Canada’s Clean Fuel Regulations are expected to push up farm fuel costs starting July 1.
However, at least one farm organization said the cost comes with an opportunity.
The regulations are part of the new Clean Fuel Standards designed to reduce the carbon intensity of fuel used for transportation.
The Parliamentary Budget Officer has analyzed the regulations and calculated the cost increase per household. The analysis assumes the increase in federal carbon pricing up to $170 per tonne by 2030.
It deemed the regulations, relative to household disposable income, as “broadly regressive.”
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“That is, the cost to lower income households represents a larger share of their disposable income compared to higher income households,” said the analysis.
By 2030, the cost will be the highest per household in Saskatchewan at .87 percent of disposable income or $1,117. Alberta will be close behind at .8 percent or $1,157, and Newfoundland and Labrador will also be at .8 percent or $850.
This is because of the higher fossil fuel intensity of their economies.
The lowest costs will be in British Columbia at .28 percent or $384, which the PBO said reflects relatively muted impact on real GDP.
A spokesperson said farmers should expect to pay the same expected increase in on-farm fuel costs as households.
Environment and Climate Change Canada has estimated that will be, by 2030, up to 17 cents per litre for gasoline and 16 cents for diesel, and that it will decrease real GDP in Canada by about $9 billion.
How much fuel prices will rise immediately is uncertain. Multiple attempts to contact fuel producers and suppliers were unsuccessful.
Canadian Federation of Agriculture president Keith Currie said the long-term impacts of the regulations are a concern.
But he said the increased need for biofuel or renewable diesel opens up potential new markets, especially for canola and oilseeds producers.
“While Canadian agriculture has incredible potential in the fight against climate change, and acting as feedstocks for more sustainable fuel is an aspect of that, we must always ensure that farmers can remain profitable. Financial sustainability must be a part of the environmental sustainability conversation, as farmers cannot harness the environmental potential of their operations if they are struggling to survive. As we like to say, you can’t go green if you’re in the red,” he said.
The new regulations replace the previous requirement to have at least five percent renewable fuel in gasoline and two percent in diesel.
They also establish a credit market that offers fuel suppliers flexibility to meet the requirements. These include generating credits based on approved protocols for emissions reductions, such as carbon capture and storage, and supplying low carbon ethanol or biodiesel.
ECCC said the regulations also include land use and biodiversity criteria (LUB.)
These criteria are “to minimize adverse environmental impacts stemming from the increased harvest and cultivation of agricultural feedstocks,” the department said in an email. “Only biofuels made from feedstock that adhere to the LUB criteria are eligible for credit creation.”
This comes into effect Jan. 1, 2024.
Carbon intensity is measured as the quantity of carbon dioxide equivalent emissions released over the life cycle of the regulated fuel, the PBO report said. This includes emissions from extraction, refining, distribution and use.
The limit will be lowered yearly and ECCC estimated the final reduction will be about 15 percent below 2016 levels by 2030, or about 26 million tonnes worth of reduction.
