Natural Resources Committee on June 16th, 2026

[Bob Larocque]

The United States' 45Z program states that, if you produce in the United States, you receive credits for ethanol or renewable diesel. Then, when you sell the fuel in Canada, the legislation gives you access to carbon credits from British Columbia or the federal government. However, Canadian producers don't have this incentive to produce in Canada. So we're already at a disadvantage. The difference ranges from 5 cents to 30 cents per litre.

[Mario Simard, Bloc, Jonquière, QC]

What form might an incentive program take?

[Bob Larocque]

Our recommendation is to add a multiplier to the Renewable Fuels Regulations that applies only to Canadian production. This should provide an incentive, since there would be an additional credit for production in Canada. This would bring us into line with the United States.

[Mario Simard, Bloc, Jonquière, QC]

However, the demand for this is real. I'm thinking of the Groupe Rémabec's work in our region. They serve industrial sectors that need to show that their processes consume energy while leaving a smaller carbon footprint. So this demand for low‑carbon fuels won't disappear overnight. We must ensure that we produce them collectively.

[Bob Larocque]

Exactly.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

[The Chair, Liberal, Terry Duguid]

Thank you.

Thank you both.

[Mario Simard, Bloc, Jonquière, QC]

Oh. I had only two and a half minutes.

[The Chair, Liberal, Terry Duguid]

Mrs. Stubbs, it's back to you for five minutes.

Do you want to share your time?

[Shannon Stubbs, Conservative, Lakeland, AB]

I'll decide as I get into it. Maybe you'll give me a heads-up on time.

Thanks, Chair.

This is for both the Canadian Fuels Association and Ms. Dovgal.

As you know, Conservatives did call on this government to immediately scrap all taxes on fuel for the rest of the year to provide some relief. The Liberals only removed one of those taxes.

Is it fair to say that this tax is essentially offset by the switch from the winter blend of gas to the summer blend? Would you say this means that the removal of only one of these taxes may end up being negligible for relief at the pumps for Canadians who need it?

[Bob Larocque]

I can answer some of this one.

I just want to clarify to everyone that whenever there was a change on taxation regarding fuel, it was immediately seen at the pump. When we had the carbon tax removed about a year ago, we saw it immediately. With the excise tax it was the same thing. It came into effect on Monday morning, and we saw it.

The problem we're facing is with crude. The price of crude globally has the biggest impact we see on gas prices. It went from about $90 a barrel to $95. Then there was an escalation in the Middle East, and it was $110 within three days. That pretty much eliminated the 10¢ per litre from the excise tax. Hopefully this de-escalates. Now the barrel is down to about $80 or $85.

The biggest impact on the price of gas is the price of crude as a commodity.

[Shannon Stubbs, Conservative, Lakeland, AB]

Do you have any comments, Ms. Dovgal, on removing taxes?

[Margareta Dovgal]

I can briefly comment that, overall, any taxation we do, whether it's direct to consumers or hidden taxes that have to do with the cost of producing the products we use, we see the impact on affordability. The more removed you get from it in terms of the broader supply chain, the harder it is for people to understand where it's coming from.

When we're talking about affordability, we should also talk about the ways that people can afford their lives, which are from incomes and productivity. In order to get to that, we need to have higher competitiveness for global capital, so we can build more big things and employ Canadians. That's another very valuable way of offsetting and not just looking at specific taxes that consumers are exposed to.

[Shannon Stubbs, Conservative, Lakeland, AB]

That's a good point about all the economic contributions that can also be gained from cutting expensive taxes that don't actually achieve the aims their proponents argue they will.

This is for both the Canadian Fuels Association and Ms. Dovgal.

The Liberals promised more than a year ago that they would bring in legislative and regulatory reform. They advocated for this: they would cut permitting timelines to two years and under. We're actually moving into their second year and they haven't yet brought forward that repeal and reform agenda, even though they've listed all these laws and regulations in the back of Bill C-5 that they know block building, which is why they put them in there.

Conservatives, of course, have consistently called for these regulatory and legislative changes to be made at every single step. I can say that as a person who's been here for 11 years. Conservatives have always argued for making Canada's regulatory system competitive, attractive, predictable, fair and objective, and evidence- and science-based. We have also—since I've been elected—supported the construction of two pipelines that would have provided Canadian energy self-reliance, security and exports to both Asia and Europe.

