NDP Calls New Emissions Standards ‘Double Counting’

Canada’s new emissions standards for gasoline and diesel will allow oil companies that receive federal tax relief for installing carbon capture and storage systems to also generate credits based on those systems, which they can then sell to refineries and fuel importers.

Cabinet approved the final rule for the clean fuel standard last week and The Canadian Press obtained it on Monday ahead of its scheduled release on July 6.

The regulations require Canadian companies that produce or import gasoline or diesel to register as “primary suppliers” and then show how they reduce fuel lifecycle emissions by a fixed amount each year. until 2030.

Life cycle emissions include all greenhouse gases produced from initial extraction, through refining, upgrading and transportation, to their final use, for example to power a vehicle.

To comply with the new standards, companies must show that they have reduced life cycle emissions by the required amount through a variety of activities, including purchasing credits from other companies throughout the life cycle chain that have reduced their own emissions.

These credits can come from elements such as the construction of charging stations for electric vehicles, the replacement of coal or natural gas power plants with renewable sources of electricity, the production and distribution of biofuels or investments in technologies clean, including carbon capture and storage.

Carbon capture projects that benefit from the new federal tax credit — worth 50 to 60 percent of project cost — can also generate Clean Fuel Standard credits for sale.

“So they count twice,” said NDP Environment Critic Laurel Collins.

Collins said the clean fuel standard is an “essential” tool to spur investment and conversions to renewable energy, but as things stand it doesn’t appear to be doing much.

Keith Stewart, senior energy strategist at Greenpeace Canada, said double-counting projects would not generate additional emissions reductions, but would simply ease the financial burden on companies now rolling in cash.

“There is no rational way for anyone to get a credit for the clean fuel standard, and a 50% tax credit, in addition to being able to write it off in royalties, at a time when oil companies make more money than God,” he said.

The federal government watered down the Clean Fuel Standard plan in 2020 at a time when fossil fuel companies were struggling due to a pandemic-related crash in oil prices. But in 2022, oil prices surged, largely due to the Russian invasion of Ukraine, and most Canadian companies reported record or near-record first quarter profits.

Collins is also dismayed that the timeline for implementing the new standards has been pushed back by six months. The draft regulations published in December said they would come into force in December 2022, but the final regulations push them back to the second half of 2023.

An Environment and Climate Change Canada official speaking in the background because he was not authorized to speak publicly about the regulations, said the date had been moved to allow more time to create credits. reduction in emissions that gasoline and diesel producers need to meet emissions standards.

The Canadian Fuels Association would not comment on the final version of the regulations until the government officially publishes them, but said it has long supported the plan.

“The CFA and its members are obligated parties and have always been publicly supportive of the Clean Fuel Standard because it promotes a ‘technology-neutral’ approach to fuel decarbonization and provides the policy certainty needed for businesses to plan and invest in low-carbon fuel projects,” a statement from the association said on Tuesday.

“In preparation for this settlement, our members have already committed to investing billions of dollars in low-carbon fuel technologies.”

This report from The Canadian Press was first published on June 28, 2022.