Canada developing clean fuel standard

The standard would require reductions in the carbon footprint of the fuels supplied in Canada, based on lifecycle analysis. The approach would not differentiate between crude-oil types produced in or imported into Canada. These consultations would inform the development of a regulatory approach under the Canadian Environmental Protection Act (CEPA).

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

A clean fuel standard would be flexible, and it would promote the use of clean technology, lower carbon fuels, and promote alternatives such as electricity, biogas, and hydrogen.

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. Some jurisdictions (e.g., Alberta, Ontario) also require that the renewable fuels utilized 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.

Objective

The overall objective of a clean fuel standard would be to achieve annual reductions of 30 megatonnes (Mt) of GHG emissions by 2030. This reduction will provide a significant contribution towards achieving Canada’s commitment of 30 percent emissions reduction below 2005 levels, by 2030. This reduction is like removing over 7-million vehicles from the roads for a year.

Broad coverage

A clean fuel standard will encourage the use of cleaner fuels in many sectors of the economy, including the fuels we use in transportation, in our homes and buildings, and the fuels that power our industries. It would address a broad suite of fuels, which could include 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).

Performance-based approach

The clean fuel standard would set requirements to reduce the lifecycle carbon intensities of fuels supplied in a given year, based on lifecycle analysis. By 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 reduction. The clean fuel standard would result in decreased emissions while minimizing compliance costs.

This approach would foster the deployment of a broad range of lower-carbon fuels and alternative technologies such as electricity, biogas, hydrogen, and renewable fuels.

Measuring carbon intensity by lifecycle analysis

Carbon-intensity standards will be set to reduce the lifecycle carbon intensities of all fuels supplied, based on lifecycle analysis. The standards could be set at the facility level, at a sector-wide average, or set on some other basis. Carbon intensity is the measure of how much carbon is emitted into the atmosphere relative to the amount of energy in the fuel consumed.

Flexibility

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.

Carbon pricing and clean fuel standard

The clean fuel standard would complement carbon pricing by ensuring consumers have access to a suite of lower-carbon fuels. In doing so, it will also drive down emissions and contribute to a clean-growth economy. By specifically addressing the carbon footprint of fuels, the clean fuel standard will drive innovation and create jobs and opportunities across a number of sectors, including transportation, agriculture, and clean-technology sectors.

Next steps

Environment and Climate Change Canada will publish a discussion paper in February 2017 to help guide consultations consisting of meetings, workshops, and technical-working groups that will help inform the development of Canada’s clean fuel standard.