Compliance with the Clean Fuel Regulations


Overview

The Clean Fuel Regulations take a performance-based approach to reducing greenhouse gas emissions in Canada. The Regulations are designed to incentivize innovation and adoption of clean technologies and expand the use of low carbon intensity fuels throughout the economy.

The Regulations give fuel suppliers flexibility to meet the requirements in a cost-effective way that works best for them. They also create an incentive for industries to innovate and adopt cleaner technologies to lower their compliance costs.

The Regulations establish a credit market, where each credit represents a lifecycle emission reduction of one tonne of CO2e. For each compliance period (typically a calendar year), a primary supplier will demonstrate compliance with their reduction requirement by creating credits or acquiring credits from other creators, and then using the required amount of credits for compliance.

Compliance credits can be created in three ways:

The Regulations complement other climate policies and investments, including the price on carbon pollution, methane regulations, the forthcoming oil and gas emissions cap, and the recently announced carbon capture, utilization and storage (CCUS) investment tax credit.

Regulations and supporting documents

Certain components of the Clean Fuel Regulations (Canada Gazette, Part II publication date: July 6, 2022) are in force, including:

The following documents support the Regulations. Please note these documents may be periodically revised and re-published, so we recommend bookmarking this page if you are regularly referencing this material. 

Regulations and Regulatory Impact Analysis Statement

Verification and Certification

Updates to Methods for Verification and Certification to be available on this page at a later date.

Quantification Methods

Technical presentations

Please contact us at cfsncp@ec.gc.ca for copies of guidance material, technical presentations and other documents pertaining to the Regulations and supporting documents.

Credit and Tracking System

The Clean Fuel Regulations Credit and Tracking System (CATS) is the information technology system underpinning the Regulations. The system consists of the following components: registration of parties, applications for recognition of CO2e emission reduction projects, applications for approval of carbon intensity, reporting for parties, verification activities management for third-party verification bodies, and the management of compliance credit creation and their transactions.

Please find below links for accessing CATS and documents intended for the user:

Carbon Intensity Determination

Fuel Life Cycle Assessment Model

The Government of Canada's Fuel Life Cycle Assessment (LCA) Model is a tool to calculate the life cycle carbon intensity of fuels and energy sources used and produced in Canada. Registered creators, foreign suppliers and carbon-intensity contributors may use the Fuel LCA Model for the purpose of creating credits under the Clean Fuel Regulations.

There are three main components of the Fuel LCA Model that are available in the Environment and Climate Change Canada (ECCC) Data Catalogue:

  1. Fuel LCA Model Database: Contains a library of carbon intensity datasets and fuel pathways developed to model a carbon intensity specific to a fuel or an energy source.
  2. Fuel LCA Model Methodology: Describes the methodology, data sources and assumptions that were used in the development of the Fuel LCA Model, and provides the rationale supporting the methodological approach.
  3. Fuel LCA Model User Manual: Provides information on general definitions and concepts related to LCA from the perspective of the LCA Model. Also provides technical guidance on how to perform basic operations in the openLCA software that are required for the carbon intensity calculations.

For more information on the Fuel LCA Model, please contact the Fuel LCA Model team at modeleacvcarburant-fuellcamodel@ec.gc.ca.

Specifications for Fuel LCA Model CI Calculations and CFR Data Workbook

There are two other main components, specific to the Clean Fuel Regulations, that stakeholders can use in order to determine a carbon intensity. These are also available in the Environment and Climate Change Canada (ECCC)'s Data Catalogue:

  1. CFR Specifications for Fuel LCA Model CI Calculations: Provides instructions for calculating carbon intensity values of fuels, energy sources and material input for the purpose of creating credits under the Regulations.
  2. CFR Data Workbook: A spreadsheet that helps convert applicant data to ensure compatibility with the Fuel LCA Model. For the purpose of the Regulations, it must be used to carry out all calculations (i.e. unit conversion, calculation of allocation factors, etc.) prior to data entry in the Fuel LCA Model. 

