New Clean Fuel Regulation confirms investment environment for “decarbonizing” fuel

The Canadian government has unveiled its awaited Clean Fuel Regulation (CFR), setting the stage for increased biofuel demand and production.

Once fully implemented, the CFR is expected to cut up to 26.6 million tonnes of greenhouse gas pollution by 2030, or roughly the amount of GHGs currently generated by the entire Canadian economy in two weeks.

Andrea Kent, vice president industry and government affairs for Renewable Industries Canada, explains Canada’s existing renewable fuels policy was based on volume, but this new regulation is focused on the carbon intensity of fuels, bringing it in line with policies in other jurisdictions, such as California and B.C.

“Biofuels are going to continue to do very, very well, in this policy,” says Kent, in the interview below. “They’re established; they are really effective and cost effective in decarbonization, but what we’re gonna see is a lot of the language coming out of government and a lot of the industry focus, moving towards carbon intensity, and looking at the performance of a fuel, not just its volume.”

While there have some concerns about sustainability requirements for land use and crop-based feedstocks that could be a stumbling block to agriculture really benefiting from this policy, Kent says this regulation has been updated to recognize the level of stewardship already in use on Canadian farms.

“That was something that we spent a lot of time looking at making sure that things, like the biodiversity criteria and the sustainability criteria were modern. I think, unfortunately, when we talk about biofuels, sometimes there’s still a lot of scrutiny from sustainability, that that shouldn’t be there, it’s outdated. And it doesn’t reflect the realities of Canadian agriculture,” she says.

The shift to lower carbon fuels, both in Canada and in the U.S., has been a primary driver of approximately $2 billion in expanded canola processing capacity that’s been announced since early 2021, due to anticipated demand for canola as a feedstock for renewable diesel.

The Canola Council of Canada is 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,” says Jim Everson, president of the CCC. “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.”

What the publishing of the regulation also does is set out some certainty for the market, and for companies to begin to make plans on how they will meet the standards. It also, in some circles, has re-ignited the fuel versus food debate, something that policy supporters will have to navigate.

The official publication of the CFR is scheduled for July 6, with implementation occurring on July 1, 2023.

For that discussion, including on who within in Canadian agriculture is most excited for the regulation, listen here: