Navigating Canada’s Clean Fuel Regulations

Navigating Canada’s Clean Fuel Regulations

Author: Sarah Donovan, Sustainability Analyst

What are the Clean Fuel Regulations?

Canada has set targets to reduce greenhouse gas emissions by 45-50% below 2005 levels by 2035, ultimately reaching net-zero emissions by 2050 (Government of Canada, 2025). To help achieve these lofty goals, Canada has implemented several regulations and carbon pricing mechanisms, including the Clean Fuel Regulations (CFR).

The CFR officially came into effect in June 2022 (Environment and Climate Change Canada, 2025). The purpose of these regulations is to reduce the life cycle carbon intensity (CI) of gasoline and diesel over time (with gaseous and solid fuels added to the Regulation at a later date), reflecting a shift from focusing only on combustion emissions when fossil fuels are used, to life cycle-based emissions accounting. The CFR mandates a reduction in CI of 1.5 CO₂e/MJ per year, until 2030, for fuel produced or imported to Canada. The CFR applies to primary fuel suppliers who produce or import >400 m³ of gasoline or diesel per compliance period (equal to 1 calendar year), with some exceptions (see Section 4(2) of the Regulations) (Canada, 2022). This includes all fuel dispatched from facilities, fuel used to power equipment at fueling facilities and imported fuel.

Carbon Intensities and Compliance Credits

To calculate the carbon intensity (CI) of their fuels, participants must use the Government of Canada’s Fuel Life Cycle Assessment (LCA) Model, which is accessed through openLCA. Developed in partnership with Environment and Climate Change Canada (ECCC), EarthShift Global contributed to the creation of the model’s foundational data and modeling framework, as well as the default CI values for fossil fuels. The Fuel LCA Model uses Canadian-specific data to calculate fuel pathway CIs and is also designed to align with the International Organization for Standardization (ISO) 14040 and 14044 standards. Given the strict requirement to use openLCA for CI calculations, companies should ensure they are well prepared to adapt any existing models they have already developed to align with the CFR. The linked webpage provides access to the Fuel LCA Model User Manual, detailed methodology documentation, the Fuel LCA Model database, and recorded training sessions.

To comply with the CI reduction requirements, primary suppliers must create or buy ‘compliance credits’, which can be traded through a credit market. One compliance credit is generated for every 1-tonne reduction of life cycle CO₂e- emission during a compliance period. This regulation also incentivizes CO2eq emission reduction projects or producers of low carbon fuels by allowing them to generate and sell credits, which will potentially be a key pathway for fossil fuel producers to reduce their CI once they maximize their production efficiency. This mechanism will hopefully encourage the growth of clean energy technology, encouraging a transition to a low-carbon future.

Looking Ahead

The regulatory landscape in Canada is constantly evolving. Getting ahead of these requirements early allows organizations to better understand the emissions profile of their fuels, identify meaningful reduction opportunities, and adapt before compliance pressures intensify. As carbon markets mature and reduction targets become more stringent, those companies with a clear understanding of their life cycle impacts will be better positioned to respond. Staying informed about the CFR not only helps organizations navigate upcoming regulatory changes but also contributes to the broader, collective effort needed across industry, government, and consumers to meet Canada’s climate targets.

EarthShift Global brings deep experience in regulatory life cycle assessment, including direct involvement in the development of Canada’s Fuel LCA Model, supporting organizations as they prepare for compliance and adapt to evolving CFR requirements. In addition to fuel CI modeling, EarthShift Global offers training to help organizations effectively use the Fuel LCA model, whether they are new to LCA or looking to build internal expertise. Please contact us to learn more about how EarthShift Global can support your fuel LCA and compliance needs.

Citations

Canada. (2022). Clean Fuel Regulations (SOR/2022?140). Department of Justice Canada. https://laws-lois.justice.gc.ca/eng/regulations/SOR-2022-140/index.html

Environment and Climate Change Canada. (2025, June 4). Question Period Note: Clean Fuel Regulations (Record No. ECCC-2025-QP-00005). Government of Canada. https://search.open.canada.ca/qpnotes/record/ec,ECCC-2025-QP-00005

Government of Canada. (2025, November 3). Climate change: our plan. Government of Canada. https://www.canada.ca/en/services/environment/weather/climatechange/climate-plan.html

About the Author

Sarah Donovan, Sustainability Analyst

Sarah brings a valuable combination of academic and practical LCA training and experience across a wide range of products and industries. She has experience leading LCAs for Environmental Product Declaration (EPD) development and conducting organizational life cycle assessments to support corporate sustainability strategies.

Sarah has contributed to the development of summary reports and recommendations relating to low carbon fuels regulations and funding programs in Canada, at both the provincial and federal level, providing clarity on an evolving regulatory landscape. Sarah's academic research includes quantifying greenhouse gas emissions associated with air transport in the Canadian lobster industry, and the climate impacts of beef in Nova Scotia.

Sarah earned her bachelor's from Davidson College, with dual majors in Biology and Environmental Science where she also played Division I basketball. She earned her master’s in Resource and Environmental Management from Dalhousie University.