Low Carbon Transportation Fuels in Ontario: Amendments to Ethanol in Gasoline (O. Reg. 535/05) and Greener Diesel – Renewable Fuel Content Requirements for Petroleum Diesel Fuel (O. Reg. 97/14) Regulations

ERO number
013-1929
Notice type
Regulation
Posted by
Ministry of the Environment and Climate Change
Transferred to
Ministry of the Environment, Conservation and Parks
Notice stage
Decision
Decision posted
Comment period
November 29, 2017 - January 23, 2018 (55 days) Closed
Last updated

This consultation was open from:
November 29, 2017
to January 23, 2018

Decision summary

We have amended the renewable fuel regulations to increase blending requirements, improve the environmental performance of fuels, and recognize emerging low carbon fuel technologies.

Decision details

Decision on regulation

We have amended the renewable fuel regulations to increase blending requirements, improve the environmental performance of fuels, and recognize emerging low carbon fuel technologies. This includes changes to:

  1. O. Reg. 535/05 (Ethanol in Gasoline)
  2. O. Reg. 97/14 (Greener Diesel – Renewable Fuel Content Requirements for Petroleum Diesel Fuel)

These changes are tied with a commitment outlined in Ontario’s Climate Change Action Plan (CCAP) to provide funding to fuel distributors for high-blend sustainable biofuels and infrastructure upgrades to increase the availability and use of lower-carbon fuels.

O. Reg. 535/05 (Ethanol in Gasoline)

The changes to the existing O. Reg. 535/05 (Ethanol in Gasoline) will:

  • Require gasoline suppliers to maintain an average of 10% renewable content (e.g. ethanol) in regular gasoline each calendar year, starting in 2020.
  • Require the renewable content (e.g. ethanol) used for compliance to meet an average lifecycle greenhouse gas (GHG) performance benchmark of 45% fewer GHG emissions than petroleum gasoline, assessed across the fuel’s full well-to-wheels lifecycle from extraction or cultivation to processing, distribution and end-use combustion. This is determined in combination with the 10% average content, starting in 2020.
  • Remove the existing incentive or multiplier for cellulosic ethanol, and enable all better GHG performing or advanced bio-based fuels by allowing GHG performance to be assessed on a facility basis.
  • Introduce compliance requirements for fuel volumes sold in or distributed from Northern Ontario, starting in 2023.
  • Change the regulation’s name to “Greener Gasoline: Bio-based Content Requirements for Gasoline” to reflect the broader range of advanced biofuels eligible for compliance.

O. Reg. 97/14 (Greener Diesel – Renewable Fuel Content Requirements for Petroleum Diesel Fuel)

The changes to the existing O. Reg. 97/14 (Greener Diesel – Renewable Fuel Content Requirements for Petroleum Diesel Fuel) will:

  • Create an incentive for emerging renewable fuel technologies, such as biocrude, by allowing it as a compliance option.

Using the Natural Resources Canada "GHGenius" model

To determine GHG performance, fuel suppliers will use GHGenius, a lifecycle model sponsored by Natural Resources Canada. Ontario’s fuel suppliers are familiar with this model as it is already used for GHG performance determination in O. Reg. 97/14 (Greener Diesel – Renewable Fuel Content Requirements for Petroleum Diesel Fuel).

An alternative approved method will be used for biocrude – a renewable feedstock that can displace petroleum crude oil – and other fuels and production processes that are not yet part of the GHGenius model.

The references to years in the titles of the ASTM and CGSB standards found in both regulations will be removed.

Analysis of regulatory impact

There are substantial benefits to the amendments. It is estimated that Ontario’s fossil fuel suppliers may incur some administrative costs to comply with the amended gasoline regulation starting in 2020. It is anticipated that recognizing more fuel technologies (e.g. renewable gasoline, biocrude) will provide fuel suppliers with greater flexibility to choose the most economical compliance pathway.

