ECCC proposes credit multipliers for Canadian-made low-carbon fuels

Environment and Climate Change Canada (ECCC) has proposed extra credits for low-carbon fuel produced in Canada under the Clean Fuel Regulations (CFR) and left the program's stringency unchanged. The proposal, published in the Canada Gazette on October 31, 2026, adjusts a program that Michael Berends, CEO and Co-founder of ClearBlue Markets, called "probably our best functioning carbon market to date in Canada."

The credit multipliers focus on domestic Canadian fuel, generally with feedstocks from North America, mirroring the strong 45Z incentives in the US. They range from 1.3x to 1.8x depending on fuel type, with ethanol at the low end and sustainable aviation fuel (SAF) at the high end. RNG, renewable propane and hydrogen used as vehicle fuel earn 1.4x with no feedstock test. Pipeline RNG, biogas and EV charging credits get no multiplier. The changes are proposed to apply from the 2026 compliance period, whose main deadline is July 31, 2027.

ClearBlue Markets walked through the proposal in a webinar on November 5, 2026, with Jennifer McIsaac, Chief Market Intelligence Officer, and Diana Zaraza, Project Analyst. Berends said one aim was to clear up misinformation about the amendments that is circulating online.

A market that has held up

Credit prices fell ahead of the 2025 federal election because many buyers expected a Conservative government could remove the program, Berends said. The Liberals won and doubled down on EVs, biofuels and support for farmers, and prices recovered as buyers accepted that the program was staying. He said the episode shows how closely the market follows politics, and how much stronger belief in the program is now.

Berends also pointed to money reaching credit generators. Carbon markets often have long lead times before revenue arrives, and he said that is changing in the CFR. ClearBlue has supported more than 25 clients across Canada, commercialized more than 100,000 CFR credits and facilitated more than CAD 50 million in transaction value.

"There's real value in these markets. We're seeing that, our clients are receiving it." Michael Berends, CEO and Co-founder, ClearBlue Markets

Price reporting is improving as well. ECCC now publishes monthly credit reports, and ICE and Nodal have listed CFR futures with daily settlement prices. Trading in the futures is still thin, but McIsaac said the listings point to more liquidity ahead. The ECCC reports also show where transparency is still limited: more than half of reported transfer volume carries a price of zero, which can happen when fuel and credits are sold together.

On the regulated side, Berends said the cost of the CFR is carried in the fuel price, so primary suppliers compete on how well they reduce their own obligation, and there has been little pushback. McIsaac added that many suppliers are also investing in biorefineries and co-processing, so they gain from the program as well as comply with it.

"Everyone's bought in together on this program, and that helps make it more durable for the future." Jennifer McIsaac, Chief Market Intelligence Officer, ClearBlue Markets

What it means for credit generators

Any company can register with ECCC as a credit creator. Participants run from companies with electric forklift fleets to biogas producers and refiners with carbon capture projects, and Berends said some industrial companies are expanding their EV fleets faster because of the credit opportunity.

The proposal treats the pathways differently.

Berends said some amendments help certain generators and others do not, which is why many organizations are working to determine what the proposal means for their own projects.

He also said existing projects have room to earn more. Access to better data and tighter quality checks can generate more credits, and in his view a lot of money is being left on the table on projects already in the program.

"I've never seen a carbon market with so many opportunities to optimize your projects." Michael Berends, CEO and Co-founder, ClearBlue Markets

For EV charging, the charging station is the key asset, Berends said, because that is where the data is collected, verified and approved by ECCC before credits are issued. ECCC allows credits from different organizations to be aggregated into one project, which gives scale in both generation and sales. ClearBlue Markets has developed an EV Credits Aggregator offering for this purpose, and provides ongoing assistance to credit generators. Data needs regular quality checks, for example: a client that finds at year end that a meter was not tracking properly receives no credits for that effort.

For biogas and RNG, Zaraza described how a CC2 project moves from registration to credits.

1. The project sets up an account in ECCC's credit tracking system and files a registration report. Credits can be claimed back to the registration date, which Zaraza called crucial.
2. The project files a monitoring plan that sets out how it will collect, retain and report the data behind its credit claims.
3. The project applies for a carbon intensity (CI), starting with one of ECCC's conservative default values. A project-specific CI unlocks the full credit potential but needs 24 months of data and a lifecycle assessment, and the application is verified by a third party.
4. Each quarter the project submits a monitoring report with its fuel volumes, and provisional credits are issued after each one.
5. Each year the project files a material balance report, a CI pathway report and a credit adjustment report, and an accredited third-party verifier checks all three.
   
   

"You don't need to prove additionality. An existing biogas or RNG plant can generate credits from the date you register." Diana Zaraza, Project Analyst, ClearBlue Markets.

