The Canadian government has proposed amendments to its Clean Fuel Regulations (CFR) to encourage domestic biofuel production, attract investment and strengthen agricultural supply chains through higher credit multipliers for locally produced low-carbon fuels, Biodiesel Magazine reported.
Environment and Climate Change Canada (ECCC) released the proposed amendments on October 27. The changes are intended to address competitive challenges faced by domestic biofuel producers amid evolving global trade conditions and subsidy policies.
A key proposal is to introduce credit multipliers for eligible low-carbon fuels produced in Canada from January 1, 2026. The mechanism would allow domestic producers to generate more compliance credits than imported fuels with equivalent carbon intensity.
Under the proposal, ethanol and other eligible liquid low-carbon fuels would receive a multiplier of 1.3, while biodiesel and co-processed sustainable aviation fuel (SAF) would receive 1.4. The multiplier would be 1.5 for hydrogenation-derived renewable diesel (HDRD) and 1.8 for SAF. Eligible renewable natural gas (RNG), hydrogen and renewable propane would also receive enhanced multipliers.
For liquid fuels, the incentives would apply only to the portion derived from feedstocks harvested, produced or collected and processed in North America.
The proposed amendments would also reserve half of the existing 10% compliance limit for credits generated from Canadian production of biogas, RNG, renewable propane and hydrogen. Additionally, the limit on credits from contributions to registered emission-reduction funding programmes would increase from 10% to 15% of a fuel supplier’s annual reduction requirement.
Other proposed changes include additional reporting requirements for certain credit transfers and measures to simplify reporting, record-keeping and verification processes.
The Clean Fuel Standard came into force in 2023 and requires primary fuel suppliers to progressively reduce the lifecycle carbon intensity of gasoline and diesel. The programme supports Canada’s target of achieving net-zero greenhouse gas emissions by 2050.
The proposed regulations are scheduled for publication in the Canada Gazette on October 31, opening a 75-day public consultation period.
Renewables Industries Canada (RICanada) welcomed the proposed changes but called for the ethanol credit multiplier to be increased from 1.3 to 1.4. The association said the proposed mechanism recognises the competitive disadvantage faced by domestic ethanol producers but argued that stronger incentives would be necessary to attract investment and expand production.
Covenant Energy also welcomed the proposed multipliers for renewable diesel and SAF, saying they could encourage investment in Canadian biofuel facilities and support farmers supplying feedstocks such as canola. However, the company stressed that the final regulations should ensure that demand for domestically produced fuels is not undermined by the revised credit mechanism.
The Canadian Biogas Association said the proposed multiplier system was a positive starting point for the country’s renewable natural gas industry but called for further measures to help domestic producers compete with subsidised imports.