The Ministry estimates that the additional annual administrative costs to all fossil fuel suppliers combined, will be $1,600 beginning in 2020 as a result of the amendments. Changes to gasoline retail prices are expected to be minimal, generally imperceptible to fuel users relative to other day-today market fluctuations. Experience in Ontario and other provinces (British Columbia, Alberta, Saskatchewan, and Manitoba) indicate no observable price impact from the implementation of similar transportation fuel policies, based on a comparison of retail pricing before and after implementing renewable fuel policies.

No increase to the price of diesel fuel is anticipated as a result of the amended diesel regulation. It is anticipated that recognizing biocrude as a compliance option will provide fuel suppliers with greater flexibility to choose the most economical compliance pathway.

Comments received

Through the registry

32

By email

25

By mail

1
View comments submitted through the registry

Effects of consultation

Effects of consultation on this decision

The ministry considered all comments received during the comment period in response to the posting. The ministry also considered comments received during:

  • Technical consultations held on January 10 and 15, 2018; and
  • An information webinar held on February 5, 2018.

All comments received were from a wide variety of stakeholders, including private citizens, fuel distributors, biofuel suppliers, trade associations, biofuel innovation, agriculture, environmental and consumer groups.

The following sets out the particular concerns that were raised and how the ministry considered them in the development of the final amendments.

Renewable content requirements

Comments
  • Ten per cent (10%) ethanol in regular grade gasoline is consistent with current market practice and compatible with the existing vehicle fleet.
  • General agreement that a lifecycle GHG performance threshold will not be enough of a signal to improve the GHG performance of biofuels.
  • General consensus from stakeholders to adjust biofuel compliance volumes based on their GHG performance relative to a specified performance benchmark, similar to the approach taken in O. Reg. 97/14 (Greener Diesel – Renewable Fuel Content Requirements for Petroleum Diesel Fuel) (i.e. more flexible and outcome focused). The GHG performance adjustment approach values GHG performance improvements in renewable fuels and acts as a flexibility mechanism (i.e. better performing fuels will require less blending).
  • Some stakeholders support a performance benchmark of 45% fewer GHG emissions on a lifecycle basis than petroleum gasoline, while other stakeholders suggested the performance benchmark is too aggressive.
Response
  • The existing O. Reg. 535/05 (Ethanol in Gasoline) was updated to allow biofuel compliance volumes to be adjusted based on their GHG performance. Through a performance adjusted approach, better performing fuels will require less blending.
  • The performance benchmark is 45% fewer GHG emissions than petroleum gasoline, assessed across the fuel’s full well-to-wheels lifecycle from extraction or cultivation, to processing, distribution and end-use combustion.

Emerging renewable fuel technologies

Comments
  • General consensus to support emerging renewable fuel technologies.
  • The existing generalized multiplier approach originally used for cellulosic ethanol would likely have limited impact in incenting new technologies, so the province should consider assessing the value of GHG performance of new fuel technologies based on specific facilities.
Response
  • To better respond to market trends, feedstock developments and new processes, facility-specific GHG performance values can be used.
  • Fuel suppliers will use GHGenius, a lifecycle model sponsored by Natural Resources Canada, to determine GHG performance. Ontario’s fuel suppliers are familiar with this model as it is already used for GHG performance determination in O. Reg. 97/14 (Greener Diesel – Renewable Fuel Content Requirements for Petroleum Diesel Fuel). Another approved method can be used for new fuel pathways not in GHGenius.
  • The existing incentive or multiplier for cellulosic ethanol has been removed from O. Reg. 535/05 (Ethanol in Gasoline).
  • Better-performing or advanced bio-based fuels are accepted as compliance options in both O. Reg. 535/05 (Ethanol in Gasoline) and O. Reg. 97/14 (Greener Diesel – Renewable Fuel Content Requirements for Petroleum Diesel Fuel).

Scope

Comments
  • Some stakeholders requested that requirements for fuel sold in Northern Ontario be phased in over time.
  • Many stakeholders asked to maintain the existing exemptions for marine, aviation, off-road and classic vehicle end-use, provided that the end-use can be demonstrated.
Response
  • Due to the unique distribution system, compliance requirements for fuel volumes sold in or distributed from Northern Ontario will start in 2023.
  • Province has maintained existing exemptions for marine, aviation, off-road and classic vehicle end-use, provided that the end-use can be demonstrated.

