Why Islanders are paying more for gas under new regulations

Prince Edward Islanders are paying more under the new federal clean fuel regulations in part because ethanol isn't mixed into the gasoline products generally sold in the province, a Summerside energy consultant says.

Jay Mackay said that kind of lower-carbon fuel reduces the environmental footprint of gas-powered vehicles, and is exactly the kind of product the new rules that came into effect on July 1 were designed to promote, by making them relatively cheaper to buy. 

But since gasoline-ethanol blends are not generally sold on the Island, and P.E.I. does not have rules in place to ban refineries from passing on the federal surcharges on full-carbon gas, Islanders have been paying around four cents more per litre in the past three weeks. 

"We're missing out on a whole subset of fuels that nobody even thinks about," Mackay said of ethanol, a type of alcohol made from plants, such as corn and sugar beet. "And alcohol is an extremely low-carbon fuel source... It would be a major cost saving for the people who want to use it."

The Canadian Fuels Association told CBC News that "in general, P.E.I. gasoline has no ethanol."  

In neighbouring New Brunswick, however, many pumps do offer what's called E10 gasoline, consisting of 10 per cent ethanol and 90 per cent gasoline.  

That ethanol blend, which can be used in any gas-powered engine, is readily available in major markets in central and western Canada. In some American states, gas stations offer blends with up to 15 per cent ethanol, known as E15 gasoline. You can even get E85 gas, though you'd need what's called a flex-fuel vehicle. 

The products do have their critics, though. The blends can be more corrosive and fuel efficiency is three to four per cent lower than regular gasoline.

Irving Oil operates one of Canada's biggest refineries in Saint John, N.B. 

Katherine d'Entremont from its corporate communications department sent CBC News an email saying in part: "We have been blending ethanol in gasoline for more than a decade in certain markets and continue to evaluate the availability and potential expansion of biofuel blended product within Atlantic Canada."

The company's 2022 sustainability report noted that Irving added biofuel blending capacity at its new Halifax Harbour Terminal last year. That facility introduced the capability to blend in ethanol to levels of up to 15 per cent in gasoline.

Irving's report said that move will reduce emissions equivalent to taking 45,000 passenger vehicles off the road a year.   

"Our company is on a continuous journey of sustainable development, while continuing to provide safe and reliable energy to our customers," d'Entremont's email said. 

Lowering the carbon intensity

The Trudeau government brought in the new rules on July 1, 2023,  because it wants oil and gas refiners to reduce the carbon intensity of their gas and diesel by 15 per cent by the year 2030, compared to 2016 levels.

The federal government has long said consumers shouldn't be bearing the financial burden of the new regulations, given oil refineries have been making record profits and could easily use some of that revenue to make their facilities greener. 

They can do that in a number of ways:

• Make gasoline with more ethanol or use more bio-diesel, both of which are less carbon-intensive alternatives.
• Invest in green projects such as carbon capture and storage.
• Install electric vehicle charging stations at gas stations under their brand umbrellas. 

Gas and oil companies that meet federal targets for reducing their emissions intensity will earn extra credits they can sell to other companies. Producers that don't meet the targets by cleaning up their gas can buy those credits to stay in compliance.

Less incentive to change?

The bottom line is that the federal government wants the big players in the industry to be facing higher costs unless they go greener, as an incentive for them to change. So far, that's not the way it's playing out in Atlantic Canada. 

Premiers in the region have been lobbying for a break on the regulations, saying they will hurt consumers here harder than those in other areas of Canada, in part because most of our goods are trucked here. 

In at least two cases, though, provinces made it easier for citizens to be charged more. 

Moe Qureshi, the manager of climate solutions at the Conservation Council of New Brunswick, says his provincial government actually changed the rules recently so that any new costs could be passed on to drivers.

N.B. Premier Blaine Higgs said the rule change was meant to protect gas station owners, who would see their profit margins reduced and the viability of their business model hurt if refiners passed on the costs and those costs couldn't trickle down to customers. 

Nova Scotia did the same thing.

Qureshi is not happy about that. 

"We're seeing that folks at the pump are starting to pay more, and essentially paying the bills of industry. So there was no need to do that in my opinion... They created a system that disincentivizes [companies] from making those innovation changes, because now they're getting extra money from the consumers."

No comment from P.E.I. government

CBC News asked the P.E.I. government for comment on whether it followed New Brunswick's lead with regard to letting consumers be charged more for gas products now that the regulations are in place. 

A week after the request was made, there was no reply from the province. 

So far, the Island Regulatory and Appeals Commission has been left to figure out what costs should be passed on to P.E.I. consumers. That's what the province of Newfoundland and Labrador did as well. 

On P.E.I., IRAC is in the middle of a review of how much profit fuel retailers should be allowed to make, and that price margin discussion will take into account the impact of the new clean fuel regulations.