Global Courant 2023-05-19 02:51:10
New fuel regulations that take full effect in 2030 are expected to raise fuel prices and shrink the size of Canada’s economy, according to a new report from Canada’s budget watchdog.
The Budget Officer of the States (PBO) has a distribution analysis of the federal government’s Clean Fuel Regulations Thursday.
After its publication, the report became a lightning rod for federal politicians, with conservatives calling the policy a financial burden on families.
The other political parties criticized the PBO for saying the analysis ignores the costs of inaction on climate change.
The Clean Fuel Regulation will come into effect in July.
It will require producers or importers of gas or diesel to gradually reduce the carbon intensity of the fuels they sell.
By 2030, the carbon intensity of these fuels must fall to 15 percent below 2016 levels. Environment and Climate Change Canada, this will result in a 26 million-ton reduction in greenhouse gas emissions. It establishes a carbon credit market in which reducing emissions produces credits that can be sold.
BC, California, Oregon and others have adopted similar regulations.
By raising the price of carbon-intensive fuels, the government hopes to stimulate the production and consumption of cleaner fuels such as hydrogen and biofuels.
Once these regulations go into full effect, the PBO will raise the price of gas and diesel by as much as 17 cents per liter, according to figures from Environment and Climate Change Canada.
“It’s a significant price increase as a result of these clean fuel rules,” said Yves Giroux, the parliamentary budget officer.
Canada’s economy will also take a hit, the PBO reported, as regulations will cut real GDP by up to 0.3 percent, or $9 billion, by 2030.
To determine the impact of the regulation on households, the PBO estimated that household income ranges from 0.62 percent of disposable income or $231 for lower-income families to 0.35 percent of disposable income or $1,008 for households with an income.
“For most households, it’s less than one percent of their income,” Giroux said. “It’s not a big impact in the grand scheme of things.”
“But it’s an impact.”
Parliamentary budget officer Yves Giroux waits to appear before the Commons Finance committee on Parliament Hill in Ottawa, Tuesday, March 10, 2020. Giroux said the government’s Clean Fuel Regulations will raise the price of fuel significantly. (Adrian Wyld/The Canadian Press)
That impact is being felt even more in the Prairies and Newfoundland and Labrador, the PBO said. By 2030, clean fuel regulations will cost the average Saskatchewan household $1,117 or 0.87 percent of their disposable income.
But none of these estimates took into account the cost of doing nothing to fight climate change to limit the average rise in global temperatures to 1.5C.
PBO report flawed: policy researcher
Above 1.5°C means Canada and the world will see the bigger impacts of climate change – more intense storms, heatwaves and wildfires – which are widely believed to disproportionately affect those on the lowest incomes.
“The report doesn’t paint a complete picture,” said Jason Dion, a senior research director at the independent Canadian Climate Institute. “I’m sorry.”
Dion said the report compares clean fuel regulations to a world where Canada is doing nothing about climate change and is not affected by it.
The Canadian Climate Institute estimates that climate change is costing Canada $700 per person.
Dion noted that the European Union has introduced a carbon border adjustment, or carbon tariff, that penalizes countries with weak climate policies.
Conservative leader calls regulation ‘carbon tax 2’
Outside the House of Commons, Conservative leader Pierre Poilièvre said on Thursday the regulations will cause significant problems for families, especially when combined with the national carbon price, which is set to rise to 170 per tonne by 2030.
“(It’s) yet another tax on the backs of hard-working Canadians,” Poilièvre told reporters, calling the clean fuel regulations “carbon tax two.”
The Clean Fuel Regulations are not a tax, as all money paid goes directly to oil and gas companies, said Rachel Samson, vice president of research at the Institute for Research for Public Policy.
“For starters, the revenue doesn’t go to the government,” Samson said. “So I think it’s immediately ruled out as a tax.”
Samson also found flaws in the PBO’s report, which she described as “misleading” because it uses the highest household cost estimates. She said it also assumes that fuel producers will not find low-emission fuel alternatives and that Canadians will not ditch their gas guzzlers for public transit, bicycles or electric vehicles.
Environment Secretary Steven Guilbeault joined the chorus of criticism, calling the PBO modeling “unbalanced” and accusing the Conservatives of fear mongering.
“Pierre Poilièvre is doing what he does best: scaring Canadians with slogans on bumper stickers,” said Guilbeault.
LOOK | Minister of VROM responds to PBO analysis of the Clean Fuel Regulation
Minister of VROM responds to PBO analysis of the Clean Fuel Regulation
While speaking to reporters about the impact of the Clean Fuel regulation on Canadian drivers, Environment Minister Steven Guilbeault said the government is “working to ensure costs to Canadians are minimal,” adding that the analysis of the parliamentary budget official of the regulations “did not even mention the effects of climate change.”
At a joint press conference Thursday morning calling for tighter financial regulations to kick-start the green transition, MPs from the Bloc, NDP and Greens were united in their criticism of the PBO’s climate analysis.
They said the PBO had conducted a similar analysis of the federal fuel levy, commonly referred to as the carbon tax.
“The shortcoming of their analysis is not estimating the cost of inaction,” said Green Party leader Elizabeth May.
The NDP’s Taylor Bachrach said the “high” fuel prices Canadians are experiencing are not a result of national climate policies, but the “excess profits” of oil companies.
Giroux acknowledged that his report fails to consider both the costs and benefits of policies in tackling climate change. He added that such an analysis should take into account not only what Canada is doing, but also what other countries are doing.
