Federal Renewable Fuels Regulation - Overview of Working Document for Consultation

May 22, 2009

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For consultation purposes only

Competing considerations

This figure illustrates the competing considerations during the development of regulations. There are five overlapping circles in the figure, representing broad policy considerations, legal authority, enforcement requirements, environmental objective, and real world practicalities. The overlay of these five circles represents the goal of regulation, found as a small area in the center of the five overlapping circles.

This section defines persons to whom the regulations do not apply

Ss (1) and (2): Primary suppliers must calculate their gasoline and distillate pools for each compliance period

Some volumes may be excluded from the pool:

Company volumes of gasoline, diesel fuel and distillate heating oil Identification Records
Produced at Refinery 1
Produced at Refinery 2
Produced at Refinery 3, 4, ...
Imported into Canada via Province A
Imported into Canada via Province B
Imported into Canada via Province C, D, ...
Pool gasoline or pool distillate (default if not identified)

Make record of:

  • date, fuel type, volume
  • for production: facility, RF type and volume blended
  • for imports into Canada: province of import and RF content
    • "Province" includes Territories

Special use fuels:

  • aviation
  • racing fuel
  • scientific research
  • Zone TNL
  • exports
  • in transit through Canada
Must have records documenting sale or delivery for the applicable use

Adjustments to pools may be made for volumes:

Provides the formulae for calculating the quantity of renewable fuel in:

Formula for quantity of renewable fuel for gasoline.
  1. Created for:
    • RF blended with gasoline
    • RF blended with non-distillate product
    • RF content in imports of blended gasoline & non-distillate
    • use of bio-crude as feedstock
    • carry forward of gasoline compliance units
  2. Received from others

2. Subtract gasoline compliance units that the company:

  1. Transferred to another person
  2. Cancelled for RF content in exported blended gasoline & non-distillate

3. Add the number of distillate compliance units the company decides to use for its gasoline pool requirement

Formula for quantity of renewable fuel for diesel fuel & heating distillate oil.

1. Add together distillate compliance units that the company:

  1. Created for:
    • RF blended with diesel fuel & heating distillate oil
    • RF content in imports of blended diesel fuel & heating distillate oil
    • use of bio-crude as feedstock
    • carry forward of distillate compliance units
  2. Received from others

2. Subtract distillate compliance units that the company:

  1. Transferred to another person
  2. Cancelled for RF content in exported blended diesel fuel and heating distillate oil

3. Subtract the number of distillate compliance units the company used for its gasoline pool requirement

Ss (1): Volumes must be measured by meters that are calibrated to industry standards

Ss (2): Importers must have written evidence that volumes have been measured according to industry standards

Ss (3): Rules for rounding

Ss (1): A primary supplier must submit a one-time registration report

Ss (2): Information must be reported for each production facility, blending facility, facility using bio-crude, province of import:

Ss (3): Report must be updated if information changes

Ss (4): Reported volumes exclude fuel for special uses and export

Ss (1): The primary supplier must submit a report with information by facility and province of importation

Ss (2): Report must include:

Ss (3): Reported volumes exclude fuel for special uses and export

Ss (4): Exempted from reporting if not producing or importing gasoline during the compliance period

Ss (1): The primary supplier may record fuel “type” before dispatch or import of a batch of gasoline, diesel fuel and heating distillate oil

Ss (2): Any batch not identified is considered to be in the primary supplier's pool

Ss (3): All batches identified as for special use must have written evidence that they were sold or delivered for the appropriate use

S 10: The primary supplier must make a record for each batch dispatched or imported into Canada, including:

S 11: Records must be maintained in Canada for 5 years after creation

Ss (1): Minister may request samples and records

Ss (2) and (3): Reports must be submitted in format provided by Environment Canada

Ss (4): No reports are required for those who only produce or import fuels for special use or fuels for use in Zone TNL

Requirements pertaining to a system of tradeable compliance units

This figure visually shows that a primary supplier may either create compliance units or acquire compliance units from others. One compliance unit represents one litre of renewable fuel (RF) and may be created at any facility when RF is blended into fuel, at a refinery when bio-crude is used as feedstock, or when a fuel containing RF is imported. Compliance units which are not used in a compliance period may be re-created for use in the following period.

