Dan McTeague
New Carbon Tax, Same Price Tags
We must keep energy affordable for Canadian families. I have been saying this for years. But despite this simple message, some politicians still don’t get it.
Justin Trudeau’s Liberal government keeps insisting on one new expensive energy policy after another, and all of these efforts are designed to make energy unaffordable for Canadians.
One of Trudeau’s latest initiatives is his “Second Carbon Tax,” also known as the “Clean Fuel Standard,” or “CFS.”
We’ve dubbed the Clean Fuel Standard a Second Carbon Tax because that is exactly what it is – simply another tax grab that will only make life more unaffordable for Canadians.
Trudeau’s friends in the media barely mention this new tax, so it falls to Canadians for Affordable Energy and a few like-minded people to alert Canadians to this latest assault on your pocketbook.
To this end, CAE is publishing a new report authored by economist Ross McKitrick on the Clean Fuel Standard a.k.a the ‘Second Carbon Tax’. You may recall I wrote about the Clean Fuel Standard a few years ago when it was first proposed.
The Clean Fuel Standard is a tax that aims to reduce the carbon intensity of liquid fuels used in transportation (gasoline, diesel) by 15% by 2030. This will be done by blending ethanol into traditional liquid fuels, and by the use of carbon credits which will be available to those switching to electric vehicles or increasing EV infrastructure.
The report released by LFX Associates ‘Economic Analysis of the 2022 Federal Clean Fuels Standard’ shows us just how expensive and ineffective this policy will be.
The conservative estimate is an increase of 2.2-6.5% per household. In real money terms this will an extra tax of $1,277 a year per worker.
In provinces that rely more heavily on liquid fuel sources such as oil – like Newfoundland and New Brunswick- these prices will be higher.
What a time to increase energy bills for families.
This new carbon tax is being released at a time of soaring household costs. Grocery prices have skyrocketed. Families are struggling to afford the basic necessities for their home. Now the government is going to make it even more expensive.
And will this policy be effective? Will it reduce emissions and bring Canada into a green renewable future?
No. No, it will not.
While locally (in Canada) emissions may go down, there will be no global reduction in greenhouse gas (GHG) emissions. That is because the ethanol used to dilute our liquid fuels will most likely be imported from the United States. US based ethanol has a higher lifetime carbon intensity than gasoline. To extract, store it, ship it, etc. produces more emissions than what would be produced by using gasoline to fill our cars.
This new “Second Carbon Tax” will not reduce emissions. But it will allow Justin Trudeau to state that he has reduced Canada’s carbon intensity footprint. Unfortunately, any such reduction resulting from this tax will be achieved on the backs of working Canadians.
This policy will not help Canadians lead better lives. But it will make it more expensive to drive your car to the grocery store, to hockey practices, to medical appointments, and to work.
And, contrary to the government’s claim that there will be virtually no effect on GDP, the impact of this new tax on the Canadian economy will be significant. By 2030 the Canadian GDP will be about 1.3 percent lower than without the CFS. In other words, we can expect that Trudeau’s new CFS carbon tax will actually harm the Canadian economy. Unemployment, higher cost of living and further diversion of investments from Canada will put downward pressure on government revenue. This will lead to an increase in the consolidated government deficit in every year of the policy’s implementation. The extra government debt accumulated by 2040 because of the Clean Fuel Standard is estimated to reach as high as $95.2 billion.
You may feel like I am starting to sound like a broken record. Believe me, I feel like that too. My message is always consistent: bad government policies mean prices go up for Canadian families, and Canadian families should not be punished for the sake of our government’s phony global image as climate heroes.
But that is because policies like the Clean Fuel Standard will have real, serious, even detrimental effects for Canadian families.
A new tax on energy? A second carbon tax, on top of the already disastrous and ever-increasing carbon tax that Trudeau insists on forcing Canadians to pay? Yep. Because, well, because it’s 2022.
Dan McTeague
“Axe the Tax” is just the beginning
From Canadians for Affordable Energy
All across Canada preemptive obituaries are being written for the Carbon Tax. (I’ve written one myself.) And for good reason. The closer we get to the full implementation of Justin Trudeau’s carbon tax, the harder regular people are being hit in the wallet. The tax has helped make it more expensive to feed and clothe our families, to heat our homes, and to gas up our cars. It has been a direct assault on the Canadian standard of living.
The fact that the Trudeau Liberals are behind the Carbon Tax is central to their collapsing poll numbers. And Conservative leader Pierre Poilievre has capitalized on its unpopularity by pledging to “Axe the Tax” every chance he gets. Chances are that pledge will carry his party into the majority, whenever we get around to having an election.
That said, we must be careful because the Carbon Tax is just one part of Trudeau’s Net-Zero program. It would be a catastrophic blunder for the Conservatives, upon entering government, to repeal only the Carbon Tax and leave the rest of the Liberals’ green agenda in place. Doing so would jeopardize Poilievre’s ability to make life in Canada more affordable.
There are a whole raft of policies on this file which a Poilievre government should quickly repeal. Here are a few which ought to be at the top of the list:
Clean Fuel Regulations (CFR)
Trudeau’s Clean Fuel Regulations (CFR), which I’ve nicknamed the Second Carbon Tax, are designed to reduce the carbon intensity of fuels like gasoline and diesel by blending increased amounts of ethanol into those fuels, making them less efficient while potentially contributing to engine corrosion and other problems. Plus, it’s estimated that the CFR will raise gasoline prices between six and seventeen cents a litre by 2030. Which is to say, we’ll be paying more for fuel and getting less out of it.
And, like the original Carbon Tax, the cost of the CFR is felt beyond the pumps, with estimates suggesting it will increase household energy costs by between 2.2 and 6.5 percent a year, while also significantly constricting the growth of our economy. These regulations ought to be scrapped entirely.
Emissions Caps
As I’ve written elsewhere, the Trudeau government’s proposed Emissions Cap, which targets our nation’s oil and gas sector, “would make Canada the only country in the world which willingly and purposefully stifles its single largest revenue stream.” Oil and gas is our “golden goose,” according to a study by Jack Mintz and Philip Cross, but the Trudeau government is proposing a cap on that sector’s carbon emissions, which a recent Deloitte report found “would lead to a 10% decrease in Alberta’s oil production and a 16% decrease in conventional natural gas production.” That translates to an estimated decline of real GDP in Alberta of $191 billion, and of $91 billion in the rest of Canada.
This is madness, and that’s before we even touch on the fact that it will have no discernable impact on global carbon emissions. It merely ensures that the world’s energy needs will be met by less environmentally responsible nations like Russia, Venezuela, Saudi Arabia, and Iran.
Electric Vehicle Mandates and Subsidies
Among the most reckless policies enacted by this government is Trudeau’s Electric Vehicle (EV) mandate, which bans the sale of new gas-and-diesel driven cars and trucks by 2035. I’ll say that again – in just under a decade, every new car and truck sold in Canada will have to be electric! This despite the fact that electric vehicles are notoriously bad at holding their charge in cold weather, one of our country’s trademarks.
And that’s assuming you can find a place to charge them. Natural Resources Canada estimates that we will need roughly 450,000 public charging stations by 2035 to make this EV transition at all realistic. At the moment we have about 28,000.
Plus, the wholesale adoption of EVs across Canada would put a tremendous strain on our electrical grid, especially at a time when the environmentalists have been pushing for a nationwide transition to less reliable methods of generating electricity, like wind and solar.
And then there’s the billions in subsidies which support the mandate. Federal and provincial taxpayer dollars are being thrown at automotive companies to underwrite their producing a product which taxpayers will then be forced to buy. It’s an outrageous example of double dipping.
Poilievre seems to understand this. He has called the EV mandate “a tax on the poor,” because of the elevated cost of an EV, compared to traditional vehicles, and he’s slammed the subsidies as bad deals for Canada.
Even so, when Trudeau has accused Poilievre of wanting to cancel the subsidies, Poilievre has tended to pivot to discussing the “generational” opportunity Canada has to start producing the minerals necessary for EV batteries, if only the Liberals would speed up the approval process for new mines.
That’s all well and good, except that the entire EV industry is built on subsidies and mandates. And even with those, countries around the world are finding that demand for EVs is much softer than anticipated. Some “generational” opportunity for Canada, to become a key link in the supply chain for a product that no one wants! Much better to change course, scrap the mandates and subsidies, and see if the industry can stand on its own two feet. Once consumers have shown that they’re willing to buy EVs, then we can talk.
And Many More…
Of course, repealing these policies is just scratching the surface. I could easily have written about the problems with Bill C-69, the so-called “no new pipelines bill;” Bill C-48, the Oil Tanker Moratorium Act which significantly reduces Canada’s ability to export our natural resources; or Bill C-59, which bans businesses from touting the environmental positives of their work if it doesn’t meet a government-approved standard.
The fact of the matter is, Canadians need a government that will not just pull down the low-hanging fruit of the Carbon Tax, but to “axe” the numerous Net-Zero policies, enacted by Trudeau’s and his environmentalist allies over the past nine years, which are making all of our lives more expensive.
Pierre Poilievre has his work cut out for him. Let’s all hope that he turns out to be the man we need him to be. We can’t afford anything less.
Dan McTeague is President of Canadians for Affordable Energy.
