Revised questions and answers on the Federal Renewable Fuels Regulations: part 1


Section 5 - Prescribed Levels

F.1: How were the requirements for a renewable content of 5% in gasoline and 2% in diesel fuel and heating distillate oil arrived at?

In May 2006, federal, provincial and territorial ministers responsible for renewable fuels assembled for a dedicated meeting on the subject. Ministers discussed the opportunities that renewable fuels present for Canadians and agreed to work towards the finalization of a national strategy by the fall of 2006.

Extensive consultations were carried out on the development of a national renewable fuels strategy. Much of this was done through the federal-provincial-territorial Working Group on Renewable Fuels under the Council of Energy Ministers, which developed recommendations for a national framework on renewable fuels.

In late 2006, the government announced a four-pronged government strategy for renewable fuels, jointly developed by Environment Canada, Natural Resources Canada, and Agriculture and Agri-Food Canada. One of the components of the strategy is to increase the retail availability of renewable fuels. This is being done through the implementing the 5% and 2% requirements under these Regulations under the Canadian Environmental Protection Act, 1999. Refer to question A.2.

F.2: How do I calculate the minimum volume of renewable fuel that I need in order to comply with the renewable fuel requirement for gasoline?

Your minimum volume of renewable fuel required to meet the renewable fuel requirement for gasoline is 5% of your gasoline pool for any given compliance period (which is calculated in accordance with section 6 of the Regulations).

Compliance is demonstrated through ownership of sufficient gasoline compliance units, with each compliance unit representing one litre of renewable fuel. Distillate compliance units may also be used to meet your renewable fuel requirement for gasoline. Compliance units are created pursuant to sections 13 to 16 of the Regulations.

F.3: The requirement of subsection 5(1) is for "5%" renewable fuel content. At the end of a compliance period, the renewable fuel content of my gasoline pool is 4.95%, which rounds to 5% - am I in compliance with the requirement of 5(1)?

No. Subsection 5(1) requires that the quantity of renewable fuel be at least 5% of your gasoline pool.

F.4: How do I calculate the minimum volume of renewable fuel that I need in order to comply with the renewable fuel requirement for diesel fuel and heating distillate oil?

Your minimum volume of renewable fuel required to meet the renewable fuel requirement for diesel fuel and heating distillate oil is 2% of your distillate pool for any given compliance period. Compliance is demonstrated through ownership of sufficient distillate compliance units, with each compliance unit representing one litre of renewable fuel. Gasoline compliance units cannot be used to meet your renewable fuel requirement for diesel fuel and heating distillate oil. Compliance units are created pursuant to sections 13 to 16 of the Regulations.

F.5: How will I know at the start of a year how much renewable fuel I will need?

You will not know precisely how much renewable fuel you will need to have in your gasoline, diesel fuel or heating distillate oil, or how many compliance units you will need to have, until you know the total volume of your gasoline and distillate pools, probably at the end of the year.

You may be able to estimate the amount based on your previous year's production and importation volumes of gasoline, diesel fuel and heating distillate oil. The monthly reconciliation of compliance unit balances in your compliance unit account book (required under section 31 of the Regulations) will provide a record of how many compliance units you have throughout the year.

An additional three months (until March 31) is provided after the end of the compliance period to allow primary suppliers to true up their account books, determine their pool volumes, calculate their renewable fuel volume requirements and to come into compliance with these requirements through the acquisition of additional compliance units if needed, or to trade any surplus compliance units to other primary suppliers.

F.6: When do I have to meet the requirement of 5% for my gasoline pool?

The requirement starts on December 15, 2010. The renewable fuel volume requirement for the first gasoline compliance period will be determined over the period December 15, 2010 to December 31, 2012 (a 24½-month period). There is also a further three months for the associated trading period. For the first compliance period, you must, on March 31, 2013, own gasoline compliance units that were created during or carried back into the compliance period sufficient to meet the 5% requirement.

For example, a primary supplier need not have any compliance units during the first few months of the first gasoline compliance period, but must then make up for this deficiency either through creating compliance units or acquiring them from others. If at the end of the first gasoline compliance period (December 31, 2012), the primary supplier still has a shortfall, it has until March 31, 2013 to acquire compliance units through trading with other participants in the trading system. A primary supplier also has an option under section 24 to carry back compliance units from the first three months of 2013 to use for the first compliance period (refer to section 24 of the Regulations).

F.7: When do I have to meet the requirement of 2% for my distillate pool?

The requirement started on July 1, 2011. The renewable fuel volume requirement for the first distillate compliance period is to be determined based on the period from July 1, 2011 to December 31, 2012 (an 18-month period). In addition, there is an associated three month trading period following each compliance period. For the first compliance period, you must, on March 31, 2013, own distillate compliance units that were created during, carried forward into, or carried back into the compliance
period sufficient to meet the 2% requirement.

For example, a primary supplier need not have any compliance units during the first few months of the first distillate compliance period, but must then make up for this deficiency either through creating compliance units or acquiring them from others. If at the end of the first distillate compliance period (December 31, 2012), the primary supplier still has a shortfall of distillate compliance units; it has until March 31, 2013 to acquire compliance units through trading with other participants in the trading system. A primary supplier also has an option under section 24 to carry back compliance units from the first three months of 2013 to use for the first compliance period (refer to section 24 of the Regulations).

