Conservative Leader Pierre Poilievre has vowed to eliminate what he calls “carbon tax 2.0,” following the party's success in scrapping the previous consumer carbon tax earlier this year. During a recent visit to the East Coast, Poilievre emphasized the need to enhance take-home pay and address the rising cost of living in Canada. He stated, “We are making it a priority to boost take-home pay and reverse the Liberal cost of living crisis by opposing (Prime Minister) Mark Carney’s carbon tax 2.0.”

The term “carbon tax 2.0” refers to the Clean Fuel Regulation (CFR), which took effect in 2023. Poilievre claims that this regulation is contributing to higher gas prices across Canada. The CFR targets oil producers and refiners, aiming to reduce greenhouse gas emissions. According to the Government of Canada, the regulation is intended to encourage innovation and the adoption of clean technologies while promoting the use of low carbon intensity fuels throughout the economy.

Unlike the previous carbon tax, which imposed a direct price on emissions, the CFR requires energy producers to adopt cleaner practices. The costs incurred by these producers may be passed on to consumers, but it is unclear how much the CFR is currently affecting gas prices. Previously, the carbon tax added 17 cents per liter of gasoline and was projected to rise to 37 cents per liter by 2030.

Poilievre has pointed to a report from the Parliamentary Budget Officer, suggesting that the CFR could increase gas prices by up to 17 cents by 2030. He remarked, “What did the last carbon tax add to your gas? Seventeen cents per liter. The new tax is starting to look a lot like the old tax, and Mark Carney thinks no one will notice.”

However, experts like Jessica Green, a political science professor at the University of Toronto, argue that the situation is more nuanced. She explained, “It is (the same) in the sense that it regulates suppliers. And then the suppliers have to decide what they want to do to cover the cost of compliance, and they can pass those costs on to the consumer.” Green noted that the CFR offers more flexibility for energy producers in meeting their goals compared to a straightforward tax.

The CFR was implemented prior to the cancellation of the previous carbon tax, and its impact on current gas prices remains uncertain. The report cited by Poilievre was published in May 2023, before the CFR came into effect on July 1. Environment and Climate Change Canada estimates that by 2030, the CFR will increase gasoline prices by up to 17 cents per liter and diesel prices by up to 16 cents per liter. Additionally, the CFR is projected to reduce Canada’s real GDP by up to 0.3 percent, equating to a potential loss of $9 billion in 2030.

Poilievre argues that eliminating the CFR could alleviate financial burdens on Canadians, claiming it could save households up to $136 annually. He attributes rising living costs and affordability issues to this regulation, asserting that its removal would help improve the financial situation for many families.