Media Temporary: Canada’s Clear Gas Rules

Clear Power Canada is a clear power assume tank on the Morris J. Wosk Centre for Dialogue at Simon Fraser College. By media briefs, we purpose to offer helpful factual and contextual info associated to Canada’s clear power transition. Please use this as a useful resource, and tell us if there are any subjects that you simply wish to see for future media briefs. 

The federal authorities’s Clear Gas Rules, finalized in June 2022, took impact this month. The next media transient explores the aim of the laws and the influence they may have on shoppers and the Canadian fuels business.

What are the Clear Gas Rules?

  • The Clear Gas Rules set more and more stringent necessities on gas producers and importers to scale back the carbon depth of transportation fuels resembling gasoline and diesel with the eventual purpose of lowering the carbon depth by roughly 15% (under 2016 ranges) by 2030.
  • The brand new regulation, which got here into impact this month (July 2023), is at the moment at only a quarter of its full stringency in 2030. This implies the carbon depth of fuels should be decreased by lower than 4% this 12 months (in comparison with 2016 ranges), rising to fifteen% by 2030.
  • B.C., California, Oregon, and Washington state have related laws in place.
  • The federal authorities has additionally launched a complementary program, the $1.5 billion Clear Fuels Fund, to assist clear gas manufacturing in Canada, together with superior biofuels and hydrogen initiatives.

Why is the coverage wanted?

  • The transportation and oil and fuel sectors every accounted for 150 and 189 megatonnes of emissions respectively in 2021—simply over half of Canada’s whole. The federal authorities’s 2030 Emissions Discount Plan, which might see Canada meet its worldwide local weather commitments, means that transportation emissions would want to be decreased to 143 megatonnes and oil and fuel emissions to 110 megatonnes by 2030.
  • In keeping with Atmosphere and Local weather Change Canada, the Clear Fuels Rules will assist minimize as much as 26.6 megatonnes of greenhouse fuel air pollution in 2030, one of many largest reductions from Canada’s portfolio of local weather insurance policies.
  • Trade affiliation Superior Biofuels Canada estimates the annual financial contribution from home clear gas manufacturing will likely be $14.1 billion in 2030, virtually triple the sector’s $5.3 billion in 2020.

What does it imply for fuel costs?

  • In seven years, when the regulation is in full pressure, the federal authorities estimates the measure so as to add between 6 to 13 cents per litre of gasoline. Worth impacts within the earlier years of the coverage are anticipated to be minimal.
  • Equally, Superior Biofuels Canada estimates, based mostly on actual world information, that the Clear Gas Rules would add round 9 cents per litre to the price of gasoline and diesel in Canada by 2030. 
  • A latest Parliamentary Finances Officer’s report estimated that the regulation might add as much as 16 to 17 cents per litre respectively to the value of gasoline and diesel bought in Canada in 2030. Nevertheless, the PBO acknowledges that its “estimates ought to be considered higher certain estimates.” The PBO additionally signifies it doesn’t account for the know-how change the coverage is designed to incentivize, which might decrease the regulation’s financial influence. Superior Biofuels Canada says the PBO’s estimate overstates compliance prices by 80% to 95% and that the methodology will not be supported by actual world proof from jurisdictions the place related insurance policies have already been applied.

The shift to EVs

  • The Clear Gas Rules are accompanied by different federal insurance policies to make electrical automobiles extra inexpensive and obtainable. These embrace:
  • A latest Clear Power Canada evaluation in contrast the whole possession prices of quite a few widespread electrical automobile fashions with gas-powered equivalents. With only one exception, the electrical model of each automobile analyzed was cheaper, normally considerably so. The evaluation discovered that the electrical Hyundai Kona, Canada’s second best-selling EV in 2021, is $17,800 cheaper to personal than the gas-powered Kona when fuel costs are $2 per litre.

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