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:

• Compliance Category 1: Undertaking projects that reduce the lifecycle carbon intensity of liquid fossil fuels (e.g., carbon capture and storage, on-site renewable electricity, co-processing);
• Compliance Category 2: Supplying low carbon intensity fuels (e.g., ethanol, biodiesel); and
• Compliance Category 3: Supplying fuel or energy to advanced vehicle technology (e.g., electricity or hydrogen in vehicles).

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:

• registration for primary suppliers, registered creators, foreign suppliers and carbon intensity contributors,
• applications for recognition of CO₂e emission-reduction projects,
• applications for approval of carbon intensity, and
• compliance credit creation.

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

• Clean Fuel Regulations
• Regulatory Impact Analysis Statement – Clean Fuel Regulations

Verification and Certification

• Methods for Verification and Certification

Quantification Methods

• Quantification Method Development Guidance Document
• Quantification Method for Low-Carbon-Intensity Electricity Integration
• Quantification Method for CO₂ Capture and Permanent Storage
• Quantification Method for Enhanced Oil Recovery with CO₂ Capture and Permanent Storage
• Generic Quantification Method
• Quantification Method for Co-processing in Refineries (Update on this page to be available at a later date)

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:

• Credit and Tracking System
• User Guides: 
  • Clean Fuel Regulations: Credit and Tracking System User Guide for Primary Suppliers, Registered Creators and Foreign Suppliers Version 3.1 (PDF) (Update on this page to be available at a later date)
    

    • This document provides guidance to Primary Suppliers, Registered Creators and Foreign Suppliers and their Authorized Agents, Authorized Administrators and Read/Write users on using the CATS for the purpose of conducting their report or notice submission activities under the Regulations.

  • Clean Fuel Regulations: Credit and Tracking System User Guide for Verification Bodies Version 3.1 (PDF) (Update on this page to be available at a later date)

    • This document provides guidance to Verification Body Organizations and their authorized agents on creating an account in CATS, and providing registration and accreditation information. At this time, no additional users are able to be on boarded.

• Frequently Asked Questions

Carbon Intensity Determination

Fuel Life Cycle Assessment Model

The 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.

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

Specifications for Fuel LCA Model CI Calculations and CFR Data Workbook

There are two main components, specific to the Clean Fuel Regulations, that stakeholders must use in order to determine a carbon intensity. These are 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 intensities 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.

• Emissions Reduction Advancement Program (ERAP)
• Newfoundland and Labrador Emissions Reduction Fund

Land Use and Biodiversity Criteria

• Land Use and Biodiversity Criteria guidance
• Material balancing and declarations guidance

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.

Credit Market Data Report

The first CFR Credit Market Data Report presents data on the compliance credit market. The report first highlights key aspects of the credit market, such as credit prices and number of transfers, and then presents more details on credit creation by compliance category. The report includes credit creation data for 2022 and 2023 as well as credit transfer data until May 31, 2024.

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.