Propane should be eligible for credit under Clean Fuel Standard
On December 20, a key document in the development of Canada’s Clean Fuel Standard (CFS) was released. The Regulatory Design Paper presents key elements about the design of the CFS regulations, building on the features described in the CFS regulatory framework that was published in December 2017.
And it's good news for the propane industry! CPA’s initial analysis of the Regulatory Design Paper indicates that propane will be eligible for credit generation in the transportation sector and in the production chain under the CFS. The inclusion of propane is a result of efforts by the CPA and its involvement in the development of the CFS since 2017.
As noted in the document, “Actions that generate credits, including fuel switching by end-users in the liquid stream: credits can be generated when some fuel users switch from a higher carbon intensity fuel to a lower carbon intensity fuel by changing or retrofitting combustion devices when a liquid transportation fuel is displaced by natural gas, propane or a non-carbon energy carrier (e.g., electricity, hydrogen) or when fuels are switched along the production chain of a fossil fuel”.
The paper also notes that “Early Action Credits” will be allowed for actions taken in all three fuel streams after the publication of final regulations for the liquid stream, which is expected to occur in 2020.
Regarding some of the specifics concerning the application of the CFS, propane is not included in Phase I of the CFS in terms of having a target to reduce carbon intensity. For now, this will be exclusively applied to liquid fuels.
The paper does note that, “the carbon intensity requirements for gaseous and solid fossil fuels primary suppliers will be set at a later date. Parties that are not fossil fuel primary suppliers will be able to participate in the Clean Fuel Standard as voluntary credit generators”.
The federal government says it is developing the CFS to achieve 30 million tonnes of annual reductions in GHG emissions by 2030 and plays a key role in helping Canada to meet its target of reducing national emissions by 30% below 2005 levels by 2030.
The CPA is reviewing the Regulatory Design Paper and will be engaging CPA members for comment and input.