Michael Binnion is the executive director of the Modern Miracle Network, whose mission is to encourage Canadians to have reasoned conversations about energy issues.
In an unusual – and good – move quietly enacted by the Trudeau administration, the Clean Fuel Standards (CFS) – or as some called it, a second carbon tax – was delayed for seven months until July 2023. Why is this good, one can logically wonder?
Two main reasons: affordability and practical reduction of emissions.
The CFS threatens to add up to 13 cents per liter to the gas price in the coming years. This is in addition to the projected 40 cents per liter that the $170 per tonne of 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 recognized the impact of rising energy prices on all aspects of life.
Alberta, for example, dropped their gas tax of 13 cents per liter at the pumps. Ontario did the same with drivers saving 9 cents per liter as of July 1. Canadians, concerned about the skyrocketing cost of living, urged the federal government to do the same. But Trudeau and Co. offered resistance. Even President Biden granted temporary exemptions from gas taxes.
However, the Secretary of Natural Resources, John Wilkinson, claimed that the same “tax holiday” approach President Biden called for would be “irresponsible” in Canada.
On the other hand, Environment Secretary Steven Guilbeault has slowed down the CFS and the price hike it would cause. Promised by the FBI in 2016, they released their final plan in July with a big surprise. Rather than take effect this year, as previously announced, it has been postponed to July 2023 with the first compliance check in December 2023.
This is a welcome relief for Canadians who are already battling inflation and choking on a slew of taxes, especially on energy.
Now to the second reason why the slowdown is good for Canadians: It will actually help the industry cut emissions, especially if the government gets involved.
We all agree that it is good to reduce the negative effects of oil and gas production. The government should focus on that.
The problem with the carbon tax is that people are penalized for going to work and heating their homes. It was ineffective in reducing emissions, which was its intended goal, but instead only added to the cost of living for Canadians. By 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 encourages investment in carbon technology rather than penalizing citizens for living their lives.
And it’s not too late.
Canadian oil and gas producers — which 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 in the beginning like MP Mark Gerretsen recently pointed out. Electric vehicles are far from perfect with unreliable batteries made from rare-earth metals that require intensive mining, often in conflict zones, and simply store energy produced in other ways, such as natural gas or even coal in some areas.
But carbon technology is advancing rapidly — and has the potential to significantly reduce emissions.
Carbon technology has been recognized as an important solution to our emissions problem by international bodies such as the UN’s International Panel on Climate Change and the International Energy Agency.
A 2021 Woods Mackenzie report noted that if all proposed carbon technology projects in Canada came online, the country’s emissions could be reduced by 115 million tons of CO2, about 60% of our 2030 climate target. Guilbeault and Wilkinson of the Secretary of State even admitted that carbon technology plays an important role in reducing emissions.
Yet we have a government that is still too focused on taxing Canadian families rather than investing in innovation that we can use now.
Delaying CVS helps Canadians now and in the future, and gives us time to do it right. The slowdown will allow industry to continue investing in innovations that work – and reduce future emissions – while postponing an unnecessary burden with significant social impact. It gives the government time to rethink their plan, to focus on the elements that work — such as industrial carbon pricing and encouraging investment in carbon technology — and drop the elements that don’t.
Are Guilbeault and Trudeau beginning to shift towards a practical approach to policy rather than an ideology driven?
However, it’s too early to say that delaying CFS for now could be a welcome step in the right direction.