On June 22, 2023, Newfoundland and Labrador enacted Regulation 48/23 under the Petroleum Products Act, which amends the existing Petroleum Products Regulations. This regulatory update is designed to enhance various aspects of petroleum pricing and introduces new definitions and procedures in light of evolving standards regarding carbon emissions.

One of the components of the amendment is the refinement of definitions. Notably, it introduces terms such as “Argus,” which pertains to relevant reports on biofuels, and “low-carbon-intensity fuel,” in accordance with Canada’s Clean Fuel Regulations. Additionally, the term “benchmark” has been clarified to include price assessments from additional sources, including Argus, thus providing a more comprehensive basis for determining prices of heating and motor fuels.

The amendment also revises the framework for the release of information related to petroleum pricing, emphasizing the importance of transparency within the market. A significant innovation introduced is the “carbon price adjustment,” which will now be included in the maximum prices for petroleum products. This adjustment aims to mitigate the financial burdens that wholesalers and retailers face due to compliance with national clean fuel regulations.

Furthermore, the regulation updates the method for establishing the benchmark price for motor and heating fuels. The new approach stipulates that the benchmark will be calculated as the average of the high and low product prices reported over the preceding four weeks, utilizing data from recognized sources such as Platts, Bloombergs, and Argus. This change is intended to better reflect current market conditions.

Periodic price adjustments have also been addressed in the regulation, allowing the board to modify prices based on prevailing market trends and the costs incurred by suppliers. This ensures that pricing remains aligned with economic realities.

The introduction of the carbon price adjustment represents a significant step forward, aiming to alleviate the financial pressures on wholesalers and retailers complying with the Clean Fuel Regulations. The board responsible for this adjustment will consider various factors, including stakeholder feedback on compliance burdens, costs associated with low-carbon-intensity fuels, and other pertinent market information. The adjustment will be expressed in Canadian cents per litre or other relevant units, providing clarity regarding cost implications.

By integrating carbon pricing into the regulations, the province seeks to promote a transition toward lower carbon emissions within the fuel industry. 

Newfoundland and Labrador (48/23) June 24, 2023