Energy
Canada creates a brand new fossil fuel subsidy – Awkward: Etam
From the Frontier Centre for Public Policy
By Terry Etam
Upon hearing about the federal government’s decision to roll back the carbon tax on heating oil, I rolled up my sleeves. The point of writing about energy at all is to try to illuminate some aspect of an energy topic from a viewpoint inside the energy sector; to explain some energy nuance that the general population, which cares little for the nuances of energy, may find valuable. Energy is not simple, and there are a lot of loud storytellers out there, selling magical beans and wishful thinking.
To me, the carbon tax rollback was an annoyingly flagrant bit of vote-buying, yet another irritant from the federal government but one that, on centre-stage, seemed to have far less potential for cross-country histrionics than, for example, the time the prime minister threw his talented and principled First Nations minister under the bus. Now that was a shockwave.
This carbon tax vote grab? Ha. SNC Lavalin, Jody Wilson-Raybould, the WE Charity scandal, foreign interference… a heating oil subsidy doesn’t even crack an annual top-ten list of federal governance dirty diapers.
Or so I thought. Hoo boy. The Hail Mary scheme has blown up, blown up real good. Critics are everywhere, from across the political and environmental spectrum. Liberal heavyweights are attacking Trudeau; economists that love the carbon tax for its ‘efficiency’ are declaring the carbon tax dead. Incredulously, premiers have voiced a unanimous opinion that the entire country needs to be treated consistently.
Upon further thought, it shouldn’t be a big surprise that even the hard core climate crowd is displeased. The federal government has been lavish with announcements and proclamations about eliminating fossil fuel subsidies, that they would do so faster than imaginable, that, well, read their words for yourself: “Canada is the only G20 country to phase out inefficient fossil fuel subsidies ahead of the 2025 deadline. We are the first country to release a rigorous analytical guide that both fulfills our commitment and transparently supports action.”
“What the hell is this?” appears to be the consensus among a disparate group of voices that reaches consensus on nothing.
Be very clear why there is outrage: this is a shallow, obvious vote grab that crumbles the pillars of this government, and it most definitely is a creation of a brand new fossil fuel subsidy – so much for international credibility after all the hectoring this government has done globally. (If you have any doubts that this is anything but a political maneuver, consider that almost exactly a year before, in October 2022, the Conservatives tried to pass a motion to exempt home heating oil from the carbon tax, and all Liberal MPs save one brave Newfoundlander voted against it.)
Since the whole topic of the carbon tax has now come up though, here is a critical point that warrants some thought.
Canada and the US have chosen two different strategies to reduce emissions. Canada has, of course, the carbon tax – if you use or burn hydrocarbons, you’re going to pay (certain rural maritimers temporarily notwithstanding). Governmental, and government friendly, economists contort themselves into pretzels to demonstrate that the rebates handed back by the federal government “more than compensate” for the carbon tax, but every citizen that goes to a grocery store and realizes that every item in the industrial chain that handled any of those products in this country paid their own carbon tax, and that all that is rolled into the end product, has a very strong real-world suspicion that the government’s equation is laughable.
Beyond that, there is a big problem with Canada’s ‘stick’ approach to carbon reduction. Canadians can choose to limit the impact of the carbon tax by switching to something less carbon intensive, or spending to otherwise limit emissions. You don’t want to pay the carbon tax, you or your business? “No problem!” Says the federal government; just spend some exorbitant amount of capital, based on frameworks and guidelines that are not yet even ready.
In the US, the government long ago (2008) introduced something called 45Q, a carbon credit which was recently beefed up significantly under the Biden Inflation Reduction Act energy policy. 45Q is a carrot. If you are a carbon emitter, well, no one likes the emissions, but go ahead and carry on with your business.
If you choose to reduce your carbon emissions however, the government will hand you a cheque (sorry, check) for doing so – $85 per tonne CO2e, to be precise. You can start a new business that generates emissions credits, and if you can do it for less than $85/tonne, you have a new profit centre. There is a companion credit called 45X; credit revenue can be generated from it by manufacturing components that go into various energy technologies including structural fasteners, steel tubing, critical minerals, pretty much any battery component, etc.
