Clean Fuel Regulations (SOR/2022-140)

Marginal note:Fair market value

107 The price paid for the transfer of a compliance credit that is created under subsection 102(1) must not be less than its fair market value.

Transfer of Compliance Credits

Marginal note:Transfer on creation

• 108 (1) A registered creator who has created provisional compliance credits under paragraph 19(1)(b) or (c) or 20(b) or (c) by producing in Canada or importing into Canada a quantity of low-carbon-intensity fuel must not transfer those provisional compliance credits to a participant who is purchasing that low-carbon-intensity fuel unless the registered creator and the transferee submit a transfer request to the Minister that is signed by the authorized agent of the registered creator as well as the authorized agent of the transferee and contains the information referred to in subsection (2).

• Marginal note:Request to transfer — form

  (2) The registered creator must indicate in the transfer request their intention to have the compliance credits that have been deposited into their account under subsection 24(1) or (2) immediately transferred to the transferee and must include the following information in the transfer request:

  • (a) the name, civic address and postal address of the registered creator;

  • (b) the name, title, civic address, postal address, telephone number and, if any, email address of the registered creator’s authorized agent;

  • (c) the name, civic address and postal address of the transferee;

  • (d) the name, title, civic address, postal address, telephone number and, if any, email address of the transferee’s authorized agent;

  • (e) the type of low-carbon-intensity fuel used to create the compliance credits;

  • (f) the carbon intensity of the low-carbon-intensity fuel used to create the compliance credits and any alphanumeric identifier assigned to it; and

  • (g) the compliance period to which the transfer relates.

Marginal note:Immediate transfer

109 After the Minister receives the transfer request, any compliance credits deposited by the Minister during the compliance period referred to in paragraph 108(2)(g) into the registered creator’s account opened under paragraph 28(a) or (b), as the case may be, must be immediately withdrawn from that account and deposited into the transferee’s account opened under the same paragraph.

Compliance-Credit Clearance Mechanism

Marginal note:Pledging credits to mechanism

• 110 (1) A participant may, in a report submitted under subsection 126(1) or 127(1), pledge to offer to transfer through the compliance-credit clearance mechanism any compliance credits that

  • (a) are in an account that was opened under paragraph 28(a);

  • (b) were created as provisional compliance credits on or before the last day of the compliance period to which the report relates; and

  • (c) are not suspended under section 158.

• Marginal note:Restriction

  (2) During the period beginning on the day on which a report referred to in subsection (1) is submitted and ending on the following October 31 or, if a notice is sent in accordance with subsection 111(1), ending on the day on which that notice is sent, a participant must not use a compliance credit that a participant has pledged to offer to transfer and must not transfer that compliance credit except through the compliance-credit clearance mechanism.

Marginal note:No clearance mechanism

• 111 (1) If the compliance reports submitted under subsection 127(1) for a compliance period indicate that all primary suppliers have satisfied the total reduction requirements, the Minister must, before the following August 31, send a notice to each participant who has pledged to offer to transfer compliance credits under subsection 110(1) that informs them that there will be no compliance-credit clearance mechanism for that compliance period.

• Marginal note:No pledge to transfer credits

  (2) If no participant pledges, in a report submitted under subsection 126(1) or 127(1) for a compliance period, to offer to transfer a compliance credit through the compliance-credit clearance mechanism, the Minister must, before the following August 31, send a notice to each primary supplier who has not satisfied the total reduction requirement that informs them that there will be no compliance-credit clearance mechanism for that compliance period.

• Marginal note:Notice to participants

  (3) If subsections (1) and (2) do not apply, the Minister must, before the August 31 that follows the end of the compliance period, send a notice to each participant who has pledged to offer to transfer compliance credits under subsection 110(1) and to each primary supplier who has not yet satisfied the total reduction requirement that informs them that a compliance-credit clearance mechanism will take place for that compliance period. The notice must include the following information:

  • (a) the total number of compliance credits for all participants in respect of which a pledge to offer to transfer has been made under subsection 110(1);

  • (b) the names of all participants who have pledged to offer to transfer compliance credits under subsection 110(1); and

  • (c) the value of the total reduction requirement that has not been satisfied by all primary suppliers.

