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ARCHIVED - Renewable Fuels Regulation - Issues from Industry Technical Advisory Working Group Meeting of June 10 and 11, 2009

Definition of Renewable Fuel

  • 1. Concern that black liquor might qualify as a renewable fuel.
    • EC to consider whether definition should encompass black liquor.

    • EC Path Forward:
    • Exclude black liquor from definition of renewable fuel.
      • Proposal (to exclude) to be tabled with Working Group.


  • 2. Concern that biodiesel might not meet definition of renewable fuel.
    • Definition in final regulations will encompass biodiesel.

    • EC Path Forward:
    • Amend definition of Renewable fuel to encompass biodiesel.
      • Proposal (to include) to be tabled with Working Group.


  • 3. Question as to whether fuel made from municipal solid waste falls under the definition.
    • Should there be a minimum organic content requirement for MSW feedstock?
    • Ian Thomson and John Creighton to monitor Alberta developments and table any proposals to EC to define MSW.

    • EC Path Forward:
    • No further action at this time.
      • Waiting for information from Ian and John.

Measurement of Volumes

  • 4. Suggestion that metering should not be required (refiners do not meter volumes dispatched).
  • 5. Suggestion that calibration inspection be once every two years, as per Measurement Canada.
  • 6. Suggestion that temperature corrections should be required for all volumes.
    • 4, 5 and 6 combined: Subgroup formed (Gilles Morel and Rick Cote) to work with Mark Tushingham on proposals for measurement provisions (including temperature correction issue).

    • EC Path Forward:
    • Mark to follow up with subgroup via email, and cc to Brian Ahearn and Jean-Sebastien Borduas (originally identified to work on issue).
    • Subgroup to report back to Industry Technical Advisory Group at next meeting.
      • Waiting for information from subgroup.

Blending

  • 7. Question as to how kerosene [jet fuel] volumes blended into diesel fuel downstream of refineries are accounted for.
    • A primary supplier's pool should include any such volumes of jet fuel.
    • EC will consider possible options to ensure this is covered.

    • EC Path Forward:
    • Draft new provisions to allow adjustment to distillate pool for jet fuel unless it is blended into diesel.
      • Proposal (special identification provision) to be tabled with Working Group.


  • 8. Suggestion that level of denaturant should be consistent with federal tax act (definition of "denaturant").
    • EC will match the maximum allowable level in the definition of denaturant (that is 4.76% (5L/105L)).
    • Gilles Morel will provide EC with any recommendation as to minimum level (e.g., 0.19%).

    • EC Path Forward:
    • Draft changes to definition of denaturant.
      • Proposal (regarding levels) to be tabled with Working Group.

Compliance Units

  • 9. Suggestion that compliance units should be created from use of B100 [FAME]
    • EC will consider possible options for implementing this.

    • EC Path Forward:
    • Draft provisions to allow for B100 to create compliance units upon proof of combustion.
      • Work in progress to draft provisions.


  • 10. Concern about approach to creation of compliance units where there are multiple owners of a batch.
    • EC clarified provisions: no compliance units are created for batches owned by multiple owners unless there is an agreement that there is one owner of all compliance units.
    • Industry to consider if there are any further issues.

    • EC Path Forward:
    • No further action at this time.


  • 11. Concern that compliance units should be validated before trading is allowed.
    • Suggestions:
      1. Require an independent audit prior to end of trading period.
      2. Extend trading period past 45 days to firm up arrangements -- a date of March 31 was suggested.
      3. Leave to commercial arrangements.
    • EC to consider whether changes should be made in this regard.

    • EC Path Forward:
    • Draft provisions to extend date of trading period to March 31.
    • Make associated change to the date for the submission of auditor's report to June 30.
      • Proposed changes to be tabled with Working Group.


  • 12. Suggestion that there should be a "clearing house" for compliance units.
    • EC intends to publish timely list of the names of registered trading system participants.

    • EC Path Forward:
    • Noted for future action.


  • 13. Suggestion that there should be provisions to restrict the risk of speculating (e.g., a person that imports one batch of fuel could acquire any number of compliance units).
    • Suggestion to limit the amount of compliance units owned or acquired and/or sold.
    • EC to consider whether changes should be made in this regard.

    • EC Path Forward:
    • Explore provisions to add a maximum amount of compliance units that can be owned.
      • Proposal to be tabled with Working Group.


  • 14. Suggestion that provisions be added to allow credit for early action. [i.e., prior to limits coming into effect date]
    • Suggestion that compliance units could be created once the regulations come into force, instead of only after the volumetric requirements start (e.g., June 2010, instead of September 2010).
    • EC to consider whether changes should be made in this regard.

    • EC Path Forward:
      • To be discussed as part of a general discussion on flexibility provisions (also see Issue 30).


  • 15. Concern that trading could lead to non-compliance.

  • 16. Concern that the timeline for the creation of distillate compliance units is unclear. [Suggestion that all distillate compliance units created in first gasoline compliance period be allowed to be used during first distillate compliance period.]
    • Relates to having a firm start date for the distillate compliance period.
    • With the expected distillate start date in 2011, EC intends that all such distillate credit units may be used.

    • EC Path Forward:
    • Draft provisions to allow all distillate compliance units to be re-created in the first distillate compliance period.
      • Proposal to be tabled with Working Group.


  • 17. Concern that the carry-over (re-creation) provisions are unclear [as written, subsection 14(12) would not allow the re-creation of distillate compliance units at the beginning].
    • EC intends to revise in order to provide for the re-creation of these compliance units.
    • Linked to Issue 16. See above.

