Our Industry

Low-Carbon Fuels

Low-carbon fuels are making huge strides and will be a growing part of Canada’s future fuel mix.

Overview

Low-carbon fuels play a crucial role in reducing emissions as they can be used in existing engines and infrastructure, offering an immediate, practical solution to lower carbon emissions. With advancements in technology, the efficiency of low-carbon fuels is steadily improving, making them a more viable option for decarbonizing the transportation fuel sector and addressing climate change today. Continued innovation and investment in these fuels are essential for bridging the gap until electric technologies become more widespread.

Canada has the potential to be a leader in the low-carbon fuel market, driving innovation and setting new standards for sustainability. By scaling up low-carbon fuel projects, Canada can enhance its energy security, support economic growth, and create jobs across the fuel value chain. This includes benefiting agriculture and forestry sectors that provide feedstock for low-carbon fuel production.

Expanding low-carbon fuel production and distribution will reduce Canada’s reliance on fuel imports and improve energy security. Maintaining and utilizing the current fuel infrastructure while diversifying the energy mix will ensure reliable, affordable, and efficient transportation fuels for both businesses and consumers, contributing to a more sustainable energy future.

Ethanol

Ethanol is a renewable, alcohol-based fuel made primarily from the fermentation of plant materials like corn, sugarcane, or other biomass feedstocks. It is commonly blended with gasoline to reduce emissions and can enhance engine performance. Ethanol is widely used as a cleaner alternative to fossil fuels in transportation.

Today, Canada has a well-established ethanol industry, with production facilities across the country producing approximately 1.7 billion liters of ethanol annually (as of 2023). The industry continues to evolve, driven by technological advancements, government policies, and growing demand for renewable energy sources.

The government of Canada currently requires that gasoline at the pump contains an average of five per cent ethanol. Some provinces currently require a higher percentage and some gas retails stations may go to fifteen percent to support and meet evolving federal and provincial regulations related to renewable fuels.

As the industry raises ethanol blend levels to meet Canada’s future emission targets, demand for ethanol in Canada is expected to rise by about 50% from 2022 levels, reaching around 5 billion liters per year by 2030. Canadian Fuels Association (CFA) members are leading the way in ethanol production in Canada today. Their investments in facilities and infrastructure create jobs and help local economies grow. 

With the right policies in place, our members can continue to grow their production of this important biofuel to support Canada’s climate goals and promote a more sustainable energy future. This will not only help the environment but could also position Canada as a leader in renewable energy, paving the way for a cleaner and stronger economy.

Some Facts on E15 Ethanol

• CFA members may start introducing higher ethanol content gasoline (higher than 10% ethanol) at some retail locations to support and meet evolving federal and provincial regulations related to renewable fuels. These changes will further contribute to decarbonizing transportation fuels in line with CFA’s Driving to 2050 vision.

• Provincial biofuel policies are one of the main drivers for the introduction of E15 fuel at retail gas stations. This said, even with the introduction of E15 into the Canadian market, E10 and other products will remain available.

• Fuel quality requirements for E15 are governed by the Canadian General Standards Board and as such, gasoline offered by CFA members will continue to meet regulatory requirements and Canadian gasoline quality standards.

• In the U.S., E15 is already available at retail gas stations​ and the U.S. Environmental Protection Agency has approved the use of E15 in post-2001 vehicles.​ 

• Always refer to your vehicle manufacturer handbook or manual to confirm the optimum fuel choice for your vehicle.   E15 should not be used in small engine applications (e.g. motorcycles, boats, lawnmowers) unless the owner’s manual states otherwise.

Contacting your local fuel retail station or the customer services of the retail station brand is the most efficient way to understand the fuel options they provide.

Renewable Diesel

Renewable diesel is a sustainable alternative to conventional diesel fuel, produced from renewable feedstocks such as vegetable oils, animal fats, and waste oils. The most common way to make renewable diesel includes a process known as hydrotreating, which produces a fuel that is chemically identical to petroleum diesel. This allows it to be used in any diesel engine without modifications and meets the same fuel quality standards as traditional diesel.

In Canada, renewable diesel production is growing but remains limited compared to demand. Facilities like Tidewater Renewables in British Columbia and Braya Renewable Fuels in Newfoundland have started production, and Imperial Oil’s Strathcona renewable diesel facility is expected to start production in 2025. Investments in this sector could increase significantly with the right policies and incentives in place.

Renewable diesel helps meet the Clean Fuel Regulations targets, as well as provincial mandates, which require a reduction in carbon intensity of liquid fuels used in Canada. Demand for renewable diesel is expected to rise significantly in the coming years, driven by increasing regulatory pressure to reduce greenhouse gas emissions and corporate commitments to sustainability. Forecasts indicate that renewable diesel demand in Canada could grow exponentially, especially in sectors such as long-haul transportation, heavy industry, and agriculture, as the country works towards achieving its future climate targets.

Sustainable Aviation Fuel (SAF)

Sustainable Aviation Fuel (SAF) is a cleaner alternative to traditional jet fuel, made from sustainable sources like waste oils, agricultural residues, and non-food crops. It offers a way to reduce carbon emissions in aviation, a sector responsible for 2-3% of global greenhouse gas emissions. Even better, SAF can replace fossil jet fuels without requiring any changes to existing aircraft engines or infrastructure.

Demand for SAF is rising rapidly as the aviation industry pushes to decarbonize. Jurisdictions are implementing policies mandating SAF use or incentivizing SAF production through tax credits. The biofuel sector is working hard to expand access to feedstocks, enhance production technologies, and lower costs to meet growing demand. These advancements are positioning SAF as a viable, low-carbon alternative to conventional jet fuel for the next decade and beyond.

Hydrogen

Hydrogen is a colourless, odourless gas and the most abundant element in the universe. It has the potential to play a key role in our transition to a low-carbon economy. When used in a fuel cell, hydrogen only produces water and heat as byproducts, making it a cleaner alternative to fossil fuels. Hydrogen can be used across transportation, industry and energy storage sectors, making it a key player in reducing greenhouse gas emissions. With its abundant natural resources, Canada is well-positioned to become a leader in clean hydrogen production.

Hydrogen is increasingly being explored within Canada’s transportation energy sector. Automakers are working hard to develop and deploy hydrogen fuel cell vehicles, while hydrogen-powered buses, trains, and maritime vessels are being tested across various regions. Ongoing research and development efforts focus on overcoming challenges and improving hydrogen’s viability as a sustainable transportation fuel, especially for difficult to decarbonize sectors such as heavy transport, shipping and marine.

Hydrogen plays an important role in the refining process, upgrading fuels and removing contaminants to ensure that final products meet stringent specifications and environmental standards. It is also key in the production of biofuels like renewable diesel, sustainable aviation fuel (SAF), and synthetic fuels. Beyond transportation fuels, hydrogen can replace natural gas as a feedstock in steel production and other heavy industrial applications. As low-carbon hydrogen production ramps up, it will reduce the carbon intensity of biofuel production and help industrial facilities lower greenhouse gas emissions, supporting cleaner and more sustainable energy solutions for various sectors.

Canada’s hydrogen strategy established a framework for using hydrogen as a tool to reduce emissions. Canada has brought forward a number of measures to promote the production and adoption of low-carbon hydrogen, including the Clean Hydrogen Investment Tax Credit and Clean Fuel Regulations. With a number of Canadian provinces leading the way, Canada is accelerating efforts to unlock the potential of hydrogen as a game-changing fuel. It could very well be the key to a cleaner, more sustainable future over the next decade and beyond