October 18, 2022

Trudeau’s Second Carbon Tax to cost $1,277 per Canadian - Report


Trudeau’s Second Carbon Tax to cost $1,277 per Canadian - Report

Toronto - A newly released report authored by economist Ross McKitrick exposes the true cost to Canadians of the Trudeau government’s new Clean Fuel Standard, dubbed Canada’s “Second Carbon Tax.” 

This new tax will be expensive. According to the report released by LFX Associates, Economic Analysis of the 2022 Federal Clean Fuels Standard, household energy costs will increase by 2.2 to 6.5% a year per household. In real money terms this will mean an extra tax of $1,277 a year per worker. 

According to CAE President Dan McTeague “This new carbon tax is being released at a time of soaring household costs. Grocery prices have skyrocketed. Families are struggling to afford the basic necessities for their home. Now the Trudeau government is going to make it even more expensive.”

In provinces that rely more heavily on liquid fuel sources such as oil - like Newfoundland and New Brunswick - these prices will be even higher than in the rest of Canada. 

And, contrary to the government’s claim that there will be virtually no negative effect on Canada’s GDP, the impact of this new tax on the Canadian economy could be significant. According to the report, by 2030 the Canadian GDP will be about 1.3 percent lower than without the CFS.

In other words, we can expect that Trudeau’s new CFS carbon tax will actually harm the Canadian economy. Unemployment, higher cost of living and further diversion of investments from Canada will put downward pressure on government revenue. This will lead to an increase in the consolidated government deficit in every year of the policy’s implementation. The extra government debt accumulated by 2040 because of the Clean Fuel Standard is estimated to reach as high as $95.2 billion.  

“We’ve dubbed the Clean Fuel Standard a Second Carbon Tax because that is exactly what it is,” says McTeague, “it is simply another tax grab that will only make life more unaffordable for Canadians.”

The Clean Fuel Standard is a tax that aims to reduce the carbon intensity of liquid fuels used in transportation (gasoline, diesel) by 15% by 2030. This will be done by blending ethanol into traditional liquid fuels, and by using carbon credits which will be available to those switching to electric vehicles or increasing EV infrastructure. 

If compliance is achieved through blending ethanol into liquid fuels or credit creation, this tax will achieve no global reduction in in green house gas (GHG) emissions.  That is because the ethanol used to dilute liquid fuels will most likely be imported from the United States. US based ethanol has been shown to have a higher lifetime carbon intensity than gasoline. To extract, store it, ship it, etc. produces more emissions than what would be produced by using gasoline to fill our cars. 

“This new “Second Carbon Tax” will not reduce emissions.” McTeague added. “But it will allow Justin Trudeau to state that he has reduced Canada’s carbon intensity footprint. Unfortunately, any such reduction resulting from this tax will be achieved on the backs of working Canadians.”


Ross McKitrick is a widely published professor of economics at University of Guelph with decades of experience studying climate change, climate policy and environmental economics. He appears frequently in Canadian and international media. He is also an author at LFX Associates, a Canadian based team of experts that provide policy evaluation, cost-benefit analysis and economic research with a focus on Canadian energy and industrial sectors.  

Keeping energy services affordable must be an ongoing public policy priority for all levels of government. Founded in 2016, Canadians for Affordable Energy is a not-for-profit organization committed to speaking out on this issue of so there is an informed debate, and the interests of all Canadians are heard.



For media inquiries, please contact Dan McTeague at [email protected]