In short, an existing business can carry on as before, or embark on a new venture with a guaranteed revenue stream from carbon credits generated.
In Canada, the stick is, like, really big, and for real. If you exist and consume conventional energy, you will pay, and pay dearly, and the amount will go up every year until either 2030 or until you cry uncle, whichever comes first.
Want to avoid paying the tax? Again, you will pay dearly, but differently; you will pay for capital expenditures on whatever means are available to you, using whatever policies are worked out by governments at all levels (Not a secret: a great many of the regulatory bugs are not yet worked as to potential solutions to limit emissions, capture/store carbon, etc.).
In Canada, either way, you pay through the nose. In the US, you have options to go into another line of business, or to find potentially unrelated ways to reduce emissions, with a ‘guaranteed revenue stream’ in the form of credits.
Guess in which direction businesses will thunder?
Economists love Canada’s carbon tax because it is ‘efficient’. Well, yes, that is true in an oddball sort of way, just as I can guarantee you that I can ‘efficiently’ reduce local vehicular traffic by blowing up every bridge and overpass. How’s that for efficient? I could cut traffic levels by greater than 50 percent within hours of delivery of the ACME Dynamite.
At the end of the day, the federal government’s backpedaling on the carbon tax is symptomatic of a cornerstone of the entire movement failing, because it was made of styrofoam and the building upon which it was constructed will only work with carefully engineered cement.
Europe is no different, celebrating emissions reduction successes while not wanting to talk much about how the industrial sector has been hollowed out. “Stick” taxes force companies to shut down and/or leave, and just plain punish citizens for things like heating their homes.
The carbon tax is a solution to the extent that there is readily-trimmable fat in the system. But it has to be designed to go after that fat, not after everything that moves. Autos are a perfect example. The federal government could have mandated a switch to hybrids, and banned sales of 500-hp SUVs and whatever (don’t yell at me free marketers; I’m pointing out real-world pathways that are possible). They could have mandated a rise in corporate average fuel economy in one way or another.
That is trimmable fat. Attacking home heating fuels is not.
This isn’t to say the US’ program is sheer genius. However, it is worth noting that 45Q has been around for fifteen years; what has happened recently is that it has been beefed up in a way that makes sense. (The US is also doing nonsensical things like forcing companies into carbon capture and sequestration, at the same time that, as US Senator Joe Manchin points out, “CCUS and DAC developers have submitted more than 120 applications to EPA [Environmental Protection Agency] for Class VI well permits to sequester carbon since the IRA passed, and there are 169 total pending applications, and not one approval has been made by the Biden Administration.”)
The energy transition as envisioned by the ‘climate emergency’ crowd was doomed to fail because it was based on a ‘too fast, too soon’ transition game plan – which was actually not a plan at all, more of a command – and, equally as relevant, was based on the tenuous fear instilled in citizens by bad weather (an entire generation is now being raised to 1) be terrified of the weather, and 2) be convinced that their actions can influence it. Stop it.).
Our entire world is built on oil, natural gas, coal (in some parts of the world) and hydrocarbon energy systems in general. Sue ‘Big Oil’ all you want; that won’t change anytime soon.
Energy illiteracy is the slow-moving black plague of our time.
Canada’s efficient carbon tax pits citizens against their heating needs, against their business interests, and against inescapable realities.
Here’s the sad part: All the federal government is doing here is facing reality, or starting to. Europe did the same last year, spending hundreds of billions in brand new fossil fuel subsidies to shield consumers from rocketing energy prices. When push comes to shove, governments will wilt under pressured voter pocketbooks.
Boneheads will at this point insert the oft-heard refrain “So you’re saying we should just do nothing.” I’ve heard that so often it sounds like mosquitoes in summer. It’s the only attack some people have.
It is actually an amazing time to see new energy technologies take shape, with the best minds in the entire energy industry pushing in that way. We are seeing the creation of hydrogen hubs, development of new technology like fuel cells, greater use of methane capture from landfills, etc. A great many great minds are making significant progress.