F.8: As an elective participant, do any of these renewable fuel requirements apply to me?

No. An elective participant is not a primary supplier, and these requirements only apply to primary suppliers.

Section 6 - Gasoline Pool and Distillate Pool

G.1: What are my gasoline and distillate pools?

A primary supplier's gasoline pool is the total volume of

  • the batches of gasoline that it produces in Canada and, during the gasoline compliance period, either
    • dispatches from a production facility, or
    • dispenses into the fuel tank of a vehicle or other mobile equipment within a production facility; plus
  • the batches of gasoline that it imports during the compliance period.

Similarly, a primary supplier's distillate pool is the total volume of

  • the batches of diesel fuel and heating distillate oil that it produces in Canada and, during the distillate compliance period, either
    • dispatches from a production facility, or
    • dispenses into the fuel tank of a vehicle or other mobile equipment within a production facility; plus
  • the batches of diesel fuel and heating distillate oil that it imports during the compliance period.

In special circumstances, as set out in section 6 of the regulations, certain volumes may be subtracted from the pool.

Note that you must calculate your period-to-date gasoline and distillate pool volumes each month, as that is a basis for the limits on monthly ownership of compliance units under section 19. Subsection 32(7) requires you to make a record of this monthly limit. You must also calculate your distillate pool volume for the pre-distillate compliance period for the limits under section 19.

In addition, items 3 (a) and (b) of Schedule 4 require reporting in the early part of the first gasoline compliance periods of the volume in your distillate pool determined using the appropriate part of the pre-distillate compliance period as if it were the distillate compliance period.

G.2: The 2011 amendments added flexibility to subtract, until December 31, 2012, diesel fuel or heating distillate oil sold for or delivered for use in Nova Scotia, New Brunswick, Prince Edward Island, and that part of Quebec that is on or south of 60°N. In calculating my distillate pool volume for the pre-distillate compliance period under subsections 19(2) and 22.1(1) and for item 3 of Schedule 4, do I exclude such volumes?

Subsection 6(4) is a permissive clause; it does not obligate you to subtract volumes of excluded types of fuels. You may, however, exclude such volumes.

G.3: How is production defined?

The term "production" is not defined in these regulations or in the Canadian Environmental Protection Act, 1999. Consequently, the ordinary meaning of the term is applicable.

G.4: If I produce gasoline, diesel fuel or heating distillate oil at my production facility for use in equipment at the production facility, is the volume of the fuel included in my pool?

Fuel produced at your facility that is dispensed into vehicles or other mobile equipment at the facility is included in your pool. For some facilities, this may represent a significant volume of fuel.

Fuel produced at your facility that is dispensed into non-mobile equipment at the facility is not included in your pool. This exclusion means that fuel that is further processed or used to produce energy in facility process units is not included in your pool.

G.5: If I produce a batch of gasoline, diesel fuel or heating distillate oil but it is not dispatched nor used in any on-site mobile equipment, is the volume of that batch included in my gasoline/distillate pool?

No, a batch that is neither dispatched from your production facility nor dispensed into on-site mobile equipment is not included in your pool.

G.6: Under the Benzene in Gasoline Regulations and Sulphur in Gasoline Regulations, the pool for a refinery is determined based only on the volume "dispatched" from the production facility. Why do the Renewable Fuels Regulations include fuel that is used at the production facility in the pool?

Under the Renewable Fuels Regulations, a refinery pool includes fuel dispensed at the facility into mobile equipment, as well as fuel dispatched from a facility. This approach captures a larger volume of fuel in the pool and consequently results in a larger requirement for renewable fuel. Comments were received on this aspect of the proposed regulations both supporting it and opposing it. Supportive comments submitted that the approach was necessary to keep a level playing field between oil sands upgraders (some of which also produce diesel fuel).

G.7: I produce a batch of unfinished gasoline and then add renewable fuel to it at my production facility to produce finished gasoline? Have I produced two batches of gasoline?

Yes, however, only the batch that is dispatched from your production facility (or dispensed into mobile equipment at the facility) must be measured and included in your pool.

G.8: I produced and dispatched a batch of a diesel-like substance to another refinery for final processing. Who includes this batch in their pool?

If the substance you produced meets the definition of diesel fuel, you must include the volume of the batch in your pool. If the other primary supplier produces a batch of diesel fuel or heating distillate oil from that batch it received, it only needs to include in its pool that portion of the volume that is incrementally produced (i.e. exceeds the volume of the other batches received) - refer to subsection 6(3) of the Regulations. That primary supplier must, under section 29, record this incremental production as part of its distillate pool.

If the substance does not meet the definition of diesel fuel when it is dispatched from your refinery, you would not include the volume of the batch in your pool. In that case, if the substance meets the definition of diesel fuel when it is dispatched from the other refinery, the other primary supplier must include the volume of the batch in its pool.

G.9: What happens if I import a batch of off-spec gasoline (or diesel fuel or heating oil) and blend or process it at my production facility to produce on-spec fuel? Is there any difference if the imported batch is a gasoline or distillate blendstock?

If you imported a batch of a fuel that meets the definition of gasoline (or diesel fuel or heating oil) under these regulations, then its volume must be included in your pool. Subsection 6(3) addresses the situation where a batch of gasoline, diesel fuel or heating oil is produced at a facility from other batches of fuel received at that facility. For the final batch of on-spec fuel that you produce at your production facility, you include in your pool only the incremental volume produced at your facility.

The above applies equally in respect of a gasoline or distillate blendstock if the blendstock meets the definition in the regulations of gasoline, diesel fuel or heating distillate oil.

G.10: What happens if I purchase a batch of off-spec gasoline (or diesel fuel or heating distillate oil) and blend or process it at my production facility to produce on-spec fuel? Is there any difference if the purchased batch is a gasoline or distillate blendstock?

If you purchase a batch of a fuel that meets the definition of gasoline (or diesel fuel or heating distillate oil) under these regulations, then its volume is required to have been included in the pool of the primary supplier that produced or imported the fuel. Subsection 6(3) addresses the situation where a batch of gasoline, diesel fuel or heating oil is produced at a facility from other batches of fuel received at that facility. For the final batch of on-spec fuel that you produce at your production facility, you include in your pool only the incremental volume produced at your facility.

The above applies equally in respect of a gasoline or distillate blendstock if the blendstock meets the definition in the regulations of gasoline, diesel fuel or heating distillate oil.

G.11: What volumes may I subtract from my pools?

You may subtract from your total gasoline pool, the volumes of all specialty-use gasoline that you sold for, or delivered for, use in the applicable situation, and similarly from your total distillate pool, the volumes of all specialty-use diesel fuel and distillate heating oil. You must have a record that establishes that these volumes were sold or delivered for the specified use. These specialty-use fuels are: fuel for use

  • in aircraft,
  • in competition vehicles,
  • in scientific research,
  • as feedstock in the production of chemicals other than fuels in a chemical manufacturing facility,
  • in the case of diesel fuel and heating distillate oil,
    • in military combat equipment,
    • represented as kerosene, in unvented space heaters, wick-fed illuminating lamps, or flue-connected stoves and heaters,
  • in the North (Yukon, the Northwest Territories, Nunavut, Quebec north of 60°N), and
  • in the case of gasoline, in Newfoundland and Labrador.

In addition, a primary supplier may subtract from its distillate pool any diesel fuel or heating distillate oil that was, until December 31, 2012, for use in Nova Scotia, New Brunswick, Prince Edward Island and Quebec on or south of 60°N. Also refer to question G.2.

Fuel for export (or fuel in transit through Canada from a place outside Canada to another place outside Canada) may also be subtracted from your applicable pool.

The renewable fuel portion contained in any batch of fuel that is in your pool may be subtracted from that pool, provided that there are records establishing that the volume is in fact, renewable fuel. Similarly, if biocrude was used to produce a batch of fuel that is in your pool, you may subtract a portion of the volume of biocrude used to produce that fuel from your pool. The portion of the volume subtracted, and the pool from which it is subtracted, is dependent on the type of biocrude - details are set out in subsections 6(6) and 6(7) of the regulations. These portions align with the factors used for the creation of compliance units from the use of biocrude under section 15 of the regulations.

All subtractions from pool volumes are optional. You are never required to subtract the above volumes from your pools and you may choose not to.

G.12: What records do I need to demonstrate that the fuel was sold or delivered for one of the prescribed uses?

You must have a record that clearly demonstrates that the fuel was so sold or delivered. A variety of records in current use may suffice. If for any reason a record of the applicable use is not available for a volume of fuel, that volume may not be subtracted from your pool.

G.13: Why are some volumes of fuels excluded from my pools?

Fuels for certain special uses may not be suitable for the addition of renewable fuel because of the nature of their use. Some examples of this are gasoline used in aircraft or competition vehicles and diesel fuel or heating distillate oil used in military vehicles and engines. Fuel used for scientific research may be custom-made for the individual needs of the researchers, depending on the nature of the scientific inquiry and could have a considerable variation in its parameters.

Exports are excluded because this regulation is intended to only cover fuel used in Canada.

Fuel for use in Yukon, the Northwest Territories and Nunavut, plus the northernmost parts of Quebec (above 60°N), and in Newfoundland and Labrador, is excluded due to various factors, including generally poor extreme cold-weather performance of fuels containing some renewable fuels, limited logistical infrastructure for the distribution of fuels, limited supply options, and factors related to security of supply and availability of renewable fuel in these regions.

In addition, as a temporary transitional flexibility, diesel fuel and heating distillate oil for use in Nova Scotia, New Brunswick, Prince Edward Island and Quebec on or south of 60°N may, until December 31, 2012, be excluded from the primary supplier's distillate pool.

G.14: Why are diesel fuel and heating distillate oil for use in military combat equipment subtracted from the distillate pool, but not gasoline for the gasoline pool?

The specialized diesel engines in some military combat equipment cannot, at present, run on diesel fuels with renewable content. Furthermore, logistical issues during joint international training exercises and combat situations could arise, as some NATOallies will not accept renewable fuel content in diesel fuel to be used in their military combat equipment. These issues are only in relation to diesel engines in military combat equipment, and not to gasoline engines in military combat equipment, which can operate on gasoline with a renewable content.

This exclusion for diesel fuel and heating distillate oil for use in military combat equipment was developed in consultation with the Department of National Defence.

G.15: If I produce and sell diesel fuel or heating distillate oil to the Department of National Defence, can I exclude this volume from my distillate pool?

