The Canadian Energy Centre (CEC) found that Canadians will pay up to 350 percent more at the pump by 2030. The typical Canadian motorist will pay up to $900 annually to cover the federal carbon tax.
Depending on the province and type of vehicle, gas prices could range between 297 percent and 350 percent higher by 2030.
Examining the top five vehicles in Canada in 2019 alongside planned increases to the federal carbon tax, the research outlines how much more the average Canadian vehicle owner will add to their annual fuel costs by 2030 when the carbon tax increases from $40 to $170 per tonne.
Following back-to-back-to-back annual carbon tax hikes, the Parliamentary Budget Officer (PBO) estimated in a report released in late June that an additional $120 per tonne of carbon tax will be added by 2030. Passed in 2018, the Greenhouse Gas Pollution Pricing Act capped the tax at $50 per tonne.
To exceed the 2030 Paris targets, the PBO advocated for the tightening of the Output-Based Pricing System (OBPS) standards to reduce Canada’s emissions by 96 Mt in 2030. Increasing the federal fuel charge to $170 per tonne and tightening OBPS will help Canada achieve over half of the 168 Mt reduction projected in Budget 2021.
To achieve the 168 Mt reduction by 2030 projected in Budget 2021 and exceed the Paris target, the PBO estimates that announced non-price policies will have an effective cost of $91 per tonne, in addition to the $170 carbon tax. These regulations and incentives to develop and adopt lower emissions technologies assume that the measures chosen have the lowest cost.
Between 2021 and 2030, gasoline costs associated with the $170 carbon tax are expected to rise from 8.8 cents per litre to 39.6 cents per litre, an increase of 350 percent over those nine years, including the $91 non-price policy increase that is equivalent to 62 cents extra for gasoline.
In 2019, there were over 25.4 million automobile registrations in Canada, with the top five vehicles sold being the Ford F-Series, Dodge Ram, Toyota RAV4, Honda Civic, and Honda CR-V.
Based on Canada’s 2021 carbon tax, the portion paid by motorists is between $161 and $257, or about 7 percent of the fill-up costs.
For example, the Dodge Ram 1500 has $3,931 in annual fuel costs in 2021, with the federal carbon tax comprising $257 of that cost. While the Honda Civic has $2,453 in annual fuel costs this year, with the federal carbon tax comprising $161 of that cost.
By 2030, based on the planned carbon tax increase, the portion paid by motorists is expected to be between $723 and $1,158, or about 24 percent of the fill-up costs, assuming that the remaining components of the gasoline cost structure stay the same.
Considering the carbon tax increases by 2030, the Dodge Ram 1500 has $4,832 in annual fuel costs in 2021, with the federal carbon tax comprising $1,158 of that cost. While the Honda Civic has $3,015 in annual fuel costs this year, with the federal carbon tax comprising $723 of that cost.
On April 22, 2021, the Government announced its intention to reduce Canada’s GHG emissions below the 468 Mt projected in Budget 2021 to 40 to 45 percent below 2005 levels.
A climate report by Pembina Institute found Canada is falling short of net-zero emissions targets. The energy and climate think-tank concluded that no government would meet their 2030 net-zero goals.
Modelling for the 2021 budget included the federal climate policy published in December 2020, forecasting a national emissions reduction of only 36 percent below 2005 levels by 2030.
The report noted that the federal government’s announcement in April to further reduce emissions by another 30 to 66 Mt by 2030 will require further action. The federal government has not yet announced policy measures to achieve this additional reduction in emissions.
As of May 2021, the retail price for regular unleaded gasoline in the 18 metropolitan areas surveyed by Statistics Canada averaged 134.4 cents per litre, including 8.8 cents per litre to cover the $40 per tonne carbon tax.
Assuming no change in the remaining cost structure for regular unleaded gasoline by 2030, the cost is expected to rise to an average of 165.2 cents by 2030, including approximately 39.6 cents per litre to cover the $170 per tonne carbon tax.
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