The Clean Fuel Regulations will cut greenhouse gas pollution across the country. This is good for our climate, economy, health, and well-being. It will also help Canadians avoid future costs with impacts from climate change, which is already costing the Canadian economy billions every year.
On June 28, 2023, senior officials from Environment and Climate Change Canada held a technical briefing for the media. A transcript of their remarks on the Clean Fuel Regulations is published below.
"Last summer, the Government of Canada published the final Clean Fuel Regulations. This is an important part of Canada's climate action plan by delivering up to 26.6 million tonnes of emissions reduction annually by 2030. The Clean Fuel Regulations build on the success of the federal Renewable Fuels Regulations, which have been in effect for over a decade. They specified one pathway for reducing the emissions intensity of fuels, while the Clean Fuel Regulations take a more flexible approach, to encourage the development and deployment of a range of cleaner fuels and technologies.
"The Clean Fuel Regulations require producers and importers of gasoline and diesel to reduce the life-cycle carbon intensity from the fuels supplied for use in Canada. A life-cycle approach accounts for emissions across all stages of fuel production and use, from extraction through processing, distribution, and end use. Unlike the federal fuel charge on carbon pollution, the Clean Fuel Regulations do not prescribe a price at the pumps. Rather, actual price impacts will depend on how producers and importers of gasoline and diesel choose to comply. The Regulations give them the flexibility to choose the most cost-effective approaches that work best for them.
"To enable this, the Clean Fuel Regulations establishes a credit market, whereby credits can be created through three categories of actions:
- From projects that reduce the greenhouse gas emissions from the production of gasoline and diesel, like carbon capture and storage.
- From supplying low-carbon intensity fuel, such as biofuel.
- From supplying fuel or energy to advanced vehicle technologies, such as electric vehicles or hydrogen fuel cell vehicles, for example.
"Credits under the Clean Fuel Regulations can be created by both regulated parties, either by producers or importers of gasoline and diesel, and voluntary participants, such as biofuel producers. This system also creates economic opportunities for the industries that support credit creation-for example, farmers and foresters who supply feedstock for biofuel.
"However, the cost to comply with the Clean Fuel Regulations will be small to begin with, and the compliance obligation will grow gradually to 2030. This allows lead time for investments and compliance actions to come online.
"The first compliance period will be July 2023 to December 2023. Regulated parties will not have to submit credits they may owe until July 2024. In addition, the renewable fuels used to comply with existing provincial and federal fuel-blending requirements will count toward the Clean Fuel Regulations. As a result, in the early years the Government of Canada expects there will be about three times as many credits in the market as will be required, meaning that the cost to acquire credits by any company needing them should be relatively low.
We have already seen significant investments being made as the demand for cleaner fuels across North America grows, and because of policies like the Clean Fuel Regulations. For example, Tidewater Renewables just completed construction of a renewable diesel complex in Prince George, British Columbia, and expects to begin production soon. Last month, the Government of Canada announced up to $86 million to support Braya Renewable Fuels to convert the refinery in Come By Chance, Newfoundland and Labrador, to produce renewable diesel and sustainable aviation fuel. These companies, and others like them, will be able to create and sell credits under the Clean Fuel Regulations for supplying low-carbon fuel to Canada.
"Electric vehicle charging companies operating across Canada are also already creating credits under the Clean Fuel Regulations. These credits can also be sold in the Clean Fuel Regulations credit market, and revenues can be reinvested to expand electric vehicle charging networks.
"The Clean Fuel Regulations were modelled on existing low-carbon fuel regulations in other jurisdictions, such as British Columbia and California, where we've seen that they have led to the growth of clean technology industries and a supply of cleaner fuels. Like those jurisdictions, we expect the Clean Fuel Regulations to continue driving investments in clean technology, low carbon fuels, and innovation across the country."