    • EC Path Forward:
    • Fix provisions.
      • Proposal to be tabled with Working Group.

Bio-crude

  • 18. Suggestion that there should be refinery-specific ratios for the number of gasoline vs. distillate compliance units created from use of bio-crude.
  • 19. Suggestion that there should be bio-crude-specific factors for the number of compliance units created per unit of bio-crude feedstock (based on the ratio of bio-crude energy content to petroleum crude energy content).
    • 18 and 19 combined: Working group agreed on revising provisions to reflect six distillate and two gasoline compliance units for every 10 litres of bio-crude, measured on a dry basis.
    • Jacques Bellavance will provide information to support this.
    • It was recognized that future revisions to the ratio could be made if further information is provided.

    • EC Path Forward:
    • Draft necessary provisions; may require a methodology for measuring on a dry basis and a specified precision.
      • Proposal (with 6:2 ratio) to be tabled with Working Group.


  • 20. Suggestion that records for bio-crude should be required less frequently than weekly.
    • EC considers a weekly frequency is required.

    • EC Path Forward:
    • No further action.

Other Issues

  • 21. Question as to how volumes of renewable fuel ultimately used for non-fuel purposes are handled. [Concern that the pools include petroleum products that may not be used as fuels.]
    • EC agreed to look at modifications to subsection 9(1) to provide for the identification of chemical feedstocks.

    • EC Path Forward:
    • Draft necessary changes to subsection 9(1) for identification of chemical feedstocks.
      • Proposal (special identification provisions) to be tabled with Working Group.


  • 22. Question as to whether marine diesel fuel used outside Canadian waters is considered exported.
    • EC explained subsection 9(1), identification provisions, addresses the issue.

    • EC Path Forward:
    • No further action.


  • 23. Concern that definitions should be the same as in other regulations, unless differences are warranted.
    • Gilles Morel indicated he would provide specific comments to EC.

    • EC Path Forward:
    • Follow up with Gilles Morel once detailed comments received.
      • Waiting for information from Gilles.


  • 24. Concern that the definition of "unfinished gasoline" is too broad.

  • 25. Suggestion that third-party audits are not required.
    • EC considers audits are essential to the regulation.

    • EC Path Forward:
    • No further action.


  • 26. Concern that Zone TNL is not defined by latitude, similar to Sulphur in Diesel Regulations.
    • Bruce McEwen agreed to take the issue back to EC management.

    • EC Path Forward:
    • Bruce tabled issue with Helen.
    • Provisions to be drafted to use a line of latitude across Canada as an exemption line.
      • Proposal (north of 60°N) to be tabled with Working Group.


  • 27. Question as to how a batch is treated where part of the dispatched batch is for use in the excluded zone, with the rest being delivered elsewhere in Canada.
    • EC indicated it would follow up with Rob Bridges.
    • EC will consider possible options for handling this.

    • EC Path Forward:
    • Follow up with Rob Bridges.
    • Explore provisions to address issue.
      • Proposal (special identification provisions) to be tabled with Working Group.


  • 28. Concern that company volume information should be kept confidential.
    • Concern that requirements for audits should not require the auditing of other companies.
    • EC does not intend to have such a requirement.
    • EC intends to continue its standard practices for handling volume information.

    • EC Path Forward:
    • No further action.

New Issues

  • 29. Concern that B99-level blends do not meet the definition of renewable fuel. This may be a common product imported from the U.S. (given U.S. incentives).
    • EC to consider whether changes should be made in this regard.

    • EC Path Forward:
    • Adjust definition of renewable fuel to include B99 blends.
      • Proposal to be tabled with Working Group.


  • 30. Suggestion that a minimal amount of deficit carry-over be allowed.
    • EC indicated that there may be legal issues around doing this under CEPA.
    • EC to consider whether changes should be made in this regard.

    • EC Path Forward:
      • To be discussed as part of a general discussion on flexibility provisions (also see Issue 14).


  • 31. Concern that requiring 5% renewable fuel volume based on production and import volumes excluding renewable fuel content results in less than 5% renewable fuel content in the finished gasoline pool.
    • EC does not propose to make any change in this regard.

    • EC Path Forward:
    • No further action.


  • 32. Possibility of high level blends being re-blended, creating possible opportunity for double counting of compliance units. [eg: E85 + E100 = E96which meets the definition of renewable fuel and could then be blended to create additional compliance units]
    • EC will consider possible options to address this issue.

    • EC Path Forward:
    • Draft provisions to prevent double counting of compliance units.
      • EC considering options.


  • 33. Concern that the wording regarding exports in section 9(3) is inconsistent with other regulations (re: "sold or delivered for")
    • EC to examine and consider possible options. [Note: EC subsequently examined subsection 9(3) and did not note any differences. EC to follow up with Gilles Morel, who raised this issue.]

    • EC Path Forward:
    • Follow up with Gilles Morel.
      • Waiting to hear from Gilles.
      • Text for subsection 9(3) will be tabled for discussion with Working Group.


  • 34. Concern that provisions do not provide for the creation of compliance units for renewable fuel produced at a bio-refinery.
    • EC will consider possible options for addressing this.

    • EC Path Forward:
    • Explore issue.
      • Work under way to draft provisions.


  • 35. Can two separate entities be treated as one under the regulations? Can pool volumes be transferred between entities?
    • EC explained: Answer to first question is: no. In regards to the second question, subsections 4(6) to 4(10) allow adjustments to pools for deliveries to refineries.

    • EC Path Forward:
    • No further action.
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