Clean fuel standards allow companies to get both tax credits and sell carbon credits

OTTAWA — Canada’s new emissions standards for gasoline and diesel will allow oil companies that get a federal tax break for installing carbon capture and storage systems to generate credits based on those systems, which they can then sell to refineries and fuel importers.

Cabinet approved the final regulations for the Clean Fuel Standard last week and The Canadian Press obtained them Monday ahead of their intended publication July 6.

Gasoline and diesel suppliers can meet the new emissions standards for the two fuels in multiple ways, including buying credits from other companies that produce renewable fuels, build electric vehicle infrastructure or reduce emissions when fuels are extracted.

Oil companies that get a new federal tax credit of up to 60 per cent of the cost of installing carbon capture and storage systems can also generate and sell credits for use within the clean fuel standard credit system.

The Canadian Fuels Association says it has long supported the Clean Fuel Standard because it helps companies plan and invest in low-carbon technologies, but wouldn’t comment on the final version of the regulations until the government officially releases them.

Greenpeace Canada’s senior energy strategist Keith Stewart says the clean fuel standard isn’t going to generate any new emissions cuts and will instead create new revenue sources for big oil producers.

This report by The Canadian Press was first published June 28, 2022.