(Government of Canada/Environment and Climate Change Canada) The Government of Canada is helping strengthen Canada’s low-carbon fuel industry by proposing changes to the Clean Fuel Regulations. This will support domestic production and encourage long-term reductions in greenhouse gas emissions. These amendments are part of the Government’s broader efforts to build Canada strong by strengthening economic resilience, supporting Canadian workers and businesses, and ensuring Canada remains competitive in the face of rapid change.
The proposed amendments will be published in the Canada Gazette, Part I, on October 30, 2026, followed by a 75-day public consultation period. By creating the conditions for long-term investment and growth, together these proposed amendments would:
- Close the competitiveness gap facing Canadian low-carbon fuel producers so they can compete fairly in the domestic low-carbon fuel market.
- Create conditions for more investment in clean technology projects in the fuels sector, like carbon capture and storage at low-carbon fuel (for example, ethanol) facilities and co-processing bio-based feedstocks, like canola oil, along with crude oil at refineries.
- Make it easier and cheaper for companies to comply with the Regulations and supply fuels to Canadians and businesses that lower emissions gradually and reliably.
The Clean Fuel Regulations encourage companies to invest in cleaner technologies and reduce emissions throughout the fuel supply chain. Since the Regulations came into effect, the credit market has grown to more than $3 billion, supporting investment in low-carbon fuels, agriculture, forestry, and clean technology. The value of the Clean Fuel Regulations credit market is reflected in the investments, jobs, facilities, feedstock demand, and domestic production capacity that those credits help create and sustain across Canada.
These proposed amendments support the Government’s goal of building a stronger, more competitive, and more resilient Canadian economy while continuing to reduce emissions. The Government of Canada is laying the foundations for a more prosperous Canada.
Quotes
“Our government designed these proposed amendments to support Canada’s low-carbon fuel sector and ensure resilient long-term emissions reductions while building the decarbonized industries of the future. We look forward to continuing to work with industry, provinces and territories, Indigenous partners, and other stakeholders as we advance these measures to support a strong, competitive, low-carbon fuel sector and Canada’s clean economy.”
– The Honourable Julie Dabrusin, Minister of the Environment, Climate Change and Nature
Quick facts
-
A strong Canadian low-carbon fuel industry is critical to maintaining a reliable supply of low-carbon fuels and achieving sustained greenhouse gas reductions over time from the almost 200 million litres of gasoline and diesel consumed per day.
-
Canada’s Biofuels Production Incentive program complements the proposed amendments and is open for intake until December 2027.
- The program provides up to $372 million in production-based support for domestic biodiesel and renewable diesel producers, helping sustain domestic production capacity, strengthen Canadian value chains, and support jobs across the sector.
-
To date, the Clean Fuel Regulations have driven billions of dollars in investments in clean technologies and low carbon fuel production, supporting and growing sustainable jobs for Canadians. This includes:
- Co-processing projects at six refineries across Canada and allowing renewable feedstocks, like crop-based oils and other biogenic materials, to be refined along with crude oil.
- Ongoing operations and expansion of several Canadian liquid low-carbon fuel producers, as well as the construction of new facilities, and new canola crush plants to provide feedstocks for these facilities.
- Diversification of our low-carbon fuel supply, with investments in new hydrogen and renewable natural gas facilities.
-
The Clean Fuel Regulations have generated more than $185 million in credits for residential and public electric vehicle charging. By creating compliance options that direct Clean Fuel Regulations credit revenue into charging infrastructure, it supports electric vehicle adoption through lower charging costs and more charging stations for Canadians while also reducing emissions.
Associated links
READ MORE
Related articles
Excerpt from RealAgriculture: Farm and biofuel groups—including Grain Farmers of Ontario (GFO), the Farms and Fuels Alliance (FFA) and Renewable Industries Canada (RICanada)—have sounded the alarm that Canadian ethanol producers are struggling to compete with American ethanol imports that are subsidized through the U.S. Inflation Reduction Act's 45Z credit and other supports.
