Whether you’re a fleet manager, government official or sustainability advocate, understanding the Clean Fuel Regulation (CFR) credit system is key to moving towards net zero in the Canadian transportation sector. The benefits don’t stop at earning revenue through selling CFR credits—you’ll be hitting sustainability goals faster, reducing emissions and helping shape a cleaner, brighter future for your community.
Designed to reduce greenhouse gas emissions and promote cleaner energy alternatives, the CFR came into effect in June 2022. Its credit system offers significant benefits to fleets that switch from diesel or gasoline to alternative fuels. One is compressed natural gas (CNG)—a sustainable, market-ready solution that can help reduce emissions and provide a quieter drive. From highway tractors to delivery vehicles, converting fleets to CNG can reduce fuel costs by as much as 50 percent.
When fleet electrification is not a practical option, CNG and other alternative fuels allow for fast implementation and highly effective reduction of greenhouse gas emissions. In Ontario, Enbridge Gas is a leader in CNG conversion projects, offering a comprehensive turnkey program that covers the entire design, build, operation and maintenance process for CNG deployments. This includes funding for infrastructure, as well as expert advice on clean fuel regulations and other essential aspects of CNG adoption.
Organizations that have participated in this market and realized revenue generation from CFR include:
- Tomlinson Environmental in Ottawa dispensed over 1.3 million cubic metres of CNG from their station in 2023, fueling both their fleet and third-party vehicles, significantly displacing diesel usage and reducing their carbon footprint in Ontario.
- Bluewater Recycling Association and Ontario Waste Management Association transitioned their entire waste collection fleet to CNG; later, they began the transition to renewable natural gas (RNG) with Ontario’s first carbon-negative waste truck.
Understanding CFR credits
At the heart of the CFR is the concept of CFR credits. Fuels with carbon intensity below the established benchmark—including CNG—are eligible to generate CFR credits.
Credits are registered and traded via the Credit and Tracking System (CATS), a web-based platform for managing credit creation, verification and compliance reporting. Parties that have an obligation to reduce the carbon intensity of their fuels can do so through a variety of means. This program encourages investments that support the development of low-carbon-intensity fuels and transportation methods, such as electric and CNG vehicles.
How CFR credits earn revenue
Fleet decision-makers can leverage CFR credits to drive sustainability initiatives within their communities. By participating in the CFR credit system, fleets can reduce greenhouse gas emissions and unlock additional revenue streams.
So, how does it work? First, organizations need to determine their activities are eligible within the CFR program, submit their registration and undergo verification by a third party. They then generate credits on either a quarterly or annual basis. These credits are sold to parties who have an annual CFR compliance target. The monetary value of the credits fluctuates based on market demand, creating opportunities for fleets to maximize their returns.
The status of the CFR program
Since June 2022, the CFR has gradually gained traction within the transportation sector. Organizations can voluntarily participate in the program immediately and are eligible to start earning credits on the day their facilities are registered.
While demand for CFR credits is expected to increase over time, early trading activities have seen credit prices range from CAD $200 and above,* signaling a promising market for investment in low-carbon-intensity fuels and technologies.
Calculating potential returns
An organization’s revenue from the CFR depends on its fleet size, the number of credits earned and credit pricing, which is expected to change over time. While it’s challenging to predict exact revenues, a hypothetical CNG fleet that formerly consumed 30,000 litres of diesel per year per truck could see the following returns (assuming a CFR price of $200 per credit):
- 25-truck CNG fleet: $45,000 to $90,000 per year
- 50-truck CNG fleet: $90,000 to $180,000 per year
- 75-truck CNG fleet: $135,000 to $270,000 per year
In the above scenarios, CFR credits represent approximately 6 – 12 cents per litre in additional revenue.
How Enbridge Gas is driving sustainable change
Embracing the CFR presents a unique opportunity to reduce emissions proactively, add revenue streams and accelerate the adoption of sustainable fuel sources. For fleets in Ontario, Enbridge Gas has the expertise necessary to kickstart clean fuel projects.
Enbridge Gas’ Alternative Fuel Specialists are well versed in the CFR credit system. They can help you evaluate existing fleets, analyze the opportunity to switch from diesel or gasoline and calculate potential CFR credit earnings. Fleets running on CNG are quieter, less costly to operate, improve air quality and reduce greenhouse gas emissions.
Plus, CNG conversion opens up the opportunity to go fully carbon neutral with renewable natural gas (RNG), a market-ready alternative fuel produced from organic waste. Once a fleet is running on CNG, no further infrastructure changes or capital investments are needed to adopt RNG in the future. Visit enbridgegas.com/CNG to learn more about how your fleet can benefit from the CFR credit system and take advantage of the expertise available at Enbridge Gas.
