Backgrounder

Renewable Fuels Strategy is reducing greenhouse gases and creating jobs

New regulations require renewable fuel content  

The Renewable Fuel Regulations will require an annual average renewable content of five per cent in gasoline starting on December 15, 2010. The Government of Canada also intends to regulate a two per cent requirement for renewable content in diesel fuel and heating oil by 2011, subject to successful demonstration of technical feasibility under the range of Canadian conditions. The two per cent requirement would be put in place by an amendment to the Renewable Fuels Regulations. These regulations will fulfill the commitment made by the Government of Canada in 2006, when it announced that it would regulate renewable fuel content.

These regulations are part of the Government’s broader Renewable Fuels Strategy and a key initiative in support of the Government’s commitment to reduce Canada’s greenhouse gas emissions. 

The five per cent renewable fuel content requirement in gasoline will require about two billion litres a year of renewable fuel across Canada, a volume estimated to reduce greenhouse gas emissions by about one megatonne a year. When fully implemented, the Strategy’s two regulatory requirements combined with provincial regulations will ensure a total volume of renewable fuel that will reduce greenhouse gas emissions by up to four megatonnes in 2012 -- about the equivalent of taking one million vehicles off the road.

In addition, the Regulations will stimulate Canadian demand for renewable fuels and give industry the regulatory certainty it needs in order to secure investments to build new production plants and ensure an adequate supply of renewable fuels for the Canadian market. This will create jobs in rural communities and opportunities for farmers.

Progress toward Regulations

Environment Canada issued a Notice of Intent in 2006 that set out the proposed regulatory approach. Consultations on the proposed approach were held in 2007 and the Canadian Environmental Protection Act was amended in 2008 to allow for development of effective regulations.

In 2009, consultations were held with stakeholders to develop the proposed Regulations, which were then published in Part I of the Canada Gazette in April 2010 for a 60-day public comment period.

Other elements of the Government of Canada’s Renewable Fuels Strategy

Production incentive to stimulate domestic capacity

EcoENERGY for Biofuels supports the regulated demand by facilitating and encouraging domestic production of renewable fuels.  The Program will provide up to $1.5 billion over nine years as an operating incentive, based on production/sales volumes, to producers of renewable alternatives to gasoline, such as ethanol, and renewable alternatives to diesel, such as biodiesel.  Incentive payments are paid on a per litre basis based on incentive rates that are fixed and start at $0.10/L for renewable alternatives to gasoline and $0.26/L for renewable alternatives to diesel and decline over the life of the Program. This makes investment in production facilities more attractive by partially offsetting the risk of price fluctuations for feedstock and fuel. To date, agreements have been signed with 21 companies.

For more information on ecoENERGY for Biofuels, visit http://oee.nrcan.gc.ca/transportation/ecoenergy-biofuels/index.cfm?attr=0

Programs to support farmer participation in the industry

The ecoAgriculture Biofuels Capital (ecoABC) program encourages farmer participation in the biofuels industry. So far, $46 million in capital grants have been committed to eight projects supporting the investments of 500 farmers. The deadline for this program has been extended to allow additional projects to contribute to the volume of biofuels.

For more information on ecoABC, visit

http://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1195672401464&lang=eng

Initiatives to support next generation technologies

Next generation technologies will accelerate progress in reducing greenhouse gas emissions and pave the way for a broader bio-based economy. The Government has provided $500 million over nine years to Sustainable Development Technology Canada to invest in establishing large scale, first-of-kind demonstration facilities for the production of next-generation renewable fuels. An example of this is cellulosic ethanol made from non-food sources such as agricultural and forestry residues.