for the long weekend will be due to market pressures.

But UCP whip Shane Getson was still warning Albertans of “Justin Trudeau’s plan to impose a second carbon tax on consumers,” in a news release on Friday, following up on Environment Minister Rebecca Schulz’s letter to federal Environment and Climate Change Minister Steven Guilbault on Thursday stating Alberta’s opposition to the program.

Under the phased-in approach to the new regulations, most producers already fall in line with the first phase with ethanol additives, and will not be on the hook for purchasing credits that can be passed on to the consumer. But higher costs are on the horizon.

“These impacts both on households and the economy as a whole will gradually increase over the coming years,” said Trevor Tombe, an economist at the University of Calgary. “The best estimates on this are from the parliamentary budget office . . . where they quantify the effects by 2030.”

CFR will cost the average Alberta family north of $1,100 annually: PBO

Tombe said the CFR is not a carbon tax. It is a regulatory intervention that will increase costs, which will be passed on to the individual.

It is estimated that by 2030, it will cost the average Alberta family more than $1,100 annually, according to the PBO. This will be on top of a carbon tax that is expected to increase to $170 per tonne by 2030.

“That’s something that will have real consequences for people,” said Tombe. “This is certainly something that does affect the cost of transportation fuel, and that’s the main way in which it has broader economic effects, so it shifts consumer spending away from other things.”

He added higher transportation costs will drive up the cost of all goods and services.

The Canadian Taxpayers Federation was still encouraging drivers to fill up their cars before Canada Day, especially if they are driving west into B.C.

The difference in price between Crowsnest Pass and Sparwood, B.C., on the other side of the border, was 29 cents a litre, due largely to the difference in provincial taxes. Alberta has suspended its 13 cents in fuel tax until the end of 2023.

Tombe said the effectiveness of the CFR as a tool in lowering emissions remains to be seen, but it will likely not be as effective or as inexpensive as the carbon tax.

‘Gasoline prices at $2 a litre … probably changed a lot of math for many consumers, probably even more than the carbon tax’

Charles St-Arnaud, chief economist for Alberta Central, said the increase in carbon tax and the CFR will not compare to the current market volatility due to effects from the pandemic, the Russia-Ukraine war and other global factors. He said those factors alone may have pushed more people to rethink their transportation than any tax.

“Gasoline prices at $2 a litre because of the war in Ukraine probably changed a lot of math for many consumers, probably even more than the carbon tax,” he said. “Because, suddenly, you see the price and you’re like, ‘OK, how can I change my behaviour to reduce my costs?’ ”

While consumers may escape the hit at the pumps, those still on a regulated-rate option for electricity will see a spike in their bill for July, with a 51 per cent energy rate increase.

Prices have climbed to 26.6 cents per kilowatt-hour in July, as high anticipated usage coupled with market factors and deferred repayment of affordability measures put in place earlier this year combine to drive rates up. The price is up from 16 cents/kWh in May and 16.7 cents/kWh in April.

Dan McTeague, president of Canadians for Affordable Energy, said large portions of the country are lacking in options, even when it comes to public transportation. He also questioned the reliability of electric vehicles in comparison to combustion engines in Canada’s colder climate.

He is also concerned about the broader effects of another price on carbon and its impacts on the economy and the cost of living, especially in light of recent improvements to inflation.

“There’s a big drop in inflation driven by . . . energy prices,” said McTeague, pointing to a 50 cent decrease in the price of gas since the beginning of the year. “It’s ubiquitous, it’s pervasive and it makes its way through the economy. So to start messing around with the cost of energy, it makes us uncompetitive and it also makes the cost of living that much more difficult.”

McTeague is not in favour of any tax or carbon pricing. Instead, he echoed Premier Danielle Smith on the need to look at global emission targets, not just Canada’s, which account for a relatively small amount of total emissions. He said this could be addressed by increasing the export of LNG to markets such as Japan and Germany.

“Emissions don’t stop at the Canadian border, nor do they stop when they’re coming to the Canadian border,” he said.

“I think what we need to do is to make damn sure that we have a scenario in this country where you have people who finally recognize that Canada has a variety of energy services and fuels and opportunities on a basis that very few other countries can match. And for that reason, we have every ability to change our way.”

Twitter: @JoshAldrich03

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