Possible New Clean Fuel Standard in Canada

Written By Mike Barrett, Sarah E. Gilbert, Thomas W. McInerney and Duncan M. McPherson

Environment and Climate Change Canada (ECCC) is considering the development of a new clean fuels regulation under the Canadian Environmental Protection Act, 1999. The purpose of this proposed new regulation is to reduce Canada’s greenhouse gas (GHG) emissions through the adoption of lower carbon fuels and related technologies.

ECCC is intending to consult with provinces, territories, Indigenous Peoples and other stakeholders.  Written comments are due by April 25, 2017, at the address provided below.  ECCC has issued a discussion paper which includes the following issues for consideration:

• The regulation is intended to cover a wide range of fuels including liquid, gaseous and solid fuels to be used in transportation, industry, homes and buildings.
• The overall objective of the proposed regulation is to achieve a 30 megatonne annual reduction in Canada’s aggregate GHG emissions by 2030 which, if achieved, will meaningfully contribute to Canada’s overall GHG emissions reduction goal of 30 percent below 2005 emission levels by 2030.
• The regulation is intended to be non-prescriptive and designed to provide maximum flexibility to fuel suppliers—including a market-based crediting and trading system.
• The existing federal renewable fuel regulations require fuel producers and importers to have an average renewable content of at least five percent (for gasoline) and at least two percent (for diesel and heating oil). ECCC estimates that the current federal regulations, coupled with current provincial regulations, result in approximately four megatonnes of annual GHG emissions reductions. Note this is well below the stated 30 megatonne annual target identified above.
• Five provinces (British Columbia, Alberta, Saskatchewan, Manitoba and Ontario) have existing renewable fuels mandates for the transportation sector that exceed current federal regulations.
• The current United States federal renewable fuel standard requires increasing annual volumes of renewable fuels to be blended into traditional fuels. Each renewable fuel is measured using lifecycle GHG emissions reduction analysis. For example, the GHG emissions reduction consequences of a land use change to produce a renewable fuel is part of the GHG emission reduction calculation applied. A number of individual states also have their own renewable fuel mandates.
• The new regulation is intended to be complementary to the recently announced pan-Canadian carbon pricing regime.

Following the comment period, it is our expectation the federal government will issue a draft regulation in 2017 for further comment. Comments on the discussion paper can be sent to:

Mark Cauchi
Executive Director, Oil, Gas and Alternative Energy Division
Clean Fuel Standard
Energy and Transportation Directorate
Environment and Climate Change Canada
351 St. Joseph Boulevard, 12^th Floor
Gatineau, QC
K1A 0H3
Email: ec.cfsncp.ec@canada.ca

We would be pleased to discuss how this new federal initiative may impact your business.

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