Supporting materials

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Important notice: Due to the ongoing COVID-19 pandemic, viewing supporting materials in person is not available at this time.

Please reach out to the Contact listed in this notice to see if alternate arrangements can be made.

Air Policy Instruments and Programs Design Branch
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77 Wellesley Street West
Ferguson Block, 10th floor
Toronto, ON
M7A 2T5
Canada

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Original proposal

ERO number
013-1929
Notice type
Regulation
Posted by
Ministry of the Environment and Climate Change
Proposal posted

Comment period

November 29, 2017 - January 23, 2018 (55 days)

Proposal details

Description of regulation

The Ministry is proposing to make the following amendments to the Ethanol in Gasoline regulation (O. Reg. 535/05) under the Environmental Protection Act, R.S.O. 1990, c.E.19:

  1. Require gasoline suppliers to maintain an average of at least 10% ethanol in regular grade gasoline (88 octane or less), by volume per calendar year starting in 2020.
  2. Require ethanol used for compliance to emit significantly fewer (e.g. 35%) greenhouse gas (GHG) emissions on a lifecycle basis than petroleum gasoline starting in 2020.
  3. Expand the existing incentive/multiplier for advanced renewable fuel technology to emerging technologies, including renewable gasoline and biocrude and include a compliance value for renewable gasoline and biocrude, to be informed by consultations.
  4. Calculate the lifecycle GHG performance of a fuel in carbon intensity (CI) using GHGenius version 4.03a, or a subsequent model adopted by the Director.
  5. Require that a professional engineer certify that primary data used in the carbon intensity calculations are reasonable and the calculations are correct.

The Ministry is proposing to make the following amendments to Greener Diesel – Renewable Fuel Content Requirements for Petroleum Diesel Fuel (O. Reg. 97/14) under the Environmental Protection Act, R.S.O. 1990, c.E.19:

  1. Amend the regulation to create an incentive for emerging renewable fuel technologies, such as biocrude, by allowing it as a compliance option and assigning a compliance value, to be informed by stakeholder consultation.

For both regulations, make any other housekeeping updates to clarify existing regulatory requirements (e.g. updating references to revised fuel standards, updating reporting requirements such as removing requirements for reporting summer volumes).

Purpose of regulation

In Ontario’s Climate Change Action Plan (CCAP) 2016-2020, the province committed to increase the availability and use of lower-carbon fuel in the transportation sector.

CCAP proposed to set a Renewable Fuels Standard (RFS) to increase the percentage of renewable content required in transportation fuels sold in the province. The proposal focused on gasoline since Ontario had already set a Greener Diesel requirement. The Ministry posted a discussion paper entitled Developing a modern renewable fuel standard for gasoline in Ontario on the environmental and regulatory registries between January 11th to March 12th, 2017 and conducted consultations with key stakeholders.

Based on consultation feedback received from key stakeholders regarding the potential for overlap and duplication between a modern renewable fuel standard for gasoline in Ontario and the developing federal Clean Fuels Standard (CFS), and in recognizing that the CFS could contribute to Ontario’s Climate Change Action Plan commitment to reduce GHG emissions from gasoline, the Ministry is proposing to amend existing renewable fuel regulations to increase ethanol blending requirements, improve the environmental performance of fuels, and recognize emerging clean fuel technologies.

Proposed amendments are intended to work with the expected federal CFS, ensuring GHG reductions take place in Ontario and Ontario’s Climate Change Action Plan goals are supported. The proposed amendments would support innovation in emerging technologies.

The ministry is also exploring options to support biofuel production and innovation through a Blenders Support Program (BSP) including potential funding of up to $155 million for fuel refiners to make infrastructure upgrades to support the long-term use of biocrude and other program opportunities for further GHG reductions from fuels in the transportation sector.

Other information

On November 25, 2016, the government of Canada announced that it would consult to develop a Clean Fuel Standard (CFS) to reduce Canada’s greenhouse gas emissions through the increased use of lower carbon fuels and alternative technologies. Federal consultations on the CFS are currently ongoing.