The Carney government first committed to updating the CFR to support domestic production in September 2025. ECCC (Environment and Climate Change Canada) subsequently outlined two potential pathways in a December discussion paper: a minimum domestic content approach, and the credit multiplier approach favoured by the FFA.
In the draft regulatory text shared on Tuesday, ECCC opted for the credit multiplier mechanism rather than the domestic content mandate. The formula allows Canadian fuel producers to generate additional "related compliance credits" based on designated credit factors:
- Ethanol and other liquid low-carbon fuels: Assigned a 0.3 factor, resulting in an effective 1.3-times multiplier (a 30% credit top-up).
- Biodiesel: Assigned a 0.4 factor (effective 1.4x multiplier).
- Hydrogenation-Derived Renewable Diesel (HDRD): Assigned a 0.5 factor (effective 1.5x multiplier).
- Sustainable Aviation Fuel (SAF): Assigned a 0.8 factor (effective 1.8x multiplier).
- Co-processed refinery fuels: 0.3 for low-carbon gasoline and 0.4 for diesel.
- Renewable natural gas and hydrogen: Assigned a 0.4 factor.
To qualify for the credit top-up, feedstocks must be harvested, produced, extracted, or collected within North America (Canada, the U.S., or Mexico). The provisions are set to apply retroactively to credits created on or after January 1, 2026.
The proposed 1.3x multiplier for ethanol falls short of the 1.4x minimum requested by GFO, the FFA, and RICanada. Farm leaders have stressed that without sufficient parity, mounting U.S. imports will jeopardize more than $1 billion in planned domestic processing capital and erode demand for Canadian feedstocks like Ontario corn.
"Canada has recognized the competitive disadvantage facing domestic ethanol producers and adopted a mechanism to address it. That's important progress," says Andrea Kent, RICanada past president and board member, responding to ECCC announcement. "But recognizing the problem and closing the gap are two different things. The multiplier must reflect real-world competitive conditions if we're serious about attracting investment and expanding Canadian biofuel production, not simply increasing biofuel consumption."
According to RICanada, U.S. ethanol producers are reporting production tax credits equivalent to approximately 35 cents CAD per litre, while the proposed 1.3x multiplier would only generate an estimated 12 cents CAD per litre in additional credit value. The group also warns expanded compliance flexibility could weaken the CFR credit market, undermining the investment signal for Canadian industry.
In a separate response, the FFA says the 1.3x credit multiplier for ethanol is a "meaningful step, but falls short of the evidence-based 1.4x minimum needed to level the playing field for domestic producers."
Both FFA and RICanada say expanded compliance flexibility also risks weakening the market signals needed to attract investment in Canadian ethanol production.
"We look forward to working with the government to secure a minimum 1.4x multiplier in the final amendments and deliver on its commitment to level the playing field for Canadian producers," says the FFA.
Stakeholders will have until mid-January 2027 to comment and suggest changes on the proposed regulations. READ MORE
Excerpt from GasWorld: Recent policy changes in the US have increased competitive pressures on Canadian low-CI fuel producers.
US production is supported by renewable fuel requirements, low-carbon fuel programmes, and economic incentives, including the 45Z Clean Fuel Production Tax Credit.
The 45Z credit supports US transportation fuel production based on lifecycle carbon intensity, incentivising the domestic production of low-carbon fuels.
According to the ECCC, assuming input costs and production efficiency are equal in both countries, the 45Z credit allows US low-CI fuel producers to offer their fuel at a lower price than Canadian producers.
Through the proposed CFR amendments, the Canadian government aims to increase the competitiveness of domestic low-CI fuel production.
Canadian RNG market
In 2024, 292 biogas and RNG projects utilised over 2 million tonnes of organic matter, representing only 14% of available domestic feedstock, according to the Canadian Biogas Association (CBA).
Under the CFR draft amendments, half of the existing 10% cap on gaseous-class credit use will be allocated to credits generated from Canadian production.
In combination with the 1.4x credit multiplier on domestic RNG production, the CBA said this cap reduces the amount of domestic RNG that can participate in the regulation.