You may exclude a volume that was sold or delivered for use in military combat equipment, provided that you have records establishing that the volume was sold or delivered for that use. If you cannot obtain such records, you may not exclude that volume. Fuel sold or delivered to the Department of National Defence for use in other types of equipment cannot be excluded from your pool.

G.16: Why may gasoline, diesel fuel and heating distillate oil for use in Newfoundland and Labrador be subtracted from the gasoline and distillate pools?

After consulting on the logistical infrastructure for the distribution of gasoline, diesel fuel and heating distillate oil and the supply options and availability of renewable fuel in Newfoundland and Labrador, the Government decided that gasoline, diesel fuel and heating distillate oil used in this province would be excluded from a person's gasoline or distillate pool. Consequently, a primary supplier (anywhere in Canada) may exclude the volume of gasoline, diesel fuel and heating distillate oil that it sold or delivered for use in Newfoundland and Labrador.

G.17: Until December 31, 2012, why may diesel fuel and heating distillate oil that was sold for or delivered for use in Nova Scotia, New Brunswick, Prince Edward Island and Quebec on or south of 60°N be excluded from my distillate pool?

These exemptions were added as a transitional flexibility mechanism, mainly to give fuel suppliers in these provinces sufficient time to install necessary infrastructure.

G.18: If I am located outside of the North or Newfoundland and Labrador (or from July 1, 2011 until December 31, 2012 and only in regards to diesel fuel or heating distillate oil, I am located outside of Quebec and the Maritimes), but supply a volume of fuel into these areas, can I subtract that volume of fuel?

Yes, you can. Any primary supplier producing or importing fuel for use in these areas, regardless of where the fuel is produced or imported, may exclude the volume of such fuel from its pool. If you withdraw fuel from a terminal located in these areas, you may exclude the volume of that fuel up to the total volume which you produced (or imported) and delivered to that terminal during the compliance period.

G.19: If I am located in the North or Newfoundland and Labrador (or from July 1, 2011 until December 31, 2012 and only in regards to diesel fuel or heating distillate oil, I am located in Quebec and the Maritimes), but supply a volume of fuel outside of these areas, can I subtract that volume of fuel?

No, you cannot. Volumes of fuel produced or imported for use in places outside of these areas (whether or not they were produced or imported into these areas) must be included in your pool (unless some other exclusion applies).

G.20: I produce:

  1. a batch of gasoline, diesel fuel or heating distillate oil and sell a portion of it into the North or Newfoundland and Labrador and the rest of it to somewhere else in Canada; or

  2. a batch of diesel fuel or heating distillate oil and sell a portion of it into Quebec or the Maritimes and the rest of it to somewhere else in Canada.

What can I subtract from my pool?

Provided that you have records (see question G.12) demonstrating the sale or delivery for use of that portion of gasoline, diesel or heating oil into the North or Newfoundland and Labrador, you may subtract the volume so sold or delivered from your pool. The volume of the gasoline sold or delivered for use elsewhere in Canada may not be subtracted from your pool (except until December 31, 2012, for diesel fuel or heating distillate oil sold or delivered for use in the Maritimes (Nova Scotia, New Brunswick, Prince Edward Island) and Quebec on or south of 60°N).

G.21: Between July 1st, 2011 and December 31, 2012, through an exchange agreement I (as a primary supplier of diesel fuel) provide a volume of diesel fuel in Ontario to another primary supplier and in return receives an identical volume of diesel fuel in Quebec or Atlantic Canada from that primary supplier. Can I subtract the volume of diesel fuel from my distillate pool that I received in Quebec or Atlantic Canada?

No, you cannot. Only the primary supplier of the diesel fuel for use in Quebec or Atlantic Canada can subtract the volume from their distillate pool.

G.22: Are volumes of my unfinished gasoline, gasoline-like blendstocks or "CBOB" blendstock included in my gasoline pool?

Generally, yes. If the fuel meets the definition of "gasoline" in the regulations, which includes suboctane blendstocks (or unfinished gasoline), then volumes of batches dispatched from the production facility or dispensed into mobile equipment at the facility, are to be included in your pool. This approach captures blendstocks that will be blended with renewable fuel to become finished gasoline.

This approach varies somewhat from that of the Benzene in Gasoline Regulations and the Sulphur in Gasoline Regulations. Under those regulations, gasoline-like blendstock is encompassed in the definition of "gasoline", but is not captured in a primary supplier's pool until further processed.

G.23: What do I exclude from my pool if I do not know whether jet fuel that I produced will be sold for use in aircraft, as originally intended, or blended into diesel fuel at a facility downstream of my refinery?

This issue relates to the cold weather operation of adding diesel-like blendstocks (primarily jet fuel) to diesel fuel to ensure proper cold-weather performance.

Under these regulations, only the volumes of jet fuel used in aircraft (and not as a seasonal blending component for diesel) can be excluded from the distillate pool, and only once the precise volume sold for use in aircraft is known and recorded. This means that initially all jet fuel would be included in your distillate pool. If you have records establishing that a volume was sold or delivered for this use you may then subtract that volume from your pool.

G.24: Is it possible to exclude jet fuel from the distillate pool at the time of production and importation?

The volumes of jet fuel produced and imported may be deducted from the distillate pool if they are delivered or sold for use in aircraft, provided that the record demonstrating it was sold or delivered for use in aircraft is made before the end of the trading period.

