Natural gas costs to double for chemistry industry under the proposed Clean Fuel Standard

‘The jobs and revenues that we generate could disappear,’ says President and CEO of CIAC.

April 9, 2019

The Chemistry Industry Association of Canada (CIAC) is expressing extreme concern about the federal government’s proposed Clean Fuel Standard (CFS), saying that if implemented as proposed, the CFS will push the total carbon price in excess of $200 a tonne, effectively doubling the cost of natural gas for the industry.

The CFS as currently designed will be the first standard in the world to include industrial natural gas and propane. The Government of Canada has proposed a phased-in approach targeting liquid fuel in 2020.

“As an industry, we believe climate change is an urgent issue that must be addressed,” said President and CEO of CIAC, Bob Masterson.

“We believe that provincial climate change policies and the federal carbon pricing backstop system get a number of things right: Carbon costs are transparent and predictable; there is an upper ceiling on costs faced by industry and consumers of $50 a tonne by 2022; competitiveness considerations have been taken into account for trade-exposed industrial sectors; and industry and consumers are left to their own decision making to determine how to minimize exposure to the carbon price signal.”

The CFS, in its current form, will duplicate provincial carbon pricing policies and the federal carbon pricing backstop, doubling costs for our industry. While accommodation has been provided to industries unable to bear the full $50 carbon price signal, no such accommodation is proposed in the CFS.

To keep Canada’s chemistry sector competitive, governments must assess the additional costs on the sector as they implement policies to tackle climate change. CIAC believes Canada should support a carbon policy that recognizes emission-intensive, trade-exposed sectors and encourages investment.

The chemistry industry is committed to working with the Government of Canada to ensure the CFS framework is realistic, effective and addresses industry concerns on competitiveness and feasibility.

Please see the CIAC’s information sheet on the CFS and its potential impact on the industry and the backgrounder for more detailed information.

On April 9 at 10 a.m. in 135-B Press Conference Room in West Block on Parliament Hill, Mr. Masterson and will be holding a press conference with Marcelo Lu, CIAC Chair and President of BASF Canada to further discuss the implications of the CFS and to answer any questions about the affect it could have on the chemistry industry.