Fresh Fuel Standard
Sustaining Canada’s Future
The natural world and our environment is one of life’s greatest treasures. The duty to protect it today and for future generations falls on all Canadians, our industries and governments.
At the same time, Canadians in all regions of the country must financially support themselves and their loved ones and leave future generations with a strong foundation to achieve their own financial stability. Creating the conditions for diverse economic prosperity equally falls on all Canadians, our industries and governments.
In order to turn these ambitions into a reality, it is not enough for industry and government to merely have the same goals. They must work as equal partners in developing answers to the challenges before us. Only through this collaborative approach will we find solutions that both improve the environment and create prosperity for Canadian families.
Leaders in Canada’s manufacturing, transport, agriculture and energy industries are acutely aware of the need to achieve success on both fronts. This is why we launched the Fresh Fuel Standard campaign.
As Canadians and our businesses, both big and small, struggle to stay afloat, the Government of Canada is planning to impose a 30% increase in fuel costs – which is about $15 billion per year. And as our businesses teeter on the edge between staying open and failure, the new regulation will push far too many businesses to close their doors.
The increased costs associated with the proposed Clean Fuel Standard (CFS) include a whopping 30% increase to natural gas costs alone. The CFS will apply to 70% of the energy consumed by end users, such as homes, industry and agriculture. This means a significant increase in costs for manufacturing, transportation, mining, agriculture and even hospitality sectors, among others.
Upon closer scrutiny from Policy Options, there are serious questions as to whether the proposed CFS will come anywhere near its stated goals to reduce CO2 emissions. At the same time, Canada’s version of the standard would be the first in the world to include the fuels industries use in their manufacturing processes (e.g. natural gas used to dry paint by automakers) and this will put Canadian businesses at a significant competitive disadvantage as their costs to produce goods will increase at a time when we need to grow our trade.
In addition, the CFS is premised upon the ability of businesses to buy and sell carbon credits as offsets. However, Canada has no formal framework or protocol to do so and only has a crude offset market. This may create liquidity challenges as companies may have limited offsets available to support compliance.
Climate change remains one of the main challenges of our times, and we all have a role to play in mitigating its effects. There are solid examples in other countries of how a clean fuel standard can work without driving up costs for small businesses in the middle of a pandemic, such as the Low-Carbon Fuel Standard in California or the Fuel Quality Directive in the EU, both of which are working to make for cleaner transportation systems without putting burdensome costs on small businesses and industry.
We need to work together to develop a better approach or risk being out of touch with the day-to-day realities of small businesses in Canada.
Environment + Economy = Solutions
As our governments, businesses and all Canadians work to build a brighter future, it’s important to remember that the environment and the economy go hand-in-hand. To get there, we need to create good jobs right here in Canada with companies that are fighting to protect our natural world for future generations. Leaders in our manufacturing, transportation, energy and agricultural industries understand what’s at stake for all Canadians – and want to be at the table in order to be part of the solution.
To allow Canadian companies to remain competitive and continue to fight to protect our environment, an updated CFS needs to address four key areas:
- Ensure the CFS approach to industry is aligned with other jurisdictions. This prevents carbon leakage that harms the environment and ensures a level playing field for Canadian businesses to compete.
- Design a CFS that is technology-neutral, which includes consistent costs and stringency.
- Ensure the CFS is aligned with the Output Based Price System and design low-cost credit and offset options to support compliance.
- Complete regulatory impact assessments for the three fuel streams to ensure the CFS will succeed in protecting the environment and growing the economy.
All Canadians, businesses included, want to do their part to mitigate the effect of climate change. We can achieve our climate commitments, even while managing the terrible economic effects of COVID-19, but it will require well-designed policies and strategies. We want to work with government to find one that doesn’t crush small businesses in the middle of a pandemic – together we can get there.
You Can Help
If you agree that both protecting the environment and creating jobs for Canadians – especially now – are important objectives and that it’s time for a fresh approach to the CFS, it’s important for you to be heard.
We are asking concerned Canadians to contact their Members of Parliament and let them know to speak out. Now more than ever, raising fuel prices by 30%, adding $15 billion per year in costs, is not the path forward to help Canadians or our natural world. We need to work together to develop a better approach that both protects the environment and creates jobs for Canadians.
The economy and the environment go hand-in-hand: industry supports Canada’s climate goals and works every day to grow the economy. To achieve success, we need a collaborative approach from government to adopt fresh standards that will allow us to get there.