G.25: What if I produce or import a fuel for a non-fuel use, such as for use as a solvent or a chemical feedstock?

Under paragraph 6(4)(d) of the regulations, fuel used as feedstock in the production of chemicals (other than fuels) in a chemical manufacturing facility may be excluded from your pool, provided that there are records evidencing the volume. You may not subtract that volume if it was used in the chemical manufacturing facility as a feedstock to produce other fuels.

G.26: I am importing reference gasoline for testing octane levels at my refinery. Can this fuel be excluded from my pool as fuel for scientific research?

No, it cannot. Such fuel is not intended for scientific research, but part of routine assessment of fuel quality.

G.27: What if I import diesel fuel and later blend it into marine fuel?

Imports of diesel fuel are to be included in your distillate pool. There is no exclusion for volumes used in marine fuel.

The Regulations provide flexibility in allowing primary suppliers to choose which distillate petroleum stream to add renewable fuel content to. Where a primary supplier decides it is not desirable to add renewable fuel content to a particular distillate fuel type, such as marine diesel fuel, the averaging provisions and other flexibilities in the Regulations allow for those volumes to be made up by blending elsewhere. In addition, where a primary supplier does not wish to add renewable fuel to its petroleum fuel, it can obtain compliance units from other parties through the trading system.

G.28: I produce or import naphtha or kerosene for use in drilling operations. Am I subject to the regulations? Can I exclude the volume of the naphtha or kerosene from my pool?

In the case where the naphtha or kerosene is not to be used as a fuel (as per the definition of fuel in the Canadian Environmental Protection Act, 1999: any form of matter that is combusted or oxidized for the generation of energy), the naphtha or kerosene is not covered by the Regulations and the volume would not be included in your pool, provided that the naphtha or kerosene non-fuel use is documented.

G.29: I produce or import gasoline for use as a diluent only. Am I subject to the Regulations? Can I exclude this volume from my gasoline pool?

In the case where gasoline is not to be used as a fuel (as per the definition of fuel in the Canadian Environmental Protection Act, 1999: any form of matter that is combusted or oxidized for the generation of energy), the gasoline is not covered by the Regulations and the volume would not be included in your pool, provided that the gasoline's non-fuel use is documented.

G.30: Is naphtha that I produce at my refinery considered to be part of my gasoline pool?

If a batch of naphtha meets the definition of gasoline under these regulations and is dispatched from the facility or dispensed into mobile equipment at the facility, its volume is to be included in your gasoline pool. If it does not, its volume is not part of your gasoline pool.

G.31: Why is the renewable content of a fuel subtracted from the pool?

The intent of these regulations is to require the addition of renewable fuels to conventional petroleum fuels, and not to other renewable fuels. To ensure that a primary supplier's pool only consists of petroleum fuel, a primary supplier may subtract the volume of any renewable fuel in its pool (provided that there are records evidencing that volume).

G.32: Why is only a portion of the biocrude used as feedstock subtracted from the pool? What is the rationale behind the percentages and why do they differ depending on the type of biocrude used?

Only a portion of renewable fuel is subtracted from a primary supplier's pool due to yield losses in the refining processes related to the use of biocrude. These yield losses vary with type of biocrude. The portion percentages for triglyceride-derived biocrude and the other types of biocrude were developed in consultation during the spring of 2009 with the Industry Technical Advisory Group (a group of technical experts from the petroleum and renewable fuel industries). These percentages are based on the data that were at hand at the time, and may change in the future as more data become available.

G.33: A batch of fuel that meets the regulations' definition of diesel fuel is transferred to me from the primary supplier who produced it. I then process this batch for the primary supplier and then return the batch to them. Can I exclude that production from my pool?

You need not include the volume in your distillate pool. Since the batch of fuel met the definition of diesel fuel when you received it, you did not produce diesel fuel in respect of the batch. The producer of the original batch must include its volume in their distillate pool. However, any incremental volume produced by you in excess of the original volume of the batch would be included in your pool.

G.34: I have a processing agreement where I process crude oil for someone else and charge them a processing fee. I then supply that person with the finished gasoline at my distribution terminal. Can I exclude that production from my gasoline pool?

No, you cannot exclude it. Because you produced the gasoline, you must include it in your gasoline pool if it is dispatched from the facility or dispensed into mobile equipment at the facility.

G.35: If I import a volume of gasoline and sell it to my affiliate who then exports a portion of the volume, can I exclude that portion from my import pool?

No, you may not. The imported gasoline is transferred in Canada to another party, and so it cannot be excluded from your import pool.

Sections 7 and 8 - Compliance Units and the Quantity of Renewable Fuel

H.1: What is a compliance unit?

Compliance units represent litres of renewable fuel - generally, one compliance unit equates to one litre of renewable fuel that is for use in Canada (or to a portion of biocrude used at a refinery). Compliance units are created under the provisions of these regulations by activities such as adding renewable fuel to liquid petroleum fuel, importing liquid petroleum fuels with renewable fuel content or by using biocrude, and they are tradeable.

There are two types of compliance units: gasoline and distillate. Gasoline compliance units are used to demonstrate compliance with the 5% renewable fuel requirement based on gasoline, and distillate compliance units are used to demonstrate compliance with the 2% renewable fuel requirement in diesel fuel and heating distillate oil. Distillate compliance units may also be used to meet the renewable fuel requirement for gasoline.

