Ottawa’s emissions cap another headache for consumers and business

Ottawa’s emissions cap for oil and gas aims to cut emissions but risks raising costs for consumers and disrupting industry stability.

Ottawa has brought down a new emissions cap for the oil and gas industry, with a mandate to reduce emissions by 35 percent from 2019 levels by 2030 to support the federal government’s climate targets. While the federal government is celebrating the cap as a big step towards a more sustainable future, it is going to make life harder for consumers and businesses alike.

This cap is coming in at a time when the oil sector is finally gaining greater stability due to the expanded Trans Mountain pipeline (TMX), and the mandate would undermine that progress and press greater costs upon households and industries that are already adjusting to high inflation and uncertainty in world markets.

Now that TMX is operational, Canada’s oil producers have grown their access to international markets, most importantly in Asia and the West Coast of the United States. Much-needed price stability now exists for Western Canadian Select (WCS), cutting the discount against the U.S. West Texas Intermediate benchmark, enabling Canadian oil to compete more effectively.

Newfound stability means that Canadian consumers and businesses have benefited from slightly lower prices, and that industry has grown less dependent on a more limited domestic demand. However, Ottawa’s emissions cap does threaten this new balance, and the sector now has to deal with compliance costs that could be passed down to consumers.

In order to meet the cap’s targets, Canadian oil producers must heavily invest in carbon capture and storage (CCS) technologies, which is costly but essential. Major CCS projects include Shell’s Quest and the Alberta Carbon Trunk Line, both of which are already operational.

The Pathways Alliance is a coalition of six major oil sands companies and is preparing to invest in one of the world’s largest networks for carbon storage. These efforts are crucial for reducing emissions, despite requiring vast amounts of capital.

Those in the industry are worrying that the emissions cap will push resources away from production and, instead, towards compliance, adding costs that will be borne by fuel prices and other consumer products.

Ottawa has portrayed the cap as an essential measure for meeting the federal government’s climate goals, with Environment Minister Jonathan Wilkinson labeling it “technically achievable.” Nonetheless, industry players argue that the timeline does not align with the practicalities of scaling CCS and other strategies aimed at decarbonizing.

Strathcona Resources executive chairman Adam Waterous pointed out the “stroke-of-the-pen” risk, in which shifting political landscapes imperil ongoing investments in carbon capture. Numerous oil producers feel that without certainty in carbon price stability, Ottawa’s cap will result in an unstable business environment that will push investment away from production.

Business leaders do not share the federal government’s optimism about the cap and see it as a one-sided approach that fails to reckon with market realities. The Pathways Alliance, which includes companies like Suncor Energy and Canadian Natural Resources, has been frustrated in its multiple attempts to get federal support to fund its $16.5-billion CCS project.

Rather than imposing these new limits, energy industry advocates argue that the government should provide targeted incentives like “carbon contracts for difference” (CCfDs), which help to stabilize carbon credit prices and reduce financial risk among investors. These measures would enable the energy sector to decarbonize without putting a greater burden on consumers.

The cap’s timing also raises concerns about the Canada-U.S. relationship. Canada has traditionally been a stable supplier of energy and helps to bolster U.S. energy security. However, as the U.S. increases its reliance on Canadian oil, the cap could disrupt this trade relationship. Lowered production levels would leave the economies of both the U.S. and Canada vulnerable, potentially disrupting energy prices and supply stability.

For households across Canada, the emissions cap could mean further financial strain. The higher costs of compliance passed to oil producers will mean higher prices at the pump and more expensive heating costs at a time when Canadian consumers are already struggling financially.

Businesses will also face increasing operating costs, which will be passed down to consumers via more expensive goods and services. Furthermore, higher costs and reduced production will erode Canada’s competitive advantage in the global energy market, slowing economic growth and risking job losses in the energy sector.

So, while Ottawa can laud its emissions cap as a necessary action on the climate, the implications for consumers and businesses are tremendous. Working with industry to find pragmatic, collaborative solutions is how Ottawa can avoid creating more financial burdens for Canadians.

Related Topics:#ResourceWorks JonathanWilkinsonEmissionsCap JustinTrudeauEmissionsCap OttawaEmissionsCap

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Peavey Mart confirms all 90 stores will be closing

Business

Peavey Mart confirms all 90 stores will be closing

Published on January 28, 2025

Todayville

From Retail Insider

By Craig Patterson

Sources have confirmed to Retail Insider that Peavey Mart, a Canadian retail chain known for its agricultural supplies, hardware, and home improvement products, is closing all of its stores nationwide. Liquidation sales began on the weekend. The store closures include the flagship location in Red Deer, Alberta, where the company’s headquarters are also based. This marks a significant and surprising turn of events for a company with deep roots in Canadian retail, dating back to its establishment in Winnipeg in 1967.

