Clean Fuel Regulations (SOR/2022-140)

Marginal note:Submission to Minister

• 22 (1) A registered creator who enters into an agreement referred to in section 21 must submit the agreement to the Minister and, subject to subsection (2), must not create provisional compliance credits under the agreement until the day after the day on which it is submitted.

• Marginal note:Exception — submission within first 60 days

  (2) If the agreement is submitted to the Minister during the first 60 days of the compliance period to which the agreement relates, the registered creator may create provisional compliance credits under the agreement as of the first day of that compliance period unless the agreement provides for a later date.

Creation of Provisional Compliance Credits

Marginal note:Creation of provisional compliance credits

• 23 (1) Any compliance credit created under subsection 19(1) or section 20 is considered to be a provisional compliance credit at the time that it is created.

• Marginal note:No use of provisional credit

  (2) A primary supplier must not use a provisional compliance credit to satisfy a total reduction requirement or to comply with any of the volumetric requirements set out in subsections 6(1) and 7(1) and must not transfer a provisional compliance credit under the compliance-credit transfer system.

• Marginal note:Single use for creation of provisional credits

  (3) A quantity of a fuel or an energy source that has been used by a person to create provisional compliance credits under subsection 94(1), 95(1), 96(1), 98(1), 99(1), 100(1), 101(1), 102(1) or 104(1) must not be used by another person to create compliance credits under the same subsection, and any quantity that is used more than once under the same subsection is deemed not to create any provisional compliance credits.

• Marginal note:Loss of provisional status

  (4) A provisional compliance credit that is the subject of a credit-creation report submitted under section 120 or 121 ceases to be provisional when the Minister deposits it into a compliance-credit account under subsection 24(1) or (2).

• Marginal note:Ownership of provisional credits

  (5) On creation, a provisional compliance credit is owned by the registered creator who created it.

• Marginal note:Single owner

  (6) At any given time, a provisional compliance credit may only have a single owner.

Marginal note:Deposit into account

• 24 (1) The compliance credits that are the subject of a credit-creation report submitted under section 120 or 121 must be deposited by the Minister as soon as feasible after the reception of the report into the registered creator’s account that was opened under

  • (a) paragraph 28(a), in the case of a compliance credit created under subsection 19(1); and

  • (b) paragraph 28(b), in the case of a compliance credit created under section 20.

• Marginal note:Deposit — adjustment of credits

  (2) The compliance credits created under section 88, 89 or 90 that are the subject of a credit-creation report submitted under section 120 or a credit-adjustment report submitted under section 122 must be deposited by the Minister as soon as feasible after the reception of the report into any of the registered creator’s compliance-credit accounts opened under section 28.

• Marginal note:Identification number

  (3) The Minister must assign an identification number to each compliance credit when it is deposited into a compliance-credit account.

Registration as Registered Creator

Marginal note:Registration report

• 25 (1) A person who wishes to create compliance credits under subsection 19(1) or section 20 or under an agreement referred to in section 21 may register with the Minister as a registered creator by submitting to the Minister a registration report containing the information referred to in section 1 of Schedule 3 and any applicable information referred to in sections 4 to 12 of that Schedule.

• Marginal note:Registration before creation

  (2) A registered creator must not create provisional compliance credits under subsection 19(1) or section 20 until the day after the day on which they become a registered creator.

• Marginal note:Exception — registration within 60 days

  (3) However, a person who submits a registration report to the Minister during the period that begins on the day on which these Regulations are registered and ends 60 days after that day may create provisional compliance credits as of that day.

Marginal note:Change of information

• 26 (1) If there are any changes in the information referred to in section 1 of Schedule 3 that is provided in the registration report, the registered creator must send a notice to the Minister that provides the updated information within 30 days after the day on which the change occurs.

• Marginal note:Sections 4 to 12 of Schedule 3

  (2) If there are any changes in the information referred to in sections 4 to 12 of Schedule 3 that is provided in the registration report, the registered creator must send a notice to the Minister that provides the updated information no later than on the next day on which they are required to submit a report under subsection 120(1) or 121(1).

• Marginal note:New agreement

  (3) A registered creator who enters into an agreement under section 21 must send a notice to the Minister that contains, in respect of the activities carried out by the person with whom they have entered into the agreement, the information referred to in section 1 of Schedule 3 and any applicable information referred to in sections 4 to 12 of that Schedule.

