Temporary Sulphur Credit Trading Re-enacted

Summary#

This is a proposed set of changes to the Sulphur in Gasoline Regulations that would temporarily bring back the credit trading system for sulphur levels in gasoline. If approved, the trading system would be available for the years 2026 to 2030 and would let some refiners and importers use or bank credits instead of meeting the 10 ppm annual sulphur average directly.

What it does#

• Re-enacts the temporary sulphur compliance unit (SCU) trading system under the Regulations Amending the Sulphur in Gasoline Regulations for the years 2026–2030.
• Lets regulated companies create, trade, use, or bank SCUs to adjust a pool’s reported sulphur average for any year from 2026 to 2030.
• Allows companies to transfer surplus SCUs they owned as of March 31, 2026 into the re‑enacted system.
• Adjusts some reporting timelines so companies can make required notices for 2026 within 30 days of the amendments coming into force.
• Requires companies participating in the trading system to keep books and records in Canada until December 31, 2036.
• The proposal is published for comment (it is not law yet). The government intends the rule to come into force when it is registered, likely in early-to-mid 2026, if approved.

Who's affected#

• Primarily gasoline refiners and gasoline importers (often called "primary suppliers").
• Industry groups involved in consultation include the Canadian Fuels Association and the Canadian Energy Marketers Association.
• Other stakeholders who may notice effects include vehicle makers and parts groups such as Global Automakers of Canada and the Automotive Parts Manufacturers’ Association of Canada.
• Environmental groups and some Indigenous organizations raised concerns during consultations. Those names include the Métis National Council, the Assembly of First Nations, and Inuit Tapiriit Kanatami.
• Drivers and regional fuel markets could be indirectly affected if the trading system helps avoid refinery slowdowns or regional supply shortages.

Why it matters#

• Keeps gasoline supply steadier: The trading system gives refiners temporary flexibility to cope with equipment outages or delayed upgrades. That can reduce the chance of cutting back refinery output or creating local fuel shortages.
• Small, temporary environmental trade-off: Allowing use of banked credits can cause some short-term, regional increases in sulphur-related pollution from vehicle exhaust. The government says these increases should be limited and decline over time.
• Gives time for longer-term rules: The Department of the Environment is planning work on a consolidated fuel regulation and a possible permanent credit system. This re-enactment buys time for that work.
• Administrative and cost impact: The government’s earlier analysis estimated administrative costs for the sector at about $4,041 in annualized average costs, with an average of 7 hours per year and roughly $176 per business.
• Consultation and concerns: The government reports no legal or treaty impacts on Indigenous rights were identified, but some Indigenous groups have asked for more information and raised health concerns.
• This is a proposal open for comment for 60 days; the comment period ends on February 11, 2026.