Marginal note:Transfer through clearance mechanism

• 112 (1) A participant must not transfer any compliance credits through the compliance-credit clearance mechanism to a primary supplier unless the transfer request referred to in subsection 106(2) has been submitted to the Minister, along with a compliance report under subsection 127(1) indicating that the primary supplier has not satisfied the total reduction requirement for the compliance period to which the report relates by using all their compliance credits in accordance with subsection 13(1), (2) or (4). The transfer of compliance credits to that primary supplier must occur during the period beginning on the August 31 that follows the end of that compliance period and ending on the following October 31.

• Marginal note:Acquisition of compliance credits by primary supplier

  (2) A primary supplier who has submitted a report under subsection 127(1) indicating that they have not satisfied the total reduction requirement for the compliance period to which the report relates by using all their compliance credits in accordance with subsection 13(1), (2) or (4) must acquire, by transfer through the compliance-credit clearance mechanism, the number of compliance credits determined in accordance with subsection (5) for that compliance period.

• Marginal note:Maximum price

  (3) A participant who has pledged to offer to transfer a compliance credit must accept an offer to acquire the compliance credit by transfer through the compliance-credit clearance mechanism if the compliance credit is in their account and the price offered for the transfer is equal to or less than the amount determined by the formula

  $300 × (CPI_A ÷ CPI_B)

  where

  CPI_A

  is the average Consumer Price Index for the calendar year to which the compliance period relates, as published by Statistics Canada under the Statistics Act; and

  CPI_B

  is the average Consumer Price Index for the 12 months of the year 2022, as published by Statistics Canada under the Statistics Act.

• Marginal note:Prohibition

  (4) A participant who has pledged to offer to transfer a compliance credit must not accept an offer to acquire the compliance credit by transfer through the compliance-credit clearance mechanism if the amount offered for the transfer is higher than the amount determined in accordance with subsection (3).

• Marginal note:Credits per primary supplier

  (5) A primary supplier must not acquire a greater number of compliance credits by transfer through the compliance-credit clearance mechanism than the lesser of

  • (a) the total number of compliance credits that they require in order to satisfy the total reduction requirement as indicated in the compliance report that they submitted under subsection 127(1), and

  • (b) the number determined by the formula

    C × (R_p ÷ R_t)

    where

    C

    is the total number of compliance credits from all participants that are subject to any pledges made under subsection 110(1),

    R_p

    is the total number of compliance credits that the primary supplier requires in order to satisfy the total reduction requirement, and

    R_t

    is the total number of compliance credits that all primary suppliers require in order to satisfy the total reduction requirement.

Registered Emission-Reduction Funding Program

Marginal note:Registration

113 Subject to section 115, the Minister may register a funding program whose purpose is the reduction of CO₂e emissions

• (a) on application by a person under section 114 to register the emission-reduction funding program, if the conditions set out in that section are met; or

• (b) on the Minister’s own initiative, if the emission-reduction funding program is established under an Act of Parliament and operates in Canada.

Marginal note:Application for registration

• 114 (1) A person who administers an emission-reduction funding program may apply to the Minister to register the program if

  • (a) the person is an agent of Her Majesty in right of Canada or an agent or mandatary of Her Majesty in right of a province or the person is a non-profit corporation that is established by or under a law of Canada or of a province; and

  • (b) the program operates in Canada.

• Marginal note:Contents of application

  (2) The application must contain the information referred to in Schedule 9 and be accompanied by an attestation, signed by the person’s authorized agent, that

  • (a) the emission-reduction funding program will distribute contributions made to the program to the projects referred to in subsection 115(1); and

  • (b) the person will make publicly available, no later than the December 31 following the end of the compliance period in respect of which those contributions are made, a report containing the information referred to in section 2 of Schedule 10.

Marginal note:Registration — conditions

• 115 (1) The Minister must not register an emission-reduction funding program under section 113 unless the Minister is satisfied that all contributions made to the program will be used to fund projects that support the deployment or commercialization of technologies or processes that will reduce CO₂e emissions by

  • (a) December 31, 2030, in the case of a contribution made on or before December 31, 2025; and

  • (b) the fifth anniversary of the day on which the contribution is made, in any other case.

• Marginal note:Factors

  (2) In deciding whether to register the emission-reduction funding program, the Minister must take into consideration

  • (a) the program’s policies, criteria or procedures for the distribution of contributions, including its policy for avoiding conflicts of interest regarding the distribution of contributions;

  • (b) the quality of the program’s financial and management control systems, information systems and management practices; and

  • (c) whether the person who administers the program has failed to make publicly available, no later than the December 31 that follows the end of the compliance period during which contributions are made to the program, the information referred to in section 2 of Schedule 10.

