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Ottawa tells regulators oil industry profits should pay for new clean fuel requirements

Ottawa tells regulators oil industry profits should pay for new clean fuel requirements

Federal Setting and Local weather Change Minister Stephen Guilbeault is urging regulators in Atlantic Canada to think about oil trade income earlier than approving any gas worth will increase to pay for the brand new clear gas laws coming into impact July 1.

In a Could 25 letter to unbiased regulators within the area, Guilbeault additionally singled out the area’s solely refiner — Irving Oil — accusing the corporate of exaggerating its value of compliance. He mentioned prices might be absorbed into refinery margins as an alternative of being handed onto customers.

“I might respectfully encourage regulators to evaluate the total suite of compliance choices accessible to refiners, together with inexpensive paths of compliance, and the elasticity of margins when reviewing any request by refiners to regulate gas pricing in your province,” Guilbeault wrote to chairman of the Nova Scotia Utility and Assessment Board.

In Nova Scotia, refinery margins — the distinction between the promoting worth and the associated fee to make a product — elevated from 10.7 cents per litre to 48.3 cents per litre between 2019 and 2022, Guilbeault wrote,

Margins per litre equally elevated in New Brunswick, Prince Edward Island and Newfoundland and Labrador, he mentioned.

The letters had been despatched the identical day Atlantic premiers requested the federal authorities to delay implementation of the laws, arguing they may push up pump costs and harm the area’s economic system.

Clear gas laws

Guilbeault met just about with the premiers the day earlier than to debate the difficulty.

The clear gas laws require gasoline and diesel suppliers to scale back greenhouse fuel air pollution from the fuels they produce to fifteen per cent under 2016 ranges by 2030.

The laws are a part of a deal with paying for air pollution all through the life cycle of fuels.

The laws permit suppliers to earn credit for lowering the “carbon depth” of their operations by way of actions like carbon seize and storage, on-site renewable electrical energy, producing low carbon ethanol and biodiesel or supplying gas or vitality to superior automobile expertise.

Setting and Local weather Change Canada estimates the worth affect to be six to 13 cents per litre for gasoline by 2030.

“Given these elevated refinery margins and the compliance flexibilities constructed into the Clear Gasoline Laws, there is no such thing as a motive the marginal prices of the Laws ought to routinely be handed alongside to customers,” Guilbeault wrote.

Atlantic premiers ask for delay

The required reductions enhance progressively and are usually not anticipated to lead to giant value will increase in preliminary years, Guilbeault mentioned, including credit can’t be claimed till July 2024, which means there is no such thing as a must get well value immediately.

“In search of speedy shopper worth will increase to account for estimated prices beneath a worst-case state of affairs projection may result in a state of affairs the place an organization later chooses a lower-cost choice, pockets the elevated income from customers, and provides it to already elevated refinery margins,” Guilbeault wrote.

The Atlantic premiers are asking the federal authorities to delay implementations of the clear gas laws till a plan might be developed to handle what they name “the disproportionate affect of laws on Atlantic Canadians,” the place many items wanted by customers and companies need to be trucked in.

Nova Scotia Premier Tim Houston, New Brunswick Premier Blaine Higgs, Newfoundland and Labrador Premier Andrew Furey and Prince Edward Island Premier Dennis King, left to proper, are proven in a 2022 information convention after a gathering of the Council of Atlantic Premiers in Halifax. (Andrew Vaughan/The Canadian Press)

The clear gas laws and the carbon tax enhance are scheduled to return into impact on July 1.

Earlier this month, the parliamentary price range officer mentioned the clear gas regulation will enhance the price of gasoline by 17 cents a litre and 16 cents for diesel by 2030. 

Nationally, the parliamentary price range officer mentioned the associated fee to households would vary from $231 for lower-income households to $1,008 for higher-income households.

Setting Canada has challenged these numbers, saying they don’t take note of the prices of local weather change.

“I feel we’re distinctive right here for plenty of causes. Initially, we don’t have a complete lot of choices when it comes to [having] one main refinery that produces many of the gas that we use for the area,” P.E.I. Premier Dennis King informed CBC’s Energy & Politics on Thursday.

In an announcement to CBC Information, Irving Oil mentioned the price of motor fuels is about independently of presidency and trade.

Guilbeault mentioned he understands Irving will rely solely on “one of the pricey of all compliance choices beneath the brand new laws.”

“Briefly, it’s the place of the Authorities of Canada that the Clear Gasoline Laws won’t essentially result in vital value will increase to refiners, significantly within the brief time period, and definitely not as excessive as these claimed by Irving.”

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