Federal government delays release of new emissions standards for gasoline and diesel for a year, but demands oil and gas sector to further reduce fuel emissions by 2030, given how much these companies are spending win this year.
Cabinet last week approved the long-awaited final regulations for the ‘Clean Fuel Standard’. The new rules were obtained Monday by The Canadian Press even though the government had no intention of releasing them until July 6.
A series of miscommunications led to the early distribution of the regulations and the government scrambled to notify the provinces on Monday as the news was about to be released.
“The PCN will be a key tool that complements pollution pricing and the impending emissions cap from the oil and gas sector, to reduce emissions and encourage the use of clean fuels and technologies in Canada,” said in a statement. communicated the Minister of the Environment, Steven Guilbeault.
“Since the previous version of the PCN, we have worked to ensure (that the regulation) is as focused as possible on our end goal — reducing emissions and driving innovation,” he said.
The Clean Fuel Standard was first promised by the Liberals in 2016. At the time, it was expected to reduce 30 million tonnes of greenhouse gases per year by 2030 , but that could change as a new analysis based on the final regulations is expected shortly.
The initial plan was to have draft regulations ready in the spring of 2020, but the draft was not released until December 2021 and was followed by a mandatory six-month consultation period.
The new standard was due to be implemented this year, but the final rule says the first compliance check will now take place in December 2023.
The draft rule also included kerosene, jet fuel and fuel oil on the list of fuels that must be compliant, but these are not included in the final rule. They do, however, increase the expected reductions in gasoline and diesel emissions.
The draft regulations predicted that gasoline would reduce carbon intensity by 2.5% in December 2022 compared to baselines set using a 2016 average intensity. Adjustments were made to the new rules, which state that Gasoline and diesel emissions will have to drop by 3.6% for gasoline and 3.8% for diesel in December 2023.
The emissions intensity cap is expected to decrease each year until 2030. Initially, the plan called for gasoline and diesel emissions intensity to decrease by 12.5% by 2030. However, the final rule stipulates that gasoline must fall by 14.7% by 2030, and diesel by 15%.
Invest in clean technologies
In 2020, the federal government said it would stagger the standard over the first few years as oil and gas companies suffered a drop in revenue due to the pandemic.
The office of Environment Minister Steven Guilbeault says companies are now making record profits and that “there is no doubt that there is an ability to invest in clean options”.
Mr Guilbeault’s firm now says the companies are making record profits and “there is no doubt that there is the ability to invest in clean options”.
“In fact, the future sustainability of the industry depends on investing in innovation,” says Guilbeault.
Most Canadian oil and gas companies reported massive first quarter profits as world oil prices surged, largely due to Russia’s invasion of Ukraine.
In May, Mr. Guilbeault told The Canadian Press that he expected these companies to use their profits to invest in clean technologies, after an oil industry CEO complained that tax credits funds for carbon capture and storage technology were not generous enough.
Emissions intensity is calculated over what is known as the life cycle of emissions – each ounce of carbon dioxide, methane or other greenhouse gases produced when oil and gas is extracted, processed , refined, valued, transported and finally burned.
There are several options to reduce emissions intensity, for example by replacing fossil fuels with clean electricity during the extraction or refining phases, by distributing biofuels such as ethanol and biodiesel, or by investing in electric or hydrogen vehicles.