The CBA argues that less Canadian RNG would be able to participate than imported RNG, going against the government’s overall target to reduce import dependency.
Sarah Stadnyk, Director of Policy and Communications at CBA, said, “There is more work to be done ahead of the final amendments.
“Maintaining the limiting cap on gaseous credit use as proposed will continue to undermine the policy certainty and Canadian opportunity the amendments are intended to provide,” she noted.
The proposal follows a similar approach in Ireland, where a planned multiplier for domestically produced biomethane was challenged by the European Commission over concerns that it discriminated against imports. READ MORE
Excerpt from Canadian Council for Sustainable Aviation Fuels: The Canadian Council for Sustainable Aviation Fuels (C-SAF) welcomes the proposed 1.8x credit multiplier for sustainable aviation fuel (SAF) in the draft targeted amendments to the Clean Fuel Regulations (CFR) published today. This SAF-specific rate is what C-SAF has been recommending to Environment and Climate Change Canada, and will send a strong signal to the entire SAF value chain about the importance of building up SAF production capacity here in Canada.
C-SAF has worked closely with government over the past year to convey the importance of including support for Canadian SAF production in the targeted changes to the CFR in order to attract investment and realize the economic benefits of Canadian leadership in SAF. A level playing field is needed to support solutions for hard-to-decarbonize industries like aviation, and C-SAF is pleased to see the draft amendments recognize that SAF is more costly to produce than other biofuels.
"The strong credit multiplier is a major win for Canada's SAF producers and sends a positive signal to our aviation and aerospace industries," said Geoff Tauvette, Executive Director of C-SAF. "Canadian aviation supports over $112 billion of economic activity annually, and if we do not build out a domestic SAF supply and market, the industry will be reliant on importing clean energy. The draft amendment lays the groundwork for a made-in-Canada SAF solution that uses Canadian feedstocks like canola and woody residuals to further grow the sector's resiliency."
Building on the momentum of the targeted CFR amendments, C-SAF will continue to work with industry and government to develop a comprehensive SAF strategy that would enable the rapid scaling up of SAF production in Canada. SAF is the largest decarbonization opportunity for the aviation and aerospace sectors and Canada has all the necessary ingredients to succeed.
About C-SAF: The Canadian Council for Sustainable Aviation Fuels (C-SAF) was created by leaders from over 60 airlines operating in Canada seeking to bring together key industry stakeholders and government to accelerate the commercial production and use of Canadian-made low-carbon and sustainable aviation fuels (SAF) in Canada. READ MORE
Excerpt from Covenant Energy/PR Newswire: A credit multiplier for renewable diesel and sustainable aviation fuel will help drive Canadian investment and home-grown biofuel production, but the final regulations must ensure overall demand for biofuels does not decline.
Covenant Energy, a Saskatchewan-based biofuel company, welcomes the government of Canada's proposed Clean Fuel Regulations (CFR) amendments, which support renewable diesel and sustainable aviation fuel (SAF) through distinct credit multipliers of 1.5x and 1.8x, respectively.
By supporting low-carbon fuels produced at home, Covenant Energy believes that these amendments will help incentivize Canadian investment and home-grown production of biofuels – if the government adds a proper balancing mechanism to ensure demand stays whole.
Because a credit multiplier awards more credits for each litre of eligible fuel, without a balancing mechanism fuel suppliers could meet their CFR obligations with fewer total litres of low-carbon fuel. Covenant Energy urges the government of Canada to account for this in its final publication of the amendments to ensure that the overall demand for biofuels does not decrease. Otherwise, a measure designed to support domestic production and Canadian agriculture, could shrink the market it is meant to strengthen.
Covenant Energy looks forward to working with the federal government to finalize amendments that deliver on their intent.
QUOTES:
"These amendments are a welcome signal to current and prospective Canadian biofuel producers, and to the farmers who grow valuable Canadian feedstocks, such as canola. They recognize the value of home-grown biofuels, and the distinct investment needed to produce each fuel. But to work as intended, final regulations need to include a mechanism that balances the additional credits so that our overall demand for Canadian product does not fall. -- Josh Gustafson, President & CEO, Covenant Energy Ltd.