A compliance unit may only be used once and only to demonstrate compliance in respect of the compliance period during which it was created, or into which it was carried forward or carried back. For any compliance period, at the end of the trading period (i.e. March 31st after the compliance period ends), a primary supplier must own sufficient compliance units that were created during, carried forward into, or carried back into, the compliance period to meet their renewable fuel volume requirements.

For more details, refer to the questions and answers in Section K on the creation of compliance units.

H.2: Why are there gasoline compliance units and distillate compliance units? What is the difference?

Gasoline compliance units can only be used to meet the requirement for 5% renewable fuel content in the gasoline pool. Distillate compliance units can be used towards meeting either the 5% requirement, or the requirement for 2% renewable fuel content in the distillate pool.

Distillate compliance units may be created in respect of renewable fuel content in diesel fuel or heating distillate oil, by the use of neat renewable fuel that displaces diesel fuel or heating distillate oil (e.g., through the use of neat renewable fuel in a diesel engine or a domestic-type oil burner) or from the use of biocrude in a refinery.

Gasoline compliance units may be created in respect of renewable fuel content in gasoline or any other type of liquid petroleum fuel other than diesel fuel or heating distillate oil, by the use of neat renewable fuel that displaces liquid petroleum fuel, other than diesel fuel or heating distillate oil (e.g., through the use of neat renewable fuel in a gasoline engine, industrial combustion device or other combustion device) or from the use of biocrude in a refinery.

H.3: Why can't gasoline compliance units be used to meet the renewable fuel requirement for diesel fuel and heating distillate oil when distillate compliance units may be used to meet the renewable fuel requirement for gasoline?

This one-way flexibility is intended to promote a Canadian market for renewable fuels for use in distillate fuels.

H.4: What is the difference between a compliance unit and a RIN?

A compliance unit is created under the Canadian Renewable Fuels Regulations, while a RIN (or "renewable identification number") is created under the U.S. Renewable Fuel Standard. They are not the same and cannot be used in place of one another.

H.5: Can I use EPA's RINs to meet the requirements of the Canadian regulation?

No. A U.S.RINcannot be used to meet the requirements under the Canadian regulations. A Canadian compliance unit cannot be used in place of a U.S. RIN. The two regulatory regimes are entirely separate.

H.6: Will Environment Canada issue compliance units?

No. Compliance units are created by participants in the trading system pursuant to the provisions of these regulations.

H.7: How do I get compliance units?

Participants in the trading system may create compliance units pursuant to the provisions of these regulations. Primary suppliers may also acquire compliance units from other participants.

H.8: How do I use compliance units to establish compliance with section 5 of the regulations?

Your end-of-trading period balances for the compliance units that you own are calculated in accordance with section 8 of the regulations. This balance represents the volume of renewable fuel in your gasoline and distillate pools.

H.9: The various parameters of the equations in section 8 of the regulations are set out as "in respect of a gasoline [or distillate] compliance period". What does that mean?

Compliance for a compliance period is based on compliance units created during the period as well as compliance units carried forward or back into the compliance period. The phrase "in respect of a gasoline [or distillate] compliance period"encompasses such compliance units.

H.10: After the end of the trading period in respect of a compliance period, I discovered an error in my calculation of the volume of renewable fuel in my pool - my actual quantity of renewable fuel was less than required under section 5 of the regulations. How do I correct this?

Compliance with the requirements of section 5 is determined based on the number of compliance units in respect of the compliance period that you own at the end of the trading period. The trading period, which ends three months after the compliance period ends (i.e., March 31), is to provide additional time for you to ensure that you have sufficient compliance units to be in compliance. If you are in a deficit situation, prior to the end of the trading period, you may acquire compliance units from other participants, or use the carry back mechanism described under section 24 of the regulations.

If you do not own sufficient compliance units at the end of the trading period in respect of the compliance period, then you would be out of compliance with the regulations.

H.11: Can I use any compliance units I own to meet the requirements?

Compliance units used to establish compliance with the requirements for a given compliance period must be owned by you at the end of the trading period associated with that compliance period. They must have been:

  • created during that compliance period,
  • carried forward into that compliance period, or
  • carried back into that compliance period.

This includes such compliance units received in trade during the compliance period or its associated trading period.

A gasoline compliance unit may only be used to meet the 5% renewable fuel requirement for gasoline. A distillate compliance unit may be used to meet either the 2% renewable fuel requirement for diesel fuel and heating distillate oil or the 5% renewable fuel requirement for gasoline, but not both.

H.12: Can I later trade compliance units that I have used for compliance?

No. Compliance is based on the number of compliance units that you own at the end of the trading period in respect of a compliance period. Once a compliance unit has been used to demonstrate compliance, it cannot be re-used. Any compliance units that are in excess of the amount required for compliance may be carried forward into a subsequent compliance period, subject to specified conditions set out in the regulations. For more details, refer to the questions and answers in Section O on the carry forward of compliance units.

H.13: Where do the regulations indicate that compliance is based on how many compliance units I own at end of a trading period?

The volume of renewable fuel in your pool is calculated according to the formula in Section 8. A number of the parameters in the formulae will not be known until the end of the trading period, such as the number of compliance units received in trade, the number of compliance units transferred to another primary supplier and the number of compliance units carried back. The phrase "in respect of a gasoline [or distillate] compliance period" is used to denote this.