Dan McTeague
Ottawa’s intentional destruction of western wealth
From Canadians for Affordable Energy
Even if it fails to hit its emissions targets (which it will,) the economic consequences of enacting this plan are very serious. It would make Canada the only country in the world which willingly and purposefully stifles its single largest revenue stream.
At this point, everyone in Canada has heard about the Carbon Tax and had a chance to experience its negative effects. But less has been said about another harmful policy dreamed up by the Trudeau government — the Emissions Cap on the oil and gas sector. Just like the Carbon Tax, the Emissions Cap is part of Trudeau’s larger program to try and achieve “Net Zero” greenhouse gas (GHG) emissions by 2050, which will have no positive impact on the environment, but which will be ruinous to Canada’s natural resource sector and to the national economy.
In their 2021 platform, the Liberals made a commitment to “cap and cut emissions from the oil and gas sector” and proclaimed that that industry must reduce emissions “at a pace and scale needed to achieve net-zero by 2050.” As promised, in December 2023 the Trudeau government proposed an Emissions Cap to reduce GHG emissions in the oil and gas sector by 42 percent by 2030. Keep in mind Canada contributes only 1.5% of global emissions, so this plan, even if accomplished, would reduce global emissions by less than one half of one percent.
Even if it fails to hit its emissions targets (which it will,) the economic consequences of enacting this plan are very serious. It would make Canada the only country in the world which willingly and purposefully stifles its single largest revenue stream. After all, the oil and gas industry generates $45 billion per year in annual economic activity, and contributes $170 billion per year to the GDP.
But don’t take my word for it. According to a Deloitte report commissioned by the Government of Alberta, an Emissions Cap would lead to a 10% decrease in Alberta’s oil production and a 16% decrease in conventional natural gas production. Fossil fuel production would decrease in B.C., Saskatchewan, and Newfoundland as well. Other industries connected to the oil and gas sector such as the mining, refinery products, and utilities are also expected to be impacted and will experience a decrease in output in Alberta and the rest of Canada.
The report goes on to state that in 2040 “Alberta’s GDP is estimated to be lower by 4.5% and Canada’s GDP by 1.0% compared to the baseline.”
It notes that because it is assumed that “the Cap is a permanent measure, the shift in the output of the oil and gas sector and associated losses are permanent and accumulate over time. Cumulatively, over the 2030 to 2040 period, we estimate that real GDP in Alberta is $191 billion lower and real GDP in the Rest of Canada is $91 billion lower, compared to the baseline scenario ($2017 dollars).”
Of course, the environmentalists will crow that the oil and gas industry is dying anyway and the demand for oil and gas around the world is slowly decreasing, but this is simply not true.
Global demand for oil and gas is only growing and will continue to do so. According to the report, “Based on current policy and before the impact of the Cap, we expect: Oil production in Canada to increase by 27% by 2030 and 32% by 2040 from 2021 levels; and Gas production in Canada to increase by 10% by 2030 and 16% by 2040 from 2021 levels.”
And this isn’t the only study which projects negative outcomes from this policy. The Montreal Economic Institute (MEI) released a study which describes how the Trudeau government’s proposed Emissions Cap for the energy sector would “cost the Canadian economy between $44.8 billion and $79.3 billion a year” and would “cause substantial losses, without achieving any net reduction in global emission.”
You can read the study here.
Plus it is worth noting that this emissions cap will result in “substantial losses without achieving any net reduction in global emissions.”
Why? Because of the increase in global demands for oil and gas, we can either produce those resources here or get them from another country that has no environmental, much less labour standards, such as Russia, Venezuela, and Iran.
To add insult to injury for the oil and gas producing provinces, and as I’ve pointed out in the past, this cap on emissions would apply only to the oil and gas sector. This emissions cap would not apply to the concrete industry, the automotive industry, or the mining industry. And — surprise surprise — it certainly won’t apply to Montreal’s lucrative jet-building industry.
But take heed: this isn’t simply an Alberta issue. This is a Canadian issue and one that everyone in Canada should be concerned about.
The umbrella of Net Zero by 2050 is large and far reaching, and an emissions cap is simply one part of a multi-layered attack on our economy and way of life. Carbon taxes, layered on top of a Clean Fuel Standard, layered on top of pipeline blockages, layered on top of Bills C-48 and C-69, preventing oil from being shipped from other parts of the world — will run counter to our national interests, and endanger the Canadian way of life for generations to come.
If Canadians are now vehemently opposed to carbon taxes, as we suggested would be the case half a dozen years ago, wait for this unnecessary burden to befall them.
In the words made famous by the Canadian rock legend BTO, “You ain’t seen nothing yet!”
Dan McTeague is President of Canadians for Affordable Energy.
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