About Covenant Energy: Founded in 2019, Covenant Energy holds the mission to become a Canadian leader in the transformative green fuel industry through the production of clean, renewable diesel (standard and arctic grades) and sustainable aviation fuel (SAF). To do so, the company is developing one of Canada's first stand-alone Hydrogenation-derived Renewable Diesel (HDRD) refineries. Located in Lloydminster, Saskatchewan, the facility will use Canadian-produced and processed canola as the primary feedstock to create a premier quality biofuel, producing an estimated 320 million litres of renewable diesel per year. READ MORE
Excerpt from Canadian Biogas Association/Canadian Biomass: The Canadian Biogas Association (CBA) is encouraged by the consideration given to renewable natural gas (RNG) in today’s draft publication of amendments to the Clean Fuel Regulations (CFR) but notes that further refinement to the draft measures to provide adequate support to the Canadian RNG sector.
The inclusion of a 1.4x credit multiplier for Canadian-made RNG is a positive signal, but the proposed measure only applies to RNG used as energy in a vehicle. This does not address the fact that all American-produced RNG coming into Canada from the US could benefit from the 45Z tax credit regardless of whether or not it is used in transport. The CBA is of the view that Environment and Climate Change Canada must expand eligibility for the credit multiplier to all Canadian RNG generating CFR credits, otherwise the amendment fails to provide a meaningful response to 45Z for RNG.
Further the CBA is concerned by the draft’s proposed changes to the CFR’s 10 per cent cap on gaseous-class credit use. The draft allocates half of the existing cap to credits generated by Canadian production. When combined with the 1.4x multiplier, this proposal reduces the amount of RNG that can participate in the regulation. It also means that less Canadian RNG than imported RNG can participate, which runs counter to the very intent of the amendment.
The CBA looks forward to continuing to work with government to ensure the final amendments better reflect current market realities for Canada’s RNG industry, and that these important changes to the Clean Fuel Regulations succeed in leveling the playing field for our domestic product.
“A credit multiplier would help Canada’s RNG sector compete if it were to apply to all domestic RNG production said Sarah Stadnyk, CBA director of policy and communications. “At the same time, we recognize that there is more work to be done ahead of the final amendments.” READ MORE
Excerpt from RealAgriculture: In a statement responding to Environment and Climate Change Canada’s (ECCC) draft regulatory package released Oct. 27, Renewable Fuels Association (RFA) president and CEO Geoff Cooper says the organization is pleased the Canadian government opted against a domestic content requirement that would have curtailed cross-border trade.
"We are carefully evaluating the ECCC's proposed amendments to Canada’s Clean Fuel Regulations and will provide detailed comments on the package as a whole," says Cooper. "That said, we are pleased that ECCC did not ultimately settle on a proposal to apply domestic content restrictions, thereby prohibiting U.S. imports to help Canada meet its clean fuel targets."
Cooper says the RFA prefers a policy that avoids rigid trade barriers. "RFA has previously provided supportive comments in favour of a market-based, flexible approach that prioritizes logistical and economic efficiency and protects consumers from the potential for higher fuel prices. We think a reasonably set credit multiplier could do just that."
...
While the RFA is welcoming the multiplier approach, the reaction north of the border has been more critical.
Renewable Industries Canada (RICanada), the Farms and Fuels Alliance (FFA), and Grain Farmers of Ontario (GFO) have lobbied for a minimum 1.4-times multiplier to offset the U.S. Inflation Reduction Act's 45Z production credit. The groups say U.S. producers are receiving tax credits worth roughly 35 cents CAD per litre, while a 1.3x multiplier will only generate an estimated 12 cents CAD per litre in extra credit value, leaving domestic ethanol at a steep disadvantage in its own market.
Canada is already the top export destination for American ethanol and is on track to take in roughly 4 billion litres (1 billion gallons) per year. According to federal data, imports already dominate Canada's ethanol supply, making up 62 per cent of all ethanol credited under the CFR in 2024. READ MORE