The federal government recently proposed amendments to the CFR, which represent an important opportunity to strengthen the conditions for investment, improve the competitiveness of Canadian producers and support the growth of a domestic lower-carbon fuels sector.

As the government begins its consultation process, Canadian Fuels Association (CFA) President and CEO Bob Larocque shares his perspective on the proposed changes, what they could mean for Canada’s fuels industry and where further improvements might be needed.

Q: Bob, first of all, why did CFA believe changes to the Clean Fuel Regulations were needed?

The CFR have created more demand for lower-carbon fuels. The next challenge is making sure they also create the right conditions for more of those fuels to be produced here in Canada.

Canadian producers are competing with U.S. facilities that benefit from significant production incentives. If Canada does not improve its competitiveness, more of the growing demand created by the CFR will need to be met through imports.

We need stronger incentives for investment in Canadian production, refinery upgrades, co-processing and emissions-reduction technologies so domestic supply can grow alongside demand.

Q: What are the most important elements of the proposed amendments from CFA’s perspective?

The proposed domestic production multiplier is an important measure because it could improve the competitiveness of Canadian lower-carbon fuel production and strengthen the incentive to invest here.

We also welcome the proposed increase in the amount companies can contribute to registered emissions reduction funding programs, from 10% to 15% of their annual requirement.

That is a positive step. CFA recommended increasing that level to 20%, and we hope there will be an opportunity through the consultation to move closer to that level.

A larger fund could support more investment in emissions-reduction projects, refinery upgrades, new technology and modifications that allow existing refineries to process more renewable feedstocks and reduce the carbon intensity of transportation fuels.

We are also encouraged by the government’s intent to simplify the rules and reduce unnecessary administrative work. These changes have real potential to lower administrative burdens and reduce regulatory complexity.

Q: How could these changes help attract more investment in Canada, including through existing refinery and fuel infrastructure?

The changes could improve the business case for investing in Canadian lower-carbon fuel production and emissions-reduction projects. That may support investment in new facilities, but it could also help unlock more investment in the infrastructure Canada already has.

Existing refineries can be upgraded to process renewable feedstocks, improve energy efficiency, reduce emissions and adopt new technology. Canada already has refineries, skilled workers, terminals, transportation networks and supply chains. Better investment conditions can help us make greater use of those assets.

Another important point is that the measures CFA has recommended, including the production multiplier, greater use of emissions reduction funding programs and simpler administrative processes, do not require direct government funding. They work largely within the CFR system itself.

The multiplier increases the regulatory value of eligible Canadian production. Emissions reduction funding programs use contributions from regulated companies to support eligible projects. Simpler rules can also reduce unnecessary compliance costs for both companies and government.

Together, these measures can improve competitiveness and encourage companies to invest more of their own capital in Canadian lower-carbon fuel production, infrastructure and technology upgrades, and emissions-reduction projects.

Q: Beyond the measures announced so far, what else will CFA be looking at during the consultation?

We see these proposed amendments as a positive step in the right direction. They reflect many of the recommendations we have been discussing with government and could help attract new investment, support jobs and strengthen Canada’s energy security.

There are three areas we will be watching closely.

The first is emissions reduction funding. Moving from 10% to 15% is positive, but CFA recommended 20%. Moving closer to that level could make significantly more capital available for refinery upgrades, new technology and other projects that reduce emissions.

Second, we want to see the details of how government plans to simplify compliance. Relatively small changes to paperwork, reporting and approval processes can sometimes make a big difference. Reducing unnecessary complexity and simplifying the regulations could accelerate project implementation.

Finally, the rules need to work across Canada. Fuel markets are different from one region to another because of geography, infrastructure and access to supply. Atlantic Canada is a good example. Its location, infrastructure and market connections are different from other parts of the country. We will be looking closely at whether the final amendments provide enough flexibility to work effectively in different regions.

Q: What happens next, and what will CFA be doing during the consultation?

The next step is the formal 75-day consultation. CFA will review the proposal closely with our members and recommend further improvements where needed.

Timing is also critical. Companies are making investment decisions now, and Canada is competing with other countries for that capital. If we want to attract new lower-carbon fuel production, refinery and technology upgrades, and emissions-reduction projects, we need to put stronger investment conditions in place quickly.

Our objective is to work constructively with government to move the process forward as efficiently as possible and have the amendments finalized and in place by March 31, 2027, at the latest.

The longer uncertainty continues, the greater the risk that projects are delayed or investment goes elsewhere.

Q: What would success look like when these amendments are finalized?

Success would mean creating stronger reasons for companies to want to invest in Canada.

We have the feedstocks, infrastructure, skilled workers and technical expertise to produce more lower-carbon fuels here and reduce the emissions associated with the fuels Canadians use every day.

Getting the final amendments right could help attract investment, support Canadian jobs, create opportunities for agriculture, forestry and rural communities, modernize existing infrastructure and technology, and strengthen energy security.

It would also help ensure that as demand for lower-carbon fuels grows, more of that demand can be met by fuels produced right here in Canada.

Looking ahead

The proposed CFR amendments are an important opportunity to strengthen Canada’s domestic fuels industry and create the conditions for long-term investment. With the right regulatory framework, Canada can build on its existing industrial strengths, encourage new production and technology, and support a more competitive and resilient lower-carbon fuels sector.

CFA looks forward to continuing to work with government and its members throughout the consultation process to help ensure the final regulations deliver on that opportunity.

Read CFA’s recent statement on the proposed Clean Fuel Regulations amendments.