Launched in 2023, the Canada Clean Fuels Regulations (CFR) aim to decrease the carbon intensity of gasoline and diesel in Canada by 15% (below 2016 levels) by 2030. In 2023, the carbon intensity (CI) reduction target started at 3.5 gCO2e/MJ and will gradually increase to 14 gCO2e/MJ in 2030. Thus, the goal is to gradually reduce pollution by replacing existing fossil fuels with alternate and clean fuels.

The program establishes a credit market where each fuel supplier complies with their carbon intensity reduction requirement by either generating credits or acquiring credits from other creators. Undertaking lifecycle CI-reduction projects, selling low CI fuels like ethanol and biodiesel, and providing energy to advanced vehicles are the three ways by which credit generation is feasible.

The regulations incentivize biofuel and lower-carbon fuel producers to generate and sell credits. This provides farmers with opportunities to diversify their businesses by creating a demand for feedstock. Furthermore, the CFR provides excellent opportunities for hydrogen and electric-based vehicles to get a strong foothold in the market.

Last Updated: Tuesday, 27th August 2024