Very few Atlantic Canadians are aware the federal government is about to usher in new regulations on fuel production that will cost businesses and consumers in this region over $1.4 billion in direct compliance costs.
Ottawa’s proposed Clean Fuel Standard essentially creates a new, second carbon tax on all fossil fuels with the aim of reducing greenhouse gas emissions.
There is growing concern that the costs associated with complying with the new rules will create a crippling burden at a time when we can least afford it.
The Clean Fuel Standard requires energy producers, distributors, and retailers to reduce carbon fuel content in their fuels with limits becoming increasingly stringent in future years. Regulations are scheduled to be introduced this fall.
These are costs that will ultimately be borne by the consumer, including increasing natural gas prices, higher home heating bills and more expensive gasoline and diesel at the pumps. Indeed, we can expect to pay more for almost anything that has to be shipped or processed in Canada, which is today just about everything.
Moreover, despite the heavy cost, there is emerging evidence that the fuel standard will fail to meet Ottawa’s target of a 30-megatonne reduction in annual greenhouse gas emissions by 2030.
As an organization devoted to studying and raising awareness of energy issues in the region, the Atlantica Centre for Energy recognizes the need to reduce greenhouse gas emissions. We are an advocate of clean and sustainable energy solutions.
As citizens of the world, all of us have a duty to be better stewards of the environment. In many ways, Canada stands as a leader in reducing emissions that contribute to climate change but there is more that must be done.
However, in examining what we know of Ottawa’s plans for the fuel standard, we are deeply concerned by its complexity and the disproportionally high financial burden that it will have on our region. Compliance costs here in Atlantic Canada are estimated to be almost five times higher than the Canadian average and, by way of example, will exceed $1,400 per every single person living in New Brunswick.
No other region in the nation stands to be as heavily impacted by the fuel standard than Atlantic Canada.
This region has the highest dependency on refined petroleum as an energy source, at nearly 60 per cent. Unlike other areas of the country, it does not have widespread access to affordable sources of low-carbon fuels such as biofuels or even natural gas.
The Atlantica Centre for Energy is deeply concerned that there has not been enough consultation or consideration for the impact the fuel standard will have on Atlantic Canadians, particularly at a time of acute economic vulnerability with the ongoing global pandemic.
We have written to the premiers of the four Atlantic provinces and federal Environment and Climate Change Minister Jonathan Wilkinson, expressing concern for the significant impact this fuel standard could have.
The Centre is calling on the federal government to:
- work with Atlantic provinces to undertake a detailed cost-benefit analysis to understand the impacts the fuel standard will have on the region,
- launch a comprehensive stakeholder education, awareness and engagement process,
- ensure there are economically viable paths to complying with the standard.
An increasing number of organizations are raising concerns at the national level as well – among them, the Canadian Chamber of Commerce and Canadian Manufacturers and Exporters.
“All Canadians, businesses included, want to do their part to mitigate the effect of climate change. We can achieve our climate commitments, even while managing the terrible economic effects of COVID-19, but it will require well-designed policies and strategies,” says Aaron Henry, senior director of natural resources and sustainable growth with the Canadian Chamber of Commerce. “There are better models and designs that we can pursue, and we’d like to work with the government to find a policy design that doesn’t crush small businesses in the middle of a pandemic.”
“All Canadians, including the industrial sector, have a responsibility to do what we can to address climate change. We fully agree with the government’s view that a balance must be struck between the environment and the economy. We are, however, concerned that the Clean Fuel Standard as currently proposed misses the mark,” says Dennis Darby, President & CEO of Canadian Manufacturers & Exporters. “The Clean Fuel Standard will put manufacturers at a competitive disadvantage and restrict the sector’s ability to grow and attract new investments to Canada.”
Rather than paying a punitive tax on top of the existing carbon tax, businesses, investors and consumers should be encouraged to embrace clean energy innovations and solutions that reflect Atlantic Canada’s unique strengths, while not penalizing us for our weaknesses: low population density and geography.
We should focus on curbing emissions through leadership in energy efficiency, renewable electricity generation and our ability to store and move clean energy around the region.
We should leverage our region’s innovation and ingenuity in emerging clean energy technologies such as smart grid, small modular reactors (SMRs) and alternative clean fuels such as hydrogen.
We should also continue to advance our region’s offshore and onshore hydrocarbon production and value-added processing capacity as a critically important energy bridge to a net-zero future. Atlantic Canada’s oil and gas sector continues to innovate and reduce their carbon footprint, while supporting thousands of well-paying jobs in the region.
Working together, it is time for the four Atlantic provinces and Government of Canada to forge a shared energy vision and plan, specific to our region, that addresses our current economic reality while proactively planning the transition to a sustainable clean energy future.
Stephen MacMackin is the Chair of the Atlantica Centre for Energy. The Centre provides a unique meeting ground for industry, government, the education and research sectors, and the community at large to foster partnerships and proactively engage in energy-related issues.