On December 18, 2020, Environment and Climate Change Canada (ECCC) published the proposed Clean Fuel Regulations (CFR) for liquid fuels for public comment. The proposed CFR will support Canada’s goal to lower greenhouse gas emissions by requiring liquid fossil fuel producers and importers to achieve a 13% reduction in carbon intensity (CI) based on 2016 levels by 2030. The proposed regulations provide flexibility for achieving these targets through various market-based credit systems, including:
- Undertaking projects anywhere along the supply chain to reduce the life-cycle carbon intensity of the fuel;
- Supplying low CI fuels (e.g. ethanol, biodiesel); and
- Investing in advanced vehicle technologies, such as electric or hydrogen fuel-cell.
ECCC has confirmed with CPA verbally that the production and use of solid biomass fuels, such as wood pellets, to displace liquid fossil fuels is not a credit creating activity under the proposed CFR. This positive development for composite wood product producers removes both the threat to fiber supplies and the increased production costs associated with the CFR. However, users of liquid fossil fuels will be subject to higher fuel prices as producers offset increased costs to meet CI reduction obligations.
The proposed Regulations and supporting documents are currently under review by CPA staff, with comments due by March 4. See Canada Gazette – Proposed Clean Fuel Regulations.