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Canada proposes bonus CFR credits for domestic fuels

  • : Biofuels, Emissions, Hydrogen
  • 26/10/27

Canada is proposing to award bonus Clean Fuel Regulations (CFR) credits for domestic low-carbon fuels as part of a package of program amendments.

The goal of the amendments is to close the "competitiveness gap" for Canadian producers, Environment and Climate Change Canada (ECCC) said.

Producers of co-processed fuels, renewable diesel (RD), biodiesel, aviation fuel, renewable natural gas (RNG), hydrogen and renewable propane could earn additional credits. The multiplier ranges from 1.3-1.8, depending on the fuel type, with domestically produced sustainable aviation fuel (SAF) earning 1.8 credits, RD 1.5, biodiesel 1.4 and ethanol 1.3.

The agency estimates the multipliers will add 2mn credits to the market 2026, increasing to 2.8mn by 2030 and 2035. Overall, the bonus will add 26.9mn credits to the CFR market from 2026-2035, according to ECCC.

Fuel made in Newfoundland and Labrador would qualify in full, while for producers elsewhere in Canada the bonus would depend on the share of North American feedstock used. The bonus would apply to credits created in compliance periods ending after 1 January 2026.

The amendments are due to be published in the Canada Gazette, Part I, on 30 October, followed by a 75-day public consultation.

The CFR requires yearly reductions of road fuel carbon intensity. Suppliers must offset deficits produced by higher-carbon fuels exceeding the annual limits with credits generated from the distribution to the market of approved, lower-carbon alternatives.

The agency is also proposing new requirements for certain gas-related credits and adding closer scrutiny of credit trades.

The current regulations cap the use of gaseous credits at 10pc of a company's overall carbon-intensity (CI) obligations. The proposal would require half of the share to come from the domestic production of biogas, renewable natural gas, renewable propane, or hydrogen. The remaining credits could come from imported gaseous fuels.

Obligated parties could meet a larger share of their obligation by contributing to registered emission-reduction funding programs under the proposal. The limit would rise to 15pc of the CI-reduction requirement, from 10pc.

Under proposed reporting changes, any credit transfers priced at zero or below fair market value would require a detailed explanation, and parties would have to keep proof of the price. Reporting errors above a defined threshold would have to be corrected within 60 days. New administrative penalties would reinforce these provisions.

ECCC says the CFR credit market is now worth more than C$3bn ($2.13bn). Ottawa also highlighted its Biofuels Production Incentive, worth up to C$372mn in performance-based support and open for applications until December 2027.


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