Low-Carbon Fuels
Low-carbon fuels play a crucial role in reducing emissions as they can be used in existing engines and infrastructure, offering an immediate, practical solution to lower carbon emissions. With advancements in technology, the efficiency of low-carbon fuels is steadily improving, making them a more viable option for decarbonizing the transportation fuel sector and addressing climate change today. Continued innovation and investment in these fuels are essential for bridging the gap until electric technologies become more widespread.
Canada has the potential to be a leader in the low-carbon fuel market, driving innovation in emission-reduction technologies and setting new standards for sustainability. By scaling up low-carbon fuel and other emission-reduction technology projects, Canada can enhance its energy security, support economic growth, and create jobs across the fuel value chain. This includes benefiting agriculture and forestry sectors that provide feedstock for low-carbon fuel production.
By the numbers
6.5 billion litres
As of 2024, Canada consumed 6.5 billion litres of biofuels annually.
Over 60%
Over 60% of biofuels consumed in Canada were imported, mainly from the U.S.
10 billion litres
By 2030, demand for biofuels in Canada is expected to reach 10 billion litres.
Government policies and regulations, such as Canada’s Clean Fuel Regulations (CFR), play a critical role in accelerating the production and use of low-carbon fuels. These regulations set clear targets for reducing carbon intensity in transportation fuels, encouraging fuel producers to innovate and incorporate low-carbon alternatives like ethanol, renewable diesel, SAF and hydrogen, drive innovation in emission-reduction technology and continue to improve the efficiency of refinery processes.
Key Policy Principles
Click here for key policy development principles to stimulate investments in low-carbon solutions.
Types of low-carbon fuels
Ethanol
Over the past few decades, ethanol has played a crucial role in reducing greenhouse gas emissions by serving as a cleaner alternative to fossil fuels. Its use in transportation fuels has contributed to lowering carbon intensity, reducing air pollution, and supporting the shift towards renewable energy sources.
Sustainable Aviation Fuel (SAF)
Sustainable Aviation Fuel (SAF) is a low-carbon alternative to traditional jet fuel made from renewable resources like waste oils, agricultural residues, and non-food crops. SAF significantly reduces greenhouse gas emissions and can be used in existing aircraft engines, helping to decarbonize the aviation industry and promote sustainable air travel.
Renewable diesel
Renewable diesel is a low-carbon fuel produced from renewable resources like plant oils, animal fats, and waste materials. It is chemically similar to petroleum diesel but emits fewer greenhouse gases. Compatible with existing diesel engines and infrastructure, renewable diesel plays a key role in reducing transportation emissions.
Hydrogen
Hydrogen is a versatile clean fuel that can be used across multiple sectors, including transportation, industry, and energy production. Hydrogen releases zero emissions at the point of use, making it a key solution for reducing greenhouse gas emissions and supporting a cleaner energy transition especially when produced using low-carbon methods.
Canada’s Biofuels Sector
Canada’s annual biofuel production capacity currently stands at a little over 5 billion litres. CFA members account for nearly 80% of this output through 13 facilities nationwide. This map shows the complete Canadian biofuels sector, including both CFA member and non-member facilities.
For CFA members’ contact information, please visit the Who We Are section.
Low-carbon solutions
Co-processing
Co-processing is an innovative refining technique that allows biogenic feedstocks—such as canola oil, animal fats, used cooking oil, and forestry biomass—to be processed alongside crude oil in existing refinery infrastructure. This process produces drop-in, lower-carbon fuels that are fully compatible with today’s engines, fuel distribution systems, and infrastructure.
