Fuel (HS: 271012 and 271019); Quality (ICS 03.120), Environmental protection (ICS 13.020), Fuels (ICS 75.160)

Clean Fuel Regulations (323 pages, available in English and French)

The proposed Clean Fuel Regulations (the proposed Regulations) would require primary suppliers (i.e., liquid fossil fuel producers and importers) to reduce the carbon intensity (CI) of the liquid fossil fuels they produce and import in Canada from 2016 CI levels by 2.4gCO₂e/MJ in 2022, increasing to 12gCO₂e/MJ in 2030. The proposed Regulations would also establish a credit market whereby the annual CI reduction requirement could be met via three main categories of credit-creating actions: actions throughout its lifecycle of fossil fuels that reduce the CI of the fossil fuel, supplying low-carbon fuels, and specified end-use fuel switching in transportation. Parties that are not primary suppliers would be able to participate in the credit market as voluntary credit creators (e.g., low carbon intensity fuel producers and importers). In addition, the proposed Regulations would include the minimum volumetric requirements (minimum 5% low CI fuel content in gasoline and 2% low CI fuel content in diesel fuel and light fuel oil) currently set out in the federal Renewable Fuel Regulations.

A Fuel LCA Model is being developed to support the development and implementation of the proposed Regulations. Low carbon intensity fuel producers would be permitted to use the model to determine facility specific CI values once 24 months of operating data is available. The propose Regulations will increase the use of biofuels in Canada and the demand for biofuel feedstock. Only biofuels made from biomass feedstock that adhere to land use and biodiversity criteria will be eligible for compliance credit creation. These criteria ensure the financial incentives created by the Regulations do not result in loss of biodiversity or negative land use impacts from growing and harvesting biofuel feedstock. These criteria apply to feedstock regardless of geographic origin.

A primary supplier may also choose avail of the compliance fund mechanism by contributing to a funding program in order to satisfy up to 10% of its annual reduction requirement. Funds or programs within a fund that reduce CO₂e emissions may be eligible to become registered funds, the fund must provide funding for projects or activities that support the deployment or commercialization of technologies or processes that reduce CO₂e emissions. For primary suppliers who are unable to satisfy their reduction requirement by 30 June following the end of a given compliance period, a market clearing mechanism that facilitates credit acquisition by primary suppliers would also be implemented.

The majority of applications and reports must be submitted with a validation or verification statement that pertains to the validity of the application / report. The validation / verification body must have the appropriate accreditations as well as the application / report being reviewed by an independent reviewer.