As small businesses struggle and economy wobbles, government plans 30 per cent increase in fuel costs: Canadian Chamber of Commerce

(OTTAWA) – September 21, 2020 – Small businesses everywhere are desperately struggling to remain open, and wherever possible, keep their employees on the payroll. As they teeter on the edge between staying open and failure, the federal government is introducing a new regulation that will push far too many to close their doors.

The proposed Clean Fuel Standard (CFS), will increase the fuel costs for many small businesses, with a whopping 30 percent increase to natural gas costs alone. The CFS will apply to 70 per cent of the energy consumed by end users, such as homes, industry and agriculture and would be additional to existing carbon fuel surcharge tax and other pricing regimes. This means a significant increase in costs for manufacturing, transportation, mining, agriculture, and even hospitality sectors, among others.

These estimates from the consulting firm ICF, come from one of the few studies available on the impacts of the proposed CFS. The Canadian Chamber advocates that the development of a policy like CFS must be supported by a cost benefit analysis to determine how it will help or hinder Canada’s economy, and a regulatory impact assessment to determine the effect upon businesses and the effectiveness of the CFS in meeting Canada’s environmental targets. To date, the Government of Canada has not made any such analyses available to the public.

“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 businesses as we recover from   a pandemic. We need to work together to develop a better approach, or risk being completely oblivious to the day to day struggle of small businesses,” said Dr. Aaron Henry, Sr. Director of Natural Resources and Sustainable Growth, Canadian Chamber of Commerce.

Upon closer scrutiny from Policy Options, there are serious questions as to whether the proposed Clean Fuel Standard will come anywhere near its stated goals to reduce CO₂ emissions. At the same time, Canada’s version of the Clean Fuel 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 and this may create liquidity challenges as companies may have limited offsets available to comply.

“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. There are better models and designs that we can pursue, and we’d like to work with the government to find a policy design that doesn’t crush small businesses in the middle of a pandemic,” added Dr, Henry.

In response to the government’s current proposals and approach, today the Canadian Chamber of Commerce is launching the national Fresh Fuel Standard campaign. The campaign highlights these issues and proposes solutions that will allow Canadian businesses to continue to lead the world in responsible development, environmental protection, and job creation.

Learn more on the campaign website: FreshFuelStandard.ca.

About the Canadian Chamber of Commerce – Because Business Matters

The Canadian Chamber of Commerce helps build the businesses that support our families, our communities and our country. We do this by influencing government policy, by providing essential business services and by connecting businesses to information they can use, to opportunities for growth and to a network of local chambers, businesses, decision-makers and peers from across the country, in every sector of the economy and at all levels of government, as well as internationally. We are unapologetic in our support for business and the vital role it plays in building and sustaining our great nation.

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For more information, please contact:

Phil Taylor
ptaylor@chamber.ca