Canada to develop clean fuel standard

The government of Canada announced plans to develop a clean fuel standard and said it will publish a discussion paper in February 2017 to help guide consultations with stakeholders, including provinces and territories, indigenous peoples, industries and non-governmental organisations, in developing the standard. These consultations would inform the development of a regulatory approach under the Canadian Environmental Protection Act (CEPA).

The overall objective of the clean fuel standard would be to achieve annual reductions of 30 megatonnes (Mt) of greenhouse gas (GHG) emissions by 2030. This reduction will provide a significant contribution towards achieving Canada’s commitment of 30% emissions reduction below 2005 levels by 2030 and is equivalent to removing more than seven million vehicles from the road for a year.

The standard will encourage the use of cleaner fuels, including transportation fuels, as well as fuels used in homes, buildings and industries. The standard would be flexible and would foster the deployment of a broad range of lower-carbon fuels and alternative technologies such as electricity, biogas, hydrogen and renewable fuels, as well as address conventional liquid fuels (e.g., gasoline, diesel and heavy-fuel oil), gaseous fuels (e.g., natural gas and propane) and solid fuels (e.g., petroleum coke). The approach would not differentiate between crude-oil types produced in or imported into Canada.

The standard would set requirements to reduce the lifecycle carbon intensities of fuels supplied in a given year, based on lifecycle analysis. In contrast to renewable-fuel mandates, this approach would not prescribe the particular low-carbon fuel or technology that must be used; instead, it would focus on emissions reductions and lowering compliance costs.

Currently, the average renewable-fuel blending in Canada’s fuels is more than 7% ethanol in gasoline, which exceeds the 5% level set out in the Renewable Fuels Regulations, and about 2% renewable content in diesel fuel, which meets the regulatory level.

A variety of regulatory approaches are used throughout the world to reduce the emissions related to the use of fuel. The provinces of Ontario and Saskatchewan have been Canadian leaders with effective renewable-fuels requirements since 2007. Other provinces have followed and they have adopted renewable-fuel mandates under which a minimum amount of renewable fuel is required to be blended into gasoline or diesel fuel. Some jurisdictions (e.g., Alberta, Ontario) also require that the renewable fuels utilised meet a specific greenhouse gas (GHG) performance standard. British Columbia has led by implementing low-carbon fuel standards that require a reduction in the lifecycle GHG-emissions intensity of the fuels supplied in a given year.

The standard will be designed to provide maximum flexibility to fuel suppliers, and it may include provisions to take into account regional differences, similar to those that currently exist under the Renewable Fuels Regulations.