Clean Fuel Regulations (SOR/2022-140)

Marginal note:Recognition — specific quantification method

• 36 (1) In the case of an application under subsection 34(1) for the recognition of a CO₂e-emission-reduction project and the use of a specific emission-reduction quantification method that is applicable to the project, the Minister must recognize the project as a project that may create compliance credits when carried out if the Minister is satisfied, based on the information provided to the Minister by the registered creator, that

  • (a) the activities that result in the reduction, sequestration or use of CO₂e emissions will be carried out in Canada;

  • (b) the project’s reduction, sequestration or use of CO₂e emissions will be determined using the specific emission-reduction quantification method; and

  • (c) the activity specified in the specific emission-reduction quantification method that allows the project to begin to reduce, sequester or use CO₂e emissions was or will be carried out on or after July 1, 2017, unless the method provides that the activity may be carried out before that date.

• Marginal note:Unique alphanumeric identifier

  (2) The Minister must assign a unique alphanumeric identifier to a CO₂e-emission-reduction project recognized under subsection (1).

• Marginal note:Number of compliance credits

  (3) The number of provisional compliance credits that are created for each compliance period by the carrying out of a project recognized under subsection (1) is determined — in accordance with the specific emission-reduction quantification method — based on the proportion of the quantity of crude oil or liquid fossil fuel that is not exported from Canada and that has a reduced carbon intensity as a result of the activities carried out for the project.

• Marginal note:End of project

  (4) The carrying out of a project recognized under subsection (1) ceases to create compliance credits as of the end of the period referred to in paragraph 32(2)(d) or, if applicable, the end of the five-year period referred to in subsection 42(1).

Marginal note:Application for recognition — change of method

• 37 (1) If, after the recognition of a CO₂e-emission-reduction project under subsection 35(1) but before the end of the period referred to in paragraph 31(2)(b) or, if applicable, the five-year period referred to in subsection 42(1), the Minister establishes a specific emission-reduction quantification method under subsection 32(1) that is applicable to the project, the registered creator may apply to the Minister for the recognition of the project as a project that may create compliance credits when carried out in Canada using that method.

• Marginal note:Contents of application

  (2) The application must be signed by the authorized agent of the registered creator and contain

  • (a) if the information contained in the original application for recognition under subsection 34(1), other than the information referred to in paragraph 2(d) of Schedule 4, has changed, the updated information;

  • (b) an indication that the registered creator is applying to use the specific emission-reduction quantification method and the name of that method;

  • (c) the information referred to in paragraph 2(d) of Schedule 4 in respect of that method; and

  • (d) if the registered creator prefers that the carrying out of the project may create provisional compliance credits only as of a particular day, an indication of that preferred day, which must be

    • (i) no later than 18 months after the day on which the application is made, and

    • (ii) before the end of the period referred to in paragraph 31(2)(b) or, if applicable, the five-year period referred to in subsection 42(1).

• Marginal note:Recognition by the Minister

  (3) The Minister must recognize the CO₂e-emission-reduction project as a project that may create compliance credits when carried out if the Minister is satisfied, based on the information provided by the registered creator, that the project meets the criteria set out in paragraphs 36(1)(a) to (c).

• Marginal note:Unique alphanumeric identifier

  (4) The Minister must assign a unique alphanumeric identifier to a CO₂e-emission-reduction project recognized under subsection (3).

• Marginal note:Period — creation of compliance credits

  (5) Subject to subsection 42(4), the period during which the carrying out of the project may create provisional compliance credits begins on the later of the day on which it is recognized under subsection (3) and the preferred day referred to in paragraph (2)(d) and is determined by the formula

  S − D

  where

  S

  is the period referred to in paragraph 32(2)(d) and established in the specific emission-reduction quantification method that is applicable to the project, expressed as a number of days; and

  D

  is the number of days — during the period referred to in paragraph 31(2)(b) — on which the carrying out of the project has created provisional compliance credits using the generic emission-reduction quantification method.

• Marginal note:Number of compliance credits

  (6) The number of provisional compliance credits that are created for the period determined under subsection (5) or, if applicable, subsection 42(4) by the carrying out of a project that is recognized under subsection (3) is determined — in accordance with the specific emission-reduction quantification method — based on the proportion of the quantity of crude oil or liquid fossil fuel that is not exported from Canada and that has a reduced carbon intensity as a result of the activities carried out for the project.

• Marginal note:End of project — generic method

  (7) The carrying out of a project that is recognized under subsection (3) ceases to create compliance credits under section 35 as of the day before the day on which the period determined under subsection (5) begins.

• Marginal note:End of project — specific method

  (8) The carrying out of a project that is recognized under subsection (3) ceases to create compliance credits under subsection (6) as of the end of the period determined under subsection (5) or, if applicable, the end of the five-year period referred to in subsection 42(1).

Marginal note:Application for recognition — project in foreign country

• 38 (1) A registered creator may apply to the Minister for the recognition of a CO₂e-emission-reduction project that is described in section 30 and carried out in a foreign country or subdivision of a foreign country as a project that may create compliance credits when carried out in the foreign country or subdivision, if there is an agreement referred to in paragraph 39(1)(b) between Canada and that foreign country or subdivision and the agreement is applicable to that type of project.

• Marginal note:Contents of application

  (2) The application must be signed by the authorized agent of the registered creator and must contain

  • (a) the information referred to in Schedule 4;

  • (b) if the registered creator prefers that the carrying out of the project may create provisional compliance credits only as of a particular day, which must be no later than 18 months after the day on which the application is made, an indication of that preferred day; and

  • (c) an indication that the registered creator is applying to use the applicable generic emission-reduction quantification method or specific emission-reduction quantification method that is indicated in the agreement referred to in subsection (1) and the name of that method.

Marginal note:Recognition — project in foreign country

• 39 (1) The Minister must recognize a CO₂e-emission-reduction project carried out in a foreign country or subdivision of a foreign country as a project that may create compliance credits when carried out if the Minister is satisfied that

  • (a) based on the information provided to the Minister by the registered creator, the project meets the criteria set out in subsection (2) or (3), as the case may be; and

  • (b) Canada has an agreement with the foreign country or the subdivision that meets the requirements set out in subsection (4).

• Marginal note:Generic quantification method

  (2) In the case of an application under subsection 38(1) for the recognition of a CO₂e-emission-reduction project and the use of a generic emission-reduction quantification method that is applicable to the project, the project must meet the following criteria:

  • (a) the activities carried out outside Canada during the project that result in the reduction, sequestration or use of CO₂e emissions are comparable in effectiveness with projects that are carried out in Canada with respect to the reduction, sequestration or use of CO₂e emissions released during the activities carried out over the life cycle of a fossil fuel that is in the liquid state at standard conditions;

  • (b) the activity specified in the generic emission-reduction quantification method that allows the project to begin to reduce, sequester or use CO₂e emissions was or will be carried out on or after July 1, 2017;

  • (c) the reduction, sequestration or use of CO₂e emissions resulting from the project is determined using the generic emission-reduction quantification method;

  • (d) the specified activities that would have been carried out if not for the implementation of the project and the CO₂e emissions that would have resulted from those activities, as well as the greenhouse gas sources and sinks that have been selected by the applicant to determine those CO₂e emissions,

    • (i) are functionally equivalent to the project, in terms of the type and level of activity of products provided,

    • (ii) are in accordance with ISO Standard 14064-2 and with the generic emission-reduction quantification method, and

    • (iii) do not result in an overestimation of CO₂e emissions resulting from those specified activities that would have been carried out by the applicant; and

  • (e) the greenhouse gas sources and sinks that have been selected by the applicant and are relevant to the project meet the following conditions:

    • (i) they are in accordance with ISO Standard 14064-2 and with the generic emission-reduction quantification method, and

    • (ii) they do not result in an underestimation of CO₂e emissions released during the project.

• Marginal note:Specific quantification method

  (3) In the case of an application under subsection 38(1) for the recognition of a CO₂e-emission-reduction project and the use of a specific emission-reduction quantification method that is applicable to the project, the project must meet the following criteria:

  • (a) the activities carried out outside Canada during the project that result in the reduction, sequestration or use of CO₂e emissions are comparable in effectiveness with projects that are carried out in Canada with respect to the reduction, sequestration or use of CO₂e emissions released during the activities carried out over the life cycle of a fossil fuel that is in the liquid state at standard conditions;

  • (b) the activity specified in the specific emission-reduction quantification method that allows the project to begin to reduce, sequester or use CO₂e emissions was or will be carried out on or after July 1, 2017, unless the method provides that the activity may be carried out before that date; and

  • (c) the reduction, sequestration or use of CO₂e emissions resulting from the project is determined using the specific emission-reduction quantification method.

• Marginal note:Agreement with foreign country or subdivision

  (4) An agreement referred to in paragraph (1)(b) with a foreign country or a subdivision of a foreign country must

  • (a) specify any generic emission-reduction quantification methods and specific emission-reduction quantification methods that are applicable to projects of specific types that are carried out in the foreign country or subdivision;

  • (b) recognize that the emission reductions that result from those specific types of projects do not result from current practices that would be carried out in the ordinary course of business;

  • (c) recognize that the emission reductions that result from those specific types of projects are permanent;

  • (d) recognize that there are environmental laws that are in force in, and enforceable by, the foreign country or the subdivision that are applicable to those specific types of projects and that are comparable to environmental laws in force in Canada in terms of effectiveness;

  • (e) recognize that there are laws related to the requirement set out in paragraph (c) that are in force in, and enforceable by, the foreign country or the subdivision and that are comparable to environmental laws in force in Canada in terms of effectiveness;

  • (f) set out how the foreign country or the subdivision will carry out enforcement activities, including the conduct of inspections, compliance verifications and investigations of suspected violations, and how it will enforce compliance with the laws referred to in paragraphs (d) and (e) in a manner that is equivalent to the level of enforcement in Canada; and

  • (g) set out how the foreign country or the subdivision will cooperate and share information with Canada to assist in the administration and enforcement of these Regulations.

• Marginal note:Unique alphanumeric identifier

  (5) The Minister must assign a unique alphanumeric identifier to a CO₂e-emission-reduction project recognized under subsection (1).

• Marginal note:End of project

  (6) The carrying out of a project that is recognized under subsection (1) ceases to create compliance credits under section 41 on the earlier of

  • (a) the end of the period referred to in paragraph 31(2)(b) or, if applicable, the end the five-year period referred to in subsection 42(1), and

  • (b) the day on which Canada no longer has an agreement with the foreign country or subdivision of a foreign country in which the project is carried out.

Marginal note:Application for recognition — change of method

• 40 (1) If, after the recognition of a CO₂e-emission-reduction project under subsection 39(1) as a project that may create compliance credits using a generic emission-reduction quantification method, but before the end of the period referred to in paragraph 31(2)(b) or, if applicable, the five-year period referred to in subsection 42(1), the Minister establishes a specific emission-reduction quantification method under subsection 32(1) that is applicable to the project and the agreement referred to in paragraph 39(1)(b) is amended to permit the use of that specific emission-reduction quantification method for that type of project, the registered creator may apply to the Minister for the recognition of the project as a project that may create compliance credits when carried out using that specific emission-reduction quantification method.

• Marginal note:Contents of application

  (2) The application must be signed by the authorized agent of the registered creator and must contain

  • (a) if the information contained in the original application for recognition of the project under subsection 38(1), other than the information referred to in paragraph 2(d) of Schedule 4, has changed, the updated information;

  • (b) an indication that the registered creator is applying to use the specific emission-reduction quantification method and the name of that method;

  • (c) the information referred to in paragraph 2(d) of Schedule 4 in respect of that method; and

  • (d) if the registered creator prefers that the carrying out of the project may create provisional compliance credits only as of a particular day, an indication of the preferred day, which must be

    • (i) no later than 18 months after the day on which the application is made, and

    • (ii) before the end of the period referred to in paragraph 31(2)(b) or , if applicable, the five-year period referred to in subsection 42(1).

• Marginal note:Recognition by the Minister

  (3) The Minister must recognize the CO₂e-emission-reduction project as a project that may create compliance credits when carried out if the Minister is satisfied, based on the information provided by the registered creator, that the project meets the criteria set out in paragraph 39(1)(b) and subsection 39(3).

• Marginal note:Unique alphanumeric identifier

  (4) The Minister must assign a unique alphanumeric identifier to a CO₂e-emission-reduction project recognized under subsection (3).

• Marginal note:Creation of compliance credits

  (5) Subject to subsection 42(4), the period during which the carrying out of the project may create provisional compliance credits begins on the later of the day on which the project is recognized under subsection (3) and the preferred day referred to in paragraph (2)(d) and is determined by the formula

  S − D

  where

  S

  is the period referred to in paragraph 32(2)(d) and established in the specific emission-reduction quantification method that is indicated in the agreement referred to in paragraph 39(1)(b) and that is applicable to the project, expressed as a number of days; and

  D

  is the number of days — during the period referred to in paragraph 31(2)(b) — on which the carrying out of the project has created provisional compliance credits using the generic emission-reduction quantification method.

• Marginal note:End of project — generic method

  (6) The carrying out of a CO₂e-emission-reduction project that is recognized under subsection (3) ceases to create compliance credits under section 39 on the earlier of

  • (a) the day before the day on which the period determined under subsection (5) begins, and

  • (b) the day on which Canada no longer has an agreement with the foreign country or subdivision of a foreign country in which the project is carried out.

• Marginal note:End of project — specific method

  (7) The carrying out of a project that is recognized under subsection (3) ceases to create compliance credits under section 41 as of the end of the period determined under subsection (5) or, if applicable, the end of the five-year period referred to in subsection 42(1).