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While the Liberal government has not finalized details of the cap-and-trade plan, the independent petroleum marketers worry it will follow Quebec’s model, in which wholesalers must purchase emission allowances for every litre of fuel they sell and then pass the costs along to their customers.

Lynne Sladky/AP

Ontario's independent petroleum marketers are warning the province's cap-and-trade plan will limit competition and drive up pump prices by reducing their access to imported gasoline and diesel.

While the Liberal government has not finalized details of the plan, the independents worry it will follow Quebec's model, in which wholesalers must purchase emission allowances for every litre of fuel they sell and then pass the costs along to their customers.

The Quebec industry complains they face an administrative nightmare, uncertain prices and a tendency for customers – especially long-haul truckers – to avoid purchasing fuel in the province where possible. And because they don't produce the fuel or consume it, they have little chance to cut emissions.

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Independent wholesalers and gas stations represent a growing share of the Canadian markets, supplying more than a third of all gasoline sold in the country. But they face a squeeze if importers are discouraged by the complexity of the system, said Tricia Anderson, president of the Canadian Independent Petroleum Marketers Association, which represents companies such as Canadian Tire Corp., Pioneer Energy LB of Burlington, Ont., and Eastern Ontario's MacEwen Petroleum Inc.

"Security of supply is the No. 1 issue for our members," Ms. Anderson said. "And we're concerned a cap-and-trade program can impede trade back and forth across borders, and anything that is effecting supply is a concern for us."

In a submission to the provincial government last month, the association said it preferred a simple carbon tax to the far more complication cap-and-trade regime, "which we believe has the potential to further restrict gasoline supply and create undue penalties for the independent petroleum marketing sector that will hinder competitiveness."

Premier Kathleen Wynne announced this week that her government would move Ontario into a shared carbon market with Quebec and California, with details to be worked out over the next six months. Ms. Wynne said the province would look to protect the competitiveness of energy-intensive industries that are subject to import competition, such as the refining sector.

In Quebec, refiners receive free allowance to cover the greenhouse gas emissions that emit when processing the crude into petroleum products. They are required to reduce their emissions – or purchase credits on the carbon market – over time. Its cap-and-trade system has added roughly three cents a litre of gasoline, a figure that will rise over time.

MacEwan president Allan MacEwen said the province should simply impose a tax and eliminate the complex administrative burden.

"The long and the short of it is they want the money, prices are low, so the government is saying this is a good time to add a tax," Mr. MacEwen said. "But the way they're doing it is unnecessarily complicated for them and the industry."

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