1225 I Street NW

Suite 900

Washington DC 20005

+1 202.534.1600

www.theicct.org

August 26, 2019

RE: International Council on Clean Transportation comments on the Clean Fuel Standard
Proposed Regulatory Approach

These comments are submitted by the International Council on Clean Transportation (ICCT).
The ICCT is an independent nonprofit organization founded to provide unbiased research and
technical analysis to environmental regulators. Our mission is to improve the environmental
performance and energy efficiency of road, marine, and air transportation, in order to benefit
public health and mitigate climate change. We promote best practices and comprehensive
solutions to increase vehicle efficiency, increase the sustainability of alternative fuels, reduce
pollution from the in-use fleet, and curtail emissions of local air pollutants and greenhouse
gases (GHG) from international goods movement.

The ICCT welcomes the opportunity to provide comments on Environment and Climate Change
Canada’s (ECCC) Proposed Regulatory Approach to the Clean Fuel Standard (CFS). We
commend ECCC for its continuing efforts to promote a cleaner, lower-carbon transportation
sector that uses less petroleum-based fuels. This proposed program builds upon the impressive
steps ECCC has undertaken to promote low-carbon fuels. The comments below offer a number
of technical observations and recommendations for ECCC to consider in its efforts to build this
program and maximize the program’s benefits in mitigating the risks of climate change and
reducing petroleum use.

We would be glad to clarify or elaborate on any points made in the below comments. If there are
any questions, ECCC staff can feel free to contact Dr. Stephanie Searle
(stephanie@theicct.org) or Nik Pavlenko (n.pavlenko@theicct.org).

Stephanie Searle

Fuels Program Lead


International Council on Clean Transportation

 ICCT comments on the Clean Fuel Standard Proposed Regulatory Approach

Summary of comments
These technical comments on the proposed regulatory approach for the CFS published in June
2019 pertain in particular to sustainability criteria, indirect land-use change emissions,
additionality requirements for upstream efficiency improvements for fossil fuel suppliers, fuels
used for the marine & aviation sectors, and non-metered residential electric vehicle charging.
Introduce ILUC accounting to improve the accuracy of life-cycle GHG estimates of fuels
within the CFS. While the addition of sustainability criteria is an improvement over the
regulatory design paper presented last year, the GHG accounting for food-based biofuels
remains incomplete within the CFS. The decision not to account for ILUC emissions at the
outset of CFS implementation in 2022 will undermine the GHG reduction benefits of the
program. Without ILUC accounting, the CFS will not adequately incentive the use of better
performing fuels and could potentially drive the use of some biofuels that worsen GHG
emissions compared to petroleum. Delaying any decisions on ILUC accounting to the 2025
midterm review creates high regulatory uncertainty for the low carbon fuels industry. This
decision could hold back investment in new low carbon fuel production capacity and potentially
lead to stranded investments in higher-emission, food-based biofuels after 2025.
Update the sustainability criteria to exclude feedstocks with strong links to deforestation.
If Canada continues with its decision to move forward with CFS implementation without ILUC
accounting, there are several measures that would improve the efficacy of the CFS if adopted.
First and foremost, ECCC should consider reducing the deforestation threshold in the
sustainability criteria to 7% in order to correct a flawed calculation that ECCC has implicitly
copied from the European Commission. This change would exclude soy oil from eligibility. Soy
oil has been linked to sizeable ILUC emissions and indirect palm oil expansion in a number of
economic analyses. Therefore, excluding soy oil from the CFS on the basis of its deforestation
rate would reduce overall GHG emissions from its production and use in biofuel. ICCT also
recommends Canada consider differentiating amongst food- and feed-based biofuel feedstocks.
ECCC could consider implementing either a cap on the contribution from food-based fuels or a
sub-target for sustainable second-generation lignocellulosic feedstocks for which there is
evidence that carbon stock and biodiversity impacts are very low.
Revert to a mass-balance approach for credit allocation for sustainable fuels in mixed
batches. The proposed credit allocation methodology for fuels containing a mix of sustainable
and non-sustainable feedstocks raises the possibility of double-claiming. The methodology
presented at the Technical Working Group (TWG) webinar in August would credit facilities
according to their share of sustainable feedstock use in each reporting period, which is
misaligned with the European Union’s (EU) system of crediting the feedstock share in each fuel
production batch. Canada’s proposed methodology would create an incentive for facilities to
ship batches with a greater share of sustainable feedstock to European countries while shipping
batches with a lower share of sustainable feedstock to Canada. Canada would then award
credits in excess of the amount of sustainable biofuel it had actually received, and in total the
feedstock use by co-processing facilities could easily be overcredited. This proposed approach
may result in Canada consuming more unsustainable fuel and failing to incentivize greater use
of sustainable feedstocks globally. ICCT recommends ECCC revert to the approach proposed in
the April, 2019 TWG meeting to credit the share of sustainable feedstock use in each fuel
production batch in order to align with the EU and eliminate the incentive for shipping dirty fuel
to Canada.

2
 ICCT comments on the Clean Fuel Standard Proposed Regulatory Approach

Implement additionality measures for emissions reductions generated by facilities that

extract and process fossil fuels. There are several concerns about the additionality of GHG
reductions achieved through upstream efficiency improvements and emissions reductions
achieved by primary suppliers of fossil fuels, such as refineries and upgraders. Notably, new
refineries and upgraders may claim CFS credits if they have a lower carbon intensity than a
federal output-based performance standard. The proposed approach does not lay out a detailed
method for ensuring that these projects’ emissions reductions are viable only through carbon
pricing; rather, the document only primarily excludes projects attributable to separate regulatory
drivers, intentional curtailment, and routine maintenance. ICCT proposes that ECCC adopt an
additionality test for qualifying projects to ensure that they are driven by carbon pricing, and
more importantly, reflect an improvement over common practices in Canada.
Allow alternative aviation and marine fuels to generate credits on an optional, “opt-in”
basis. ICCT supports ECCC’s decision to exclude aviation and marine fuels for international
use from generating credits within the CFS. However, ICCT recommends allowing alternative
aviation and marine fuels consumed domestically to qualify for credit generation on an “opt-in”
basis. This approach would be consistent with existing fuels policies in the United States (U.S.),
California and the EU and would allow for low-carbon alternative fuels to generate GHG
reductions relative to the existing fossil baselines for jet fuel and heavy fuel oil provided in the
proposed regulatory approach. As many second-generation biofuel production processes
generate a slate of possible fuels for both the road sector and non-road uses, an opt-in
provision would provide a greater economic incentive for advanced fuel producers overall and
encourage them to maximize their overall liquid fuel output.
Develop an accounting method to credit the electricity supplied for non-metered,
residential electric vehicle charging. ICCT supports ECCC’s decision to allow end-use fuel
switching to electric vehicles to generate credits under the CFS, as well as the inclusion of
residential charging. In order to ensure that all vehicle charging is accounted for, in cases where
vehicle telemetry or smart home charging meters are unavailable, ECCC may allow electricity
distribution utilities to conservatively estimate the EV charging in their service area based on the
number of qualifying electric vehicles.

Ensuring Additionality through Compliance Category #1

The CFS proposed regulatory approach outlines a series of actions that would allow primary
suppliers and credit creators to take actions throughout the life-cycle of a fossil fuel that would
reduce its GHG intensity and therefore create GHG reductions credits under the CFS. These
actions include, but are not limited to, carbon capture & sequestration (CCS), facility renewable
energy integration, and using lower-carbon fuel inputs at facilities. Notably, the proposed
regulatory approach also allows new oil and gas facilities to qualify for credit generation. In the
absence of additionality requirements, projects could hypothetically generate GHG reductions
under the CFS for actions that would have occurred in the absence of the policy, thereby
undermining the integrity of the CFS’s 30 million tonne GHG reduction target.
While the proposed regulatory approach mentions the future development of a GHG reduction
quantification methodology for each project type that will assess a variety of factors, including
financial considerations, technological barriers, and technology penetration rates, the document
does not establish a detailed additionality methodology for these projects. Rather, the proposed
regulatory approach only explicitly excludes projects mandated by non-carbon pricing-related

3
 ICCT comments on the Clean Fuel Standard Proposed Regulatory Approach

regulations, double-counting, intentional curtailment of production by facilities, replacement of

pneumatic devices, and maintenance activities.
In particular, the eligibility of new oil and gas facilities for credit generation under the CFS likely
poses additionality risks. The proposed regulatory approach considers the option for CFS
credits to be generated by new refineries and upgraders based on the difference between the
carbon intensity of their fuel output relative to a benchmark based on the Federal Output-Based
Pricing System. The proposed use of a complexity weighted barrel metric would estimate the
carbon intensity of a new facility relative to that of a typical facility with the comparable product
slate.1 The Federal output based standards are intended to represent the top quartile in
performance for applicable facilities in order to incentivize improvements.2 Actions in
Compliance Category #1 must thus reduce the carbon intensity of a new facility below the
output-based standard in order to generate credits. If the output-based standard is not
continuously re-evaluated under the output-based pricing system, there is a risk that a greater
number of facilities will have lower carbon intensity scores than the standard. Therefore, over
time a growing number of facilities could generate CFS credits in excess of the CFS-specific
actions they take to reduce their fuel’s carbon intensity and these actions may thus become
common practice by 2030. CFS credits generated for these actions will reduce the stringency of
the CFS carbon reduction targets without driving any additional GHG reductions. Furthermore,
these projects may generate credits for carbon reductions under the CFS even as their
deployment increases Canada’s GHG emissions in the aggregate.
In order to ensure that GHG reductions generated at refineries, upgraders, and other large fossil
fuel facilities are truly additional and developed in response to carbon-pricing mechanisms, we
recommend ECCC consider requiring an additionality assessment for actions in Compliance
Category #1 based on principles from the Clean Development Mechanism (CDM).3 In the CDM,
project leaders must complete:
• A common practice assessment. If more than similar projects or more than 20% of
similar projects in the region use the same key measure or technology, that measure or
technology is considered to be “common practice” and thus any GHG reductions
generated by that measure or technology cannot generate CDM credits.
AND
• An investment analysis. Project leaders must show that the project is cost viable with the
sale of CDM credits but is not viable without, using an appropriate financial benchmark
and internal rate of return that is standard for the industry. In the case of the CFS,
project leaders could be required to show that the project is not cost viable in the
absence of the CFS and the Federal Output-Based Pricing System.
OR

1 https://ww3.arb.ca.gov/cc/capandtrade/meetings/081313/cwt-cwb_backgrounddocument.pdf
2 https://www.canada.ca/content/dam/eccc/documents/pdf/20170518-2-en.pdf
And https://www.canada.ca/en/environment-climate-change/services/climate-change/pricing-pollution-
how-it-will-work/output-based-pricing-system/complete-text-for-proposal-regulations.html#toc8
3 https://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-01-v5.2.pdf

4
 ICCT comments on the Clean Fuel Standard Proposed Regulatory Approach

• A barrier analysis. Project leaders must show that non-cost barriers prevent the
execution of the project, and that these non-cost barriers are removed by access to
CDM support. In the case of the CFS, project leaders could be required to show that the
barriers to the project are removed by the CFS and the Federal Output-Based Pricing
System.

Carbon Intensity Methodology for Compliance Category #2

The CFS proposed regulatory approach document includes a proposed methodology for
estimating the carbon intensity for alternative fuels, along with a set of baseline carbon
intensities for conventional fossil fuels. The ICCT supports ECCC’s use of a life-cycle
assessment methodology to evaluate the carbon intensity of baseline and alternative fuel
emissions; this approach aligns with the best practices demonstrated by other jurisdictions, such
as California’s Low-Carbon Fuels Standard (LCFS). The proposed method for developing and
approving fuel pathway applications not only provides a robust framework for estimating GHG
reductions through the increased use of alternative fuels, but also provides an additional
incentive to reduce the carbon intensity of alternative fuel production over time through
operational improvements.
While the finalized LCA modelling tool to be utilized by ECCC is still forthcoming, the proposed
set of disaggregated default values for fuels are well-supported by existing literature and have
already undergone an extensive review in the European context for the Renewable Energy
Directive (RED II). The proposed use of these values as conservative, default values prior to the
adoption of facility and pathway-specific values upon the collection of operating data and
approval by ECCC and third-party certifiers aligns with best practices from the California LCFS.
ICCT recommends the publication of approved pathway LCA data to the extent possible (with
the removal of some confidential business information), in order to ensure transparency for the
pathway approval system.
ICCT supports the inclusion of direct land-use change emissions into the methodology to be
used in ECCC’s LCA model. Emissions from soil carbon fluxes from agricultural practices are an
inherent component of the life-cycle emissions from crop-derived fuels. In the EU context, the
Biograce LCA model incorporates direct land-use change emissions in accordance with a 2010
European Commission Decision.4 The guidelines established by the European Commission
involve estimating the change in carbon stock per unit of land area from the current use of the
land relative to that land’s carbon stock in 2008 allocated over 20 years of feedstock production,
with parameters for management practices.5 Biograce provides the option of a default
calculation or the input of actual measured values. It is critical to note that the estimation of
direct land-use change emissions is not a substitute for full land-use change carbon accounting.
Demand for biofuels created by policies such as the CFS creates market-mediated pressure for
cropland that may result in land expansion outside of the direct area used for biofuel cultivation
and therefore outside the scope of traditional, attributional life-cycle accounting.6 The omission
of these indirect land-use change emissions therefore leads to overestimating the emissions

4 https://www.biograce.net/content/ghgcalculationtools/recognisedtool/
5 https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:151:0019:0041:EN:PDF
6 https://theicct.org/publications/guide-perplexed-indirect-effects-biofuels-production

5
 ICCT comments on the Clean Fuel Standard Proposed Regulatory Approach

reductions generated from crop-derived biofuels and reduces the integrity of GHG reductions
attributed to the CFS.

Sustainability Criteria
The inclusion of sustainability criteria into the proposed regulatory approach is a meaningful
step towards reducing the negative unintended consequences of the CFS. The proposed
sustainability criteria exclude biofuels directly grown on forestland and biodiverse areas from
generating credits within the CFS. However, the proposed criteria fall far short of fully
addressing the market-mediated emissions from indirect land-use change. Furthermore, the
proposed approach for allocating credits to biofuels on the basis of a facility’s reporting period
production mix rather than a mass balance approach for a given batch of biofuel poses an
implementation risk and will require strict monitoring, reporting and verification, as described in
further detail below.

ILUC Accounting is Necessary Even with Sustainability Criteria in Place

The sustainability criteria presented in Annex VI of the proposed regulatory approach rightfully
ensure that biofuel feedstocks directly grown on high-risk land will not be eligible to generate
credits within the CFS. However, this approach does not go far enough to ensure that
deforestation and market-mediated land use change emissions attributable to biofuel demand
from the CFS are prevented. As with the original EU RED, the omission of ILUC accounting will
undermine the GHG reduction goal of the CFS.7 Modeling performed for other jurisdictions has
found that ILUC emissions substantially reduce or in some cases reverse the GHG savings from
biofuels produced from first-generation food- and feed-based crops.8 Because the magnitude of
ILUC emissions varies widely amongst biofuel feedstocks, a performance-based CFS without
ILUC accounting will not provide a value signal across pathways consistent with full lifecycle
GHG impacts. The CFS will thus not adequately incentivize better performing pathways with low
ILUC emissions and could potentially incentivize the use of some biofuels that worsen GHG
emissions compared to petroleum.
In the regulatory design paper published in 2018 and in subsequent meetings of the Technical
Working Group, ECCC has referenced a CFS midterm review to be held in 2025, which will
consider whether and how ILUC should be accounted for. It is not necessary to wait until 2025
to decide whether and how to address ILUC because the available science already clearly
shows that ILUC emissions are large in every jurisdiction that has conducted modeling. ECCC
could reference estimated ILUC emissions from another jurisdiction (for example, California or
the United States) in its final regulation. Incorporating ILUC accounting into the CFS in 2025 will
be more difficult and have greater negative impacts on businesses compared to adopting ILUC
accounting in the 2019 proposed regulation. The omission of ILUC accounting in the early years
of the program (2022-2025) will incentivize the continued expansion of first-generation food- and
feed-based biofuel capacity over more sustainable second-generation technologies. Introducing

7 https://www.theicct.org/news/comments-environment-and-climate-change-canada-clean-fuel-standard-
regulatory-framework
8 https://www.govinfo.gov/content/pkg/FR-2010-03-26/pdf/2010-3851.pdf;

https://www.arb.ca.gov/regact/2015/lcfs2015/lcfs15appi.pdf;
https://ec.europa.eu/energy/sites/ener/files/documents/Final%20Report_GLOBIOM_publication.pdf

6
 ICCT comments on the Clean Fuel Standard Proposed Regulatory Approach

ILUC accounting in 2025 or soon thereafter would abruptly greatly reduce support for first-
generation facilities, stranding investments. The delay in including ILUC accounting until 2025
will create enormous uncertainty and investment risk for all biofuel producers in Canada.
If Canada is to move ahead without ILUC accounting in the 2019 proposed CFS regulation,
however, ECCC should consider other measures to limit the use of high-ILUC feedstocks in the
CFS in order to improve GHG performance of the program and investment certainty for
businesses. The EU, which has implemented similar sustainability criteria to those proposed by
ECCC, does not use ILUC emission factors in the RED II. Instead, the policy caps the
contribution of food-based biofuels to the overall mandate for renewable energy supplied to
transportation. Canada could similarly cap towards the contribution of food-derived fuels
towards the liquid fuel class of the CFS, thus ring-fencing some portion of the policy for
advanced, second-generation fuels made from energy crops, wastes and residues. These fuels
have a much higher certainty of delivering GHG reductions without contributing to indirect land-
use change and deforestation.9 Alternately, ECCC may consider some form of additional
incentive for second-generation fuels, such as a credit multiplier or sub-target. This would help
to create a strong policy signal for ultralow-carbon fuels, which would provide greater
investment certainty for biofuel pathways likely to provide deeper GHG reductions over the
longer term.

Lowering the Sustainability Criteria’s Deforestation Threshold

The purpose of implementing a deforestation threshold in the sustainability criteria is to exclude
the worst-performing biofuel feedstocks – those for which land use change emissions likely
more than offset the GHG reductions achieved by utilizing that feedstock. The proposed 10%
threshold for expansion onto high carbon stock land will exclude palm oil-derived biofuels from
generating credits under the CFS, which mitigates the risk of extensive ILUC emissions from
deforestation and peatland oxidation in Southeast Asia. However, the 10% threshold is too high
to exclude soy-derived biofuels, which have high ILUC emissions ranging from 17 to 100
gCO2e/MJ according to a number of regulatory modelling exercises under various jurisdictions.10
Economic analysis demonstrates that demand for soy oil drives increased demand for palm oil,
as soy is diverted from its existing uses and replaced by the cheapest substitute.11 This
relationship has been demonstrated further in 2019 modelling conducted by the International
Civil Aviation Organization (ICAO), which utilized two separate economic modelling tools
(GTAP-BIO and GLOBIOM) to develop an ILUC assessment for aviation biofuels. Both these
analyses found that soy-derived biofuels were linked to high ILUC emissions due to
deforestation and interaction with the palm oil market.12
The proposed regulatory approach copies both the 10% threshold for expansion onto high
carbon stock land as well as data on the share of expansion onto high carbon stock land
published in the European Commission’s Delegated Act on high indirect land use change risk

9 https://ec.europa.eu/energy/sites/ener/files/documents/Final%20Report_GLOBIOM_publication.pdf
10 https://ww3.arb.ca.gov/fuels/lcfs/iluc_assessment/iluc_analysis.pdf and
11 https://theicct.org/publications/how-rapeseed-and-soy-biodiesel-drive-oil-palm-expansion
12 https://www.icao.int/environmental-

protection/CORSIA/Documents/CORSIA%20Supporting%20Document_CORSIA%20Eligible%20Fuels_L
CA%20Methodology.pdf

7
 ICCT comments on the Clean Fuel Standard Proposed Regulatory Approach

feedstocks.13 This threshold was established based on an incomplete calculation of likely GHG
impacts of biofuel feedstocks. According to a supporting report for the Delegated Act,14 this
threshold was determined based on a calculation of the share of expansion onto forestland a
generic oilcrop would need to have in order for its total lifecycle GHG emissions to equal those
of petroleum. It appears that this calculation may have omitted GHG emissions from below-
ground biomass and soil organic carbon.
We replicate the Commission’s calculations but include belowground biomass and social carbon
loss. We assume a belowground:aboveground biomass ratio of 0.2, towards the low end of the
range of values for various forest types reviewed in Table 4.4 of forest chapter of the IPCC’s
2006 Guidelines for National Greenhouse Gas Inventories.15 We assume average soil carbon
stocks on converted land of 37 tonnes carbon per hectare, which is the area-weighted average
of soil carbon stocks for Africa, Asia (excluding Indonesia and Malaysia), and South America.16
World average soil carbon stocks are higher, around 60 tonnes carbon per hectare, but soil
carbon stocks tend to be lower than average in tropical areas where a great deal of cropland
expansion occurs. We assume that 20% of soil carbon stocks are emitted as CO2 upon
conversion to cropland based on literature review.17 We assume this soil carbon loss occurs for
all land area converted to cropland production, whether or not it is forested. Using the
Commission’s assumptions on amortization period (20 years), energy yield per area (48
GJ/ha/yr), and GHG emissions of biofuel production other than land use change emissions (47
gCO2e/MJ), we estimate that with a 4.5% share of expansion onto forestland, biofuel produced
from a generic oilcrop would produce zero GHG savings compared to petroleum. For newer
biofuel installations starting operation after 1 January 2021, GHG emissions other than land use
change emissions would need to be at least 65% lower than the fossil fuel comparator. For such
installations, we estimate that a 7.9% share of expansion onto high carbon stock land would
result in zero lifecycle GHG emission reductions compared to petroleum. Thus, depending on
the age and performance of biofuel installations, the share of expansion onto high carbon stock
land for which biofuel feedstocks would have no net climate benefits ranges from around 4-7%.
ICCT recommends that ECCC correct the error in the European Commission’s calculations by
setting the deforestation threshold for eligible feedstocks in the CFS to 7%. This change would
more accurately reflect the threshold of expansion onto high carbon stock land that would result
in a biofuel feedstock have no net GHG savings and would exclude feedstocks that are likely
worse than fossil fuels. This change would result in the exclusion of soy oil from the CFS, which
would eliminate the high ILUC emissions from soy-derived fuels.

13 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=pi_com:Ares(2019)762855
14 https://ec.europa.eu/energy/sites/ener/files/documents/report.pdf
15 https://www.ipcc-nggip.iges.or.jp/public/2006gl/
16 Calculated using data from the Harmonized World Soil Database, downloaded in 2011. This database
is now available online at:
http://www.iiasa.ac.at/web/home/research/researchPrograms/water/HWSD.html
17 Reviewed in Guo, L. B., and R. M. Gifford (2002). “Soil Carbon Stocks and Land Use Change: A Meta

Analysis.” Global Change Biology 8, no. 4 (April): 345–60; Murty, D., M. U. F. Kirschbaum, R. E.
McMurtrie, and H. McGilvray (2002). “Does Conversion of Forest to Agricultural Land Change Soil Carbon
and Nitrogen? A Review of the Literature.” Global Change Biology 8, no. 2 (February): 105–23; and Don,
A., J. Schumacher, and A. Freibauer (2011). “Impact of Tropical Land-Use Change on Soil Organic
Carbon Stocks—A Meta-Analysis.” Global Change Biology 17, no. 4 (April): 1658–70.

