Sulphur Compliance Unit Trading Reinstated

Summary#

The final rule Regulations Amending the Sulphur in Gasoline Regulations: SOR/2020-277 re‑establishes a temporary sulphur compliance unit (SCU) trading system for gasoline for 2020 to 2025. It lets refiners and importers use, trade or bank SCUs they already earned (or earn during this period), and updates testing, reporting and record‑keeping rules. These regulations came into force on the day they were registered (December 16, 2020).

What it does#

• Re‑enacts the temporary sulphur compliance unit (SCU) trading system so it applies for 2020 to 2025.
• Allows companies to transfer surplus SCUs they owned as of March 31, 2020 into the re‑established system.
• Lets primary suppliers create SCUs for a year using this formula: (10 mg/kg − pool average in mg/kg) × volume in m3. The figure 10 mg/kg is used in that calculation.
• Permits use of SCUs to adjust a pool’s annual average sulphur for any year from 2020 to 2025.
• Keeps the existing sulphur limits (for example, the default batch limit of 12 mg/kg in some cases and the never‑to‑be‑exceeded limit of 80 ppm remain unchanged).
• Updates test methods and sampling standards, including reference to CAN/CGSB‑3.5‑2016 and ASTM International test method D5453‑19a (for total sulfur) and D6667‑14(2019) (for butane).
• Changes how and when notices and reports are submitted:
  • Notices to participate must be sent within specified windows tied to the coming‑into‑force date.
  • Annual reports for pools participating in the trading system are due no later than April 30 of the year after the reporting year.
  • Reports must be submitted electronically in the form and format specified, unless impractical.
• Tightens record keeping:
  • Companies must keep books and supporting documents in Canada.
  • Records must be kept until December 31, 2031.

Who's affected#

• Primary impact: gasoline refiners and importers (the regulated “primary suppliers”) in Canada.
• Industry associations involved or consulted include the Canadian Fuels Association, Canadian Independent Petroleum Marketers Association, and vehicle industry groups such as the Canadian Vehicle Manufacturers’ Association.
• Vehicle owners and the general public are indirectly affected because sulphur in gasoline affects vehicle emissions systems and air quality.
• Small gasoline producers are not affected because reporting thresholds exclude producers/importers under 400 m3 per year.
• Indigenous groups were informed and offered consultation; the government said no specific impacts were anticipated.

Why it matters#

• It gives refiners and importers extra flexibility to meet low‑sulphur standards while they complete upgrades or respond to unexpected equipment problems. That can reduce the risk of short‑term supply or compliance problems.
• Because companies can use older SCUs, the practical date when the market average reaches 10 mg/kg could be pushed back to 2026, compared with a scenario without this trading system.
• Officials say this is temporary (through 2025) and not expected to meaningfully raise national sulphur levels in gasoline or harm emissions controls, though small regional or short‑term increases are possible.
• The change creates a small administrative burden for businesses. The government estimated an annualized administrative cost of about $4,041 total (roughly $176 per affected business among 23 regulated parties).