The Clean Fuel Regulations - Course 102

Following our course 101 last month, in this post we explain how hydrogen is accounted for in the CFR.

Compliance credit creation with hydrogen

The CFR allow hydrogen players to generate compliance credits in proportion to the GHG emission reductions achieved through the use of low-carbon hydrogen. These registered creators, using the CFR terminology, can then sell these credits and improve their competitiveness.

Hydrogen uses generating compliance credits

The CFR describe the following uses of hydrogen which allow a registered creator to generate compliance credits directly:

  • Replacing natural gas or propane with low-carbon hydrogen for heat generation. In this case, the producer or importer of the hydrogen generates the compliance credits.
  • Supplying low-carbon hydrogen to vehicles. In this case, the owner or manager of the refueling stations generates the compliance credits.

The following uses of hydrogen generate compliance units indirectly, by reducing the carbon intensity of another fuel:

  • Use of low-carbon hydrogen as a fuel or feedstock for the production of other low-carbon fuels, such as renewable natural gas. In this case, the producer of that low-carbon fuel generates the compliance credits.
  • Use of low-carbon hydrogen as a fuel or feedstock for the production of fossil fuels, such as in refining, or for GHG emission reduction projects related to that production, such as carbon capture. The CFR provide for several quantification methods to measure GHG emission reductions in this context. The entity that generates the compliance credits depends on the applicable quantification method.

Number of compliance credits generated

The calculation of the number of compliance credits generated varies by activity. On principle, it is linked to the reduction of GHG emissions achieved, but the quantification of this reduction implies a certain arbitrariness. Indeed, it consists in comparing the emissions linked to the use of hydrogen to the emissions in a reference scenario without hydrogen, defined by convention in the regulations.

Montréal, Québec, Canada

© 2023 by PYONNIER.

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