(Update: Peavey Industries confirmed store closures on Monday evening in a press release)

A Legacy of Growth and Acquisitions

Peavey Mart has long been a staple for rural and small-town communities, catering to farmers, ranchers, and homeowners. Over the years, the company expanded from its Western Canada base into Ontario and other regions, particularly following its acquisition of TSC Stores in 2016. That move helped establish Peavey Mart as a household name in Ontario, diversifying its reach and bolstering its product offerings. It was also a huge expense.

In 2020, the company further broadened its scope by acquiring the Canadian master license for Ace Hardware from Lowe’s-owned RONA Inc., adding 107 Ace Hardware locations to its portfolio. This strategic acquisition was part of Peavey Industries’ efforts to compete in the hardware and home improvement sector against larger rivals like Home Depot and Canadian Tire.

However, Peavey’s relationship with Ace Hardware International came to an end in 2024, following the announcement that the partnership would cease on December 31, 2024. This decision marked a turning point for the company, forcing it to refocus on its Peavey Mart and MainStreet Hardware brands.

Financial Struggles and Early Signs of Trouble

Last week, Peavey Industries announced plans to shutter 22 underperforming Peavey Mart locations in Ontario and Nova Scotia by the end of April. At the time, the closures were presented as part of an organizational restructuring aimed at stabilizing the business and positioning it for future growth.

Doug Anderson, President and CEO of Peavey Industries, addressed the challenges in a previous statement:

“The Canadian retail environment has undergone significant disruptions in recent years, and Peavey has not been immune to these challenges. These closures are a challenging yet necessary step to stabilize and position our business for future growth.”

Despite these efforts, it now appears the company’s financial difficulties have proven insurmountable, leading to the closure of all 90+ stores across Canada.

Liquidation signs at Peavey Mart’s Red Deer store on Saturday, January 25. Photo: Joel Graham via Facebook

Financing and Restructuring Efforts Fall Short

In its bid to remain viable, Peavey Industries had secured a CAD $155 million financing package from Gordon Brothers. The package included a $105 million revolving credit facility, a $30 million term loan, and a $20 million consignment program. This financial injection was intended to facilitate restructuring efforts, support ongoing operations, and provide a lifeline to the struggling retailer.

Additionally, Peavey Industries collaborated with Gordon Brothers to ensure a smooth transition for affected employees and communities. However, these measures were ultimately insufficient to save the business.

Impact on Communities and Employees

The closure of Peavey Mart will leave a significant void in the Canadian retail landscape, particularly in rural and small-town markets where the chain has long been a trusted resource for agricultural and home improvement needs. The closures are also a major blow to the company’s workforce across the country.

While Peavey Industries initially expressed a commitment to supporting its employees during the transition, the abrupt announcement of a full shutdown leaves many workers and communities grappling with uncertainty.

Image: Peavey Mart

Image: Peavey Mart

A message from the Peace River Manager

In a heartfelt statement shared on Facebook, the manager of the Peace River, Alberta, Peavey Mart location expressed regret about the closures. The post sheds light on the situation and offers a glimpse into the company’s struggles over recent years. The manager wrote:

“Peace River Community,

It is with regret that I inform you of the upcoming closure of Peace River Peavey Mart, along with all other Peavey Mart locations across Canada. While many details are being kept confidential, I will keep you updated as we receive more information from the corporate team. At this time, I do not have a time frame; my best guess is 3 to 6 months.

Until an official statement is released by the company, I can only offer my personal perspective on the situation. Since 2016, Peavey Mart has expanded rapidly, acquiring over 70 stores in Eastern Canada, opening new stores, and acquiring several other businesses. However, growth was met with challenges, including a decline in business levels and rising interest rates. Unfortunately, many of the acquired stores did not prove profitable, and the company’s efforts to adjust did not have the desired results.

As a last resort, Peavey partnered with Gordon Brothers, an American investment firm, which I believe now holds a majority stake in the company and are making all decisions going forward. It appears the current plan may be to liquidate and close all locations, with potential rebranding, though which stores will remain open is still uncertain.

Please note that this is my personal opinion, and I am sharing it to help clarify the situation for our valued customers. I kindly ask that you direct any concerns toward our corporate offices, as these decisions are beyond the control of the staff here in the store.

We have worked diligently to serve you, and we appreciate your understanding during this time. It’s difficult to come to terms with the closure of so many profitable locations in Western Canada, with Peace River being one of the most notable. The Peace River location recently achieved top sales growth company-wide, consistently delivering a healthy profit despite Peavey’s constant inventory challenges.

I would like to express my sincere gratitude to all of our customers. It has been a pleasure serving the Peace River community, and I will miss it when our time here comes to an end. If you have any questions, please feel free to visit the store, and I will do my best to provide answers. At the current moment, the company has told us they are not ready to make a statement yet.”

