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A Distributional Analysis of the Clean Fuel Regulations

Published on May 18, 2023 PDF(opens a new window)

This report provides a distributional analysis of the Clean Fuel Regulations that will require reductions in the carbon intensity of gasoline and diesel used in Canada.

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Communications

Quotes

  • Since lower income households generally spend a larger share of their income on transportation and other energy-intensive goods and services compared to higher income households, on average the Clean Fuel Regulations will have a greater impact on these households.

  • At the provincial level, households in Saskatchewan, Alberta, and Newfoundland and Labrador will have the highest cost, which reflects the higher fossil fuel intensity of their economies. In contrast, the cost will be lowest in British Columbia due, in part, to revenues generated from existing provincial regulations.

Yves Giroux
Parliamentary Budget Officer

News Release

{"id":49,"created_at":"2023-05-17T13:48:16-04:00","updated_at":"2023-05-18T08:57:08-04:00","slug":"pbo-estimates-the-impact-of-the-clean-fuel-regulations-on-households-le-dpb-estime-lincidence-du-reglement-sur-les-combustibles-propres-sur-les-menages","title_en":"PBO estimates the impact of the Clean Fuel Regulations on households","title_fr":"Le DPB estime l\u2019incidence du R\u00e8glement sur les combustibles propres sur les m\u00e9nages","body_en":"The Parliamentary Budget Officer (PBO) today released a distributional analysis of the Clean Fuel Regulations (CFR). The CFR, which are a part of the federal government\u2019s climate plan, require suppliers to gradually reduce the carbon intensity of the gasoline and diesel fuels they produce and sell for use in Canada starting July 1, 2023. \n\nEnvironment and Climate Change Canada (ECCC) estimates that the CFR will increase the price of gasoline and diesel in 2030\u2014the year in which the CFR reach full stringency\u2014by up to 17 cents per litre and 16 cents per litre, respectively. ECCC also estimates that the CFR will decrease real GDP in Canada by up to 0.3 per cent (or up to $9.0 billion) in 2030.\n\nBased on ECCC\u2019s economic impact estimates, the PBO\u2019s report finds that relative to household disposable income the CFR is broadly regressive.\n\n\u201cSince lower income households generally spend a larger share of their income on transportation and other energy-intensive goods and services compared to higher income households, on average the Clean Fuel Regulations will have a greater impact on these households,\u201d says PBO Yves Giroux.\n\nThe PBO estimates that at the national level, in 2030, the cost of the CFR to households ranges from $231 (or 0.62 per cent of disposable income) for lower income households to $1,008 (or0.35 per cent of disposable income) for higher income households.\n\n\u201cAt the provincial level, households in Saskatchewan, Alberta, and Newfoundland and Labrador will have the highest cost, which reflects the higher fossil fuel intensity of their economies,\u201d adds Mr. Giroux. \u201cIn contrast, the cost will be lowest in British Columbia due, in part, to revenues generated from existing provincial regulations.\u201d\n\nThe PBO\u2019s estimates are based, in part, on data provided by ECCC from their upper bound fuel price scenario. Consequently, the PBO\u2019s estimates should be regarded as upper bound estimates.\n\nVisit the PBO\u2019s Climate Plans and Targets Hub to see all our work on this topic.","body_fr":"Le directeur parlementaire du budget (DPB) a publi\u00e9 aujourd\u2019hui une analyse distributive du R\u00e8glement sur les combustibles propres (RCP). Le RCP, qui s\u2019inscrit dans le plan climatique du gouvernement f\u00e9d\u00e9ral, oblige les fournisseurs de combustibles \u00e0 r\u00e9duire graduellement l\u2019intensit\u00e9 en carbone de l\u2019essence et des carburants diesel qu\u2019ils produisent et vendent aux fins d\u2019utilisation au Canada \u00e0 compter du 1er juillet 2023. \n\nEnvironnement et Changement climatique Canada (ECCC) estime qu\u2019en 2030, ann\u00e9e o\u00f9 la s\u00e9v\u00e9rit\u00e9 des normes du RCP atteindra son sommet, le RCP entra\u00eenera une hausse du prix de l\u2019essence et du diesel pouvant atteindre 17 et 16 cents le litre, respectivement. ECCC estime \u00e9galement que le RCP fera baisser le PIB r\u00e9el du Canada d\u2019au plus 0,3 % (soit de quelque 9 milliards de dollars) en 2030.\n\n\u00c0 la lumi\u00e8re des r\u00e9percussions \u00e9conomiques estim\u00e9es par ECCC, le rapport du DPB conclut que le RCP est globalement r\u00e9gressif par rapport au revenu disponible des m\u00e9nages.\n\n\u00ab Comparativement aux m\u00e9nages \u00e0 revenu \u00e9lev\u00e9, les m\u00e9nages \u00e0 faible revenu consacrent g\u00e9n\u00e9ralement une plus grande part de leur revenu aux transports et \u00e0 d\u2019autres biens et services \u00e9nergivores; le R\u00e8glement sur les combustibles propres aura donc, en moyenne, une plus grande incidence sur ces m\u00e9nages \u00bb, a expliqu\u00e9 le DPB, Yves Giroux. \n\nLe DPB estime qu\u2019\u00e0 l\u2019\u00e9chelle nationale, en 2030, les co\u00fbts que le RCP occasionnera aux m\u00e9nages varieront entre 231 $ (soit0,62 % du revenu disponible) dans le cas d\u2019un m\u00e9nage \u00e0 faible revenu et 1 008 $ (soit0,35 % du revenu disponible) dans le cas d\u2019un m\u00e9nage \u00e0 revenu \u00e9lev\u00e9.\n\n\u00ab \u00c0 l\u2019\u00e9chelle provinciale, ce sont les m\u00e9nages de la Saskatchewan, de l\u2019Alberta et de Terre-Neuve-et-Labrador qui devront assumer les co\u00fbts les plus \u00e9lev\u00e9s, en raison du poids des combustibles fossiles dans leur \u00e9conomie, a ajout\u00e9 M. Giroux. En revanche, c\u2019est en Colombie-Britannique que le co\u00fbt sera le plus faible, notamment gr\u00e2ce aux revenus g\u00e9n\u00e9r\u00e9s par ses r\u00e8glements provinciaux d\u00e9j\u00e0 en place. \u00bb\n\nLes estimations du DPB reposent en partie sur les donn\u00e9es ECCC selon son sc\u00e9nario de la limite sup\u00e9rieure du prix des combustibles. Par cons\u00e9quent, les estimations du DPB doivent \u00eatre consid\u00e9r\u00e9es comme des estimations de la limite sup\u00e9rieure.\n\nVisitez le Carrefour des plans et des objectifs climatiques du DPB pour voir tous nos travaux sur ce sujet.","release_date":"2023-05-18T09:00:00-04:00","is_published":"2023-05-18T08:57:08-04:00","internal_id":"COM-2324-049","permalinks":{"en":{"website":"https:\/\/www.pbo-dpb.ca\/en\/blog\/news-releases--communiques-de-presse\/pbo-estimates-the-impact-of-the-clean-fuel-regulations-on-households-le-dpb-estime-lincidence-du-reglement-sur-les-combustibles-propres-sur-les-menages"},"fr":{"website":"https:\/\/www.pbo-dpb.ca\/fr\/blog\/news-releases--communiques-de-presse\/pbo-estimates-the-impact-of-the-clean-fuel-regulations-on-households-le-dpb-estime-lincidence-du-reglement-sur-les-combustibles-propres-sur-les-menages"}},"pivot":{"publication_id":744,"news_release_id":49}}