As the Clean Fuel Standard is set to be rolled out by year’s end, it has folks across myriad industries concerned the sweeping changes proposed by the Federal Government for 20222 may not be enough time to implemented for companies and industries.
The objective of the Clean Fuel Standard (CFS) is to achieve up to 30 million tonnes of annual reductions in greenhouse gases (GHG) by 2030, meaning a significant contribution towards Canada’s ambitious target of reducing its national GHG emissions by 30% below 2005 levels by 2030.
CAPP has previously said these regulations of this $15 billion plan will impact Canadian consumers both at the pumps and in their homes, and that biofuel availability is a concern under CFS, as it is unclear whether there will be enough supply to meet created compliance demand – and from where supply will originate.
In a Canadian Energy Research Institute (CERI) study, they calculate the additional cost to be roughly $1,395 per household.
Fuel producers and importers abound will be subject to CFS and meet specific requirements for the fuels they produce, import, or distribute. The most common low-carbon fuels are alternative fuels, such as biodiesel, electric vehicles, and ethanol.
The standard spans and covers all fossil fuels used in Canada. This has producers and refiners in Canada’s oil and gas sector asking questions and scrambling to comply with said regulation targets through infrastructure and operations changes.
To stay compliant, producers and suppliers of fuels with intensity above the target line will have to find ways to get under the benchmark (blend biofuels to liquids or adding renewable gas to natural gas) or will have to buy credits from suppliers who have reached the target.
It could be remembered that when there’s opportunity, there’s challenges. Decarbonizing transportation and creating a viable low-carbon market pose challenges that need to be sorted out.
How does Canada create jobs while they decarbonize?
If they do create jobs, is it enough of a wash from the thousands who have already lost their jobs?
How do these regulations end up being a complement to current day and not a patchwork?
How do fuel producers plan on making their fuel cleaner? We all know that gas will still be around for a long time, but it’s Canada’s goal to slowly chip away.
Does this put producers and refineries in positions where they having to change how they operate?
As of now, it seems as though refineries and producers have many more questions than answers and tangible ways to move forward.
Although the clean fuel technology and market is ripe for the picking and taking for Canada, potentially creating a global market, clean fuel injection could become hard to crack. This fuel is hard and expensive to make.It looks like there needs to be a mix and blend. This mix affects not just oil and gas, but aviation, heavy hauling, on-road transportation, and other sources reliant on various fuels.
This presents a delicate dance between industry and governments, as there are no silver bullets. Canada’s geography also factors into this standard. As a vast country with changing and at times violent weather and landscapes, this is something to be monitored.
It’s the aim of the Federal Government to position Canada as a leading clean fuel producer, citing a focused approach to innovative methods, and investments. Producers will do their best vying to remain competitive.
This could mean, although not necessarily new news, refineries facing shutdowns and collapses, such as the Come By Chance oil refinery in Placentia Bay, in the country.
Shutting down refineries could lead to higher fuel costs for consumers, affecting all Canadians. CFS is not without costs to both consumers and producers, which evokes a sense of poignancy, especially during a global pandemic.
It makes one question whether the CFS is going to be more expensive per ton of emissions reduced than other avenues, such as the divisive carbon tax.
It is true the aforementioned offsetting credit needs of the sector exceeds the current generation of creditable biofuels within the country, but it may also be underestimating the burgeoning interest in said alternative fuels, and how this could potentially affect Canadian energy by ways of which those fuels are produced.
Ultimately, the goal is to see actions reducing GHG emissions throughout the entire life cycle of fuels and fuel alternatives, although how this is done harmoniously between Canada and its oil and gas producers and refinery operators remains to be seen.