H.14: What do I include as cancelled compliance units in the terms "CanG" and "CanD" which appear in the formulae in Section 8?

These terms are the sum of compliance units cancelled for carry back under subsection 25(1), for exported renewable fuel content under subsection 25(2), and for units in excess of the monthly maximum under subsection 25(3). The terms do not include cancellation of unused compliance units under subsection 25(4) as this occurs at the end of the trading period after the compliance units are used in the assessment of compliance through the equations in section 8. Compliance units cancelled by a person due to them rescinding their opt-in under subsection 3(3) are also not included in the cancellation terms CanG and CanD.

H.15: For the terms CBG and CBD, why must I subtract the compliance units that I carried back into previous gasoline compliance period?

Compliance units that are carried back are moved from one compliance period into the preceding period. The subtraction reflects the transfer of those compliance units out of the compliance period that they are moved from.

H.16: How do I assign distillate compliance units to meet the renewable fuel requirement for gasoline?

Only a primary supplier can make such an assignment. The formula for calculating the volume of renewable fuel in your gasoline pool in subsection 8(1) of the regulations contains a parameter (DtGDG) that represents the number of distillate compliance units that you choose to use to meet the renewable fuel requirement for gasoline. You may assign any number of distillate compliance units that you own to this variable, as long as you assign the same number to the corresponding parameter (DtGDD) in formula in subsection 8(2), for calculating the volume of renewable fuel in your distillate pool.

The assignment of distillate compliance units to the renewable fuel requirement for gasoline must be recorded in your compliance unit account book under paragraph 31(2)(l) of the regulations and reported in your annual report under section 30 of the regulations (specifically in item 2 of Schedule 4 of the regulations).

H.17: When do I assign distillate compliance units to meet the renewable fuel requirement for gasoline?

You may assign distillate compliance units to the gasoline pool at any time until the end of the relevant trading period. Such assignments must be recorded in your compliance unit account book within 15 days after the end of the month in which the assignment was done.

For example, if you assign distillate compliance units at the end of the trading period (that is, March 31), then the record of that assigning must be made in your compliance unit account book no later than April 15. The report to Environment Canada made under section 30 of the regulations is also due no later than April 15.

H.18: Are there any limitations on the number of distillate compliance units that I can assign to meet the renewable fuel requirement for gasoline?

There is no numerical limit; however, you may only assign distillate compliance units that you own and that were created during the compliance period (or carried forward or carried back into the compliance period). Any distillate compliance unit that you assign in this manner cannot be used to comply with the renewable fuel requirement for diesel fuel and heating distillate oil. You must ensure that both the renewable fuel requirement for gasoline and the renewable fuel requirement for diesel fuel and heating distillate oil (if in force) are met.

H.19: Can I meet the 5% renewable fuel requirement for gasoline using only distillate compliance units?

Yes, you can. However, each distillate compliance unit can only be used in one way, either to meet the renewable fuel requirement for gasoline or the renewable fuel requirement for diesel fuel and heating distillate oil (if in force), but not both.

H.20: Can I use a distillate compliance unit to meet both the 5% renewable fuel requirement for gasoline and the 2% renewable fuel requirement for diesel fuel and heating distillate oil?

No. A distillate compliance unit can only be used to meet one of those requirements - not both.

H.21: Can I report the parameters for the calculations in section 8 in cubic metres?

No, you cannot. The parameters in section 8 represent compliance units, which represent litres of renewable fuel, therefore subsection 4(7) does not apply and so the parameters in section 8 must be in litres. Refer to section 7(1).

Section 9 (and Schedule 1) - Registration as a Primary Supplier

I.1: Why is registration information required by the Environment Canada?

Registration information is collected for a primary supplier under section 9 of the regulations, for an elective participant under section 11, and for a renewable fuels producer or importer under section 34. This information is to assist Environment Canada in the administration of the regulations and in identifying and understanding the regulated community and the various facilities of the industrial sectors covered by these regulations. The information collected under registration reports assists Environment Canada in understanding your operations and the operations of other regulated parties, and thus enables a more effective and efficient administration of the regulations. Other federal fuel regulations have similar registration information requirements.

I.2: Schedule 2 requires a description of the primary use of produced, blended and imported products. Why is this required and what is it intended to cover?

This information will help identify instances where a product might be used in such a way that it would not be a fuel: for example, as feedstock to a chemical plant. Such blended product is not intended to create compliance units. The description should identify the primary use as "for fuel", or some other specified use.

I.3: When do I have to submit the registration report?

All registration reports are one-time reports (with updates when the submitted information changes). The registration report for primary suppliers must be submitted at least one day prior to the primary supplier producing and importing its 400th m³ of gasoline, or its 400th m³ of diesel fuel and heating distillate oil, during any 12-month period in a compliance period.

For existing primary suppliers, this effectively means on or before December 14, 2010, as the compliance period starts December 15, 2010. For new large-volume primary suppliers, this effectively means at least one day before commencing production or import operations.

I.4: As part of the registration report, are volumes for 2010 required to be reported?

Volumes from the calendar year before you registered are required to be provided in the registration report. If you register in 2011, then 2010 volumes are required. If you register in 2010, then 2009 volumes are required.

I.5: If I am importing more than 400 m³ of diesel fuel for use exclusively in the Arctic and then one day start importing fuel for use in southern Canada, when do I need to register?