Marginal note:Cancellation of registration

• 27 (1) A registered creator may cancel their registration as a registered creator if they

  • (a) send to the Minister a notice that indicates their intention to cancel their registration; and

  • (b) submit to the Minister any report or send any notice that they are required by these Regulations to submit or send.

• Marginal note:Cancellation by Minister

  (2) If, after receiving the notice referred to in paragraph (1)(a), the Minister is satisfied that the registered creator has complied with these Regulations, the Minister must

  • (a) in the case of a registered creator who is not a primary supplier, cancel any compliance credits in any of the registered creator’s accounts opened under section 28;

  • (b) cancel the registered creator’s registration as a registered creator; and

  • (c) send a notice to the registered creator informing them that their registration is cancelled.

Compliance-Credit Accounts

Marginal note:Opening

28 On the registration of a primary supplier under subsection 10(1) or a registered creator under subsection 25(1), the Minister must open the following accounts for the primary supplier or the registered creator in the compliance-credit transfer system:

• (a) a liquid-fuel-compliance-credit account; and

• (b) a gaseous-fuel-compliance-credit account.

Marginal note:Credit remains in account

29 A compliance credit that is deposited into an account must remain in that account until the compliance credit is cancelled or transferred.

CO₂e-Emission-Reduction Project

Marginal note:Series of activities

30 A CO₂e-emission-reduction project must consist of a series of activities that, when carried out, result in

• (a) a reduction of the number of tonnes of CO₂e emissions that are released during the activities carried out over the life cycle of a fossil fuel in the liquid state at standard conditions, including all emissions associated with the extraction of the hydrocarbons used to produce the fuel, with the processing, refining or upgrading of those hydrocarbons to produce the fuel, with the transportation or distribution of those hydrocarbons or the fuel and with the combustion of the fuel;

• (b) the sequestration of any CO₂e emissions that are released during the activities carried out over the life cycle of a fossil fuel in the liquid state at standard conditions, including all emissions associated with the extraction of the hydrocarbons used to produce the fuel, with the processing, refining or upgrading of those hydrocarbons to produce the fuel, with the transportation or distribution of those hydrocarbons or the fuel and with the combustion of the fuel;

• (c) the use of any CO₂e emissions that are released during the activities carried out over the life cycle of a fossil fuel in the liquid state at standard conditions, including all emissions associated with the extraction of the hydrocarbons used to produce the fuel, with processing, refining or upgrading those hydrocarbons to produce the fuel, with the transportation or distribution of those hydrocarbons or the fuel and with the combustion of the fuel; or

• (d) the production of a quantity of co-processed low-carbon-intensity fuel to which may be attributed a reduction in the number of tonnes of CO₂e that would otherwise have been emitted by the use of a fuel in the liquid class or gaseous class, if the co-processed low-carbon-intensity fuel

  • (i) is used or sold for use as a fuel in Canada whether as neat fuel or as part of a blend, and

  • (ii) meets the requirements set out in section 56.

Marginal note:Generic quantification method

• 31 (1) The Minister may establish a generic emission-reduction quantification method that is applicable to any project for which no specific emission-reduction quantification method is applicable on the day on which the project is recognized under subsection 35(1) or 39(1).

• Marginal note:Conditions

  (2) The generic emission-reduction quantification method must

  • (a) be consistent with ISO Standard 14064-2;

  • (b) establish a period of 10 years, beginning on the later of the day on which the Minister recognizes a project to which it is applicable and any preferred day referred to in paragraph 34(2)(b), at the end of which the carrying out of the project ceases to create compliance credits; and

  • (c) indicate that it is applicable to projects carried out in Canada or indicate that it is applicable to projects carried out in a specified foreign country or subdivision of a foreign country that has an agreement with Canada referred to in paragraph 39(1)(b).

Marginal note:Specific quantification method

• 32 (1) The Minister may establish a specific emission-reduction quantification method that is applicable to a project of a specific type.

• Marginal note:Conditions

  (2) The specific emission-reduction quantification method must

  • (a) be consistent with ISO Standard 14064-2;

  • (b) be based on data that are verifiable for a specified period

  • (c) be based on emission factors that are considered by generally recognized scientific sources

    • (i) to be appropriate for the quantification of the reduction, sequestration or use of CO₂e emissions for the project, and

    • (ii) to not result in an overestimate of that quantification;

  • (d) establish a period of no less than 10 years, beginning on the later of the day on which the Minister recognizes the project and any preferred day referred to in paragraph 34(2)(b), at the end of which the carrying out of the project ceases to create compliance credits;

  • (e) identify the data that are necessary to determine the number of compliance credits created under paragraph 19(1)(a) or 20(a) by the carrying out of the project for a specified period; and

  • (f) indicate that it is applicable to projects carried out in Canada or indicate that it is applicable to projects carried out in a specified foreign country or subdivision of a foreign country that has an agreement with Canada referred to in paragraph 39(1)(b).

