Regulations are necessary—and the Clean Fuel Standard is a great one

A recent headline in the Globe and Mail summed it up well: “Business risk from climate change now top of mind for Canada’s corporate boards.”

There’s a reason Canada’s business leaders are prioritizing climate change: it’s going to cost companies, our economy and Canadians. Despite this fact, not everyone sees a need for regulations to reduce carbon pollution—to lessen the damage and its associated costs.

Canadians for Affordable Energy is an advocacy group that, apparently, does not like regulations. Writing for the Financial Post, the organization questioned our report on the Clean Fuel Standard—and specifically, the jobs we said it would lead to in clean fuels.

Having some of Canada’s brightest minds focused on producing clean fuels—while reducing carbon pollution and making money doing it—seems like a good thing to me.

Here’s the argument in their words: “If it is good for the economy to institute a clean-fuel regulation to increase economic activity in clean fuels by $5.6 billion annually, then why not spur economic growth by encouraging other industries in the same way, by loading on regulations that require costly compliance?”

What’s missing here is that the job of the Clean Fuel Standard is to reduce carbon pollution. The policy provides a clear signal to businesses providing fuels (for transportation and industry) that those fuels must get cleaner over time. That signal then shifts investment and employment from dirtier forms of energy to cleaner ones.

Having some of Canada’s brightest minds focused on producing clean fuels—while reducing carbon pollution and making money doing it—seems like a good thing to me.

But I’m not alone. According to the latest polling from Abacus Data, 63 per cent of Canadians want Canada to fight climate change. They want cleaner air and healthier communities, or perhaps they recognize that the yearly cost of climate change is a number in the billions for Canada. Policies like the clean fuel standard help mitigate those costs.

Should Canada spur any industry with regulation? Perhaps not. But it does make sense to use regulations to address carbon pollution. And doing so means Canadians will be employed in designing, building and supplying cleaner fuels—up to 31,000 in 2030 according to our modelling, which was conducted over 10 months with Navius Research (here’s our 106-page technical report).

Canada should also work on how to best compete in the global clean transportation market. Countries are vying to dominate clean transport technologies like electric vehicles. Canada can be both a market to invest in and an exporter of these technologies.

A more useful question would be: “How should we design our regulations to affordably reduce carbon pollution while continuing employment and investment growth in new sectors?” The criticism from Canadians for Affordable Energy avoids this more difficult question. But this is the question that guided our analysis—and it’s the question that every nation must ask itself now and for decades to come.

As for the Clean Fuel Standard itself, it’s a reflection of good regulatory design that we can achieve great environmental outcomes (in this case, cutting 30 million tonnes of CO2 in 2030, which is about equal to taking seven million cars off the road) with promising job and economic outcomes to boot.

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