Clean Fuel Regulations (SOR/2022-140)

Marginal note:Incorporation by reference

• 2 (1) A standard or method that is incorporated by reference in these Regulations, other than ISO Standard 14064-3:2019, is incorporated as amended from time to time.

• Marginal note:Interpretation of documents incorporated by reference

  (2) For the purpose of interpreting any document that is incorporated by reference in these Regulations, a reference to “should” in the English version of the document is to be read as “must” and any recommendation or suggestion is to be read as an obligation unless the context requires otherwise. For greater certainty, in the case of the accuracy or precision of a measurement, the context never requires otherwise.

• Marginal note:Inconsistencies with these Regulations

  (3) In the event of an inconsistency between a provision in a document incorporated by reference into these Regulations and any provision of these Regulations, the provision of these Regulations prevails to the extent of the inconsistency.

Marginal note:Standard conditions

3 Unless otherwise specified, a reference in these Regulations to a volume or quantity of gas or liquid that is expressed in cubic metres is a reference to the volume or quantity of that gas or liquid at standard conditions.

Application

Marginal note:Exemption — primary suppliers

• 4 (1) A primary supplier who produces in Canada or imports into Canada a volume of less than 400 m³ of gasoline or a volume of less than 400 m³ of diesel during a compliance period is exempt from the application of these Regulations with respect to that fuel for that compliance period.

• Marginal note:Non-application — certain fuels

  (2) These Regulations do not apply in respect of gasoline or diesel that is

  • (a) aviation gasoline;

  • (b) exported from Canada;

  • (c) used for scientific research, other than research on consumer preferences in respect of various properties of fuels or market research; or

  • (d) sold or delivered for the purpose of supplying the engine of a vehicle, including a marine vessel, that is used exclusively for competition.

• Marginal note:Exception

  (3) However, a primary supplier who, during a compliance period, produces in Canada or imports into Canada a volume of 400 m³ or more of gasoline or diesel must record the volume of every fuel referred to in paragraphs (2)(a) to (d) that is produced or imported during that compliance period and must include that information in the compliance report submitted to the Minister under section 127.

• Marginal note:Clarification

  (4) For greater certainty, the fuels referred to in paragraphs (2)(a) to (d) are not included when determining, for the purposes of subsection (1), the volume of fuel that is produced in Canada or imported into Canada by a primary supplier.

Requirements for Liquid Fuels

Carbon-Intensity Limits

Marginal note:Requirement — carbon intensity

• 5 (1) For the purposes of section 139 of the Act, a primary supplier’s pool — as determined in accordance with section 8 — of a liquid fossil fuel that is set out in column 1 of the table to this subsection must not have a carbon intensity that is greater than the corresponding limit set out in column 2 for the corresponding compliance period.

  	Column 1	Column 2
  		Limit for Each Compliance Period (gCO2e/MJ)
  Item	Liquid Fossil Fuel	2023	2024	2025	2026	2027	2028	2029	2030 and after
  1	Gasoline	91.5	90.0	88.5	87.0	85.5	84.0	82.5	81.0
  2	Diesel	89.5	88.0	86.5	85.0	83.5	82.0	80.5	79.0

• Marginal note:Lowering of carbon intensity

  (2) A primary supplier must comply with subsection (1) with respect to a fuel for a compliance period by lowering the carbon intensity of their pool of that fuel for that compliance period by an amount that is equal to the difference between the baseline carbon intensity for that fuel and the limit set out in the table to subsection (1) for that fuel and that compliance period. The carbon intensity must be lowered by using compliance credits in accordance with section 11 to satisfy the reduction requirement for that compliance period.

• Marginal note:Baseline carbon intensity

  (3) For the purposes of subsection (2), the baseline carbon intensity of gasoline is 95 gCO₂e/MJ and the baseline carbon intensity of diesel is 93 gCO₂e/MJ.

• Marginal note:Non-application

  (4) Subsection (1) does not apply in respect of a fuel that is produced in Canada or imported into Canada before July 1, 2023.

Marginal note:Volumetric requirement — gasoline

• 6 (1) For the purposes of section 139 of the Act, at least 5% of the volume of a primary supplier’s pool of gasoline — as determined in accordance with section 8 — must, for each compliance period, be displaced by an equivalent volume of a gasoline replacement.

