Canada’s finalized Clean Fuel Regulations (CFR) were published on July 6, 2022, in the Canada Gazette, Part II. According to the federal government’s news release on June 29, the CFR will help cut up to 26.6 million tonnes of greenhouse gas pollution in 2030.
The Clean Fuel Regulations set increasing requirements on producers and importers of gasoline and diesel to reduce the carbon intensity of these products over time. The CFR establishes a credit market, where businesses can receive credits for emissions they have reduced and/or acquire credits from other creators.
Businesses can create credits by reducing the amount of emissions emitted while getting petroleum from the ground to the gas station (such as carbon capture, using green hydrogen or renovating equipment to be more efficient, etc.). Businesses can also blend gasoline and diesel with biofuels, or supply energy for electric or hydrogen vehicles, for example.
The Clean Fuel Regulations have increased since drafted and now require the carbon intensity of gasoline and diesel to drop by 15 per cent below the 2016 level by 2030. However, compliance will begin on July 1, 2023, seven months later than the government initially planned.
Based on the federal government’s analysis, the CFR will see gasoline and diesel prices increase by up to 13 and 16 cents per litre, respectively. Other studies imply it could be much higher. The CFR will also impact GDP by an estimated 0.6% drop in 2030 in New Brunswick, or $255 million.
After the final publication, the Canadian Fuels Association stated: “Achieving the intended outcomes of the Clean Fuel Regulations will be challenging. The ambition of the CFR is unprecedented and the regulations are complex. Canada’s transportation fuels providers have a proven track record of innovation and successfully implementing technology, and we are up for the challenge that the CFR represents.”