The Canadian government published draft regulations for the Clean Fuel Standard (CFS) after extensive consultations.
The draft highlighted the importance of green hydrogen in the fight against climate change. In addition to hydrogen, the report also recognised the importance of other fuels such as ethanol, biodiesel and renewable natural.
The proposed regulations would require producers and importers of liquid fossil fuel to cut the carbon intensity (CI) of the liquid fossil fuels from its 2016 levels by 2.4 gCO2e/MJ in 2022, further rising to 12 gCO2e/MJ in 2030. The government will set up a credit market that will help the participants achieve their targets by reducing fossil fuel supply and increasing low carbon fuel and substitutions.
The regulation will also benefit end-use fuel switching in the transport sector, which can be achieved through fuel changes or retrofits a combustion device such as electric motors or fuel cells. This would help reduce emission by substituting fuel with lower CI. The regulation also has similar provisions for vehicles to run on natural gas and propane.
The regulation is set to increase liquid fuel prices but on the other hand, the prices of low-carbon energy fuel such as biofuel and electricity will fall.
It is estimated that the proposed regulation will reduce cumulative GHG emission between 173- 254 megatonnes of carbon dioxide equivalent (Mt CO2e) during 20221-2040. However, the government also ascertained that the societal costs to achieve these targets would range from $14.1 to $26.7 billion, which is translated to around between $64 to $128 per tonne.