What does it say when everyone from industry to legal experts, from the Supreme Court of Canada and opposition members to every premier and territorial leader have called for overhauls? This government is going into its second year of power, and it has just announced that it's going to delay consultations on the very changes that proponents right across the natural resources sector are saying need to happen.

[Margareta Dovgal]

The Liberals were elected in 2015. For the majority of the 11 years they've been here, we've had policies on the books whose implicit purpose, even if it wasn't the stated purpose, was to keep the product in the ground. I was a Liberal for many years. I organized for the Young Liberals. That was something members of Parliament told me was a priority. It was about ensuring that we shut down the dirty tar sands. That was a line I heard from elected officials on the other side.

[Shannon Stubbs, Conservative, Lakeland, AB]

That's so anti-scientific, because there's no tar there.

[Margareta Dovgal]

Precisely. There are big quotation marks around it.

That was a policy framework that had the intent of making it profoundly difficult for this industry to grow. Now the light has seemingly been seen. We've come under unprecedented economic pressures. It is hard to roll all of that back. The pressure is on to get to results that aren't just band-aids, because we are seeing band-aids. There are a lot of promising indicators and signs, but we need to ensure that it's not just large corporations that have the ability to navigate lots of regulation—to hire large teams that can successfully navigate this.

We need to ensure that the energy sector is one that all Canadians can benefit from. That comes down to the core principles of these policies. If we want to see a change that makes Canada an energy superpower, we need to think more in terms of structural reform, in order to get away from the policies of the past.

[The Chair, Liberal, Terry Duguid]

Thank you, both.

Ms. McKelvie.

[Shannon Stubbs, Conservative, Lakeland, AB]

Chair, maybe the Fuels Association could submit more context in a written submission, if they like.

Of course, I'll note, for the Electro-Federation, that this committee made a recommendation to do west-to-east interties in this country in 2017. I too wish they'd get on that.

[The Chair, Liberal, Terry Duguid]

Thank you.

Ms. McKelvie, you will be wrapping up this panel. You have five minutes.

[Jennifer McKelvie, Liberal, Ajax, ON]

Thank you, Mr. Chair.

My questions are for Mr. Larocque and Ms. Stilborn, to start.

Can you speak to how the government can further strengthen the biofuels sector here in Canada and increase domestic production? What role might the biofuels production incentive have in that?

[Bob Larocque]

I'll take that one. Thank you so much.

Very clearly, they need to amend the clean fuel regulations. They needed to do that yesterday. We're waiting for an amendment. In that one, there needs to be an incentive that relates to the Canadian production of biofuels. The number one thing they can do right now is amend the CFR.

The second thing they can do is approve those projects. The CFR is a life-cycle assessment-type regulation. Sometimes it takes 18 months to two years to approve something. We need to fast-track those approvals within the CFR. It's different from legislation, but they need to do it within the clean fuel regulations.

Those are the two things they can do right now.

[Jennifer McKelvie, Liberal, Ajax, ON]

Can you speak to the innovation that exists within Canadian oil and gas companies? How much are they spending on R and D? What are the sorts of investments being made around decarbonization, renewables and biofuels?

[Bob Larocque]

We have about $10 billion in investments waiting on the table. The number one biggest innovation is called co-processing. Basically, you're putting Canadian canola oil or, if you wish, any kind of oil right into the refinery. When it comes out, you're making renewable diesel, renewable gasoline or renewable jet fuel. It's a new process. It's innovation. It requires some investments, like in the supply chain. I really like what Electro-Federation said. Sometimes the supports are only at the mill site. They're not supporting the whole supply chain. Those are additional changes that could be made. The approval of that is taking a long time because it's so new. It's not traditional biodiesel plants.

Second is, through life-cycle analysis, carbon capture at a refinery like an ethanol plant all the way through the supply chain to the gas station. That's where all the investments.... They're just waiting right now, because there are no incentives to produce that in Canada. It's still technically cheaper to buy your renewable diesel from the United States, where they are incentivized to do it. We're not.

[Jennifer McKelvie, Liberal, Ajax, ON]

Do you have examples of countries that are doing it well, in terms of biofuels? One that pops into my mind is Italy with Eni, the international oil and gas company. Who is doing it well, and are there models we can look to?