Fueling Canada’s Path to Net-Zero Emissions

Canada's Clean Fuels Standard, along with its net-zero emissions goal, remind us that the most effective climate policies are, at their core, investment policies. To succeed, they must support the essential role of biofuels in emissions reduction.
By Andrea Kent | February 11, 2021

Equal parts political opportunity and mammoth challenge, climate change has been the crux of Canada’s policy agenda since Prime Minister Justin Trudeau signed the Paris Agreement in 2016. At the signing, Trudeau enthusiastically vowed Canada would “harness the power of renewable energy as a way of reducing greenhouse gas emissions.” His government has been working to make that promise a reality ever since.

Last December, Canada added to this commitment and joined a growing list of countries pledging to achieve carbon neutrality in emissions, or “net-zero” by 2050. This, despite the fact Canada is the 10th-largest GHG emitter globally.

So, how can Canada, with emissions that increased 20% between 1990 and 2018, expect to reach its emissions targets by 2030, let alone net-zero by 2050? The short answer is by using cleaner transportation fuel—a lot more of it.

Thirty percent of Canada’s overall GHG emissions come from transportation, a figure similar to the United States’. Governments now realize that climate policy must also be transportation policy and vice versa. Today, a growing suite of regulations seeks to measure fuel not in liters or gallons, but by its carbon intensity and ability to reduce emissions. Canada’s new Clean Fuel Standard is the latest example, and its successful execution is critical to reaching net-zero.

The CFS was announced in 2016, and the draft regulation was published in December 2020 with a 75-day consultation period. If adopted, the CFS will replace Canada’s current national blending mandate and would come into force at the end of 2022. The federal 5% minimum ethanol blend requirement will be carried forward in the CFS.

Under the proposed CFS, producers and distributors of fossil fuels would have to reduce the carbon content of products like gasoline and diesel by 2.6% by 2022, scaling up to a 13% carbon reduction by 2030. Carbon intensity is measured on a full life-cycle basis, so fuel suppliers can meet the obligations by lowering the carbon emissions at the crude oil refinery, or through increased biofuels blending, or through creating other low-carbon options for consumers. The CFS will also create a credit trading scheme, where fuel suppliers that are not meeting carbon intensity reduction requirements can buy credits generated by companies with excess credits through producing fuels that are even cleaner than the minimum standard in the CFS. If it works as intended, the CFS will cut carbon emissions, spur investment in clean-energy technology and see higher biofuels-blending levels.

Like other low-carbon fuel standards, the CFS will require more stringent reductions in carbon intensity over time. For the policy to work, the market needs robust renewable fuel production and obligated parties need available and affordable low-carbon alternatives to petroleum. Ethanol comes in strong on both counts. Under the CFS, the government projects an additional 2.8 billion liters (nearly 740 million gallons) of ethanol demand in 2030. This projection complements higher ethanol blending requirements in some provinces also coming online in 2030, like in Ontario.

The final CFS regulation will be published later this year. Some important details remain to be seen, but overall, the CFS shows positive signs of aligning Canada’s renewable fuels industry and international trade goals and obligations with the U.S. Our industry also continues to advocate for parameters that would ensure ethanol producers and grain growers continue to see the economic benefits of their process improvements, innovations and efforts to reduce their own carbon footprints.

While policies like the CFS and net-zero emissions are “new” to some, they still ring true for renewable fuel producers. Like the first ethanol RFS, they confirm that the most effective climate policies are, at their core, investment policies. And second, to succeed, they need to situate biofuels as an essential pathway to emissions reductions and creating a robust, resilient—and ultimately, net-zero—economy.

 

Author: Andrea Kent
Board Member, Renewable
Industries Canada
Vice President of Government and Public Relations, Greenfield Global
833.476.3835
andrea.kent@greenfield.com