Key Takeways

Revised renewable diesel and biodiesel blending assumptions, based on current market trends, point to slower credit generation under the Canada Clean Fuel Regulations (CFR) going forward. The model now also includes new ZEV adoption scenarios, with different levels of EV uptake based on the EVAP policy announcement, while charging utilization assumptions shape future EV credit supply. In addition, fund credits equal to 10% of deficits have been introduced in the latest model. The model also reflects the potential impact of credit multipliers and a minimum blend approach proposed in the draft CFR amendment discussion paper, which, if adopted, would increase credit generation by improving domestic blending economics. Overall, bank projections suggest the market could tighten toward the end of the decade.

Detailed price projections and bank balances are available exclusively to our Pro clients.

Canada CFR: Regulatory Updates and 2026 cCarbon Model Outlook

The Canada Clean Fuel Regulations (CFR) require primary fuel suppliers to reduce the carbon intensity of liquid fuels by blending renewable diesel, biodiesel, ethanol, and other low-carbon fuels, or by trading credits for compliance. The framework is playing a central role in shaping blending strategies, credit balances, and overall fuel market dynamics across Canada, influencing both short-term operational decisions and long-term investment planning within the fuel supply chain.

On September 5, 2025, the Government of Canada announced its intent to introduce targeted amendments to the Clean Fuel Regulations to enhance system resiliency and support the development of domestic low-carbon fuel production. Subsequently, Environment and Climate Change Canada (ECCC) released a discussion paper outlining potential approaches to incentivize domestic biofuel production and strengthen supply chains, with a particular focus on improving market stability and reducing reliance on imports. On February 5, 2026, the Government of Canada also announced additional incentives and policy measures aimed at accelerating zero-emission vehicle (ZEV) adoption, further influencing long-term fuel demand and credit generation under the CFR framework, and reinforcing the transition toward lower-carbon transportation systems.

This note summarizes the updated results of the 2026 run of the CFS.Carbon Outlook™ for Canada CFR. While the output was presented during the webinar on February 5, 2026, this note provides additional detail on the assumptions, methodology, and resulting market outlook, offering greater transparency into the analytical framework and key drivers underpinning the projections.

This version of the model (202602v2) has also been updated on the online platform within the Canada CFR Forecast Dashboard. The tool provides structured visibility into credit generation, deficits, and bank through 2030, enabling a clearer assessment of future market conditions and compliance pathways. The dashboard is powered by cCarbon’s demand and supply outlook model and is continuously calibrated using the latest credit reports and regulatory developments to ensure accuracy and relevance. In the February 2026 update, the model is calibrated using the Q1 2025 credit summary report and Canada CFR Outreach 2025. It also incorporates updated vehicle stock data through Q4 2024, along with updated light-duty vehicle (LDV) and fuel sales data through Q3 2025, based on Statistics Canada, improving the robustness, consistency, and reliability of demand projections and credit market estimates.