Opinion: Carney should scrap punitive Trudeau-era Clean Fuel Regulations

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But to increase long-term affordability, the CFR should goLast updated 11 minutes ago If the government wants to help increase long-term affordability for Canadians, it should eliminate the Clean Fuel Regulations, write Julio Mejia and Elmira Aliakbari. Photo by BRUNSWICK NEWS ARCHIVESTwo weeks ago, amid the tariff war and continued concerns about the cost of living, the Carney government extended the federal tax holiday on gasoline and diesel until January 2027. But if the Carney government wants to help reduce fuel costs in the long run, it should axe Ottawa’s so-called “Clean Fuel Regulations” (CFR) enacted by the Trudeau government in 2023.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountTo recap, the war in Iran and the blockade of the Strait of Hormuz, which sees roughly one-fourth of global seaborne oil trade, led to a spike in oil prices. Between February and March alone, gasoline prices jumped 21.2 per cent, the largest monthly increase on record. In response, Ottawa in April suspended the federal excise tax on gasoline and diesel as an affordability measure, reducing prices by about 10 cents per litre for gasoline and four cents for diesel, then extended the suspension on Sept. 2.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againBut the logic behind the tax break won’t disappear once the tax returns in 2027. If fuel affordability matters enough to justify temporary relief, it should matter enough to axe the CFR, which forces primary fuel suppliers (producers and importers) to reduce their “carbon intensity” — the emissions produced (per unit of energy the fuel generates) from extraction through production, distribution and use — by 15 per cent below 2016 levels by 2030. Fuel suppliers that fail to meet the targets must buy compliance credits, adding costs that will ultimately be passed on to Canadian consumers.In fact, according to a recent study by the Parliamentary Budget Officer (PBO), the CFR will increase fuel prices by up to 17 cents per litre for gasoline and 16 cents for diesel by 2030. And because Canadians use gasoline and diesel to transport food, medicine, construction materials and other goods and services, those higher fuel prices will ripple through the economy, shrinking Canada’s economy by up to 0.3 per cent — or about $9 billion — in 2030.Clearly, all Canadians will face higher costs for gasoline and diesel, but some provinces will bear a much heavier burden than others. According to the PBO, the CFR will cost the average household an extra $1,157 per year in Alberta and $1,117 per year in Saskatchewan — two provinces that depend heavily on fossil fuels for freight transportation, agriculture, mining, oil and gas extraction and other industrial activities. The two provinces with the lowest median household incomes in Canada will also get hit relatively hard — Nova Scotia ($635) and Prince Edward Island ($569) — as will households in Ontario ($495).In fact, the CFR imposes a heavier burden on lower-income households across the country, since they generally spend a larger share of their income on transportation and other energy-intensive goods and services including food. In other words, Ottawa’s CFR makes life more expensive for Canadians who already struggle with the cost of living.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Of course, proponents of the “Clean Fuel Regulations” point to the environmental benefits. But in reality, those benefits are remarkably small. The CFR is expected to cut greenhouse gas emissions by 26 million tonnes in 2030, which according to the federal government, equals roughly two weeks of emissions from the Canadian economy. But because Canada is only one source of global emissions, from a broader perspective, the expected reduction would represent about 0.04 per cent of projected global emissions in 2030. Lots of pain for little gain.The Carney government’s extended tax holiday on gasoline and diesel will provide some relief at the pumps. But if the government wants to help increase long-term affordability for Canadians, it should eliminate the CFR, a punitive and poorly-constructed policy from the Trudeau era.Julio Mejia and Elmira Aliakbari are analysts with the Fraser Institute.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.