Consumers could pay more for gas to help companies comply with federal rules

Gasoline producers and retailers in New Brunswick will gain the ability to try to convince regulators to let them pass on the costs of federal emissions-reduction policies to consumers.

The Higgs government's legislation to change the price-setting formula for gasoline and other liquid fuels includes a clause creating a "cost of carbon adjustor" in the Energy and Utilities Board's formula.

Once the bill becomes law, suppliers, wholesalers and retailers will be allowed to present evidence and make arguments that complying with the federal Clean Fuel Regulations carries extra costs.

The board could then let the companies account for those costs in higher prices charged to consumers.

"That's giving them an opportunity to make a case and say, 'these are legitimate, real costs that we have associated with complying with the clean fuel standards emission reduction targets,'" said Energy Development Minister Mike Holland.

"It actually gives them an opportunity to bring those costs to the table and say 'here's what we're facing. Can that be considered?'"

The Petroleum Products Pricing Act already lets the EUB account for many costs wholesalers face serving the New Brunswick market when it sets margins – the markups retailers can charge.

Holland's amendments will let the board add the cost of complying with Ottawa's Clean Fuel Regulations or any other regulations created under two federal environmental laws. 

He says it will make it more affordable for companies such as Irving Oil to comply with the regulations, which are designed to prod them into producing cleaner, lower-emitting fuels.

But Green Party leader David Coon says the amendments will actually create a disincentive because of the mechanism at the heart of the federal Clean Fuel Regulations.

The regulations create a credit-trading system that gives companies a choice between making their own products cleaner, or buying credits from other companies that are doing it.

Holland's bill would allow Irving Oil to buy credits and pass on the cost of them to consumers, without ever having to produce fuels with lower emissions, Coon said.

"This looks like a way to enable them to recoup the cost of the credits, which takes away the incentive to do anything else to clean up their fuel," Coon said.

"Rather than making improvements in your own facility or other things that would essentially reduce your output of carbon, you can buy credits from those who have done elsewhere." 

The new federal regulations take effect next year.

In 2020, the four Atlantic premiers called on Ottawa to postpone their implementation.

Holland says the province is not requiring consumers to absorb the costs of lower-emitting fuels – it's just giving industry the ability to make the case for it. 

"We're not approving anything. We're giving the industry an opportunity to compile those and allow them to have that conversation with the EUB and determine if there's a value to be placed on that," he said.

"Nothing that we're talking about in this legislation presupposes an outcome." 

Liberal energy critic Keith Chiasson said it appears the Progressive Conservative government is still trying to undermine federal climate policies, three years after it reluctantly decided to comply with Ottawa's carbon tax plan.

"That's a cause for concern," Chiasson said. "I thought that discussion or that debate was had."