By Fraser Institute
It’s official, the Trudeau government’s Clean Fuel Regulations (CFR) came into effect on July 1. At a time when many Albertans families are struggling with the high cost of living, the CFR will increase the price of gasoline and raise the cost of goods and services more broadly. And this is just the beginning.
The carbon tax is also set to rise from $65 per tonne this year to $170 per tonne in 2030. The pain for Albertans extends well beyond simply fuelling their vehicles. For example, according to a recent study published by the Fraser Institute, the $170 per tonne carbon tax will shrink Alberta’s economy (measured by GDP) by an estimated 2.4 per cent and result in more than 30,100 job losses in 2030, compared to the state of the economy with no carbon tax.
Now, over and above the carbon tax, the Trudeau government is imposing the CFR, which requires fuel producers and importers to reduce the carbon content of fuels they sell. By 2030, the “carbon intensity,” which measures emissions generated per unit of energy, of these fuels must be 15 per cent below 2016 levels. Consequently, the CFR will lead to increased prices for virtually all fossil fuels including gasoline, diesel, natural gas and propane.
And crucially, while the CFR will impose costs all across the country, Albertans will be among the hardest hit. According to a recent analysis by the Parliamentary Budget Officer, among the provinces, Albertans will bear the second-highest costs (relative to disposable income) trailing only Saskatchewan, with the CFR costing Albertan families an average of $1,157 per year. For some Albertan families, the cost could reach as high as $2,269 annually.
To make matters worse, the costly effects of the Trudeau government’s carbon tax and CFR will fall disproportionally on lower-income households who dedicate a higher proportion of their income to electricity and heating bills. Besides fuel, the carbon tax and CFR also indirectly increase the price of many other goods—including groceries—by increasing the cost of transportation.
Provincial governments across Canada have recognized the damage these regulations will cause. In Alberta, the Smith government has attempted to offer citizens some relief by pausing provincial fuel taxes while joining Saskatchewan and Atlantic Canada in opposing the new fuel levy. But without federal reform, provinces will continue to be limited in what they can do to help restrain prices.
With Albertan families already struggling to keep up with increases in the cost of living, the joint burdens of the escalating carbon tax and CFR will cause great economic pain across the province. Unfortunately, this is just the beginning.
Authors:
Alex Whalen
Associate Director, Atlantic Canada Prosperity, Fraser Institute
Elmira Aliakbari
Director, Natural Resource Studies, Fraser Institute
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