But even those geniuses can’t change the laws of reality. Eight billion people are now alive at the same time due to a certain system, and it will take a very long time to change that system if all of those people stay alive and try to live like the west does.
Energy wise, we need better, much better. Canada’s government is paying the price for heedlessly listening to ideological cheerleaders. Just like Canada’s citizens have been.
Terry Etam is a columnist with the BOE Report, a leading energy industry newsletter based in Calgary. He is the author of The End of Fossil Fuel Insanity. You can watch his Policy on the Frontier session from May 5, 2022 here.
Business
Premiers fight to lower gas taxes as Trudeau hikes pump costs
From the Canadian Taxpayers Federation
By Jay Goldberg
Thirty-nine hundred dollars – that’s how much the typical two-car Ontario family is spending on gas taxes at the pump this year.
You read that right. That’s not the overall fuel bill. That’s just taxes.
Prime Minister Justin Trudeau keeps increasing your gas bill, while Premier Doug Ford is lowering it.
Ford’s latest gas tax cut extension is music to taxpayers’ ears. Ford’s 6.4 cent per litre gas tax cut, temporarily introduced in July 2022, is here to stay until at least next June.
Because of the cut, a two-car family has saved more than $1,000 so far. And that’s welcome news for Ontario taxpayers, because Trudeau is planning yet another carbon tax hike next April.
Trudeau has raised the overall tax burden at the pumps every April for the past five years. Next spring, he plans to raise gas taxes by another three cents per litre, bringing the overall gas tax burden for Ontarians to almost 60 cents per litre.
While Trudeau keeps hiking costs for taxpayers at the pumps, premiers of all stripes have been stepping up to the plate to blunt the impact of his punitive carbon tax.
Obviously, Ford has stepped up to the plate and has lowered gas taxes. But he’s not alone.
In Manitoba, NDP Premier Wab Kinew fully suspended the province’s 14 cent per litre gas tax for a year. And in Newfoundland, Liberal Premier Andrew Furey cut the gas tax by 8.05 cents per litre for nearly two-and-a-half years.
It’s a tale of two approaches: the Trudeau government keeps making life more expensive at the pumps, while premiers of all stripes are fighting to get costs down.
Families still have to get to work, get the kids to school and make it to hockey practice. And they can’t afford increasingly high gas taxes. Common sense premiers seem to get it, while Ottawa has its head in the clouds.
When Ford announced his gas tax cut extension, he took aim at the Liberal carbon tax mandated by the Trudeau government in Ottawa.
Ford noted the carbon tax is set to rise to 20.9 cents per litre next April, “bumping up the cost of everything once again and it’s absolutely ridiculous.”
“Our government will always fight against it,” Ford said.
But there’s some good news for taxpayers: reprieve may be on the horizon.
Federal Conservative leader Pierre Poilievre’s promises to axe the carbon tax as soon as he takes office.
With a federal election scheduled for next fall, the federal carbon tax’s days may very well be numbered.
Scrapping the carbon tax would make a huge difference in the lives of everyday Canadians.
Right now, the carbon tax costs 17.6 cents per litre. For a family filling up two cars once a week, that’s nearly $24 a week in carbon taxes at the pump.
Scrapping the carbon tax could save families more than $1,200 a year at the pumps. Plus, there would be savings on the cost of home heating, food, and virtually everything else.
While the Trudeau government likes to argue that the carbon tax rebates make up for all these additional costs, the Parliamentary Budget Officer says it’s not so.
The PBO has shown that the typical Ontario family will lose nearly $400 this year due to the carbon tax, even after the rebates.
That’s why premiers like Ford, Kinew and Furey have stepped up to the plate.
Canadians pay far too much at the pumps in taxes. While Trudeau hikes the carbon tax year after year, provincial leaders like Ford are keeping costs down and delivering meaningful relief for struggling families.
Economy
Gas prices plummet in BC thanks to TMX pipeline expansion
From Resource Works
By more than doubling capacity and cutting down the costs, the benefits of the TMX expansion are keeping more money in consumer pockets.
