Key Policy Principles

What Are the Clean Fuel Regulations?

Effective policy is crucial for stimulating investments in lower-carbon fuel solutions in Canada, as it sets the framework for creating a competitive and sustainable industry. Clear, supportive policies can reduce investor risk, accelerate technology development, and promote the growth of lower-carbon fuels and other lower-carbon solutions as a viable alternative to fossil fuels.  

With the right policies, Canada can leverage its natural resources to produce lower-carbon fuels domestically, reducing reliance on imported fuels and enhancing energy security. Moreover, a strong lower-carbon fuel industry can contribute to economic development, particularly in rural areas, by creating jobs and boosting agricultural markets.

Five key policy principles for driving investment in lower-carbon fuel production are: 

1

Stable Regulatory Framework

Long-term, clear, consistent policies provide certainty for investors, reducing risks associated with fluctuating regulations and stranded investments.

2

Incentives and Subsidies

Predictable, non-application-based incentives such as tax credits are preferred as they help lower initial investment costs and support research and development in advanced biofuel technologies.

3

Transportation Decarbonization policies

All pathways will be needed to reduce transportation emissions and a Carbon Intensity (CI) based approach using a recognized Life Cycle Analysis Tool will best foster technology neutrality. Scaling up biofuels is the most cost-effective decarbonization pathway and CI-based policies, coupled with the right incentives will help unlock Canada’s full potential.

4

Credit Market Mechanism

Implementing carbon pricing or credits for lower-carbon fuels can make these more competitive with traditional fuels.

5

Technology neutrality

Technology neutrality is key to stimulating innovation in the lower-carbon fuel sector as it allows diverse solutions to compete, encourages technological breakthroughs, and avoids favouring specific technologies over potentially better alternatives.

Here are links to current federal and provincial clean fuel / low carbon fuel regulations in Canada: