Regulation Proposal Notice:

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).

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.

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.

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.

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

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

Other

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

Complementary Program Support

6. 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?
7. What other renewable fuel program opportunities exist for further GHG reductions from fuels in the transportation sector?

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.

Rebecca Tan
Policy Advisor
Ministry of the Environment and Climate Change
Climate Change and Environmental Policy Division
Air Policy Instruments and Programs Design Branch
77 Wellesley Street West
Floor 10
Ferguson Block
Toronto Ontario
M7A2T5
Phone: (416) 325-5102

Air Policy Instruments and Programs Design Branch
77 Wellesley Street West
Floor 10
Ferguson Block
Toronto Ontario
M7A2T5
Phone: (416) 314-3923