Zaraza described a client with an existing anaerobic digestion system that was already processing organic waste. ClearBlue carried out a feasibility analysis, data preparation and CI modelling, and consolidated the client's food waste and other organic waste streams into a single biogas pathway, which she said maximizes efficiency and simplifies reporting. ClearBlue secured first-time approval and issuance of the client's credits, resolved ECCC's review questions and managed verification, and the credits were then sold through ClearBlue's compliance buyer network in multi-year transactions.

For fossil fuel decarbonization (CC1), Zaraza said carbon capture and storage is one of the largest single levers available. ECCC applies a regulatory surplus test to these projects. "The key word here is beyond," she said, meaning projects earn credits only for reductions that go past what the law already requires.

Why ECCC chose multipliers

The proposal targets the US 45Z credit, McIsaac said. US-produced renewable diesel made from North American feedstock keeps the 45Z when it is exported to Canada, while US RINs and California LCFS credits are earned only when fuel is sold in the US. The multipliers are meant to level the playing field for domestic producers.

ECCC's December 2025 discussion paper raised three options: multipliers, domestic blending mandates and a hybrid of the two, and calculated its multipliers to compensate for the 45Z.

ECCC went with multipliers only, which McIsaac said keeps the program simple and consistent with how a credit trading market works. She named the support for domestic producers, and for the farmers who supply their feedstock, as the most positive change, and said that domestic focus speaks to the program's durability.

How incentives stack for US renewable diesel

North American fuel standards are not linked, but they compete for the same supply of low-carbon fuel, and producers can send fuel to whichever market pays the most once every incentive is counted. McIsaac noted that these programs "are all supremely stackable," and that the clean fuel standard or low carbon fuel standard credit value is not always the largest part of the stack.

For example, the chart shows the stacked incentives for US-produced renewable diesel made from soybean oil. In California the US RIN is the largest component, and it is lost if the fuel is exported. The 45Z stays with the fuel if it is exported, including exports from the US to Canada.

ClearBlue Markets’ Vantage platform calculates the CFR credit price that would be needed to pull US renewable diesel to Canada instead of California, which McIsaac called the implied fair value of the credit. As of October 30, 2026 it was about CAD 690 for Canada outside BC, roughly double the traded price of about CAD 350 and above the CAD 380 fund price in effect for 2025 compliance. In British Columbia, where BC LCFS credits stack on top of the CFR, the figure was about CAD 450. McIsaac said CFR prices have been influenced more by the fund price than by this implied fair value.

Proposed changes in detail

The multipliers will create “related credits,” which are calculated based on the North American feedstock share times the standard credits created times a fuel factor. These related credits may not be used for blending mandates but would be usable for CFR compliance. Under the proposal, a renewable diesel producer with 100% North American feedstock and 100,000 standard credits would earn 50,000 related credits at a factor of 0.5, for 150,000 in total. At a 60% feedstock share the same producer would earn 30,000. Imported fuel, gaseous class credits and EV charging credits are not eligible, and related credits cannot be used for the volumetric requirements.

The proposal also includes these changes.

• The gaseous usage limit stays at 10% of deficits, with a new cap of 5% on imported gaseous credits within it. Gaseous credits trade at a discount to liquid credits because of the limit, and McIsaac said the new cap could mean a further way of tagging credits to track imported gas separately from domestic gas, and a potentially larger discount for imported gaseous credits.
• The compliance fund limit rises from 10% to 15% of deficits, which McIsaac said gives more headroom to the larger deficit generators, for whom 10% in absolute terms was difficult.
• Fall compliance fund participation, which takes place after the July primary compliance deadline, is allowed only after buying in the credit clearance mechanism market, unless the market is not held. The first fund round is unchanged.
• Default carbon intensities fall to 61 g/MJ for biogas, RNG and non-fossil hydrogen, and 67 g/MJ for renewable propane. This allows some crediting before defaults are replaced with actuals.
• CI invalidation thresholds are doubled. ECCC is also adding reporting for zero-price transfers.
• ECCC is reviewing feedstock verification and certification, including traceability of foreign used cooking oil.

Comment period and next steps

The 75-day comment period closes on January 14, 2027, and ECCC is holding information sessions on November 10, 2026. Berends encouraged anyone who sees a gap in the proposal to raise it with ECCC. McIsaac expects comments on the proposal, especially for the RNG multiplier restrictions and on the new cap for domestic gaseous credits. The final amendments come into force on registration, and a comprehensive program review will follow to set the post-2030 CFR program. The program review could begin as early as 2027, after the current proposal is finalized.

Download the webinar recording here. To talk about a project, our EV Credits Aggregator, or a specific amendment, contact the ClearBlue Markets team.