‘Hidden carbon tax’ will add to gas prices this year, taxpayers group says

Vehicle are shown gas station north of Newcastle, Ont. on Wednesday April 1, 2025.

As the cost of living continues to squeeze households, gas prices remain a major concern for many Canadians, even after Ottawa scrapped the federal consumer carbon tax last year.

The Canadian Taxpayers Federation says drivers are still paying more at the pump because of a separate federal climate policy introduced in 2023, known as the Clean Fuel Regulations.

At gas stations across Calgary, drivers said rising prices are adding to their financial strain.

“The cost has really gone up for most things, whether it’s groceries or fuel prices,” said Ali Mazher.

According to the federal government’s website, the regulations require fuel producers and importers to reduce the carbon intensity of gasoline and diesel. If they cannot meet those requirements, they must purchase compliance credits, a cost the federation says is passed on to consumers.

Unlike the former consumer carbon tax, there are no rebates tied to the Clean Fuel Regulations.

Franco Terrazzano, federal director of the Canadian Taxpayers Federation, said the group’s analysis is based on projections from the Parliamentary Budget Officer (PBO).

“The “hidden carbon tax” will add up to seven cents per litre of gas this year,” Terrazzano said. “As these regulations get fully implemented by 2030 they’re going to increase the price of gas by up to 17 cents per litre.”

Terrazzano said the PBO estimates the Clean Fuel Regulations could cost the average household between $384 and $1,157 per year by 2030, depending on the province.

The federation also points to government records suggesting the regulations could cost Canada’s economy up to $9 billion by the end of the decade.

CTV News reached out to the federal government for comment but did not receive a response by deadline.

Climate advocates, however, dispute claims that the regulations are significantly driving up fuel prices. They argue the cost estimates cited by critics do not reflect how the system is operating today.

Thomas Green, senior climate policy adviser with the David Suzuki Foundation, said earlier projections assumed fuel producers would make no adjustments.

“This is relying on outdated analysis,” said Green. “Now that the Clean Fuel Regulations are in effect, we’re seeing credit prices trading and we’re seeing clean fuel production ramp up in Canada.”

Public reaction to the policy remains mixed.

“Because the cost gets passed down to us, I don’t think we should be responsible,” said Emmanuel Atika.

“If you go to the producer, they’ll say they have to recover the cost,” said Mazher. “If you ask me, I’ll say why should I pay? We need to look at the situation holistically. There is no right or wrong answer.”

According to GasBuddy, the national average gas price currently sits at about $1.28 per litre. Analysts say prices could continue to inch lower through the rest of the month, barring any major geopolitical developments that could push fuel costs higher.