How Fossil Fuels Drive Inflation and Make Life Less Affordable for Canadians

The document examines how fossil fuel price volatility contributes to inflation in Canada, noting that energy prices accounted for 33% of overall inflation between February 2021 and June 2022. It argues that transitioning to net-zero electricity grids by 2050 could save Canada up to CAD 15 billion annually in total energy costs. The brief suggests that policies such as carbon pricing and incentives for heat pumps and electric vehicles can improve affordability by reducing reliance on volatile global oil and gas markets.

• Fossil fuel prices are a primary driver of inflation in Canada and are more volatile than other components like food or shelter. Between February 2021 and June 2022, energy prices were responsible for one-third of the country's total inflation.
• Canada's energy consumption remains heavily reliant on fossil fuels, with natural gas and refined petroleum products together making up over 73% of primary energy use in 2022.
• The integration of regional natural gas markets with global liquified natural gas (LNG) markets increases the risk of domestic price spikes in North America when global demand surges.
• Transitioning Canada's electricity grids to net-zero by 2050 could result in total energy cost savings of up to CAD 15 billion per year, with an average annual saving of CAD 1,500 for most households.
• Climate-related disruptions, such as the 2021 polar vortex in Texas and Canadian wildfires in 2016 and 2023, have caused significant oil and gas price volatility across North America.

APA

Kelly,, J. (2024). How Fossil Fuels Drive Inflation and Make Life Less Affordable for Canadians. International Institute for Sustainable Development. https://www.iisd.org/articles/deep-dive/fossil-fuels-drive-inflation-canada

Chicago

Kelly,, Jessica. How Fossil Fuels Drive Inflation and Make Life Less Affordable for Canadians. International Institute for Sustainable Development, 2024. https://www.iisd.org/articles/deep-dive/fossil-fuels-drive-inflation-canada.

Wikipedia

{{cite report |last1=Kelly, |first1=Jessica |title=How Fossil Fuels Drive Inflation and Make Life Less Affordable for Canadians |publisher=International Institute for Sustainable Development |date=17 July 2024 |url=https://www.iisd.org/articles/deep-dive/fossil-fuels-drive-inflation-canada |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kelly2024how, author = {Kelly,, Jessica}, title = {{How Fossil Fuels Drive Inflation and Make Life Less Affordable for Canadians}}, institution = {International Institute for Sustainable Development}, year = {2024}, month = jul, url = {https://www.iisd.org/articles/deep-dive/fossil-fuels-drive-inflation-canada}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }