Canada: Are You A "Primary Supplier" To Whom The New (Federal) Clean Fuel Regulations Apply?
Energy Bulletin

The new Clean Fuel Regulations (the "Regulations") apply primarily to what the Regulations refer to as "primary suppliers". Primary suppliers are entities that produce or import gasoline or diesel, the two liquid fuels to which the Regulations apply. For the Regulations to apply to primary suppliers, they must import or produce at least 400 m3 of gasoline or diesel for use in Canada.

There are four categories of liquid fuels that are not covered by the Regulations:

• Aviation gasoline;
• Fuels exported from Canada;
• Fossil fuels used for scientific research purposes; and
• Fossil fuels sold or delivered for use in competition vehicles.

Primary suppliers must gradually reduce the carbon intensity of the gasoline and diesel that they produce or import, effective July 1, 2023, starting with a reduction of 3.5 g CO2e/MJ (3.5 grams of carbon dioxide equivalents per megajoule) until the end of 2023 and increasing to a reduction of 14 g CO2e/MJ by 2030 at a rate of 1.5 g CO2e/MJ per year.

Primary suppliers can meet their reduction obligations in two ways:

1) Either by reducing the carbon intensity of the liquid fuels that they import or produce; or

2) By acquiring compliance credits from a registered creator, e.g., producers of low-carbon-intensity fuel, electric vehicle charging-site hosts for electric vehicles or hydrogen fuelling station operators for hydrogen fuel cell vehicles.

In the Regulatory Impact Analysis Statement ¹, which is published following the Regulations in the Canada Gazette, it states the following about companies that refine, upgrade or import liquid fossil fuels covered by the Regulations:

There are 30 companies that refine, upgrade or import liquid fossil fuels that are regulated parties under the regulations. Of these, 14 companies own refineries and upgraders and 8 of them also import. Approximately 95% of the hydrocarbon upgrading capacity is in Alberta and the remaining 5% is in Saskatchewan. Thirty-four percent of petroleum refining capacity is located in British Columbia, Alberta, Saskatchewan and Manitoba, while 43% is in Ontario and Quebec and about 23% in the Atlantic Provinces.

In support of this claim, the study cites the Kent Group LTD report, published in 2016 and titled: "Canada's Downstream Logistical Infrastructure: Refining, Biofuel Plants, Pipelines, Terminals, Bulk Plants & Cardlocks" ².

The Kent Group's report contains an appendix listing Canada's refineries and mentions well-known companies such as Chevron Canada Limited, Federated Co-operatives Limited, Canadian Natural Resources Limited, Imperial Oil, Irving Oil Limited, Shell Canada, Valero Energy, etc.

You now know if you may be a primary supplier and the identity of primary suppliers who may be interested in acquiring compliance credits.

Footnotes

1 Available online : https://www.gazette.gc.ca/rp-pr/p2/2022/2022-07-06/html/sor-dors140-fra.html (page 2902)

2 Available online : https://www.canadianfuels.ca/wp-content/uploads/2020/09/Report-OverviewofCanada-sLogisticalInfrastructure.pdf