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Canada’s Clean Fuel Credit Market in 2024: Expansion in Credits with Flat Volume Growth (Updated Following ECCC Clarification)

Canada’s Clean Fuel Credit Market in 2024: Expansion in Credits with Flat Volume Growth (Updated Following ECCC Clarification)

Key Takeaways

ECCC’s 2024 Clean Fuel Regulation credit market report showed an increase in credit transfers from 2023. Peak prices occurred in Q2 at CAD $166, but softened by Q4 to $149.24, as credit supply increased.
RNG’s volume surged by 417.5% from 2023 to 2024, while ethanol and HDRD showed steady but more modest increases.
Most fuels saw a significant reduction in average carbon intensity (CI), with ethanol’s CI dropping by 20% to 41 gCO2e/MJ, HDRD’s by 37.4% to 40.9 gCO2e/MJ, and RNG’s by 12.1% to 62 gCO2e/MJ.
The feedstock mix revealed that unsurprisingly corn is the dominant source for ethanol (97%), while canola oil remains the primary feedstock for biodiesel (50%) and Tallow (42%) for HDRD.
cCarbon estimated 9 million credits, with the actual report showing 7.98 million (which at the moment excludes CC1 credits and electricity credits, expected in a future report).

On July 12^th, 2025, Environment and Climate Change (ECCC) released the Clean Fuel Regulations (CFR) 2024 Quarterly Credit Market Report. Designed to reduce the life cycle carbon intensity of transportation fuels, the CFR credit system enables producers and importers to comply by generating or purchasing credits tied to low-carbon fuel supply and use in vehicles. This is the second edition of the report. The first was published in June 2024. cCarbon published the Canada CFR Data Release Analyst note based on the program data, offering a detailed analysis of the credit market trends.

Credit Market Performance: Price Volatility and Growing Transactions

Across 2024, the CFR market saw a total of 347 credit transfers with an associated price. The volume of credits transferred in these transactions totaled 3.33 million tonnes of CO₂e, with prices showing notable volatility:

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Prices for credits fluctuated significantly, with the highest prices in Q2 and a decline in Q4. A significant portion of the credits, approximately 5 million, were transferred at near-zero prices. These credits are generally part of broader fuel supply contracts or long-term agreements where the credit pricing isn’t disclosed immediately or is pre-arranged.

Fuel Supply and Credit Creation: Ethanol Dominates, RNG Grows Rapidly

Ethanol continued to lead Canada’s low-carbon fuel mix in 2024, contributing 4,628,815 t CO₂e in credits from 4,240,168 m³ produced and imported. Ethanol’s average carbon intensity (CI) of 41 gCO₂e/MJ with a range of 33 to 79 gCO₂e/MJ.

Hydrogenation-Derived Renewable Diesel (HDRD) accounted for the second largest credit volumes, generating 2,107,443 t CO₂e, of which 1,299,467 m³ were generated from imported fuel. CI values for HDRD ranged from 18 to 79 gCO₂e/MJ, with an average of 41 gCO₂e/MJ. Renewable Natural Gas (RNG) saw the impressive growth in fuel volumes, increasing by 417.5% from 26.5 million m³ in 2023 to 137 million m³ in 2024. RNG generated 90,871 t CO₂e in credits in 2024, with an exceptionally low average CI of 7 gCO₂e/MJ.

Comparing Last Year’s Credit Report with 2024

Volume Comparison of Low-Carbon Fuels (2023 vs 2024)

Ethanol and HDRD volumes grew modestly by 5.5% and 4.4% respectively, while low-CI aviation fuel entered the market with 40,745 m³. RNG saw a sharp 417.5% jump, becoming the most significant contributor. In contrast, other low-CI fuels dropped steeply by 62.2%.

Credit Comparison of Low-Carbon Fuels (2023 vs 2024)

Ethanol and HDRD led credit growth with increases of 30.8% and 105.6% respectively. RNG credits surged by 270.3%, while low-CI aviation fuel entered the market with 58,503 t CO₂e. Meanwhile, credits from other low-CI fuels declined by 21.9%.

Carbon Intensity (CI) Comparison: 2023 vs 2024

CI levels fell across all fuels. HDRD and other low-CI fuels saw the steepest drops at 37.4% and 59.2% respectively. Ethanol dropped by 20%, while RNG saw a 12.1% decline. Low-CI aviation fuel entered with a CI of 45 gCO₂e/MJ.

Trends in Low-Carbon Fuel Volume Changes: Declining Production and Rising Imports

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In 2024, the volume dynamics of various low-carbon fuels showed significant shifts compared to 2023. Ethanol saw a slight decrease in production, dropping by 1%, though imports rose by 9%, indicating a growing reliance on imported ethanol to meet demand. Hydrogenation-Derived Renewable Diesel (HDRD) experienced a modest 4% increase in imports, , though production data for 2023 was not available for comparison. Imports accounted for 100% of Low-Carbon-Intensity Aviation Fuel. The Other Low-Carbon Intensity Fuels category, which includes biodiesel and self-declared low-CI fuels, experienced a 92% increase in production, but a sharp decline in imports which suggests a shift toward more domestic production in this category.

Feedstock Patterns: Corn for Ethanol, Canola for Biodiesel

Canada’s CFR encourages lower carbon intensity not just through the final fuel but through upstream feedstock decisions. The 2024 feedstock mix revealed some expected do patterns:

Ethanol: 97% of credits came from corn, with the remaining 3% from other grains.
HDRD: The feedstock mix was broad. Vegetable oil from soy and canola accounted for 65%, used vegetable oil 22%, and animal fats 10%.
Biodiesel: Canola oil was the primary source (50%), followed by soybean oil (36%).

This feedstock data is essential, as the CI score of fuels under the CFR heavily depends on their lifecycle — especially upstream agricultural emissions.

cCarbon Model vs Reported Data: 2024 Credits and Deficits

Credits: The cCarbon model estimated 9 million credits to be generated, but the reported data indicates 7,954,390 credits, a difference of 1,045,610 credits. The current report does not include CC1 credits and electricity credits. An annual report, expected on last year’s format, will update these numbers.

Deficits: The cCarbon model forecasted a 9.50 million deficit for 2024. While ECCC estimates deficits to be 12.3 million in 2024.