8
 ICCT comments on the Clean Fuel Standard Proposed Regulatory Approach

Proposed Mechanism for Credit Allocation

At the TWG Webinar held on August 16th, 2019, ECCC proposed a new approach for allocating
credits to fuels that meet the sustainability criteria for the CFS. For facilities processing a mix of
feedstocks, the CFS will credit fuel according to the share of eligible feedstock and its
associated carbon intensity. For example, a renewable diesel facility processing 50% used
cooking oil and 50% palm oil would generate credits for 50% of the fuel consumed in Canada,
using the carbon intensity for used cooking oil.18 This is similar to the mass-balance approach
used by the EU that requires chain of custody bookkeeping to track the share of each feedstock
in each batch in order to allocate credits proportionally for each batch. While the original mass
balance approach proposed at the TWG in April 2019 would similarly award credits according to
the share of sustainable feedstock in each batch of fuel production, the new approach will award
credits according to the share of sustainable feedstock in each reporting period. The intent for
this change appears to be to facilitate easier compliance and the deployment of co-processing
of sustainable bio-crudes in existing facilities.
However, implementing this allocation method poses substantial compliance and enforcement
risks. Because this approach does not align with the mass balance approach used in the EU,
there is a risk of crediting the same feedstock in multiple jurisdictions. To illustrate, we walk
through the above example of a renewable diesel facility co-processing used cooking oil and
palm oil and shipping the resulting fuel to both Canada and Germany. Table 1 shows how the
used cooking oil component would be credited if Canada returned to its originally proposed
approach to credit the share of sustainable feedstock in each fuel batch. This example Facility A
ships one batch of fuel to Germany and the next to Canada, within the same reporting period.
The share of sustainable feedstock (used cooking oil) varies across batches, but because the
share in each batch is counted by the country it is shipped to, the total amount of used cooking
oil biofuel that is credited in this reporting period (100 gallons) exactly equals the actual amount
of used cooking oil biofuel produced during the reporting period (100 gallons).

18Assuming palm oil biofuel is not eligible in the CFS, as per the proposed sustainability criteria excluding
biofuel feedstocks associated with significant conversion of high carbon stock lands.

9
 ICCT comments on the Clean Fuel Standard Proposed Regulatory Approach

Table 1: Example illustrating accurate overall crediting of sustainable feedstock across

jurisdictions given Canada’s previous proposal to count the feedstock mix in each batch.

FUEL
VOLUME COUNTRY
BATCHES IN CREDITS CREDITS
FEEDSTOCK FROM FUEL
REPORTING CLAIMED IN CLAIMED IN
MIX USED PHYSICALLY
PERIOD A GERMANY CANADA
COOKING SHIPPED TO
OIL

75% used GHG savings

Batch 1 (100
cooking oil; 75 gallons Germany from 75 None
gallons)
25% palm oil gallons

25% used GHG

Batch 2 (100
cooking oil; 25 gallons Canada None savings from
gallons)
75% palm oil 25 gallons

Total for
50% used
reporting 100 Total credits claimed across
cooking oi;
period A (200 gallons jurisdictions: 100 gallons
50% palm oil
gallons)

Table 2 illustrates the accounting problem introduced by Canada’s new proposal to count the
share of sustainable feedstock in each reporting period. Because Germany still counts the share
of sustainable feedstock in each batch, Facility A has an incentive to ship batches with a higher
share of used cooking oil to Germany (75 gallons in Batch 1). Because Canada does not
differentiate between batches, Facility A has an incentive to ship batches with a lower share of
used cooking oil to Canada (25 gallons in Batch 2). Germany credits the facility according to the
75 gallons of used cooking oil biofuel it received. But even though Canada only received 25
physical gallons of used cooking oil biofuel, it credits the higher share of used cooking oil in the
entire reporting period (50%, which multiplied by the 100 gallons received by Canada results in
crediting 50 gallons used cooking oil biofuel). The total amount of credits received by facility A is
thus equivalent to 125 gallons of used cooking oil biofuel, more than it actually produced.
Canada’s new proposed approach to credit the share of sustainable feedstock used in co-
processing by reporting period could thus lead to significant overcrediting of those facilities.

10
 ICCT comments on the Clean Fuel Standard Proposed Regulatory Approach

Table 2: Example illustrating how sustainable feedstock can be overcredited across jurisdictions
given Canada’s proposed approach to count the feedstock mix in each reporting period.

FUEL
VOLUME COUNTRY
BATCHES IN CREDITS CREDITS
FEEDSTOCK FROM FUEL
REPORTING CLAIMED IN CLAIMED IN
MIX USED PHYSICALLY
PERIOD A GERMANY CANADA
COOKING SHIPPED TO
OIL

75% used GHG savings

Batch 1 (100
cooking oil; 75 gallons Germany from 75
gallons)
25% palm oil gallons GHG
savings from
25% used 50 gallons
Batch 2 (100
cooking oil; 25 gallons Canada None
gallons)
75% palm oil

Total for
50% used
reporting 100 Total credits claimed across
cooking oi;
period A (200 gallons jurisdictions: 125 gallons
50% palm oil
gallons)

The approach proposed at the August TWG meeting would incentivize co-processing facilities to
ship batches of fuel with greater share of sustainable feedstock to European countries while
shipping batches of fuel with greater share of unsustainable feedstocks to Canada. This
approach would also be ineffective in driving greater use of sustainable feedstocks globally.
ICCT thus recommends that ECCC revert to its original proposed approach to credit the share
of sustainable feedstock in each batch of co-processed fuel.

Support for Alternative Aviation and Marine Fuels

The ICCT agrees with the ECCC’s decision to exclude alternative fuels used for the
international aviation and marine sectors from credit generation under the CFS. However, there
is still an opportunity to expand the slate of eligible fuels to generate GHG reductions under the
CFS and widen the ambition of the program by allowing marine and aviation fuels to generate
credits on an “opt-in” basis. This approach would resemble California’s recent LCFS
amendment, wherein primary suppliers and fuel importers would not generate deficits from the
share of jet fuel produced or imported but have the opportunity to generate credits from each
unit of alternative jet fuel blended.19 The baseline carbon intensity for fossil-derived jet fuel is
already included in the proposed regulatory approach and would be suitable for use in
conjunction with the CI reduction requirement for the liquid fuel pool.

19https://ww3.arb.ca.gov/regact/2018/lcfs18/fro.pdf?_ga=2.229271519.21210401.1566267885-
327470106.1542036226

11
 ICCT comments on the Clean Fuel Standard Proposed Regulatory Approach

Including an opt-in provision for domestically-consumed aviation fuels would benefit the
economics for advanced biofuel producers for the road sector. Virtually all renewable jet fuel
produced at present is produced as part of a product slate of different fuels. For example, a
hydroprocessing facility using vegetable or waste oils generates mostly road fuels (mostly
renewable diesel), and small amounts of renewable jet fuel and other products (propane and
other light hydrocarbons) are produced as co-products (Figure 1). Advanced fuel production
processes such as gasification and Fischer-Tropsch synthesis and alcohol-to-jet similarly
produce a mix of these products. Previous analysis by the ICCT suggests that creating an
economic incentive for the share of aviation fuel co-product from a facility producing primarily
road fuels would improve the economic prospects for that project and lower its levelized cost of
production.20 Incentivizing these fuels on an opt-in basis (rather than through a multiplier) would
in most cases not cause them to shift their production slate towards aviation fuels, which may
be linked to efficiency losses for the facility.21

Figure 1: Product slates for four alternative jet fuel production pathways.

Electric vehicles
ICCT supports the inclusion of end-use fuel switching to electric vehicles as a credit generator in
the program as well as the use of energy efficiency ratios to properly account for the relative
efficiency of electric vehicles. The proposed regulatory approach states that credits generated
for electricity used in vehicles will be generated by vehicle manufacturers, charging network
operators, and site hosts, depending on the type of charger used. We support the requirement
to reinvest electric vehicle credit revenue into projects and programs that reduce the cost of
electric vehicle purchases and expand the availability of charging infrastructure, as previous

20 https://theicct.org/sites/default/files/publications/Alternative_jet_fuels_cost_EU_20190320_1.pdf
21 Ibid.

12
 ICCT comments on the Clean Fuel Standard Proposed Regulatory Approach

ICCT analyses suggest that these two factors provide some of the greatest barriers to electric
vehicle deployment.
In the TWG webinar held in August, ECCC indicated that the quantity of credits generated from
residential charging would be estimated through vehicle telemetry or home smart charging
systems. In cases where vehicle telemetry or smart home charging equipment is unable to
estimate the quantity of electricity consumed for vehicle charging, there is a risk that a share of
overall EV charging would be ineligible for credit generation. ICCT recommends that ECCC
allow non-metered residential EV charging to generate credits for distribution utilities based on
the number of non-metered electric vehicles in their service area. ECCC may utilize the
methodology adopted by California’s Air Resources Board in 2018, wherein utilities use a
conservative assumption of the daily average electricity use per vehicle in conjunction with the
quantity of qualifying vehicles in their service area, which can be estimated through separate
policies or tracking mechanisms.22

22 https://ww3.arb.ca.gov/fuels/lcfs/electricity/030818notice.pdf

13