Under subsection 2(3), when you are only importing fuel for use in the Arctic you do not have to register, so long as this fuel use purpose is documented fro the volumes. When you start importing fuel for use in southern Canada, you would be required to register one day before you import fuel for use in that region.

I.6: What happens if the information I submitted in my registration report changes?

If the registration information changes, other than the information in items 1(b) and (c) of Schedule 1 of the regulations (the contact information), you must submit a notice to Environment Canada that updates the changed information. This must be done no later than five days after the change. This requirement and the timing for the notice are the same as in other federal fuel regulations. If you do not submit the updated data by this time, you would be in contravention of the regulations.

I.7: Why don't I have to submit updates regarding information on my authorized official or contact person?

Because contact information can change frequently, you do not have to submit an update of this information. Such information must be submitted to Environment Canada as part of the annual reports.

As of August 28, 2011, information regarding the company name and address (item 1(a)) is required to be updated. This is to facilitate Environment Canada tracking the company's information in its database.

I.8: What happens if I do not, or cannot, provide the update within five days of the change?

Updated data must be sent to Environment Canada no later than five days after the change. If you do not submit the updated data by this time, you would be in contravention of the regulations.

I.9: What if I don't know how much of a special-use fuel I produced or imported last year?

Item 4 of Schedule 1 of the regulations requires that you provide information on the previous year's volumes of the various special-use fuels that you produced or imported for sale or delivery for those uses - if known. It is generally expected that much of this information would be routinely recorded and well known; however, there may be some instances where a primary supplier would not know this information. In such a case, you are not obligated to provide such information.

I.10: What information is required when I register a new production facility?

You must provide the information listed in Schedule 1. If, because the facility has just begun operations, there is no volumetric data for the previous year, then you would enter a zero for that information.

I.11: As a primary supplier, do I have to submit all of the information in Schedule 2 of the regulations as well? If so, why?

Yes, under item 5 of Schedule 1, all the information listed in Schedule 2 must be provided, except for the contact information in item 1 of Schedule 2 (which is already covered under items 1(b) and (c) of Schedule 1). The information in Schedule 2 is required to assist Environment Canada in administering the regulations and in understanding your operations as they pertain to the addition of renewable fuels to your petroleum fuels, or any other aspect of your operations that might create compliance units.

I.12: I do not currently import into a province. Can I register for imports of gasoline into that province, in case I want to import in the future?

Yes, you may, since such a report would meet the condition that it be submitted before the 400th m³ of gasoline was imported.

I.13: If I only produce or import diesel fuel or heating distillate oil, do I still have to register prior to the first distillate compliance period,? If yes, why?

Yes, you do. The registration information will provide Environment Canada with information on persons who will be regulatees once the renewable fuel requirement for diesel fuel and heating distillate oil comes into force. Furthermore, the information listed in Schedule 2 is required to support administration of provisions regarding creation and trading of distillate compliance units during that time.

I.14: I am already an elective participant. I will soon start to import gasoline, diesel fuel or heating distillate oil and thereby become a primary supplier. Do I have to register as a primary supplier under section 9 of the regulations?

Yes, you do. Once you start to import, you are a primary supplier and no longer an elective participant. All the information in Schedule 1 of the regulations must be submitted to Environment Canada, pursuant to section 9 at least one day before you produce or import your 400th m³ of gasoline, or your 400th m³ of diesel fuel and heating distillate oil. If the information that you previously submitted under Schedule 2 has not changed, you need not re-submit that portion of the required registration information.

I.15: I have a terminal at which batches of gasoline, diesel fuel or heating distillate oil may be mixed together. Do I need to register my terminal as production facility?

Generally, no. The mixing of gasolines or diesel fuels is not considered production. However, if you are producing a fuel that meets the regulatory definition of "gasoline", "diesel fuel" or "heating distillate oil" by combining other fuels or fuel components that do not meet those definitions, then the facility would be a production facility.

If you wish to create compliance units at this terminal by blending petroleum fuels with renewable fuels, you would have to provide registration information on this facility under section 11 of the regulations.

I.16: I have a terminal at which batches of naphtha are mixed to make gasoline. Do I need to register my terminal as production facility?

Generally, yes, you do, because you are producing gasoline from substances that are not gasoline.

However, if all the batches of naphtha meet the definition of "gasoline", then their volumes should be included in the pools of the refineries that produced the naphtha. In that case, you would be considered as simply mixing "gasolines", and you would not be required to register your terminal as a production facility.

I.17: If I only blend heavy fuel oil with lighter products to make marine diesel fuel for use in marine diesel engines, am I a primary supplier?

Yes, you are a primary supplier, but only if your "marine diesel fuel" meets the definition of "diesel fuel" in subsection 1(1) of the Regulations.

I.18: Will Environment Canada issue me a registration or identification number after I submit the information required in Schedule 1 of the regulations?

Environment Canada does not plan to issue such numbers under the Renewable Fuels Regulations.

I.19: Is there a special format for submitting registration information?

Under section 27 of the Regulations, reports must be in the form and format specified by Environment Canada. If an electronic form and format are specified, they must be used, unless there are circumstances beyond your control that make it impractical for you to do so. (This would be assessed on a case-by-case basis.) If no electronic form and format have been specified, the report must be sent on paper

Environment Canada will notify participants if and when a form and format are specified.

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