Marginal note:Exception

33 Despite sections 31 and 32, no emission-reduction quantification method is applicable to, and no compliance credits are created under paragraph 19(1)(a) or 20(a) by any of the following types of projects:

• (a) projects that include an operational or physical change that is solely for the purpose of reducing the production of fuel;

• (b) projects that are maintenance activities;

• (c) projects that include a reduction in the number of tonnes of CO₂e emissions by displacing the use of a type of crude oil processed by a facility with the use of another type of crude oil;

• (d) projects that consist of current practices that would be carried out in the ordinary course of business;

• (e) projects that include a reduction in the number of tonnes of CO₂e emissions that are released during the extraction of the hydrocarbons used to produce a fuel, during the processing, refining or upgrading of those hydrocarbons to produce the fuel, during the transportation or distribution of those hydrocarbons or the fuel and during the combustion of the fuel by displacing the use of that fuel with the use of fuel, hydrogen or electricity for which compliance credits may be created under any of sections 94, 96, 98 to 102 and 104.

Marginal note:Application for recognition

• 34 (1) A registered creator may apply to the Minister for the recognition of a CO₂e-emission-reduction project described in section 30 as a project that may create compliance credits when carried out in Canada.

• Marginal note:Contents of application

  (2) The application must be signed by the authorized agent of the registered creator and contain

  • (a) the information referred to in Schedule 4;

  • (b) if the registered creator prefers that the carrying out of the project may create provisional compliance credits only as of a particular day, which must be no later than 18 months after the day on which the application is made, an indication of that preferred day; and

  • (c) an indication that the registered creator is applying to use a generic emission-reduction quantification method or a specific emission-reduction quantification method, whichever is applicable to the project, and the name of that method.

Marginal note:Recognition — generic quantification method

• 35 (1) In the case of an application under subsection 34(1) for the recognition of a CO₂e-emission-reduction project and the use of a generic emission-reduction quantification method that is applicable to the project, the Minister must recognize the project as a project that may create compliance credits when carried out if the Minister is satisfied, based on the information provided by the registered creator, that

  • (a) the activities that result in the reduction, sequestration or use of CO₂e emissions will be carried out in Canada;

  • (b) the project’s reduction, sequestration or use of CO₂e emissions will be determined using the generic emission-reduction quantification method;

  • (c) the activity specified in the generic emission-reduction quantification method that allows the project to begin to reduce, sequester or use CO₂e emissions was or will be carried out on or after July 1, 2017;

  • (d) the specified activities that would have been carried out if not for the implementation of the project and the CO₂e emissions that would have resulted from those activities, as well as the greenhouse gas sources and sinks that have been selected by the applicant to determine those CO₂e emissions,

    • (i) are functionally equivalent to the project, in terms of the type and level of activity of products provided,

    • (ii) are in accordance with ISO Standard 14064-2 and with the generic emission-reduction quantification method, and

    • (iii) do not result in an overestimation of CO₂e emissions resulting from those specified activities that would have been carried out by the applicant; and

  • (e) the greenhouse gas sources and sinks that have been selected by the applicant and are relevant to the project meet the following conditions:

    • (i) they are in accordance with ISO Standard 14064-2 and with the generic emission-reduction quantification method, and

    • (ii) they do not result in an underestimation of CO₂e emissions released during the project.

• Marginal note:Unique alphanumeric identifier

  (2) The Minister must assign a unique alphanumeric identifier to a CO₂e-emission-reduction project recognized under subsection (1).

• Marginal note:Number of compliance credits

  (3) The number of provisional compliance credits that are created for each compliance period by the carrying out of a project recognized under subsection (1) is determined — in accordance with the generic emission-reduction quantification method — based on the proportion of the quantity of crude oil or liquid fossil fuel that is not exported from Canada and that has a reduced carbon intensity as a result of the activities carried out for the project.

• Marginal note:End of project

  (4) The carrying out of a project recognized under subsection (1) ceases to create compliance credits as of the end of the period referred to in paragraph 31(2)(b) or, if applicable, the end of the five-year period referred to in subsection 42(1).