Gas prices may rise due to the Clean Fuel Regulations, adding up to 7¢ per litre now and up to 17¢ by 2030, warns taxpayers group.
Canadians Face Rising Gas Costs Despite Carbon Tax Repeal
Even though Ottawa removed the federal consumer carbon tax last year, Canadian drivers are still feeling the pinch at the pump. Rising fuel costs are stretching household budgets, and many are asking why prices aren’t dropping faster.
The Canadian Taxpayers Federation points to a lesser-known culprit: the Clean Fuel Regulations, a federal climate policy introduced in 2023.
Clean Fuel Regulations: The ‘Hidden Carbon Tax’
Under these regulations, fuel producers and importers must cut the carbon intensity of gasoline and diesel. If they fall short, they must buy compliance credits—costs that are ultimately passed on to consumers. Unlike the previous carbon tax, these new rules do not include rebates.
Franco Terrazzano, federal director of the Canadian Taxpayers Federation, calls this a “hidden carbon tax.” According to projections from the Parliamentary Budget Officer, the policy could add up to 7¢ per litre of gas this year. By 2030, the cost could climb to 17¢ per litre, potentially adding $384 to $1,157 per household annually, depending on the province.
Government records suggest that, by the end of the decade, these regulations could also cost Canada’s economy up to $9 billion.
Drivers Feel the Squeeze
At gas stations across Calgary, the impact is clear.
“The cost has really gone up for most things, whether it’s groceries or fuel prices,” said driver Ali Mazher. Another commuter, Emmanuel Atika, argued, “Because the cost gets passed down to us, I don’t think we should be responsible.”
Despite these frustrations, some experts say the policy is not as costly as critics claim. Thomas Green, senior climate policy adviser at the David Suzuki Foundation, explained that early projections didn’t account for producers’ adjustments.
“Credit prices are now trading, and clean fuel production is ramping up in Canada,” Green said, suggesting the impact on fuel prices may be less dramatic than feared.
Gas Prices Today and Tomorrow
Currently, GasBuddy reports the national average gas price at around $1.28 per litre. Analysts predict prices may gradually decline through January unless unexpected global events push fuel costs higher.
While public opinion remains mixed, one thing is certain: Canadians are keeping a close eye on their wallets as new climate policies reshape the cost of fuel.
