Poorer households will have to spend a larger share of their income than wealthier ones on the clean fuels Ottawa wants to see, shows a report with conclusions disputed by Environment Minister Steven Guilbeault.
The price of a liter of gasoline could increase by 17 cents per liter in 2030 because of federal regulations on clean fuels, can we read in the analysis released Thursday by the Parliamentary Budget Officer (PBO), Yves Giroux. For diesel, this surcharge could go up to 16 cents per litre.
Starting in July of this year, Ottawa will force fuel suppliers to reduce the “carbon intensity” of their product, that is to say the emissions that come from the extraction of oil, above all, but also from its refining, distribution and use of fuel.
The clean fuel regulations have a special credit trading system that aims to make the cleanest gasoline cheaper, in what the federal government has called “one of the most most complex ever developed.
The wallet of the less fortunate
Although Quebec households will be among those for whom the bill for the operation is the lowest, the PBO estimates that this price increase could cost them $436 on average, or 0.39% of their income, for the year. 2030. This is a maximum based on a scenario where the price would be fully transferred to consumers and in which companies would not have invented a way to reduce carbon intensity for less.
However, these estimates also show that the amount that could fall to the poorest 20% of Quebec families — $178 for 2030 — represents a larger share of their income, at 0.54% of their budget. The more significant impact on the wallets of the less fortunate is qualified as “regressive” in the analysis of the Agent of Parliament.
“Low-income households generally spend a greater proportion of their income on transportation and other energy-intensive goods and services compared to high-income households,” the report explains.
Taxpayers in the oil-producing provinces of Newfoundland and Labrador, Saskatchewan and Alberta would be the hardest hit in the country by these fuel regulations, with an average bill for 2030 of $850, $1,117 and $1,157, respectively.
Contested methodology
The leader of the Conservative Party of Canada turned the spotlight on this report on Thursday, calling the regulation “carbon tax number two” which will also apply to Quebec.
“It is only the Conservative Party that will cancel these taxes to reduce prices […] at the same time, the Wokist Bloc and the Liberals are increasing the cost on the backs of Quebecers,” said Pierre Poilievre.
Canada’s Environment and Climate Change Minister, Steven Guilbeault, criticized the Parliamentary Budget Officer’s methodology.
“The analysis does not take into account changing technologies and assumes that no new technologies will be introduced. The starting assumption is not reasonable especially considering the $120 billion in clean economy investment our government made in Budget 2023 alone. »
Minister Guilbeault says the regulations were designed so that there would be no “immediate” impact on fuel prices, and the expected increase as we approach 2030 “should be minimal compared to the profits of oil refineries that double or even triple their usual margins”. He criticized the fact that the costs of this policy are not highlighted with those, very important, of the consequences of climate change, such as the forest fires in Alberta.
“It is not our job to estimate the benefits of government measures,” replies Yves Giroux, joined by The duty. The Parliamentary Budget Officer adds that he does not believe the clean fuels regulations will have a big effect, by themselves, on the Alberta wildfires.
“There is a great reluctance to clearly explain to Canadians that there are costs to fighting climate change. […] Even when you act through regulations, there are costs. And the impacts can be regressive”, that is to say, affect the poorest, he says.
The Clean Fuel Regulations promise to reduce greenhouse gas emissions by 26 million tonnes in 2030. They are combined with other measures, such as a federal fuel charge, dubbed “carbon tax” set at 170 $ per ton for 2030.