Canada plans to publish the final version of its Clean Fuel Regulations after years of delays, intense lobbying and policy shifts.
Ian Thomson, president of Advanced Biofuels Canada, said the result is a Clean Fuel Standard that will not deliver the same impact for biofuels as standards in British Columbia and California.
“It’s essentially kind of an insurance policy on provincial mandates,” he said.
“There may not be a lot of new market that’s not already existing through provincial demand for a handful of years, maybe until mid-decade.”
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Most of the actions taken to meet provincial biofuel regulations will also be eligible for the federal regulations, which has some critics questioning the purpose of the federal standard, he said.
There will undoubtedly be some additional blending of biofuels resulting from the federal regulation in the second half of the decade but how much has yet to be determined.
Thomson’s other big concern about the regulation is that it doesn’t limit credits on upstream oil production like other clean fuel standards.
He wonders how many credits will be generated by the fossil fuel industry for more efficient crude oil production and refinery production versus downstream credits generated by electric vehicles, hydrogen or biofuels.
The good news is that Environment and Climate Change Canada decided on a compromise solution to the indirect land-use rules related to biofuel feedstocks.
Farm groups were upset when the department started with an aggregate North American approach and then switched to an individual farm-level approach.
In the end, it settled on a “workable solution” that has some requirements at an individual level but those are likely to be addressed by existing farming practices, said Thomson.
The canola sector is happy with the result.
“We’re pleased to see the CFR provides options that would minimize regulatory burden and allow canola to be used to reduce GHG emissions through biofuel production,” Jim Everson, president of the Canola Council of Canada, said in a news release.
“Recognition of the sustainable production practices of Canadian growers that help sequester and store carbon, such as no- and minimal-till, are critical components to support canola as the preferred biofuels feedstock to deliver GHG emission reductions for Canada.”
About $2 billion of expanded canola processing capacity has been announced in Canada since 2021 in anticipation of the CFS and the approval of canola as an eligible feedstock for U.S. renewable diesel production, which happened in April.
One of those projects has since been put on hold. Ceres Global Ag Corp. announced in June that it is suspending its $350 million crush plant at Northgate, Sask., due in part to rising construction costs.
Thomson said farm groups are also pleased that the regulations do not put Canadian farmers at a disadvantage to their U.S. counterparts.
“That was a big concern with an earlier draft,” he said.
Thomson said the CFR ends the existing federal Renewable Fuels Regulations that established the five percent ethanol mandate in 2010 and the two percent biodiesel mandate in 2011.
Those mandates are rolled into the new CFS but that is kind of a moot point because provincial mandates far exceed the federal ones.
He said there are still numerous unknowns about the CFR because unlike other regulations there is plenty of discretion left to the regulator and it is still uncertain how many credits will be generated by upstream activities.
The regulation comes into force on July 1, 2023, and the first compliance period is the six-month period ending Dec. 31, 2023.
Oil and gas companies must drop carbon intensity for gasoline by 3.6 percent and diesel by 3.8 percent from a 2016 baseline for that first compliance period.
The emissions intensity cap continues to decline each year until 2030 when gasoline must fall by 14.7 percent and diesel by 15 percent.