Ss (1): A non-primary supplier who blends, uses bio-crude as feedstock, or imports blended product may elect to participate by notifying the Minister and providing a one-time registration report

Ss (2): Information is required for each blending facility and province of import

Ss (3): Report must be updated if information changes

Ss (4): Notification of withdrawal

A gasoline compliance unit may be created for each litre of renewable fuel

A distillate compliance unit may be created for each litre of renewable fuel

Ss (5): Compliance units may be created from use of bio-crude feedstock

Ss (6): Time of creation (commencing September 1, 2010)

Ss (7): Maximum content of renewable fuel

Ss (8): Single owner upon creation

Ss (9): Gasoline compliance units not used in a compliance period may be re-created for use in the following period

Ss (11): Distillate compliance units not used in previous compliance period may be re-created for use in the following period

Ss(1): Compliance units are owned by the trading system participant who creates them

Ss(2): A compliance unit may only have a single owner at any time

Ss(3): Only trading system participants may own compliance units

Ss(1): Compliance units may be exchanged provided both parties make a record of the exchange

Ss(2): Compliance units created during a compliance period cannot be exchanged after the end of the trading period for that compliance period (February 15)

Ss(3): A compliance unit may only be transferred to a primary supplier

Recipient
Primary supplier Non-PS trading system participant Another party
Transferor Primary supplier Yes No No
Non-PS trading system participant
Yes
No
No
Another party No No No

Ss(1): Compliance units are valid only for the compliance year in which they are created (or “re-created”)

Ss(2): A trading system participant must cancel one compliance unit for each litre of renewable fuel in a batch of fuel exported

Ss(3): A trading system participant must cancel the original unused compliance unit that was used to “re-create” a new compliance unit

Ss (1): Participants shall make a compliance unit account book

Ss (2): Record changes and balance for each facility, province of import, province of export, transfer and receipt, carry-over, re-creation and total

Rules regarding compliance unit account book

CU Account Book for 2014 (gasoline) Blending Facility, Province of Import, or Participant Transaction Details CU's Created CU's Received CU's Transferred CU's Cancelled Period-to-date: by Facility, Province or Participant Period-to-date: Total CU's
November 30 Facility 1 Monthly blending 123,012 1,258,158 3,258,102
November 30 Facility 2 Monthly blending 200,454 2,123,098 3,381,114
November 30 Ontario Monthly imports into Canada (common event) 5,200 15,058 3,386,314
December 11 Company Y Transfer (second of the year) 10,000 20,000 3,376,314
December 17 Alberta One-time export (unusual event) 800 800 3,375,514
December 31 Facility 1 Monthly blending 129,589 1,387,747 3,505,103
December 31 Facility 2 Monthly blending (unplanned 19-day shutdown) 50,550 2,173,648 3,555,653
December 31 Ontario Monthly imports into Canada (Seaway closed) 0 15,058 3,555,653
January 13 (2015) Company Z Receipt 150,500 150,500 3,706,153
February 15 All Final balance at the end of the trading period 3,706,153

2014 gasoline pool = 74,856,212 litres → 5% requirement = 3,742,811, which is more than CU balance
Company uses 36,658 unused 2014 distillate CU's to bring it into compliance

Ss (1): For each batch blended

Ss (2): Similar information for weekly bio-crude use

Ss (3): Similar information for each batch imported

Ss (4): For compliance units “re-created”

Ss (5): For each fuel produced, imported or sold for export by the participant

Ss (6): Additional records evidencing information recorded in the compliance unit account book and above records

Ss (1): Participants must submit a report for each compliance period

Ss (2): Report must include:

Ss (1): A person, other than a trading system participant, who sells fuel for export, must make a record

Ss (2): The person must provide a report by February 15

Ss (3): The report must contain information on

Ss (1): A person that produces or imports renewable fuel must provide a one-time report with registration information

Ss (2): Report must include:

Ss (3): Report must be updated if information changes

Ss (4): A person that produces or imports renewable fuel must make a record for each batch dispatched from a production facility or imported, including:

Ss (5): A similar record is required for each batch sold

Ss (6): A renewable fuel producer / importer must submit a report with information by facility and province of importation

Ss (7): Report must include:

Ss (1): Trading system participants and producers or importers of renewable fuel, shall have their records and reports audited each compliance period

Ss (2): Does not apply to a person only producing or importing fuel for special uses or for use in Zone TNL, unless compliance units are created or exchanged

Ss (3): Exempted from audit report if not producing gasoline or importing during the compliance period

Requirement Primary supplier (producer or importer) Non-PS trading system participant (blender) Seller for export Producer or importer of renewable fuel
Renewable fuel in gasoline, diesel fuel, and heating distillate oil Yes No No No
Election into the trading system Automatic Optional No No
One-time registration Yes Yes No Yes
Annual reports Yes Yes Yes Yes
Compliance unit account book Yes Yes No No
Other records Yes Yes Yes Yes
Third-party audits Yes Yes No Yes
This figure shows a circle with an equation written in it. The equation is that regulatory complexity is a function of flexibility and enforceability.

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