Subject: Feedback on…

Subject: Feedback on Proposed Amendment to O. Reg. 663/20 – Clean Fuel Regulation (ERO #019-0669)

To Whom It May Concern,

As one of Ontario’s largest blenders and suppliers of renewable diesel and biodiesel, I am writing to express feedback and alternatives regarding the proposed amendment requiring that 75% of the renewable content used to meet the province’s 4% renewable fuel requirement be sourced from Canadian producers.

While I understand and support the government’s interest in stimulating domestic production, reducing lifecycle emissions, and supporting Canada’s clean fuel economy, the proposed sourcing constraint introduces potential risks and challenges that may undermine the effectiveness of the Clean Fuel Regulation.

A More Balanced Alternative - Increase the CTF clean diesel requirement to 8%

Rather than just restricting fuel origin, Ontario should consider increasing the overall renewable content requirement for the diesel pool—up to 5%, 6%, or even 8%—in line with other leading jurisdictions such as British Columbia, Quebec, Manitoba, and several U.S. states. These regions have implemented higher biodiesel blend levels without compromising engine compatibility or public acceptance. This increase blend requirements would increase the overall demand market thereby assisting Canadian producers without reducing flexibility in the system. The Government could even mandate that a portion of the increase comes from Canadian producers.

And Ontario’s already leading the way, having raised the ethanol requirement for gasoline from 10% to 15% by 2030 (though it left clean diesel content flat at 4%). Increasing the diesel mandate would reflect a more consistent and impactful policy direction.

Other considerations on the policy proposal:

1. Upward Pressure on Prices
Restricting eligible product to Canadian sources effectively shrinks the supply pool, creating a less flexible and more constrained market. This could lead to increased prices for renewable content, especially when Canadian product could be backfilled from more cost-effective U.S. or international suppliers under normal market conditions. This price volatility risks eliminating the voluntary use of biofuels by non-obligated customers—such as municipalities and private fleets—who are highly price-sensitive. As a result, the regulation could reduce total clean fuel usage and hinder progress toward decarbonization goals.

2. Weak Investment Signal for New Canadian Production
While the amendment may be intended to stimulate Canadian production, the temporary and regulatory nature of the mandate may not provide sufficient certainty to justify the capital-intensive, multi-year process of building new facilities. In fact, the perception of policy-driven market distortions may discourage long-term investment by introducing risk and complexity.

3. Reduced Flexibility, Misaligned with Broader Policy Goals
By narrowing the definition of eligible clean fuel, the proposal penalizes otherwise qualified, cost-effective renewable fuel from reputable international sources, and limits Ontario’s ability to meet its clean fuel goals efficiently. It may also work against federal-level objectives under the Clean Fuel Regulations (CFR), which were designed to promote a performance-based, market-driven system that encourages the lowest-carbon intensity fuels, regardless of origin.

Summary

If the government wishes to prioritize Canadian-produced clean fuel, it would be better to increase the overall pool requirement, and then require that a portion of the increased mandate (i.e., above 4%) come from Canadian sources. This would preserve flexibility, promote competitiveness, and support the build-out of domestic capacity without disrupting the current market structure.

In summary, while I support the objective of growing Canada’s clean fuel industry, the proposed 75% domestic sourcing requirement is not currently practical, may create unintended economic consequences, and could undercut the broader policy goals of the regulation.

I respectfully urge the Ministry to reconsider this proposal and instead pursue a more flexible, scalable, and investment-friendly path to clean fuel adoption.

Sincerely,
Giovanni Angelucci
VP, Canada Clean Fuels Inc
gangelucci@canadacleanfuels.com