Canada's Clean Fuel Standard (CFS)
Frequently Asked Questions
What is the Clean Fuel Standard?
The Clean Fuel Standard (CFS) is a regulatory program being developed by the Canadian government to reduce greenhouse gas emissions (GHGs) by 30 million tonnes annually, by 2030, through the increased use of lower carbon fuels and technologies, such as electricity and EVs.
Is the CFS another Carbon Tax?
No. The Clean Fuel Standard is not a tax and the government will not collect revenue through this program. Instead, liquid fuel producers or importers are obligated to reduce the greenhouse gas emissions that result from the combustion of their fuels. Each year the carbon emissions from these fuels will be required to decrease. Compliance can be achieved by blending biofuels or, for example, buying compliance credits from EV charging companies or EV manufacturers. The program operates on a credit basis. Revenue goes to the clean technology provider, not the government.
What other jurisdictions have a CFS program?
In developing its own program, Canada learned lessons from similar programs in California, Oregon, and British Columbia. However, Canada is proposing a made-in-Canada and data-driven approach that learns from implementation challenges and successes in other jurisdictions.
As an EV driver, how will the CFS affect me?
If implemented properly, the CFS would create new funding sources for electric vehicle infrastructure, incentives and more. When fuel refiners produce or import liquid fuels, they would generate or hold a certain number of CFS “credits” by investing in lower carbon processes, blending lower carbon fuels (e.g. advanced biofuels) or by investing in the electrification of Canada’s vehicle fleet. If the program were designed to properly support clean electricity used in EVs, then fuel producers and importers would contribute to lower EV prices and more EV infrastructure (through credit proceeds raised and reinvested in rebates and more charging infrastructure).
Why should automakers get credits?
In order to accurately count 100% of all EV charging by province, and to accurately calculate the GHG reductions, it is vital that automakers be able to participate in the CFS program. Given that most charging happens at home, and often from a non-networked charging connector, without automaker participation all of this clean fuel use (80%+) will go unmeasured. Estimates were considered as an option, but estimates would likely over or under-represent actual electricity use and would not provide the data needed to track Canada’s progress towards meeting its GHG reduction commitments made through the Paris climate agreement. Because EV manufacturers can aggregate charging activity by province through the use of onboard telematics, all electricity used as clean fuel can be counted. This program will also encourage more supply of EVs to Canada and enable EV manufacturers to offer additional incentives and charging benefits to their customers.
Who else would get credit for electrification?
EV drivers, environmental groups and automakers, including companies like Tesla, have proposed that charging operators and utilities who deploy networked charging equipment that can collect high quality data about energy use should also be able to participate, along with automakers. Where these operators count energy use by vehicle make, they would receive the credits and associated revenue, rather than the automaker. Where they don’t, then automakers would generate credits and be required to reinvest that revenue in Canada to accelerate EV adoption. This process would ensure that there is no double-counting of the same clean energy use while also supporting a broad segment of Canada’s EV industry, including utilities, to participate. However, Canada has unexpectedly reversed its position in 2020, and is no longer proposing a pathway for automakers to participate, effectively excluding 80%+ of clean energy used in electric mobility from the program and cutting off a viable polluter-pay funding stream to invest in EV adoption.
What is the bottom line?
By including charging operators, utilities and EV manufacturers in the CFS program Canadians could trust that clean fuel use, and the greenhouse gas reductions associated with it, will be accurately counted. The program would also generate new private-sector funded, non-tax, investment in Canada’s EV ecosystem. This will mean lower priced vehicles, more charging, cleaner air, improved public health and an overall healthier planet. However, Environment Canada has reversed its position on including EV manufacturers, meaning 80%+ of the EV-related benefits of this program, proposed last year, will no longer materialize
Why did Environment Canada reverse its position and decide to exclude automakers and the counting 80% of clean fuel used in electric mobility?
Environment Canada has yet to provide a compelling explanation that is satisfactory to EV drivers, the auto industry or environmental groups for this decision. If, by counting 100% of clean electricity used in EV mobility, Canada ends up on track to achieve its GHG reduction goals before 2030, Canada would be well-positioned to then raise its goals for the program and increase the stringency. Instead, Environment Canada has suggested that no additional funding is needed for EV adoption and that the polluter pay model of CFS would do nothing to further accelerate EV adoption. Environmental groups, EV drivers and automakers, including companies like Tesla, have all indicated their disagreement with this position.
Where can I learn more about the CFS for myself?
You can visit the government’s CFS website here.