Marginal note:Cancelling registration

116 The Minister must cancel the registration of an emission-reduction funding program if any of the following occurs:

• (a) the Minister, taking into consideration the factors set out in subsection 115(2), is no longer satisfied that contributions made to the program are being used in accordance with subsection 115(1);

• (b) the person who administers the program fails to ensure that a financial audit of the program is conducted each year and, in the case of a program registered under paragraph 113(a), fails to ensure that such an audit is conducted by an independent body;

• (c) the person who administers the program fails to submit to the Minister, no later than the December 31 following the end of the compliance period during which contributions are made to the program for the purposes of subsection 13(3) or 14(3), a report with respect to the operation of the program during each compliance period that contains the information referred to in Schedule 10;

• (d) the person who administers the program fails to make publicly available, no later than the December 31 following the end of the compliance period in respect of which the contributions are made to the program, the information referred to in section 2 of Schedule 10;

• (e) in the case of a program registered under paragraph 113(a), the program no longer meets the conditions set out in subsection 114(1);

• (f) in the case of a program registered under paragraph 113(b), the provision of the Act of Parliament referred to in that paragraph that establishes the program is repealed or the program no longer operates in Canada.

Marginal note:List of programs

117 The Minister must make a list of all registered emission-reduction funding programs publicly available.

Marginal note:Contribution to funding program

• 118 (1) A registered primary supplier may create compliance credits for a compliance period by contributing to a registered emission-reduction funding program during

  • (a) the period beginning on the January 1 that follows the end of the compliance period and ending on the following July 31; or

  • (b) the period beginning on the October 31 that follows the end of the compliance period and ending on the following November 30.

• Marginal note:Receipt

  (2) A primary supplier who creates compliance credits by contributing to a emission-reduction funding program must provide to the Minister, with the report they submit under section 127 or 128, as the case may be, a receipt issued by the program that establishes that they made the contribution.

• Marginal note:Compliance credits created

  (3) The number of compliance credits that the primary supplier may create under subsection (1) for a compliance period is determined by the formula

  C ÷ P

  where

  C

  is the amount of the primary supplier’s contribution to the registered emission-reduction funding program; and

  P

  is $350.

• Marginal note:Consumer Price Index
  

  (4) On every January 1 that follows the end of a compliance period, the amount set out in subsection (3) for P is replaced by the result determined by the following formula, rounded to the nearest dollar or, if the result is halfway between two consecutive whole numbers, to the greater of those whole numbers:

  $350 x (CPI_A ÷ CPI_B)

  where

  CPI_A

  is the average Consumer Price Index for the calendar year to which the compliance period relates, as published by Statistics Canada under the Statistics Act; and

  CPI_B

  is the average Consumer Price Index for the 12 months of the year 2022, as published by Statistics Canada under the Statistics Act.

• Marginal note:Deposit into account

  (5) The number of compliance credits created by a primary supplier under subsections (1) to (4) must be deposited into their account that was opened under paragraph 28(a).

Marginal note:No subsequent transfer

• 119 (1) A primary supplier must not transfer a compliance credit that they created under subsection 118(1).

• Marginal note:Cancellation on December 1

  (2) The Minister must cancel any compliance credit created under subsection 118(1) that has not been used on the December 1 that follows its creation.

Reporting

Marginal note:Annual credit-creation report

• 120 (1) A registered creator must submit to the Minister, no later than the April 30 of the calendar year that follows the end of a compliance period, a report respecting the creation of compliance credits during that compliance period under paragraph 19(1)(a), subparagraph 19(1)(d)(i), (ii), (iv) or (v) or paragraph 20(a).

• Marginal note:Contents of report

  (2) The credit-creation report must be signed by the authorized agent of the registered creator and contain the information referred to in Schedule 11 for the compliance period to which the report relates.

• Marginal note:June 30, 2023

  (3) Despite subsection (1), the registered creator must submit the credit-creation report for the compliance period that ends on December 31, 2022 no later than June 30, 2023.

• Marginal note:April 30, 2024 — single report

  (4) The registered creator must combine the credit-creation reports required under subsection (1) for the compliance period that ends on June 30, 2023 and the compliance period that ends on December 31, 2023 into a single report and submit that report no later than April 30, 2024.