New Standard Will Force Tar Sands/Oil Sands to Match Lower Carbon Intensity of Imported Crude
Canada took another step toward implementing a mid-2019 clean fuel standard this week, with the release of a draft framework for the anticipated regulations. A key reveal: the standards will apply to all kinds of fuel—liquid, solid, or gas.
The framework released by Environment and Climate Change Minister Catherine McKenna did not specify any targets for reducing greenhouse gas emissions from fuels, but did add some clarity about how the government intends to keep a commitment made a year ago to introduce the standard. It outlines the pending regulation’s proposed scope, approach to assessing fuel carbon intensity, and compliance requirements.
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McKenna stood by her goal of achieving at least a 30-million-tonne annual reduction in Canada’s GHG emissions by 2030 by implementing the standard. Achieving that goal would cut the country’s overall emissions by about 5%, delivering about one-sixth of the total 30% cut below 2005 that the government hopes to accomplish by 2030.
Clean Energy Canada analyst Jeremy Moorhouse welcomed McKenna’s statement that the standard will apply to all fuels—including aviation fuel, and natural gas for heating, and metallurgical coal—not only gasoline and diesel. Coal used to generate electricity is not covered, but is subject to other regulations phasing it out entirely.
The coming standard will also apply to the full life cycle of fuels, to drive emissions intensity improvements all along their supply chains. That “could address the concern that creating additional biofuels, such as ethanol, wouldn’t end up reducing emissions, since the carbon generated by cultivating the corn used to make the ethanol would negate any gain realized from blending the biofuel with gasoline,” The Canadian Press notes.
The government said it planned to “establish life cycle carbon intensity requirements separately for liquid, gaseous, and solid fuels,” but that when it came to oil, it would make no distinction based on “whether the crude oil is produced in or imported into Canada. A Canadian-average default carbon intensity for crude oil produced and imported and consumed in Canada will be used.”
That will mean a significant challenge for Canadian producers of oil from tar sands/oil sands bitumen, whose emissions-intensive extraction processes will have to find ways to match those of imported crudes with much lower carbon footprints across their life cycles. As-yet undetailed “potential compliance options such as credit trading” may help them do it.
The government will accept written comments on the clean fuel framework until January 19, 2018, and intends to publish final regulations by mid-2019, a target that it said will give industry “sufficient lead time to meet requirements, while at the same time providing adequate time to achieve the required 30 megatonnes of GHG reductions by 2030.”
Clean Energy Canada previously estimated that implementing a clean fuel standard could add $5.6 billion to GDP and create 31,000 new jobs by 2030, at an illustrative average cost of 5¢ on a litre of gasoline.