Michael Binnion is the Executive Director of the Modern Miracle Network, whose mission it is to encourage Canadians to have reasoned conversations about energy issues.
In an unusual – and good – move, quietly enacted by the Trudeau government, the Clean Fuel Standards (CFS) – or as some have referred to it, a second carbon tax – was delayed seven months until July 2023. Why is this good, one may logically ask?
Two main reasons – affordability and practically reducing emissions.
The CFS threatens to add up to 13 cents per litre to the price of gas over the next few years. This is on top of the expected 40 cents per litre that the $170 per tonne carbon tax will add in 2030. This is at a time when most Canadians are struggling to cope with rising inflation and borrowing costs. Many provinces have already realized the impact of rising energy prices on all aspects of life.
Alberta, for example, dropped their gas tax of 13 cents per litre at the pumps. Ontario did the same with drivers saving 9 cents per litre starting back on July 1. Canadians, worried about the skyrocketing cost of living, urged the feds to do the same. But Trudeau and Co. resisted. Even President Biden gave temporary relief from gas taxes.
However, the Minister of Natural Resources, John Wilkinson, claimed that the same “tax holiday” approach President Biden called for would be “irresponsible to do” in Canada.
On the other hand, environment Minister Steven Guilbeault has delayed the CFS and the price increase that it would cause. Promised by the feds back in 2016, they released their final plan in July with a big surprise. Instead of going into effect this year, as previously announced, it’s been delayed until July 2023 with the first compliance check in December 2023.
This is welcome relief for Canadians already battling inflation and suffocating under a bevy of taxes, especially on energy.
Now on to the second reason the delay is good for Canadians: it will actually help the industry reduce emissions, especially if the government gets on board.
We can all agree that reducing negative impacts from oil and gas production is good. That’s what government needs to focus on.
The problem with the carbon tax is it penalizes people for going to work and heating their homes. It hasn’t been effective in cutting emissions, which was its intended goal, but instead just added to the cost of living for Canadians. In delaying the CFS, another carbon tax in all but name, the government has given itself a chance to get it right.
We need a pricing system that incentivizes investment in carbon tech instead of penalizing citizens for living their lives.
And it’s not too late.
Canadian oil and gas producers – who account for about a quarter of the country’s emissions – continue to implement new and evolving technology when it comes to reducing carbon emissions.
No technological innovation is perfect at first, as MP Mark Gerretsen recently pointed out. Electrical vehicles are still very far from perfect with unreliable batteries made from rare-earth metals which require intensive mining, often in conflict zones, and simply store energy produced by other means – such as natural gas or even coal in some areas.
But carbon tech is rapidly advancing – and has the potential to significantly reduce emissions.
A 2021 report by Woods Mackenzie noted that if all proposed carbon tech projects in Canada came online, the country’s emissions could be reduced by 115 million tonnes of CO2, about 60% of our 2030 climate goal. Minister’s Guilbeault and Wilkinson even admitted carbon tech’s important role in reducing emissions.
Yet we have a government still too focused on taxing Canadian families instead of investing in innovation that we can use now.
Delaying the CFS helps Canadians now and in the future, and gives time for us to get this right. The delay allows industry to continue investing in innovations that work – and reduce future emissions – while delaying an unnecessary tax with significant societal ramifications. It gives the government time to rethink their plan, to focus on the elements that work – like industrial carbon pricing and encouraging investments in carbon tech – and drop those that don’t.
Are Guilbeault and Trudeau beginning to shift towards a practical approach to policy rather than one driven by ideology?
It’s too early to say, however, delaying the CFS may be a welcome step in the right direction, for now.