For more information on the specifications and data workbook, please contact us at cfsncp@ec.gc.ca.

Emission Reduction Funding Programs

Starting on January 1, 2024, a primary supplier may choose to contribute to a registered Emission Reduction Funding Program under the Clean Fuel Regulations in order to satisfy up to 10% of its annual carbon intensity reduction requirement. The credit price under this mechanism is set in the Regulations at $350 in 2022 (consumer price index [CPI] adjusted) per compliance credit. The credits created by these investments cannot be traded and will expire if not used for the compliance period to which the contribution relates. Primary suppliers may create credits by contributing to a registered funding program between January 1 and July 31, and between October 15 and November 30 following the end of a compliance period, if required.

Eligible funding programs can be registered under the Clean Fuel Regulations if they meet the criteria set out in the Regulations. This includes using contributions by primary suppliers to fund projects that support the deployment or commercialization of technologies or processes that will reduce carbon dioxide equivalent (CO2e) emissions. To register a funding program, please contact Environment and Climate Change Canada’s Low Carbon Fuels Division at cfsncp@ec.gc.ca.

The following is a list of registered Emission Reduction Funding Programs. This list will be updated as new funding programs are registered.

Land Use and Biodiversity Criteria

Legislative Recognition

Legislative recognition under the Clean Fuel Regulations serves as an optional mechanism to demonstrate compliance with the Land Use and Biodiversity (LUB) Criteria for low carbon-intensity fuel feedstock. After January 1, 2024, feedstock must comply with the LUB criteria in order to support the creation of compliance credits under the CFR. National and subnational jurisdictions have the option to submit an application, showcasing any legislation they enforce that achieves the same intended outcomes as one or more of the LUB criteria. These legislations must be currently in effect, enforceable, and applicable to agricultural and/or forest harvest practices.

The following table provides information regarding jurisdictions that have received legislative recognition under the Clean Fuel Regulations, indicating which jurisdiction and which criteria are approved, and which type of feedstock the criteria apply to (forestry or agriculture). Please note this table may be periodically revised.

Table 1: List of approved jurisdictions that received Legislative Recognition with respect to specific Land Use and Biodiversity Criteria
Jurisdiction LUB Criteria Feedstock Date of Approval
Canada Wildlife Habitat - Ss. 48(1) Agricultural and Forestry Feedstock 09-11-2023
Canada Damaging Agents - S. 49 Agricultural and Forestry Feedstock 09-11-2023
Canada Forest Management Plan - Watercourse Connectivity - Ss. 52(c)(iv) Forestry Feedstock 09-11-2023
United States of America Wildlife Habitat - Ss. 48(1) Agricultural and Forestry Feedstock 09-11-2023
United States of America Damaging Agents - S. 49 Agricultural and Forestry Feedstock 09-11-2023
Ontario, Canada (Crown Forests) Forest Management Plan - Forest Regeneration - Ss. 52(c)(i) and Ss. 55(1)(c) Forestry Feedstock 14-12-2023
Ontario, Canada (Crown Forests) Forest Management Plan - Naturally Regenerated Stands - Ss. 52(c)(ii) and Ss. 55(1)(d) Forestry Feedstock 14-12-2023
Ontario, Canada (Crown Forests) Forest Management Plan - Quantity and Quality of Soil - Ss. 52(c)(iii) and Ss. 55(1)(e) Forestry Feedstock 14-12-2023
Ontario, Canada (Crown Forests) Forest Management Plan - Quantity and Quality of Surface and Ground Water Resources - Ss. 52(c)(iii) and Ss. 55(1)(f) Forestry Feedstock 14-12-2023
Ontario, Canada (Crown Forests) Forest Management Plan Biodiversity - Ss. 52(c)(iii) and 55(1)(g) Forestry Feedstock 14-12-2023

Engagement and consultation

From late 2016 to spring 2022, Environment and Climate Change Canada extensively engaged stakeholders, provinces and territories, Indigenous peoples, industries, and non-governmental organizations during the development of the Clean Fuel Regulations. Past engagement documents are available on engagements and consultations.

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