Canadian consumers are bracing themselves for even higher gas prices after a consumer advocate warned about the impact of a “second carbon tax” taking effect in 2025 on top of the current carbon tax hike. This is due to Ottawa’s Clean Fuel Regulations (CFR) that are slated to impact Canada in 2025. Fuel suppliers will be required to reduce the carbon intensity of gasoline and diesel used in the country by 15 percent below 2016 levels by 2030.
Such regulations are expected to lead to higher costs as they encourage fuel suppliers to move towards cleaner fuel sources. This is separate from the existing carbon tax as well as the provincial sales taxes, with British Columbia already having a clean fuel standard, running about 17 cents a litre.
Already, gas suppliers in Atlantic Canada have begun passing along the cost of CFR to consumers. Specifically, in Nova Scotia, the cost is already at five cents a litre and will eventually reach 17 cents a litre before the HST is applied by 2030.
Consumer advocate Dan McTeague warned that by 2030, consumers in Ontario would be paying a total of 61.5 cents per litre in carbon taxes, including the current carbon tax of 37.43 cents per litre, the CFR, and the 13 percent sales tax. In Alberta, Saskatchewan, and Manitoba, the cost, along with the 5 percent HST, will add 57.2 cents a litre to gasoline prices. It’s anticipated that Atlantic Canada will see that number rise to 61.5 cents per litre.
According to a report from Parliamentary Budget Officer (PBO) Yves Giroux, the CFR will lead to an increase in the price of gas by 17 cents per litre and of diesel by 16 cents per litre. The PBO report also noted that the CFR is expected to decrease real GDP in Canada by up to 0.3 percent (or up to $9.0 billion) in 2030.