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New clean fuel regulations are coming to Canada in the coming months, federal Environment Minister Catherine Mc-Kenna announced earlier this month. She says the policy – titled the Clean Fuel Standard – is a really important piece of our climate plan and an economic opportunity for Canada. The idea behind the plan, which will require fuel producers to reduce the carbon intensity of their products, is being cheered on by Clean Energy Canada, an organization launched by Tides Canada in 2010 and now connected to Simon Fraser University.
According to a recent report from Clean Energy Canada, more federal fuel regulations would be an economic boon for the country. It argues that additional regulations would increase economic activity in clean fuels in Canada by up to $5.6-billion a year in 2030 and create as many as 31,000 new jobs. Even after accounting for the negative effects of the regulations in other sectors, it is claimed, there will still be a large positive net effect on the economy and employment.
This is nonsense. The logic behind the claim that the Clean Fuel Standard would be economically beneficial is that government regulation somehow grows the economy by forcing people and businesses to spend money complying with the regulation. Those of us who don’t buy into that thinking might well suspect that politicians who claim economic benefits of punitive energy regulations are simply catering to rent-seekers and climate activists.
Indeed, 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? This is the lens through which we should view the 31,000 new jobs that would be allegedly be created by Ottawa’s coming clean-fuel regulations.
Is it good for the economy when 31,000 workers, rather than being efficiently employed to produce goods and services that Canadians demand, are instead put to work to achieve compliance with government rules?
Anyone still skeptical of the economic opportunity that McKenna claims these new regulations will bring might want to review the last time we heard grand promises of green economic opportunity from Liberal politicians. Recall the Green Energy Act disaster orchestrated by the Ontario Liberals, who had promised that their strict new regulations dictating electricity generation would create 50,000 green jobs.
Reports from the province’s auditor general later found that around 30,000 jobs were created as opposed to 50,000, and most of the jobs were temporary construction work. Meanwhile, a recent Fraser Institute study estimated that 75,000 jobs were lost in Ontario’s manufacturing sector between 2008 and 2015 as a result of soaring electricity costs.
This is apparently what Liberals and climate activists consider economic success: diverting scarce resources from the production of desired goods and services to comply with environmental schemes that politicians dictate. The soon to-be-announced clean fuel regulations are just the latest example. They will make running a business costlier and Canada poorer.
Matthew Lau is an economics writer based in Toronto and a contributing writer to Canadians for Affordable Energy.
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