Description of the Amendments

The Renewable Fuels Regulations (the Regulations) already include full provisions to require fuel producers and importers of diesel fuel and heating distillate oil to have an average annual renewable fuel content equal to at least 2% of the volume of distillates that they produce and import. However, the Regulations do not specify a start date for this requirement. Section 17 of the Amendments amend subsection 40(3) of the Regulations to set a coming-into-force date of the 2% requirement for diesel fuel and heating distillate oil of July 1, 2011.  This requirement leads to the following changes:

  • Subsection 1(1) clarifies the definition of “pre-distillate compliance period” by explicitly including the exact dates, specifically from December 15, 2010, to June 30, 2011. This does not result in any change of the actual requirements; and
  • Subsection 1(2) clarifies the definition of “distillate compliance period” by explicitly including the exact dates; specifically, the first compliance period is from July 1, 2011, to December 31, 2012. This does not result in any change of the actual requirements.

In response to comments from stakeholders, the Government has carefully considered all the comments received and is balancing competitiveness impacts on eastern refiners with the need to minimize delays to support the Canadian biodiesel industry.  Some transitional flexibility has been added to the Amendments. For the first distillate compliance period only, section 3 allows a primary supplier to subtract from its distillate pool the volume of diesel fuel and heating distillate oil that it sold for, or delivered for, use in New Brunswick, Nova Scotia, Prince Edward Island or Quebec south of 60°N.  In addition, for all distillate compliance periods, section 3 also allows a primary supplier to subtract from its distillate pool the volume of diesel fuel and heating distillate oil that it sold for, or delivered for, use in Newfoundland and Labrador.

In addition, Environment Canada and industry stakeholders have identified some issues, minor inconsistencies and lack of clarity in parts of the regulatory text since the publication of the Regulations in the Canada Gazette, Part II.  The Amendments also include the following revisions on that account:

  • Subsection 2(1) corrects paragraph 4(7)(a) of the Regulations by removing the phrase “or report”. The various clauses referred to in paragraph 4(7)(a) do not cover reports;
  • Subsection 2(2) adds a new subsection 4(9) to the Regulations which clarifies the rules on how the percentages of renewable fuel in petroleum fuel, determined for the purposes of the definition of “high-renewable-content fuel” or in subsection 17(1) of the Regulations, are to be determined. Consistent with current industry standards, these percentages are to be rounded to the nearest whole number percentage or, if equidistant between two whole number percentages, to the nearest even whole number percentage;
  • Section 4 revises the marginal note in the English version of subsection 8(2) of the Regulations from “Distillate” to “Distillate pool”, which aligns with the marginal notes for subsections 5(2) and 6(2) of the Regulations;
  • Sections 5 and 6, subsection 14(1) and section 15 adjust the requirement for sending a notice of changed registration information, under subsections 9(2), 11(2), 34(2) or 35(2) of the Regulations, by now requiring such a notice 5 days after the company’s name or address has changed. Under subsection 25(2), these provisions are bought into force 60 days after the Amendments are registered;
  • Section 7 and subsection 8(1) remove the phrase “the description” from the English versions of definitions of RFG and RFD in subsections 21(2) and 22(2) of the Regulations. This phrase is superfluous;
  • Section 9 combines all changes to provisions related to carrying forward of distillate compliance units into the first distillate compliance period. These provisions have extended the trading period for these units by an additional three months. This extended trading period necessitates the differentiation by vintage of these compliance units from those created during those three months, as well as requiring a written statement as to their vintage. As a consequence of the combination of these provisions into one section, subsection 8(2) of the Amendments repeals the existing provisions under subsection 22(3) of the Regulations. Because the implementation date is now known, section 9 also simplifies section 23 of the Regulations by removing references to gasoline compliance periods that precede the first distillate compliance period as there are now no such periods;
  • Subsection 10(1) adds the word “content” after “renewable fuel” in subsection 25(2) in the English version to make it consistent with the French version and with other parts of the Regulations;
  • Subsection 10(2) adds a new subsection 25(5) to the Regulations which clarifies that compliance units that were created as a result of the use of biocrude are to be cancelled in proportion to the volume of biocrude content in the exported fuel produced from that biocrude;
  • Subsection 10(2) also adds a new subsection 25(6) to the Regulations which clarifies that excess distillate compliance units owned by an elective participant at the end of the pre-distillate compliance period are cancelled. Subsection 12(3) and sections 21 and 22 of the Amendments add recordkeeping and reporting requirements for information regarding such cancellations to subsection 31(2) and Schedule 5 of the Regulations;
  • Subsection 11(1) revises the French version of subsection 28(3) of the Regulations to make it consistent with the English version;
  • Subsection 11(2) repeals section 28(4) of the Regulations because the implementation date is now known;
  • Subsection 12(1) revises the wording of subsection 31(1) of the Regulations to clarify the requirement to make records in a compliance unit account book. As a consequence of those changes, subsection 12(2) of the Amendments changes “and” to “or” at the end of the English version of paragraph 31(1)(b) of the Regulations;
  • Section 13 adds a new subparagraph 32(3)(a)(iii) to the Regulations providing for compliance units to be created for a two-step blending process that initially results in high-renewable-content fuel which is later re-blended into fuel that is no longer high-renewable-content fuel. Some companies are considering such two-step blending, particularly for biodiesel where B50 can be stored unheated and then re-blended to create B5;
  • Subsection 14(2) corrects the English spelling of “occurred” in paragraph 34(3)(e) of the Regulations, and subsection 14(3) of the Amendments clarifies the requirements of the Regulation’s paragraph 34(3)(g) and to make them more closely align with the text of paragraph 34(3)(h);
  • Section 16 corrects the duration of interim period in the French version of section 39 of the Regulations to align with the duration in the English version;
  • Sections 18, 19, 23 and 24 correct the references below the headings of Schedules 1, 2, 6 and 8, respectively, to reflect the provisions to which the schedules refer; and
  • Section 20 simplifies the requirements of Item 3 of Schedule 4 of the Regulations, now that the implementation date is known.