On January 11, 2017, Ontario released a discussion paper entitled, Developing a Modern Renewable Fuel Standard for Gasoline, for a 60 day comment period on the Environmental and Regulatory Registries and held public consultation sessions. Input from the consultations, in particular with respect to concerns expressed regarding the potential for overlap and duplication with the proposed federal CFS, was used to inform the development of this proposal.

The Ethanol in Gasoline regulation currently mandates that gasoline placed in the Ontario market contain an annual average of at least 5 per cent ethanol content by volume. In recognition of their additional lifecycle GHG emission reduction benefits, volumes of fuels meeting the definition of cellulosic ethanol are multiplied by 2.5 when determining compliance. The Greener Diesel regulation mandates that diesel fuel placed in the Ontario market contain an annual average of at least 4% bio-based diesel by volume and that the bio-based diesel component of this blend must have a 70% lifecycle GHG performance improvement relative to petroleum diesel.

Public consultation

This proposal was posted for a 55 day public review and comment period starting November 29, 2017. Comments were to be received by January 23, 2018.

All comments received during the comment period are being considered as part of the decision-making process by the Ministry.

Please Note: All comments and submissions received have become part of the public record.

Other public consultation opportunities

Topics for public input include:

Blending requirements

  1. In setting requirements, what factors should be considered, e.g. technology investment and planning cycles?
  2. How can the adoption of emerging clean fuel technologies be encouraged? Are there further measures to support compliance flexibility?

Lifecycle GHG emissions

  1. What should be considered in assessing lifecycle GHG performance and recognizing and assigning environmental performance values of biofuels?

Other

  1. What other considerations should be given in operationalizing the proposal in the Ethanol in Gasoline and Greener Diesel regulations?
  2. Do you have input not captured in the questions above?

Complementary program support

  1. What design considerations are recommended for a possible Blenders Support Program (BSP) to encourage the long-term use of biocrude and other high-biofuel blends?
  2. What other renewable fuel program opportunities exist for further GHG reductions from fuels in the transportation sector?

Regulatory impact statement

An increase to the price of gasoline of approximately 0.3 cents per litre may occur if any compliance costs as a result of proposed amendments to the Ethanol in Gasoline regulation are fully passed on to consumers. This projection is based on current ethanol and carbon price projections.

Ontario’s fossil fuel suppliers may incur some costs to comply with the proposed Ethanol in Gasoline requirements. Cost impacts to fuel suppliers will depend on the price difference between ethanol and gasoline and the cost of other octane substitutes, as well as the cost impacts of any terminal upgrades that have to be made. It is anticipated that recognizing more fuel technologies (e.g. renewable gasoline, biocrude) will provide fuel suppliers with greater flexibility to choose the most economical compliance pathway.

Based on comparison of retail pricing before and after implementing renewable fuel policies, experience in Ontario and other provinces (BC, AB, SK, and MB) indicate no observable price impact from the implementation of similar policies.

No increase to the price of diesel fuel is anticipated as a result of proposed amendments to the Greener Diesel regulation. It is anticipated that recognizing biocrude as a compliance option will provide fuel suppliers with greater flexibility to choose the most economical compliance pathway.

By incenting better GHG-performing fuels like renewable gasoline, the proposal supports innovation in advanced biofuels and investment in Ontario.

Supporting materials

View materials in person

Important notice: Due to the ongoing COVID-19 pandemic, viewing supporting materials in person is not available at this time.

Please reach out to the Contact listed in this notice to see if alternate arrangements can be made.

Air Policy Instruments and Programs Design Branch
Address

77 Wellesley Street West
Ferguson Block, 10th floor
Toronto, ON
M7A 2T5
Canada

Office phone number

Comment

Commenting is now closed.

This consultation was open from November 29, 2017
to January 23, 2018

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Air Policy Instruments and Programs Design Branch
Address

77 Wellesley Street West
Ferguson Block, 10th floor
Toronto, ON
M7A 2T5
Canada

Office phone number