Update: Press Release from Peavey Industries

Peavey Industries confirmed Monday evening that all Peavey Mart stores will be closing. The following is the press release that was forwarded by email to Canadian media sources:

“Red Deer, Alberta – January 27, 2025 – Peavey Industries LP (“Peavey” or “the Company”), Canada’s largest farm and ranch retail chain, announced today that it has sought and obtained an Initial Order for creditor protection under the Companies’ Creditors Arrangement Act (CCAA) from the Court of King’s Bench Alberta.

Following the recently announced closures of 22 stores in Ontario and Nova Scotia, the Company will now begin store closing sales at all remaining locations across Canada. This includes 90 Peavey Mart stores and six MainStreet Hardware locations. The closures and liquidation efforts will commence immediately.

The decision to seek creditor protection and close all stores was made after thorough evaluation of available options, in consultation with legal and financial advisors. The Canadian retail industry is experiencing unprecedented challenges, including record-low consumer confidence, inflationary pressures, rising operating costs, and ongoing supply disruptions along with a difficult regulatory environment. These factors have created significant obstacles for businesses like Peavey.

“This was a profoundly difficult decision, but one that allows us to explore the best possible alternatives for the future of the Company,” said Doug Anderson, President and CEO of Peavey Industries LP. “For nearly six decades, our customers’ loyalty, employees’ dedication, and the resilience of the communities we serve have been the cornerstone of our business. We remain focused on working with our partners and stakeholders to preserve the Peavey brand and the value it represents.”

The Company’s immediate priority is to generate liquidity through the closure process while continuing to work with funders, partners, and stakeholders to explore potential opportunities to preserve the brand.

Peavey Industries LP is committed to providing regular updates as the situation develops.”

Craig Patterson

Located in Toronto, Craig is the Publisher & CEO of Retail Insider Media Ltd. He is also a retail analyst and consultant, Advisor at the University of Alberta School Centre for Cities and Communities in Edmonton, former lawyer and a public speaker. He has studied the Canadian retail landscape for over 25 years and he holds Bachelor of Commerce and Bachelor of Laws Degrees.

Business

Instead of competing, Ontario’s Ford plans to spend billions to stimulate growth

Published on January 28, 2025

Todayville

From the Fraser Institute

By Jake Fuss and Grady Munro

Premier Doug Ford, who will trigger an election this week, recently said he plans to “spend billions of dollars” to stimulate Ontario’s economy if President Donald Trump makes good on his threat to slap a 25 per cent tariff on Canadian exports into the United States.

But rather than piling on even more spending, the next Ontario government—whoever that may be—should enact policies that finally get provincial finances back in order and make Ontario an attractive place to work and invest.

Relief can’t come soon enough. The Ford government has woefully mismanaged provincial finances. When first elected in 2018, Premier Ford promised to balance the budget and reduce government debt—something Ford’s former finance minister Vic Fedeli described as a “moral” imperative. Yet since then, the government has run deficits in five of six years and its net debt burden has increased by an estimated $70.3 billion.

As a result, in 2023 Ontario had the second-highest debt burden of any province (only Newfoundland and Labrador had a larger burden) when measured on a per-person basis.

Based on the Ford government’s latest fiscal update, the reckless mismanagement has continued into this fiscal year (2024/25). Despite enjoying lower-than-expected debt interest costs and higher-than-expected revenues—which combined could have nearly eliminated the budget deficit—the Ford government instead chose to again increase spending and keep running deficits.

Why should Ontarians care?

Because the Ford government’s penchant for spending and borrowing is hurting Ontario’s economy. When the government runs a deficit and accumulates more debt, it competes with individuals, households and businesses for borrowing. This drives up interest rates (i.e. the cost of borrowing) for everyone, which can reduce the level of investment in the economy. Moreover, because rising debt and higher interest rates equal higher interest payments, the government faces pressure to raise taxes. And the brunt of the new tax burden will fall on younger generations of Ontarians.

Also this week, Premier Ford said President Trump “wants to attract businesses from Ontario to come down to the United States,” which will eliminate jobs in the province.

And Ford’s right. When policymakers create the conditions to attract people and investment, their economies grow and people prosper.

If the Ontario government wants to beat Trump at his own game, it should lower personal income taxes and make the province a more attractive destination for high-skilled workers such as engineers and entrepreneurs who contribute greatly to the economy and create jobs. Lower taxes also improve the incentive for individuals to engage in productive activities such as working, saving and investing. In 2023, Ontario had the third-highest top combined (provincial and federal) personal income tax rate in Canada and the U.S.

The government should also lower business taxes to make Ontario more competitive with the U.S. in attracting businesses and investment—the pillars of job-creation and prosperity.

Regardless of who wins the election, the next Ontario government should finally restore some semblance of fiscal responsibility and balance the budget. And it should lower taxes for workers and businesses to help create prosperity across the province. That’s a much more sensible and sustainable way to counter threats from Trump (or anyone else) than spending billions of dollars borrowed on the backs of Ontarians.