Just months after the Trans Mountain Expansion (TMX) project was completed last year, Canadians, especially British Columbians, are experiencing the benefits promised by this once-maligned but invaluable piece of infrastructure. As prices fall when people gas up their cars, the effects are evident for all to see.
This drop in gasoline prices is a welcome new reality for consumers across B.C. and a long-overdue relief given the painful inflation of the past few years.
TMX has helped broaden Canadian oil’s access to world markets like never before, improve supply chains, and boost regional fuel supplies—all of which are helping keep money in the pockets of the middle class.
When TMX was approaching the finish line after the new year, it was praised for promising to ease long-standing capacity issues and help eliminate less efficient, pricier methods of shipping oil. By mid-May, TMX was completed and in full swing, with early data suggesting that gas prices in Vancouver were slackening compared to other cities in Canada.
Kent Fellows, an assistant professor of Economics and the Director of Graduate Programs for the School of Public Policy at the University of Calgary, noted that wholesale prices in Vancouver fell by roughly 28 cents per litre compared to the typically lower prices in Edmonton, thanks to the expanded capacity of TMX. Consequently, the actual price at the gas pump in the Lower Mainland fell too, providing relief to a part of Canada that traditionally suffers from high fuel costs.
In large part due to limited pipeline capacity, Vancouver’s gas prices have been higher than the rest of the country. From at least 2008 to this year, TMX’s capacity was unable to accommodate demand, leading to the generational issue of “apportionment,” which meant rationing pipeline space to manage excess demand.
Under the apportionment regime, customers received less fuel than they requested, which increased costs. With the expansion of TMX now complete, the pipeline’s capacity has more than doubled from 350,000 barrels per day to 890,000, effectively neutralizing the apportionment problem for now.
Since May, TMX has operated at 80 percent capacity, with no apportionment affecting customers or consumers.
Before the TMX expansion was completed, a litre of gas in Vancouver cost 45 cents more than a litre in Edmonton. By August, it was just 17 cents—a remarkable drop that underscores why it’s crucial to expand B.C.’s capacity to move energy sources like oil without the need for costly alternatives, allowing consumers to enjoy savings at the pump.
More than doubling TMX’s capacity has rapidly reshaped B.C.’s energy landscape. Despite tensions in the Middle East, per-litre gas prices in Vancouver have fallen from about $2.30 per litre to $1.54 this month. Even when there was a slight disruption in October, the price only rose to about $1.80, far below its earlier peaks.
As Kent Fellows noted, the only real change during this entire timeline has been the completion of the TMX expansion, and the benefits extend far beyond the province’s shores.
With TMX moving over 500,000 barrels more per day than it did previously, Canadian oil is now far more plentiful on the international market. Tankers routinely depart Burrard Inlet loaded with oil bound for destinations in South Korea and Japan.
In this uncertain world, where oil markets remain volatile, TMX serves as a stabilizing force for both Canada and the world. People in B.C. can rest easier with TMX acting as a barrier against sharp shifts in supply and demand.
For critics who argue that the $31 billion invested in the project is short-sighted, the benefits for everyday people are becoming increasingly evident in a province where families have endured high gas prices for years.
-
C2C Journal23 hours ago
Mischief Trial of the Century: Inside the Crown’s Bogus, Punitive and Occasionally Hilarious Case Against the Freedom Convoy’s Tamara Lich and Chris Barber, Part I
-
Bruce Dowbiggin2 days ago
Why Canada’s Elites Are Captives To The Kamala Narrative
-
Business1 day ago
Premiers fight to lower gas taxes as Trudeau hikes pump costs
-
Agriculture1 day ago
Sweeping ‘pandemic prevention’ bill would give Trudeau government ability to regulate meat production
-
Alberta2 days ago
Alberta Bill of Rights Amendment, Bill 24 – Stronger protections for personal rights
-
Economy2 days ago
Gas prices plummet in BC thanks to TMX pipeline expansion
-
Economy2 days ago
One Solution to Canada’s Housing Crisis: Move. Toronto loses nearly half million people to more affordable locations
-
Business2 days ago
Trudeau government spends millions producing podcasts