• Marginal note:Exception — Newfoundland and Labrador

  (2) For the purposes of subsection (1), the primary supplier may, for a compliance period, subtract from their pool of gasoline determined in accordance with section 8 any volume of gasoline that, during the compliance period, the primary supplier produced in or imported into Newfoundland and Labrador and sold or delivered for use in that province, if the primary supplier records information that establishes that the volume of gasoline met those conditions.

• Marginal note:Non-application

  (3) Subsection (1) does not apply in respect of gasoline that is produced in Canada or imported into Canada before July 1, 2023.

Marginal note:Volumetric requirement — diesel

• 7 (1) For the purposes of section 139 of the Act, at least 2% of the volume of a primary supplier’s pool of diesel — as determined in accordance with section 8 — must, for each compliance period, be displaced by an equivalent volume of a diesel replacement.

• Marginal note:Exception — Newfoundland and Labrador

  (2) For the purposes of subsection (1), the primary supplier may, for a compliance period, subtract from their pool of diesel determined in accordance with section 8 any volume of diesel that, during the compliance period, the primary supplier produced in or imported into Newfoundland and Labrador and sold or delivered for use in that province, if the primary supplier records information that establishes that the volume of diesel met those conditions.

• Marginal note:Non-application

  (3) Subsection (1) does not apply in respect of diesel that is produced in Canada or imported into Canada before July 1, 2023.

Marginal note:Pool of liquid fuel — volume

• 8 (1) A primary supplier must, for each compliance period, determine the total volume, expressed in cubic metres, of their pool of gasoline or diesel, as the case may be, that was

  • (a) produced by the primary supplier at a fuel production facility in Canada and, during the compliance period, either

    • (i) dispatched from the fuel production facility, or

    • (ii) used to fuel a vehicle or other mobile equipment at the fuel production facility; or

  • (b) imported by the primary supplier into Canada during the compliance period.

• Marginal note:Subtraction from pool

  (2) However, a primary supplier may, for each compliance period, subtract from their pool of gasoline or diesel, as the case may be, any volume of that fuel, if the primary supplier, before the August 1 of the calendar year that follows the end of the compliance period, records information that establishes that the volume of fuel met any of the following conditions during the compliance period:

  • (a) it was sold or delivered for a use other than combustion;

  • (b) it was sold or delivered for use in a marine vessel that had a non-Canadian port as its destination;

  • (c) it was sold or delivered for use for non-industrial purposes in a geographic area that is served by neither an electrical distribution network that is subject to the standards of the North American Electric Reliability Corporation nor a natural gas distribution system;

  • (d) it was sold or delivered for the purpose of space heating;

  • (e) it was sold or delivered for use in the generation of electricity in a geographic area that is served by neither an electrical distribution network that is subject to the standards of the North American Electric Reliability Corporation nor a natural gas distribution system.

Reduction Requirement

Marginal note:Reduction in tonnes

9 The carbon intensity of a pool of gasoline or diesel for a compliance period is considered to be lowered for the purposes of subsection 5(2) if the number of tonnes of CO₂e released over the life cycle of that fuel is reduced by the value of the reduction requirement for that compliance period, as determined by the formula

Registration as Primary Supplier

Marginal note:Registration report

• 10 (1) A primary supplier must register with the Minister by submitting a registration report to the Minister that contains the information referred to in sections 1 to 3 of Schedule 3 no later than 45 days after the day on which they have produced in Canada or imported into Canada, during a compliance period, a total volume of 400 m³ or more of gasoline or a total volume of 400 m³ or more of diesel.

• Marginal note:Exception — registration within 90 days

  (2) However, the registration report may be submitted at any time during the period that begins on the day on which these Regulations are registered and ends 90 days after that day.

• Marginal note:Change of information

  (3) If there are any changes in the information referred to in section 1 of Schedule 3 that is provided in the registration report, the primary supplier must send a notice to the Minister that provides the updated information within 30 days after the day on which the change occurs.

• Marginal note:Notice of cancellation

  (4) A primary supplier who is not required by subsection (1) to be registered for a given compliance period and who has complied with the requirements set out in these Regulations for all of the previous compliance periods, including the volumetric requirements set out in subsections 6(1) and 7(1) and the reduction requirement, may cancel their registration as a primary supplier by sending a notice to that effect to the Minister.

• Marginal note:Cancellation by Minister

  (5) If, after receiving the notice referred to in subsection (4), the Minister is satisfied that the primary supplier has complied with these Regulations for all previous compliance periods, the Minister must

  • (a) if the primary supplier is not a registered creator, cancel any compliance credits in their accounts opened under section 28;

  • (b) cancel their registration as a primary supplier; and

  • (c) send a notice to the primary supplier informing them that their registration has been cancelled.

• Marginal note:Clarification

  (6) For greater certainty, subsection (1) applies to a primary supplier whose registration was cancelled by the Minister under subsection (5).

Compliance Credits

Use

Marginal note:Satisfaction of reduction requirement

• 11 (1) A primary supplier must use the compliance credits that they create under sections 19 and 20, or that are transferred to them under the compliance-credit transfer system, to satisfy the total reduction requirement.

• Marginal note:Deemed reduction

  (2) The use of one compliance credit by a primary supplier for gasoline or diesel that is produced in Canada or imported into Canada during a compliance period is deemed to reduce by one tonne the quantity of CO₂e released over the life cycle of that fuel during that compliance period.

• Marginal note:Prior creation of provisional credit

  (3) The primary supplier must use only the compliance credits that are created as provisional compliance credits before the end of a compliance period or the compliance credits that they create under subsection 19(2) to satisfy the reduction requirement for that compliance period.

• Marginal note:Cancellation after use

  (4) The Minister must cancel a compliance credit immediately after it is used.

Marginal note:Deemed compliance — gasoline

• 12 (1) For the purposes of subsection 6(1), a compliance credit that was created under paragraph 19(1)(a), (b) or (c) by producing in Canada or importing into Canada a volume of a gasoline replacement, and that is used by a primary supplier in accordance with section 11 for a compliance period, is deemed to displace, for that compliance period, the use of an equivalent volume of the primary supplier’s pool of gasoline.

• Marginal note:Deemed compliance — diesel

  (2) For the purposes of subsection 7(1), a compliance credit that was created under paragraph 19(1)(a), (b) or (c) by producing in Canada or importing into Canada a volume of a diesel replacement, and that was used by a primary supplier in accordance with section 11 for a compliance period, is deemed to displace, for that compliance period, the use of an equivalent volume of the primary supplier’s pool of diesel.

• Marginal note:Prior creation of provisional credit

  (3) The primary supplier must use only the compliance credits that are created as provisional compliance credits before the end of a compliance period to comply with the volumetric requirements set out in subsections 6(1) and 7(1) for that compliance period.

Marginal note:July 31 — gasoline

• 13 (1) For the purposes of subsection 12(1), a primary supplier must, no later than the July 31 that follows the end of a compliance period, use — in accordance with subsection 12(3) — the compliance credits that are in their account opened under paragraph 28(a), until

  • (a) the volumetric requirement set out in subsection 6(1) is met for that compliance period; or

  • (b) no such compliance credits remain in that account.

• Marginal note:July 31 — diesel

  (2) For the purposes of subsection 12(2), a primary supplier must, no later than the July 31 that follows the end of a compliance period, use — in accordance with subsection 12(3) — the compliance credits that are in their account opened under paragraph 28(a), until

  • (a) the volumetric requirement set out in subsection 7(1) is met for that compliance period; or

  • (b) no such compliance credits remain in that account.

• Marginal note:July 31 — contribution to funding program

  (3) For the purposes of section 11 and subject to subsection 15(1), a primary supplier must, no later than the July 31 that follows the end of a compliance period, use all of the compliance credits that they created by contributing to a registered emission-reduction funding program in accordance with paragraph 118(1)(a) to satisfy the reduction requirement for that compliance period.

• Marginal note:July 31 — reduction requirement

  (4) For the purposes of section 11 and subject to subsections 15(2) and (3), a primary supplier must, no later than the July 31 that follows the end of a compliance period, use the compliance credits that are in their accounts opened under section 28, until

  • (a) the reduction requirement is satisfied for that compliance period; or

  • (b) no such compliance credits remain in those accounts.

• Marginal note:Choice of compliance credits

  (5) Subject to subsections (1) and (2), if the circumstances described in paragraph (4)(a) occur before the circumstances described in paragraph (4)(b), the primary supplier must satisfy the reduction requirement by using compliance credits that are chosen by them and indicated in the report submitted under subsection 127(1).

• Marginal note:August 1 — cancellation of credits

  (6) On the August 1 that follows the end of a compliance period, if any of the compliance credits referred to in subsection (3) have not been used by the primary supplier, the Minister must cancel those credits.

• Marginal note:Non-application — subsections (1) to (4)

  (7) Subsections (1) to (4) do not apply in respect of any compliance period that ends before July 1, 2023.