Canada’s clean fuel standard is exactly the kind of climate action we need

It's a measured and orderly approach to a necessary energy transition

July 16, 2019
Blog Entry

Photo: Roberta Franchuk, Pembina Institute

As Canadians endure a summer of historic flooding and wildfires, the effects of climate change have never been more keenly felt. To reach our 2030 target under the Paris Agreement, and achieve the ultimate aim of net-zero greenhouse gas emissions by 2050, we need to set a foundation for transitioning our economy. The recently (and unfairly) maligned clean fuel standard, or CFS, helps do just that: it takes an incremental approach to shifting our energy system toward the low-carbon future we must achieve if we are to have any hope of turning the tide on the climate crisis.

While other climate policies like carbon pricing and the national coal phase-out are more well known, the clean fuel standard is hardly new, having been announced as part of the Pan-Canadian Framework on Clean Growth and Climate Change (PCF) in 2016.

Working alongside industry and government, the Pembina Institute has been part of the technical working group helping to design the regulations. Throughout these consultations, overall policy ambition has remained constant: by requiring fuel products to incrementally lower emissions intensity by approximately 11 per cent by 2030, the clean fuel standard should result in 30 megatonnes of greenhouse gas emissions reductions by that time (equivalent to taking seven million cars off the road). This makes the policy the largest contributor to Canada’s mitigation efforts. The CFS alone will help deliver 15 per cent of our GHG emissions reduction target. The policy’s high impact is in part due to its broad coverage, applying to fuels used in transportation, buildings and by industry. 

To be clear, the standard is not a tax or a price on carbon.  While a carbon price makes polluters pay for what they emit, the clean fuel standard works by gradually lowering the carbon content of our energy mix. It enters into force in 2022, when suppliers of liquid fuels will face an obligation to begin reducing, on average, the carbon intensity of the products they supply domestically. This provides traditional fuel suppliers, investors, and clean technology firms with a clear, consistent signal to shift their businesses toward lower-carbon energy sources, tackling climate change while helping to grow Canada’s clean fuels industry as the global market for clean fuels expands.

And while the government sets the final objective, it does not prescribe the manner in which that objective should be achieved. So whether it’s increasing blends of cleaner fuels, or making efficiency improvements to existing fuel production facilities, or supporting companies focused on electric mobility (via credit purchase), fossil fuel producers themselves decide how to comply with their reduction requirement.

The standard, then, is an example of strong climate policy that slowly ratchets up emissions reductions while laying the foundation for deeper decarbonization outcomes in future decades. More important, it’s one in a suite of climate policies that are distinct but complementary. The clean fuel standard helps to gradually displace emissions from traditional fuel consumption as we simultaneously move toward a more electrified transportation system under the guidance of the zero-emissions vehicle target (another PCF measure). Meanwhile, fuel economy regulations and carbon pricing incentivize the supply and purchase, respectively, of more fuel-efficient vehicles.

This is particularly important considering the transportation sector itself accounts for a quarter of Canada’s GHG emissions, and is notoriously hard to tackle since the movement of passengers and freight generates a carbon footprint composed of millions of different “point sources” of pollution from cars, SUVs, motorcycles, buses, trains, heavy-duty trucks, ships and planes.

The complementary nature of the many climate actions in the Pan-Canadian Framework is the secret to its success – and our ability to meet our targets. Canada’s clean fuel standard should be celebrated as a measured and orderly approach to a necessary energy transition. It’s exactly the kind of climate action we need right now.