Canada proposes changes to Clean Fuel Regulations

29 October 2026

The Government of Canada is proposing changes to the Clean Fuel Regulations (CFR) that will support domestic production and encourage long-term reductions in greenhouse gas emissions.

The proposal would award additional compliance credits for eligible lower-carbon fuels produced in Canada, strengthening the incentive to expand domestic production. While ethanol facilities in Canada have been operating close to capacity, domestically produced ethanol supplies only about 40% of domestic demand, with the remainder imported from the United States.

The proposed amendments would also increase from 10% to 15% the share of compliance obligations that fuel suppliers can meet through contributions to registered emissions reduction funding programs and give supported projects more time to deliver emissions reductions. Targeted reporting and verification changes could also reduce administrative work and compliance costs.

The Canadian Fuels Association (CFA) welcomed the federal government’s proposed targeted amendments.

One biofuel producer, Covenant Energy, noted that without a balancing mechanism, fuel suppliers could meet their CFR obligations with less low-carbon fuel because a credit multiplier awards more credits for each liter of eligible fuel. Covenant Energy urges the government of Canada to account for this in its final publication of the amendments to ensure that the overall demand for biofuels does not decrease.

The proposed 1.3 multiplier for ethanol falls short of the 1.4 minimum requested by Grain Farmers of Ontario, the Farms and Fuels Alliance, and Renewable Industries Canada.

The proposed amendments will be published in the Canada Gazette, Part I, on October 30, 2026, followed by a 75-day public consultation period.

Source: Environment and Climate Change Canada